There already helicopter money in the markets . They are buying so much of the debt already, pushing the maturities out. Are they really financing stimulus . Deciding many years ago what theyre going to do. In mike will bring with with his interview Esther George. Her outlook for inflation. You have to focus on inflation, jon. Jon lets get you up to speed. Teachers marginally negative, down. 2 in the u. S. A soccer session in europe with the ftse down. 25 . Soccer session in europe a softer session in europe. The bloomberg dollar slightly softer. Covering the bond market as well come a quick look at commodities, the index coming in just a little bit. It is very much a Federal Reserve story. Alix a risk off day, little bit into friday. Lets check in with our bloomberg team. Matt boesler on janet yellen. Onon clark in tokyo helicopter money coming to japan. With investoryde confidence 26 hours to go. What will be here in the next day . We hear in the next day . How its interesting that far weve come over the last two months or so, if you look back to months ago, the market was pricing a greater chance of a rate cut over the next several months then he rate hike. The fact that they now have markets back to 5050 odds for a rate hike over the next six months, by the end of this year, goes to show you the kind of have things right where they want it. What we are likely to hear from janet yellen is what many central bankers try to do when theres not much reason to move markets around, stick the landing and keep things on an even keel. Alix we have a chart that shows how the fed has helped the market rewrite expectation. Markets are confused. This chart seems to prove that the fed has done its job. Definitely fair to say that markets dont really know whether they are going to hike or not. That is what 5050 odds mean. That is not necessarily a bad thing for the fed. ,t gives them flexibility especially since the probability is not too low. Alix tune in tomorrow for bloomberg s special fed coverage. We have breaking news considering mylan. Cost. Ill cut the epipen they will cover up 300 of that outofpocket cost, cut the cost of its list price. Timing to do this, couple months away from an election where mrs. Clinton has already come out and said pretty clearly that these guys will have to do something. Why would they do this a couple months before a crucial election in this country . Alix good point. I have to look up what the final cost was cutting it by 50 . One prominent investor says the boj acting to response of ggish they will engage in helicopter money with great care and reluctance if they do it to carefully, it will not have an effect. That is the dilemma they are facing. Mobiusat was mark speaking to bloomberg tv. For more, aaron clark is in tokyo. There is a big debate over what helicopter money actually is and what it looks like in practice. Mark mobius spoke with Bloomberg News and basically said the bank of japan is going to implement or engage in helicopter money. Negativehat because rates have not been effective, they have not seen the underlying Economic Growth in hope for. Theyve not seen the inflation they hoped for. Mobius said it could happen as soon as next month. The bank would likely wait until yen strengthened jon why does he think this will happen anytime soon . Given this is still illegal in japan. Aaron that is the issue. But that is not willing to raise rates. That will strengthen the end. The yen. There will be pressure when the repatriate that money with a stronger yen, their earnings are much lower. Jon thank you very much for joining us this morning. Joining us from berlin on the confidence numbers that came out of couple hours ago. Not pretty. That is the summary of these data points today. Caroline way off estimates and years. St slump in four have a look at just how far we were away from the estimates. The estimates for 108. 5. Plunging down to 106. 2. Not much of a surprise. E third. Is that biggest export market for germany. We saw a slowdown and services. Finally, brexit is biting. Jon is that the case . Caroline we saw some movement in the euro. Businesses have been going this nervousness echoing this nervousness. Ofmany beat in terms earnings estimates by more than 10 . The number one Engineering Company in europe really paints the picture. They raised their earnings target. On the other hand, the ceo is warning of concerns of the. Eakening Investment Climate still think the underlying strength in the economy is there. Drop, the biggest drop since 2012. Having an impact on equities in europe. The dax up by one full percentage point. Futures a bit softer on the session. An shares moving up to the company saying they will cut the cost of their epipen drug by 50 . It raised its drug prices for the abbey penn 400 over the epipen 400 of the last decade. Mylany clinton calling on to voluntarily cut its costs and it listened. Drug stocks in europe were getting hit on the pricing issues here in the u. S. They are still lower, but watch them for a potential turnaround as this mylan news trickles through the market. Orkday up 10 lastription revenue below quarter was up 37 above its estimates. Hp is a different story. Fourthquarter earnings outlook lower than its lowest end of its forecast. You ended up having better revenue in terms of pcs, but desktops were down printers down 14 . The outlook for hp not as bright for the fourth quarter. Emma the death toll is rising from the earthquake that rocked central italy. The government says 247 people were killed when the magnitude 6. 2 quake hit. Three mountain towns were leveled. Rescue crews are still digging through the rubble to try to find survivors. In kabul say 13 people were killed in an attack on the American University in afghanistan. The siege lasted nine hours. No group has claimed responsibility, but the taliban is suspected. Donald trump is welcoming the support of a backer who cannot even vote in the u. S. Election. Rage said trump is right on immigration. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Jon coming up, is helicopter money really on the horizon . Mark mobius said the strength in the end will force the bank of japans hand. Jon this is bloomberg. Mark mobius says helicopter money will be japans next big monetary experiment. He spoke to Bloomberg Television earlier. More they will be much circumspect and they probably will wait until the yen reaches 90 before taking action. Jon the last time the yen reached 90 was back in 2012. Is Vincent Chaigneau. Great to have you with us on the program. Basicstart with the question define helicopter money for me. We have several different debates every day with several different guests on the same thing but the find it very differently. Canent helicopter money take different forms. Basically, the way i would put it is that the central bank creates money and makes that money directly available to support the economy. That could be through funding government projects, b spending from the government, spending money directly to the households for them to spend. Alix this is actually illegal. Can you take us through the process of what japan would have to do to trigger some type of helicopter money . Vincent it is very borderline. I dont think this is a decision that boj can take. Lightly. Very lightly. What will happen in september is will want to fight the argument that it is now out of ammunition. Possibly deliver something, especially if the dollar is below 100. Money, i think we boj would need to be need it dollar yen to be well below 100. We talked about the inflation rate in japan. When the are doing now government is using the fiscal policy to support the economy, we are not that far from helicopter money. Dealing difference is there is not determinate spending of that spending from the government. For deeperom cooperation between the central bank and the government. The only way they can prove to the market they can do more is by doing more. They will have to do Something Else other than just buy more etfs. What can they actually do on september 21 that will get dollar yen materially away from the 100 handle . Vincent it is going to be hard. We saw that when they cut rates yen actuallyhe weekend. Weakened. There is still room there. They see massive resistance internally from the banks in particular. With they could do is potentially cut rates because there is still hope that this channel will be working to weaken the currency. They might deliver some sweeteners for the banks. This is an era when Central Banks want to focus going we look at the transmission of Monetary Policy, clearly, one missing element has been bank lending. Why Central Banks have eased policy, the banks have faced massive tightening of regulation that is also hurting bank lending. If we are talking about helicopter money at the end of august, does that become the market expectation . Vincent if you build up expectation, the risk is that you will eventually disappoint. That will be interesting to hear kurota. C he is joining the jackson hole conference. There is the risk of disappointment. I would like to buy protection against a lower dollar yen. The markets will be challenging the boj. Jon this debate continues. Kurota says it is illegal. Alix how much more clear can he be . Treasuries in demand ahead of jackson hole tomorrow. Indirect bidders, including Central Banks buying a record amount of short debt would they be buying if that that was prepared to hike . Alix this is bloomberg. Is a september rate hike off the table . It might be if you look at treasury auctions. If the fed were going to raise rates, centralbank the band demand would have been miniscule. The big buyers yesterday, other Central Banks. Vincentgenerales chaigneau still with us. Does that take a rate hike off the table . Vincent i think the Central Bank Buying is not based on the inside information therefrom the central bank and all. There from the central bank at all. Janet yellen will have to do a great job tomorrow to push pricing much higher. For the be very hard fed to tighten win probability of a hike is so low. Indirect its, foreignuying bids buying. And a week when theres a lot of supply ahead of a big risk event. What is the message and the signal . Vincent we are back to international comparison. Treasuries are low, the dollar quite high. You have that ongoing demand from foreign investors. I dont think it is going to fade away. More than ever, treasuries are driven by international rates. Alix what does that wind up meeting overall meaning overall . No one will notice when they state in theour next 48 hours . Miss yellen will want to hammer down the message we got from the likes of vice chairman fisher, dudley, there of a hike this year, but she will focus on the longterm debate. The fed has been shifting towards the view that policy is maybe not as accommodative as we thought it was. The fed probably does not have a lot of work to do. The longerterm view that is quite dovish. Jon Vincent Chaigneau joining us from london. The idea is the same. Gterm hawkish jon that will be the debate. Says a 2 uest increase could lead to a 20 pullback in stocks. N t down with ahead of alix this is bloomberg. It is 12 30 p. M. In london. Mylan said it would take immediate action to cut the cost of its epipen emergency allergy shot. Mylan shares had been slumping after several members of congress began demanding explanation. German Business Sentiment on expect lee declined the most in more than four years in august. A sign that companies took some time to weigh the consequences of britains decision to quit the european union. Posted a Second Quarter loss as sales continue to shrink. Sears lost 395 million compared with the profits of 208 million a year earlier. Look at the yield curve. The lowest level since 2008. Esther we will be talking about jon we will be talking about that. Look at the bloomberg dollar index which captured the performance of the greenback. Ome a weaker one by. 1 wti pulls back just a touch. Alix mentioning the flat yield curve. We come in another basis point at 2. 237 . It is the calm before the speech. Only one lady has the remedy for that. Alix miss janet yellen herself. Jon we really do need a countdown clock. Alix global centralbank leaders are gathering in jackson hole today. Michael mckee sat down with the host, Esther George. She told Bloomberg Television about the factors that could be affecting inflation. Esther i think we are going when it hasriod been difficult to explain what is pushing down inflation. The Oil Price Shock we had come a strong dollar, number of things have influence that. Permanentat is a state, it is hard to say. Longerterm inflationary dictations have been anchored and we are beginning to see wage growth move in a way that would affect a tighter labor market. Your staff has come that with a perfectly timed topic for this meeting. Looking at what Monetary Policy should be like in this new world Going Forward. The number of members of the fomc have come out with papers, theories about this lately. The you think a fundamental rethinking how Monetary Policy is conducted is necessary at this point . Esther im not connced, but that is why im very interested in this conference. Keys to this conference is you look at these. Ssues from both sides whether a different framework will be needed Going Forward or we can go back to the kind of Monetary Policy that looks more conventional to us. Mike do you think policymakers need to be more humble about what they can accomplish with Monetary Policy . Alix ive always esther ive always thought that. We have gone through a terrible crisis. It did damage to the economy and we know that can take a long time. Want to rush to assuming we know what the future will look like. It is an appropriate time to raise some of these questions. All of us feel a heavy dose of humility. Mike i have to ask you about fed communications. In the minutes recently, there members ofuggestions the Market Committee have not been happy with the way the markets have interpreted things. An opportunity here for a lot of members of the open Market Committee to talk to the markets. What are you doing wrong . You have a credibility problem . Esther i dont know if we have a credibility problem. We all come at these issues in different ways in terms of a policy prescription. I think the minutes are good communication tool. Where there are going to be different views. How wee we talk about are each thinking about it and how thetes showed committee forms consensus around that is probably the best tool for medication. Mike the markets start to price in a move and it is taken off the table and people are we have to say that write them out of the equation unless we are absolutely guaranteed because you know they will put it out there and pull it back again. People are watching the data and reacting to that. Its very important that we be data dependent. That doesnt mean to be immobilized by shortterm use. Focus on that mediumterm outlook for me has been the focus. Mike this is the 40th year for the Kansas City Fed symposium. 30 of those years, the vice chair came and gave a keynote that went along with the theme of the conference and was not particularly newsworthy. Ben bernanke he came out here twice and laid out policy and moved the market. Janet yellen will be kicking off your conference. The markets are expecting something from her. Do you want this to be a place where the fed is making policy pronouncements . Esther the chair decides what she will address. I dont know what her remarks are for tomorrow. We will all be staying tuned. Mike has the conference gotten a little too important to the markets in terms of shortterm movement . Esther this is a function of the time we are in. I look forward to a time when that is not the key focus. The purpose of our conference here is not a policy platform. That is what the fomc is for. We will continue to keep our focus on issues we think are important to Central Banks. That was our morning must watch with Esther George. Hear it from every single central banker. They wanted so bad to be boring. It just is not boring. Participants, it has been dead boring, but certainly, we anticipate something come friday. Should it be all about that . She comes along and delivers a speech and it moves markets. Alix she says no, but the markets have a different take. Joined now by the man who wrote the book on inflation, what is wrong with money . Michael ashton says inflation could pick up as much as 2 . That could mean a 20 decline in stocks. Welcome, michael. You agree with Esther George . Michael moore esther is the prescription we really need at the fed. Alix she does want to raise rates. Mike absolutely. That that could have made a good case for hiking rates back in 2010. The fed could have made a good case. The Unemployment Rate is low. Look at core inflation, medium inflation, they all say the inflation goal has been met. Alix growth is there come inflation is there. What is the problem . Jon are we treating this 2 target as a ceiling at the moment . There is no urgency, no real need. Michael the fed believes Inflation Expectations are grounded. So, inflation is contained. If inflation goes a little bit above 2 , that is not a concern. If it goes a little higher than that, it can easily be restrained and pulled back. I think they are wrong on all of those counts. Historically, we always believe we fed has to move before got inflation to where it is going because inflation has momentum. You look at the sticky element, it looks like inflation will continue to rise for a bit. Alix you really dig d