the week ahead features the minute from the fomc. this is "bloomberg real yield." scarlet: i am scarlet fu. this is "bloomberg real yield." time for the final spread. coming up you have u.s. at retail sales, nafta discussions, missile defense talks in washington, as well as minutes from the fomc. we were just talking about whether assets are overvalued. the federal reserve of minneapolis bank president speaking out and he says no asset class is lashing red to him. our view is we are comfortable and confident with the rescue from the great recession as well as managing recovery going forward. , withg up at the fomc regard to the balance sheet, we don't see a repeat of the tantrum. michael: i want to take you guys into the short end of the market spread8582, this is the between yields and the last time we had a debt ceiling problem we saw a spike below zero for that spread. we are not quite there yet, but you can see us moving down here let's start with brian. are you concerned that we will have something happen in the debt ailing debate that will cause the markets t

the week ahead features the minute from the fomc. all of that coming up. this is "bloomberg real yield." ♪ ♪ scarlet: i am scarlet fu. this is "bloomberg real yield." time for the final spread. coming up over the next week, you have u.s. at retail sales, nafta discussions, missile defense talks in washington, as well as minutes from the fomc. we are getting ever closer to the jackson hole meeting right now. michael: we were just talking about whether assets are overvalued at all. the federal reserve of minneapolis bank president speaking out and he says no asset class is lashing red to -- flashing red to him. craig: our view is we are comfortable and confident with the rescue from the great recession as well as managing recovery going forward. looking at the upcoming fomc meeting, with regard to the balance sheet, we don't see a repeat of the tantrum. michael: i want to take you guys into the short end of the market , the very short and of the market, g# btv 8582, this is the spread between yields and the last time we had a debt ceiling problem we saw

the week ahead features the minutes from last fomc. all that coming up. this is "bloomberg real yield." ♪ scarlet: i'm scarlet fu. this is "bloomberg real yield." time now for the final spread. coming up over the next week, you have yes retail sales, nafta discussions, and minutes from the fomc. are getting ever closer to the jackson hole meeting as well. michael: we were talking about whether assets were overvalued at all. the federal reserve of minneapolis bank president speaking now and he says no asset class is flashing red to him. doingnything the fed worrying you? craig: not at all. we have been comfortable and confident with the steps the fed has taken to rescue from the rate recession as well as managing recovery going forward. at the upcoming fomc meeting with regard to the balance sheet, we don't see a repeat of the taper tantrum. we see a fed rate hike coming in december. michael: speak and tantrums come i want to bring up a chart and take you to the short end of the market. #btv 8582. this is the spread between one month and three-month buil

the fomc remains confused and divided over white prices, price rises are still up 2%. will jackson hole deliver any clarity? asking permission. president on's donald trump is the situation on the currents -- korean peninsula beginning to cool? matt: we have best is coming out with earnings, second-quarter euros.s 279 million missing the estimate by about 61 million euros, the street was

minutes -- showed a majoritytheir of the fomc. many saw some likelihood that inflation might remain below 2% for longer than they expected. that is your bloomberg business flash. matt. sebastian, thanks very much for that. itsas has maintained outlook and announced a six hundred million euros share buyback after orders surged in the americas. joining us now from copenhagen is the ceo, under sharrod -- anders runevad. you miss euro revenue estimates, of global walls street. why do underperformance in the most recent quarter? anders: i mean, i would argue that it is actually -- we always knew that the year on year comparison with q2 was going to be a tough quarter to compare against. overall, i would say it is a solid result. matt: but if it is a solid result, why is the market selling the shares so hard? you are down 6% in today's trading. anders: i cannot speculate in the market. of course, i am looking at -- and how we can improve that for the long-term. said, we maintain our guidance. the results are very much within line of our

she continues as a chair of the fomc so they have to take that seriously. we do have a new nominee for the vice chair for bank regulatory matters. we could hear a slightly buterent tone from powell, in general, you will see more consensus among the fomc on bank regulatory matters among federal reserve participants in general in the sense that this is very much a process where you have enacted a lot of regulation post crisis, certainly you are trying to walk the fine balance between a state financial system, but a financial system that supports economic growth, and i think these comments and thomas we are likely to hear over the next year or so are keeping with striking the correct balance between those two. mark: the inflation question clearly dividing policymakers. just listen to esther george and robert kaplan speaking to us in the last 24 hours or so. you look at our wirp function probability of a rate hike by the end of the year, 50%. which will win through when it comes to the likelihood of another rate hike this year? andrew: this is such a difficult

what did you learn from the fomc yesterday? >> they are confused, but at least they have been honest to admit they are not sure. maybe that is one step toward change. until now, we have seen no real evidence of any humility around this on inflation. so some things are moving. francine: which means what? that everything will be delayed or that the balance sheet papering -- is a guest. half of them recognize that tightening too soon by too much could be dangerous. this supports the idea that they are not going to do very much on goes and they are going to easy on the balance sheet they do not know exactly what the balance sheet means. it supports a benign outlook to keep edging lower. tom: on an august morning, let us look at the good news of what mr. major has wrought. this is the outlier call of steve major back in 2016. the lower rates did not occur with the political mix. he abruptly changed to a higher rate and absolutely nailed it. 2.40%.ed the move to now you have this call lower. is this about fed policy, as fresh -- fran

the week ahead features the minute from the fomc. this is "bloomberg real yield." ♪ scarlet: i am scarlet fu. this is "bloomberg real yield." time for the final spread. coming up you have u.s. at retail sales, nafta discussions, missile defense talks in washington, as well as minutes from the fomc. michael: we were just talking about whether assets are overvalued. the federal reserve of minneapolis bank president speaking out and he says no asset class is lashing red to him. craig: our view is we are comfortable and confident with the rescue from the great recession as well as managing recovery going forward. looking up at the fomc, with regard to the balance sheet, we don't see a repeat of the tantrum. michael: i want to take you guys into the short end of the market g# btv 8582, this is the spread between yields and the last time we had a debt ceiling problem we saw a spike below zero for that spread. we are not quite there yet, but you can see us moving down here let's start with brian. are you concerned that we will have someth

and 2:00 p.m., the fomc will release minutes. pepsico was pressured to walk away and under armour got pushback when they did that. keep fortores inc. to a few keen trump and not severing ties as three more members of the advisory council resigned on tuesday. joining us is marty shanker, a senior executive editor. it was a busy tuesday, where do we go from there? next: let's see what the 10 minutes brings. donald trump has been tweeting, and going after amazon, just done before, which is the owner of the washington post. amazon did take a quick hit but recovered. the issue was not without some substance. they have been in tax trouble in europe and there retailers who think they have an unfair advantage. david: didn't amazon say they would be in favor of federal internet tax or something? marty: they did and have begun collecting sales taxes in every state that has on. they have been trying to thread the needle. donald trump bringing it up in a tweet might not mean anything for them but it does bring that issue to the forefront. da

but i also think a wide variety of voices on the fomc is beneficial. we've certainly benefited from having people with different backgrounds on the fomc. i think also because it's a big committee, you get a lot of stability through that process, because people are coming and going all the time, but he gives you a lot of continuity. you have some people that have served for quite a while, like committee,rs on the and that gives the institutional memory that you can carry forward. you also have a very good staff in the fed, both at the banks, like you just talk to, but also at the board, and it gives a lot of continuity as well. those are some of the considerations when you think about the fed versus other agenc ies. kathleen: ok, do you think that it is maybe time for something where we have more diversity in terms of people who know markets, people have experience with this? james: whoever it is and whatever background they come from, they will have to know monetary policy and spend a lot of time thinking about our start, all these issues. this is kind

the fomc. the risk evaluation prices arest are elevated. i think that is the most significant thing. i know everybody is freaked out over balance sheet reduction. >> well, you know, if i had your laptop, i would -- when the s&p talking -- 500 is so high. >> strange that you should mention financial conditions. here is one. hikes and financial conditions. >> s&p 500 helps. those two factors. credit spreads have come in as well. probably sideways the last few months. that's exactly what they are talking about. this has loosened up because over the evaluations getting tighter. >> i want to talk about the debt ceiling. we will talk about the looming debt ceiling day. the 29th of september. it is goc going to be a big time. a lot of grandstanding and heightened rhetoric. they extend it and we move on. >> we have not been fair. that is if significance. if the democrats, let's hope they don't go down that road. if they think this is a weak point his presidency, let's tab at it and see how it bleeds. a debt ceiling. the republican party, they want

i want to start with the fomc minutes. what are we going to hear about how they are looking at inflation? >> i think the majority of the fomc thinks inflation is ok. it is not where they want it to be but it is not the deflationary problems we had a couple of years back. i think there is a fairly hard consensusbuilding around september being when they start to trim the balance sheet with another rate hike. i think that is what is going to happen. alix: we still have the market assuming we will see one rate hike in december. is the weaker inflation worth that kind of pessimism? >> no. you see service sector inflation is stuck in the mid-2's. food inflation is weak. negative.me has been you had your first positive in two years, the longest time since the 1950's that food has been negative. it is interesting but not that important as far as the overall economy is concerned. i think the fomc probably wishes it had not targeted inflation so vigorously. it is a metric they wish was higher in an economy doing ok. it is not the wo

launching it and potentially new leadership on the way at the federal reserve >>> the symposium pits fomc hawks including esther george and loretta mester against many centrists and doves. let's get back to nicholas brooks can we expect any surprises from the ecbgiven the reuters leak couple days ago saying mario draghi won't be speaking about monetary policy? or should we expect fireworks from the fed >> i would think mario draghi will be careful. the ecb's meeting in just under two weeks. if they want to make big statements about tapering, i suspect it would be more likely there. though one never knows in terms of monetary policy, again, i think he'll be careful. we've seen a range of mixed data, as we were talking about earlier, strong growth data, but weak inflation data. i don't know if there's anything new for him to say today on that i suspect with mario draghi on the monetary front, it will be relatively calm. yellen could be more interesting. there are a number of key issues floating around. she has used the jackson hole symposium to make major statements before. but i think are

the fed, the annual economics symposium next week in jackson hole, wyoming, the next meeting of the fomc is in september, at the fed, i'm hampton piercing for "nightly business report." >>> on wall street stocks struggled to hold on to the gains after the release of those minutes. ? strategists say the tension around the white house may be contributing to uncertainly in the market. 9 dow jones industrial average rose 25 points to 22,024. the nasdaq added 12. the s&p 500 was up 3 1/2. >>> still ahead, what target did that most other retailers can't. >>> tart's turnaround may be taking hold. the retailer was brought back shoppers. sales rose, profits beat expectations and the company issued an upbeat outlook. that sent the stock higher. courtney reagan has more in retail. >> it's wrecking retailer sales and profits. and this quarter target is one of them. comparable sales thanks to the highest store traffic in it 2 1/2 years and online sales growth of more than 30%. target is more confident about the sales and profit expectations for the rest of the year, it says it's still being prudent.

. >> i think the fomc has been surprised by inflation coming in to the downside during the spring here. and not by just tiny amounts. really by kind of a large amount compared to the progress that we made through 2015 and 2016. >> inflation has been coming up short, a little low relative to our 2% target. that actually matters. you think 1.5 is not a big deal, but it actually matters that investors believe the fed can achieve its goals. >> it has moved up from the very low level seen in 2015 when it was held down by falling oil and import prices. the last couple of years were on the weak side. if it runs below the federal of 2%. vonnie: i want to bring in genus smiling who covers the economy here at bloomberg in new york. let's start with those cheaper prices. werentioned how autos featuring heavily and it might be a good time to look at buying a car. if you look at our chart in our library, you will see zach levi how much the prices have been dropping off. what was it about today's cpi that really caused the difference? gina: the autos component was an important factor, but another th

you do have the fomc releasing their minutes. and the u.s.-south korea joint military drills next week, not to mention mario draghi, a lot of the markets -- a lot the markets have to digest. betty: absolutely, you nailed it. we have a lot of events coming up. the fomc minutes will be released tomorrow in the u.s. investors perhaps hit the path button. i want to pull up where we ended the day in the markets. pretty much unchanged. 1%, theaq down 1/10 of dow adding any points, up five. the s&p trading flat and closing flat. theident trump stoking flames over charlottesville, repeating his controversial claim there was blame on both sides. he added that the liberal protesters also bear responsibility for what happens. his is what he said in dramatic press conference a trump tower. president trump: there was blame on both sides. you look at both sides -- i think there is blame on both sides. there is no doubt about it, and you don't have any doubt about it, either. betty: a former washington reporter for bloomberg joins us now. was just an incred

traders feel like she's probably going to raise again or that the fomc is going to raise again this year. does that not seem just a little you, in optimistic to the sense of -- is a lot of inflation readings to come in. it as tooouldn't put optimistic. i think it's right in the pocket of where there is a proper amount of uncertainty priced in, will the fed or won't they hike rates in december pretty do expect the fed to hike a third time in december and when we look at the path of monthly information, we expect, able look worse before it gets better but it is going to be better by the time they go into that december meeting in with growth where it needs to be an unemployment rate where he needs to be an easy financial conditions, that's the prescription. we think it will be there and hike in december. it's too early for markets to fully make that decision. i think we will continue to have around 30% to 40% probability for the december hike until we get through that meeting. vonnie: the other topic that's really been taking our attention today, tax reform. apparently the president is goin

and finally, a quick check on gold that was already hired before the fomc minutes were released. as thosea leg up right minutes were released, headlines crossed and they are at session highs. 12% by the way hasn't about so far this year. more on news for you in the last hour. president donald trump ending his manufacturing counsel and his strategy policy forum. the president faces criticism on both sides of the aisle equating neo-nazis to counter protesters in virginia. with the latest, senior white house correspondent margaret calla. we have been talking about the back-and-forth between trump and the various ceos. what are we hearing from the rest of washington on this as they tried to make progress on their policy agenda. >> today was sort of you can't quit because i canceled the board. beyond the ceos, they are signaling to the administration and the public. making pretty strong statements. one was mitch mcconnell, the senate majority leader has been the target of president trump's criticism over the failure to get the votes to repeal the affordable care act. mitch mcconnell s

mike: i think the broader fomc is less concerned. they feel they may get some affect out of it, but it has been telegraphed so widely, it shouldn't have a major impact. they can react on the other side of the policy lever by dialing back the number of rate increases they might do if they start to get a reaction from the balance sheet unwind. there's the theory at this point that they don't know what they don't know, but they can get away with it and make it work. david: one is tempted to hook up what you just talked to esther george about with what we expect to hear from janet yellen tomorrow. when the asset prices come down as you unwind the balance sheet as they went up -- she took a sidestep. mike: that is a real question. do people stopped buying when there's less money in the system? the taper is going to be so small, but when you get into next year and get significant rolloffs, you could have an effect. it is hard to disentangle it from what else is going on, particularly in equity markets. earnings are strong, the economy does

waysnk he differs in two from the fomc. he focuses more on balance sheet reduction and less on taking rates higher. but it is not the only voice. we still think they are going to raise rates one more time. i think it is all about getting dry powder for the next rough patch in the economy. you either get dry powder by raising rates now, so you can lower them later, in orthodox monetary policy, or you reduce the size of the balance sheet a little bit. julia: speaking of potential rough patches for investors, we have a number of investors, like howard marks in the last couple of weeks, voice concerns about markets here. what we heard from jeff is he is paring risk, giving up some return in order to de-risk, moving higher up the credit curve in terms of quality. do you share that view? philip: i think there are good reasons to share that view. certainly, assets are not cheap right now. but i think the real question is -- and i think howard marks really did talk about it in his note -- is, how long does the present situation las

president bill doubly says it's reasonable to expect a timeline for tripping the balance sheet and the fomc meets next month. he also supports another rate hike if the u.s. economy continues to grow. the comments signal optimism despite sluggish inflation that employment is growing and the economy is chugging along reasonably well. statement and expected inflation is raising questions about the rate hike in india. dpi rose 2.4% from a year earlier, faster than the estimate from a bloomberg survey , but it is in line. wholesale prices also rose, indicating building pressure. issuewait plans to vendors for a solar power plant in the first quarter of next year. a deadline has been set for companies to express interest. part of a plan for renewables by 2030. kuwait consumes 14 gigawatts of electricity per day, especially in the summer. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i'm debra mao, this is bloomberg. simon: thank you. let's get the latest on the markets. with sophie to get a look at the markets, not a strong case to be made

fomc minutes were not completely predictable, but what are dollar future traders thinking? abouthere's a lot of talk dollar future trading this morning, but really kind of some shaky talk in there about their gauge or measure of inflation, really bringing some questions about whether they really trust that or not. looking at the ecb, the question this morning is who is going to be first to move and unwind stimulus. .ould be a bit of a race there if that's the case, if the ecb goes first, that keeps pressure on the dollar. the only thing that will get it to continue to sustain higher at this point, higher rates with a bond high-back. if the ecb polls the punch first, it will be tough to catch up. in the meantime we continue with a bunch of global unrest here in the united states. also, with russia and north korea, serious trade disputes with china and venezuela. the list is long. it's difficult to see the dollar going much higher from here. running into down trend resistance, the lows are going to come in quickly. vonnie: ted seifried, thank you. nejra: still ahead, bill ack

the new york fed says it is reasonable to expect a timeline for trimming the balance sheet month.e fomc meets next he supports another rate hike this year if the u.s. economy continues to grow. his comments signal optimism among policymakers despite .luggish inflation our outlook hasn't changed. >> we have further strengthening in the labor market which we think will push inflation to the medium-term back to the objective of 2%. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. let's return to the tensions on the korean peninsula with america's top general reassuring the south that a diplomatic solution with pyongyang remains the priority. defense secretary james mattis says the situation could escalate quickly into war if north korea attacks u.s. territory.let's bring in stephen engle . where do we stand right now? u.s. was asked if there was an attack on guam, was that part of the u.s., and he said absolutely. reporter: absolutely glom is part of the u.s. 1980's.there in the is about 170,000 cit

fomc not long after that. let's get to the first word news. >> two explosions rocked a chemical plant in the houston area, they lost power in harvey. arkema had one of the plant was without power to referred rate chemicals that become volatile as the temperature rises. arkema makes organic peroxide at the plant. flood waters are receding in houston today, firefighters plan to conduct a block by block search in areas that have been not accessible. the death toll has risen to 31. harvey has knocked almost one fourth of u.s. oil refining capacity off-line. department has responded to disruptions in the oil market, authorizing the release of half a million barrels of oil from the strategic petroleum reserve. it will be refined at the phillips 66 facility in louisiana. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am emma chandra. this is bloomberg. vonnie: thank you. president donald trump kicked off his effort to sell the american public on his tax pla

cleveland's fed president who has been more one of -- one of the more hawkish members but -- of the fomc. >> monetary policy is still accommodative. the gradual path of normalization is really a gradual path and my argument of why you want to stay on that path is because we are in a more normal economy. inflation is not yet at 2%, but what we learned is we have to move policy a little bit before we get to the goals or we are going to be behind or potentially left behind. we could find yourself in a bad spot. i would not say i may advocate of higher rates. i am a advocate of keeping on this more gradual normalization path where we are taking away some of the accommodations we needed to put in. ofhael: you think the risk higher inflation is greater than the risk of higher rates having a damping of act on the economy? loretta: there are a number of risks. the underlying momentum of the economy is very good. we have very strong labor markets and we have seen that overtime. seen the growth has been maintained at a little above 2% or so and a think that is very important because we have had a

>> in terms of the debt ceiling and continuing resolution, it will be over by december fomc meeting. it may not be pretty. hopefully it will be done fairly quickly and will get done by december. i was still say there's a slightly better chance they get done this year than they don't. >> i hope you're right. that's the one thing would like to see as investors. >> good to be with you. lauren: homers for his sixth game in a row. here we go. triple play. the boston red sox over the st. louis cardinals. jared max has all the highlights in sports when we come back. also live to london to see how global markets are react to this morning to it seems like the escalation in tensions with north korea. plus a debate over science this event. riva gold will explain. dow up about 50 points. you are watching "fbn:am." ♪ at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. and at $4.95, you can trade with a clear advantage. the dinosaurs' extinction.

will be interesting about today's fomc minutes is that most folks are going to be looking towards signals around the balance sheet. looking forng to be his information rather expectations for inflation. yellen is a labor economist and she continues to be perplexed by this idea that with unemployment so low, and job growth continuing at this late stage of the economic cycle, why there's no wage growth. that is what is keeping them steadfast in raising rates. vonnie: i think what you mean there is goldilocks markets. i'm not sure how comfortable this economy is. let's have a look at the charts. decline,without a 5% you know, and it's been a while. when do we get that? >> i'm not sure. i think from an investor perspective, when markets are reaching new heights and volatility is plumbing new lows, it's important to look at things that could go wrong. it's kind of a three bear we were chatting about. a monetary policy mistake could be a risk. certainly the failure of the republican policy is a risk and leslie, though it seems to have been abated a little bit of late , military conflict or an u

what's happening with trump, that comes on the backdrop of relatively more dovish interpretation of fomc minutes, even the ecb minutes this week highlighting discomfort from the euro that will push global yields lower. i think there's concern about the policy agenda of trump what he can get done in terms of fiscalpolicy and deregulation has been set back. of course this global lower yield environment and the weaker dollar, it should be favorable for capital flows to emerging markets. as we talk about the overall peck ch picture, one thing you look at is how all these things interact with each other. if you were to handicap what's happening in the markets now, how much importance is being placed on a relative basis to the u.s. political situation, geopolitical risks and the terrorism stuff that just happened in barcelona and corporate fundamentals, economic fundamentals around the world. what's driving the trade >> there's so many drivers it's hard to put a weight. the weight of each factor varies day-to-day a lot of the reflation trades on the become of trump's policies have been taken o

from current levels, we think they're in play for december they have a dual mandate >> some on the fomc claim that the weakness in inflation is just temporary it's down to, i think, mobile tariffs, declines in mobile phone prices and prescription drugs. that's the line from janet yellen do you agree with that view? do you think there's a bigger underlying issue in the u.s. economy, especially when it comes to wages wages this time around around after the financial crisis will be more depressed. >> when we look at the growth picture in the united states, which remains solid, and we look at the labor dynamic, which is very strong and improving, we do think that will ultimately put pressure on wage inflation we think it's a matter of time and that over the medium and long-term we will start to see wage inflation pressure kick in. so we expect the fed to hike rates in december, pending inflation, with probably a couple hikes next year in order to get to the zero percent real yield, even if we have a fairly benign view of inflation then they might pause and see where to take it >> do you thi

anna: the fomc minutes are due out later today. fed watchers are hoping for clues on how many policymakers want a negative interest rate and how many are wavering after the softer inflation report. they will be looking for more details about when the central bank will begin running down its balance sheet. tim haywood and michael bell still with us. mike, on the fed, your expectation -- we're looking for any clues as to whether any of the previously hawkish members of the fed have wavered at all in their desire to see another rate hike in the u.s. are you expecting another one? michael: i think one more. in september, they will announce the start of the balance sheet reduction in october. assuming that will go smoothly and you don't have a massive shock with bond yields moving up dramatically, they will raise rates in december. a lot of people talked about how that was doing some tightening for the federal reserve, and reduced the need to put rates up. we are seeing the reverse this year. easedial conditions have as the dollar has c

the fed has been vocal, just to go back to the last fomc minutes. where there are concerns over valuations in segments of the stock market, concerns over commercial real estate, in the past, comments about subprime autos, and areas that, of course, are influencing the balance sheets of the small regional banks, which, by the way, have rolled over in the past several months. so, it's going to be interesting to see how she puts this in the context today after talking about financial stability given all these concerns >> david, all other things equal, does what she says today and the actions of the fed in the coming months change give than she has less time left in her tenure than if she had another two years left >> i don't think that is going to have an influence at all. if you go back to the changeovers, let's go to volker to alan greenspan, back to 1987. the policy that was in place was actually reinforced by greenspan. greenspan leaves in 2006, bernanke takes over. it's not like there's a shift in policy it was steady eddie smooth going i don't th

matt: meanwhile cleveland fed president urges the fomc to look beyond weak inflation and stick trey radel -- stick to a gradual rate. >> we have to move policy a little bit before we get to the goal or else we are going to be behind. driver --ers new uber's new driver. expedia ceopick the dara khosrowshahi. ♪ matt: welcome to "daybreak: europe." good morning. i am matt miller from the german capital of berlin at anna: checking on the futures than this morning. it is bank holiday in the united kingdom. then i mention that, matt? .orking on a bank holiday we are expecting to get weakness coming through on the euro stoxx. stoxx 50 down. mixed,arkets pretty watching for the impact of hurricane harvey, pressing it in. it is really in the fx market that we seem to be seeing the jackson hole optimal. matt? matt: i am seeing some interesting arbitrage because of due to her can harvey. if you take of the crew trade, you see nymex it down. that is the west texas intermediate light sweet crude that is so important in houston. , brentbal rinse mark crude oil trading up tencent a barrel to $52.51. c

the fed or the fomc has prepared the country for the beginning of this. they used the language of relatively soon but soon could be september, it could be december. they don't define soon, they say relatively soon. back to you. david: happening all over the world, central banks all over the world are going to sell off assets. very interesting time. adam, thank you very much, lot out of esther george, appreciate it. cheryl? cheryl: well, the navy suspending its search. naval officials ending the search for nine missing sailors for the u.s.s. mccain. 80 hours after the search began, ten sailors went missing after the destroyer accident monday off the coast of singapore. all ten servicemen have been identified with one confirmed dead. cause of that collision was an oil tanker still unknown at this time. >> the debate over confederate monuments is heating up all over the country. it hasn't let down a bit. now another southern city bracing itself for potential trouble. the details coming next. >>> plus 758 million reasons to happy. the winner of the powerball

the key event to watch now is the release of the july fomc minutes that come out tomorrow. with us to discuss is andrew sheets of morgan stanley. dudley, it does not seem like they are. your view? andrew: i think they still are. it is important to remember that policy is still extremely accommodative. the fed policy rate is still negative in inflation-adjusted terms. there is still an argument to keep rate -- raising that rate modestly simply to make it a little bit less extremely accommodative. jonathan: i find that difficult to understand. the removal of accommodations should be data dependent. if the inflation story is weaker and not stronger, than why are they carrying on the same projections and why are the likes of william dudley saying that his projection for the year has not changed from the one he had eight months ago? scott: there are two elements of this. the first is that inflation is part of the story, but not the entire story and other data has been stronger. measures of industrial production, things like isn have been quite strong. there is this other element

becomes the latest fomc member to criticize the fed. lining up a bid for the second-largest u.s. cable company, charter. this is "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. inflation tomorrow. we have a lot of earnings in europe. tom: a jumble today. dominant constant talking about what james bullard said about the mystery of inflation. geopolitics front and center this morning. francine: let's get straight to the bloomberg first word news. taylor: we are starting with geopolitics. south korea says an attack on guam would lead to a strong response from the u.s.-south korean alliance. japan said they would intercept the missile. in kenya, hacking and fraud thems are threatening elections. president trump used twitter to rip senate republican leader mitch mcconnell. trumpell suggested that was a political novice. trump responded by asking why they could not repeal and replace obamacare after seven years of trying. sheryl sandberg spoke with bloomberg tv's emily chang. >> with so many people posting to facebook, we make mistakes. we are trying

. >> i think the fomc was surprised by inflation coming into the downside during the spring. amounts.y just tiny we really kind of compared it to the progress we made through 2015 and 2016. matt: meanwhile, two of the biggest money managers have a message for investors. it is time to dialback risk. pimco is joining a course of warnings from the biggest names in the asset management industry in agreement on that. manish singh is with us. about this think growing course that we have heard? when i was reading this morning about pimco, i thought this was the kind of thing that it is like yelling fire in a theater almost. yes, you are going to you hear a lot of these stories and the reason is very simple. we are in a series of economic expansion as we have seen in the u.s.. my view is that unless i see the fed really raising rates, that is not going to happen us inflation catches up. and that inflation does not happen unless you see the rate rise happening. look at these statistics in the 2001 and the 2007 recovery. they were rising by nearly 4.25%. now, the wages are rising at 2.

stocks fall amid mounting concerns of a policy or fomc voter manus: he will notn says fire inflation before another rate hike. balance sheet runoff soon. since november since he quit as ceo. ♪ manus: this is our flagship morning show in the city of london. i am manus cranny. i am anna edwards. our top story remains what is happening in barcelona and we will continue to update you with that. 7:00 so let's dive into what we are getting through. it is an indian business that dominates things this hour. headlines coming through from -- infosys. , on thestepping away side of the next chairman who is a cohort, a founder of the business who tries to influence the direction. they are continuing to maintain corporate governance. he is the former counter. they say his actions are damaging the country -- company, they reject the ceo putting themselves behind the company who stepped -- the ceo that stepped aside going on to say it hurts the efforts to transform itself. the share price considerably this hour.n by 7% manus: major protagonists this morning, the terror which has , the reality of t

we heard from very dovish fomc participants, but we also heard from president dudley and president kaplan who mentioned inflation is probably not coming back to the target level anytime soon. julie: at some point, does inflation become a less important part of the fed's mandate? does it just start to not ignore it but not to weigh it as heavily as the employment picture, or does it prevent the fed from raising rates? matt: that is the big question about.een wondering despite the strong job market, will they start to pay more attention to the shortfall in inflation? i don't know if we are necessarily seeing that coming through in the fed speak. you do have this belief in the phillips curve relationship reasserting itself, so that kind of implies if the unemployment rate keeps falling, is going to be hard for fed officials to shake that narrative, that idea that they need to keep raising rates despite the low inflation. if you look at the components of inflation, there are so many things you can .2. that's part of the problem with the core cpi. you can go through so many components, and the

the fomc meeting ending on the 20th and the debt ceiling as well coming up late september, early october. quiet now, not a great month, but the catalyst that might move equities around are going to play out over the next several weeks. aboutl: we were talking financial stress indicators and there's been a turn in the global financial stress indicator. bloombergchart on the and you and i looked at this in april. can you take us through it? guest: it is the best measure of cross asset come across geography volatility. to me isnteresting late 2014, this moved up sharply and remains in an elevated environment until april of this year. about broad measures of volatility, and all declined sharply. pricesay, and this only once a day, on friday, it was at zero and that is a critical level. above that, we are in higher volatility environments. below that, and lower volatility environments. what happens over the next several weeks? does gsi break to the upside it we are in a more elevated time of financial market volatility or to the downside? series tos one time keep an eye on an eye on, it is th

president bill bradley says it is reasonable to expect a timeline for trimming the balance sheets when the fomc next month. he supports another rate hike this year if the u.s. economy continues to grow. his comments signal optimism among policymakers despite sluggish inflation. employment is growing and the economy in the u.s. is chugging along reasonably well. >> our outlook has not changed. we continue to anticipate a moderate growth trend. we think it will push inflation over the medium term that's who our objective of 2%. emma: integrating update reporting a cash profit of $1.4 billion. the bank declared that the equity ratio of 9.8% as of june 30. they are in a. of lower revenue growth. some parts of the economy experiencing challenges. has improved.lity global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than on hundred 20 countries. this is bloomberg. betty: thank you. we saw wall street kick off the week on this bullish note for stocks pretty much all around the world. let us take a closer look at what that means. what top investors are seeing behind

that will lead into later in september when we get the fomc. there is quite a lot coming up next phase. it has gone back to risk on and they started yesterday in though you still got these incredible geopolitical tensions. it is not like the trump team or the north koreans have back down and all. mark: what you have seen is so many times this year, the matter how many as north korea has fired, we are up to a dozen or so and so far the market reactions have been short-lived. it is not lasted for more than 24 hours or so. people are assuming this is another case like that. some people have been burned trying to trade fair officially on previous examples of korean missiles. if you look at people who tried to short equities over to buy volatility, it did not last very long. they are probably disappointed. this willobably think blow over pretty quickly. and there is no point in taking a big bearish position went you have to reverse it within 24 hours. that is helping support the markets. guy: i am confused and you can see this on the chart. copper s

that is where most of the fomc is, consistent with a hike in december. we could obviously be wrong about that. i do not think yellen will butle the issue this week, she may suggest talking about it. betty: it is interesting, this whole debate about the phillips curve, whether it is broken or not. also an element of causation as well on what really generates these inflationary pressures. rising wages trigger inflation, or is it the other way around? lewis: the best recent research has suggested the link between wages and inflation is not that tight. i do not think we should think of it as wages, first and inflation is not what the data in the u.s. suggest. if resources are scarce, we should expect it to be rising. if that means the unemployment rate continues to fall, we should expect prices to move higher. yes, the curve is a lot flatter than it used to be, but that does not mean it has gone away. betty: when you look at the investment community and how they are looking at policy, and how that could not only affect their investments, but their outlook on

not making any impact on the equity markets, although we did see some impact on the dollar with these fomc minutes showing concern over inflation, but as you said, you mention singapore exports also gaining, the australian job mark it australian job numbers, and tons of things that investors need to digest this of how, and for a check markets are starting to trade, sophie, of course, we have seen that surge of the yen. how is that affecting the market? yenie: yes, we have the trading higher, and that has some pressure on stocks in tokyo, the nikkei 225 opening 1% loeber, and we have the trade surplus coming in and we have the trade surplus coming in higher. this is gaining one quarter of 1%, and with earnings, we are looking at the big ones, like tencent, and a report from cathay pacific. the reaction to there is anutes, and gain of half of 1%, the offshore gaining, and asian bonds, they are gaining, although we continuingtreasuries to drop. in the commodities space, we had a surge in industrial metals continuing overnight. surge on the back of the fed minutes, but it would todifficult for

the three fed hawks are on the fed reserve forward, the fomc, so they have a voice, and they all see inflation as transitory and see it coming act, snap that -- snap back. john williams sees one more rate hike this year and said at 4.4% unemployment that the u.s. is above full employment. you haveeconomists say to have wage pressures and more inflation. the boston fed sees some reasonable risks that unemployment falls below 4% in the next two years. he told this to the wall street journal. the cleveland fed sees inflation back at 2%, but once to see more data before deciding on the support for a september rate hike. this40 coming you can see is what these guys are looking at and have to answer. look at how low we have unemployment. you can see it is where it was before the great recession. the turquoise is average hourly earnings has fallen down below 2.5%. to havee line seems plateaued, so this is the fed's conundrum. up 178,000 adp jobs in july. that is consistent with u.s. payrolls rising 190,000, but average hourly earnings are expected to fall .1% to 2.4% year over year. fed off

we were given this chart in the june fomc meeting where we saw three members vote for the immediate rate rise and the market was not expecting this. now the market is anticipating for this week's meeting on thursday that some of those hawkish votes will go back into the shadows, that we have two or three voting for an interest rate hike, but it still could be sometime before the actual hike. erosion that inflation is having on the incomes and the likelihood that will slow consumption i ithe year ahead. from that perspective, the market sees the backdrop of the world economy doing fairly well. and the bank of england, keeping rates on hold in that environment. francine: on this chart in white you have the boe's consumer credit data and the blue is the finance data. the blue, this is lobby group formally known as the bba. these numbers show the other large lenders had about 90 billion pounds of consumer credit outstanding, which means an increase of less than 7% over two years. the bank of england think years are much more optimistic, saying the gain is up to 15% of what people want to bor

comments with china dollar settled in, but then it legged back down again when we couldn't decide what the fomc was going to do. i'll leave the bond side to rick i'll tell you the equity side. we grind higher hand continue to grind higher thereto he's no reason for us to sell off right now earnings have been great the follow through has been lackluster on the certain sectors in the economy, but nonetheless the economy still moves along, chugs along and takes the equity market with it. >> michael, the question is if the equity market continues to rise and i don't know that that's your view, which group is it led by, because that continues to sort of be a rotating story today technology and financials are rallying together. that hasn't necessarily been the case lately. >> well, great question, so when you look at it, being a bond trader and also an equity manager now, i look at both side of the coin, right you look at the bond market and have asset level inflation with qe infinity and we're see qt, quantitative tightening and you'll see cracks in the bond market which is healthy has long they are

this -- act accordingly, even if friday's cpi report does not show the long-awaited process toward the fomc' inflation goal. do yous share the concerns? darrell: i agree with the statements and it is off the asset inflation bubbles. i'm not sure we are still seeing that today. i'm not sure there is an evident asset double out there -- bubble out there pushing forward. l's point is well taken. we saw cpi yesterday, services were down .2. last week, i us some services spike -- ism spike down. if the services side of the economy slows, that can be a problem for overall gdp growth, which becomes a problem for the fed. david: give me sensitivity analysis. if it is .1 more or less them you expect, is it symmetrical risk, which matters more? darrell: certainly the consensus is .2 as the headline but .1 of the court. the court is weaker. if the -- the core is weaker. i think the market likes that if it comes in haotter. -- hotter. if it surprises to the downside, that puts us back into a wash down. .2 or better, maybe everything is ok and not much reaction. if you get a soft print, you ask question

in the june fomc, stability was mentioned four times. the july meeting came up eight times. it is definitely the word of the moment. a lot of people were worried that this meant the fed would be trying to drive down equity valuations to create more stability. however, when one reads the minutes of the meeting released last week, it is very clear that, in practice, the fed are not worried about equity valuations. they are more worried about the possibility of bond deals. we will observe no preparedness to pull back and tighten early. they will continue to be supporters of markets. david: how much continuity do you expect there to continue to be from portugal and this meeting later this week in jackson hole? conversation the to be a continuation of what we heard in portugal? james: yes, a general migration. i completely shared the view that there will be a lot of talk position. yellen's i think it will be a humdinger of a speech from her. francine: what do we think gary cohn will do? james: we know that he is a man of immense intellect and great capability, but in terms of lea

to a ceiling to the wire makes it difficult for the next fomc meeting. that makes it hard for me. but overall, i think you will hear from mario draghi. you will want to say something that stops the euro goigng up, that hints at the tapering, but will highlight this big interest rate differential. you still have big interest rates in europe and that will continue. monetary policy is still very loose in the eurozone. janet yellen is in a different position because we have got a tightening slowly happening in the u.s. it will be pointing to the fact of financial stability and that the tightening will be very slow. francine: this is a morning must-read. let's bring it up to see what exactly we picked out. he says a lot more work is needed to understand the consequences of persistently low inflation. until that happens, central bankers might be advised to stick with what they know, rather than and up with a future financial instability that undermines prospects for growth and prosperity. understand if the films model curve -- if the philips model curve is broken, or just a sleep at the