francine: fed up. that speaks central-bank medications fall short. -- fed is speaks. central-bank medic -- central-bank medications fall short. on the horizon, helicopter money will be japan's next big experiment says mark mobius. could it come as early as september? ♪ welcome to the false, live from bloomberg's european headquarters. i am francine lacqua. we are going to get some people

numbers. will get through the markets in just a moment. 106.2.is that it is below expectations. if you look at the difference. the 108.5 that we were expecting. down with some of -- we break it down with some of the numbers. ceo's expected future revenue -- the future is at 100.1. it might be a little bit of post-brexit. it might be a little bit of august lull. it may have an impact on fifa's money.- ifo's janet yellen speech will be taken live at 4:00 p.m. london

time, a specific index come i put in there because volume in asia, you can see overall stocks gained volume -- volumes are 30% lower than the previous month. brent crude, $49. a good measure to see where that is at 138. let's get to the bloomberg first word news with nejra cehic. nejra: the death toll from the powerful earthquake that hit italy yesterday has written to 247. it is according to the civil protection agency. flattened that hit the center of three ancient towns. there is fear that more baby buried in the rubble. investors pulled more than 25 billion dollars from hedge funds last month, the biggest monthly redemption since they were a 2009. either estimate said total outflows are close to 56

billion. hedge funds have faced criticism from clients over seed costs and their failure to keep pace with benchmarks. it is almost time to short this year's crude rally. the commodities firm that was once the largest independent oil refiner in the u.s. he said that traders should short wti crude. members of opec will probably not cut outlook month informal meeting. nigel farage appeared on stage at a rally with donald trump. he spoke about britain's decision to leave the europeans just the european union as a positive example and urged trump supporters to get out and vote against "the establishment." >> if you want change, you better get your walking boots on. you better get out there campaigning, and remember, anything is possible if enough

decent people are prepared to stand up against the establishment. thank you very much indeed. >> the issues we face here in america are similar to the issues faced in britain during their referendum on membership in the european union. nejra: global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i am nejra cehic. this is bloomberg. francine: i'm confused, i thought nigel farage was against foreigners coming up and talking about brexit. then he shows a in the u.s. of janetre quite ahead yellen speech. analysts are expecting analysts -- analysts are expecting hawkish comments. as investors take to the sidelines, pimco have criticized

central banks medications. just central-bank's -- central banks communications. the chair has not come forward to convey -- we have a mixed message. my guest this morning, luca paolini. great to have you on the program. they keep coming in. i am confused as to what the market is expecting from janet yellen. luca: i think there's a lot of confusion about what the fed is going to do because the fed is split. you are different views and the market is not convinced, because we have some indication that growth is picking up. hugelly we don't see this pace in terms of inflation.

francine: do we have too much over communication expectation? is a difficult in these uncertain times for the fed to clearly say one rate hike before december -- before december? luca: the fed is discussing special change with the inflation target. there is confusion about what the economy is doing, but also the long-term goal for the fed -- for the feds are. francine: you don't think they will hike before the next year? luca: at think it is possible if this strong growth in the u.s. is confirmed. i think september is very unlikely. i think december is possible. we have to wait for the next you months to see this kind of data. francine: september unlikely because of the u.s. election?

or likely because you do not see enough strength in ways growth? luca: i think ways growth is actually picking up and i think they are not convinced about the timing of the hike because of the election, but also because we don't have enough evidence that this acceleration growth is real. they want to wait for more evidence. francine: i want to bring you over to my bloomberg terminal. 30 yield, to your spread on treasuries. going back to levels that we have not seen since the financial crisis at what does that tell us about how fed up bond markets are? luca: it tends to be very cyclical so it is normal that there is some sort of flattening at this stage of the cycle could what is surprising is the lack of any inflation premium priced into the curve. maybe it is too early

[indiscernible] this is tsipras first the lack of inflation premium. francine: inflation has been compounding every central-bank are around the world. luca: if you look at core inflation, the last month, [indiscernible] that.rket was missed growth was -- if growth accelerates and inflation remains around 2%, i think we may have some kind of -- and the market. growth indicators are not missed in the u.s.. francine: if they wait to hike for the fed and janet yellen weights, that they will have to -- if inflation picks up -- they will have to hike more rapidly. that will be more damaging than a reversal if the hike in december? luca: the risks that you have on

s&p, you have a melt up scenario. oppositeorced to the -- and that will be more problematic. decisionwill be a good but we have to wait for the next two months. paolini: next, luca stays with us. tune in tomorrow for special coverage of the jackson hole economic symposium. also we do know that governor kuroda will be there. he is arriving tomorrow night. stay with the pulse. plenty coming up, including is helicopter money about to take off? will enforce the boj's hand? attempts.er the coup we'll bring you an exclusive interview with the prime minister as the country's tries to stabilize the economy. can brexit see a tech exit?

will talk talent in a post-brexit europe. this is bloomberg. ♪

>> this is the pulse. let's get to the bloomberg

business flash with nejra cehic. improvedst reduction stability in the netherlands. the dutch firm says operating income growth -- rose 18%. it has a 6500 stores around the world and annual sales exceeding 60 billion euros, mostly from the u.s. shares at hp tumbled after hours . a forecast that those short. expected profit of $.34 per share lower than estimates of $.40. it struggled with slumping demand for its product. new zealand led the world when it gave women the vote and introduced inflation targeting. now it is claiming another first, pizza delivery by drone. domino's pizza enterprises has joined forces with the us-based flying robot for the world's first commercial drone pizza

delivery. the company says it will start testing the service in new zealand later this year and is also looking at using drones in australia, belgium, france, the netherlands, japan and germany. that is the bloomberg business flash. francine: the government will act -- in financial markets. we wait earnings from china construction. let's go straight to hong kong and speak to francis chan. francis, great to have you on the program. forhere stuff we're waiting in these results that may link back to the fact that we are concerned about the financial system in china? investors will focus on the trends of china construction bank and its peers. if we try to refer to the industrywide nonperforming loan

ratio, released by the regulator, we see a moving trend with the ratio seizing to rise -- seizing to rise in the second quarter. we can also draw a similar conclusion to the technicality of the major bank in china. quickly, what are the other risks for these lenders? are they able to manage them? francis: the chinese banks are facing a squeeze. cuts.xed interest rate the banks are reprising, their departments are lower. -- their deposits are lower. less -- a lesser worry. francine: let's get more with luca paolini.

luca, when you look at how the fed should view china or we should view china. we had this horrible turmoil almost a year ago. january was not great. now we have concerns about shadow banking. there are things that concern us but nothing is coming to the forefront. doesn't mean it is more stable? afterwhat we see in china this stimulus in the first part -- we see a decline in terms of growth and supply. i think it is difficult to expect easing. we will go back to this downtrend in terms of growth which will put some pressure on the fed, because this will be problem for growth. it is more of a risk than reality. china hasrobably in only happened. francine: they can deal with growth. they can deal with the dampening

of growth in china. what they cannot deal with this volatility, something much more ugly we could be a financial crisis hike event in china. are we there? .uca: we're still in the past the chinese authority has not been them to communicate what it wants to do. it would not be a huge surprise if there is another policy mistake that could trigger a risk off kind of market that would force the fed to fuld. that would be a bigger risk than a sharp decline in china. francine: the linkage between china and devaluing the yuan and inflation is one that we try and follow. how big is that linkage? it is difficult to get inflation up, can we blame it all on china? luca: you cannot. deflation is not a bad is china -- as bad in china as it was. has been a huge deflationary force in the global

economy. there is no change. that is been the case for the last year. [indiscernible] francine: where do you see the best returns? we talked about the theory also about possibly raising the inflation target. on a day-to-day basis, what does it mean -- where did he want to put your money? luca: equities, if you think about earnings momentum is improving. the markets are not -- a little -- of risk on francine: or the u.s.? luca: europe, we will see a lot of risks. u.s. is still expensive. it is much better to be not invested in japan. in emerging markets were -- climb --

japan, where we -- luca: the level of the yen is so high that it will force a response by the central banks. francine: a response that will be what? luca: theynd it -- will find a way to expand the monetary stimulus. market will dose quite well because [indiscernible] francine: what is the one thing people misunderstand about japan? luca: the fact that the country time fortakes a long this to be successful. we have to be patient. we should not forget that japan is the only country where there is a government which can implement the reforms that are required. francine: luca paolini stays with us.

up next, helicopter money on the horizon and it could drop in japan as early as next month. mark mobius, we will bring you that interview. this is bloomberg. ♪

>> we are beginning to think about what ammunition they have. ok, let'sreaction is go for helicopter money. let's get money directly to the

hands of consumers. they may want to try that but i think they are scared the effect might have of very high inflation. it could get out of control. i would expect that they will try that. that will probably be the next step. japan is the leader in the sense that what japan is doing is having a global impact. the experiments that japan are trying are being watched globally. so in many ways japan is a leading indicator for the rest of the world. i think they will engage in helicopter money with great care and reluctance. if they do it to carefully, it will not have the desired effect.

francine: that was mark mobius on helicopter money in japan. can the policy help with japan's other big problem back on the aging population. we'll take a look at the chart of the hour. the unemployment rate is 3.2%, one of the lowest. the white line is the balance sheet that boj has. , this isee more qe gone up. unemployment has gone down. it is a structural problem they relate to the fact that it is an aging population and they have no immigration. let's get more from luca paolini. when you look at this chart and you like japanese equities. they have been undersold so much . you are expecting more from the boj. what in this chart that can tell us about the issues that japan has? luca: the potential growth in

japan is low because you have activity in extreme levels. with this is telling you is there is a structural issue. you don't solve the problem in the long-term i printing money. -- long-term by printing money. a change in tax incentives. that is the story about japan. it is stagnating and the central bank is trying to push above potential. francine: does helicopter money -- do expect -- you can argue we have seen a little bit of helicopter money already. you expect checks to be put through the door? luca: i think it is too early. it is not an economy that is falling apart. this is the kind of thing you would do in a big recession. japan is not in a recession. i think it will wait. they will come up with something new.

view. my francine: is europe coming desk is europe becoming more like japan? -- is europe becoming more like japan? luca: if you look at japan, the gdp is better than the u.s. this is the kind of publishing come all of the numbers are lower. it is not an economy in a terrible situation. in europe, i think that is a risk. european banks are making money. there are some exceptions. the backing system in europe is positive. southern banks and more solid position. i don't think the europe is like japan. there are more political risks but it is a more -- it is a better position. francine: luca, think so much. up next, turkey wasted time.

we will bring you an exclusive interview with the turkish prime minister. we go through some of the currency moves. this is only seven weeks from the coup in turkey. this is bloomberg. ♪

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francine: welcome to the pulse, live from bloomberg's european headquarters. i am francine lacqua could lift it to bloomberg first word news with nejra cehic. nejra: the death toll of the powerful earthquake that hit central italy has risen to 247. the magnitude six tremor struck in -- and was felt in rome. it flattened the center of three ancient towns. slippeds is sentiment

companiesnd time -- are still weighing the consequent is of brexit on future demands. the u.k. acting as germany's third-largest export market, we could demand their have the potential to stamp out put in europe's largest economy. the spanish -- in the second quarter. output grew by better than thecast 0.8%, keeping companies -- the country's pace alive. investorsrt says pulled more than 25 billion dollars from hedge funds last month, the biggest monthly deduction since 2009. total outflows are close to $56 billion driven by mediocre performance. hedge funds have faced criticism from clients over steep costs and their failure to keep pace with stock market benchmarks.

global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i am their change. this is bloomberg. francine: markets slower this morning. let's head to mark barton. mark: stocks falling for the first day. the stoxx 600 down. the last time was august the fifth when it rose over 1%. that was 20 or so days ago. our hold was one company, they live was another. it is forecast to boost the second half profits of joining forces after second quarter profits beat estimates as of cost productions improving profitability in the netherlands. shares of by 1.3%. treasury two-year notes, the cheapest relative to 30 year bonds since the start of 2008. thanks to a large space of hawkish comments from various

been officials as we of weight -- as we await janet yellen's speech tomorrow. the yields is poised for its highest growth in two months, 75 basis points. is interest rate expectation -- the blue line is interest rate expectation. -- the 30 yearm yield spread against the two year yield. the extra yield on 30 year bonds onto your notes has contracted the48 basis points, smallest premium on a closing basis since january 2008. the peril that carry trades that demonstrated in this chart returns on perry trades have tumbled from the highest in the year. according to this ubs index which has fallen to percent from 2% high in august -- fallen

from its high in august. francine in south africa. beware the carry trade. francine: i am sure my grandmother said some things similar. john kerry's visit to turkey has been greeted by snubs. and next was interview with the country's prime minister, we ask what the future holds for futures -- for turkey's relationship with the west? u.s.erica -- turkey in the have a deep rooted relationship. the u.s. has existed for 200 years. however our relationship has developed only since 1950. our closeness turned into a strategic partnership in many areas such as the economy and nato. the u.s. has strongly supported full eu membership of turkey and they defended us against eu member states, some of the eu

ministers have slightly shifted their attitudes toward turks the -- toward turkey after the failed coup attempt and they started to make different statements. finally, they realized the truth. today they see it better. francine: that was the turkish prime minister speaking in an exclusive interview. let's bring in jonathan ferro. -- john freire. john, welcome. if you look at turkey, we manage of it but the fact that joe and he is greeted by low-level officials means a lot. right, the optics do matter. uncomfortable -- quite amusing footage.

[indiscernible] president erdogan set their stony faced. that is going on. jimmy unhappy -- extremely unhappy. you look at what happened yesterday in northern syria, we did a first significant engagement. u.s. is a big part of that. u.s. engaged in that. behind the diplomacy, if you look at what is going on the ground, there is a lot of convergence going on. [indiscernible] what to do with islamic state. not so much about that but behind the scenes, the u.s. is a big part of it. i know with all of the formulations, it is complicated. angela merkel and in the -- and the next u.s. president will

turn a blind eye to turkey as long as they maintain and i like. -- an ally. john:an: -- jonathan -- merkel does need erdogan. i can't turn a blind eye to it because in theory negotiations are ongoing with eu membership. merkel cannot turn away from it. toncine: is a difficult separate the politics? the question that we have as investors is the political risk. the valuation may be attractive but no way as attractive as brazil was. france is not taking -- is not worth taking the risk. it still is a country that is very vulnerable. midnight,around

columbia reaching a final peace deal with guerrillas. how much impact will that have of the economy? john: it can have a huge impact. polls show their perfect. deeply emotional issue. it is hard to predict which way it will go. this is been a war that is devastated the country. the very fact of not having were -- there will have a will not have to spend as much money on military and defense. [indiscernible] development, agriculture, tourism. if this works, -- francine: tourism because there were huge kidnappings, right? left certain areas, you need to be careful. it permeated the dna of every

part of colombia. passed, itrendum was changes the country. francine: that would be the same for investments? is strong.he market the old market would circle but at the same time you have a country that is well-managed. you have low leverage. have a strong demographic. -- you have a strong demographic. john: it is 50 million people. francine: it is not somewhere you would go on a whim. would you invest? currency? how do you do the colombian work? john: i would say i would probably invest more in bonds because in latin america, we see

more value in bonds the neck with a. -- in bonds then inequity. francine: after that? are we sure that means the country will be safer? john: it would be difficult. it would be difficult to go back. if the referendum was rejected, the leadership that has gone on this way would have difficulty answering. they're been on the back foot for the last 10 years. there's a contingency -- we had them on the run. ireland itt northern decade tothan a really taking root, even early now. these things i never clean or easy. -- these things are never clean or easy.

francine: if you look at the fact -- does the next u.s. president have a big role to play with colombia? john: a lot of this is about drug traffickers. i'm assuming this doesn't change the status of drug traffickers who are wanted. that is an ongoing sore they'll go on and on and on. until these people are brought to justice. that might come to get relations. there are people high up gore implicated in this -- high up who are implicated in this. i know we could talk about it for another six hours. my final question, depending on the who has that's who the u.s. chooses as the next president -- who the u.s. chooses as the next president, does it change your on emerging markets,

especially in central and south america? luca: [indiscernible] it is too early. the huge inflows in the last few months, any situation, it changes perception of the emerging markets could be risky for the next few months. francine: luca and john, think it's much for joining us. are anhnology companies important component to the u.s. stock market. territory?ubble wicks for that next. this is -- we explore that next. this is bloomberg. ♪

francine: technology companies are in morecambe -- a more important component to the u.s. stock market than the time to the.com bust. stocks-- means that tech make up more than 21%. managers are worth 16%, the closest since the widest gap ever. let's talk to eileen burbidge. eileen, great to have you on the program. we talk about bubbles and devaluations. there is not a bubble until it bursts. are we there yet? eileen: i don't think so. there is nothing wrong with growth.

what you are seeing happening is -- especially these giants. amazon,ng about apple, facebook and alphabet. what is happening they are no longer singler. -- no longer singular. look at amazon which has the because they keep reinvesting the company's revenue. it is not just consumer services , is not amazon prime which is delivering content, boston post or other media outlet, it is a strong business with its cloud of the structure. $8 billion in revenue last year. these companies are almost omnipresent. they are everywhere. francine: will they continue growing? will they continue growing at these rates? eileen: they are savvy

-- facebook having acquired and not being shy about bringing more technology and more services. the question is whether they will grow at the rate -- i think i just read in order to meet -- they have to keep growing revenue 7% for the rest of the century. that is a big ask. i will know if it is going to meet that. pneumatic for what makes these companies valuable. francine: what can go wrong with these companies? you could argue that it means they feel under more pressure to give back to shareholders, to keep people happy. therefore, they fall down on investments. is that a possibility? eileen: they get past the by someone who has been one of the big four for a while. it really probably wasn't on the radar back in the days.

that is the question. it is going to be companies from asia. we saw the spread of alibaba. seeink you are going to some of these companies from other regions becoming more globally minded, but just as we didn't have twitter, they're going to be dark horses that come up over the next couple of years. francine: the front face is quite dense. eileen: the user experience has a lot to be desired and is not the same you see coming from california. the strong aspect they have is the marketplace. it owns all of asia and they are going to be of the picked it up fairly quickly. francine: what about apple? every two months, we hear it is the end of apple. what are you expecting from the new phone. eileen: it has to be something new that takes everyone interest

as everyone's interest again. peaks everyone's interest again. each time they come back around and the surprise either creating a new category. francine: you see these categories. you were one of the first one to came on the program and talk to me about -- what is the next category? there currently looking at vehicles, cars. there is no limit to where we are going to see technology. that is one thing that is interesting, whether or not tech is no longer a spectre in of its own anymore. francine: you expect that to happen? if you look at a car company, is the best car company in the world going to be google or apple bit -- or apple bit --

alphabet? eileen: it is not going to be coming from technology desk from car companies, i think it is going to be coming from technology companies -- it is not going to be coming from technology -- francine: will carry on the tech ask what thend brexit means for the -- this is bloomberg. ♪

francine: this is "the pulse." i am francine lacqua. this get to the bloomberg business flash with nejra cehic. nejra: calls productions improved profitability in the netherlands. -- burress with belgium's belair last month. it rose 8%. the new company had $6,500 around the world in annual sales exceeding 60 billion euros mostly on the u.s.. chairs and hp tumbled after hours on a fawlty -- forecast. it expected a profit of $.34 per share, lower than the estimate of $.40. it struggled with slumping demand for its product. that is it for the bloomberg business flash. francine: let's carry on the tech conversation. -- but howed cement

will the country -- impact? let's get more from eileen burbidge. the problem with brexit is it becomes a little cheaper if you are an outside investor because of the pound fall. you couldhave access be concerned that you do not have access to europe. eileen: the concern is the uncertainty. there is a possibility that things might change. that is a challenge on the norse and people who are spending their company trying to prioritize. having said that, i think are really resent -- i think entrepreneur are really resilient. people don't start companies because they're considering the macro economic climate. they start companies because

they see a problem they want to solve and they have an ambition they want to realize. francine: what i do it in brazil where rent is so much cheaper? eileen: it is been so much cheaper in berlin. london is the tech capital of europe. great dynamic. cost of living and cost of running a business, relatively affordable good when you think about london, you thought that not quite as affordable. you have a high-level -- much deeper talent pool. yet the mergers and acquisitions. you have the london stock exchange. it is as if you had berlin and frankfurt all in one place. francine: this is free brexit. -- this is free brexit.

-- free brexit. anything else is up for grabs. eileen: utep about sampras is go, new york and said -- you talk about san francisco, new york and washington, dc in one place. i don't think you're good to see an exit because it is a fantasy place to be. where one of the -- we are one of the capitals of the world. we have all caps sorts of businesses here. i think what might change is very specific to certain sectors. all of the great companies here in the u k have already continue to hire from outside of the eu. [indiscernible] maybeill continue and financial services yet the question of passporting. francine: eileen burbidge, thank you so much for now. stay with us. surveillance is up next.

i will be joined by tom keene where we talk about macroeconomics. i have a great chart showing you the 30 year differential compared to the two-year market. jackson hole starts later this evening could we have jackson -- we have -- ♪

francine: central-bank munication's fall short. markets pause ahead of janet yellen's friday remarks. the $25 billion redemption. hedge funds to the biggest monthly withdrawals since 2009. and, helicopter money will be japan's next big experiment as mark mobius says it could come as early as september. this is "surveillance." tom, we have an interesting day. volumes