at jackson hole. it's the absolute total dead of august. europe is on holiday. does anyone care about brexit, and mr. trump, well, he tries to get an economic script. forget ant that. last night distracted by ms. brazinsky. good morning. tuesday, august 23rd, i'm tom keene. francine: europe is the with me francine lacqua. with me. solution, not the problem. we'll do the trump thing. he just doesn't want to stay on they stand united in the face of brexit as the chart a future script we learned. without britain. shrugging off brexit, the euro francine: what he wants is to be trump and it's working. area economy maintained its momentum throughout august. if you want to be trump, unlash him. a manufacturing slump as germany tom: there's the debate and disappoints. secretary clinton is distracted by epails. sequel first sarkozy, he says but right now a non-bizarre he wants to return as president and has three weeks to overtake bloomberg news here's taylor. his opponent to lead his party. rial tom, in the president's this is "surveillance," francine

lacqua in london, tom keene in trip comes four days after new york. tom: it was a strong yen this donald trump criticized the morning. esident for staying on sarkozy running the relief ng again, like mr. romney running again in the united states? francine: possibly. efforts and a come he is popular. we knew he would run. postpurchasing manageers growth the timing seems quite genius now at the highest level in because he has three months to seven months and the euro zone take the mayor of bordeaux. very european. economy remains an steady let's get to the bloomberg first word news. growth path meanwhile an taylor: bayer and monsanto are increase in the -- hit a getting closer to a blockbuster deal that would produce the 10-month nigh august. neeble french factory fell for largest company of pesticides the -- stalled in the second and seeds. quarter. the country's central bank rejectedh, monsanto expects growth to resume in september. beyers improved offer. germany's chancellor -- needs the euro area economy showed little sign of being hurt by the show the it can prosper without the u.k. fallout from the brexit vote.

management index france roy o'lon. on an italian aircraft carrier. rose to the seven -- the highest they are trying to come one level in seven. there will be an e.u. summit the euro zone economy remains on a steady growth path. next month without the u.k. and hillary clinton faces questions angela merkel says the eu needs to show it can prosper without about her work at the state the u.k. she met with the french -- that the d they president and italian prime minister on an aircraft carrier f.b.i. recovered from clinton's private email servers. to come up with a vision of a post brexit block. e clinton campaign is -- they will be in an eu summit next month without the u.k. global news 24 hours a day powered by more than 120 donald trump says the fbi and justice department cannot be trusted to investigate hillary countries, i'm taylor, this is clinton so he wants a special bloomberg. prosecutor. trump: the justice tom? tom: thank you taylor. let's look at this right now. get right through this, futures department is required to up six. appoint an independent special oil, weaker. prosecutor because it has proven itself to be really, sadly, a we'll talk to michael about the yen. political arm of the white house. that was much stronger earlier. taylor: the clinton campaign has t to 99 but i put the two --

rejected accusations that while she was secretary of state she francine just because i felt like it. took any action based on donations to the foundation. global news 24 hours a day, francine: i like the way they powered by our 2600 journalists and analysts in more than 120 countries. pick wuti-for-you. i am taylor riggs. and at zero things this is bloomberg. tom: equities, bonds, currencies, commodities, get right to it. futures up five, the 10 year point at the bottom of your screen. yield turning. this is after the new zeal bank i am going to call that a and cuts in the nation. pre-jackson hole turn. brent south, nymex grid south. ok very quickly. imagine a sheet of paper on the crude, 46.84. surveils wall and you pat pin in the paper on that red h for 99.ade a das circle. you normalize the two series on the bottom to have lehman's you know what, this lowe's. an italian industrial production normalized citizens end of the crisis tore market looks like my chart. i wanted to do two pairings we crisis where the u.s. grossly do not usually do.

yuan leading the outperforms you've got different slopes. game in the emerging market. francine what a struggle for italy to get it going. the new zealand currency strengthening after the central bank earlier saying the pace of francine: it's an ugly chart but i like it because iter interest rate cuts will be gradual. crude below 47 and the stocks europe 600 is gaining .7%. underlies all the political concerns and things that a are tom: i guess this goes after the coming to fruition slowly. tom, this is short-term noise. mediterranean charter meeting we so basically a dollar yen one saw. we should have been there. month and three months and the that would have been a good junket to go on. volatility is a white line and pinine, two series with a you can see this is ahead of the 21st of september, traders in the map. are nervous because on that day the white line is u.s. industrial production, the you have japanese and central banks muting and giving some yellow line is italian industrial production and from the lehman lows, it idea. o -- is breathtaking how india has underperformed. in the past america's tom: he writes outstanding work performance was a little steeper on price change for barclays but italy cannot get their act

where he -- gaining the together. expectation of inflation. why is that? francine: you have restrictive this is a chart that janet labor laws and no growth. yellen doesn't want to look at. this is the elephant in thety sometimes it is unfair, it is tons, the mountains that easily -- easy to beat up on michael mckeys will climb in italy. days and inflation expectation if you take a step back, it is and michael pond that, red an economy that is not growing. arrow is the removable reality they have great companies but they are not productive for a that vice -- number of things. >>i think it's also important if you speak to politicians, that, that chart is on c.p.i. they say it takes time with unemployment and only 25% of the and the -- so if that's alreadyborough the fed's targets then the implied level youth, i do not know that they have that much time. deserve to goe on pc se even more below that down there for a week and research this and study this carefully, like tuscany. so the -- francine: task in a sounds tom: take your magnificent great. tom: what do you have? granularity on how the gain these expectations and dovetail francine: your chart is way it with a question we had yet better because i have plotted which c.p.i. or service sector dollar volatility. c.p.i. to people like you and people like eling do they care

the white line is one month volatility, the blue line is three-month. about that or do they only look just to show that the red -- the at these other inflation yen trainers -- traders are indices? >> i look bracing because they both meet michael: of what inflation is doing. the fed, though is, seemingly on september 20 and 21st. if you are in london, on the trying to pick its measures to morning of the 21st the boj and try to find the measure that best fits its narrative so in the afternoon it is the fed. with the boj, you want to make other words they are sort of gaining the datea here. mr. lavrov: what is the sure you have not done the wrong thing with the fed about 12 expectation in the markets hours afterward. right now for expectation? we are joined by stephen say well. michael: not go lower from here but the 10-year break even rate a great pleasure to have you on the program. cash -year-five-year in we have a little bit of italian bashing, a change from banker bashing, and a little bit of and the market is implying the implied volatility. market will level off overall it is about the fed and consistently below the fed's target. whether you think we are confused why communication, or whether actually we can read something into it. ancine: so give than, the -- is there a clear path? steven: i would agree, it is about the fed and i think this

friday speech by janet yellen is michael: again, they are missing their targets. going to be a great signal ahead to so it's not hear that on the of that meeting in september. we have a pretty bold call. inflation side they are not -- we think the fed hikes rates in francine: let's push back against anything we have said september. or heard. we think a key theme is the there's a brilliant piece last markets being too complacent. and no said if you don't hit if you look at the possibility your inflationing target what of a september hike it is you need to do is move your sitting around 20% despite their inflation target so do they relatively hawkish comments from eed to go into qe and -- dudley, from fisher, and from wiggins. we think the market needs to stand up and listen a bit more. michael: right now many fed officials think that they are janet yellen will be key to see hitting their targets. if she follows and talks hawkish we. vice chairman fisher said they francine: what is her main are hitting their inflation message going to be? target with 137b96% but with a it is clear that ben bernanke long-term perspective they are has used communication as his worried that a neutral-fed, tool and she does not want to, funds rate is too low and that or it is more complicated than they might need to raise their it used to be? steven: she does not want to inflation target to give them more cushion on any sort of promise a raked hike -- rate recessions in their usual hike but wants to signal that

policy pool of rates so there september is live. is is long-term rethink on numbers are on payrolls where they should target because you you look at previous re-thinks but right now their minutes, the fed has been nervous about a deterioration in targets are 2% and for payrolls. the data is coming out the other way around. if you look at the three-month employment so be w their target of 27, they think they are outreach on payrolls, the last pretty close. francine: but michael, why is meeting was a hundred 50,000. -- does this come from china we think when they meet in september it will have risen to and -- 250,000. that is a big turnaround for the michael: well tom mentioned fed because the bottom line here is they are biased toward service sector inflation and that's a -- u.s. domestic i tightening. the reason they would not believe nation pressures look tighten as if they saw a downside risk to the u.s. fairly normal. low good overall inflation economy or global concerns. without those we think they go ahead and move. tom: a go to the surveillance so it's growth that's keeping the fed on hold. wall as we show the bloomberg tom: and this is a long-term terminal, and it is nothing more what is called an h-15 series. than strong dollar. for those of you viewing at home this goes back to 1962 to , dollars strength, we have had j.f.k.

off to the left in 53-54 is that move. can janet yellen move the dollar eisenhower-like deflation. on friday? and to your point, michael, you have done a lot of dollars study. this is not an economy unlike what is the elasticity into this we are used to have. we are a much more open elastic important speech? steven: we think it is pretty global economy now. high so absolutely, we think she can any central bank gain your can move the dollar on friday. if we are right and the dollar expectations? michael: well, it makes it does rally on friday, what do difficult for fed to go the you want to sell against the other way where they are dollar? easing. if the fed is tightening too this is where i think it is interesting and we could add value. rapidly here that's going to we would argue that the topic is slow to economy. the commodity currencies and the so they are in a bit of a trap. main one, the australian dollar tom: a trap? come on, michael pond. followed by the new zealand you've got this tattooed on dollar. we would say that at bnp paribas your left arm. docks. because we have several usually we clean it up. quantitative models and one is that red line is miles from telling us that currently with that jackson hole green line. what portion of the green line is going to come down on the aussie-u.s., the principal driver is the equity markets. dots to the red line? feel like an onion spoof, if you see the fed height rakes or the market moves, we would francine, help me here.

the vigilantes are in charge, suggest the global equities will also come off and that will be a double hit for the commodity aren't they? bloc. michael: well it's the markets that have been more right than that is why we like short aussie. tom: the idea of a weaker the feds. the feds have been coming down australian dollar, let's look at to the market. tom: do they come down off the commodity complex that mr. say will talks about. the rebound in commodities jerry ellen's speech or do we have to wait until next year? blended together has been a michael: i think you at least nothing on the right side of the have to wait until the payroll chart, and the goldman sachs report at the oved next week. statement in the last 48 hours om: this is fantastic. about oil supply playing into that. i would agree that this is a lot barclays' michael pond capital more than just oil we are managing director. talking about. francine: actually, tom, given jim glassman? that we were talking about j.p. morgan and we will look of aussie dollar, we did have a course at mr. glassman at the little bit of news from central bank saying they will actually more troubled technology, this is bloomberg. -- the pace of interest rate ♪ cuts will be a little more gradual than we thought. steven: that is where new zealand alley -- dollar has rallied overnight but we would argue it is a similar situation with australia.

the other point we would make pertaining to your comment, he is already assuming cuts of 35 basis points into his forecast. same,hing else being the he is still assuming he will cut rates. it does not mean they will not cut rates, they just maybe will not be hugely aggressive going forward. tom: i think that is fancy british talk early in the morning. we will have american talk in our next hour. usually with us on jobs day, james glassman of jpmorgan, jim glassman on the american labor economy before labor day. it is a beautiful new york, good morning. ♪

francine: i'm francine lacqua near london and tom keene is in new york. this is "bloomberg surveillance." before we get to politics let's get to the taylor. >> francine the largest producers of the pest sirksdze according to people familiar with the company, progress on the issues such as purchase price and determination feels. you can blame the airlines and not the weather, according to the department of transportation. but a lack of flight crews and the largest category of delays last year. that is only the second time weather and air traffic control haven't topped list citizens government started keeping statistics in 2003. that's your business flash.

francine? francine: thank you, taylor. having late flight is annoying francine: it is bloomberg and some of the carriers arrive "surveillance," francine lacqua on time and then have the music in london, tom keene in new like ta-da! york. currency pair wells -- currency we are on time! tom: i've been really, really pairings with steven saywell. lucky recently, but i have taylor: volkswagen has ended a heard some horror stories, francine, that are not funny. contract dispute think parts like three and four and eight supplier that caused production and 12 hours for some people to be shut down at six factories. with families stuck in a terminal and in america, that's they have agreed to a long-term partnership. parts deliveries will begin as a big deal. soon as possible. vw hence halted assembly. of course all classes. francine: and a lot of issues say it may be in the last couple of weeks where the two-hour trip ended up being 12 and that again is self-defeating for opec to agrees -- to agree to freezing not funny especially if you have young kids. output. now let's turn to european a report says it could lead to politics. current price gains. germany's chancellor angela airlines australian merkel says they need to show they can prosper without the qantas have more than tripled in u.k. and they and france and

three years and investors want italy note discuss the brexit. to know when dividends will be resumed. tomorrow they are expected to ian, this was largely symbolic. announce record profit. they have not paid a dividend are they actually going to achieve anything in the next for seven years. couple of months? michael: probably not. that is your bloomberg business it takes a lot longer than that flash. germany, andnce, to chief anything in the the euro area released pmi data european union. from august. i think we saw that yesterday the services sector led to a when they spoke. to come up with solutions as pickup and economic activity. you say it was purely imbolic. momentum.ained their italy, france, germany saying we are the heart of the e.u. caroline hyde is an berlin with we want to stick together and the latest -- in your lan with show that the e.u. is part of the solution not a part of the the latest. if you look at august, it is problem. hard data but we have not even but an uphill task i think. triggered article 50. caroline: there is still some francine: yes. two of them are quite weak. caution to come but this is the best pmi reading on a composite it's not clear whether he can win it in november and he has basis in seven months. there does not seem to be a been challenged by nicolas particular caution being hit in sarkozy. terms of confidence from businesses. labor look strong.

is it only angela merkel that we have overall readings being can get us out of this mess? the strongest and seven months and it looks as though germany slightly slowing down but france ian: yes, but she is probably more unpopular than she has more than offsetting that. francine: what does it tell us been in years because of the refugee crisis and they cannot about what happens next? do anything without the other leaders of the european union i do not want to make excuses, and i know the pro brexiteers behind them. so it's a real struggle for will say everyone shrugged off them. brexit. they have got to somehow show are there any seasonal factors that they can be united, and that explain what we have seen? caroline: i think at the moment more importantly show to the people in europe that the there is the factor that article european union is still worth 50 has not been triggered, the fighting for. renegotiation has not gone into because at the moment not gear. for now it is steady as we go. guarantee that the people around think that. these numbers imply the third-quarter growth for the om: if angela merkel dials eurozone will be about the same as the second quarter. shills -- still 1-800-brussels, who is she talking to? ho does she exactly talk to? showing slow and steady. there is still room for stimulus in the ecb. when i comes to the output ian: that's the question that's prices, they are sub 50 and been asked by america for a generation or two, isn't it? there is retraction and

correction still to come. tom: how did the boat junket and that's probably europe's problem but it's also their play in germany yesterday? strength because 27 or 28 different countries so she can how did that play at home? caroline: it seems as though it took angela merkel because she is the strongest leader of the biggest country but she also has been played across all the news stations. has to take into account the desires and wishes of all the overall, it that much clarity. other voters and populations still they say merkel as a figure leader. too. it was symbolic more than that makes this thing so complicated. on the boattting tom: ian, thank you. near naples, talking of strength to come, growth a focus, listen, michael pond in your world there's no mystery about migration a focus. europe when you talk to they would were on a boat that barclays in london and barclays is helping refugees in the europe. it's simple. negative rates dominate. give us an update on what mediterranean and rescuing them, standing shoulder to shoulder michael pond thinks about this but not much detail. tom: caroline hyde in berlin, most original experiment. i don't want the get you in trouble but into ahead. thank you. take a shot at it. steven saywell with us. michael: it's difficult because you don't have a fiscal or where do they each one the euro banking union and that's what to be? makes a monetary policy union if we have looked at stand alone.

not necessarily sustainable. this before, and certainly the so they really need to work on formling a tighter union across way we would look at this is the french and the italians tend to the board. not just the monetary one. favor a lower euro. i think germans would like that as well but their breakeven levels tend to be higher. tom: it's an experiment in charter. michael pond with us. an economicom we'll get back to his inflation perspective and looking at discussion and further on competitiveness, a weaker euro radio. is important, but the key point david blanchflower of dartmouth is two things, it is down to college, boy, the conservatives love to go at him. monetary policy for the ecb blanchflower on austerity in whether they are going to do august and hanover, new anymore. hampshire. but more importantly it is where this is bloomberg. ♪ the policy divergence comes back and that means focusing back on the fed. does janet yellen signal a rate hike, do they reengage and the dollar rebound? francine: i have a more controversial question. of the three leaders, who is still in charge in 12 months? i am ruthless. we heard that sarkozy once back.

he is really not popular. a very difficult referendum he needs to get through in november and angela merkel because of her open-door policy is also going through a tough time. steven: i think europe is opening a real potential answer to the fact that it could be nobody from that perspective. we could all change. i think probably a more important question is if we get back to what this is about, and this is about brexit and britain point isi think a key it is increasingly in the market's view much more an issue for the u.k. them a euro zone, and the pmi numbers back that up because they have been relatively stable. look at britain, they are falling off a cliff and really collapsing. more and more this is a british problem affecting the u.k. tom: steven saywell with us as

we look at the dynamics of an august in europe. we say hello to michael pond of barclays capital, he slices and dices inflation dynamics like nobody. we will talk to him about janet yellen and her disinflation. this is bloomberg. ♪

tom: new york is beautiful. that's a fworjouse building that's the old general electric building where jack welch held court for years. down at about 51st street and lexing tune avenue in the heart of midtown new york. good morning, everyone. tom keene in new york. francine lacqua in london. thrilled you're with us. looking at the markets churning and of course the day-to-day battle of a presidential campaign. you're supposed to take off like three or four weeks after the cone vengeance. that didn't happen this year. betsy appeared with us, former lieutenant governor working with lieutenant governor pataki and an ardent trump supporter and policy advisor and she joins us this morning. you want to talk about his economic policy and the fact is i feel bad for you.

every 48 hours of or so he gets distracted and all he said about morning joe and all that. when does he get on the betsy mccoy script to benefit you and his supporters nationwide? >> well, let's look at the last 72 hours. he met with hispanic leaders on growth and addressed african-americans about how they can participate in a trump turnaround. tom: can you take his phone away so he doesn't tweet out. i'm serious. >> i think these other issues are more important. tom: what's the number one issue we need to focus on? >> low growth. 0ur company is limping along at francine: bloomberg -- the reason three quarters of "surveillance." tom and francine. deadline business vement. let's go back to one of the how to turn that around? charts that we were showing all lower corporate tax rates mrs. of our viewers earlier on.

clinton is crisscrossing the we are trying to chart what janet yellen can give in terms country, wag her finger at of indication when she is in corporations and saying they janet -- jackson hole. don't pay their fair share. member boj is on the same day as that is demagoguery. the fed. we know they pay the highest corporate tax rates in the steven saywell from bnp paribas world. is still with us. what does this tell you? traders are nervous and it seems to be playing out on the currency market. have it,s luck would tom: mr. strump against trade deal. we were discussing this chart how can a american candidate be this morning before i came in. francine: the minds meet. itven: what you can see is against free trade? that's unmanner rp american. >> well i don't know that it's was very elevated ahead of that unamerican but republicans are boj meeting in july and then of course we had a lot of listening and the fact that disappointment. they have said for decades that straightaway you can see that -- francine: this comes down. free trade promotes growth and tooen: expectations were in theory it does but too many of workers are getting whakt in high and when the boj the back with -- disappointed it came down very hard. 100, markets are tom: francine? ancine: betsy, are we sure starting to think there may be a surprise to the upside, there

donald trump really wants to be may be a policy bazooka coming president or is just working on his brand? from the japanese to try and tom: does he want to become help this. that saying, the market does not president? want to push it below 100. betsy: yes, and more we think it is going to be importantly, people who need jobs want him to become difficult to expect anything radical out of the japanese. presidents and not the rich the key is probably the fed. whom mrs. clinton refers to. if the fed surprised markets and 8 million more people are in hiked, that is most likely to be the catalyst to get dollar-yen poverties and the reason trump to move. tom: you talk about a bazooka, has spoken tout the and we have the hope. african-americans is because they have got the worst of it. if yenes it mean for us tom: you wrote an essay on envy goes to 98? steven: i think from our and growth in america how does mr. trump who by all means was perspective, the markets are born on third base. looking at two things. you said you have some kind of betsy: god bless him, i was hope on the monetary policy born before first base. tom: and that's fine, we know side, but probably some intervention from the japanese. the courage of you to get to where you were but tell me our view at bnp paribas is to pretty much down play that. about envy and government and

we think the yen is relatively how trump is going to debt us there. weak so if you look at long-term valuation equilibrium, that level is currently around 83 so betsy: he focuses on reduceling dollar-yen is still high. corporate tax rates. lit in a decade produce more the japanese do not have the tax revenue, more payroll and moral high ground to intervene at these levels that it gets back to the fed. the reason i think the income tax revenue. dollar-yen is down is because of tom: ok get ahold of his cell low u.s. yields. francine: the sequel for phone that was outrageous last night. that's betsy in support of mr. predecessorlande's trump. francine lacqua and i are here and jim glass mavepb will join wants to return. us from j.p. morgan and with we speak with carsten nickel. this is bloomberg. all due respect. 5:00 p.m. tonight. ♪ this is bloomberg. ♪ [ clock ticking ]

time. you only have so much. that's why we want to make sure you won't have to wait on hold. and you won't have to guess when we'll turn up. because after all we should fit into your life.

not the other way around. ♪ everything is cool when you're watching a screen ♪ ♪ everything is awesome, ♪ when you're sharing a meme ♪ ♪ a voice remote, "show me angry kings" ♪ ♪ you know what's awesome? everything! ♪ ♪ apps that please, more selfies, ♪ ♪ endless hours of the best tvs ♪ ♪ brand new apps, shows to go, ♪ ♪ awesome internet that's super whoa... ♪ ♪ everything is awesome xfinity. the future of awesome. francine: live pictures from the city of london. "surveillance," look at that, tom. tom: god, your architecture is francine in london, i am tom ugly. keene in new york. francine: it's a cheese grater. she likes pizza. michael mckee near jelly stone park in wyoming, fishing on his it's great.

tom keene in new york and way to jackson hole. francine lacqua in sunny london. feels good to say that. so let's get to the bloomberg to the first word news and a serious moment. taylor: the united nations has first reviews. here's taylor. called for a 48 hour truce in torial francine they have the syrian city that has been under siege for weeks. called for a cease-fire in ahe need to you convoys willo and almost 1 million deliver supplies to almost one million people. people there. syria's government has approved syrian's government has less than half of the request approved less than half the and will not allow aid to be requests and it won't let aid given to rebel held areas. be sent to rebel-held areas in ahe willo. in october palestinians will theirlestinians will hold hold its first elections in a next election in almost a decade. decade. they are hoping to expand the space to a mude abbas' held the party lost in parliamentary sayingand 2006 and he is space. he has stayed in office since his term expired in 2009 and 2009,his term expired in they consider hamas a terrorist group. the u.s. and eu consider hamas a terrorist group. joe biden goes turkey with president orport anti-americanism on the rise -- they blame angry that the u.s. has refused

to extradite ghoulen. they blame ghoulen for last goal in for last months attempted coup. month's attempted coup. he has denied any involvement. they find wage gap between men a study in the u.k. found the wage gap between men and women nd women increased after increased after childbirth because mothers decrease their childbirth because mothers hours and miss out on pay educed their hours after raises. they are paid 18% less than men. giving birth and the pay gap less than two decades ago, the was 20%. pay gap was 28%. and ryan lochte has now lost all his sponsors after lying ryan lochte has lost all of his sponsors after lying about being robbed at the olympics. they have joined speedo in babbitt being robert at the olympics. ending their relationship. and ralph lauren has joined his endorsements were worth speedo and they say lochte's about a million dollars. global news 24 hours a day, endorsements were worth about powered by our 2600 journalists and analysts in more than 120 $1 million. countries. i am taylor riggs. this is bloomberg. i'm taylor rigs, this is bloomberg. francine: thank you so much. tom? tom: taylor, thanks so much. some very important, not only

michael pond will return in a about sponsorship but i would moment but we are thrilled to bring you right now not on jobs urge everybody to go back and check about this pay wage gap day james glassman of j.p. morgan. jim glassman helping us out between men and women. with bill gross. we drag him in before. angela merkel says the eu needs to show it can prosper without discuss as they met to jim, i want to go to a chart you first showed me. the future of the post bloc. not unemployed but employed in america going back to 1947 in the advent of modern economics. this was largely symbolic and that little green line is a nothing will come out of what happened yesterday. decade we all remember how much pressure are these leaders under? whistfully when we were a job-creating machine. can they show a more positive view of europe from now on? carsten: they can present a more and then something happened. i'm sorry. this is the great unspoken of positive view for the media and jackson hole, isn't it? tv picture and we have seen a >> yes. and this chart tells you to lot of that yesterday, but that give you a better sense of what the true unemployment picture does not mean that they can really move in substance. i think it is clear if you look looks because a lot of people at the domestic french contacts dropped out of the job market in the upcoming election, when they gave up looking. as people get older they are francois hollande had the record moving toward retirement but

low approval. there are about 2 million 20 and 30-year-olds where they are out of the market and parents the space to move is really very are helping and they are slowly narrow. who has the toughest coming back but there's a hidden amount of unemployed job? if you look at employment, people. tom: what's the level of popularity, germany is well ahead. italy?worse, france or underemployment? jim: that includes the people carsten: that is a good one. working part-time. that's hard to tell, i think potentially it is france because the true unemployment measure may be 6.47. france is expected to play this leadership role to counter germany and policymaking on the tom: yellen is a dual mandate european level, but what we've and speaks on friday. have seen over the past couple everybody is focused on michael of years as they have been embattled too much at the home ponds and interest rates and front and that has limited the negative rates are you expecting to hear her say ability to push back to germany. tom: do americans from a something about that 6.57 distance, these leaders prancing glassman statistic? around, there is mr. junker who jim: they have been telling you the official unemployment rate has some for form of federal doesn't capture the picture but the fact is we are making feeling or belief, is there a progress but that doesn't mean

you keep rates at zero forever. federal representative or it does look like the labor institution in europe right now? it,ten: i think let's face market is improving and if the fed can move itself back to these days are over almost. the power in brussels has moved normal we are going to have a to the other side of the street chance to exand in. away from the european commission to the european francine: you're saying the true jobless rate is about 6.5% council to the representation of the governments, driven by and there's so many robots that concerns of domestic politics. will actually take over our jobs so, what will be the idea we are not there today. tom: what do you expect the or best in class for unemployment when we see the united kingdom and prime revolution really coming into minister made to do? how do they jump start this play? jim: well, those are things that have been going on for process given the disarray? inventory centuries and that carsten: i think the most doesn't happen overnight. important disarray she has to it does create more job deal with is not in brussels. the most tricky disarray is at opportunities and it's hard to home in the u.k. where you have know what kind of unemployment comes out of that. the brexit campaign that has if spoil put in the right place sold this message you can retain access to the single market and i personally think the economy has a way of cheaving more at the same time limit immigration. that is not anything the u.k. is employment and the federal reserve can help make that

going to get so the negotiations happen. will be tricky for years to so that's why the fed has a come. francine: i am not sure how i mandate of 2% inflation and if read brexit. we can't get there because of away from the problems for the robots, whether he work to make u.k., is it a cassandra moment that happen. for things to come or is it symptomatic of the u.k.? my morning must-read shows there full ne: does that mean is a similar fear that donald trump is putting forward, the employment? same fear we had from jeremy corbyn. jim: you would imagine wage instead of introducing creative trends try match what's going new ideas, mr. corbyn and trump on with productivity. and that's part of the fed's have nearly succeeded in job. you can get full employment and recycling some bad old ones. have inflation too low and that's why they talk about state control of the economy in the case of mr. corbyn and overheavyweight but there's -- we are working our way back america first isolationism in the case of mr. trump. toward -- that means more normal trends coming. their rise to prominence is a sign of a real sickness in british and american democracy, now, it's starting to pick up a and we could see this in france. little bit. carsten: in france and elsewhere ancine: but is the linkage

in europe because at the end of the day, merkel is in a strong broken? position but she pays the price. jim: we don't know what's going button productivity but that she has been paying the price by going to brussels for the last sure,rs and making really hasn't happened in a while because i think there's a lot going on in the economy precisely what we have been talking about, there is that's disrupted things. but i think over time you would step-by-step solutions and negotiations between government expect that to happen. and closer integration or something like fiscal stimulus that france would need. tom: michael, you were mentioning off the show here this would all be at the agenda september or never, this idea in europe. of it's a made the better get you obviously see different anytime gear. now, can they do that with a degrees of populism across europe and the u.s. but at the end of the day, this problem of jim glassman scenario of a political fragmentation is something that limits leaders' grinding economy? jim: well -- movement. francine: should we fear what we michael: well jim mentioned you have to overheat the economy to heard from nicolas sarkozy get the inflation up and that's talking about immigration? the theory behind our september should we fear europe becomes or never because either they go much more isolationist? carsten: let's be careful, this in september or they say you know what? we need to overheat the economy is the first sign. in order get inflation up this is the start for an internal battle in the

because of globalization and republican party. technology. tom: but it's critical. we will see who gets the if they go in september does it nomination for the president the but at the end of the day it is knock x thousand off of clear that the next president payrolls? will have been elected in a i don't see the linkage. second-round runoff against there? marine le pen. michael: we wouldn't be talking about the fed. there would be no reason for they will have to take the skeptic just -- skipped assist the fed to raise rates. l views. skeptica jim: the problem is the rates are extremely low and what we worry about is having rates at and i wantn britain zero and creating financial imbalances that we will have to to affect a brexit process. how do i talked to france? worry and pay for later. do i do it direct, through because that's been the thing that's thrown us off. brussels, or chancellor merkel? francine: but the problem is if carsten: keep talking to you wait too long you will have everybody. tom: nothing gets done. to rise quickly so what's more damaging? thaten: the reality is to wait too long or raising interest rates or actually france is going to elections in may 2017, and they will have a taking your sweet time or not strong interest. taking your sweet time and aving to reverse course?

flirting with euro skeptic forces is not a good idea so if >>i think they on the to go slowly but i think it's more you want to be serious from the french perspective, you will be disruptive. if you wait until it's obvious reserved with the brits through and then you go rapidly. the election and probably we got a taste of this in 1995 beyond. that is the reality of the brexit vote. francine: that was the money when the fed moved quickly the mexican crisis was born from that. question and this is why there so when the market is very is so much speculation that if you are theresa may you wait to liquid, it can be challenging trigger article 50. and for the fed right now starting to normal lies policy you do not know who you were talking to. is right because everyone else if you want to get down to is in the easy mode. business, you need to be speaking to the people in charge and at the moment it is tom: folks, we are ripping up the script big-time here but unlikely, it does not seem like they will stay in charge for the next 12 months. this is 1994 and 1995 and did i tom: let me ask a dumb question hear you say jim glassman that -- why should britain put up the mexican crisis came out of with this? they have got to figure out who the lift in rates? to talk to. francine: are you kidding me? jim: i think there's a good chance of that because when the feds started to raise those the britain that did not have a government for three weeks and bond rates rose. it was very disruptive.

did not have the lawyers in place to deal with brexit? tom: francine? francine: yes. i want to go back to something the situation is less than ideal michael said when he said it's on the british side and the eu side. tom: who does prime minister may dangerous in liquid markets. speak to? carsten: right now she will michael, do you agree that we sometimes underestimate or certainly have to wait until we don't look deeply at the have figured this out in france markets in play that the feds and germany. i would suggest in the meantime have to deal with? she speaks to her own euros michael: well something that clearly came out of the last euroed six in the -- fomc meeting is they think they skeptics in her own party. have time and that's part of their re-think of the monetary tom: carsten nichols, great policy framework that will discussion. happen this weekend at jackson le of where is the filip's as we look at the international relations and non-relations of a continental europe. curve? tore kink in the filip's curve? on bloomberg radio later this and how flat is it? morning, we will speak with david lynch lower of dartmouth so do they really have to college. overheat the economy in order to create the inflation? we will speak to him about tom: that was a few years jackson hole. ebefore you and me but the worldwide, this is bloomberg. ♪ filip's curve is at the london school of economics, is it dated? jim:well janet yellen's view is

you don't get much bang out of it. bob gordon doesn't buy that. he thinks the unemployment gap is much more significant in other words if unemployment is about a percentage point above you get inflation. tom: how closely, michael pond, are your worlds linked or are they so discreet because of our great bond distortion? michael: i think they are closely linked and to me the link is inflation expectation and it really needs to be anchored in order for the fed foil work here and we think they are starting to move over. tom: you're going to bring that up for you on the ipod cast. on the itunes podcast with apple, thank you, steven morris as well.

coming up on "bloomberg" radio. diane from p.s. economics driving the view for chicago. diane swan on jackson hole. this is bloomberg. ♪

francine: it is bloomberg "surveillance." tom keene is in new york, francine lacqua in london. goldman sachs is any opec deal may only deepen the oversupply. crude below $47. the executive editor of commodities, and steven saywell is with us. we were expecting a lot from this possible freeze and we do not even know if they will do anything, but if they do there is push back saying that is not enough to deal with the oversupply. >> opec is gently encouraging noises. i do not know if anyone has talked about cuts. there was already a great deal

of skepticism. if you look at the positioning we have on friday from the previous week, all of the action was in the short and there were virtually no longs at all. they are looking at libya and i cheered up and you -- nigeria and iraq. they are saying that probably will mean a trickle short-term and long-term it could mean a lot more oil and that pushes francine: this is "bloomberg back the rebalancing of the market. francine: are you surprised that surveillance." oil moves five or six dollars? tom keene is in new york. et's get to the bloomberg -- stuart: no. the one thing you need to know about commodities, they are very tailor? tailor: they volatile. have greed to a long-term or 300% in a month is not partnership. that unusual. parts deliveries will begin as oil, the volatility is off the soon as possible. charts and it has been coming down somewhat although that is and delta airlines is trying to hard to imagine. break a contract with the crude the global pilots' union and delta has

offered the pilots a 27% pay price? bring up the chart. raise over four years and the pilots want 37%. we have the bounce off the 200 day moving average and you and i the two sides have been deadlocked since the first of the year. will have the same conversation four days from now. is brent the global price right consumers stim want their now? biggest products. stuart: i think it has been for irish banks say -- bank of some time. it is not the only price and we ireland issued more than twice do have to pay attention to wti as many loans in the u.k. as in ireland. about 60% of loans in ireland particularly since you have a rickle coming out of the u.s. are bought without a mortgage up 57 from a decade ago. in terms of global pricing, it that's your bloomberg business is benchmark. tom: do you feel like you have flash. enough information or are you francine? francine: thank you tailor. coming up with alex steele and flying blind in gaming the price of oil? stuart: when you look at the oil on set with tom keene. >> yes. market to some extent you are always flying blind. think of opec itself. you've got treasuries and there is a degree of opec this monthly trading range since 2006. we have not seen a move on the about what the relationships are and what their domestic policy is. s&p since 2005. it's like the calm before the if you look at saudi arabia, they're producing a record yellen storm as we count down

amount of oil, some because of on -- to friday. demand and some because of client demand. so a big discussion as we on the production numbers alone, it is somewhat of a moving target. continue to count down to chair yellen. how much are they producing? we have a lot of people could tom: in the quiet of august we working hard -- working hard are going get past chair yellen. brexit-like in every month to come up with a sensible number but it is a moving target. tom: what is the timeline in the the coming weeks. next six weeks to get >> i think getting past yell season one thing but i wouldn't knowledgeable about production dynamics? stuart: what i would point say it's a calm market. it's a quiet market and once we people to are the freight markets. get fed's speech you you will get a market that has a little they will tell opec or anyone more and i think it's going to else, this is how much we are producing. take a lot of months to at the tankers and see what is actually come to this and we've coming out of those ports, and got start official negotiations that is particularly important as well. tom: i want to keep you around. in places like nigeria where it i know you've got decompress is difficult to find out what is going on. we can come to some sort of for bloomberg go but bring up sensible conclusion about how the must-read. much oil they are carrying. i thought this was brilliant. francine: are you on tankers or mark really did --sit pukka?

do you just look at some of the research? steven: i think we will be now. i didn't know what that meant. is that a fancy guy? this is important to the foreign exchange market and important pukka? for the oil producers. more broadly in the commodity it's like "upscale"? currencies, we have already been strong? fancy. speaking about bearish outlook let's read it again. for things like australian and right now. new zealand dollars. i got to read that. i would argue this adds to the silence on how the divorce weakness in the norwegian krone proceedings will be conducted and canadian dollar. has been devinning. this is their main out port. really, if may is serious in so if oilrish as well her pledge that the brexit means brexit she kneads to be does come off because there is oversupply, it will push -- put sensitive to the thraveg taking pressure on those currencies. too long to start the formal tom: are you surprised at dollar process will anger the 27 spurned countries. canada? steven: it could even go higher hell hath no fury like a trading partner scorned. -- stuart: it could even go francine, your thoughts on a higher. timeline here? francine: i would argue if you we have a bold call that it could go higher. trigger article 50 ooh little bit too soon, it would please we are expecting the fed to angela merkel but to your reengage and if oil continues to point. come off, dollar canada gets hit don't know who we are

on both sides, higher on the u.s. side, weaker on the talking with. canadian side. conditions, are it would be the same so we need to make sure that renzi or whoever comes up next gets you steeled for a jump condition through a referendum. in your commodities world or is >> i would stay one trump card this boredom as we go? stuart: the latter, i think. they have they have not triggered article 50 yet. tom: do not give me that answer. once they do the leverage switches to the other side. stuart: that is a terrible way think it will be a calm negotiation between the prime of describing commodities markets. say, reiterating minister may and as francine points out. tom: francine, who is on the what bhp was talking about, we other side? that's what i can't figure have seen probably most of the snout francine: apart from end of the free fall we have witnessed over the past couple of years. adelle? all it is going to take is one i'm kidding. and all of a sudden i don't know. you have fragile people at the helm but let's not forget we have a global crisis. tom: stewart wallace, running teresa may is considered for the moment great. she is steadying the ship but all commodities worldwide. they also need to have the it is like herding cats. lawyers working to try and

figure out what brexit means. mr. say well, i do not know what at the moment what's clear is we will do with him. they didn't have a plan b. we will look at one of his toys -- would be nut place by currency pairs. equities, bonds, currency, commodities. tom: jim glassman, is chair the vix, 11.99. yellen a central banker to the -- is she that linked? yen, 100.17. a 99 print on yen to jackson jim: she touches all of us but our partners are better off if hole would be something. this is bloomberg. ♪ we make sure the u.s. economy continues on the road to expansion. tom: michael pond has been rarely silent here. we are going come back and talk inflation with him and jim as well. let's hear some data on the way out. if i delay on the data screen, ferrall can exit quicker. seriously, -- in syria soil down 1%. from london and new york, this is bloomberg.

♪

tom: thrilled you are with us, bloomberg "surveillance." francine lacqua in london, tom keene in new york. michael mckee will report from jackson hole in a number of days. taylor: delta airlines is trying to break a calm tracked impact with its pilots union, offering a 27% pay raise over four years tom: thrilled you are with us. francine lacqua. and the pilots 137%. she is in london. they have been deadlocked since and this morning really

the first of the year. helpful. lockheed martin has proposed to bnp pair baugh steering the move all of its manufacturing to world coming -- sterling coming to an end as we know it. india. under the proposal, india would have partial control over which confounding the gloom crew, and i watched -- the yen 100. countries could buy f-16s, meaning it could choke off excuse me, 100.18. supply to pakistan which has this has been a joy. flown f-16s for decades. j.p. morgan and irishers do not want banks' products. now, the nd of -- home loans were the slowest part of lending for the first dutch oddity of the resgs. part of the year. down we got we have never seen they issued twice as many loans in the u k then ireland. this before. the horse before the cart. your world of great distortion that is your bloomberg business flash. tom: let's go to the and fixed-income distortion surveillance wall and the causing this lousy bloomberg terminal. productivity? or is it an effect of the euro-sterling, usually we look people adapting to the -- to at cable which is the cable under the water which is sterling-dollar. it? michael: we think product sivet

weaker sterling is the red driving lower potential g.d.p. circle up top, down we go with a which is driving a lower quote, brexit move and recent weakening of sterling against euro toward unquote, r-star which is dreaded parity. driving real rates lower, and steven saywell of bnp paribas the fed is coming to the with us. do you just extrapolate out to conclusion that they are going the shock and awe of parity? to be low for quite some time. tom: i mean, the real five-year rate. steven: i think that would be a r-star. i don't even know how you put little bit far. that up as a banner. you have had a big decline in michael pond's r-star. sterling against the euro and if this is five-year real rate. you look at valuation and the not the double recession in modeling, we would argue a lot of the bad news is priced in. the 1970's. there probably will be more bad it's sustained low real rates. news but i think the big how does your industry adapt to sterling move will likely come against the dollar. i think you will be looking for sterling weakness or those sustained low rates? michael: i adapt. sterling-dollar is more likely it creates lower volatility to be the vehicle. tom: your sterling is a slow around them. tom: come on. the actuarial assumption is dynamic of trade between the continent and england, tell us thrown out of the -- my i789 r.a. and everybody else's. about weaker sterling and what michael: and it certainly does that mean for trade dynamics?

i think what you are ushes them into more risky a assessts. alluding to, it will be beneficial for u.k. exporters. about 50% of u.k. exports go to francine: michael, we focus so the eu so it is very important. much on the u. in. . it comes through with a bit of a do we not need to focus on china? lag. because we talk about productivity and inflation. there is another factor to look at here. everything has a link back to you cannot just look at the end china and if china implodse product. take the car industry, this is a then the stust is going to be big industry and the u.k.. in much worse shape than it is. it exports a lot to the eu but a michael: thinking the long-term lot of the content of british cars are actually sourced from structural framework if indeed the eurozone. shine slows down significantly, that weaker pound is a bit of a double-edged sword and you do the fed is going to have retook into account that but they are not get a complete follow-through that you would looking at the u.s. economy think so just looking at the in being ok. maybe at full employment. front. francine: what is your call for maybe a little more work to do the end of the year? steven: we think it goes a but inflation is low and part of why domestic inflation is little bit higher but not much. francine: it is in a range? low is because of global growth, and they have toe tae steven: yes, and we are also pay attention to that. pretty bearish on the euro.

francine: ok. the only way people argue that it is not looking at the sterling in isolation, it is we get inflation up is some looking at it against other currencies. kind of global la core that stops china from doing that. move should come in michael: well, we can get a bout of wage pressures and the cable and we have got a call for 124. u.s. market is tightening up francine: by year end. and domestic inflation pressures are normal. those could move into high mark carney says he does not want negative rates. levels and bring overall will he have to? steven: he may get away without inflation low despite global growth but the issue on the having to do it. table is whether the fed is we think they will cut again by qb.all amount and ramp up willing to run the u.s. economy hot in order to achieve inflation goals. the pm eyes have fallen off a quick -- cliff. tom: and m.i.t. overshoorkts can economists and policymakers they are looking very weak as far as the u.k. is concerned. tom: steven saywell, very make an overshoot? can they manufacture it? jim: yes, because interest quickly, do you model a recession in the united kingdom rates are an an artificial level so the way you make this or do they keep it together with all of the dynamics we have talked about? happen is you keep rates at an steven: this is a good question i cam dative level.

and i will give you a very technical answer. you wouldn't say -- it's not a we see three consecutive q4,ters of zero growth, q3, useful thing to say to folks. because although the market is not really worried about the and q1 into next year. effects of higher interest rates and inflations you don't if you look at the definition of really like to hear central recession, one could easily dip banks talking about into negative territory. it will be close but we think overheating. tom: you two have been get a. probably they will avoid it. michael pond from barclays and tom: i would go to the jim glassman of j.p. morgan. distribution of the 000. you're not with us on jobs day? no? somewhere else? steven saywell with bnp paribas, they will continue on radio with us also david blanch thank you. coming up, michael pond slices flower from dartmouth college, and dices u.s. inflation like no and he will have a few opinions other. of jackson hole. this is front and salad -- this is bloomberg. ♪ center for chair yellen. ♪

jonathan: the calm before the tom: this morning again the storm. trishes move in the tightest month through this week's most banks of europe they would

anticipated speech. alix: planting a seed for a wrath err yellen speak c5eu68 deal. this progress is made on a final purchase price. jonathan: and shrugging off the brexit effect showing little signs of the fallout. welcome to "bloomberg ." i'm jonathan ferro alongside alix steel. david west on on vacation. we're live from new york with another big speech coming up on friday and the countdown continues but the story in the silence maybe in the market. alix: and you said it earlier with treasuries moving in its smallest range. the vix still a 12. bank of england saying investors are not ready for some kind of sell-off if we see it in the s&p. jonathan: i don't think this is a sign of calm. i think this is a sign of a lack of conviction and we're right for a breakout. what we're going to discuss is in which direction we're going