doubt the fed will -- goldman sachs and morgan stanley doubt the fed will act. we discuss in minutes. someamerican consumers -- shop and some do not. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. it is wednesday, august 19. i'm tom keene. joining me, brendan greeley and vonnie quinn. brendan: they are making the case in front of the bundestag. we will talk with hans nichols in a second. angela merkel will not talk. we think she will put it on wolfgang schauble. we are not worried about whether this passes. the greek it will pass. we are looking at how many members of her party defect. president like the and john kerry or the president

and jack lew. brendan: it is like the president and harry reid. they are all members of the same party. it is more who is responsible for the party. tom: i want to know about the german parliament. as move on to top headlines. he was vonnie quinn. vonnie: good morning for you later today the federal reserve is releasing minutes from last month policy makers meeting. investors are waiting to see whether there is a consensus that september is the right time for the first interest rate increase in nine years. more than 75% of the economists surveyed say the fed will raise race -- will raise rates. the annan has devalued -- vietnam has devalued its currency for the third time this year. the government wants to make sure that exports continue to grow. biggest trade its partner for at least eight years. lawmakers in germany appear

ready to back a third greek bailout. angela merkel lobbied members of the lower house of the german parliament, trying to keep members from voting against the $95 billion aid package. a test votes showed it may pass by a wide margin. hillary clinton says she has no idea whether she deleted data from her private e-mail server. the democratic presidential candidate was campaigning in las vegas when a reporter asked her if she tried to wipe clean the server she used while secretary of state. hillary clinton: with a cloth or something? we have turned over the server. they can do whatever they want to determine what is there and what is not there. that is for the people investigating it to try to figure out. but we turned over everything that was work related. every single thing. vonnie: the fbi now has the server. agents are investigating whether any of the data erased on the server can be recovered. in pro football, the showdown between the nfl and quarterback

tom brady resumes today. lawyers for both sides will be in federal court in new york. the judge has urged a settlement over brady's four-game suspension. american comps were down 3%. they have to confront back to school. let's do a data check right now. equities, bonds, currencies, commodities. i had to rip this up with the currencies actions. oil trying to get a bid after a good day yesterday. 42.42 for oil. onto the next screen, please. i do not believe we have ever done this. the vietnamese dong, 22,360. the machine gives us four decimal points. that is life with bloomberg. that is 22,360 per dollar.

dollar having canada stronger. some expected it to be weaker. this was 15-year is trending toward a negative yield. let's go over to the bloomberg terminal. this is something we can do for our asia market. the vietnamese currency, 20 years back -- not back to the vietnam war, the back 20 years -- has been a steady here, a small country. untagged,ere china and then you have weakness. brendan: there are two things going on, that basically this is basically this-- is getting ahead of the fed. victor, come on over here. here's the fta with a one trillion number on emerging markets rocked. brendan: the first rule of a global currency crisis is that

you start to be able to name the currencies of small countries. wasuse asked on a tank he also -- the kazakhstani currency was also devalued. me -- weclueless, like turn to michael mckee for tea leaf wisdom. and we will talk about hedge fund carnage within the hour. mike, we have to rip up the script. we are in the midst of the dong. tell us the story of how we ended up with 10,000 vietnam dong, worth 44.7 cents. mike: i cannot even buy you a cup of coffee with this. . brought back some you can keep it as a souvenir. this is an example -- tom: this is an example of what

you and i have done. will we see more of vietnam's devaluing? mike: probably. you make a good point that they are joined at the hip to china. the annan's largest single trading -- vietnam's largest single trading partner is the united states, and the vietnam dong does not mean much. with asia appeared we see malaysia's currency fall by 12% this year, and we have seen rhodesia posterity down by 4%, 7%. vietnam only down 4%. to remain competitive with the region, they have to weaken the currency. tom: let's move on. i know stanley fischer has binders full of dongs. does janet yellen care about the vietnam dong? or the context and currency? brendan: vonnie quinn new it offhand in the meeting. off the top of her head.

in terms of monetary policy, they are going to do what is best for the united states. the fallout from a fed rate increase is that the dollar is going to get stronger, and that is going to hurt emerging markets, and to a certain extent that is what is playing out. maybe if it is done by september, if we have seen most of the major moves, maybe that even takes the pressure off them. brendan: when you look country by country, which is more important, particularly to emerging economies in asia? is it what happens in september with the fed, or is it what happened in august with china? mike: let me bring you back to kazakhstan. it is an oil-exporting country. the drop in oil is what is putting most of the pressure on these countries, and in anticipation of the fed. arguably today, the cpi numbers will be more important to the markets than the minutes are, because the fed has got to be concerned about inflation. tom: we have seen the

five-year-five-year forward come back. zentnere case of ellen later this morning. state the goldman stanley case that stanley is wrong, it is not september. mike: their feeling is you do not have to move because inflation is so low. ofyou have the possibility harm to the united states economy from raising rates, why not wait. you do not have to move right now. point. that is the from "the new york times," very unusual that an op-ed would appear at the same time the fomc minutes are out. biggest threat to the american economy is monetary policy. mike: and he has been dovish for almost all of his career at the fed, but the problem the fed faces is what happens if coutu

another round of qe is not going to do a lot, and that is a risk. they would like to get started on moving rates higher so they have a little bit of a cushion in order to protect the economy in the future. just publishing on hillary clinton -- she is called "feisty and defiant yuriko troy gayeski -- and defiant." troy gayeski -- is this good or bad for hedge funds? the vast majority of hedge funds that profit from currency moves fall in trends. we want to be short-lived -- we on ando be short the w the long on the -- tom: is anybody making money, or --

troy: some of the discretionary -- there was more expected pain and commodity currencies, so they protected their bets from being short the yen and short the euro. to places like not vietnam in particular but south the annan -- but brendan: i want to bring it back to what vonnie was quoting from. that there is no reason yet to make a move. --is just a basic inpatien it is just a basic impatience. do you feel like the markets are just impatient? troy: they would like to see the game -- they would like to see them get going. whether they move in september or december, it does not matter that much at the end of the day. .t is not like qe

this we do not see as being substantial. troywe will continue with gayeski and michael mckee annexed our. news out of germany -- i guess no surprise here, right? german lawmakers get it done. vonnie: they approved the third greek bailout vote. brendan: what we do not have yet is how many defections. tom: i feel like nouri rue beanie -- i feel like nouriel roubini. is there going to be a fourth greek bailout? thisan: whether or not debt is sustainable is what we will figure out. i would argue that the next question is whether or not -- and the unanswered question is whether the imf is going to participate. vonnie: you may not have an answer on that until october. tom: michael mckee would have a greek drachma in his wallet the next time he appears with us. gentlemen, thank you for joining us. the trump question was record

input. forget about trump today. who will join the currency or a next -- who will join the currency war next? stay with us worldwide. "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." let's get right to our top headline this morning. here is vonnie quinn. now 30,000re are firefighters and support staff battling the wildfires in the west. they will be assisted by 200 soldiers. five states are fighting 10 large wildfires each. the forest services wildfires will consume over half its budget this year. data fromo stole ashley madison our naming

names -- our naming names online. said the posting includes user identities, addresses, phone numbers, and payment ownedation this site is by avid life media. the hackers want the company to shut down ashley madison and a related site. in baseball, a shakeup for the boston red sox, who are stuck in last place in the american league east. the red sox have named dave dombrowski as the head of baseball operations. he turned the florida marlins into world series champions. what is your prognosis, tom? tom: my prognosis -- this is a classic american franchise. people are thunderstruck at the rate of decline, that they just were so good and they got rapidly -- i do not think there is a soccer equivalent. brendan: they should have been

relegated to the second league. since they are is -- since there is no second league, they were not regulated. tom: let's move on to target and retail. vonnie: target security breach issues out of the way, now they can get back to business retailing with the new ceo, john mulligan, overseeing the stores and the supply chain. how is the school shopping season shaping up? oliver chen joins us now. we will get to reported earnings, but tell us what we will see from target. oliver: we are excited about target. walmart reported yesterday. their traffic was up. like brianet we cornell, the new ceo, and we like their categories. and bricks and clicks is important. at two point 3%

cop, they are guiding between 2.3 and 2.5. vonnie: are all these stores battling a weakened consumer, or are they battling their own internal structural problems? oliver: the consumer is better. they were also pretty happy with the top line. vonnie: but 1.5% growth for walmart? better than forecast, but it is still pretty anemic. yeah, it is better than forecast, but it is a sequential improvement. , but it isgrowing modest. it is a question mark as the stores get more mature. tom: their performance has been great. they have done great versus walmart. they have done well over the last 10 years. who is their audience? oliver: target consumers have a slightly higher household income. target is a little more lean and versus 1800 stores

12,000. brendan: you settled the argument we had in the meeting this morning. whether any members of our audience would go to target. we all said yes, tom said no. tom: tell me about what you follow religiously with a vengeance, which is all these places closing stores. are we over retailed in america? speaking, thelly answer is yes, just because of the rise of mobile and the overdevelopment of malls and so if you think about macy's, particularly apparel retailing, there is a process from which most are closing stores or pruning. vonnie: what are we going to see from john mulligan? coo. unusual for a oliver: you have to really think about the competitive

advantage of using your stores, click and collect and same-they pick up. that is a big deal. i also think mobile is a huge theme for holiday impact. about half of all traffic is mobile, and 30% of all sales online is mobile, so there are a lot of initiatives. brendan: which retailer has gotten this best, the idea of using stores as a warehouse. oliver: we like what nordstrom has been doing online. they have been a pioneer. and macy's. but you are right about sales and cops. it has -- about sales and comps. customers one value, so the themes for the consumer is getting brand names at a discount. tom: 10 seconds, single best buy right now. oliver: target. tom: i like it. he goes right on story and stays with us. oliver chen, appreciate it. in our next hour, michael mckee will be with us. be joined by bruce kasman of jpmorgan. terrific research out of them.

we will talk with bruce kasman about the new mediocre, the new lower terminal rate. fed minutes out this afternoon. stay with us. worldwide and coast-to-coast, it is "bloomberg surveillance." ♪

tom: good morning, everyone. we welcome you. "bloomberg surveillance" from new york city. brendan greeley has a listen of the morning type. brendan: yes, we have manus cranny in oslo. he spoke to the ceo of the world possible largest public health fund. loss ind its first

three years. this is what he told manus cranny. it is monetary policy and china. both of those have different variables there. thingsthose as the key we're spending the most time on. brendan: manus cranny joins us from oslo. i would argue that he missed a third thing, the very real possibility that in the next two years the norwegian government could take money out of the sovereign wealth fund and start putting it into the general budget. that is a big issue. the inflows of foreign money into the sovereign wealth fund are way below the norm here they picked up a little bit in this quarter, but that is a huge political issue. when you fly into oslo, you begin to understand that this is a heck of a wealthy country. was, we are to me not going to make radical moves,

we do not move radically. we are a sovereign wealth fund, so we will make incremental changes, but no radical change when it comes to $50 oil. i love the line that he used, which is the transfer of risk. you have equity market volatility, and that has gone into foreign exchange market. the foreign exchange market volatility was front and center in the conversation, and he talked about emerging markets and china. brendan: in just a second we will get to troy gayeski, who runs not quite as much money as yngvie. why is this a big deal? why is the decision of this one guy affecting the rest of us? manus: the decisions that happen in china have transfer themselves into the foreign exchange markets, and that came through.

we still have about 5.5 minutes together, and you can pick up the whole of the interview. is, will he continue and what shape will those equity investments have? brendan: manus cranny in oslo, thank you very much. coming up, german lawmakers approve a third rate bailout. we go to berlin after the break to help understand what that means for angela merkel and her coalition. spoiler alert, it is not in danger. this is "bloomberg surveillance ." good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." here is the non-news. the data screen is pretty quiet this morning. the headlines are not. here is vonnie quinn. vonnie: later today we may get a

better sense on whether the fed is ready to raise interest rates next month. at 2:00 p.m. eastern, the fed will release minutes from last month posco policy maker's meeting. has hit aest rally roadblock. oil prices fell after rising almost 2% yesterday. it is trading for a little more than $42 a barrel. there is speculation opec increased output and will make a global oil surplus bigger. first -- the pill will come with a number of warnings. doctors will not be able to prescribe it until they take an online consultation program. risks include nausea, drowsiness, and dizziness. we have target's quarterly

earnings report. yesterday the retailer settled over that giant hack attack over the 2013 holiday season. bloomberg news reports target agreed to pay up to $67 million to banks that issued visa cards. the attack exposed the personal information of millions of target customers. alex rodriguez broke out of a slump in a big way. his seventh-inning grand slam wiped out a three run deficit and carried the new york win, 8-4. a he is the all-time leader in grand slams with 25. "the new york times" this --ning, "randomly getting "grand awakening." it would be a great september if the mets and the yankees went on a tear. it would be so much fun. brendan: you have just given up

altogether, caring about the red sox? vonnie: a moment of silence. --: i set by the phone "john, call me, please!" brendan: wolfgang schauble has been the most vocal opponent this year of a new deal with greece. this morning he appeared before the bundestag and made the case. minutes ago, that body approved its 86 billion euro bailout. 454 in favor, 113 against. hans nichols did not abstain. he always votes yes for more drama on greece. why did angela merkel not make the case to her own parliament this morning for her own deal? schauble ended up making it. it was his baby. procedurally, you could make the case that that was proper. optically, schauble is at 70% approval rating, merkel is at

67. schauble can maybe afford to take the hit. why would merkel want to fully embrace this? with the second vote in 2008, opposition see the to the tarp vote, but you saw the analysis that it is something they needed to do. brendan: my sober analysis question is where is the imf? isn't that a crucial proponent of this? they do not seem to be completely on board. hans: they are in purgatory. we do not know quite where they are. from brussels it seems more doubtful that they will join. we spoke to the vice-chairman of the eu, the european commission, and he thinks there a -- he thinks they are in a gray area. the imf has said they will come aboard if you do something substantial on debt and is greece follows through with their programs. it does not seem like either of those are certain propositions. schaublee speak of

having 70% approval, and merkel at 66%, 67%. could there be any other stumbling blocks ahead of the vote? hans: the only other one that really has to vote is the netherlands. the government there has a one-seat majority. there is a 76 seat majority. it looksomprised of -- like there may be a vote of no-confidence called and you could see a collapse of the government there. i doubt it. it does not look like our analysts and reporters in the hague are saying no. be money is going to transferred electronically. the banks can get recapitalized, and germany can start worrying about resilient and china. comedy broken has out in germany?

hans: it is only easy because we have found a center party that does not exist on paper but exists in actuality in athens. some series a members -- some syriza members, the question i have is really, when did the government collapse in athens, and what replaces it? looks like we will have a snap election in the back half of september, maybe october, so then we will have this argument again. who has everyone made this deal with, the government in greece or the government of athens? that is the question i have going forward. brendan: hans nichols in berlin, thank you. we have troy gayeski on the desk from sky bridge capital. i will pose the same question to you that i did to hans nichols a second ago. profoundlyems undramatic. are we passed this? the: we are passed it from point of market chaos, but not from opportunity. greece's sovereign debt should trade up nicely.

there will be more drama around the election, but compared to the january election victory, syriza, or some of the chaos with capital controls, volatility has come down dramatically. brendan: i am thinking back to that last blog. if you wantedas to put your arm around his shoulder and say it is tough for an asset manager out there right now. troy: it is a challenging environment. interest rates are extremely low. a rich- this is not environment. trying to make 2% to 4% is challenging. 4% is big picture, 2% to better than a crisis or a collapse. vonnie: internally, give us the lowdown. what are hedge funds telling us? troy: the majority of opportunities we are pursuing, we hope to make 6% to 10%, but

they do not all work out that way. oftrast that to the years 2009 through the early part of 2014. there was one theme where you had a chance to make 15 or 20. now there is nothing anywhere close. talkingyour world still about making 15 to 20%? troy: no. tom: how can you justify 2% and 20% in a single digit world? trust me, i have gone to the back of the envelopes attempting to do that. troy: anyone with buying power pays substantially less than that. they are trending down. people get it. lower turn environment, you should get paid less. tom: we are going to come back and talk about this. r druckenmiller and paulson right on gold? troy: we have

been bearish on this for a long time. tom: we will come back and talk about this. brendan: is tough all over out there. we are wondering whether we are headed in 1998. the answer is probably not. the results of the subject of our single best chart. this is "bloomberg surveillance ." good morning. ♪

tom: what you need to know this morning, a churn to the markets. it is a quiet day as markets wait for news to figure out where to head. we have the single best chart with brendan greeley. brendan: i realized in the first ine -- for the first time talking to you for eight months, that churn means nothing. because the98 economies we worry about spent the last decade rolling up their foreign reserves. the one exception, malaysia. that is the subject of today's single best chart. we are looking at a 10-year history of foreign reserves. malaysia had higher absolute reserves and thailand and indonesia. they have both since passed malaysia. what markets really care about is not absolute levels but the direction of foreign reserves.

catch you poors a can ski -- katia porzecanski is with us. the direction of asia is bad? katia: as things go faster and faster, investors are looking at the trend. that is what makes them nervous. when things get really bad, does that accelerate? there was a good article from william pesek about malaysia in the asian crisis. they take their currency, and by pegging their currency, they were able to avoid and implement capital controls, avoid the turmoil that a lot of other countries face. the implemented other measures that kept them from doing so. in doing that, they did not make the changes that all their regional neighbors made that are theing them from having problems malaysia is happening now. they did not make the economic adjustments and they did not make institutional adjustments. now we have the corruption scandal, the political scandal

in malaysia, and investors are scared because the interest to show -- because the institutional strength is not there. brendan: everything i know about asia i learned from willie pesek. chance to make political changes in malaysia and they still have these policies that favor the majority over the indians and the chinese. ultimately economics comes down to politics and the inability to be flexible when they need to be. about $25y spent billion in reserves since 2014 trying to stabilize the currency and defend the currency, and now they're reserves cover about 100% of their short-term external liabilities, and under 100% you are just not comfortable with that. what you see in latin america and other countries. brendan: one of the reasons they have been burning through their reserves, you showed a chart yesterday that looks at the price of oil and the drop in foreign reserves. if we bring it up again, the real difference between indonesia and china and malaysia

is that malaysia is a one-export economy. katia: we pulled up a chart with the russian reserves. it is all on the same trend. it is an oil-based economy. reserves are just falling. tom: i took a course on latin american history, back when south america was attached to africa, a few years ago. when we see a currency depreciation, who is losing wealth? who in chile, in brazil, is losing wealth? is a private big hitters, is it the government? who are the losers? katia: whenever there is a real depreciation and that translates into the economy, everybody is losing wealth because suddenly everything is much more expensive. we do not know what it is like to live in a country where your wealth can depreciate from a day to day basis. it is costly. we did a nice little study in

early 2014 when argentina devalued, just from one to the other, all your goods in the store become so much more expensive. tom: so when chile gets hammered chilly or -- is it chill-ay? you had better have a bullish economy. it gets back to russia. when people speculated that russia was in rebound, it all came back to what your perspective on oil was. brendan: we went back and forth with anastasia amoroso yesterday and she is not bullish on russia, but she says russia can rebalance. i do not know how long that takes. tom: where is the copper? , where the katia copper is? they are building up

the surplus in china right now. tom: where is all the copper? katia: we do not know. but in chile, the cost is breakeven. they are basically at breakeven. if prices stay at these current levels, mines are going to have to close in chile. it is 50% of their exports, mining. fishhave other exports -- -- but -- tom: 10 seconds -- which is a better city to visit, santiago or point of sarah's -- or point aires?h'-- or buenos vonnie: top photos -- this device is for you. the no-frills area camera. it is a drone like device that

attaches a gopro camera. jeff bezos is walking around amazon with this. brendan: here is what i am amazed by five years ago i had a friend who works for the discovery channel. they spent billions of dollars -- millions of dollars on devices like this to film great white sharks. now you can take it out of a can and it costs what? vonnie: $500. we know what to get brendan. photos -- idaho has removed its 420-mile marker. transportation department officials replaced before hundred 20 sign with mile -- get this -- 419.9.

stricts known as having anti-marijuana laws. now they will have crash problems. brendan: i am amazed that people have the drive to keep stealing that sign. it takes motivation. you have to find a wrench. think that they would want to steal the other one just as much. room, i wouldse want 419.9. vonnie: top photo number one yesterday, southeast england commemorated the anniversary of the battle of britain. with planes and historical reenactments. 1940.ttle was august 18, southeast military bases

were attacked by the german luftwaffe. o'brien, is patrick who did novels. he drove in an ambulance in it and decided 20 years later that being inre dangerous europe. brendan: you forget what happened in london. and walkingondon, by the houses, and just one of them has been replaced by a house in 1955. fabulous -- tom: fabulous photos. our twitter question of the day -- it is not on donald trump. thank you. who will join the currency war next? it is an important question. not vietnam, not kazakhstan. stay with us. worldwide without twitter question, "bloomberg surveillance."

♪

tom: good morning, everyone. "bloomberg surveillance." let's get vonnie: right to top headlines with vonnie quinn. vonnie:there is a report --

that v there is a report a plea today to child pornography charges. six weeks ago, authorities seized electronics and other items from his home near indianapolis. subway says it ended its relationship with him. workers areuto angry about a plan being studied by g.m.. the company is looking at importing a buick model built in china. that would make general motors the first automaker to sell chinese cars in the u.s.. gm and the union are in contract talks. the current agreement expires in a month. what does it take to create the world's biggest tech shop? a quarter of a million animals. it is twice the size of the white house. it is in germany. read about the tour and the man behind it on our website, bloomberg.com. i don't think so. brendan: that is amazing.

vonnie: i guess that is how big the ark had to be. tom: put in a shot with some hedge fund lobby in new york. finally we turn to hedge funds? how are they doing? notng headlines -- i do want to slice this too narrow, but i guess they are teeing off on gold. troy gayeski of sky bridge capital. he bets on what they are going to do through asset allocation and choosing which beast to go into. what is different about your job august, ora year ago five years ago august? troy: a year ago we were concerned about an impending contraction. asset a huge run-up in prices. qe was ending, so we were defensive. now opportunities are marginally better, not great, but at least people have a fighting chance to make money. last year and was about -- last

year was about cutting risk. now there are opportunities -- five years ago there were opportunities, and right now there just are not. everybody focuses on events where someone he stands up and goes blah blah, and everybody scurries off to buy stock. you and i know there is a drudgery to it. making out the is about a day to day grind. how: the grind right now is to make money without taking too much risk, leverage. off,e are still leveraged fortunately, which is one of the reasons we have not had the calamities when we have had dislocations. this,environment like focusing on the run off -- the one-off opportunities. it is a competitive year with less volatility, and

hopefully the hedge funds will outperform bonds. tom: did you even have to say that statement? troy: it is what it is, tom. vonnie: correlations -- where are managers looking for them? tom: troy, correlations are -- of them are focused on macro strategies, where you can follow big currency moves that may or may not have anything to do with water markets or can be negatively correlated. the term, it moves in the opposite direction of equities. are there any sources that are having fun right now the summer? troy: challenging environment. this business is about doing the best you can for your clients, not about having fun. you have to keep your head down, find the opportunity that you can, and be realistic with your clients. you cannot take too much risk. tom: troy gayeski, thank you so

much, with sky bridge. our forex report today, real 1.2433.- yen, stay with us. bruce kasman of jpmorgan, next. ♪ tom: vietnam devalues their

currency. they adapted to china and continuing mediocre. goldman sachs and morgan stanley adopted the federal act in september and jpmorgan disagrees. the februaryrd to 2017 state of the union address with president trump. we are live from the world headquarters in new york. it is wednesday, august 19 and joining me is vonnie quinn and brendan greeley. we have another bailout. what is the significance of this bailout? brendan: at this point it was a foregone conclusion but what we are waiting for is not all of these votes but the imf dragging their heels. they are not completely convinced that the debt load is sustainable. so we are really rating until

october. we will travel to peru for meta-lagarde's festivities. the minutes from last month's federal reserve meeting will be released during the study concludes about if and when the central bank will boost interest rates. the fed will raise rates at next month's meeting and it would be the first increase in nine years. are still following because of the chinese currency devaluation. government is trying to make sure that exports keep growing. china has been vietnam's biggest trade partner for at least eight years. lawmakers are giving green lights to the greek bailout.

one of the final hurdles for the plan. lobbyingeasily after right angela merkel and her finance minister. this afternoon lawmakers will debate the rescue plan. concerns about hillary clinton's e-mail controversy are servicing among voters. 66% ofurvey finds that those polled think she was wrong to use a personal e-mail account. on the campaign trail she was asked if she tried to clean the server. sec. clinton: with a cloth? we have turned over the server and they can do everything they want to figure out what is there and not there. that is for the people investigating but we turned over everything work related every single thing. shows: one other note donald trump within six percentage points of mrs. clinton in a head-to-head

matchup and tom brady's deflategate controversy resumes without brady. earning brady and the nfl to settle this spat over the punishment tampering with footballs. trump like that donald mentioned mr. brady will be in his cabinet. brendan: at what has turned from a page one issue for the tabloids is now a very real dispute about labor laws. day i sawto the first it i was in the boston office and they had three adverbs in the first two paragraphs and i said i have never seen that. i have just never seen that ever. never quiet data check. good news for people like bruce kasman, euro-dollar and oil churning. both goldman sachs and morgan

stanley are most unsure what the fomc will do. us frome kasman is with jpmorgan. i want to get to vietnam but i have to follow up that introduction. do you agree that the fed could delay until september? >> it is a close call what they do. we are on the september decision and we will see some information today but we think the domestic economy once the fed to raise rates and there are a bunch of which maynal issues be on their mind and give them a reason to ponce. tommy what this is all part of the harder game. but the backdrop is a new bout of no inflation. >> that is a question for the fed. the labor market has pretty much met their mandate so do they worry about inflation? >> you had a chart in the last

hour that showed interest rates and inflation going way down but consumers in a number of different surveys with they think of inflation and they have been remarkably stable so at this point the fed doesn't see the drop in oil prices working to inflation expectations so they feel reasonably confident that they can go ahead. tom: there like two different worlds. >> inflation has been rising faster than good deflation. you didn't know that i read your research notes? >> a new that very well. vonnie: the fed has said it doesn't need to see the whites in their eyes for inflation to raise. does that mean we have the go-ahead? >> know what we have is exactly the story you described.

an international set of forces adding worry to the fed and the dollar going up. it hits inflation and growth. the domestic economy is showing continued labor market tightening and the fed from a forecasting point of view should be looking at that the push-up inflation overtime. >> it is not that far from 2% and they are trying to discount the commodities and oil prices and they point out when you talk to them that five years ago we were sing oil prices that woodward $40 a barrel who were not raising rates then because we knew oil prices would come back down and now they figure they will come back up to a certain extent and inflation will flatten out and start to learn -- rise because of labor market pressures. know how tothey create inflation? >> i don't think you can create inflation in this world where global pricing is determined on

a global basis without having some help from what is happening locally and right now we're in a world where there are powerful this inflationary forces working from emerging markets and even in the developed companies we do not have a good economy in europe. brendan: it's in like an is not just about the decision but whether or not we have the tools to do it. there a lot of signals telling us that the u.s. labor market is tight. remember, the issue here is not if you will put policy normal but whether you will take the first step away from the extraordinary accommodative policy. tom: is this about a currency war within asia and much of the world? terms of the in financial market moves much more than oil prices or anything else is the thing that worries the

fed. it has been creating imported inflation and if the fed is going to stop from an international perspective it is the concern that the dollar is moving up. greenspan affected by the dollar? thinkthis point they also that the dollar is an aftereffect of the u.s. economy being stronger than the rest of the world. tom: at mike and i have a book called greenspan's-isms. the biggest threat they say is monetary policy and the threat of a hike. are the outlier calls interesting in today's fomc minutes or do they not matter? >> you will not find out much for the minutes today.

but he is basically saying if the fed were to move that pushes real rates higher in there for the public and wall street will think the fed is losing credibility because they are changing inflation goals and that is a little bit esoteric. i have to ask. the landmark work by michael for rowley. do you reaffirm that we all better get used to lower interest rates and lower gdp doubtures deco >> no about it. we think it is fallen well below 2%. one application of that is over a long period of time equilibrium interest rates move lower but the reason why the fed is thinking of tightening is because that low potential growth is leading to a rapid tightening and the labor market. the dynamic here is lower equilibrium rates but you have to get there quicker.

tom: what is the animal spirit? >> i think we will be sitting here with imported disinflation still below 2% and gdp around 2.5% or so. a little less than 4%. tom: he made me miserable. that is terrible. >> there isn't anyone in washington that can survive with that. >> with a 2% real economy and a 1% potential your unemployment rate will be allowed -- down below 5%. tom: let me get to the twitter whotion of the day deco will join the currency war next deco stay with us

tom: good morning everyone. let's look at smart and cogent analysis. andlly this is long-winded goes on forever. this is david powell of bloomberg intelligence writing on greece this morning. european creditors paying for the change and the creditors will have to swallow the cost by providing extra financing in the near term and restructuring greece's enormous official debt.

the syriza coalition has been largely unsuccessful in altering any of the terms of the bailout package. i know you believe that greece is a sideshow but the imf now has to act. i'm not sure but i do not think whether the imf goes along or not will it try the outcome of the greeks getting this financing and going on this path they are on agreement for. the imf issue is about whether they are part of the package but not whether or not it goes forward. brendan: it is interesting that they are sticking to their own rules. they may be out whereas, germany or all of europe is looking at this and telling themselves a pleasant lie. >> i don't think that is the right way to look at it. with the germans and the europeans are saying overall is right now we are

providing you an opportunity we have modest and expense and you need to do the frontloaded cuts in the structural reforms and then we talk about debt. the imf is looking at it that we need to have the debt sustainable now. bridginga problem in the gap between the two. >> brendan: one of the problems is they have sustainable debt. there is a possibility they could be a dad debt restructuring. >> not anytime in the near future. debt is a difficult one particularly on the agreements. what we have seen is a stepping away from aggressive political pressure for fiscal tightening. tom: bruce kasman with us.

it has come in very nicely. the markets certainly voting some confidence. we hope you will get smart analysis. we will do that from votto gate. who do that on market makers later. oil stable this morning. west texas, 42 .36 per barrel.

tom: good morning everyone. let's get to our top headlines. vonnie: there are 30,000 firefighters battling those wildfires in the west. they will be assisted by 200 soldiers. service says that wildfires will consume more than half of this year's budget. hackers of ashley madison

are naming names online. says theagazine posting includes user identities, addresses, phone numbers and payment information. the hackers want the company to shut down. puritan this is revenge. vonnie: we knew that. brendan: this is not blackmail. vonnie: we will move onto something else. in red sox bringing baseball. tom: you are killing me. boston general --ager will have torowski

understand it borders on calvinist reduction. >> i think calvinist is the way to put it. will the red sox smile on you -- that is up to the red sox. vonnie: neil diamond. >> i was by the phone. move to bank of america. not boston strong but bank of america strong. job is to completely overhaul the measurement of risk taken by the bank. bloomberg news put out a strong article this morning on where we are going september 22 and september 30th for brian moynihan. i know bruce that it is inappropriate for you to comment mr.what is new with

moynahan and the sole surviving get to september 22. >> you have a co who has been in power for 5.5 years but he is fighting for his life. if he fails a stress test one more time that is three strikes. tom: he has restructured his management recently. michael mayo way out in front. is he an outlier? analysts who0 still have a body of 39 or 40. come and 14 people there do not. dynamic, how is the business doing? i get mixed signals. many want to run. >> a lot of people have this view.

it doesn't matter who is running it as long as interest rates rise. and it will start making a lot more money. that is why warren buffett likes the stock. i am curious about the perspective of the regulators. what is that issue in the stress test? >> their issue with the stress is that bank of america has proposed dozens over the years. boston and countrywide california, all of these different tech systems. all of the day that we have is correct and thus you show me otherwise the regulators say you have to take the opposite tack. you assume this is wrong until you can assume confidently that the data is wrong. vonnie: are they just looking for dividend increases.

>> wells fargo is much higher. tom: to be fair to mr. moynahan he inherited a disaster. do you monitoring this still blame the merger and the messiness of the ken lewis area or should there have been a more seamless transition to a new view? >> the problems of candlemas's era the fact they did not have any secession whatsoever led to a result that was suboptimal. and brian owns it now. tom: they completely moved on from that debate. brendan: the story for last to act -- two decades is boring work. this is not a new challenge. which bank has done that well? probablyk jpmorgan is

, goldman sachs is probably best in class. tom: is he correct? >> i think he has good points. as much as bma handles -- hammers them on this. tom: what happens up to 22nd? >> before we know even the result is the vote -- it is a special shareholder meeting and their holding it just so people can decide if brian moynihan should be chairman. >> they have to submit the stress test. brendan: coming up we turn to donald trump. we used to think it was entertainment but now it

is politics.

tom: the headlines are quiet markets finally. have some top headlines here is a vonnie quinn. vonnie: police in thailand are issuing an arrest ward for a

suspected bomber. 20 people and injured more than 120 but police are not limiting their search to him. and officials say he probably had accomplices. the federal reserve is releasing the last -- the minutes from last month's policy meeting. those minutes are due out this afternoon at 2 p.m. eastern will have them for you here on bloomberg. the first prescription drug to boost sexual desire and women is headed for the market. the controversial pill one approval. the treatment comes from with an array of warning sent doctors will not be able to prescribe it until they have taken an online certification program and they have to cancel site -- side effects like nausea and dizziness. reaprday the discount

taylor settled over the -- settled with lisa over that -- settled with visa over that giant hack attack. the attack exposed personal information of millions of target customers. out of theuez broke slump in a big way. three-month deficit and carried the new york yankees over minnesota. he has not homered since his 40th birthday. tom: let's move on to something more important than a rod. over to the bloomberg terminal and hear his the greater depreciation of the greater depreciation adjacent to china. thatuch different here in depreciation.

brendan: here is what becomes really important. the story we are seeing in malaysia is about commodities with vietnam the story is about trade. and much more diversified economy. tom: the other elephant is up a number next. one hundred 20o or ¥130 >> we're seeing an economy not delivering strong growth and an economy that will not hit the f inflation objective. with with the chinese have done if we get continued disappointment october is by no means out of the question and with that the end -- the yen goes down further. tell me what you say a percent of easing to their gdp this is like our qe on steroids.

>> exactly. if they continue to miss their inflation objective stash tom: objective -- tom: where is your call on the yen? >> it continues to depreciate in 2016 against the dollar. brendan: let me bring up a quote from bill emmett the former editor of the economist who made the call. determinisme main to merge sustainably our politics and policy. rideugh countries can waves of growth despite having political institution straight the real test comes when it looks less favorable. important thanre we pay attention to it in the good times? >> i think they are usually important for every

because. i think the point is well taken that for an economy to grow and develop and get beyond cheap labor you need to have institutions that develop. redux 19 itgoing to to? -- 1982? the think the issue here is dollar is strong because the rest of the world is weak. and can we get the policy support around the currency moves -- you asked before can we manage inflation. can we manage global demand. can we get easing out of china or other countries. policy mix toight support growth and right now the answer is it doesn't look like we are getting that. be a mostll

interesting september and october. is the churn.oday bid thisg to find a morning. brendan: this is bloomberg surveillance and i am brendan greeley with tom keene. donald trump releases immigration plan. a big wall, everyone pays -- mexico days and everyone goes home. isis average of -- it unusually specific which means it can be scored. gina did just that. what is the bill? >> we looked more at the economic cost and what those boiled down to is the labor market. plan plan -- trump's basically said that everyone has to go and if everyone were to go that would cost us one million

workers. that is a pretty heavy toll on the labor market. if they the argument is leave, assuming that is possible or practical if they leave wages go up for everyone else? research dig into the is really highly uncertain. there is this body of research that says undocumented workers strike down research but if you look at more recent research what they are finding is these undocumented workers often couple meant rather than supplement. so when they are here they can drive wages up a little bit and so by affording them we may not actually rage -- raise wages. we are looking at

whether or not mexico can pay for the wall and it turns out we are just wrong to be worried about it because the most recent poll shows that he may be competitive already with hillary clinton. so it is working -- right? >> will have to see. plan has met with a lot of debate on twitter i think all of the major newspapers carried stories about it this week. will have to see how that shakes out with the american people. brendan: thank you so much. tom: what i saw there from jean it was this idea of 8 million bodies. ofelieve it is a reduction gdp. which is missed much of the political analysis. >> policies are not only important for emerging market economies.

of weak laborlem supply and weak potential growth. one of our problems is that we have had week immigration across the board. tom: do you agree that it lowers the terminal value? >> i do know the details but i would say most likely. brendan: we looking at labor supply in japan. it is so much worse and the u.s. or germany. is that a difference of immigration are we doing better than japan? >> japan is closed and it is an aging population in japan is in some ways ahead of the curve that we are following to a less serious degree. labor supply and lower potential growth. it is a huge problem in a world

where we have a buildup of public sector debt and a burden as populations age. tom: i know that you read so well i will ask you an unfair question. are the immigrants today different than the immigrants of 1910 or 1880 or 1830? >> they are different and there are a lot of different ways to cut this. my point is that i don't think we should be looking them -- looking at immigrants as a negative for the economy. the problems we have right now is slow growth looking forward. allowing people into this country with the right rules and regulations is a positive and we did something to slow the flow and that has hurt us. vonnie: we're seeing fewer and fewer children being born. >> we have talked about a competition for capital and over the next 20 years we be talking competition for labor brendan:.

background there is the move from china and we're looking at all of the consequences. who will join the currency were next? let us know.

tom: good morning everyone.

brendan greeley and funny quinn. what a treat to have bruce kasman of jpmorgan particularly after what you experience globally just over the last number of months. it was $100 a barrel and that it was $80 a barrel and now we're down here at 40. i want to talk about what you'd do so well when you research which is the elasticity or responsiveness. let's talk about what we do not talk enough about which is demand. if we get cheaper oil do we use more? >> we do and you can see that over the last year. driven by strong supply it is a reflection of that and what we're seeing in the world right now is some of both and that is what makes it complicated. tom: everybody loves to talk

about the romance of the united arab emirates that is all supply-side analysis. should we be looking at demand echo >> part of what we have been seeing in the oil markets and the broader commodity markets is a world in which a lot of countries who are intensive in their consumption have been weak. most of the world has been extremely weak areas that is a economy of the global but the u.s. has been an some ways cushioning the rest of the world. tradee been running a net drag which has been us helping the rest of the world but in some ways weighing on our own performance. brendan: they have really seen it that we backed away from buying cars and got back to buying trucks. have wese -- where else seen the adjustment inhabit yet go >> in direct spending on

gasoline and the miles being driven. we went through a long period from the middle of the last decade to 2013 or 2014 where the consumption was falling in real terms and what you have seen is a take move up. there is a sensitivity changing habits. elasticity andt responsiveness what i have seen is a shift from production dynamics back to what we traditionally looked at. do you agree that we should a no questione is we have seen a big drop but we haven't really seen any drop in production. have been sing better news on the production side any rack we have seen the saudi's continue to try to keep their market share at the expense of low prices hurting their positions and have the

prospect of iran coming on board. the supply-side has been positive in the demand-side has been weak. tom: we will continue this discussion on bloomberg television. experience on big oil and particularly on the pipeline of america and the middle east. stay with us.

tom: good morning everyone, "bloomberg surveillance." we continue our space coverage. we go to japan. this is the japanese launching the h2 transfer vehicle. it is a little bit heavier than the last time around because they have to get stuff into space. nope pretzels on board but this has serious science attached to it as well. it is like work a day space. it is like a grind. >> what i love about this is that if a rocket takes off

somewhere in the world we will cover it. rockets are awesome. vonnie: it is a japanese train. this will happen in a few minutes. we will migrate now to top headlines. wait, thiswe consulting firm is paying $50 million to end it two-year fight with new york state bank regulators. regulator has said they violated sanctions by handling transactions for iran. admits they stretched rules. the company is looking at importing a buick model from china. gm and the union are in contract talks and the current deal

expires and a month. what would it take to create the world's a guest pet shop? about 250,000 animals. store and the man behind it on our website bloomberg.com. 250,000 critters. tom: baby chicks. sloths. brendan: are there baby sloths? vonnie: how would you tell? brendan: bruce kasman is with us. last week, jesse betterton and michael frilly released a note. it is full of microeconomics like the wealth effect and the substitution effect. those effects are felt on people who have assets. they might appreciate or deeper depreciate.

the vast majority of u.s. households have bank deposits and they do have short-term savings deposits and we should recognize that income -- interest rates going up do tend to boost income. wealth effects in equity markets with issues around mortgage rates going up. tom: we are going south of japan. this is an island north of okinawa and south of nagasaki. craft intounmanned space toward the space station. little bit heavier than normal and there have been some real challenges recently to getting things in space. we have seen that with elon musk as well as richard branson. this is a very public effort by the japanese and centers around

their pride. vonnie: isn't it amazing how nations can collaborate on the international space station. tom: we need this with everything else. brendan: i think pride is the important word. it is impossible to tease apart how important it is commercially and the pride of ownership. tom: what we have seen is it is not a small matter. this is south of japan. the island nicely north of okinawa and nicely southeast of nagasaki. i am sorry to interrupt, a few were talking to bruce kasman. brendan: we will take a hard turn back to the american consumer. i want to talk about deposits and even savings deposits. smallple who have that amount of money really making decisions?

>> i don't think there is any doubt and there is a fairly long body of research. the other effect is interest rates go up and it tends to create incentives to increase savings and push the dollar up. effect has been to help household balance sheets help household income. the question here is whether the fed is following an economy that is doing better and the interest rate rise appropriate. if you get that what you get is growth andlid rotation of the demand in the household sector. brendan: the metaphor we always use is the whites of their eyes. don't raise rates until they get their. you suggested that they are. but it is more like they are at the bottom of the hill.

is wage growth there? guest: wage growth is not there. it is just showing early signs of picking up but we have to remember two things. wages are moving very slowly upward against a backdrop of weak productivity. course we have the unemployment rate continuing to move down which what's pressure on the labor market going forward. but policy rates are at zero. the issue is not whether we are there yet, but whether we are at an appropriate point to take one step on a path toward normalizing. brendan: let me look -- tom: let me look at a blunt instrument like auto sales -- why is stanley having so much trouble convincing chair yellen to move from ultra economy? guest: we have been debating

september, december but the fed is sending a message that they are ready to go sometime this year as long as nothing goes wrong. tom: what are they waiting for? guest: that is what we are hopefully going to find out more this afternoon. riske: what is the biggest to the u.s. economy? guest: i think it is blaze. i'll think this economy right now is in a position where it is at threat of going into recession or boom. the idea that we continue to go with subpar performance where the supply-side deteriorates as huge negative consequences. brendan: that brings us smack bang into our agenda. the numbers come out today and that will be a data point the fed is watching. is inflation there or not? to tents we are right, on the headline and two tenths on the court reading.

with the housing stuff being strong and with some better news on health care inflation. brendan: that puts bruce's prediction 1/10 below medium. vonnie: i will be keeping an eye on that as well. read on thearly back-to-school consumer as well as all of the items directly related to target including the new coo john mulligan. to remove the is silliness from the minutes where some, several and few will be parsed. vonnie: how many dissenters? tom: do a word search for several and you can learn a lot. we will see those and as dr. katzman says, these are important minutes. vonnie: time to answer our twitter question of the day.

join the currency war next. has good cause to devalue now. answer, how has nobody noticed the hybrid currency war which russia is somehow both losing and winning. vonnie: people have come located thoughts. brendan: i am not sure i understand that. tom: it is ambiguity august. the guys who write the ruble is an interesting history. vonnie: there are definitely different effects. third answer -- the real question is why should american jobs be subject to free-trade deals while other countries manipulate their currency? brendan: we call what other

countries do easing and we do what we want. tom: very good. bruce kasman, thank you. congratulations on your terminal value research. market makers is next. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker stephanie ruhle. stephanie: good morning everybody. it is wednesday, august 19.

you are watching "market makers ." i am olivia sterns here with blue eyes. eric and stephanie have the week off. the big focus is commodities this morning. ceo of the world's largest fund space exclusively to lenders about risks in the market. cory: we talk about the founders behind these. we talk about how that became the goto satchel of the street. olivia: breaking news. let's get over to vonnie quinn. even though 1.22 is the best of the