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tv   Bloomberg Surveillance  Bloomberg  August 29, 2016 5:00am-7:01am EDT

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jackson hole, the jobs report on friday is critical. janet yellen wants to raise rates, can she? this morning, the curve is flatter. and this week, mr. trump goes to arizona for a little bit of wall talk. we are live from the world
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headquarters in new york. and anna edwards in london. how was jackson hole taken in the city? na: we are watching how this is playing out in the equity markets. taken badly by the equity markets. down .3%. down across the european session. i was fascinated with how they had to walk the line by saying, we don't have that many policy tools, but they have enough. anna:. nextr joining us in the hour. taylor: italy will investigate whether fraud has anything to do with people who died in the earthquake. contractors that
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broke building codes. and the country wants to make sure that organized crime does not get involved in the session.g the authorities say someone set fire to the crime lab in an -- in colombia, a permanent cease-fire has taken effect in a conflict that has lasted five decades. they are laying down their arms as part of the peace accord. to approve the agreement. fighting in colombia has killed an estimated 520,000 people. singapore has confirmed that residents have the zika virus. the majority of the cases concerned were in foreign construction workers. and donald trump will go to
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detroit next weekend to make his first appearance before a predominantly black audience. he has been making a bid for coats but has done it in front of predominantly white crowds. donald trump has little support in front of black crowds. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. tom: we have real nuances this morning. more than i expected. the yield, 1.61%. the oil is churning. on to the next screen. over 14.s well 76. a flatter yield curve. loweris a two-year relative and the yen of finally backs up in and a-friendly way. let's take that forward a
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little bit and look at what it is doing to equities. this is the picture across asia. we had the pacific down by .3% we have a negative slant. --: it does bear weakening watching. this is inflation today with days out today. the blue line is 0%. the red line is the regression. the disinflation in america. and the two circles are the
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inflation that we feel. ande is they are inflation then is ours. the top circle is 3.2% service sector. go back to that chart. the top circle is 3.2%. the bottom circle is goods. the service sector is killing us. and goods deflation is remarkably helpful right now. you have the blend of the inflator. however you look at it, inflation is a jumble. chinese deflation story has been going on for months and. it has been weighing on goods prices. i have a chart that helps us look forward to the end of the week. have jobs data out of the u.s. and this looks at the corporate profit environment. drop.gs it marks the end of the recession. of 2000 15 into 2016. how much does this threaten the
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continuation of stronger jobs data? we have seen a couple of strong readings and may is in the rearview mirror. how much is that threatened by this kind of picture? the case for tightening policy is strengthened. on according to janet yellen friday, whether that could come as early as september, it is still open. we are joined now by lena komileva. markets are closed today but let's talk about jackson hole. we have seen goldman sachs and broader markets reassessing the expectations around a september hike. now above 40%. and yet forces at pimco said there wasn't anything new. what did you think? three major takeaways. as janet yellen explained, there will be no return to the 2007 global crisis.
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an environment of massive stimulus going forward and the question is the degree of that stimulus going forward. the second thing is that monetary at the moment remains consistent with low inflation environments in the u.s.. so monetary policy remains geared towards hedging down service towards inflation and finally, in the context of this, seemingly remarkably dovish as ast, janet yellen was hawkish as she could be but without job conditions and i think this is nothing to be underappreciated. when her tenure began and she took over. the big concern for the market was how the global financial theem was going to handle
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risk shock in a financial system that is heavily weighed. towards the jobs number, how are repositioned around it? how good does it have to be to justify a rate hike in the u.s.? ,r to give them the firepower if that is what they are waiting to do? is frustratedet in that janet yellen did not give a strong enough signal as to what will possibly help with a rate move in september. but i think that while the fed not databased, the time when they have offered is based on economic figures. have informed the fed's actions but it has been at such a glacial pace that it seems like it is on hold forever. unemploymentthe rate. at the fact that the u.s. economy is generating the employment that can shift it towards a cycle low tells us that the current arc is
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somewhere below the neutral rate level. i'm going to untie my bow tie. i don't know where -- came from. i think it is the biggest bunch of jargon malarkey. you nailed it with glacial pace. my experience is that glacial paces and at some point. when does this end? lena: exactly. this is where the second pillar of the fed guidance comes in. the reason why u.s. inflation is important is because the real interest rate has become the key monetary fool for the fed since the end of quantitative easing. since the fed stock packaging bank reserves. so the one thing the fed cannot
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control is inflation. we are going to announce in a minute some guy i'm talking to tomorrow in washington which i'm sure will be interesting but what i want to know, when everything is said to be done, what do is he or she do about inflation? that redline is massive disinflation. how can they raise rates against that? -- : lena: a diverging cycle between the u.s. and the rest of the world. in the u.s., on the positive side you have a boost from the capacity in the labor market, isething which they payroll likely to show even with a number below 200000 and on the
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other hand, chronic under spending in the global economy increased by the spare capacity in china and the china related global interest rates. there are under bid commodity prices in developing markets as well. and from that perspective, the fed is sensitive as to how conditions are influenced by its actions. hashat sense, the fed resisted a rise in the real interest rate. in other words, they have chosen to fall behind. tom: fall behind is a question. behind -- is is with us. i'm pleased to announce tomorrow -- my conversation with stanley is and, on why this time is not different. this is bloomberg. ♪
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anna: welcome back. i am anna edwards in london. let's get the bloomberg business flash. taylor: the ceo of chrysler called samsung a potential partner. they already have a good relationship as a supplier. they are in advanced parts to buy some of the component units. ana airlines has found broken turbines on three 787 jets. those turbines damaged other part of the engines when they snapped off. they are built by rolls-royce. they will check the engines on the fleet. shares of product rose in hong
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kong today. they predict a rebound next year. private sales slumped in the first six months of this year. anna: thank you. has reiterated its pledge to boost monetary stimulus if needed. the governor kuroda says there was more space for more easing. let's get more with brian fowler. in tokyo. so the market, once again, a divergence, a transpacific divergence in expectations around monetary policy? brian: that's right. really what we have to say is that governor kuroda is answering the wrong questions. -- do i have buy options left? and yes. that's fine. but will they have an impact on
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the economy? anna: where does the jury stand? with the economist to speak to, are they convinced? is that theylk could, instead of doing helicopter money, they could start buying local government debt and other types of debt. expand the types of debt a are able to buy. will that move the dial? give you a fairly pessimistic data point. in the last 22 years, japan's nominal gdp has expanded by 2%. 2% in 22 years. in that same time, the money 80%.y has expanded by so there is a real question as to whether flooding the market with money will have an impact. board government gets on with the bank of japan and combines fiscal with structural change, there could be an impact. does japan, the total of
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europe -- do they affect janet yellen's understanding at all? i think really, japan is taking tips from janet yellen. it is more if washington moves, japan reacts. then will be happy with hint of a potential rate hike in september. we saw the dollar get above 102. that takes pressure off japan. i think they will continue to take cues. fowler, thank you so much for the update. lena komileva is with us. i look at the -- as a market-based indicator of price change and i'm sorry, it doesn't suggest to me the scope or scale for a rate increase. who gets this right? the september or december or
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those into next year? clearly, there has been a discord within the fed with respect to the timing, with respect to how resilient the u.s. economy is. so part of the confusion comes from the fact that we have a highly invalid system. weakness in gdp figures but strength in employment. that speaks to perhaps a stalling productivity growth scenario and that would suggest, to some, that the the neutral got to bed rate has lower than it was in the past and the fed can take its time. it also suggests, as we see from the tightening conditions in the labor market, that the fed is looking at the spare capacity in the economy. it has to make some headway
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towards bringing its -- closer to the neutral rate. tom: what you do so well is the nominal versus plus value. let's bring this up. great value to us last week. "we are inclined to expect persistent, financial repression with low, real rates at least until as and when the u.s. economy slows enough to provoke response." y fiscal do you see any indication of a fiscal response? i don't see it out there. a fiscal response has got to be in the pipeline. you are right that the political lending itself towards steve globalization. and that is making events, such populism in major economies, across europe and
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brexit, it does not seem to be the systemic shock that some have feared. the meeting to get later this week in china to coordinate global growth policies and to time when we are in a world of flat heeled curves, which to me, absolutely. the reflection of expectations -- come on, i don't see anything perpetual out there. any hope for salvation of fiscal looks to be near zero. thank you for bringing that to my attention this morning. in the next hour we drive forward with peter cooper. this is bloomberg. ♪
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morning. anna edwards is with us this morning. a wonderful thing. inday is job staying america. we will to fill up a space. secretary clinton will help us. my morning, must-read. a clip on history that takes us back to jfk. the first election i actually remember. some republicans still claim jfk won the presidency in
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1960, the nationwide popular vote might margin was only 118,000 because of vote fraud in illinois. state,jfk had lost that he still would have won the electoral vote. in the u.s. we have this odd thing of popular vote and electoral vote. is anyone paying attention to that? i think it is such an important part of the calculus. and i think 2016 has been the year when the markets have realized that politics is the key constraints that we have on demand management and the capacity of central banks to respond to new challenges. this is something, it it is a growing function. bya: the challenges posed populist parties is something that europe knows well and we
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try toen donald trump use. do you see parallels between what donald trump is doing in the u.s. and the challenges that europe faces? me, this is the failure of growth policies. the pessimists would call this debt exhaustion in emerging markets and quantity of paralysis in developed markets. pragmatist such as myself, it is the fact that we are still in the aftermath of a huge balance sheet recession. that will have to mean more inclusive growth in the future and until that happens, populism will be on the rise. we talked to michael holland. this is bloomberg. ♪
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anna: welcome back, everybody. this is bloomberg surveillance. i am anna edwards in england. let's get to the bloomberg first word news. sil suspended president
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dilma roussef makes her final appeal today. she is accused of illegal financial spending. minister isng prime closing in on the number of votes needed to form a new government. the people's party has made an agreement with yo a little part liberal party. the first round of voting in the spanish parliament takes place tomorrow. fighting in syria is getting tw o u.s. backed forces against each other. they began the offensive last week with torque is forces -- an areaforces capturing backed by the state.
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a false report that shots had been fired caused panic at the los angeles international airport. hundreds of passengers were effec affected from terminals. there was a massiv traffic jam on nearby roads. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor raikes. this is bloomberg. tom: thank you so much. greatly appreciated. street, worldwide, new year's day is not january 1. new year's day is the wednesday after labor day. day you do over labor weekend is recalibrate. we are speaking with the vice president of recalibration to get us through a three-day day weekend and on to what we do with the recalibrated were fully oh wednesday all the articles come out, go to cash, go to
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crash. i know you don't like it. the people, who several months ago started saying, sell everything, they may be right, but it is such an extreme position. anyonee decades, when everyo has exposed an extreme position to me, they have normally been wrong. i think we will end up with the central banks, as criticized as they are, they justify the criticism. they criticize us with things that could go in the other direction. tom: let's go to that, ellen who hasbeen way out in front important most development. andnflation is low
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inflation expectations are falling, you do not touch rates unless you in bed the expectations lower. upr market, is it going because of thoughts like this zentner? >> certainly it will help. i think the 18th of all this theussion we have had over last several days, the increase, watching the number, forget about december, i think it would be so stupid for the fed to do something in september. i cannot believe that they would do it. they might to it. .t would be stupid anna: good morning to you. what would be the thing that would stop the stock markets from rallying right now? would be a premature hike?
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tom and i were discussing earlier on the drop off of in recent quarters. could that be the thing that threatens job creation and therefore threatens the cycle in the u.s.? described the one-to punch that tom was talking about. the veracity of the sell everything and go to cash movement. inyou have raised rates september, the market would .robably be negatively affected then, if earnings continue to surprise to the downside rather than the upside -- right now we are beginning to get some optimistic guesses about next year. we are hearing from a number of companies right now. things are getting a little tougher, not easier. i think you described the one-to
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punch. anna: obviously monetary policy activists have to do with they have to do. what kind of fiscal stimulus is the question. we heard a lot about that at jackson hole as well. would it be something around letting companies bring back there money. >> i would say all of the above. these people in charge of doing things are so hamstrung. that would be a pleasant surprise if they come up with any of the things you just talked about. tom: this is a chart that michael holland never looks at, but the action of corporate officers it's related. this is the flattening of the yield curve. i believe this is a trend. this?s the wind of when should our viewers actually pay attention to what the animals look at? >> once it starts becoming real
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world, no longer manipulated by , led by thebanks fed. we have prices that make no sense in the bond market. it makes no sense. tom: a bubble. >> of course, we have a bubble. the fed has kept on, followed by the minions around the world. tom: the question is can you bring the double, by correlation, over to an equity bubble? i heard you, i think on the radio, a couple days ago. tom: you listen to us? >> i listen to you when i shave. the bond market would be 65 times the earnings. wayink that is a real smart to look at the bond market in terms of a bubble. you will be ok in the 401(k).
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critical.is really the valuations are 21-22 times .he pe i was not around for, you are not around. it was a way higher valuation. anna: sometimes you have to go way back in history to find ecedents.si when the market is no longer manipulated, it is hard to imagine markets dominated by central banks. the economy may never walk normally again. >> that is possible. certainly for an extended amount of time. if that is the case, and it looks to be the highest probability, as far as the eye can see, we will be controlled by some extent by the loony people who sit on the boards.
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what you haveat, to deal with. friday is a big day. day.friday is a big we'll talk about the use of cash later on. tomorrow is a big day for me. this,lly waited on tomorrow, a conversation with stanley fischer. this is bloomberg. ♪
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anna: welcome back. this is bloomberg surveillance. i am anna edwards and london. let's talk a little more about the oil price, shall we? .il is still down this morning a credible deal
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for the market. i want to bring you a piece this morning. "when the opec nations last met with russia back in april, it was saudi arabia that shut down the deal, refusing to take part time, bothun, this countries may be more accommodating, this dumbly block is more likely to be iraq." from bring in our anchor dubai. making the point there is that could be the stumbling block >>. no doubt that these countries play a role in the success, or lack thereof, in the upcoming talks to the reality is that the countries that carry a lot more muscle would be saudi arabia and
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iran as well. they are the ones that a lot of experts point to. this is the chart i want to show you on the back of that. this is what i refer to as the reality chart. we're talking 3.5 5 million barrels. great, this top in the charts -- that yellow line, that is a 25% increase this year. they are saying, yeah, we're not back up to pre-sanction oil output, so we must pump further, and we will not agree to a freeze until we reach that level. .till, further to go obviously, mixed signals. anna: the chart you put out , 3.5 barrels per day, and
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they want to get to four. they are closer though. perhaps there less likely to stand in the way of freeze this time then last time. >> you are right. beer at 3.5 5 million barrels per day, the highest level since december 2011. the reality is that sure there may be less, but it is the principle that matters more than anything. they will not agree to a freeze until they pass the benchmark. an analyst from barclays weight into the conversation. they underscored that iran is the key to the puzzle. the market is likely to discount the freeze of the stocks because of compliance issues. even if you were to agree on some level output, how would you go about implementing that? what is the benchmark? that is what they are pointing to. tom: behind you is the acclaimed
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financial center for dubai. uae, ins a question in saudi arabia, what is the state of fiscal economics chuckled they have enjoyed $40 per barrel oil for a while. are they nervous chuckle how do they frame it? >> one, they are nervous, there is no doubt about it. they have been taking a series of measures to try to adjust the imbalances. they have a lot more offered to go with. they had been preparing for that. they have been pushing state level consolidation and introducing additional ways to boost revenue. in the kingdom of saudi arabia, with a much higher population and breakeven price, the pressures are substantially more. they have to move a lot faster. a lot of that ties into the national transformation plan.
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there is a lot of traction there. if you look at the equity markets, there is still a lot of reluctance from investors. tom: thank you so much. michael holland with us right now. rink at the chart, if you would, quickly. the white line is the price of oil. the orange line is the first national bank of exxon. come on. it has done great compared to oil. is that a good or bad thing? you look at big oil and say they are essentially a financial operation. or, is it a value trend? commodity.not find a you can talk about the stocks. when you buy exxon, you are buying and operatives the -- and opportunistic management that
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looks out 50 years. tom: are things cheap now? we were on the show when we were approaching 4% yield. whenever you can get 4% -- it is like 3.6 now. tom: 3.4%. >> even better. i made some money today. it is the best managed commodity company in the world, by far. anna: if the hunt for he'll take and into new entity opportunities now? >> no. i think the hunt for yield, i simply look at big companies, your respective of their industries, where they have shown an ability to go through good times and bad and grow cash flow, and therefore, dividends. not specifically energy, no. anna: how much visibility to think the sector has around dividends? >> that is the right question to
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ask. i think a number of the countries have discontinued. you could end up with a number of these companies cutting dividends. i think companies like exxon will not cut dividends. there will be some pain in the rest of the industry. anna: thank you very much. michael holland. let's bring up the data board and have a quick look at where we are across asset classes. equity session continues to be weak. stoxx 600 down. this is bloomberg. ♪
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anna: this is surveillance from london and new york. let's get the bloomberg business flash. taylor: japan's first locally built passenger jet is back in to testar after flights. it has had problems with the indistinct system. air-conditioning system.
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bmw is trying to put its flagship seven series back into the auto race. the german automaker is coming out with the new sportier version of the series. the mercedes as class now outsells the bmw seven series. next year, the audi will come out with an updated version of its a8. there are rumors that amazon may release a music streaming service as early as next month. that is according to "the financial times." amazon would charge $9.99 per month. they already provide an extensive catalog of music to the prime subscribers. tom: thank you so much. amazon. would you like to make 30% per year for the last decade chuckled that would be amazon. not that i know when to buy. let's startland -- with amazon. cheap? >> very expensive.
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i confess, it is not my kind of stock. i own some of it, i have for some time. i'm delighted i do. the company is so remarkable, but it is remarkably expensive too. tom: let's bring up the holland chart. the problem with this chart is it is inflation adjusted. we have a real equity return the is on trends and extraordinary. how do you have the urge to stay in the market? is that use of cash? >> in large part, of course. having a presence in the market over a long time makes complete sense. you cannot argue with history. they are facts and irrefutable. anna: we want to talk a little about apple and what they will do with their cash.
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what you think shareholders want to do with the? safeguard it from the european union as well as the tax authorities in the u.s. it is crazy what is going on near you with the european union doing a retrospective look at taxing. this all started with them looking at ireland, as you know better than we do here. at the end of the day, i think they have been remarkably -- apple had been remarkably successful. they put a lot of money to the side. i think they probably will pay more in the dividends in the future than have in the past in part because of this. anna: what do you think the government should do in response? you mentioned that you were skeptical earlier about whether they do anything to incentivize apple to come back. in ave read on the way very good column, an opinion
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column in the bloomberg saying the most obvious thing that should be done is the u.s. authority should get their act together and change the tax system. i have loads petitions for anything happening. i would look to apple to do anything they can, but nothing from the government. englishis ancient royalty -- sir thomas holland -- come on, you are out of english aristocracy from a million years ago, and all you know is nothing has changed. the corporate aristocracy will ignore the hot air and will just to deployment of cash. >> absolutely. theses why, when we have crazy uncertain times that you are i have talked about for years, we look at the smart people running this business. it is men and women running this business, tried to do the right thing. there was a wonderful piece of
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weeks ago where they talked about -- he said, we know this is crazy. tom: we will stop it right here. .ip up the script he is not jack welch. i say that with great respect for mr. welch of as a chooses. he was in a different world. every other big company maintains control in trying to ignore the other stuff and just do your job. right. is exactly i think the cards were dells, and they are now so different from jack welch. there are no leaders in any part of the world, so we have to do what is right for our people and us, and the people we serve, including the purchasers of the product, as well as those with the funds. tom: 10 seconds. can you buy the banks here? >> yes.
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anna should take a look at her banks right there. barclays -- the best managed once. tom: barclays? story?t to look at his >> i think the best managed banks are goodbyes. tom: michael holland with us today. coming up, peter cooper will join us. to be jackson hole -- honest, the conversation is way more nuanced now than what we heard in wyoming. we will do that next. ♪
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after jackson hole, this friday's jobs report is
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critical. cherry guillen wants to raise rates. can she? markets react this morning. the curve is flatter. dollar, ascendant. this week, mr. trump goes to arizona. good morning, everyone. this is bloomberg surveillance. ene. tom ke anna edwards in london, sitting in for francine lacqua. it is supposed jackson hole, and markets t to react. anna: of course. it was not janet yellen speaking, it was kuroda speaking, thing they can do more. tom: the divergence. we will speak to peter hooper about this in moments. in while, the first word news this morning. both investigate
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whether fraud has anything to do with the number of people killed in last week's earthquake. at least 290 people died. they want to know if contractors code, building allowing more buildings to collapse. in brussels, reports of a bomb explosion turned out to be false. instead, authorities say that someone set fire to a crime lab in order to get rid of evidence. in colombia, a permanent cease-fire has taken place in the conflict that has lasted five decades. photo still have to approve the agreement which would give the rebels political power. fighting in colombia has killed an estimated 220,000 people. think of poor has confirmed that 41 residents have zika virus. authorities say the majority of cases took place a month for an construction workers. almost all have recovered.
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they are stepping up the fight against the mosquitoes carrying zika. donald trump will go to arizona this week, making his first appearance before a from donnelly -- a predominantly black audience. polls show that he has little support among black voters. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. tom: thank you so much. let's do a data check so we can get to peter cooper quick. the tonga stronger, -- dollar stronger, oil, soggy this morning. statistic.e key two year higher t yield, a flatter curve. anna? anna: european equity markets,
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your word. use now it is the job of the per periphery markets. it is a bank holiday here. tom: we featured through the of deutsche bank with real caution. bc the regression there over the years. the 2% line is nirvana in green. the two yellow circles -- not close encounters -- service sector inflation up top, goods inflation down below. their installation is the white line. we will talk to dr. hooper about that in a moment. around thee a chart
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oil price. we talked about it in the last hour. i think it is an important one. when we look ahead to the opec meeting coming up next month, a lot of people asking questions about the production freeze. this puts in context a big ramp up in production. more less make them likely to increase to a freeze? very good. thank you so much. does international economics with a wonderful understanding of washington, a of duty. what we observed on friday, at lunch on saturday, and i guess, picking up the pieces this hyundai morning. i give a hat tip to christopher sims who seemed to have the most immediate impact. he said, we need fiscal, we need
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they, and my right, it is not their? the theme at this jackson hole conference was what is left? what we do going forward? while a lot of central bankers put a brave face on this, they are running low. no question, for countries that need stimulus, you have to look elsewhere. statement at the conference was, if needed, we will do more. there is not a whole lot more that they can do. i think chris has it right. and halfhearted. this is what was said over at pimco. he is a little bit authoritative. "chair yellen said that none are open to active consideration, but are worthy of further research -- he said he is sure
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the jackson hole said he was a lovely setting, but the chair did not want to make any real news and succeeded." >> she did. there are two questions here. one that the markets we are most focused on is what is happening in september. will she say september? no, she will not say a date. in her own way, she was clearly on board with the momentum moving in that direction. theknow, i thought that photo ops during the conference -- dley w and fisher -- dubbed and fisher. >> that was very well staged. talkingave peter hooper photo ops. looking sharp.
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a number ofole is things. ratecameras were all a there, an opportunity to make a statement. i think one of the strongest statements was this one. anna: do you think the fiscal actors will be stiffer on inflation? >> inflation is ultimately controlled by central banks. fiscal policy can put more into growth here. the central banks have been running low here on the amount of stimulus. certainly, the place for fiscal action that is most great at this point is europe. europe is well below capacity. certainly the central bank is not going to do anything to offset the effects of fiscal policy. the problem is europe is the place where it will be most difficult to get it politically.
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getting all 19 countries together to agree on this will be a problem. anna: does this basically means that germany needs to do more? put that go to the heart of the? germany is critical to europe . it is also the country that probably needs it the least at this time. it will be tough. tom: the heart of this is the idea of will they be measured in control chuckled the president of the cleveland fed suggesting a vector upwards. theseoper, i go back to modern mathematics. to we going to use the dfg get out of this mess or are we using a textbook that you have not written yet. .> the world is changing,
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what the fed is wrestling with here is the notion that policy rates are low. the level of rates that will be keeping the economy from expanding faster. we have some stimulus now. andglobal economy growth u.s. growth has slowed to the point where the trajectory of rates over time will be shallower and we thought. this is offensive. the control room is out front on the jargon alert. bring that up again. dsgg -- dynamic theory -- it is
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a modern set of mathematics. can it work check go >> there are a lot of things that don't work with the zero balance. large equilibrium on the model has failed in recent years. there are a of things that these models miss. the financial sector is way under developed, for example. the banking sector is not even in the models. the transitioning of the monetary policy to the economy through that is basically -- tom: that is the heart of the matter. where is the bank within the jackson hole discussion? we touched on that on friday, and we will do it tomorrow, a conversation with the head of the federal reserve, stanley fischer and james dimon.
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this is bloomberg.
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anna: this is bloomberg surveillance. i am anna edwards in london. let's get the bloomberg business flash. here is taylor. fiat chryslero of calls samsung a potential partner. they say that they already have a good relationship with samsung as a supplier. they are said to buy all or some of the automakers components. broken turbine parts damage other parts of the image when they -- the injured when they
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snapped off. they are built by rolls-royce. ada rose 12%. an increase in the next year. that is the bloomberg business flash. tom: thank you so much. she is in washington. a rare event for the head of our washington news bureau, megan murphy in washington, recently research for the election. mr. trump does not go for maine, he goes to ditch right in search of a black vote, and to arizona in search of a i don't know what vote. help me out. megan: we are looking ahead to big talks this week. going to arizona to speak on immigration.
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he has failed to express how to deal with the millions of immigrants in this country. that has generated controversy. of course, we will see him go to detroit to make his first appearance in front of a predominantly black audience. eff flake show up and arizona? egan: i don't think he will be there. he has been an opponent. he has talked about drawing these big crowds. he really wants to make this a signature issue. it was, he needs to turn it around and gain momentum on it. morning.d what version of donald trump will we see showing up for these events? increasingly as we get closer to the election date, does he
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change his bell, does he stick with his style? megan: your guess is probably as good as mine. he seems to vary week by week in terms of what kind of message he is trying to put forward, and what kind of person we see. whether he will be off-the-cuff, scripted -- this is a big week for him. this is a week where a lot more americans are paying attention to the race. he has to close the gap. are: behind the scenes, they preparing for the debates that will take place in september? we have to wait until september before we get the first one. megan: september 26, yes, it will be huge one. we expect to see bigger audience for these kinds of debates. how do you debate ue a person like hillary clinton or donald trump. tom: all my conversations this weekend were trump, trump, trump
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. yet, secretary clinton has had a challenging few days. does she just hide out on martha's vineyard? is that her try j? -- strategy? an: you can make the argument that it does her more service to stay out of the conversation. her campaign has adopted a hunkered down strategy. little, butback a generally the strategy has been, put your head down, let the media storm around donald trump continue, and let's write this out. they will try to hunkered down and make the showdown in hos fra with a big lead. tom: peter huber is with us of bank.che
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it is one big distraction to the economics, the american vote. >> certainly. populist forces. rise.eme on the i think part of donald trump's popularity is reflected in that. tom: can we get right over to nominal gdp, animal spirit, people are fed up with it. >> the perception that jobs are hard to come by, slow growth, certainly a factor there. probably more so in europe and the u.s.. tom: that is true. on friday, we will have an early jobs report. we will go beneath the headline data. tonight, you can go when you the political data in the political conversation, with all due respect, 5:00 tonight. they start voting in like 26 days. ♪
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anna: welcome back. this is bloomberg surveillance. i am anna edwards in london. let's talk about german politics. a new poll suggests that half of germans do not want their chancellor to run for the fourth consecutive term. could trouble light head on votes?when her country caroline, good morning to you. angela merkel trying to
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make an early bid for the elections, that are several months away. yet, it is a much more near-term test. a local german tv channel was discussing with her on sunday. she was offering tax cuts. we have not heard of those coming from germany, as of late. we were also hurrying about the turkish community after some animosity with the turkish leader there. not only do we have these elections in her own homeland, they come swiftly, and then they are swiftly followed by the state of ireland itself. notably, she does not have control -- her party does not control her homeland. that is the social democrats. what is worrying is we are seeing this shift towards the right wing, a more populist party, which has been growing in strength, surrounding concerts
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about refugees. anna: interesting there talking about the possibility of tax cuts. she is not alone. other voices talking about this. interesting that the head of the social democrats have been discussing this as well. you also hear from her own .inancial head 50 billion euros per year could be scaled back in terms of taxes. that could be a potential vote winner, perhaps setting themselves apart. at what is going on here. i have to link it into the economy. how close is germany to stagnation? is it a boom economy? >> i think it is seen as a boom economy. you look at unemployment. it is phenomenally low. this seems to be a growing area of significant strength. you are also seeing, yes, we did have worrying pm eyes, a slight contraction. business confidence has been
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ebbing, but it is a strong player within the eu. tom: peter huber with us of deutsche bank. when everything is said and done, i come back to currency. to critical is the euro merkel's future? >> i think it is quite important. honestly, strength and germany has been driven important made by the export industry. the dollar has leveled off for some time. tom: is that your call? you look for stronger dollar, and she gets help from weak euro. it is closer to moving, and this would not be the last move. our us are you suggesting a
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september rate hike? >> i think the possibility has gotten closer to 50-50. dudleyving in a direction. >> we want to see the numbers on friday. that will be critical. tom: one more time, we will look udley, yellen, and fisher. as well, we look at the free money out there in the spirit of american corporations. from london, and a beautiful new when i gotmorning -- up, it was dark, it was beautiful. this is new york. this is bloomberg. ♪
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welcome back to "bloomberg." i am anna edwards, with tom keene. taylor: dilma rousseff makes the
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final appeal to save her job today. she will address congress. she is accused of illegally financing government spending. a final vote will be held tomorrow or wednesday on rousseff. is closing in on the votes needed. he has 170 of the 176 votes he needs. fighting in syria is putting two american syria -- two american backed syrian forces against each other. turkish forces captured the town from islamic state. the u.s. has warned the kurds retreat from areas they have recently captured from islamic state.
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a false report that shots have been fired caused panic at los angeles international airport. hundreds of passengers were evacuated from terminals. flights to and from the airport were delay, and there was a massive traffic jam on nearby roads. of the gunmenorts were caused by loud noises. judo leaves today on a 10 day visit to china. chinese investment in oil sands plunged. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. this is bloomberg. tom: this is like what we love to do at "bloomberg surveillance ," get two top-flight guests from different worlds. peter hooper is from deutsche bank. is in the profusek legal business of having companies made or not made. what is the enthusiasm gekko it
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will be a big m&a season? robert: there has been a little bit of a lull in there is a tremendous pipeline right now. the fundamentals remain the way they have been -- low growth, cheap money, and the need to combine, synergize, and make yourself better. tom: many ways to look at cheap money. i look at the cleveland cpi. down we go on a 10-year yield. peter hooper, help bob profusek out right now. do we stay free money for the impending quarters? peter: the fed is, i think, on the move. we will see another 25, perhaps 50, basis points this year. it will be slow after that. but we are moving up. tom: the question is, what do the lemmings do, bob profusek?
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maybe the fed, maybe not the fed. every cfl is going into the ceo and saying let's get her done. to they cfo is going in ceo and saying let's get her done. overtime, money is going to , andck to more traditional that will have an impact because the math has to work for the deal to get through the board room. peter: you are hearing more out of the fed about a lower path for rates longer-term. san francisco fed president williams' latest speech a couple weeks ago is getting some attention. suggests he uses -- that the neutral fed funds rate is not going back to the 3% assuming.t the fed is
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but it may be as much as a half or percentage point or eight percentage point next -- a percentage point less. tom: let's bring in anna edwards. anna: good morning. are they doing deals because they are competent or just because they are cheap, money is cheap? bob: i think it is a combination of things. there is no one answer to it. deals.oney fuels companies also have a tremendous amount of money on their balance sheets. a lot of that from american companies is offshore. so if you are going to access that, you will look at targets that are offshore. to bring it back, you have to pay a huge toll on it. money is part of it, strategy is most of it. it has also been fueled a lot by the fact that overall gdp environment is so tepid. you have to get growth to fuel your multiple. how do you get that in a 1% to 2% gdp environment? you buy, you synergize, and you
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get yourself better. you fill out the holes in your portfolio. there is a tremendous amount of activity. anna: when you look at what companies are spending abroad, are they still being motivated by buying companies in low-tax environments? is that their motivation? bob: the so-called inversion phenomenon, which we saw at the end of last year and earlier this year -- that has played itself out. it got a lot of publicity and criticism in washington. then the treasury basically did what it could to undercut that. when you think about the election right now, we live in a global world. and you cannot deny -- tom: no, we don't. donald trump does not live in a global world. and secretary clinton -- she
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does not live in a global world. tpp -- is it dead? is looking pretty dismal at this point. the politics are very strongly negative on both sides of the aisle. the question is, should clinton win and should she begin to change her tune on this, that is the only chance it has. tom: i sat at a deutsche bank meeting pushing 10 years ago, anais met -- and ims meeting -- an imf meeting. we have the same argument on trade that we are having today. what shifted is the politics. how is there a shift to the american political realities on, let's call that anti-free trade? bob: these are global companies. they do business on a global basis. we have lots of systems that are
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almost 19th century, let alone 20th century. taxation -- that was the whole point about this offshore cash. we have a tax system predicated their plants in elkhart, missouri, where this they have the businesses all over the world. we have to do to compete. we want our companies to compete on a global basis. yes, i know that if you are not base wheres everything is moving, it seems like the world is leaving you behind if you are in flint, michigan, or something like that. but this happens when economies change. we are in a global economy, there is no denying it. but the politics, especially in a soundbite/twitter environment, do not do that. peter: the key to the fed's longer-term problem is low productivity. globally, you're not seeing investment right now.
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what will get them to feel good enough about the economic prospects to start spending? bob: it is very difficult to invest in the traditional bricks and mortar if you are in this gdp environment. we need the gdp back up. otherwise the investment is in myspace, synergize. listening to the german economy minister, there are skeptics. peter: i think tpp ultimately would help, but the big issue here is keeping consumer alive and doing well. but getting business investment picking up. if global trade prospects are anng to help, that is answer. it is probably not the only answer, but it certainly would help. i will leave this afternoon
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for washington. really looking forward to an early-morning conversation to start your day tomorrow. stanley fischer of the federal reserve, after jackson hole, as he and chair yellen are dependent on the jobs report. good morning. ♪
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anna: welcome back. i am anna edwards in london, with tom keene in new york. let's get to the bloomberg business flash with taylor. first locallys built passenger jet is back in the hank aaron after two test flights -- is back in the hangar
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after two ted speights. amazons a report that may introduce and music streaming service as soon as next month according to "the financial times." amazon is closing in on deals for the biggest record labels. amazon would charge $9.99 per month. the company offers an extensive catalog in music for prime subscribers. and the drug maker mylan is raising the price of epipen more than 500% over a few years per the committee says it will sell the first epipen generic at $300 less thanpack, 50% the branded medicine. that is your bloomberg business flash. anna: uk prime minister theresa may is meeting with her cabinet wednesday to discuss plans for leaving the european union. the amid reports that government is split on what brexit should mean. the globallier with cio. >> there is a window here where
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policy can still have a very large impact. one of the things i wanted to focus on this month is the example of switzerland, because in 1992 switzerland decided not to join into the european union. they struck out on their own way and they have been enormously successful. anna: what interests me about this, politically following switzerland being more financial services heavy might be a hard sell in the u.k. what interests me here is the fact that he is talking about there being a window where domestic policy can make a difference because as theresa may said, rex it means brexit, but nobody really knows what brexit means. we really do not have any clarity and they spent two month
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on holiday, it seems, on vacation. theresa may is asking the minister to come up with positives. tom: how about reality exit, if that is a name as well? from deutscheus bank. and robert profusek is with us. the two of you have huge london operations. jones day really quite dominant there. and your legacy with deutsche bank between germany and europe speaks volumes. are you going to get lawyers to move wherever? bob: not at all. we have actually seen a spike of activity in london. part of it is the movement of the currency. everything looks cheap. it is hard to imagine a permanent change. tom: peter? i know this is delegate with deutsche bank.
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peter: deutsche bank has the enviable position of having a major presence already in frankfurt. the movement from london to frankfurt is not an issue. london will remain a global presence in the financial system. anna: talking about brexit and what it does to your world, we have seen companies coming in, ultimately opportunistically, to buy assets. are we going to see more of the same? said a minute ago, we have seen a spike in our london-based pipeline. part of it is maybe there is uncertainty on the sell side because they are are a number of companies that have started a process -- there are a number of companies that have started a .rocess after brexit short-term it is probably going to be stimulated of the stuff that we do. long-term, it is tough to predict. anna: so we have made some money
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for lawyers with this brexit process so far. that might be one of the unfreezing consequences. peter, on the u.k. economy, are you convinced by the resiliency you have seen in the data, or is it too early to say? peter: the move the pound has taken is a significant plus for the industrial sector in europe, and for the u.k. it is a plus, and helping to bolster the -- a 1.20, froml is alan ruskin, your strategist? peter: yes. tom: bob profusek, in the realities of m&a, currency matters. it is on page 82. but currency matters, right? bob: sure. it affects pricing. one of the things about this u.k. thing, more companies seem
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to be putting themselves up for sale. maybe they are a little uncertain. they also know that they are attractive to people outside the u.k. it is hard to predict here where everything goes, but things are good. tom: a 32-year-old, high educated, high strung employee of your two shops -- for the audience to say we moving you to d --n, to a, the, c, peter, what do they do? do they go? peter: we have a globally mobile workforce. it will be up to the individual. but in most cases, yes. like comebob, it is on, bob, it is like herding cats. bob: is complicated. tom: bob profusek is long on m&a. bob profusek of jones day.
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they are going to type up that right now. they type in the control room like this, with one finger. complicated, according to robert profusek. let me do a data check for you right now. equities, bonds, currencies, well.ities, as i am going to call it a slog to it. stay with us. the world is collocated. this is bloomberg. ♪
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tom: foreign-exchange after jackson hole. anna edwards is with me in london. sterling, 1.3084. surprising con founding the world is going to end crew. confounding, the world is going to end crew. to 6.70.etting close anna: coming up shortly is
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"bloomberg ," with caroline hyde and alix steel. alix steel, what have you got coming up on the program? alix: it is going to be about what to do about the market. to break down the investment strategy, we are going to talk with scott mather, the cio at their responsible for u.s. core strategies. what do you do if the rate is at zero and you do not want to take on a lot of duration or credit risk? we will be building up to your important interview, tom, tomorrow with stanley fischer, pounding the drum towards jobs friday. tom: i would suggest commodities are one of the litmus papers. i know you follow that carefully. but oil is critical in september. alix: very critical, with that non-informal meeting on opec. tom: how do you know that?
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alix: because i am an oil nerd. we need humphrey bogart to walk in with -- alix: that would help oil prices. tom: robert profusek with jones day and peter hooper with deutsche bank as well. let's go to what peter hooper thinks is critical. what part does stanley fischer play in the dialogue of these three important bankers? peter: stanley fischer's going to the fed was a major event. he is a very well-respected macroeconomists in the profession. , i think, isp evident both in his internal janet yellenith and his colleagues, but also in the speeches. he has spoken much more frequently than janet yellen has
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this year. generally he is perceived as being slightly more hawkish. but he will be cautious, he will be careful, and he is not going to stray from the line. tom: i chide him that he is ultra accommodative. are we still ultra accommodative as we were eight months ago? becausee are not estimates of the neutral level of the fed funds rate keeps coming down. it increases the actual fed funds rate a little bit. we are still accommodative, and there is reason for the fed to start moving because we are getting very close to their objectives. that is the line that you're going to hear from stanley fischer. anna: peter, talking about getting close to the objectives, he was one of the voices over the weekend emphasizing the importance of the jobs data. what is he looking for? peter: they are looking for continued good payroll growth, something in the 150, 200 range
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would be sufficient to encourage the discussion. they would like to see a little bit of moving in average -- of movement in average hourly earnings. obviously with what is happening to the unemployment rate as well. tom: one of the charts with jones day, robert profusek, is you actually do law. what is the real world like on this monday morning? is the animal spirit growing? any there is certainly not fear. the equity markets have been good. there is concern over the election, and frankly i think -- tom: but deals are getting done. bob: deals are getting done and the pipeline is really good. some people are saying the election will affect pricing. as always, the fed rate issue -- is of the reasons in my view
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that you cannot operate in a vacuum. the fed can do what it wants. it cannot really go back to the good old days or the battle days. tom: we will continue this conversation. mr. profusek and mr. hooper will continue with us on bloomberg radio. tomorrow, 6:00 a.m., my conversation with the vice-chairman of the fed. there is too much to talk about. stanley fischer on the path forward for the nation. stanley fischer on the nation's capital spirit. this is bloomberg. ♪
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>> prepare for takeoff.
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janet yellen's speech boost investments. the focus turns to jobs friday. caroline: and going from a bear to bull market with opec, spurred -- the picture is not so clear anymore. alix: that your bottom dollar, the greenback climbing to a two week high. "bloomberg ," i am alix steel in new york, along with my guest cohost, caroline hyde, joining me from london. david westin and jon ferro are vacationing together in some warm country. this is really a story today about a market rereading -- re-rating it's rate hike expectations. caroline: still so much division going on. still hearing from the likes of pimco saying maybe not september quite yet. look at the

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