tv Whatd You Miss Bloomberg August 25, 2016 4:00pm-5:01pm EDT
scarlet: u.s. stocks closing lower this afternoon ahead of janet yellen's speech tomorrow. joe: the question is, "what'd you miss?" scarlet: the waiting the speech tomorrow. and we speak to narayana kocherlakota for the next half hour. joe: plus, turkey emerging from the attempted to a stronger power. what is next for its relationship with the u.s. and russia? matt: and helicopter -- coming to japan. he sees the doj acting after the yen's gain. ♪ scarlet: we begin with our market minute. stocks closing lower before janet yellen giving her speech tomorrow morning. if you look at the industry groups in the s&p 500, five out of the 10 are higher or lower as the case may be because it finished down. materials where the best performers, health care the
worst performers. overall, this is the lowest level since august 4. it we been keeping track of how long the s&p is trading. we have had enough of this. 34 days. joe: without a 1% range. yes, it is quiet. matt: there is a lot of news, which is interesting. we have a lot of news and a lot to talk about on the macro level and the company level, but there is not a lot of movement in stocks or bond yields. joe: very quiet. one loser today was the health care stocks, of course at the center of all of that controversy. matt: i have this open to show you that. let's take a look at the losers, abbott laboratories. interesting they are down, because they were up earlier. and carson block said that they announced shorting saint jude and they are long abbott laboratories, because they want to break up the purchase and
that abbott laboratories shareholders should be relieved. mylan down again today. it had recovered earlier in the day, because it was crushed over the week. but it could not maintain gains. it is down again. opening and can see the health care stocks are the biggest losers of the day. consumer discretionary's are also big losers. joe: a look at government bonds, pretty quiet for the treasuries today. of course, all the action on janet yellen tomorrow. modest increases in yields in the two-year and the 10 year. a little bit of flattening. scarlet: in terms of currencies, take a look at the south african currency. the president issued a statement of full confidence in the finance minister, but that does not do much for the rand. we saw the dollar dropped versus the rand, but then we saw the
rand weekend. it is the worst performing currency this month. the second worst is the chilean peso. a gain the most in two weeks. if prompted dollars to be traded. and thursday is typically a good day for the chilean peso, because the mining companies sell dollars to raise the money and for payroll commitments. sebastian found that typically the peso does well, gaining on thursdays and falling the other days of the week. joe: let's take a look at the oil market. , allw gains today and hope these about production, but hoping iran could take part in curbing oil production. we saw a gain. we want to look at some technical things here. we of the purple line of the 50 day moving average. the green line is the 100 day moving average and there seems
to be risk that they are going to cross below the 100. event.d be a negative it could be negative momentum. matt: like a death cross. joe: we will keep an eye on that. scarlet: let's take a dive into the bloomberg charts. you can use the function at the bottom of the screen. i am looking at treasuries, talking about how slow it is. another day of looking at it. we are looking at the green circle right there. it is a range of less than three basis points, the tightest move since it june. it is also the second smallest range of 2016. the smallest was basically when it was close. the yellow circles indicate when the market was closed. we are trading in the smallest range since in june. so very little happening in the bond market. matt: that is crazy.
joe: i am looking at my favorite chart my which i do most thursdays. the jobless claims. this is the non-i just did version. -- non-adjusted version. you can see the trend, which continues to be lower. we are at a four decade low and we go lower. this is the moving average. it is at the lowest it has been since the crisis. it is a stable time. scarlet: i only look at the four-week moving average now. joe: forget about the weekly noise. matt: the labor market is strong. i am looking at inflation. price stability is the second thing that the fed will look at. and by the way, this is 3034 on the bloomberg terminal. the cleveland fed cpi in blue, and we also have the purple line.
axes, saytwo separate cannot really see the strength of the white line. 3.6%tlanta line is showing gdp growth on this quarter, so it looks like we have decent growth at least from the atlanta gdp forecast. we have inflation that is going up toward a level that the fed should be happy with. it is 1.6%. and we have a labor picture as joe showed that is fantastic. if the fed is data dependent and it looks at the data with the two mandates, maybe it should be normalizing the interest rates. scarlet: that is what a lot of people say. let's get to breaking news we have been following all day. and matt referenced it earlier. muddy waters taking on st. jude medical. they published a report that says that the pacemakers are exposed to hacking broner
abilities. carson block says that changes must be held accountable. >> this appears to be a company that for years has put profits before patients when it comes to separate security. to we think it is important make sure that users are notified of the risks. and to hold a public thing accountable. -- publicly accountable. scarlet: they discover the flaws thanks to a separate security firm. here to discuss the story is a former -- associate. based on what you have heard from the is your reaction to these allegations from carson block? >> i read the novel. it was a flash in the pan. issueere really is an here, rather than picking up the phone and shorting the stock, you should call the fda. scarlet: if the research firm that found the loopholes approach the fda with findings,
what would the response have been? >> they would have explained how they found the phone or buddies, weather data would tell and -- what the data would tell and then the fda would've taken action. but now it is a market story. suspicion thats the public health is not primary, it is secondary. joe: when it comes to gadgets and hack ability of gadgets, obviously more and more of our lives are going to be implanted devices that are connected to the internet. how on the ball is in the fda with that? >> i would not say they are on the cutting edge of technology, but they know how to relate medical -- regulate medical devices. how they become more interactive, how they operate with systems outside of the body, they need to learn quickly. they need to get consultants and really understand what the potential negative downsides could be. scarlet: discuss the evolution
of hacking fits into the fda priorities with new products? how has it changed? >> devices have become more complex, even in the most recent five years. they need to reach out to experts when they are looking at these devices, they need to know what the device does in every respect. not only how it interacts with the parts for a drug, but also how it interacts with outside technology. scarlet: would you work with a firm like medsec? >> yes. you need to work with outside firms. matt: calling it a separate security firm i find interesting -- cyber security firm i find interesting, because this was started by a former hedge fund employee, they are looking for weaknesses so they can profit off of weaknesses, like the strategy with muddy waters. do you think we could see relations born -- regulations
born out of this investment or business model? >> there needs to be regulations. at the end of the day, there are no people that have not been hacked from outside sources. this is all about making stock move one way or another. and that is not the way to move the forward properly. matt: i want to read the statement from saint jude. it is important to tell you what changes is saying. the chief technology officer saying, the allegations are untrue. there are several layers of security in place. we conduct security on an ongoing basis and work with experts specifically at home and on all devices. saint jude takes the security of devices very seriously and consumer information is a high priority for us. and we will remain vigilant to the ever increasing sophistication of those seeking unlawful access of data.
there is an ongoing program to perform testing on medical devices and network equipment. scarlet: and the other big story we want to ask about is on mylan. matt: it is a fascinating story, it is price gouging. mylan is under the microscope. what is fascinating is they have raised prices to $600 and people are appalled by that. they only get $270 from that. and therance company benefits company are getting $334, so you can see, the patient's pain the full 600 -- paying the full $608 mesko it looks like many people are sharing the gains. >> i think the opportunity or the positive thing is the fda can insert competition into the microplates -- marketplace.
these are drugs that are off patent, there is no generic. there's been no generic company. so when you bring those into the market place, the prices plummet. so this is an opportunity to prioritize the generics and obviously at the pens -- epipens and the ceo are getting attention. joe: ok, thank you. scarlet: before we had to break -- head to break it, gamestop shares falling. they are down almost 11% in the second quarter. that is double what the experts estimated. this is bloomberg. ♪
"what'd you miss?" the former president of the minneapolis fed says we need to hear a credible plan for managing the economy. he joins us from new york. thank you for joining us. what do you hope to hear from janet yellen tomorrow? : thank youcherlakota for having me. tohink it would be useful hear her thinking about how they plan to approach the problem of interest rates over the next six months-two years. i think what the fed communicated was that they are planning to raise interest rates at about a quarter percentage point per quarter for the next few years. i do not think that was a plan that has worked over the past year. i think it is in tatters.
it better way to communicate about monetary policy is to isolate the drivers that are driving your thinking and then looking at other members of the public to watch the drivers and see how the fed will make choices. i do not think it is a great idea and i hope that janet yellen walks away from these time-based forecasts that we wer over again, about how will hear about these in 2016, 2017. these are not good ways to look at monetary policy. when they get into a meeting room, they should look at what they are struggling with, looking at data flow, to help determine whether to raise rates. joe: we are in this time in military -- in monetary policy, where there is a debate about what really drives inflation and
whether the framework through which we think about these questions is actually an accurate one. fed, youenure at the are famous because you reoriented your approach, you are seen as hawkish, now dovish. that is rare in professional circles for anybody to do a turn like that. can you explain how that happened and why that is not , in common in academia economics, or the federal reserve? : when i kocherlakota first joined the fed in minneapolis, i felt that there were strong forces that would return inflation to target rapidly, regardless of unemployment, or slack as we say in the labor market. as i spend more time watching assessmentow, that
turned out to be more and more wrong. and i also was concerned that there may not be much slack and that proved to be wrong. where did it prove wrong? there was a lot of work on --imating slack committees slack, this is micro work. i was missing high on inflation, so you need to reevaluate where you are on that. others do not make the turn? everybody must come into these decision-making problems with their own perspective. aspproach these questions what we call a bayesian, you have a lot of different models and possibilities out there in terms of how the world works and you are always putting weight on all of them and as data comes in, it could change the way to
you are putting on one versus the other. when i hear people talking about the economy, they are wedded to one framework and they will stick to it unless something blows up. my own thinking is more fluid i would say. scarlet: we appreciate you explaining the fluidity. how do you think the fed's definition of data dependent has evolved? narayana kocherlakota: great question. i think that data dependence that was supposed to convey that every meeting was life. -- live. they wanted to get back to a world where they were not telling markets way ahead of time where the interest rates would become a said they would not say a year ahead where they would be. instead, they are trying to tell the markets to watch data. i think the problem has become the fed is not saying what data
they are watching in terms of making a decision. there is a long list of indicators in the statement, a catch all of almost everything you could think about as being relevant. and i think the fed would be better served by isolating 2-3 key drivers. i am thinking about inflation, pressure, the labor market .ituation, and downside risks those are playing more of a role right now than they traditionally do, because of how scarce the toolkit is. the downward shock hits the economy. and there is not a lot of room to maneuver to offset the shock. you have to keep the economy as healthy as possible to ward off shock. matt: i wonder what you think about the targets. i remember when inflation
targets, giving in an inflation target would have been unthinkable, now most central banks are. we were talking to lincoln harris today and he said fed officials or central banks need to raise in the inflation targets, but they do not want to do that. one possible solution would be to say ok, we can overshoot the inflation target and not worry the market that they will pump the brakes right away. narayana kocherlakota: these are good considerations to put on the table. so, if you go back to the history of how we got to 2% as a target. was on then governor's back in the 1990's and was making the case for 2%. i think we learned since and then, -- whichnd is why you want a target above
0% in the first place, it is more of a problem than we might have and dissipated saying then in 1995. so that is a reason three think the target. -- re-think the target. the fed should really think about the target or whatever the goals are from monetary policy as a collective decision, not just for the committee, but really for congress to weigh in on as well. and then you get more buying on the goals and get help from congress. scarlet: the former minneapolis fed president, narayana kocherlakota, you are staying with us. this is bloomberg. ♪
president of the minneapolis fed, narayana kocherlakota. viewrote in your bloomberg releasingou said, " rate changes every three months does not help in this regard. admit --."ld you could argue she has done that. this is what she said in a 2014 news conference. >> i think one should not look to the dot plot as in the primary way in which the or istee wants to speaking about policy to the public at large. the statement is a device that the committee as a policymaking group uses to express its opinions. and we have expressed a number of opinions about the likely
path of rates. what youhat she said, would like her to reiterate? does she need to go further? what is the failure on messaging regarding the dots? narayana kocherlakota: what she said, i certainly associate myself with and about those were strong words. but like every message, it is something that bears repeating and continual reiteration, i think. one of the challenges, i know this from my own experience, is that participants often ask the question, will you raise rates in september? and so then you become boxed into communicating through that framing. and the dot plots do not help in that regard. but i think whatever she can say to get away from a time-dependent framing of policy
and get the committee back to talking about drivers for decision-making, i think that would be valuable. matt: quickly, there will be a about thejackson hole rate productivity. let's review that. narayana kocherlakota: [laughter] i could teach a course on that question. joe: i do not think we really have the time to continue with that. narayana kocherlakota, sorry for the -- sorry for just throwing that out there. narayana kocherlakota: a big question. joe: we will have much more coverage from the economic symposium tomorrow, breaking down janet yellen's much anticipated speech. scarlet: coming up, some of the biggest voices on bloomberg. matt: we will be asking narayana kocherlakota the big questions
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crewsin really, rescue are using their barehands in some cases to search for survivors from wednesday's killer earthquake. at least 250 people died, hundreds more were injured. there were more aftershocks today. the quake flattened three central towns in italy. many of the buildings in the region were built hundreds of years ago and were retrofitted to withstand earthquakes. hasmbia's president declared a cease-fire against the rebel movement starting next week. this comes after the country reached an agreement with decadesrebels to end a long war that has killed hundreds of thousands. the rebels will convert it into a legal, political party.
it will begin to seats in both houses of the colombian congress for a time. approvalll reject the deal. vladimir couldn't today ordered snap military drills on land and sea. the exercises will last until the end of the month and involve a variety of soldiers. the drills, week after president putin criticized ukraine for allegedly carrying out acts of sabotage in russia annexed crimea. president obama has gone where no u.s. president has before, into virtual reality. he is narrating a 360 degree representation of yosemite national park. teamedional geographic up with oculus studios and vr specialists to produce the free video. it's out today to mark the centennial of the national park service. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg.
joe? joe: we are still with bloomberg view columnist and the former president of the marianas -- he joins us from rochester, new york. it is now time to think about the big questions. like tor, i always ask with a neutral real rate is to plug into my model. people are saying the equilibrium rate is coming down, lower than we may have thought. do you agree, and where do you think it is? >> yeah. i want to answer the second question about where i think it is. i'm not a huge fan of the rule in general, and i think it's not the best way to free monetary policy. but i will a your question about the neutral rate and the forces on it . you see a slight downward trend in the neutral rate, from the
1980's into the great recession 2007, youut since have seen a very sharp decline. the right way to gauge it, i like to use market evidence. where markets sink rate interest rates will be, 20 or 30 years than what theyer thought they were going to be in 2007, but 150 basis points lower. that creates a lot of chances for monetary policy. if you keep the same inflation target, you'rr long run, novel interest rates, the fed funds ,ate, is more likely to be low and you are more likely to run into zero lower bound when shocks hit. that fall in the neutral real rate, i'd say that you see in market data evidence is about it has fallen 150 basis points, and
that will create challenges to monetary policy makers if the goals remain the same. joe: professor, if you don't like the tailer rule, do you have another? >> [laughter] no, i think the better way to frame it is outlook dependent. you have your outlook for your mandate variables, inflation and employment. employment is harder to measure, there are a few more challenges in terms of exactly how you measure where we are in terms of how we are doing. but then, you are trying to get interest rates set so you can get back to the inflation goal of 2% as rapidly as possible and get back to maximum employment as rapidly as possible. by that, i mean within the euro to. -- a year or two.
joe: you talk about using market measures to derive some sort of anticipation of inflation. critics would say that the fed itself is influencing the market measures with the fact that it's 2016 and the fed has been so slow to raise rates, is itself signal and theire's a feedback loop. they are ultimately looking at something influenced by the fetid itself. are you confident that they are independent enough that the fed should be looking at them? >> yeah, i remain very confident in that. the feedback loop you are pointing to is one of theoretical interest, and it is certainly one that gets a lot of excitement and attention in academic circles. but it's not something that policymakers in the u.s. have to be concerned about. but the slide we have seen in longer-term market base
measures over the past three years, its associated with the fact that the fed has been tightening monetary policy. while inflation remains low. steps toto be taking slow the return inflation will target, and i think that has created reasonable doubts about the commitment to the 2% flexion target. scarlet: bloomberg columnist, thank you so much for staying with us. we will have much more coverage from jackson hole tomorrow. we will break down the speech in the morning, and we have some of the biggest voices on bloomberg tomorrow as well. miss?i ddid you turkey has come out more stable for the attempted coup. what's next for their relationship with the united states and russia. joe biden was in on current yesterday -- was in oankara
yesterday. >> the united states government is committed to do everything we can to help. your government, mr. prime minister, to bring those to who are responsible for the coup attempt. matt: let's bring in the geopolitical futures founder and chairman, george friedman. if you are a conspiracy theorist, this is really entertaining to watch, because it would appear to you that this coup was planned for this very purpose. they didn't do a very good job if it wasn't and they sure arrested a lot of people afterwards. >> well, it is pretty clear that there was a coup, and like many coups, they were led by incompetence. latched ontoas this brilliantly to stabilize position, but
so much that he will be a russian ally, but that he brought the u.s. back into it. the only conspiracy was the gang couldn't shoot straight. the people couldn't get it done. scarlet: i want to go back to that idea of the alliance between turkey and russia. what did turkey get out of it, and how has it played off its alliance with the u.s.? >> will, what turkey got -- well, what turkey got was leverage wa with the united states. they got a number of things, among which is this guy in the united states who the turks accuse of having started the coup. remember that just before this, russia and turkey almost went to war over the turkish shootdown of the russian plane. suddenly there was a love affair, and suddenly the united states had to start reorienting itself, because it needed turkey. and turkey needs the united
states. russia is an historic enemy of turkey, it's really close, really competitive. but i think the turks managed to rearrange the entire relationship. wisedo you think that it's for the u.s. to so closely ally itself with the erdogan government? do we really share value systems, or does it not matter? >> i don't know about value systems, but we certainly share an interest in making sure that russian access to the mediterranean is controlled. that means controlling the -- and working with turkey. it depends what you want. if you only want to ally with people who are like you -- matt: what about isis? we have seen reports, at least, that in the past, erdogan's government has supported isis,
although now it is going after them. but don't you want an ally that doesn't support terrorists just because he hates his neighbor? >> stalin once supported hitler's, but he became our ally. look, you play the hand you're dealt today. whatever turkey was doing in the past, and it really is not nearly as clear as the media made it out to be, whatever it was doing in the past, right now the united states position in syria is extremely weak because of the russians and because they haven't done a good job of building allies on our side. the turks coming into syria helps the united states. any help they can give us against isis helps the united states. it blocks the russians, to some extent. isis is one of the issues. russia is another issue. the assad.regime is a third issue this is not assad regime is another issue. scarlet: a multidimensional
chess game. talk to us about turkey's influence in the middle east. it's certainly on the ascendant, but talk about his relationship with israel versus saudi arabia versus the other big players. >> well, in the middle of all this, turkey reopened relations of the israelis and has been cooperating extensively. it is the leading sunni power in the area. aside from indonesia, it has the largest gdp of any muslim country in the world. a substantial army, not as good as it was a few weeks ago, but substantial. if there is going to be stabilization in the middle east, it is not going to be done by the united states. the united states will not go to war against a useful in large-scale. if, there is use the turks will play -- going tong run, it's
return to the situation it was in 100 years ago, where it was the dominant power in the middle east. joe: all right. george friedman, thank you very much for joining us. scarlet: coming up, hillary clinton says donald trump has built his campaign on prejudice and paranoia. her comments to, next -- her comments, next. this is bloomberg. ♪
crack down on tax avoidance has drawn unusually public criticism from the u.s. more south american companies are being unfairly targeted. the eu executive commission responded with a sharp denial, insisting it is being fair as it goes after corporate tax dodging. and facebook is like the groundwork for whatsapp to start making money. it is using privacy rules so it can be used for facebook advertising and allowing businesses to message its one million users. it is the first step toward generating profit from the platform since they purchased the app in 2014. that is your bloomberg business flash. joe: what you miss? hillary clinton to donald trump's big accusation, launching a wrath of charges against her rival. >> from the start, donald trump has built his campaign on prejudice and paranoia. he is taking a groups
mainstream, and helping a radical fringe take over the republican party. his disregard for the values that make our country great is profoundly dangerous. joe: joining us for more is bloomberg's politics correspondent, margaret taliban. -- margaret calib. hillary clinton's job doesn't look terribly difficult, but donald trump's does. why is he calling her a big it? -- a bigot? >> part of it>> is to get off the defense and reach out maybe to african-american voters, but likely to white american voters who feel very uneasy about questions about whether or not his campaign tactics have racist overtones, and what he has been
attempting to do in the last couple days is turn things on her and say, you know, she's either not paying enough attention to african-americans or treating african-americans as victims. he is trying to turn the narrative around. what we saw today was very justful not even dissent, her going directly after donald trump on what she sees as a slew, on many levels, of questionable affiliations, behaviors,, statements policies. joe: those of us who are online all the time who have seen what she is talking about for a long time, the so-called olalt right, all the fringe elements. is it safe to assume that many voters are completely unfamiliar with what breitbart.com is like, and that this speech is an opportunity to get the media
showing this side of his movement to the general public? >> absolutely that's right. there was a turning point about a week ago when trump announced the higher of stephen bannon, when the clinton campaign talked about what they needed to do to address it, how to take advantage of it, and went to do it. and you can always see labor day as the point in the election cycle when voters turn away from vacation, get back home to the reality of sending their kids back to school, and inevitably focusing on the election. that has always been a turning point where you would expect to see bill clinton and -- both clinton and trump ratcheting their campaign. but it was stephen bannon, the reaction from these groups, it was just there on the table, and sure enough, with all this focus on the clinton foundation, i'm sure the clinton campaign was
happy to have a reason to turn the narrative, but i do believe it was the timing of the hire that really expedited the conversation. scarlet: against the bigger backdrop, you have pulled showing minority voters overwhelmingly supporting hillary clinton. how can trump compete for their support, or is even trying? >> conventional wisdom for quite a while has held that ohio and pennsylvania, florida and north carolina to some degree, will be the pivotal states in the selection. what you have is some pockets of voters that hillary clinton would want to turn out, particularly jacksonville, philadelphia. but for trump, the issue is voters,o maximize white including centrist white or right-leaning voters who will back him. is that concern he is trying to address in his remarks, ostensibly to african-americans, to bring some reassurance to
they do it to carefully, it will have side effects. scarlet: joining us for more, betty liu. a lot of people say that the push for helicopter money will be if the yen crosses a certain level. betty: you have the nail on the head. what mark mobius said that was so interesting, he's saying, they are going to do it, but it's likely not going to have the desired effect, so why do it at all? matt: typical bank of japan policy, is in that how they do it? they doesn't really bring it with their fiscal policy. scarlet: that reminds me of another central-bank. but why did i have to do it? like you said, because the yen continues to strengthen, and what mark mobius was saying was that ¥90s and crosses per dollar level, that will
likely be -- wasn't 100 going to be the big one, and there were hedges at 100? is it now getting ratcheted down -- betty: as it gradually moves -- at some point, thwhat's interesting, wasn't 100 going te big one, this phrase helicopter money is a phrase that won't go away. wasboj governor kuroda asked this by the bbc -- you guys are ever this? let's just remind our viewers what he said about this. -- a policy i don't think at this stage we should abandon this institutional setting. there's no possibility for helicopter money. betty: no possibility. but he also said "at this stage."
it's mixed messaging. matt: you can't take away the possibility completely, right? joe: there is still the issue of the fact that helicopter money has to involve coordination between the bank of japan and the fiscal authority, where you clearly express reservations about that coordination regardless of the conditions. betty: right. there are questions about how much they are on the same page and whether there needs to be more fiscal reform before implementing any type of further easing. absolutely. we will see. matt: you can catch betty liu with the yvonne man at 7:00 new york time for "daybreak asia." scarlet: coming up, what you need to know for tomorrow's trading day. bloomberg. this is bloomberg. ♪
scarlet: don't miss this -- japan in tokyo cpi coming out tonight at 7:30 p.m. we were talking earlier about helicopter money; deflation has taken hold and there is a projected decline, and tokyo cpi. it's only when you block out energy and food that use the an increase in prices for july. matt: and don't miss this. u.k. gdp comes out tomorrow at 4:30 in the morning. obviously, but i think it is worth getting out, because you are going to get a read on some economics that came in after the brexit vote. joe: and of course, i will be looking, as we all will be, at janet yellen's speech tomorrow in jackson hole. the title of the speech is "the federal reserve's monetary policy toolkit." should be fascinating. scarlet: thanks for watching.