san francisco fed president john williams says monetary policy needs to be reimagined to deal with a new normal. shirt of the tubing percent inflation target be scrapped? caroline: should we look at the record highs we closed out in the united states, because we are seeing a little bit of risk aversion, money coming off the table when you look at european futures. russia seems to be at a record high. today, money coming out of the riskier equities, but there is m&a action happening in germany. it looks like we could be following oil lower. guy: we are going to keep an eye with oil having a fairly bouncy time. let's take you to the gmm function, a good heads-up to what is going on around the world. i want to focus on what is happening with the yen, the yen really under pressure. you can see it's really welded. the yen moving up 1% this morning. we are flirting with the 100 line, the boj paying attention. the nikkei has responded by going down 1.22%. you've seen some fairly interesting moves in steel. there could be a bit of a chinese bid returning. it's interesting to see how that works on what exactly the chinese are doing in terms of moving money offshore. here's the bloomberg first word news with juliette sally. juliette: the minutes from the rba meeting where australia's central bank cut interest rates for the second time in four months were released. the rba said the cut would boost inflation and gdp as house price concerns cool. russian equities closed at their highest level on a record monday. that is as rebounded oil prices occured. lukoil and rosneft were among the biggest gainers on the benchmark 50's stock index. big investment banks with european headquarters in london start the process of moving jobs from the u.k. within weeks of the government triggering brexit, much faster than assumed. that is according to people briefed on the plans being drawn up by four of the biggest firms. they say executives are planning for the worst. they will lose the right to sell services freely around the eu from the city. joe biden has called donald trumps rhetoric a threat to u.s. troops. campaigning with presidential nominee hillary clinton, the u.s. vice president also sharply criticized a trumps suggestion launch cyber attacks on america. >> this guy has no limits. he even got so far as to ask putin and russia to conduct cyber attacks against the united states of america. [booing] even if he is joking, which he's not, even if he's joking, what an outrageous thing to say! global news 20 for hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. guy: thank you very much. let's get into the mining stocks. bhp billiton has reported an 81% drop in full-year profit. joining us is bloomberg metals and mining reporter jesse's nice borough. let's start with you. is this rock-bottom? is this as bad as it gets? jesse: that is the consensus view, that the numbers we are getting this earnings season could represent the trough. we've seen commodity prices for iron ore plummet over the last 12 months, which bhp is reporting, but this year, we have seen a big rebound in the share price. i think investors are taking the approach that perhaps we've seen the bottom. prices have been strangely higher than people expected, $60 per ton. we've been hearing forecasts of $35, $40 earlier this year. overall, it's been quite a dark 2-3 years for these companies. caroline: certainly, they say global growth is going to remain modest. what do they say about the outlook for the commodity prices? we've seen capital expenditure really be reined back. >> exactly. they have been raining and spending across the board. commentary was fairly limited. i think we will hear more from the scene now andrew mckenzie very shortly. was, commodity prices are expected to remain low and volatile in the short to medium term. guy: jesse references the call that is coming up. you can follow the plib function surrounding what is happening with php. let's bring in wayne bowers. are you invested? >> we have a reasonable but nine view on -- reasonably benign view on global resources. you've got this dynamic where demand is weak and poor globally, and with supply, you are seeing adequate supply across a number of different commodity and natural resource markets. you could argue the demand function is the one to watch, not the supply function. anything related to the extraction of natural resources is opening yourself up to global demand dynamics. the economic statistics, the pmi's are important to watch to try to assess the future prospects, and as we know, for most of the global economic prospects, we are not expecting a significant rebound or acceleration of growth. guy: do you think markets are in balance? >> i think it's still under pressure. based from those sectors or companies that supply core commodities, we are seeing that with a good example from the macro perspective. the australian economy is primarily based on this extraction, and we've been heavily exposed to the chinese downturn. we've seen some rebound in china. it's a good example where you can see there's enough supply of core commodities. where does the demand come from? if you see that come as we heard lack of bhp release, appetite in terms of risk-taking or capital expenditure, it will slow down. a very cautious approach for commodity-related sectors. caroline: we have heard the word cautious being reiterated by the likes of antofagasta, also coming out with a drop in sales, down 18%. what are we hearing from the rest of the sector? >> that has been a real theme across the sector. we have heard rio tinto earlier this month. costs have been arraigned in dramatically. -- reigned in dramatically. costs downtting towards the $15 to $20 per ton mark. it's an extremely profitable business, and you can understand why the ceos continue to expand market, which squeezes out higher cost producers. guy: two kind of rapid up, jesse, to wayne's point about demand, what are these guys saying about where they see demand going? back up, and we will talk about supply and demand. they are not investing in new kit. they aren't investing in new mines. that side of things has been in focus for long time, but what about demand? what is the expectation of where demand goes? the fed is not raising rates anytime soon. china is chugging along. >> that is the multibillion-dollar>> question. year, they said, no one can re-china come in that is the big x factor. demand has been a weaker, but it has not fallen off the cliff. strangely, it has held up. there's a huge question mark about the sustainability of current demand levels. caroline: are you trying to read china at all? where do you see that particular area of significant demand going? is it just a cooling story? >> it is cooling, but i've there is a transformational aspect. china has not sat on its hands doing nothing. if you visit or talk to some of the state owned enterprises, they are at a transformational stage, moving away from heavy industry, moving away from pure extraction of commodities, moving up the supply chain. more high tech, more engineering. you can see there are transformational programs going on in state owned enterprises, especially in the steel sector where they are moving more into consumer product amanda cycles. that will take many years. you can't turn a refinery into a steel manufacturer in a two-year timeframe. from a state owned perspective, it's being sponsored by the government. that transformation is occurring. it has an effect on the immediate demand of massive amounts of core commodities, quite rightly. you are seeing that anyway. going forward, i think the story of china is one of positivity, but we should remember it is moving affectively from a developing nation to a developed economy. with a developed economy, we should have an expectation of developed growth, lower growth, not high emerging market growth. i am positive on china that it's very much a long-term, long play story, and there are some in balances that need to be worked through -- imbalances that need to be worked through. isoline: wayne bowers staying with us. thank you, jesse, amid your very busy morning. i will let you get back to the analysts call with bhp billiton. guy: up next, the new normal. saysed's john williams monetary policy needs a reality check to deal with today's issues. then it's the market open. we're watching bhp. also, the brexit story by the numbers. we will get the first data from july out of the u.k. today as the bank of england heads back to the bond market. plus, the pound continuing to slump. this is bloomberg. ♪ caroline: welcome back. big moves going on in the euro-sterling trade.the euro-pound is advertised level since we saw in august 2013. this is a weakening story on the pound side. this is the euro rising higher. we are currently tracking it up at 0.87. big moves in the past three days. how much higher will we go? we've got that auction, the bank of england trying to buy the longer end of the debt curve. we will see how that manages to go, but of course, let's get you up to date with your bloomberg business flash. here is juliette sally. juliette: bhp billiton has reported an 81% slump in full-year underlining profit. however, that beat forecasts. even if the company posted its first loss since 2001. we will be talking to and are mckenzie, the ceo of the world's biggest mining company, on bloomberg . a statement from the bank's chairman says frank van jensen will be replaced by andres proven in immediate effect. shares in the swedish lender have fallen 22% since he took over as ceo in march of last year. frack sir has held merger talks with germany's lender. that is according to people familiar with the matter. the combination of the companies would create the world's largest supplier of industrial gases. berkshire hathaway boosted its thestment in apple when stock flipped. a berkshire raised its stake in maker by 55% to 15.2 million shares. that is your bloomberg business flash. guy: thank you very much, indeed. new policy for a new normal. environment calls for a new approach to banking, says fed president john williams. it's an argument he has been making more forcefully as of late as global policy fails to boost growth. in an essay released around 5:00 you to care time, williams istes, while gdp targeting an option, fiscal and monetary policy must take on some of the burden to sustain economic growth and stability. still with us, wayne bowers. do you the inflation target should go? >> i think it should be challenged and questioned. i don't think anyone can remember who made up the 2% or where it comes from. lots of banks have that is the -- as the mantra. those comments are so similar to trichet. there is only so much the central bank can do. need to move on the government side to help to stimulate demand. i do think central banks are being challenged, being seen as saver the last savior to the world economy, but also, those comments strike home some of the economic theory around central rate forecasting based on inflation forecasts. it's a whole plethora of other activities. if you think how economies are transitioning from old to new, which is more digitalization, more technology utilization, price discovery is so fast and so quick. that is being missed in a traditional central bank forecast model where you are looking at growth expectations come inflation expectations to predict the current level of rates. it's just missing so much. caroline: it's fascinating being potentially tying and fiscal powers with this. we heard from mr. williams that you should be locking in tax rates and link it to unemployment or social security benefits. is that something you could see the government signing up for? >> i can, but on one side of it, i think we've got some issues we can see around the world when it comes to tax rates. that is being focused on an sorted out through g20 or oecd levels around trying to get a fair tax paid with activity that a company has in a country. that's an issue. then you move down into the competitive side of where a country actually has a low corporation tax rate for the purpose of obtaining economic activity. centers, hongian kong, singapore, very low personal tax rates. you've got that competitive nature, which should promote economic activity and employment fulfillment. i think the u.s. has a challenge here. again, it seems to be the outlier in terms of corporation tax policy and how it treats multinationals. they are at risk of falling behind what is available around the world. going back to my comments were the use of technology doesn't mean that you need hundreds of thousands of people in one country or one city -- they can be located in many parts of the world. guy: people buying in the u.s. equity market -- we saw a fresh eye for all average indices -- are they buying into this already? jen williams saying, monetary policy, we live in a new world, we live with low inflation rates, so therefore, we need to look at other metrics. the market is already there, isn't it? there is nothing else to buy up. the market has already made this assumption. >> it has. i also think some of the larger multinationals predominately based in the u.s., historically coming up through the tech side, are very good, very quick, very fast at taking advantage of the technology enablement and corporate tax rules that sit around. that flows into better profit and higher revenue and higher dividends being taken through inequity perspective. perspective. the dollar gieves them security. large-cap equities also give them that, especially dollar-based. you can't miss that security aspect, which is the much better predict -- provision of liquidity, as well as a little bit more dynamic, visionary entrepreneurialism. guy: stay with us, wayne bowers joining us from northern trust. we will have a look at some of the potential corporate movers. linda, keep an eye on that. plenty of stocks to look out for. the opening seven minutes away. this is bloomberg. ♪ guy: five minutes to the market open. a leveraged bid on the euro versus sterling, one of the big stories. it looks like we have stocks at .8710. , one ofve this morning the stories to watch. one of the others to watch is bhp. it looks like it has hit rock bottom. caroline: a bit of merger action in germany. could we see linda, the industrial gas company, rise 4% on the open? that is what we saw the u.s. rival praxair rise in the open. there are talks of a merger. ofk out for volkswagen, course always in the eye of the press. we understand the department of justice has found evidence of criminal issues with the diesel probe, and they are negotiating a settlement. plenty to be digesting. coming up is the market open, futures pointing for a start. the open is up next. this is bloomberg. ♪ guy: welcome. you are watching "on the move." i'm alongside caroline hyde in berlin. we are moments away from the start of european trading. caroline has your morning brief. caroline: the mining meltdown. bhp's full-year profit tumbles more than 80%. have we hit rock bottom? brexit by the numbers. we get the first hard data for july out of the u.k. as the bank of england heads back to the long end of the bond market. will carney find enough sellers? california dreaming. san francisco fed president john williams says monetary policy needs to be reimagined. should the 2% inflation target be scrapped? guy: that is a big question a lot of people are asking. i also want to show you as well that the markets are opening. let us see how the equities open.s ftse 100 moving lower. that will be correlating with the continental markets as well. ftse down by 0.2%. it is certainly being driven lower by the market makers this morning. let us deal with the details of what is going on. elliott: that circle says it all. every sector down so far. into thely one minute market open but everything is down so far this morning. a lot of people are away. we hit u.s. records yesterday. oil declined a little bit. some gains in things such as gold. markets are lower across europe. this is the picture on the u.k. guilt mark -- gilt market. yields are down this morning. the bank of england has week two of its quantitative easing program, it's bond buying program. market forin the bonds today. more difficult to buy these as pension funds are holding onto these. we will see if the bank of england gets the bonds it wants. will be in a holding steady pattern suggesting interest rates are likely to rise sooner than what people were expecting. in terms of specific stocks we are looking at, quite a lot happening in corporate news. we can see the swedish bank is down 1%. they have ousted their chief executive. saying that the position is too complicated. best we do not have a price yet on linda. we understand that it is involved in merger talks with a u.s. rival. we also have the bhp billiton shares down 1.7% after posting its first net loss since 2001. itwere hearing calls that could be up a little bit this morning. back and talkme about what is happening more broadly around the world. a bond market boom in the emerging markets. picking up substantially of late. we face record low yields in china sovereign debt. seeing theirare biggest inflows in six years. quite a charge. chart.e a wayne bowers is still with us from northern trust. is that something that i want to be chasing? the bond story has been going quite strong of late. wayne: we are neutral in the end. more nervous around bonds. shows, or doesn't show if you go back is that we are significantly underway did -- underweighted. saw that play through. a lot of currency depreciation and a lot of concern but also outflows coming out of those markets back into developed markets. if you are looking at it from an allocation perspective you had significant underweight held in emerging markets which from a risk perspective you do eventually want to close up. it does not mean you are overly positive on the emerging markets. decentu have gone from a underweight to a neutral position. of the worry from our perspective is the currency affect. you could have the right call on the currency asset class that you have the currency wrong. you have an appreciating dollar currents not tied to the dollar. you're getting the fx class of appreciation but there is a negative gain. andave seen more confidence better economic data from emerging markets. if you go back a year, we were not seeing that. there was a lack of confidence do we sell our products, our goods and services? there has been a change there. i am seeing more confidence, better economic data. which supports the fundamental argument --when would we go overweight? you do want to see more domestic demand rather than speculative investment flow. looking at the data and taking a longer-term view and saying -- have we seen some game changers from an america, asia economic perspective? caroline: what has been fascinating is if you look at the chinese wand yields, it looks -- bond yield, it looks more like a developed economy. we are getting closer to the overall yield. the yuan.onds within the purple line is the j.p. morgan. we are at decade lows. we have calls at 2.5% for the end of the year. not much below that. chinesea story of domestic buyers of bonds? would you be more tempted about international bonds, if you wanted to get away from the fx exposure? asne: you are correct as far a domestic flow and that is the story in china. they are trying to capture and not allow any movement of money outside of china. you have a concentrated investor base that really does drive market basis. secondly, to put a different skew on the question, it is when of the answers we give investors when they are looking at u.s. treasury yields. the chart you showed highlighted the difference in yields between the chinese government security and the u.s. security. large corporate pension scheme or an individual, there is a different risk characteristic in terms of owning a chinese government bond versus a u.s. bond. i know this is money good but where does it go, going forward? it is not the same type of market we would see from diversification size that we get in u.s. treasury. you are seeing lower government yields in china , i think also predates or indicates more pressure coming into the u.s. treasury market, pressure in terms of more buying at pretty, it makes u.s. treasuries more attractive. more to come. wayne bowers from northern trust will stay with us. caroline: get ready for round two of the bank of england. will the boe be more successful this time around? mining meltdown. bhp tumbles 81%. is it time to start investing in wine and how does the brexit vote tie in? we will discuss. this is bloomberg. ♪ caroline: welcome back to "on the move. go let us take a look at how old the stoxx 600 is shaping up. the rest of them on the downside. travel and leisure is down. 47 billion euros is being wiped out. u.s. markets were very strong yesterday. story, rising 4.2% as well. a bid to of m&a helping the market out. bhp having a more difficult day. bloomberg first world news. here is juliette saly. san francisco's fed president is calling for a new approach to central banking. john williams argues the level of interest rates that does not stimulate the economy has fallen. low intereste new rate environment, the policy of targeting low-inflation it no longer make that low-inflation no longer -- low-inflation no longer makes sense. rebounding oil prices. the country's largest oil producers were among the biggest gainers on the benchmark 50 stock index. the investment banks with european headquarters in london will start the process of moving jobs from the u.k. within weeks taking onernment brexit, much faster than previously expected. executives are planning for the worst. that they will lose the rights it to sell services freely around the eu from the city. global news 24 hours a day powered by our 2600 journalists in more than 120 news bureaus around the world. you can find more stories on the bloomberg at top . stick with that focus on what is happening in the u.k.. the pound having a difficult morning. we have seen a- significant jump. this is a leveraged trade. -- it stops atp 110. consolidating above it. take you out to about five years, here is the context, 2013, august highs. moving through those as well. it will be interesting to see where this trade takes as next. plenty of data and the be a week reverse auction. wayne bauer is still with us. -- wayne bowers is still with us. wayne: there is a historical element. points resistance coming up. the question is why would you want to buy sterling? very speculative trade. it is holiday season. we have seen big moves on a day to day basis. from the fundamental perspective, sterling has more weakness in it. caroline: when you're talking about short trades, you can see we are at record shorts in terms of the market on the pound-sterling versus the dollar. we will see where it goes compared to the rest of the euro trade. how does the bond market play into this? that stirsin a way, demand for sterling-based assets. wayne: it does. people that sat on u.k. assets seem quite comfortable at the moment. you can hedge the currency exposure to a certain point which is a sensible thing to do. earlier points, you have the asset class correct but the currency can kill you from a net perspective as well. i don't feel people are taking u.k. asset classes exposure through and equities hedged. they are taking away some of the sterling risk they have within that trade. guy: this time last week we were aware of the fact that qe was happening in the u.k. that we were not aware of what exactly was going on. today, we have round two of that process. today, they are in the long and as well. failed reverse auction. they could not sell enough of the 15 year gilts. we will get the news today. would you sell paper to the bank right now? wayne: no, i would hold them. class, they are quite rare. we do not issue an a from a country perspective. if you have a core holding their, it tends to be a very core holding. this is something you buy and hold. guy: there is a point element. bank to a certain extent, it's objective is not to buy gilts but to get money into the economy. it is price sensitive. is there any price you would sell at or is this -- you have to have this stuff? wayne: one thing to remember is let us think about what happened and what is happening today. yield can go lower. it does not mean in a negative yield environment that you lose money. if you are a holder of bonds, the bond price keeps going up. that dynamic, people are looking at the gilt market saying how low can it go? what if your entire purpose is to keep lying? buying? aree: that is where we seeing more diversification into equities. part of the equity play is looking for companies with high dividend yield and stable earnings growth as well. we are looking at quality corporations. trying to put techniques around putting those equities together and reducing volatility. low volatility strategies are en vogue. this is a different buyer of that type of strategy with a proxy fixed income allocation. where investors can obtain stable yield generative asset class but it is not a corporate bonds. it is a collection of large corporate equities paying dividends on a regular basis. should we betors, worried if u.k. inflation rises significantly today? wayne: i don't think so. we have seen some dramatic moves in the currency. it will be difficult to tie in -- we all know there will be a lack of affect here in terms of currency moves. hedging programs. to look at one number and work through. is this based on the fall in sterling? we will need to watch a whole series of data to work out the of the currency changes. guy: 9:30 a.m. u.k. time. wayne bowers staying with us from northern trust. , the yen marches on. the japanese currency research is to flow with the hundred dollar mark. doubling down on it. this is bloomberg. ♪ guy: welcome back. let us look at the foreign exchange market. seeing some interesting moves. the continuation of the dollar week this story we have been watching since mid august. that is carrying on today. look at what is happening. the euro is up 0.5%. the dollar-swiss is trading down. 0.6%. i am not sure it is completely down. euro-sterling is trading at .87. we are consolidating north of that. currency markets are fascinating right now and continue to be so. the yen is one of the big stories and this comes back to what is happening with the dollar weakness story. floatingr-yen rate back to the 100 level pushing the pressure back onto the boj to switch its policy approach to levels last seen around this point when we had the brexit vote. the rise comes after investors rim their bets on what is happening with the federal reserve. fits intoams' essay this as well. wayne bowers is still with us. does kuroda need to try something else? the fed rethinking its monetary policy. you could argue that the central bank at the end of this story is the boj. wayne: they have doubled down or quadrupled down. what we have seen is an extension of qe and monetary policy easing and liquidity provision. they are all in. they will continue to push liquidity and support into the marketplace. caroline: the pain is so prevalent clearly in the yen. the marks week -- the march we have seen towards the 100 range. the dollar weakening against the yen. we are getting close to the 100.33. a coupling with the fx market and the stock market. look at what if we is happening on the topics -- movement are seeing where the stocks are not going exactly in line with fx. jp morgan is trying to point out that this has started to the correlate -- decorrelate. the dollar-yen is falling. ratesdo you see fx affecting japanese stocks? is jp morgan right? -- when we have seen the effect of a stronger yen, the question we are asking is why are we not seeing more m&a activity in japan based on their strong currency? you have good companies in japan that could easily increase market share and innovation and taking into the markets by purchasing more m&a. abs goes to the crux of e's issue. take more corporate risk. andstop hoarding the cash start spending a. as investors start to question, if they look at unlocking the power and spending, that we'll have an effect on japanese equities. your over under on japanese equities right now? wayne: we are reasonably comfortable right now. the safety and liquidity that we are seeing from the u.s. it is a safer crowded trade. from a japanese investor perspective, until we start to see more risk taking and domestic consumption, what will drive the fundamentals of the japanese equity markets -- not much is driving that positivity. guy: the boj is the only big investor. wayne bowers, thank you for spending so much time with us. -- ext bhp billiton.-- you do not want to miss that crucial interview with the ceo of bhp billiton at 2:30 p.m. this is bloomberg. ♪ guy: welcome back. we are 30 minutes into the trading day. is shaping upket broadly. 600, down by 0.6%. let us get some of those details on the stock stories. elliott: the biggest gainer so far this morning, linda. industrial gases out of germany. it was in merger talks with its u.s. rival, praxair. get together, that would create the worlds of industrial gases. linda rising, just under 5%. company.n, the lyft when of the biggest decliners of the stoxx 600. down to latin america in china. and we had the copper miner out , shares are- chile up 0.6%. does say that full-year copper out let will be towards the lower end of expectations. but shares up 3.7%. caroline: let us stick with that team. posting -- praxair posting earnings this morning. we have been speaking exclusively to the ceo and those numbers and the outlet. >> -- outlook. we have one of the strongest balance sheets in the copper market. we had the lowest level of debt -- when of the strongest balance sheets in the industry making as stand out. manus: my apologies. but the market wants to see you make inroads on that. >> the focus is protecting the markets and not protecting our debt. if you compare our debt levels this year to the prior year, it is unchanged. we are keeping our balance sheets. that is an important principle we continue to hold. manus: the whole world wants to know if copper will rebalance. we were talking about this meteoric rally of think -- zinc ti don you see rebalancing coming into the copper market. next year. i think we have seen a stronger demand during the first half in china representing 50% of copper demand. the outlook for copper is favorable in the medium-term. in the short-term, there is more production coming into the market so it will be similar to what we have seen similarly -- recently. we think prices will start to increase. numbers are out from bhp. positive, up by nearly 1%. is also up nicely. bhp is up by around 1%. colin hamilton has joined us on set. miners sound -- confident to you? colin: we saw the gas ceo who of the mining- industry is still suffering from the overinvestment timeframe we had. why do i invest here? derivative is getting better. commodity markets are no longer getting worse. we are in negative supply growth , copper is an exception, chinese demand has surprised to .he upset -- upside the question is the sustainability. we are comfortable that china growth during their political transition. more commodity intensive favoring growth. beyond that, that is when the question marks start to appear. are you anticipating consolidation in this area? capital expenditure is being pulled back. --we are moving towards territory for many of them. there is money to be put to work but there is still caution. mining companies themselves, we have seen a raft of changes of ceos. they don't want to make those mistakes again. there is some caution there. i think it will be a slow process. -- are being asian led consolidation. you talk about in the shorter term china still being there to support growth. what about the long-term? will production need to be ramping up? as we seehe shift china transform itself? we see steel demand of globally. -- they do longer not fully offset china. we are looking at a downward trend there. is still a lack of confidence in copper. the way utilities structures are changing through the world, medium full pitch -- that will help copper demand. how do we incentivize these new projects? let us put a list together. sellers are not lowering prices and enough to drive m&a at the moment. which both point at sellers capitulate? >> it is also led by the financial stage. a low interest rate environment, there is not enough pressure. some of the asset -- ride?re they being led to go back to january, more pressure coming from the financial market but the pressure has dissipated. is no real pressure now on copper. guy: a year out from now, we don't have much visibility on china, we are concerned, give us the picture. >> we are unlikely to see companies commit to many more growth projects. they have to start looking back at m&a. we are in a mining industry in the third world. do they get ahead of the curve and do m&a transactions this year or do they wait until the middle of next year? i think they will wage. and be cautious. us. colin hamilton joining we will be talking to bhp billiton later on, andrew mckenzie. coming at 2:30is p.m. u.k. time. caroline: up next, we will look at who is willing the fixed income void. stay with us. this is bloomberg. ♪ caroline: this is on the move. a beautiful skyline in new york. just waking up. record highs. u.s. equities across the board. trading down on the futures market already. you have a currency check for us. guy: a busy morning. let us show you what is happening around the world. euro sterling, the one to watch. consolidating near .87. the dollar keeps getting weaker. 112.61 is where we are now trading euro-dollar. the real story is the yen holding at about the 100 level. 100.29. we are down a full percent. volumes liquidity issues. some interesting moves. particularly on the dollar weakness side. let us get you caught up on what you need to know. this company has removed its ceo saying the role has become so complex that a traditional management profile is no longer adequate. he will be replaced by unknown another effective immediately. shares in the swedish lender have fallen. praxair has held merger talks with germany's linda. the combination of the two companies would create the world's largest supplier of industrial gases. morgan stanley is being targeted by capital management which disclosed a new 2% stake. the executive core holding. investmentsnds today is valued at more than $1.25 billion. warren buffett's archer hathaway boosted its investment in apple in the second order when the stock slipped. berkshire hathaway raised its stake by 55% to 15.2 million shares. george soros has taken his profits from a major investment in gold after buying a stake in --. a u.s. regulatory filing shows he cashed his holdings by 94% in the second quarter. 169% throughose june but has recently slipped from a three-month high it reached last month. now, financial rewards for trading are down. incentives are making markets are gone and the business of bonds is on its head. a great piece on the bloomberg. give us the details on how exactly the bond market has changed so much more towards the buy side. we have written a lot about how the sell side is playing a diminished role. at one point, these were the masters of the market. they would hold a lot of bonds in their inventory so they could facilitate trading. they were connecting buyers and sellers. they were the epicenter. financial crisis, regulations have come into curb that activity and make it less profitable. as a result, they are playing an ever diminished role in the market. we set out in this piece to investigate -- if they have fallen, does that mean the buy side has risen. , asset managers, hedge funds, pension funds, no longer consider themselves the junior partners in that relationship. they are wanting to exert more of authority. they feel they need to be more self-reliant in how they go about doing trading, put their own research together. influentialo a more by side -- buy side. guy: that sounds like a good thing. that there is a cost. we are worried about liquidity. today, the bank of england is struggling of late. this is not a new story. you talk about the regulatory structure and everything changing and the market. the bond market is an interesting place. we are worried it will turn. when it turns come the door will be smaller. >> that is the reason why the buy side felt they had to be more creative to put on trades and behave in the market. arebank of england, the ecb taking up more bonds every day. or the bank of england will soon, the ecb is already. the sell side has less on its books and is less active. it means the buy side has to be more adaptive. rather thanw about being price takers, they are price makers. guy: they are not market makers. if a buy old eyes, side wanted to sell a bond, it would call up three banks and ask for the best bid. whoever had the best bid, they would take that when being a price taker. they are becoming more resourceful in using electronic trading platforms and bringing in analysts so they can do their own analysis. and then they say -- we want to trade at this level. they are able to dictate the terms at which they trade. a market maker goes for buying and selling at the same time. jamie dimon has worried about -- has warned about liquidity issues. how does this play out? side,ally, will be sell be -- will the sell side come back? >> this is just the new world. regulations are such that it is much more expensive for banks to provide liquidity in the way that they used to and therefore, they are not incentivized to be market makers anymore. i don't think that will change. -- they are taking authority into their own hands and seeing what they can do about it. guy: a great he's. thank you very much. up next, in the face of record low rates, is it time to start investing in wine? we have that story next. this is bloomberg. ♪ guy: welcome back. at what is a look happening ahead. u.k. official data, post-up brexit. july cpi and ppi inflation data will be out. fact of thethe softening. we will get the details on the bank of england's bond buying program. last week did not go that well. later in the day, 10:00 a young u.k. time, we get the investor confidence numbers. theline: thinking about world of drinks. in this world of negative rates and bond markets, it is time to get some alternatives for your investments? how about a little bit of wine? was is a great piece that brought to my attention yesterday. thatis the fine wine index we track here at bloomberg. last month, july, was your best 20 10.ince november i know there are some reasons but is is it -- is it because of brexit? or a change in trend? cold water poor some someur wine -- let us pour cold water on your wine story. you are talking about it being a brexit story. the chart converted into u.s. dollars. the chart does not look so dramatic. caroline: perhaps not. isee you on your pounds but wanted to take into the sterling side of the equation. founding and managing director, simon is with us. give us a sense of the story. sterlingof this is a story? it is a combination of factors at play. certainly, the currency situation has been a big theme. changesed to dramatic in terms of the performance of those indices. what has happened is after the currency volatility, we have companiesgn traders, looking to buy into the u.k. stocks. there has been a trained on the fine wines that have been resting in u.k. sellers. -- u.k. cellars. it inre all a lot here, the u.k. particularly bordeaux. euro-basedollars and investors are making hay where the sun shines. that could be questionable. wines be a hub for fine in terms of london. where are the buyers coming from? >> a surge in u.s. interests. and august.n july strong trading data in what arm normally quieter months. asian interest has been relatively consistent throughout the year. enhanced. a wider range of wines at play with asia now. using very consistent. bordeaux coming back into the frame. a combination. a catalyst has been brought about by the exchange rates. overseas traders, investors, and u.k. investors focusing on mature bordeaux. whichntages of the 1980's are now dwindling in supply. in thee not as prevalent u.k. market as they once were. a shift in pressure points with people moving onto the next five start vintages in that region. 2005, 2009, 2010. guy: can the market push on from here? in the foothills. a fascinating combination of factors. it has given a real lift to the story of mine. people are starting to reengage. what will crucial -- what will be crucial for the market is that wine merchants are happy to at these on board prices which would be a strong sign of health. the currency story is the big factor. it is a reason for optimism. caroline: great to have your views. simon larkin, thank you for joining us. talking alternative investments. stay with bloomberg. the pulse is next. ♪ caroline: essential bank re-think. a shift in policy to deal with the new policy that the new low rate policy. we discussed with rupert harrison. banks plan a brexit. it went -- lenders won't wait around to see what deal u.k. can get from europe. we bring you the first data since the referendum. ♪