scarlet: good afternoon. david: we are covering stories from san francisco to london. scarlet: this is what we are watching. stocksthe ecb consider to buy? david: how to make apple grow again? they will host their annual media circus this week. boxes tickingp this week. let's head to markets with julie hyman. anye: we are not seeing resurgence of elite. the summer has wound to a close. there is little change.

they all did dip into the red earlier. strongerq has been the of the three averages. we saw a shift in tone after we got the august isn numbers showing an expansion of the services industry at the slowest pace in six .5 years. -- 6.5 years. that caused a ripple effect across the market. take a look at the bloomberg for how that is shaking out among the various groups. stocks on thecom ride. tilly companies tend to do well. financials are lower in tandem with lower bond yields. i mentioned energy as well. , oilf the strongest groups has rebounded bit. there is a deal in the pipeline energy. acquirednergy has been in a $28 billion deal. it is an all stock deal.

pipelineping the other companies. you are seeing them on the rise as the steel happens. we are watching a relatively smaller deal. they are buying yates petroleum. that is $2.8 billion. that exposes -- expands their presence in the delaware basin. that is coming from morgan stanley. withare signing a deal subsea services for that company. there is some news dealing with carl icahn. the stock is being held for trading. fors buying the company $9.25 a share. back in february, he offered to buy the shares of this company. at that time, his offering price

was seven dollars or share. in june he offered a dollars per share. now the deal is getting done at $9.25. he is trying to bring together three different automotive holdings. we are consolidating these retailers so we can take a look at the stock and let you know what opens backup and what it does area david: courtney collins has more from the newsroom. courtney: president obama is promising to work with the you win to increase sanctions against north korea. u.s. woulded the redouble efforts to choke off north korea's access to international currency and tech knowledge he. this was during his historic visit to laos. >> we are going to work diligently together with the most recent u.n. sanctions that

are already placing north korea on the most intense sanctions regime ever. we are going to make sure we're closing loopholes and making them even more effective. courtney: he is pledging $90 million to clean up unexploded bombs dropped during the vietnam war. the money will pay for people injured when they accidentally explode. hurricane newton slammed into the twin resorts on the southern tip of baja california. it knocked out power and stranded tourists huddled in their hotels. it and made landfall with winds of 90 miles per hour. it pelted cabo san lucas with heavy wind and rain. inpical storm running is effect for long island as hermine continues to churn hundreds of miles offshore. the storm is asked you begin weakening, but could continue to

impact areas from new york to seven new england with waves and coastal flooding. settled gretchen carlson's gender bias lawsuit. they've agreed to pay $20 million, according to a person with knowledge. they also apologized to her. roger ailes step down in july after carlson brought her lawsuit. is said in a statement she ready to move on to the next chapter of her life. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. scarlet: thanks so much. ratescides on interest thursday. if you come inside the terminal and look at the ecb space, you can see the data that has come out. it suggests little has changed in the region's economy.

you have a final plan for the second quarter of 3/10 of 1%. its 1.6% on a year-over-year asus. we know that easing policy has benefited bonds. should the ecb at stocks to its chopping list? let's get some insight from jeremy smith -- shorts from earning tree. we know it's running out of funds to buy. what do you think of that argument? an interesting word where central banks are going into stocks. you have the fed, ecb, the bank of japan, the bank of japan is buying stocks today. they thought it was a different -- disappointment. they bought $60 billion in stocks a year. think are a few lessons from

what japan is doing that the ecb would think about. they are buying to indexes. there is a lot of criticism that they are distorting or becoming shareholders because it gives big weight to small companies. they have to be successful. there is another issue with central angst weinstock. a bond matures. a stock, they will be on the balance sheet for a long time. will lay sell a stock? that is one question. scarlet: they need to think of an exit strategy. jeremy: will they ever exit now they have these stocks on the bout sheet. it's natural. if they are running out of corporate and government bonds, should they buy u.s. treasuries? i think that's a different question that would explain things. david: we have policy meters in frederick this week. jeremy: they haven't taken any action since march. the inflation

expectation, they have been trending down. they are at the same level they were in march, when they expanded the bonds. from that mandate, you expect them to take more action at some point. is it going to be this thursday? expect 80% of people them to extend the duration of the program. right now, it's going to expire in march. the first up is expanding that by another six months and i think people expect that to happen. scarlet: what would be the catalyst to them buying equities? jeremy: will equities and stimulate inflation? their mandate is inflation. they have a mandate of employment. in the u.s., it actually makes more sense. it would be tougher to get past to the congress. bonds, the u.s.

bonds would stimulate inflation more. it's all about the currency. the weaker euro is the one thing mario draghi was talking about. that is still very true today. he wants the weaker euro. i think u.s. treasuries solves that. david: what is the status of the central bank trade? might be dead right now? jeremy: i think they are supporting the bond market. yields are very low and inflation is low. stocks, if you look at stocks versus bonds, bonds look much more expensive than stocks. u.s. stocks are expensive versus history, compared to bonds they are relatively cheap. you would still say european stocks are cheap and then u.s. stocks. japanese stocks are cheaper. you would probably favor the

foreign markets over the u.s.. bond yields are down globally. scarlet: let's talk a little bit about what we can learn from the bank of japan. you mentioned that they went into etf and distorted the market a little bit. do you see the benefits of what the boj has done? jeremy: they are trying to change perception. they want to make it safer and tell investors to come in and not be scared about weinstock's when the market is going down. -- when stocks are going down. investmentt more toward that. household start feeling more confident. i think there is something to buying stocks. there is a different mandate for the ecb. david: let me about desk asked you about the difficulty of

navigating this space. you are seeing outflows. talk about how hard it is to navigate this environment right now in light of that. getmy: when summits negative, that is a sign that it's a better time to turn around. but everybody is irish, -- everybody tracks and it's easier to get disappointment. with sediment being negative, it's easier. now is a better time. it's the reverse in terms of what people think. saying by when it's out of favor, that's the time to come in. but everybody is enthusiastic is not the good time. scarlet: we not only have the ecb, we have canada meeting as well. the biggest surprise would be if the fed actually did something. most people don't expect the fed to do something in september.

everybody is looking at december. i think the big surprise to be of the fed said we've been saying we are getting closer to our mandate, we actually did something. againstsay the odds are september. i think it's more likely december. and,cb extend third base that's not going to be a surprise. scarlet: thank you very much. david: a major shift in the presidential race. how worried should mrs. clinton be? this is bloomberg. ♪

david: this is your global business report. scarlet: it's a done deal. david davis tells parliament there is no turning back now. he tells written not to worry. david: ge makes a bold move that could transform factory production. they snapped up a 3-d printing company. we will tell you what it intends to build with them. scarlet: in the quick take, immigration reform had a publicans -- reform. democrats and republicans agree the system is broken. is there a hope to fix it. the secretary of state for brexit has made his first public comments. he said there is no turning back. the prime minister has made clear there will be no attempt to state in the eu i the back

reenter.attempt to engineerno attempt to a second referendum. they will-- scarlet: investigate. david: ambridge will buy spectra in a deal that will create the biggest infrastructure company in north america. it's valued at 28 alien dollars. the prices are back. ge is buying to european companies so it can use 3-d printing tech knowledge he to make parts for engines. buying them for a total of $1.4 billion. factory orders in germany rose less than forecast in july. it's the latest in a series of

data showing momentum in europe's biggest economy has cooled off. domestic orders fell by the most in almost eight years. scarlet: it's time now for our bloomberg quick take. in the united states is broken. democrats and republicans agree on little, they do agree on this issue. the question is what to be done about it? about 11 million people already live illegally in the united states after remaining in the country after their visas expire. most americans say the on document it should not be allowed to stay. in 2015.so in a poll in june, the supreme court is divided over president obama's order that would've shielded as many as 4 million immigrants from deportation.

they say that he overstepped his authority. and the presidential race, hillary clinton says she would enforce immigration laws and provide a pathway to citizenship. donald trump has proposed real immigration reform, including building a wall between mexico and the united states. ronald reagan was the last president to pass major immigration reform. opposed a path to legal residency or citizenship. cost 71% forrs obama. arguments are more or less united on immigration. republicans are split. border security is the only issue that needs to be addressed to hardliners. there are conservatives who approve of a path to legal status, but not citizenship. the leadership here is that

fighting immigration will complete the alienation of the growing number of hispanic voters. you can read more about immigration and all their quick takes on bloomberg. that is your global business report. it had to bloomberg for more stories. head to bloomberg for more stories. ♪

scarlet: you're watching bloomberg markets. david: we're in the home stretch of the presidential election.

hillary clinton and donald trump are zeroing in on key battleground state needed to win. let's bring in our number politics reporter. let's talk about a few of these battlegrounds. there was a traffic jam on the tarmac in ohio at the cleveland air point -- airport. ohio continues to be the battleground. >> so is the entire industrial midwest. they are talking about the economy. they are talking about jobs and pitching themselves as the only ones who know how to jumpstart the economy and get people back to work. it's a hard-hit area. we have seen the unemployment numbers. both candidates on labor day target that area. they pretty much tight in terms of the lead when it comes to ohio? when you look at the national polls, it was it seemed they are in a dead heat. steve: ohio is showing some of

the tightest pulling. the is a place where democratic base in the republican base are evenly matched. it's a persuasion game for the middle. it's all about the independent voters and the ground game, convincing people in the middle the moderate voters that you are the guy or girl. david: we look feel like twhirl college map, so many surrogates are destined to go to pennsylvania in the next few weeks. you have it was before and, bill clinton, president obama, bachus to the calculus. how is important is pennsylvania? steve: it's a huge state that they have an advantage in. they have a larger democratic base there. they have to do less work. if they turn out their pace and pennsylvania, they win.

donald trump has a heavier lift. he sees it as an opportunity. he will have to persuade his base and independent voters and chip away some them a credit voters from the other side. if he can do that, it's the type of state that plays to his strengths. didworking-class voters particularly male voters there who have seen the job loss. going to siphon off any, that's where he can do it did -- do it. it's one of the biggest. scarlet: i want to highlight to , this is the election special report. you've got top headlines in the latest poll results. there is a chart of the poll as well. the blue line is tracking hillary clinton. hillary clinton is at 46.2% and donald trump at just under 43%. david: the way that the press

began its interaction has changed. there was a lot of criticism of the hillary clinton campaign not allowing people on the plane. that is beginning to change. debate ifre is some that was a press conference yesterday. it lasted 15 minutes. she did answer questions. she hasn't done that in quite a while. she is traveling with her press corps. it's going to be harder to dodge them when they are sitting there and shouting questions at her. dayld trump on the same invited reporters on his plane. he answered some questions for them. they are making sure that neither one looks less transparent. scarlet: congress went back to work today. summer is over. as they focus on what to do before the next recess, how much

work is likely to get done? steve: i think they will avoid a government shutdown. especially head of the presidential election. they are suspending bill deadlines. i think we can expect them to pass a continuing resolution that pushes that back to december because nobody wants to do the heavy lift. there will be a fight over zika funding. fightinge a lot of over not passing a rescue package. other than that, i don't think it's going to be very bloody. scarlet: coming up, boston unveils its new system. we will speak with the ceo covenant. this is bloomberg. -- we will speak with the ceo next. this is bloomberg. ♪

david: live from bloomberg world headquarters, i am scarlet fu. david: let's start with the

headlines on first word news. courtney collins has more from the newsroom. courtney: thank you. the republican chairman of the investigatinge hillary clinton's e-mail practice is once again. jason chaffetz is trying to figure out if clinton, and others working with her, played a role in the deletion of thousands of e-mails by a colorado firm. theletter was obtained by associated press. donald trump campaign has released an open letter from 88 retired military generals and officials endorsing him. dozens of republican national security leaders released a letter last month warning that trump would risk the national security and well-being. nato secretary general will make his first visit to turkey since a violent coup attempt in

july. he will meet with president erdogan and other high-ranking officials. through a ripped commercial area of central baghdad today. at least 12 people were killed. the explosive soaked pickup truck was left in a parking lot. islamic state claimed responsibility for the bombing. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. david? david: thank you so much. programnnouncing a new to be a one-stop software experience. it is calledvox relay. emily chang with the ceo.

emily: you are kicking off your annual conference this week and you have out this new product. why do you think this is better than anything anyone else has on the market? >> we want to make it easy for people to share access and collaborate around their information. we are pretty far along on the journey. we have 60% of the fortune 500 , procter &ike uber gamble, ge. everything in business and work is changing very demonically. when we look at how enterprises were today, they still need a hodgepodge of solutions around storage, workflow software, and we don't think that companies will be able to work in a modern way is that is the set of tools they are left with. what we have a doing over the past several years is to imagine how work will look like in the

future, and how box can get to the center of that. one of the new capabilities we are offering is called box relay. it allows you to streamline a lot of the routine work you are doing. things like processing invoices, all ofsales contracts -- these things that companies do hundreds of thousands of times every day or month -- we want to simplify the work that goes into that. we released box relay this morning. how long have you been working on this with ibm? what was the role? itwe have been working on for about one year. , it isarate roles are built on the box platform, so security ase data,

box has. it uses a lot of ibm's workflow, intellectual property, and technology. we have combined it with boxes user experience and collaborative tools. some: aren't there already cloud-based workflow management tools out there? verythink this will be complement each of products. our core focus is around content. it has to have a document at the center of what you are trying to do. whether that is an invoice, a anntract, and hr process -- hr process. this is meant to solve a different use scape. what it is replacing is a lot of the legacy technology that companies invested in that do not really pay off. emily: we reported that dropbox

is potentially moving forward in plans to go public. in 2015, they boosted their shares, giving it up bigger -- a bigger lead over box. dropbox also growing 80% in that part of the market, box growing 40%. does that concern you at all? >> i think it is like comparing apples to oranges. the growth rate and the figures of the kinds of products that people are buying our action pretty different when you break down the numbers. for instance, just in the past quarter, we grew just our large 50% yearlone, over over year. we are still growing significantly in the key segments of the large enterprise market. emily: then, going public, does

that change the competitive landscape for you? >> i think it will actually make the financial comparison more transparent. that will be easier to answer these kinds of questions in the future. respectwe have a lot of for dropbox and what they have been able to build. it will be interesting to see how they do publicly. what about microsoft.co they have been increasing their work in the cloud. they obviously have a larger segment than box does. >> it is interesting. microsoft is becoming more more of a significant partner with us. we will be talking at the conference tomorrow about how we are driving and openness with microsoft. things like microsoft office, outlook, using the box services. i like to think of them more as a partner. in general, whatever we are trying to do -- whether it is

microsoft, box, ibm, dropbox, or anyone -- we think the way that things work now is way too slow, complicated. what we want to do is dramatically signified that. take the money spent every year on legacy technology and help all of that move to the cloud. emily: let's talk about this competition versus cooperation theme. you will be sitting down with diane greene, who runs google cloud, you will also be speaking with microsoft, as you mentioned. i don't get it. how does this work? they are also the elephants in the room when it comes to your company. >> we have a very deep belief that the future of enterprise is customers will choose the way all want the software to work together. and a customer oriented world, you need the ability to work with all of your former or could

be competitors. what you are ultimately doing is trying to build the best possible solution for the customer. about a year ago, apple announced a new ipad. on the stage, they demoed microsoft office on the ipad. aple, they obviously have limited desire of windows to take off for certain parts of microsoft to take off, but the two companies came together because they knew, for customers, having office on the ipad would be significant. we need to work with any of the players where customers are trying to drive a great user experience. that means, even quad rating with companies that compete with us. emily: when you look at apple, and amazon, had you see the competition between them? will they only become more more powerful? >> i think they will become more

powerful. we are in really the early innings of what the cloud looks like. if you think about the most amount of money in an i.t. budget is spent on legacy systems -- we are really early on on what this cloud ecosystem will look like. you are looking at the four , there may be room for other players, but in general, they will be the big clouds. google may compete when you what added value services. microsoft might compete when you want productivity software combined with the cloud. in general, we are in the very early stages. emily: we have seen some massive acquisitions. obviously, microsoft buying linkedin, also other big

buys in the landscape. what do you think will be happening? have a lot of technology companies, a lot of which have a lot of cash, and they are seeing the need to end faster. they can get more innovation from independent companies or startups that they can bring into their organization. it is natural that, when we see ups,nflux of new start and incumbents with cash, we see m&a. : emily: where do you think you will see cash? >> all segments of technology. remainingyou see box an independent company? what is the long-term plan? >> we remain focused on being independent. when you go back to the figure, 30 percent-40% of i.t. budgets are spent on legacy programs --

we will do somewhere between 392 and 396 alien in revenue. million nearly $400 budget, but going after a market that is $4 billion. it is leaving a lot of money on the table if we were not to be independent. emily: apple's big event is g coming up tomorrow. >> they did not coordinate with us, unfortunate. emily: do you think apple can remain as innovative of the company as it has been? think so. their ability to have the ecosystem worked incredibly well together, i think based on incredible innovation ahead of them. it will be cool to see what they announced tomorrow. i will be on stage, obviously pay attention to our conference, site will not see it in real -- so i will not see it in real time.

i think the way they are entering the enterprise is strategic as to how apple sees the world. products andzing software, and you see things blossom around the technology. we can go out and get all the software ourselves on the app store. i think they see the enterprise the same way. have a great loss of me software greattem that can -- a software ecosystem that can blossom. prop. you have a can you explain this to me? >> i did not think you would do it. this is great news. emily: this is not affiliated with any political platform. explain. >> our conference is all about making better software that

works with all of our partners. we truly believe that software must be made great again. while it is not the official conference, the hats look great. it?y: will you wear >> i'm not sure. it does cover my gray hair. it is a cool hat. that is yours to keep. any of your viewers can in the less if they want one. emily: i appreciate that. make software great again. this is something i can get behind. david: thank you so much. scarlet: just a quick check of boxes shares. of 4up 44%. box trading at its highest level in almost 13 months, since august 2015. let's head over now to abigail

doolittle, lies at the -- lies at the nasdaq. abigail: we are up about 4/10 of 1%. the reason is the overweighting of technology. apple, and baidu, and facebook. facebook on record high to hit its best day since april 18. maybe some positive news is coming out of management meetings. plus, we have sebastian over at baird. he expects facebook to take a disproportionately large portion of advertising budget share. we go into the bloomberg. we see that facebook is a bullish chart with the stock

breaking new highs. one reason to think that the strength will continue, when we looked at consolidation a few years ago, we saw it led to the next move up. we now have the last year and a adjusting we have a breakout much higher that could lead to a strong future head. david: coming up, apple is expected to unveil a new iphone tomorrow, but it may be until 2017 when consumers are really wowed. ♪

scarlet: this is bloomberg markets. i am scarlet fu. david: it is time now for the bloomberg business flash.

allergan is laying out plans for price increase on their drugs. said that allergan will raise prices only once a year and increases will be limited to the single digit percentage range. he says that should limit price increases to only slightly above the rate of inflation. scarlet: and, some development on mylan. of course, a probe into the latest fallout of the company, calling outrage of the public allegations that they raised the price of the drug that quells life-threatening allergic reactions. that is the business/update. owne may be breaking its

habit. the newest iphones are scheduled to debut tomorrow. why they may have to wait another year for the wow products. ♪ an awful year for apple, at least by the company's high standards. i have a message for the fans and investors wondering when the tide will turn. wait until next year. apples revenue has declined for the last two quarters, and will probably continue to fall for the next six months. the last time the apple sales this long was 2001. mark zuckerberg was in high school. the newly updated iphones the apple will show off at an event on wednesday, no matter what will be moreled,

or less a tweaked version of the iphone 6 s. also coming are some new models a newputers and generation of the apple watch. they should help apple sells grow again, at least modestly. majorjo they copes for a turnaround are writing on 2017. expectations are hoping that they draw out a new iphone with the superthin screen -- a superthin screen. it has been five years since tim cook took over as ceo, and the company has become more financially successful, but they do not have a breakthrough wow category. bloomberghat was a gadfly reporter. this is bloomberg. ♪

scarlet: fashionistas say prepare because fashion week against on thursday. joining us now is the global managing director of fashion. bloomberg. i was going to start by asking what will be on trend at fashion week. when we talk about on trend, does it refer to something showing up in stores immediately, or a season or two? >> right now, that is interesting because it is shifting now. right now you will see a hybrid of that. there has been a lot of talk recently, maybe you have heard, ee now,ow, by now -- s buy now. historically it has been see fromby siuy six months now.

there will be a real mix of that the season. there will be traditional runway shows and presentations when the merchandise will be available six months from now, and some shows, where you will have merchandise available now. scarlet: and a variety of sizes. reading aemember column from "then your times," and it was complaining about the saturation of fashion weeks. how cognizant of that do you have to be that there are so many happening now and you have to make new york fashion week different? >> we don't have such a problem with that because new york is the flagship. we have such amazing talent here and so many talented designers come here from all over the world to be here. we are kind of the event to kickoff the international circuit, so to speak. inglet: at the same time, produces a number of shows around the world. toronto fashion week was just

canceled. what led to that decision? were looking at her perform you and what makes sense, and how the industry is shifting. we are constantly looking at what events need to be rebranded or repositioned. the toronto event needed to take some time off, i think. there is some amazing talent in toronto, and i'm hoping it will come back in the future. there is really a lot of great talent in that market. david: what is the role of fashion week in new york? yes, for the fashion industry, but for people who buy clothe s. explain to us. >> it is a huge economic event for new york. new york fashion week brings in almost $1 billion per year. it has huge economic impact on not only the fashion industry but on local businesses, hotels,

restaurants, drivers, taxis. impact.huge scarlet: give us a sneak. which designer show are you looking forward to the most? >> i cannot say. there are over 80. scarlet: it is like picking your favorite child. >> exactly. scarlet: you can read more about fashion week from pursuits. david: still ahead, lessons learned from global central banks and what the federal reserve can do to help the rest of the world. this is bloomberg. ♪

welcome to bloomberg markets

david: from bloomberg world headquarters in new york, welcome. we are watching -- u.s. service industries expanded at the weakest pace last month in six years boosting speculation that federal reserve will hold off on hiking interest rates. ayer sweetens the offer for monsanto. pipelinebiggest company could be cleared in america. may ask formusk more cash. can we raise the funds in aids for the new model 3 and the giga factory. scarlet: we are halfway through the u.s. trading day after labor day. back but's good to be not so many people are laboring

in the stock market but volume is up about 7% on the s&p 500 or with a 30 day average. we are still seeing the low volatility and the 41st withght session without -- only 1% movement. everything is trading in a narrow range as the nasdaq leads the games. in terms of the movers, within technology, we are looking at amazon and netflix. they were commented on by different analysts. they say amazon remains well below fair value and is talking about the company's long scale of growth. he's got an overweight rating. a $900 price target with chairs below $800 and netflix is being commented on. of the analysis suggests 25% upset and concerns about domestic saturation are

reflected already in his estimates for the company. we are looking at twitter because the company board is set to make -- to meet later this week. -- amight consider a swell sale. twitter shares are up about percent. graincorp water on that. and analyst says he takes it's unlikely there will be a sale to one analyst is pouring cold water on that. he says there it is unlikely there will be a sale. to wait and see until later in the week. for now, twitter is rising. david: we saw some reaction on the dollar this morning. and in a number of different assets. we saw the big drop after the service report showed the smallest expansion in 6.5 years. we saw a movement lower.

note, the yield is moving down by about five basis points. it's about 1.5% and gold prices. it was going up. it was not quite as dramatic. it has created a ripple effect and stop -- in stock markets. david: thanks very much. scarlet: let's check in on first word news. president obama's reassuring asian allies of the u.s. commitment the region. the president is in lowers where he alluded to growing concerns >> over the chinese presence. we will stand with our allies and partners in upholding fundamental interests, among them freedom of navigation and overflight, lawful commerce not impeded and peaceful resolution.

that's the security we seek. 90rtney: he also pledged million dollars to laos to clean up unexploded bombs. the filipino president is expressing regret over his tirade against president obama. the president canceled a one-on-one meeting between the two. he rejected the u.s. criticism of the message is using in his antidrug campaign saying it was an internal matter the white house is not. ruled out a less formal meeting. new nationwide polls show the race for president is tightening. nbc poll had hillary clinton leading donald trump 48-42. another survey has the two within the margin of error. that 145-43.leads labor day weekend was the end of a bloody and deadly summer for

chicago. 13 people were shot and killed over the holiday weekend. the number of homicides this year is more than 500. the summer of violence peaked in august would became their bloodiest month in 20 years. there were 472 shooting victims last month. news, 24 hours per day, powered by more than 2600 journalists and analysts in more than 120 countries. scarlet: thank you. it is a busy month for central banks. investors are awaiting the european central bank meeting and the fed may raise rates later this month. morningd about it this and we talked about lessons learned from global central banks. >> we have learned they have been discussing a lot where they will take rates eventually in this cycle. that has beene central in jackson hole.

throughout the year, we have learned about the limits of implementing rate policies and collateral damage that it , particularly with the rallies at the long end of the curve and the damage to insurance companies their low yield has created. francie: everything is compressed. >> we have seen that turning a little bit in japan. there you go. i think that is a reflection mostly of how the central bank has spoken about its implementation of policy. the next big thing seems to be too steep and back the yield curve. to make the policy more effective. that has been reflected in the pricing over the past month or so. is that thesee long-term rates seem to be

highly determined by what central banks do. it's the demand and supply for securities. the fed dowhat can not to hurt the rest of the world? >> probably hike gradually. we have higher chances of them moving in september mainly because we find it hard to see what they will come up with to say why they are not going. the unemployment rate was ok and we did not have a catastrophe out of brexit. the narrative can be pretty straightforward for delivering a hike in september. the probability is not there but it would take a couple of speeches to lift it up. the hike, they could say the trajectory will be lower and that will be interpreted it as a dovish normalization of policy. chart.t's bring up a

the three major banks assets. the white light is the u.s. in the red line is japan and down below is the tentativeness of ecb. what is the new orthodoxy of economics that links finance? what you think about moving into next year? the policy wind is changing in an important direction. there is greater recognition among policy circles, particularly the monetary ones, that there are limits to lowering rates, the so-called bound is lower relatively shallow because of the frictions we live with. therefore, there has been a push toward expanding fiscal policy and allowing central banks to underwrite essentially bigger expansions through the

qe programs. we are likely to see miss in action in the u k and the ecb will continue doing qe in our opinion throughout 2017 and the boj has set the path. iseflation possible? andpolicymakers rerflate economy? is that possible? >> i think so. we have been a bit unlucky as see inflation up because of the energy market which was another normalization post crises. the effect of that repricing of commodities are waning. comparisonver-year next year, we should see a bigger contribution from energy and food. alongside that, we are seeing economies that have received

advantages like the united states providing inflation and services which makes up the cpi basket. scarlet: that was the goldman sachs cohead of macro and market research. bayer bids up for monsanto so will this clinch a deal? this is bloomberg. ♪

scarlet: you are watching bloomberg markets. david: let's look into mergers and acquisitions starting with bayer which has sweetened its offered for monsanto for a

second time. they are above the current monsanto share price. jeff mccracken joins us now. intial offer in may and opt july. sinces has been going on may. we are at 127. 50 per share. a german newspaper cannot with a story that said bayer had bumped up the offer to 130. bayer wanted to clarify they are at 127.50. i think the deal will happen regardless. this has been progressing pretty well over the last couple of months. they are allowing them to conduct due diligence and they are talking and getting access to the books and monsanto does not have any other options.

it's not like someone else will show up to by them. doubt and dupont are working on their deal. -- dow and dupont are working on their deal. scarlet: why have the shares decline since the initial offer? >> people are concerned that a deal will happen and then regulators will block it. a lot of this is tied to whether ors u.s. regulators regulators at the department of justice or federal trade commission or eu regulators. they feel someone will block it. this is our function that gives you a snapshot of all the mergers and acquisitions activity. this shows a chart of the activity we have seen. this year, we have seen a slowdown in the last couple of months.

after labor day is when things start to get interesting across industries. last year, we saw some big deals in november. now we are going into an election year so you wonder what impact this will have. my sense is that september and early october will be busy. enbridge did a $28 billion deal, carl icahn announced a deal. there were five or $6 billion plus situations that went on today. september should be busy from what we can tell. i think we will see a lot of and and a activity. investors assumed to be supportive of this. bridge is a calgary-based company looking to widen -- >> it's maybe the biggest outbound canadian deal. when the oil prices dropped,

they were largely immune from that. investors started to realize that a lot of the companies they do business with could go bankrupt because of oil prices. we will see more consolidation. that is going on and we are replanting all of north america with these shell assets. -- shell assets. building a pipeline is not a $5 million or $10 million deal. it's hundreds of billions so it's likely to be a bigger company. scarlet: you mentioned carl icon. he will take an auto parts supplier private and he is an investor in navistar. >> it's funny how much he plays in automobiles. he also owns pep boys.

he is vertically integrated. >> navistar has not had a great run. their shares were trading closer to five dollars at the beginning of the year and now they are at $22 because of volkswagen. the engineology in space rejected by the regulators or the customers. you've got volkswagen coming in and it has a relatively minor deal but i think vw is trying to distract people from their negativity. david: vw has had difficulty getting into the truck space in the u.s. and we heard about why they are pursuing his deal. >> now is the right time for us because we are developing new components and advanced technologies. with the start of this development project, it's good

to have it and maybe navistar can generate more economic upside than before. why are they pursuing this? >> they have struggled in the u.s. in the truck space and with consumers. they never dented the u.s. market the way toyota or nissan or honda have. matter.or that i think they are trying to get into the truck space. they can make some inroads here. david: always great to talk to you. scarlet: still i, apple is expected to unveil an upgraded iphone tomorrow but don't expect to much that is new ♪, details next. this is bloomberg. ♪

david: this is bloomberg markets. unveils itst: apple newest iphone tomorrow and

analysts say expectations are fairly low. they will probably showcase a next-generation iphone and a watch and software updates. carolutler is joining massar and cory johnson on bloomberg radio. welcome everybody on bloomberg tv. we have john butler, the senior telecommunications expert to talk about what to expect from this apple event. i hear ho-hum. will there be any exciting things announced tomorrow? >> the rumor mill is going but apple is not announced anything yet. you never know. read as agood supplier community so we have a good idea of what's coming. apple normally gives us a major upgrade every two years. overall, if you take a step back, the smart phone market

innovation cycle, the changes we see in the hardware, is slowing down and shifting to the software side. for the first time in a long time, apple is breaking rank and they will not do a major upgrade, i don't think, tomorrow. they call it the big fall event but i don't think we will see a big upgrade. we will get an improved camera. the homerumor that button will be built into the screen itself. there may or may not be waterproofing. there has been debate on that. the big thing is they are doing away with the headphone jack. carol: i kind of like that. >> i am mixed on that. it presents a problem for people who have a lot of accessories that rely on that port. i have a lot of headphones, speaker systems that plug into that. away, it makest that equipment obsolete and you

are left with having to buy new accessories. a better processor, better screen, a better camera which is important to a lot of people. cory: also a better battery life because you have freed up space in the unit itself. putting aside the stuff, the question is what they will do in terms of release dates. what should we be looking for? i think what you will see as they normally do is you will see a release around the 16th or in the the month an u.s. and selected developed regions. if you think about what apple sells, they play in a premium segments of they will play to the developed in

markets like the u.s., western china, canada and even which i no longer really consider an emerging market in the sense we normally think of it. it is also a very important market for apple. in thatchina will be first round and then we will probably see a couple of weeks later, two weeks after or three after the 16th, we will see availability in a broader set of markets. in your research come you talk about next year being the 10th anniversary for the apple iphone and a super cycle for the iphone and maybe that's when we get something that might be more dramatically different. the big enhancement for me, to get that hardware truly competitive with what we see from samsung, for example, is

apple needs to get an oled screen. it translates to better resolution and better aesthetics to the device itself. i think they are saving that for next year. they are saving wireless charging for next year. if we don't see waterproofing this year, we will certainly see it next year and we may see more variants come next year. there was an original rumor going back about six weeks that apple is going to come out with three different choices of the iphone not just 2. next year, that is a possibility. you are hitting that tenure anniversary so it's an opportunity to really make a splash. i'm sorry, go ahead. apple was handed a gift the failure of the samsung note seven which is being recalled.

you think that will help? >> i was on the margin a little bit but not as much as you think. i think the migration between android ios is not as big as they make it out to be. we will certainly talking about apple tomorrow, thank you. tomorrow, bloomberg west will be live from the apple event in san francisco at 1:00 p.m. in san francisco. -1:00 p.m. eastern time. this is bloomberg. ♪

david: live from bloomberg world had is in new york scarlet:,

this is bloomberg markets. let's begin with the headlines. tney: rescue workers say that government warplanes of drops suspected bombs on a crowded aleppo neighborhood. at least 80 civilians were transported to hospitals and treated for breathing difficulties. the report cannot be independently verified and it's not clear activists determined that chlorine was released. election year politics will rule the calendar as congress returns from seven-week recess. congress must figure out a way to keep the government open before spending legislation expires october 1. lawmakers need to move funds to combat zika. forelle obama is preparing her first campaign appearance for hillary clinton. she will rally voters during an event in northern virginia on september 15 come a few days before mrs. obama hits the trail, her husband will hold his first solo campaign event in

philadelphia. the parent company fox news says settled a gender discrimination suit. fox apologized saying it was sorry gretchen carlson was not treated with respect and dignity. her $20 million. in july, she sued fox news ceo roger ailes who stepped down. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. how important is infrastructure spending? a new denver airport helps the rest of the economy take off. our editor in chief rights --

we look at the case for infrastructure. look at the history. is a state that rode the boom and bust of the energy sector for a long time. in 1984 so trough how did they decide to build a new airport? year84 was a terrible especially for the incoming mayor. he said just about everything went wrong that year. even colorado for the first time in its history lost population. people were leaving the state. every sector of the economy was falling apart. he says the only way to deal with it was a conventional way, cut spending because there were

no receipts coming in that relied upon sales tax. the solution was the airport widelywhich was not accepted at the time were embraced. it was a controversial decision but it was a big idea. by 1989, the people of denver voted 65% in favor. hugelyport and out to be transformational for the state, making it really a partner in the 21st century global economy. scarlet: what i found fascinating is that the proposal from share of critics republicans to airline executives. >> robert handel was the chairman of american airlines referred to it as a field of dreams. he said denver does not need a new airport.

what was missing in the discussion and what people did not see is that by creating an airport that would become in thelf a major conduit to north american continent, the south american continent, and asia and europe, it would transform the colorado economy and that's in fact what happened. stapleton whothat was the predecessor was hugely inefficient with national airport delays caused by what went wrong. that was the status quo then. i'm moving to a bigger place -- that the denver airport is the largest geographical airport in the united states, it's the twice --it's twice the size of manhattan island. scarlet: david: i did not know that. inid:looking at job growth colorado over the last 20 years, up almost 37%.

where colorado is in there are so many technology jobs there. the economy has diversified so how much can you attribute to the airport itself? >> it's interesting you bring up jobs. the two most important parts of the economy to most people are where they live, their house, their home, and their job. it just so happens those are the two categories where colorado, over decades, has been in the top performing states in the country. dedicate caused entirely by the airport? it's hard to say but we know the airport itself was able to make all kinds of opportunities for all kinds of businesses. mayors and 60's -- and succeeding governors all embrace this and recognized this was a ticket to common political

ground. is therewhat evidence that other politicians are picking up on this idea? >> the mayor does not have many kind words for national leaders in washington, d.c. and he does not think they get out and make the case. worths it is a case making and we should be making it now. eventthe one political where people from all sides can understand how this is a benefit to everybody. of your piecent is to encourage long-term infrastructure building. there were small problems with the baggage claim when it opened

up. politicalat has some penalty for someone who is a mayor or a governor. how do you get politicians to say this is a good event for the long-term? ask the former mayor or current governor of colorado or the mayor, what they delayell you is you can the tax or the spending that you need to make right now but it will cost you far more 10 years from now or 20 years from now than it would cost today. you are much better off and will save money because you will need this improvement anyway. it's just a question of when you do it so better to do it now. look at the state of new jersey. coming out of the global financial crisis, and the ensuing recession, there was part of the federal stimulus.

it was legislation that would have enabled the construction of a second timeout under the hudson river. at that time, we had close to zero interest rates and the economy was absolutely staggering. that would've been a great time to invest but it was put off and now we are getting around to it. aere is a rescission -- decision to do the tunnel because the tunnel itself is something that dates from 1910 so it was going to fall david: greatdid always to talk to you. coming up, breaking up is hard to do. the s&p 500 is putting up one sector and that relationship is already breaking -- breaking down. julie hyman will have more. this is bloomberg. ♪

scarlet: this is bloomberg markets. to the markets desk with julie hyman. we have a mystery chart. 500 is putting up a sector later this month and this relationship is already breaking down. julie: this has to do with the fact that the real estate index in the s&p 500 will break apart from the financial index. trustal estate investment are part of that currently. we are seeing a divergence that has been occurring between the two. the changes will take effect on

september 16 after the close of trading. be 11eans there will now sectors instead of 10 in the s&p 500. you can take a look here. these charts come to us courtesy of editor david wilson. this is the correlation between the two. the higher this chart, the closer the correlation between financials and real estate stocks. we have seen this big drop in correlation as they prepare to split apart and the correlation is now at the lowest going back to 2004. ityou look at the best real -- real estate investment trust year to date, iron mountain digital realty and ventis. flipside, if you look at the financials, the best is reits have out

performed in this market as we continue to see interest rates relatively low. you can see what the s&p 500 would look apart -- would look like when they split apart. we already have 11 groups listed. real estate is right here, up about 2/3 of 1% today and the financials are down 7/10 of 1%. the reasoning is that thanks to worse when rates go down but for reits, it's good news. scarlet: i didn't realize it was broken down. thank you so much. david: it's time for the bloomberg business flash. new york state has started an antitrust probe into the mylin price hike. the company made anti-competitive terms with

local schools in the pub is the latest fallout for the company following outrage by politicians and the public. scarlet: allergan is looking to curb some prices on into drugs. allergan willhat raise prices only once a year onethey will be limited to percentage gain. david: the union representing autoworkers in canada selected with first.tiate it will try to sign a new contract before the kind agreement expires on september 19 and then move on to fiat and ford chrysler -- with forward and fiat chrysler. -- with forward and fiat chrysler. that is your business flash update. -- with ford.

scarlet: elon musk urged more more ando produce spend less. showing more cash flow will make it easier for tesla to ask money and wall street is divided. the shareprice targets range from $160-$500. ull.ing us now is deanna h message from elon musk to his employees is he is pushing for greater efficiencies and more production out of them. how is this different than what he has pushed for in the past? how critical the third quarter is for tesla. they are in the process of trying to acquire solar city and need to show wall street they are cash flow positive. they will need to raise more cash in the fourth quarter. we had ubs on today with a low target.

let's hear what he had to say. there is clearly a camp that believes in their vision. i don't disagree with what they are trying to do which is great but fundamentally, i don't think the rest of the industry will sit on their hands. and mercedes and launching new things over the next few years. the economics are challenging. quite a wides range. what is the relationship like between wall street and has like? instead of a typical divide, it's more of a conceptual thing. they're wondering how this company will become profitable. elon musk talked about building

a semi truck and a bus in the tesla ambitions grow even though the cash needs are really high. you also have many investors are looking this company in ink this will be the next ge with such a formidable brand and so manage -- and so much support among millennials. i think it's a fascinating issue. if a&r can see how analysts have become less and dizzy as thick about tesla did i will make this chart bigger. it tracks the number ofbuys versus holds versus cells. number of buyhe recommendations has substantially decreased. has gonesay the sell

to 26. tesla is seen as a very specific kind of company. there is a debate at the -- as to whether it's a carmaker. at think the true believers look at it as a conglomerate like ge? ted is the is disrupting the energy and industry. making electric cars that run on of the elon is part musk vision is always has been. if he can get there, there's no question that true believers think this company will be the next ge. the skepticism comes to profitability and the ability for tesla to stay on target with all its projects that it keeps story.to its

you have written several pieces onto has listened what's the status of manufacturing their car? a typical auto plant would already production line up and running and maybe doing pilots. ted's letter is still building the machines. they are not in fremont yet so to makeline they want this out the door is pretty tight and everyone knows it. what makes tesla exciting is that they are always pushing the limits of what can be done. theusually pull it off at last minute. late 2017 is what they say in terms of target production yet. scarlet: thank you so much. canadian and u.s. bond

yields are diverging by the most in on the six months and investors the the bank of canada could be years away from rate increases. this is bloomberg. ♪.

scarlet: it is back-to-school season for central bankers. australia cap rates steady today and tomorrow we get a report from bank of canada. joe weisenthal joins us now as well as greg quinn in ottawa. when it comes to the bank of canada, bond investors don't necessarily see the bank of patha going down the same as the fed on rate increases. if you look at the bloomberg and

look at the canada avenue, you have the probability of rate hikes along with probability of rate cuts. do we presume the bank of canada will have a rate cut? a lot of investors earlier this year were betting aggressively on a rate cut. there has been glimmers of good news in the last week in canada that has taken that chance off the table. we have a strong report on july march and this -- merchandise trade expert. the governor has put a lot of stock in fact that that's how the recovery will be generated. the other report is second quarter gdp, the economy shrank because of wildfires in alberta but we ended with a monthly gain % in june so the idea of a rate cut is starting to be priced out.

the largestis trading partner of the u.s. and historically, the economy submitted in tandem. can you think of any other time when there was this much of a gap between the different central banks were not some lighting? -- were generating. >> they have historically tracked each other closely and it's rare to have any talk of canada cutting and the fed hiking as we did earlier this year. you have to go back decades before you see anything like it. it speaks to the deeper question of about the canadian economy and if we are keeping up with china and mexico? there are questions here about whether canada can get back to where used to be with the u.s.. that's why we see this divergence and bond markets and central banks. let's talk about the

temperament of the central bankers. there have been a few successors in the banking industry. what about the approach of the president of the rank of canada? is he more cautious? >> mark carney was a fan of forward guidance and use that to great effect in 2009 when he cut rates to record lows. theaid the -- he told markets he would for a long-term that helped it them out of trouble. we are in a different world now. when the governor came in, one of his first moves was to say i will not use forward guidance. given the stability we are in, there is some wisdom to that. willly, some people say he not raise rates for a couple of years so why get into signaling something when it might not happen? polasz has hinge the

recovery on non-energy exports. are we seeing evidence of that? >> very slim evidence. has been relatively stable and the u.s. economy is recovering and we have been waiting for years for lumber and other things to pick up. auto sales have done well in recent months and lumber is starting to come on with remodeling so it's early but we will see it. we will discuss later today more on the state of central banks. that's coming up at 4:00 p.m. eastern time. this is bloomberg ♪ ♪.

york, and00 in new seven of -- 2:00 in london. i am vonnie quinn.

welcome to bloomberg "markets." we are live in bloomberg world headquarters in new york over the next hour. what we're watching. stocks are pulling ahead with small gains after a three-day weekend. energy and telecom leading the way. vonnie: steelmaking is back in place today. in nanoen buys a stake star. we will break down the m&a landscape. david: apple is shaking things up a bit. will it pay off in the crucial fourth-quarter? going to the markets desk were julie hyman has the latest. not terribly eventful in terms of the movement in the overall stock market. that is the pace we have