>> from new york, good afternoon. >> we are covering stories from washington and dublin to berlin at this hour. here is what we are watching. u.s. stocks retreating from near record highs after apple is forced to pay more than $15 billion. evidencewe have more about apple will stop the biggest drag on stocks is apple. european commission has amended the island recoup some of the taxes. >> now ireland saying it does not want that. we will hear from both sides, from eu regulator and the finance minister this hour.

>> more evidence the fed will continue its decision on interest rates. sally fisher -- stanley fischer stuck with tom keene on "bloomberg surveillance." hey talked about potential changes and whether there is policy unity within the fed. >> we are growing at around 2% and the problem we face is that of productivity. i do not think the dollar is fundamentally the most important factor affecting the rate of growth in productivity. obviously, a stronger dollar has an impact on the profitability of american companies and on how much we want to import. but the bottom line on this is we have seen an appreciation of the dollar and the american economy continues at full employment. or moveowards --

towards full employment. in a fundamental sense, we have withstood much of the challenge. it has an impact on inflation, reducing inflation, but we have to deal with the world as it is. tom cole in a final thought. final thought. professor at princeton was quite adamant about a greater fiscal thrust. we are exhausted from nine years of monitors alone, central bankers alone. how do you link the need for fiscal policy into the actions you take in september and december? the fiscal policy debate to me 2018.7 or even it is not really part about the calculus now, is it? >> it is difficult to take into account something with that much uncertainty. i am sure there will be changes in fiscal policy in 2017 or

2018, as you suggest, but we don't know what they will be. we do not know who will implement them. so we get on with the world that we see in with the data that come in and with the data we expect to come in. symbolism at the jackson hole, walk out of the lodge and gaze at theelk in the mountains, usually would be chair ye withl somel foreignen dignitary. this time she surrounded by dudley and fischer. what was the symbolism of the new york chairman propping up the chair? >> i do not think we are propping up the chair. it is a pleasure to work with the chair. propping up is not something she needs. tom: just to make sure everybody is on the same page. >> i don't know what it was about. i was asked if i would like to .o out and see the scenery

i certainly enjoyed it. i was in the middle of a cup of coffee and i was allowed to take it out with me. tom: that was important. >> so it was fine. i think it sent a message that arepeople within the system thinking along similar lines. matt: that was our exclusive interview with stanley fischer, vice-chairman of the federal reserve. let's get more insight from the man who did the interview, tom keene with us from washington. fantastic stuff. what was the highlight for you of today's interview tom: any number of ideas. certainly, the ending idea. peter, deutsche bank, i have to give a major props for asking about the symbolism at jackson ,ole when the vice chairman coffee cup in hand as he described, and president dudley of the new york fed with chair yellen making this walk.

as you know, this walk is something with the media all lined up. you never know who will be walking out. i did think at the end of that light moment, the vice chairman made very clear that this is a symbolism of a federal reserve system all on the same page. they are going to need that, not now in august, but they're really going to need this in september and never more so after the election if they go to the december meeting. nejra: we talk about the fed being the central bankers of the world. i know you asked daily fischer about this. what did he have to say? tom: i thought he gave a traditional and expected response. he is in a position that is very different. when you are in power, when you are a public officer, there is one answer and there's a whole different answer when you are not serving the public. the vice chairman fischer gave us the expected answer. you know the ballet on this. out of london, the idea that the

central bank maintain vigilant independent even as they talk to each other all the time. in economic team down here in washington does point out that the september meeting, i believe it is the 21st right now, is the same day as the bank of japan meeting. that is a big deal. two central banks within hours of each other -- there are central banks of the world, but there are some nuances. you got something out of stanley fischer that chair yellen left out of her speech on friday, and that was the negative rates. listen to what he had to say. >> we have learned that the central banks which are implementing them, there are four or five of them, basically, think they are quite successful. and are staying with that approach. possibly with the exception of japan, although, they have said they will come back to try and make negative rates work better. matt: tom, he says the banks

using them think they are quite successful. does he agree? >> yes, he does. he is been very consistent. i spoke to the vice chair on foreign relations well in a has over a year ago and he has been consistent all along. he thinks the experiment of negative rates has value. the distinction -- i want to make this clear. moments ago, zero hedge published a very detailed part of this conversation. they went for the idea of what vice chairman fischer said about favors and invest -- savers and investors. that may be true, but far more important was the idea that you bring up that each nation is different and distinctive doing negative rates. negative rates is not only about the economics, but about culture and nation as well. nejra: i have a chart for us. economists and bankers

agreeing to disagree. we have the generic 10-year and two-year yields for germany. we know yields are negative in germany. what did you want to say about this? tom: keep this chart up. what is important is the x axis. below in the chronic sense of negative rates. it is wanting to talk about negative rates, it is another thing to understand the duration of negative rates. that is where you get into the debate. you can have adam posen at the peter institute suggesting there is some benefit to negative rates and his colleague being a lot more questioning about the value. this is a very heated debate right now. what i would focus on is the basic idea that nation the nation, it is a different experiment will stop denmark is different than germany.

nejra: i have a question on negative rates relating to the fed. i know janet yellen has pretty much rolled them out. what i am wondering as a european looking in, it is there enough ammunition for the fed where we could see another recession in the u.s.? lookst look to qe, to just to for guidance without resulting -- resorting to negative rates? tom: there are people putting out probabilities of a recession forthere is a respect nejra how long our cycle has been. i want to make clear, i hear very little out right what we nmbr recession. with that out there, there is a real debate about what the toolkit have. i will go with the idea a large diversified economy like the united states has an ample toolkit which does not need to include negative rates. with that said, what i hear from every single economist, including the vice chairman, is a real dose of humility over how

s can change this debate on a dime. matt: excellent interview, tom. appreciate your time. i know you have to get on a flight. "surveillance" anchor tom keene. you can get that interview on bloomberg.com. i know tom is also going to put it out as a podcast on itunes. you don't want to miss it. coming up, french economist resigns. will he challenge his old boss president francois hollande in the election -- in the next election year -- next year? ♪

matt: this is bloomberg markets.

nejra: let's head to the markets desk. abigail: looking at modest declines for u.s. stocks today. we have the dow, s&p 500, nasdaq all trading lower, off to lowe's slightly but still in the red. one u.s. equity not trading lower is the dow transport. this is the opposite of what usually happens. the dow transports are still in correction territory from their all-time peak back in november 2015. today we can see the dow transport up nearly 1%. the dow transports are having their best day since august 5. take a look at why. this has every thing to do the airline sector. united, american, delta airlines trading higher. lots of reasons. with a better than expected consumer confidence. , jet fuelve oil lower.

a big piece of the news, united airlines has now hired and you can airlines former number two scott kirby for the role of president. this is really bringing a nice big rally for the airlines today. today after higher kim companies. these companies are trading higher on the news that potash and agrium are in merger talks. these companies are fighting falling prices, declining spending from farmers. we see we have nice scenes here for these companies. matt: commodities not having a good day. where are you seeing weakness? ?here is it affecting equities weakness is area of in the grains complex. corn, wheat, soybeans are down sharply. these three markets are all in bear markets.

when we take a look at the 3162,berg and we go into g# this is a free interesting chart. we see a massive breakdown last friday on janet yellen's more hawkish comments supportive to the dollar, which helped to break wheat down. it appears soybeans are following wheat. there were comments that soybean plantings are expected to be an all-time high for 2017, perhaps pressuring these markets we don't talk about quite as much. you.: thank let's check in on the bloomberg first world news. mark has more. states holding primaries elections today. termmccain seeking a six in there is on a. kelly ward is his main challenger. mccain is hoping he can pull out anng win to challenge

kirkpatrick. florida voters go to the polls, marco rubio faces charles beare. the democratic side, u.s. representatives patrick murphy and alan grayson are the two leading candidates who could possibly face rubio in november. 37 victims of last extend the earthquake in italy are being honored at a state funeral in the devastated town of amatrice. an areaing held in constructed overnight after the victims families rejected plans to have the funeral in an airport hangar 40 miles away. 292 people were killed in that earthquake. u.s. secretary of state john kerry is in india were he is pushing for more cooperation on trade, defense, and energy. the two countries are trying to expand trade fivefold. the $500 billion year. u.s. officials seven pressing india to quicken reforms that would make it easier for foreigners to invest there. tropical depression threatening the north carolina coast. u.s. hurricane center says the

depression is moving northward with a forecast track that shows the center will be near north carolina's outer banks and could become a tropical storm later in the day. news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. matt: thank you. political shakeup in france. french economic minister macron has resigned from the cabinet of president all in. -- hollande. he is not yet committed to entering the race for president next year. currenteantime, the french finance minister will add economy duties to his role. joining us from the conference is caroline. a lot of intrigue. what is going on? position of the economy

minister within the aland government is getting tricky -- hollande government is getting tricky. in july, he did this big political rally saying he would carry this movement until victory in 2017, the date of the next presidential elections in france. after a little bit quiet the nice attacks. in august, he came back with a full-page in a very popular magazine where he was posing with his wife on holiday. he was getting criticized within his own socialist party. now the question is whether he will use his political movement candidate a left-wing

or decide to run against his former boss. france'su are at annual business gathering. any reaction from executives about macron quitting? >> yes. reactions are starting to come at the business event in france. was considered business-friendly. -- one of image europe's weakest technical companies told me earlier who told me he was disappointed with macron's two-parter. he has given up a little bit on the socialist government when hollande was elected. he is still expected to speak

tomorrow night here at the annual gathering. his speech may be slightly different that he has quit the government. however, the group has invited all four right-wing leaders, candidates, and quitting sarkozy . testing on ae change in 2017. matt: thank you for joining us. nejra: still ahead, breaking up is hard to do and germany is sending signals there are some tough choices ahead for post-brexit written. this is "bloomberg." ♪

matt: this is "bloomberg markets." nejra: you have to pay to play. when it comes to market access. a lawmaker for angela merkel's

says if the u.k. wants the benefits of a single eu market structure, it has to cough up some cash to maintain it. losing access to the eu single market is a huge threat to the uk's financial industry. your more details is our european government team leader alan crawford who joins us from berlin. just take us through this new development and how significant it is in the brexit negotiation. >> it is potentially hugely significant. boasts-brexit campaign strongly on the fact it would return something like 300 million -- 350 million pounds per week, which they said goes to the eu and that would be returned to the u.k. government. they asked they said they could spend on things like health care and the u.k. but now it is becoming clear not just in germany, but also

denmark, eastern europe, and the baltic region countries there are several voices now making this point that the u.k., if it wants to purchase a paid in the single market -- for dissipate in the supermarket of 500 billion people, it will have to pay something for the eu budget, somewhat akin to what norway already does. matt: even if many of the voters who decided to push the u.k. out of the eu were not aware of that, surely, someone like theresa may must have known that already. they're not going to get a free pass to tray wouldn't the eu and getting out of having to contribute anything -- free pass to trade within the eu and getting out of having to contribute anything. >> theresa may is holding the first cabinet meeting at her country residence to specifically discuss brexit and

what they see as making a success. there is been a virtually news block out. we really don't know what they want. their differences even among cabinet members over whether some of them want as close access as possible to the single market, others want to just drop that and go it alone. so we need to find out more tomorrow. what they actually want. nejra: take us through a little bit this discussion of whether you can lawmakers are going to have a say on triggering article 50. >> it is fairly straightforward. it is this idea that the british public has been asked in a referendum what they want and a majority said they wanted to leave the eu, but parliament has not yet had its say. the government was under some pressure to allow lawmakers to

have some kind of say. again, we don't know what that will mean, whether it is a legally binding vote in the house of commons or just a debate where they can invent some anger. we don't yet know. matt: we appreciate your time out of berlin, bloomberg's head of eu government coverage. nejra: coming up, a defective side of trading has become offense to many investors according to this chart. we will explain after the break. this is. >> ♪

matt: good afternoon. we are live from bloomberg's world had orders in new york. i am that miller. the markets head to

desk where abigail doolittle has more information on the history stock. take it away. abigail: we take a look at the mystery charge. in blue we have the s&p. we see the redstone declining. . we are looking at energy. the last threeer months.

these are the worst performers. one reason that investors may be utilityway from the yo stocks -- if investors think that they will hike rates this year, they may move away from higher dividend yields. nejra: if you look at the s&p today, there are two of the worst performing groups. .ow we start with headlines markham to has more from the newsroom. mark c.: hillary clinton's advisers are preparing the candidate for the first debate with donald trump. the strategy is reportedly to throw trump into blunders. they are consulting with psychology experts to gain insights on trump's largest

insecurities. the fbi is expected to release information about hillary clinton's use of a private e-mail server while secretary of state. it tells the associated press that the documents would be made public as the fbi response to open records request. the british prime minister will let parliament have a say on starting the formal process of leaving the european union. she says the timetable for that will be resolved over the coming months. the prime minister has said that process not trigger the before the end of the year. impeachment proceedings continue today. this, after suspended president doma process, failed to sway -- ilma rouseff answered

questions for 14 hours during the impeachment trial. senators are expected to vote tomorrow. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. matt: thank you very much. now, let's get to apple. it has been ordered to pay $14.5 billion in european commissions. they insist that they did nothing wrong. ceo tim cook saying that the european commission has apple's history in europe, ignore ireland's tax laws and up in the international tax system in the process. it will have a profound and harmful effect on job creation

in europe. . earlier, we were joined to talk about the tax laws. of stateon is an issue aid. no member states can give out selected benefits to a company. it is a long long-standing case practice. it goes back to actually the 1950's. in that respect, there are no novelties here. this is the work that we are supposed to do. matt>> there is disappointment g both parties including the u.s. treasury. the treasury is disappointed

that the commission is acting unilaterally. theeu and the rest of international community have made the decisions together. why did you feel the need to act unilaterally when there has been so much progress over the last three years? very important point, the progress that we have made over the last year. also the european union. is all good and fine because it makes global taxation much fair in the future and taxation of such much more transparent. specific.ere is we have a long tradition of member states handing out benefits or advantages to specific companies. this is more than a case of

taxation. the benefit can come in all forms. it can come of -- in the form of a taxp piece of land or benefit. that is the case here much more than the case of interfering in the very could work done in the g-20. >> are there any other companies tax have such favorable regimes, policies, treatments in ireland? we have more open tax cases but they have not been in ireland. , andve in luxembourg earlier on, we decided on a scheme in belgium with a number of european multinationals. just as well, it was decided on fiat and starbucks.

those were not irish cases. it is the same thing we are looking at, as if companies get selected advantages not open for other companies. >> how is this really going to damage u.s.-european relations? >> it is not going to damage the european relationship with the u.s.. we share a number of values in t these areas. you would find that there is a strong common value base when it comes to more fair global taxation. eut: that was the commissioner for competition. nejra: bloomberg markets also spoke with michael newman. he was asked whether apple is putting pressure on ireland to fight the decision. >> the irish government will take a decision tomorrow to

appeal to the european courts of justice. we are appealing because we do -- we want to stand by the people who gave opinions to apple that their operations would be treated for tax purposes. further, we believe the competition commission in europe is trying to get through that portraya backdoor to withoutthey shook it any change in the treaties they will have a competing interest in the tax free companies.

they should follow economic activity. in other words, where the economic activity occurs is where the tax should be collected. i have an apple iphone. in small print on the back of it it says design in california, many fractured and china. their tax activity is not in ireland, get, the commissioner thinks the irish should be responsible for collecting taxes. >> nevertheless, on all of the sales recorded from two very large companies were treated to a very large head office. theye of those companies tried 1% of taxes to the irish government. if you did not figure was illegal, why would apple change the tax structure? why would i only get rid of the ruling? apple has between 5000-6000

people employed in cork. they have substantial activity there. they playful taxes on the .rofits generated how they manage the profits internationally is a matter for apple. anything that was due to be taxed under irish law was full tax. >> do you mean apple pays thousands? the ipad and the are apples most excess

will products. they were both generated in the united states. the activity which gave rise to the product was based in the united states. what is your reaction. we talked yesterday before we saw the size of this number. is it surprisingly big? were is a lot more than we expecting. billion.it at about $2 when i woke up this morning and looked at my iphone, i saw what the number was and slightly jumped out of my socks. story,that said, in the we are looking at a sum that would eat up about three months of profit. is that right? you also put up a chart putting the revenue on solid ground. is it that much of a concern? >> the stock is down today.

it is obviously not that massive of a deal. it is much bigger for the , not onlyationstates with apple, but others. we are a spoke about some of the other companies which are subject of investigation right now in other nations. those are the places where really the ramifications will be felt more keenly. matt: the last time i heard about a tax bill this big after the fact, it involved vladimir gulag.and of gua did they really think they will get 14.5 billion dollars out of apple or they just try to make a statement here? >> if you look at the statement, it was quite careful, the billion euros.13

it could take three or four years before we ascertained the exact number. e ofa: what do you mak the way the apple and ireland are on the same page? does it make it more likely perhaps that apple will not foot of bill as much as $14.5 billion? the european union and the european commission, they are not insubstantial organization. the relevant courts in europe are not going to be bullied. the fact is that the treasury secretary last week said that he tried to bully europe into giving a more meaningful decision are coming to a more meaningful decision. they did not. they did not come up with a big number. the thing the should look at on the european scale, ireland has substantial international debt, which was the product of the bailout of their banks a couple years ago. , whichlot of the money

ireland may be forced to recoup, could go back into the coffers. the german system may be saying, why should we subsidize to apple to create 5000 jobs in ireland when we have stumped up hundreds of billions of euros to keep that country's economy afloat? that is the kind of argument they are making in europe. matt: is the eu in such a strong position to start challenging the member state tax policies so toon after one of its bigges member states voted to leave the eu? >> i think you have to differentiate the evidence slightly. island's tax rate unaffected. it is still 12.5%. what they are looking at is the direct relationship between apple and the irish government. there was an agreement reached under a previous regime back in

the 1990's that allowed ireland to pay a very low tax rate. that is what the european union is picking on here. that does not mean that your question is not valid. subsidies help maintain that economy not just in times of trouble but also infrastructure. it is not in their interest to look at leaving. nejra: on the other side of the coin, tax repayments could start costing the u.s. taxpayer. right? >> yeah, but there is an upper threshold. threshold tax rate is 25%. it is certainly going to be a thetopic of conversation in

presence of debates. the first is in about a month time. it is opportune timing to put at the front of the agenda. nejra: alex webb in san francisco. fantastic reporting. thank you so much. matt: fascinating story. coming up, home process -- home prices on a gradual climb. as is bloomberg. ♪

nejra: this is bloomberg markets. i'm nejra cehic. i am matt miller. u.s. home prices in 20 u.s. cities were up 5% versus june of last year but personal income is up just 2%. how much more price appreciation can we see with income not rising as much. bloomberg spoke earlier to that point. >> there has been a lot of momentum in home prices. they're different from the stock market. there have been going up since a slower pace. now, i'm kind of worried that it will slow further. seasonally adjusted, we are just about flat in the latest month. no change. ies are slightly

down. it seems to be a weakening market. how much more can prices fall. what would be your expectation for the next 12 months for home prices? >> for me, i would say something akin to the inflation rate. something around 2%. not exciting, but not horrible either. thea: i want to bring in u.k. perspective. caroline and london. in london, the minute we see a cooling down in the u.s. numbers, panic strikes as we focus so much on how that makes us feel on a consumer point of view. does this spell doom and gloom? strong and gloom is too

of a word. i have done research on this myself. housing is a very strong wealth asset. housing is held much stronger than assets are. people see it and they are very aware of the house price movements. i think it is possible that there is weak is coming -- weakness coming, say, this fall. if the fed should raise interest rates, it might be taken as a signal that the market is headed down. it could we change in confidence. we have not seen it yet though. >> from your perspective, should the fed raise rates, september? i am a little doubtful about this theory capital expenditures are not -- even though interest rates have been low -- they are not where they should be. we have seen this weakness in the housing market. i think i would wait. if i were there, i would vote

against an increase. fishereard from mr. today, earlier, speaking out .ith tom keene it seems like the rhetoric was that he was less hawkish than last week. what was the fisher that we heard today. fisher compared to the one we heard last week? if you talk about the jackson hole conference, i thought it was a pretty intellectual tech conference. i guess janet yellen was talking likelyely about the more upswing in interest rates. i guess the labor market reports have been strong recently. overall, there is still kind of a nebulous situation for me. jackson hole,e at

by don't know if it would change my opinion from listening more to these papers. matt: that was a yellow university economics professor, robert shiller. ,e is always a bit skeptical and probably rightfully so, but a little more bearish. he showed us a chart of new home sales price between 200000 and $300,000. than theore extensive median home price. here you see the chart. it goes back to 2003. very interesting. obviously since 2000, the crisis than09, that fell lower 10. this is attributed to stronger consumer confidence, so fewer concerns about the future, and

easier access to credit, something we hear about a lot. nejra: also, home ownership in the u.s. right now is quite low, relative. we are getting back up there. we had then at almost 70%. hovering around 65 right now. relatively low, but more than ped nations. up, and coming economic data -- all eyes turned to friday's jobs report. more from the exclusive interview with fisher in the up, and coming next hour. this is bloomberg. ♪

york, it is 1:00 in new 6:00 in london, 10:00 in newport beach. matt: welcome to "bloomberg markets."

we are live from bloomberg world headquarters in midtown manhattan. i'm matt miller. nejra: i'm nejra cehic. are covering stories from toronto to rome to beijing this hour. u.s. stocks slipping today as apple shares fall, the company ordered to pay a record $14.5 billion plus interest amid a european union tax crackdown. matt: said vice chair stanley fischer says we are not one and done. the dollar holds it gains and yields fall across the treasury curve. archer is repositioning ahead of the friday payrolls report? nejra: and another potential deal announced. potash and agri-amarin luminary .alks to emerge we will have a live report from toronto this hour.

matt: let's go to the markets desk aware at the of doolittle has the latest. we are looking at a similar holding pattern to what we have seen all day. small losses for the major averages. the dow, s&p, and nasdaq are down modestly. when we look at a chart of the s&p 500, we see just how small this decline is, not a lot happening. this is a 10-point range. it looks a little dramatic on the intraday scale, but this is a 10-point scale. in the retail space, we have some companies on the move. abercrombie & fitch are crumbling, down 20%, on pace for the worst day since 2008 after the retailer posted a wider than expected second-quarter loss. it looks like there are real problems here in the u.s. along

with their flagship stores in taurus locations. another retail disaster, g3 apparel. this is the worst day since the middle of march. down about 30%. the cause today, they also missed second-quarter estimates. they guided down for the full year. the dollar is at a one-month high, .6% higher on the bloomberg dollar index, wreaking some havoc on metals. this in metal and mining stocks, including freeport, u.s. steel, all down. there was also some commentary that some expect gold to fall in 2016 and 2017. here, gold isal on pace for its first decline in august since 2009. august is typically a strong the indiang into

wedding and festival season. if you look at the bloomberg, 31.58. copper has been in a range, lots of uncertain tea. there is an area of congestion. it appears bearish, it could prove to push copper below support. we don't know, we could see it spring back. but especially with the dollar strength we have been seeing, it looks like copper could be poised to fall a bit lower. matt: great chart, love the trendlines. on thenow let's check in first word news. mark crumpton has more. mark: senate minority leader harry reid is asking the fbi to investigate the threat of russian tampering with the u.s. election. the fbi director, he points to ties between a

trump campaign and russian interests and notes evidence of russian efforts to intervene in the other tour process, including hacks of democratic political organizations. bernie sanders is applauding the european union ruling that apple must pay $14 billion in back taxes and interest to ireland. apple'sed today, earnings in 2015 were the highest reported of any corporation in history, yet apparently that was not enough. was on income inequality and banking reform. department has closed offices in five states after receiving anonymous threats. a spokesperson says the department received several anonymous messages that raised concerns about the safety of personnel and facilities. the closed offices are in colorado, connecticut, maryland, north carolina, and west virginia.

the french economic minster has resigned. increases speculation he is planning to enter the presidential race next year. polls show that he enjoys wide popularity. will takee minister over his duties on the economy. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. federal reserve vice chairman stanley fischer said even if negative interest rates seem to work in other countries, they are not on the table in the u.s. speaking with tom keene washington today, he reiterated the fed will remain data dependent and that monetary policy discussions are always ongoing. work of the central bank is never done and i don't think you can say one and done, and that is it. , but ifhoose the case we choose the pace on the basis

of data coming in. so i don't think we know, whether it is one and done, or several. it depends on what is happening in the economy. you stated, i am an optimist. you are surrounded by pessimists. we speak to them every day on bloomberg. i want you to redefine martin good friend's comment at jackson hole of pervasive pessimism. it exists today. how do you push back against that? >> the question is what is the pessimism about? it is not about employment. employment is close to full employment. it is about growth. that problem is largely about productivity growth. something which is very hard to control by policymakers. enormously on what

private individuals are doing in their companies. it is very slow at the moment. buthanges from time to time we do not know when it will change. i expect it will change down the road. there are remarkable things going on on the technological front, but they are not yet in the data. >> you mention the unmitigated blessings of the united states, certainly, you and share yellen are running the central bank distinct from the challenges that other central banks have. do you feel, going into the september meeting, or for that matter, the december meeting, then you are the central bankers to the world, or can you be discreet and only look at the united states economics? >> the world is becoming increasingly interconnected, especially the capital markets of the world. what we do affects many other countries. that was always so.

what is also true, what they do affects us. we are dealing with interconnectedness and we are probably the most important of the central banks, but the european central bank is operating in an area of about the same level of gdp, and what it does matters a great deal. nejra: that was stanley fischer, federal reserve system vice chairman speaking today. templetonklin criticize the fed saying it was behind the curve. when setting policy, it is not really the fed's role to increase, or even their ability to increase potential growth. that has to do with structural reform and other issues. what the fed is at risk of doing, if we are at a new potential growth rate which is lower, and we are closing the

output get and we are running at or above the potential growth rate, the fed risks fueling inflation, either asset price inflation, or real inflation, by being too relaxed. inyou expect a rate hike september, and if so, still time to short u.s. treasuries? >> it is hard to predict. pretty much every meeting, despite better data, there is always an excuse to not hike interest rates. we are not counting on a rate hike in september although it's possible. the market is 50/50 at this point. thebigger issue to us is, fed has a lot of slack in terms of how late they can go, because of global liquidity pushing down rates, financial repression forcing certain investors to buy treasuries which create an artificial bid for treasuries. there are a lot of reasons that

the market is held at the lower-level despite economic conditions. seeome point, when you later this year headline employmentet to 3%, at full employment, the economy growing at full potential, there will be real questions that investors begin to ask about why i'm buying a u.s. 10-year bond at 1.5%, which is a negative real yield. michael, you are known for making large one-way bets on things like the yen. emerging markets like the ukraine, and here now, shorting u.s. treasuries. in that not panned out every time we have a cell of an treasuries we have a by the bit mentality, not from u.s. investors, but from japanese and onepean investors, where .5% looks pretty juicy compared to negative yielding assets in other countries. how do you square your short

bets against these investors coming in? is one of the factors holding it in, but we would not want to take huge amounts of interest rate risk betting that japanese investors will continue to fund our deficits. as we move into next year, we are likely to see an expansionary disco policy. when you combine that with the year-over-year fx of commodities falling, there will be inflationary pressure. that is kind of a toxic mix, in terms of inflation dynamics. certainly, japanese investors ae getting a little bit of yield pickup over what their earning in their home market, but we would not want to take such huge amounts of risk betting that this rally can repeat itself. installedael have from franklin templeton -- michael hasenstab from franklin templeton. as the fed is sounding

more and more hawkish, we have some very telling charts. this is bloomberg. ♪

nejra: this is "bloomberg markets." i'm nejra cehic. matt: i'm matt miller. we are talking a lot about apple. mentioned a chart on the bloomberg. i have massaged the chart for little bit, so i submitted for your interest. submit it for your interest. the slate grey blue is the amount of cash.

the think is their total debt. also, no slouch, creating debt, $85 billion of debt because they have so much money overseas. to sell backostly in the u.s.. the interesting thing is the white line here. this shows income tax expenses. though they were climbing through the beginning of this decade, they have come down theyantially, or at least have even doubt, if you put a trend line there. that is why it's interesting that they may be able to put this $14 billion bill that the eu wants them to pay ireland, even though ireland does not seem to want it. nejra: it would eat up about three months of profit. recent stability could be coming to an end.

yellen is signaling a potential rate increased by the end of the year. there are many ways where you can look at bearish bets on the yuan. you can look at the process contracts to sell, demanding a bigger contract than those to buy in the future. the futures market is also showing a discount to the spot market. here is a look at the spot market in blue, the onshore yuan spot rate. 6.7. you have also got the three-month implied volatility in white. it has come down substantially from where it was in the beginning of the year but has more in august than any month, so triggers are betting on volatility to come. china'sine is about credit party winding down. the first chart i have shows yield on china local aa+ bonds.

actuallyee these touched a record low on august 15. we have borrowing costs for chinese companies low. you can say they have never been so low, but that is little consolation to companies who are more focused on cutting debt rather than investing. now my second chart. china fixed asset investment growth. i have taken this back to 1999. we have the lowest fixed asset investment growth since 1999. this, combined with a decline in net issuanceg -- has dropped 39% in august, so as i said, cutting debt is top for these companies. this suggest a monetary easing will have a bit of trouble revising growth.

china's credit party really winding down. matt: maybe not as much of a command economy as some of us think. they can lower interest rate for sure, you can lead a horse to water, but you cannot make it drink. unless they force these companies to invest, to do fixed asset investment, which they don't want to do, to get to a more self sustained domestic growth economy. chinese cash company holdings have also been increasing. actually they reached a record high. cash, canve a lot of borrow cheap, but they are not buying stuff. still ahead, if spotify wants to avoid the fate of record stores, it will have to change its one size fits all price since cushion.

nejra: this is "bloomberg markets." i'm nejra cehic. matt: i'm matt miller. spotify is shooting for a public listing next year, which means

the music streaming service will have to explain why it is stubbornly unprofitable. has a fewe suggestions for spotify two of its game. she joins cheryl massar on radio. >> thank you so much, welcome to radio.rg we want to welcome shira ovide, a columnist at bloomberg gadfly. this $10 a month subscription fee, but you say that does not cut it. exactly sure how this happened but $10 a month has become the standard price for music streaming subsections. it is what spotify charges, the listic, go on down of everyone that has a paid music's extraction, all $10 a month. is what everyone is doing in the industry, how does spotify get out of it, what kind of leverage do they have that others don't? >> they are part owned by the music labels themselves, that gives the music industry some

incentive to see that spotify succeeds. it has also been reported that spotify represents 10% of the music industry that record labels, annual revenue, which gives them some have to. colleague and i were encouraging them to basically try a little bit more price experimentation. instead of $10, all you can listen to music every month, why not try five dollars a month for country music. if you and i are country music fans, i might not be willing to pay $10 to listen to every song in the world. >> i am not. you are aht pay if big classical music fan or country music fan. carol: like the cable industry. >> i was reading a report earlier this month which was basically comparing it to the pay-tv business. you have these large bundles of subscriptions, channels that you

buy through your pay-tv company, but now we have started to see more of these smaller bundles of channels for less money being offered by cable tv companies, to keep themselves relevant at a point when young people in particular will not pay $80 a month or whatever it costs for a big bundle of tv channels. carol: i look at my own consumption habits. people want to pick and choose what they want, and i will pay for that, but i don't want all the other stuff. paid music subscription is still a relatively new business, so everybody is still figuring out exactly how to do with the right way and maintain viable businesses for all parties involved. carol: does spotify have to do this to financially survive? >> the difficult thing for spotify is they lose money, they pay 70% or more of every dollar in sales back to the record labels and two other music industry interests.

they cannot keep going like this, losing money with an $8.5 billion valuation, trying to go public next year. they cannot do this with economics the company has now. that was shira ovide with carol massar. you can continue listening on bloomberg radio on a serious accident or bloomberg radio. matt: time now for the bloomberg business flash, a look at some of the biggest stories in the news right now. fertilizer company potash and , the largest agricultural retailer to u.s. farmers, are in talks to merge. the combination could be announced next week. no final decision has been made. potash has a market cap of $14.6 billion. bit smaller,ittle $13.2 billion. the two want to see a merger of equals. for the firstaker

light of one of its recycled rockets. will berg-based ses sending its next communication satellite up on a previously flown falcon rocket. launch will take place this fall. says the global tablet slump will likely persist for the rest of the year. the firm sees numbers reaching an historic low, down 11%, but the market is expected to rebound after 2018, when the ipad makes a comeback. south africa's ruling african national congress is urging finance minister to cooperate with a police investigation. authorities are looking into allegations he set up an illicit investigative unit when he headed the national tax agency. the anc says it has full confidence in gordon and is questioning the police unit over their questioning of him.

gordhan denies wrongdoing. up next, a deeper look into market trends with ahead of microstrategy peter tchir. this is bloomberg. ♪

nejra: live from bloomberg world headquarters in new york, i'm nejra cehic. matt: i'm matt miller. this is "bloomberg markets."

thes get the latest on first word news. mark crumpton has more from the newsroom. fbi is expected to release documents and related to its investigation of hillary clinton's use of a private e-mail server while she was secretary of state. a law enforcement official tells the ap that documents in the as theuld be made public fbi response to open records requests. it was not immediately clear when the documents would be released or exactly what they would include. a close political ally of german chancellor angola merkel says if the u.k. wants the advantages of the european union's single market, it will help to help pay into the eu budget. germanments from the lawmaker lower the uk's chances of a low-cost solution to brexit. he points out norway is a non-eu member that contributes to the blocks finances in return for market access.

a 20 story building under construction in abu dhabi caught fire earlier today. it forced the evacuation of the high-rise and a nearby luxury hotel. there were no immediate reports of casualties. in a series oft tower fires to hit the united arab emirates. a hurricane watch is in effect for the big island of hawaii as hurricane madeline closes in. forecasters say the storm should be near or over the big island by tomorrow. matalin is a category four hurricane with maximum sustained winds near 130 miles per hour. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. now for trends in the equity market, u.s. stocks are down today following their biggest gain in three weeks as investors await job data due on friday for more clues on the fed's rate hike path. for more, let's bring in joe weisenthal and brean capital's

head of microstrategy peter tchir. i love the third paragraph of your note where you talk about a willful disregard for the actual news hitting the tape on friday, and an almost gleeful response when markets bounced. what's interesting, you talk about this the knocker. >> something that you are supposed to make but you get nervous enough and you miss. the strategy has worked well over the past six months. every time you get the selloff come you buy on the debt. but this time feels different. more nerves and pressure and you are seeing volatility creep up. it may not be the simple solution now of buying the debt. dip. >> why wouldn't that work? dip is not big

by any stretch, but what has changed? back up toseeing vix about 13, which is a support level from earlier in the year. now it is creeping back up. creeping back up, as you head into more seasonality with lots of things going on in september, more about brexit, you have the spike up,see the vix and then equally important, bond yields are starting to creep up globally. and you are seeing these so-called bond proxy stocks, smallies, experiencing outflows, down for the past month, and underperforming. the things that have supported the equity market are not there. matt: that is the theme of the week for us. is,do you think that couldn't you see that the economy is improving, that things funnily look better, so

we no longer need to hide in telecoms, utilities, and staples? >> you are seeing a little bit stockssh into the beta outperforming. a lot of people chose this as a last bastion in the equity market. they did not want to own equities but were convinced to buy these dividend stocks. as yields get higher, i think they will want to go out of that. exit will be out of the stock market completely, and that is the risk. i think there are a lot of week hands clinging to this equity position. if they give up that, they are selling into the equity markets, which will create pressure. nejra: we have talked about this hunt for yield. one thing that you talk about a lot are the opportunities resented by the increasing libor. wrote a greatz story about how the equity has not paid a lot of attention to this rising. how are you playing this specifically? >> we like the leverage loan

space. it is the high-yield bond equivalent. floors at 75, so you are starting to see it creep up above that. i would prefer that element of safety compared to less yield. there are also close down funds out there, etf's. those close down funds have some leverage. you have a little bit of upside if yields rise, and you have a lot of protection because this libor move has been isolated. citibank came out with a seven-year floater. there are lots of corporate floaters out there. again, you are not giving up much to avoid the interest-rate risk. the differential between one-your libor and 10-year treasuries is a relatively long time low. the trade-off makes sense. does this advantage people

looking for diversification in their portfolios? last three days, the degree to which treasuries and equity seem to be ring and lockstep, there seems to be no diversification at all. friday was one of the worst days in a long time for the multi-strategy indices. monday was very strong. does the strategy you are representing offer an alternative? >> i think it will behave a little more uncorrelated. moving into that libor and taking advantage of that rise, which i think is technical and at this time, but people will be seeing their mortgages go up, and this is a good way to diversify your portfolio and get some fixed yield income. matt: looking forward to the jobs report on friday, we got a blowout job last month. if we get another one, does the fed go in september? has decided that yellen

has indicated that is where they will go. --the market is expecting the august report is typically disappointing. if we come in line, that will be good enough. where i differ a little, the fed put so much time on june and then did not raise. coming into that month, we had some bad data. but it was more than that. now, you have the opposite. the data is coming in ok. tople were expecting pce miss the other day, but it came in ok. i would not be surprised to see a september hike if we have an excellent jobs report. peter tchir, thank you. joe weisenthal also joining us. today,coming up later alberto ramos from goldman sachs shares his latest outlook for brazil as president dilma

rousseff's impeachment proceedings continue. matt: let's take a look at the day's losers. take a look at who is falling. bonds? are they up or down? nejra: the two-year yield pretty much unchanged. the 10-year up slightly by one basis point. seen a stronger dollar today, i believe at a month high. bloomberg dollar index along with other currencies. there we go, dollar-yen. 103.06. a little bit of a weaker euro, off 5.4%. sterling is weaker by .2%. matt: we are up at a one-month high. this is a look over the summer.

i guess tomorrow is the last day of summer? that is the way i think about it. let's take a look also at some of the commodities. .il and gas today, down commodities across the board. crude is down, brent also down almost 2%, natural gas down as well. metals are up, as we have been talking about. stocks, on the other hand, we see red arrows on the indexes, but there is a potential merger in the works that is boosting some of the stocks we are watching. potash and agrium gaining here. both are canadian companies. apple taking a hit. 4% of the nasdaq. a 1% drop their makes it very improbable that the nasdaq rises as well. hershey down 11%. yesterday we reported mond

elez will no longer be bidding for hershey. no merger there, and that hurts the stock. ,or more on potash and agrium let's bring in jamie sturgeon. what is the catalyst between this merger? fertilizer prices have fallen pretty stunningly over the past year. potash is down 50% from last summer. what is driving that decline, pretty simply overproduction. declining demand from china and india, in particular where farmers have held back on signing on new agreements. some of those contracts have been worked out in recent weeks. potash has been busy trying to reassure investors that things would get better, but the market has not bought into that narrative. you can see that in the stock short interest which has been

climbing, rising sharply in july. that is mine potash cut their dividend for the second time of the year and lowered its full-year profit forecast. agrium has also cut its full-year forecast for the year twice as well, so there has been some pressure on these companies to do something. rbc capital saying while it does not solve the problem of oversupply in the markets, this merger will help while pushing competitors to compete. nejra: what does this do in terms of market share, revenue, earnings? >> and brings together the largest american fertilizer in robustwith a much larger sales channel to sell through. they would stake in claim to a major portion of north american production. more than a quarter of nitrogen production, a third of phosphate production.

look toysoducers now to become one big global player. matt: investors are optimistic the deal will happen. any roadblocks that you could possibly see from road -- regulators? pretty are reacting favorably, but the early consensus is there could be some regulatory opposition. saying because of the sheer size, there will be regulatory interest. early suggestions are that the combined company may perhaps sell off some potash assets. others do not see significant divestments as a concern, saying there is only minor overlap in the wholesale business, which is another reason the deal makes sense. both companies appear to complement each other, which the question why this did not already happened. matt: thank you. nejra: coming up, we meet one of the first families of italian wine.

they have been making wine for 30 generations and have made quite a bit of money in the process. this is bloomberg. ♪

this is your global business report. >> apple is being hit with a massive tax bill. the european commission says apple dodge more than $14 billion because of illegal tax benefits. chief executive of volkswagen best to overcome resistance to his technology overhaul. he lays out a timeframe to

reform the company after the diesel crisis. >> threatened coastal lines price for a stormy future thanks to climate change. residents fear high wind and flooding. their governments fear reconstruction costs. we look at what is being done to minimize the damage. the european commission has ordered apple to pay more than $14 billion plus interest in a long-running tax case. it is the longest running text county in a crackdown on so-called sweetheart fiscal deals. this selective tax treatment of apple in ireland is illegal under eu state rules. it gave apple a significant benefit compared to other businesses. the eu says in 2014 the tax rate on the european profit 5/1000 of 1%.

both apple and ireland says they will fight the decision. the vw management board is working on about 60 projects to overhaul the automaker, one of those being a cultural shift to numerous 12 brands and divisions to cooperate as it retools for technological changes. the company is still trying to recover from that admissions cheating scandal. dieseln owners of those cheating volkswagens have been given a choice. you can get the car fix or get your money back, and they are lining up for the cash. whose half of the drivers cars are in violation of pollution laws have signed up for the settlement program. most are asking for the buyback. oil discovery hit a 70-year low in 25th teen ye015.

a scottish firm says explorers only discovered about 1/10 as much oil as they have had since 1960. one reason, drillers have made drastic cuts in exploration budgets. time for our bloomberg quick take, where we provide background on issues of interest. tropical storm xina hurricane terry topic around the globe due to climate change, the world's oceans are warmer. scientists say that means more storms or more intense storms. now live within 200 kilometers of the coastline. each year, many of them fierce storms and high winds and flooding and their government fears reconstruction costs. in the atlantic basin, forecasters predict the june through november hurricane season will see more storms than the 12 that occur in a normal year. for the pacific, el niño has left the ocean's surface somewhat cooler and reduced the

frenetic pace of storms in 2015, which included the strongest hurricane ever encountered in the western hemisphere. eitherle, japan was hit first typhoon in 11 years. the devastation caused by hurricanes and storms have been a constant struggle for those that live near the sea, and even before the new threats posed by climate change, disasters forced some to rethink their defenses. in galveston, texas, the seawall raised 30 blocks as well by 17 feet after one of the deadliest storms in u.s. history. in new orleans, levies and canals have been used to harness the mississippi river for 200 years, but the flow design to flooding and hurricane katrina. more than 900 people died and three quarters of homes in the new orleans area were damaged. there is a divide brewing on what to do to prevent the damage or even to rebuild.

tokyo built a massive underground flood diversion facility. new york is planning a protection system around lower manhattan. some planners and environmentalists are challenging the right of people to rebuild after storms. you can read more about storms in our quick take on the bloomberg. that is your global business report.

matt: in today's pursuits, the toscobaldi's have managed maintain their prosperous wine business for more than 700 years . in many european countries, not only will that income but also professions tend to be sticky and passed on from generation to

generation. ♪ of one of their oldest wine dynasties in italy. his ancestors built the first bridge in florence and supplied wine to michelangelo. 'sill, lamberto frescobaldi first experience has hardly been a pleasant one. because ino memories drank too much wine at the age of six. i went to a summer party, with all the workers, and i was given e because i was the son of the boss. they could not give me water. >> today, he chairs the family group and tries to be as successful as his ancestors. not an easy task after 30 generations. they are still one of the will to its families in tuscany, which is no surprise in a town like florence. richest dynasties today were

also top of the socioeconomic ladder almost 600 years ago. maintaining inherited wealth has worked for the frescobaldi's but it is less of a blessing in europe where family fortunes are more prevalent than in the u.s. or asia. sign of the continents low social mobility, keeping education, income, and social connections from evolving over the generations. theerto does not deny benefits of inherited wealth. >> i would say i was very lucky. i had also the opportunity to winein a business, in the business in california, doing my studies, and i got to know those wines as well. >> but he says it is not enough to keep a family business up and running. you do not become the richest

.erson on the earth you become a person that has somewhat of a feeling to do long-termt have a return on investment. something intangible that you have to feel when you have inherited, you actually do not own it. you only have to run it properly and carry on something else. to read more about the frescobaldi wine dynasty, check out pursuits. just go to the bloomberg. take a look at this chart, speaking of the bloomberg. despite today's losses, the s&p 500 heading for its longest

month a winning streak since 2013. it is still on course for a six-month gain. one more day of trading this month. matt: so this is the churn, climbing the wall of worry. lt-up.not a me as peter tchir has said, buying the dip has proven to be a winning strategy. nejra: the 10-year of just one basis point. stronger dollar as well. matt: coming up, if he loses the election, will donald trump build a media empire? we look at his potential partners. this is bloomberg. ♪

>> welcome to "bloomberg markets."

david: we are live in bloomberg's world headquarters in new york covering stories out of san francisco, washington, dublin and sweden. u.s. stocks retreating from near record highs and the dollar strengthening on expectations that the fed is moving closer to raising interest rates. we'll hear from the fed vice chair and show the charts that put the fed's actions into perspective. vonny: then apple is facing billions of dollars in taxes. the jury takes aim at the tech giant ordering the largest penalty yet. >> this selected tax treatment of apple in ireland is illegal under e.u. state eight rules. it gave apple a significant benefit compared to other businesses. david: and a