>> a focus firmly on inflation. turkey gets a downgrade. the turkish economic crisis shows little signs of abating. the market show little confidence the government has a plan. hall the bottles. -- hold the bottles. demandkers fight reduced at seek ways of cutting back on plastic bottles. welcome to bloomberg daybreak. >> it is good to be here. interesting stuff going on. august is a dangerous time in the market. let's talk about what is going on in markets. we have a little bit of a pop in s&p futures. some buying in asia overnight. that is spreading across the globe. we have miners in a europe up

with metals that are rebounding. we continue to watch the chinese yuan. it was strengthening versus the u.s. dollar. that is after the people's bank of china raised its daily reference rate. we have been ceiling -- seeing the weakening dollar. they have been making these moves periodically. it has not been successful over the longer term. i mentioned what is going on with the metals. we are seeing a rebound. copper is just one example. market.into a bear we are seeing a bounce of one and a half percent. orders to withdraw metals from warehouses rising the most in three years. david: here is what is coming up. today in washington, the u.s. trade representative begins six days of hearings on a proposed $200 million in chinese imports.

wednesday, we get the minutes from the chinese reserve meetings. bankers gather in jackson hill, wyoming looking for clues on how the fed will move forward with rate hikes. now, for bloomberg first take. also, we have their finds that. -- i will start with a charger. -- a chart here. though right -- the white line is a -- one of the questions we are looking at. is the fed going to keep going? >> i think they are going to stay on course unless the data changes. we have not seen trade impact the u.s. economy in a negative way yet. i do not see him stepping back.

that is also the question of the u.s. treasury issuing in the short and -- short end. >> we saw a couple of years ago that some of the global central bankers pulled the fed officials aside at jackson hole and gave them a talking to. we are not seeing that this time. it does not look like there is the market pressure on fed officials. >> something that will be interesting is to see what fed officials and policymakers are saying about what is going on in emerging manager -- emerging markets. if there is talk of emerging market risk, that could be a bit dovish. largely expecting pals message to be of gradual tightening -- message to bell's of gradual tightening. >> this is a correlation between the lira and other emerging

market currencies. this is one of the charts we watch to capture -- we have seen the other emerging market currencies move. i wanted to mention the latest move -- latest news out of turkey. we had qatar saying it was going to help out with an investment. we saw the first sign of that today with a swap deal. where are we on the contagion issue? >> the problem with emerging markets is there has been a prolific number of em countries. moving the tide away from currency was a lot of pressure away from them. as the currencies we can, their debt burden increases. markets are seeing this as a major weakness in e.m.. they will continue to push unless the emerging-market currencies get a handle on their

inflation issue. without that, they see an underlying economy weakening and the debt burden increasing. it looks like we will continue on that way. we are paying all the attention to turkey and brazil. italy has been creeping along here. the spread has blown out. italy says we want to keep spending more money. >> before all the focus was on italy, now that we have turkey and china, everyone has been pivoting their attention away. we are about 90 -- they are about 95% through. all of the micro news is shifting away. as we move forward, we are going to keep having a focus on the macro. looking at italy and china, it seems like it is going to continue. company,ere is one

that is pepsi. pepsi announced it is going to be buying soda stream. >> if i were the incoming ceo, i would be saying thank you on this one. this looks like somebody trying to hit one out of the park on the way out the door. they could've bought this company for 1.3 billion less five years ago. we are a world living away from soft drinks into this type of space, which to me looks like a fad. my personal feeling is i do not know anyone who owns one. we used one for a week or two and it is in the basement. >> we use it periodically. we remember it and forget about it. we bought one for relatives.

what strikes me is, we get to the crux of the issue. why didn't soda stream have a deal a long time ago? we can put the chart up again. its quite back in 2011 -- spiked in 2011. the valuation is a lot higher now. >> the time in question is very interesting. some analysts have said what they do like is the fact that it makes sparkling water. we have seen this trend of soda making companies try to move toward healthier products. coca-cola did this in 2014. companyested in a copy -- in a coffee company. david: i also wonder, how much of this is because soda consumption globally is down? is, we are going to

save those models from ending up in the notion. >> people who are environmentally conscious are the people who are not drinking soda. it runs a countertrend. spikedthe big trends is sparkling water. instead of going out and buying it, you save money on the can. >> who doesn't love a seltzer? it is refreshing. david: thank you both very much for being with us. you can find all of the charts with us by running gtv go on your terminal. ahead to the look gathering of the world's central bank in jackson hole. by from new york, this is

bloomberg. ♪

>> this is bloomberg daybreak. pepsico has agreed to buy soda stream, the maker of the soft drink maker machine. that represents an 11% premium. pepsico points out that soda stream makes great tasting beverages while reducing waste generated. elon musk says he has no option but to keep working at his relentless pace. ared members and investors growing more concerned about his health and stability. he tweeted yesterday that he

just got home from the factory. --is determined in italy, a government is moving ahead to revoke auto trade's highway concession. offering 11 billion dollars in aid. crash victims of the deserve justice according to -- david: central bankers are gathering at the end of the week in jackson hole, wyoming. jeff good luck is warning about too many people being too fed will keep raising rates. welcome now from boston, jeffrey klein trout -- jeffrey kleintop.

i am going to put up a chart. yield is moderating a bit. is there a real problem i the crowding trade in shorting u.s. treasuries? >> it is an interesting thing to look out. -- to look at. we have seen the very low rates around the world for a long time. u.s. rates are being compressed a little bit by what we are seeing overseas. extremely low yields in germany and japan. is somewhat here affected by what is happening with the dollar. you have a dollar that is rallying strongly since april. that has brought money back into the u.s. markets and the bond market. you have the fight between higher fiscal deficits. i think the battle is playing itself out.

it is probably going to persist. julie: who is going to win the battle? we have seen remarkably little correlation between the dollar and yields. david: that is true. it is fascinating to see that. if we do not have the rally, we would probably see a higher yield on the 10 year. the money comes in to dollar, it goes into treasuries, that is a de-risking of markets. there has not been the tight correlation. higherrates quite a bit -- we would see rates quite a bit higher if we had not seen the global turmoil. david: i think none of us expect them to come up with a big announcement. they have to be talking about this. you have u.s. inflation exceeding the 2% goal, which

would indicate they are on the right track to keep raising. on the other hand, there are glut -- there are growing and occlusions -- growing indications that growth is coming down. how to the two play out? global growth seems to have peaked. we get the flash readings for august this week. both earnings growth and economic growth. it does suggest the fed could take a slower pace. the market expectation rather than the fed expectation. the fed is still looking at five rate hikes before the end the cycle. they give -- a big gap between what the market thinks and what the fed thanks. maybe we get some clarity at jackson hole. all of the world's central bankers will be there. this is a global phenomenon.

if global economic momentum has peaked, how much more tightening is there likely to be. maybe less than central bankers believe. julie: let's get to the issue of emerging markets and turkey. it seems like after the initial flurry of concern that it has called down a bit even though the crisis does not seem to be solved. how much of a point of a discussion is that going to be in jackson hole and is that what is going to be the limiting factor for the fed? >> i do not think it will be and eliminating factor. there will be some discussion on how solvent and secure the european banking system is. the real issue is, the turkish beks of city areas seem to -- the turkish banks seem to be well reserved. 12 and these banks are

60% capital. -- and 16% capital. a broader discussion of will economic growth continue to decelerate? do they have enough reserves? i think that will be the discussion as it relates to turkey. or other ways,de i do not see the channels that will make it a major issue for markets. david: what about macro potential issues they may be discussing? is there an issue for regulatory even if they have enough reserves overall that certain banks may be exposed to certain countries. >> that is true. there are certain banks overexposed to certain countries. thatnk you try and capture

and risk weighting the assets. what you want banks to have is an abundance of capital. systemically, they do seem to have an abundance. we will see whether the bail ins or bailouts are invoked. they will be tested in the next few years. julie: one of it issues to point a longer-term societal issue, the issue of refugees and a number of refugees with in turkey that could potentially leave if a crisis deepens. that has implications for europe. how big of a long-term risk is that not just in turkey but for european economies? >> this may be the biggest risk associated with turkey. are 3.5 million syrian

refugees calling turkey home. this is based on the deal turkey cut with the european union. if the deal breaks down and there is no sign it is breaking down, but clearly, tensions are escalating with the west. down, moreto break furthering inflaming concerns about immigrants and a europe, you might see a further rise of populism in europe. governments have been trying to implement reforms. this is a longer-term issue. quickly, is that a reason to avoid european equities? >> i do not think it is. at least not in the near term. this is a problem perhaps over the next two or three years as we go through the next downturn.

the next global recession is probably not more than three years away. thesel see whether all of are still untested. this particular issue is probably result for the next year or so. i do not think we have any major elections in the next year or so. longer-term, there is a greater risk for europe. julie: on the horizon. jeffrey kleintop of charles schwab. coming up, water bubbles up as soda falls flat. pepsi agrees to buy soda stream in its latest attempt to hedge against a soda slowdown. this is bloomberg. ♪

julie: pepsi pops a deal. the soft drink maker has agreed to buy soda stream.

it is an 11% premium. pepsi looking to tap into the healthier consumer market as we see declining soda sales. joining us is bloomberg news european consumer editor. the question we have been asking is, what took so long? soda stream has been talked about an acquisition target for years. it is now a much more expensive target. what do we know about the timing? >> deals take a wild to happen. one thing you have to look at in this whole deal is the economics behind it. soda sales have been slowing down. pepsi's annual revenue growth is about 2% while soda streams is surging along at more than 20%. they just have a bit -- a good business model.

they sell a machine. you go home and put it in your kitchen. you put it on your counter and you buy carbon dioxide cap -- carbon dioxide capsules. you customize how you want your drink to be. it is a business model that works because you end up buying products. david: do they expect to have synergies in this? what happens to the profit margins? pepsi, pepsi is a big company. , a $3other company billion acquisition would be a big one. for pepsi, it is not much more than a bolt on. in terms of profit, they are not going into cut costs. they are going in to try to tap a product segment that is growing in hopes of making a

profit. julie: on that point, coke tried to tie up with curate -- with keurig. what is different about soda stream? why is there a better prospect here potentially? is that theifferent keurig system was something they were trying to experiment with. here, you have a system that has a track record. it has double-digit growth for years. they know it works. they have had some success in figuring out what flavors people like. it will be an easier business to try to integrate. david: what countries are the most dominant in? >> the u.s. is a big market. they have expanded all over the

world. europe is a major market. another thing that is interesting about them is the type of clientele they are appealing to. it is the gadget lovers. it is high income families willing to spend something on a machine that is maybe something other people and not spend on. david: thanks so much. , the board has to make a tough choice between elon musk and shareholders. this is bloomberg. ♪

julie: this is bloomberg daybreak. quiet augusta monday. we have some market moves this morning.

s&p futures falling on the heels of a rally in europe. up six tens of 1%. pop 2/10es getting a of 1%. a rebound in the shanghai composite after falling for five straight sessions. it rose better than 1%. the nikkei is down a third of 1%. we set up for the big jackson hole fed economist meeting on friday. a yield 2.86%. not budging much this morning even as jeff guttmacher warns of a potential short squeeze in the treasury market. we are continuing to watch the turkish lira. qatar adding its announcement of a potential of an investment -- a potential investment on a turkey. nonetheless, we are not seeing the lira rally.

the dollar is up almost 1.5%. price hases -- crude little change. it had been up this morning. we are seeing commodities broadly higher. copper bouncing by 1.4%. let's get an update on what is making headlines outside the business world. >> president trump's lawyer rudy giuliani is casting doubt on whether the president will sit down with special counsel robert mueller. giuliani told nbc news truth is not truth while discussing why the interview is not a good idea. floodingrn india, caused by monsoons has caused more than 900,000 people to flee to relief camps. the floods are blamed for $2.8 billion of damage.

authorities say 341 people have died. nicolas maduro was testing the capacity of an already beleaguered population. maduro carried out one of the largest currency devaluation's in history over the weekend. he devalued the currency. by 95%. inflation was already forecasted to reach 1,000,000%. global news, 24 hours a day, on air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tesla's elon musk is not eager to change the way he runs his company. he does not see a choice of changing despite increased pressure from the board and shareholders. this coming on the heels of an exchange this weekend between arianna huffington who

encouraged elon musk to get more rest. this coming after the new york times interview on friday in which he was not eating rest. he tweeted -- in which he was not getting rest. there you see huffington's tweet. homeresponding i just got from the factory. you think this is an option. it is not. david welch. what is this story at this point between elon musk and his company? >> getting some mixed signals here. elon musk does not really want to step aside. he probably thinks he is the only one who can lead the company through model for production and getting that up to speed. hopefully getting the company profitable as he predicted would happen. takeleading it through to

it private. he is trying to get that underway. to a certain degree, he is right. he is the genius who runs the company in the eyes of the investors. if he is going to do any sort of roadshow and effort to take the company private, he has to be the one who is there. could you use a coo or a manufacturing head who could take the production to the next level, that would probably be a good idea. indicating he thinks he is the only one who can do it. interview, it sounded like he would welcome the help. at the same time, it sounded like he did not think anybody else could do it. he was leaving open the idea of if you think you can find somebody who can, i will hire them tomorrow. he does not think anybody else

can handle it. he will continue to work crazy hours. julie: in the meantime, we heard played at tesla to boost morale. where are we. on actual production for the cars? a seems like he has not lost faith of people who are buying teslas, right? >> they continue to get strong orders. they have a good back order. they are selling everything they can build. production is getting up. it is tough to say they are at the 5000 a week sustainably. they hit the number some weeks and others not. they have a pretty good level of production. i think probably the bulls on tesla are right. it is a matter of do they do it efficiently or at a cost base that makes the car profitably?

do they have quality issues? they have not so far. when you are building cars under a tent, that is always a question. demand is not abated at all. they are selling all they can build. they have a good bank order. david: thank you so much. for more on tesla, we welcome charles elson, the director of the weinberg center for corporate governance at the university of delaware. thanks for being here. i want to talk about the board. at what point does the board of directors have some duty to get involved in the ceos personal life? the interview indicating he is not getting much sleep. he is taking ambien and tweeting in the car. at what point does the board have to intervene and say, you have to get your life together? >> i think that is the boards responsibility. it is an ethical responsibility.

they are obligated not to him but to all the holders. there are three things they are confronting. to take the tweet company private. the continued tweeting. there was another one this weekend. you would have thought after all of the controversy, there would not be a tweet. what arianna huffington has to do with tesla, i am not sure. to respond to a tweet in the middle of the night is rather unusual. i would think the board would have to say this is not appropriate for a ceo of a large public company. you have the buyout offer, which is a massive conflict of interest for management. andhave this interview other bits of behavior that have raised all kinds of questions. you cannot sit back and say,

everything is fine. you have an sec investigation. david: how hard can the board press them because this is not just any ceo. this is elon musk with tesla. if you take him away, how much is it worth to shareholders? >> everyone is human. what if a great ceo gets hit by a bus? the world moves on. that is why in this country, we have a vice president. you cannot predicate everything on one individual. it is the company and not the individual. you have to separate the two out. obviously, they oh their positions to a relationship with him. they also have fiduciary duties. otherwise, who would invest in a company where there was no board? julie: charles, it is interesting what has happened to the stock.

we look at that as the proxy for what investors inc. -- for what investors think. it has gone down, but it has not plunged. it is down about 2%. in that sense, it does not appear we are seeing that much concern as of yet. >> the stock has moved around like a yo-yo. it went up on the buyout offer. what about all the people who bought the stock believing a buyout was imminent? i think that is the sec inquiry. there is a lot of movement you would not necessarily see and all public companies. this does not look like a public company, but it has the capitalization of a large public company. that is why you have a board. you can explain away behavior as much as one wishes. there is a reason we have rules. there is a reason we have

standards and expect certain things of folks in leadership positions. in ahas gone on as of late normal public company, the board would have done something. people expect that. there are a reason -- there is a reason world exist. situationeen an odd that i think the board has to result whether it is retaining him or going on leave or finding someone else. whether it is bringing in a coo. they need to distance themselves from him and act like a board should be acting. julie: charles elson, we have to leave it there. the director of the weinberg center for corporate governance. thank you so much. one option for tesla is to go private and join a number of other tech companies i act -- in

equity land. on $60corn elite sitting billion of untapped wealth. you have been looking at these trends here because increasingly, this is an option for companies. >> there are record numbers of private equity raised. banks have been forming a new business model around this. the funds seeking more yields in private markets. this is an option across the board. a stat that we like to use is the wilshire 5000. the last time it had 5000 companies was in 2005. david: this undermines the very basis we have security regulations in this country. if it is all going private, you do not have the information. >> it is a contentious matter. you have the sec boosting up the

san francisco office. it is not that they are afraid to go into private markets. regulators have been on top of this. disclosurer to find in private markets. there is a bar. not everyone can invest in private companies. david: the president wants even less disclosure. julie: even with public companies. >> we saw something interesting. after the president put out his tweet, the chairman of the financial services committee put out a statement saying this could jumpstart the jobs act 3.0. the interesting thing to me about the jobs act as we have seen some companies use it. benefiting all of the companies across america or the people who did not really need it? david: the times they are a changing. thank you so for being with us. coming up, pepsi announces a

deal. what are other targets for possible takeovers? this is bloomberg. ♪

>> this is bloomberg daybreak. coming up in the next hour, jeff shannon, black rock ceo. julie: let's get your bloomberg business flash. the french oil giant hotel has pulled out iran. new u.s. sanctions -- a $20 billion agreement to

develop a natural gas field. bank's chief financial officer once banks to think twice. arguing employees should restrict nonessential travel. it is the latest of the cost cutting drive. the groundbreaking movie crazy rich agents was the box office winner in north america over the weekend. it took in $25.2 million. that is your bloomberg business flash. david: crazy rich agents. i did not see it, did you? julie: i do not see it. it is a validation. a lot was riding on this movie. there was a lot of enthusiasm. i think it is a great thing that

it made all this money. david: by with last time we had in all asian cast -- when was the last time we had it all asian cast? three things wall street is doing this morning. jpmorgan gets passive aggressive in the quest for etf dominance. atlantia loses its toll road license. italy takes steps to -- pepsi announces its $3 billion deal to buy soda stream. what does it mean for the rest of the industry? julie: let's start with jpmorgan and a big surge in etf assets. this is an interesting trend. peggy collins is with us. etf's,e huge increase in the big banks are saying to their financial advisors, why

don't you use our etf? >> this is a trend to watch. it feels a little deja vuey. if these are going to go to zero, and we saw fidelity do this, let's create our own and push our own so we can swallow up a lot of assets. the one thing i would caution in terms of what to watch, it does bring up the whole idea of conflict of interest. david: if it is your money you are managing, you want them to put up the best -- you want them to put it the best possible place. >> we have the fiduciary role that does not have the most exciting name. it is an important role for investors. david: the sec has a new role

about to come in. >> the idea is are you putting your investors in the best products or the products that benefit you most? david: we want to turn to our second story about the genoa bridge collapsing and what it has done to atlantia. they said we will pay a lot of money and rebuild the thing. the italian government saying no, no. >> the story seems to be bringing up a debate of private versus public. we see it all over the world. should the government control things like that or is it better if the private sector does? in italy, you are seeing the big debate over the tragedy that has happened. it is bringing up the whole idea if they are the best ones to take the infrastructure project for the long-term. julie: in addition to the debate, there are the implications for the benetton

family. it is a conglomerate essentially. there has been criticism of how they have handled the situation. >> we have definitely seen the stock prices of atlantia drop by a quarter since the tragedy on august 14. that company is reeling. we know that italy is in the throes of the populism debate in a much broader sense. this is touching off a debate about infrastructure across the world. in the u.s., we have huge infrastructure problems. julie: let's turn to our third story that has to do with the acquisition buy soda stream of pepsi -- by pepsi. it has not been the only food or beverage deal. we have seen a lot of activity in this industry. >> buffett raised everyone's eyebrows even before jeff bezos

did the deal with whole foods. buffett went into craft and heinz. seeing thesee deals amongst the biggest companies in food around the world. they are all trying to deal with the trends. david: one of the trends is more popularization of art seasonal, local grants -- are seasonal -- artisanl, local grants. >> patty find the ones that are going to hold on? joe's, i thought to myself, there are a million and one cells are varieties. all different -- a million and one seltzer varieties. it is amazing that the companies are trying to find the ones that are tapping into local and organic. julie: lacroix has become a synonym for a seat -- for a

certain type of hipsterness. david: it is great to have you here. coming up, the trump administration is set to roll back climate era policies. more on that next. out gtv goan check . on yourto tv go terminal. ♪

david: you see it right there. it is the white house. president trump has made no secret that he wants to change some environmental regulations. there were reports over the weekend about proposals they are going to make that would cut back on regulators of the coal industry. one would be to say we are not going to regulate what is coming out of your smokestack.

the other is to say, leave it up to the states. just delegate it to the states, which would be a radical change. julie: i guess they do not want to leave at the california. when california set the standards on auto emissions, the trump administration pushed back heavily. david the states can -- julie: the states can regulate it as long as they agree with them. david: at the same time, the courts are saying, wait a minute. we are not sure you can do this the way you want to. the administration has slowed down on implementing regulations. the d.c. circuit is saying, you want to repeal of regulation, repeal it. you do not have the party to say we are not going to enforce it. julie: with the typical hypocrisy one can find at times in washington, of course there

was a lot of criticism for president obama. so now that the trump administration is in power, you find them trying to implement various things through not indirect means shall we call them. david: this will be a battle we will see going on for some time. coming up, central banks and emerging markets with ben laidler. we have a lot to talk about when it comes to central banks and emerging markets. this is bloomberg. ♪ xfinity mobile is a new wireless network

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raise? that is the question is central bankers meeting jackson hole with a focus on inflation and how far the fed will converge. -- the verge. economic markets take a break but show little confidence that the government has a plan. hold the bottles. pepsi by sodastream as soda makers fight reduced demand and seek ways of cutting back on plastic bottles. welcome to "bloomberg daybreak " on this monday. i am with julie hyman. julie: i like the idea of getting away from the plastic bottles. straws are going away. david: when you see the videos of the oceans full of plastic. julie: it makes sense. let's get what is happening with markets. a lot of green on the screen. futures of a 10th of 1%.

the stoxx 600 is hanging on with a gain at this point of .6%. that is similar to the gain we had earlier in the index. basic resources and chemicals, oil and gas, gains when it comes to movers in the euro stoxx 600. we have continued to watch the wan, temporarily boosting iran. the dollar is -- the wan. copper prices bouncing back and below $6,000. higher than that we did have showing signs of increasing demand. david: i should not have said anything. julie: you jinxed it. david: look what happens. time for the morning brief.

today, will hear from the trade representative on six days of hearings on proposed tariffs on chinese imports. on wednesday, minutes from last month's federal reserve. meeting. chinese imports going to affect finally. on friday, a meeting of central bankers in jackson hole, wyoming, looking for clues with how the fed moves forward with ray kites -- rate hikes. taylor riggs is here with first word news. taylor: president trump's lawyer, rudy giuliani, casting doubt on whether the president will interview with special investigator robert mueller. he said truth is the truth while discussing why the interview is not a good idea. he says similar questioning could be a perjury trap for the president. it is day three of jury to liberations in the fraud trial

of president trump's former campaign manager, paul manafort. prosecutors say manafort hid tens of millions of dollars of foreign income. the defense did not call any witnesses and says the prosecution did not meet its burden of proof. in venezuela, president nicolas maduro testing capacity of the population to face more pain. president maduro carried out up currency devaluation over the weekend by 95%. inflation already forecasted to reach 1,000,000% this year, and this may make it worse. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. venezuelais not just in the emerging markets, turkey had our focus last week and set the currency markets on edge

with widespread doubts about whether it's problems could spread to other emerging markets and an item for central bankers meeting in jackson hole later this week. welcome now to ben laidler hsbc , global equity strategist. also coming to us is noelle analyst.vestment this shows how the yield curve is flattening. the fed rate is inverted and as the rate comes up, that funds out. ben, how to the federal bankers resolve the fact that we are over 2% with some of those such as turkey and venezuela and global growth? abigail: it is global divergent divergence. global inflation has been picking up here and wages picking up.

the business cycle for the rest of the world is less robust. core inflation is lower. the synchronization we were talking about a year ago has now got divergence. that is causing issue for central bankers. the strength of the dollar is one of the repercussions. lle, it is unlikely will get any rate policy pronouncement out of the meeting. do you think the idea of divergence will be the main topic, and how do they attack that issue? noelle: we do not think it will be the main topic. why would powell walked about if if we do note boat see any major moves within the market in terms of market pricing? september is priced in fully at

this point with almost 100% priced income and december is 50-50. we think that is fair, as we expect inflation to slow into the year-end. julie: we should bring in the idea of jeffrey good gundlach who was warning of a .hort squeeze potentially if we are steady as she goes in priced in, how does that happen? ben: let's pick up on the narrative that will happen this week with the minutes and jackson hole. i would focus less on the past or how tight and how quickly the fed will raise. watch more is, what is the size of the balance sheet? there is a discussion going on. the fed may shrink the balance sheet less than we think and

that normalization may and sooner. that takes some of the pressure off short rates and along the rates. some of the news we get that maybe we not -- we're not expecting. david: what do you think will happen with the balance sheet? there are suggestions it may not grow at the rate we thought. if that happens, how surprised with a markedly and how will it react? noelle: we are focusing on the willce sheet and the fed focus on wages and confidence in wages and those feeding into inflation. the market is looking for persistent trends and we have not seen them yet. we have not seen wages get into inflation in a significant way. we will be watching for that this week and in the coming months. maybe balance sheet talk and wage talk coming up this weekend. what does all of this do to

other central bankers? we have focused on the fed, but when you talk about the ecb and the bank of japan, they will be representatives of the other central banks there as well. ben: they may clearly have less robust growth stories. growth and yield is above trying, but slowing the quickest and fastest of others globally. japan is in a similar situation. inflation is lower. the next move is the tightening move, but they are falling so far behind the fed that you are getting the divergence and that is driving the dollar strength and putting pressure on some parts of the world. david: about the ecb, we thought we knew what the path was, that they were going to get there. now we are seeing rumblings. over the weekend, you had the

italian government come forward and say we should keep it going at the ecb, particularly if italy is concerned. qe? the ecb delay further noelle: italy is something we are watching and concerned about. that will come to ahead here in a headmp -- come to here. the fundamentals are strong in europe and we think that will continue or at least bring the convergence story back into play. julie: you will stick around for us, noelle corum. next, how you put all this to work? where are we finding opportunities? this is bloomberg. ♪

taylor: this is "bloomberg daybreak." here is your business flash. run oilzuelan state company will pay $500 million within 90 days. they will have 4.5 years to pay off the rest. mexico has agreed to buy price $3.2 the billion in cash. that represents an 11% premium to friday's closing price. it makes great beverages while reducing the amount of waste generated, a reference to

plastic bottles. tesla ceo elon musk sees no option but to keep working at his current, relentless pace. board members and investors are growing concerned about his fewth and stability, a hours before sunrise yesterday he tweeted he had just gotten home from a tesla factory. he appears determined to lead the company to the turmoil that erupted when he suggested taking it private. that is your "bloomberg business flash." julie: still with us is ben laidler, equity strategist and noelle corum, invesco portfolio manager in atlanta. en, let's talk about what this means for your portfolio. what has been remarkable? what will the central banks do and what will be president tweet and what weapon to trade? we have had ups and downs in the markets, but volatility is still nowhere. ben: volatility is low.

a lot is happening behind the scenes. look at the u.s. we had 25% earnings in the second quarter. close to that for a full year. the market is up 7% rate that is a massive rating. evaluation is a lot cheaper -- devaluation is a lot cheaper. it affects the market significantly. it takes a lot of risk out. the fundamentals are more solid. i worry about less volatility than i did six months ago. earnings are coming through robustly and valuations are cheaper, volatility is lower. valuations are somewhat lower. you have a good insurance policy if it remains as robust as it has been. david: as long as earnings remain as robust as they are, we have been showing 24%, 25% growth year to year.

can that continue or have we peaked in earnings growth? we are focused on the fundamentals at invesco, and growth is solid and confidence is up. the consumer is still spending. we are taking it back to the basics that growth will continue to do well, fiscal policy is supportive, and that will support risk assets into your end. we like emerging markets collectively, but we like investment grade. those are basically due to valuations. we are thinking about financial conditions and two ways. on one hand you have financial conditions, and on the other hand, you have globally led financial conditions. we are thinking about hedges and toggling between the two. one is good for rates and one is bad for rates. we are keeping that in mind in

terms of risk. julie: on emerging markets, where are you being selective? concern andturkey concern about emerging markets. defensivehe more emerging markets to that situation? we are focusing on where the growth is coming from and so countries have growth. david: you seem to be more defensive, you like utilities and staples and not discretionary. ben: we have continued upside. the u.s. earnings cycles could extend. expectations look low to us and that could be the next story. peaking ors cycle is

rolling over depending on where you're at. for does not mean to much the level of markets, but means a lot to the type of sectors you should own. investors are cyclical right now. that rates are higher and cycles rolling over and defensive sectors are out of favor, volatility could rise. david: he also likes small caps. moore counter intuitively, but the u.s. is growing and will continue to grow into next year -. i still think there is room for small-cap outperformance. you had some earlier in the year but less than i hoped. that group has a lot of visibility. julie: do you still see it as a trade proxy? ben: a little bit of that, but it started before then. it was supercharged are the tax

reform. earnings ince the the large-cap and it has been helpful. trade noelle, what about question mark as a defector decisions at all? -- trade? affect your decisions at all? noelle: it is hard and exhausting. we have to watch it closely. in terms of inflation, we do not expect markets to care too much on tariffs because we think it will be a one-off type of increase on inflation. what we care about is the persistent trends and going back to wages and costs. david: thank you so much, noelle corum of invesco. ben laidler, great to have you both with us. pepsi's bet on sodastream.

that is coming up next. this is bloomberg. ♪

summer, butdays of no shortage of company stories. we welcome brooke sutherland of bloomberg opinion could let's start with tesla. we have start with them every day. elon musk has been at the factory all night long but not too tired to respond to arianna huffington. he is focused on getting the job done. arianna huffington was telling him his habits were unhealthy and he needs to sleep and take care of himself. david: is this a larger campaign and that we need to take better care of ourselves? ford and tesla are the only two companies to not have gone bankrupt was what he was saying. i was struck by how narrowminded

this response is because there are plenty of options. one of the biggest is hiring a coo and a right-hand man to help them navigate. david: when i read this tweet was that you should not work all night long or you will go bankrupt. the pattern of short-term thinking of opening the production line and having production running 24 hours a day. that sort of thing is not sustainable over the long-term. it might be a band-aid that might get them cash flow positive for a couple of quarters, but it does not get him toward his long-term goal of revolutionizing the way we drive and creating a mass-market of electric cars. julie: there are two things about the tweet, one, he thinks he is the only guy who can do it. clearly, he thinks he is integral to the company. a lot agree with them, to be fair. second, he sees it to your point again short-term and long-term

as a series of sprints. he keeps on doing it and it is not really working. brooke: is motivation for taking tesla private was to get away from short-term thinking and volatility, but he is perpetuating a lot of the moves. i do not think shareholders are quite as fixated on quarterly numbers as he is. a lot of them are his own target. inie: the shares are down 7% the premarket session. they were down half of that in the past half hour or so as we have seen more people get in and volumes heat up. they are down sharply. : you had jp morgan out and :owering perspective -- brooke you high jp morgan out and lowering their perspective. he is out saying i'm the only guy and i am fragile and working myself to death, it does not bear a lot of confidence. brooke: you cannot have it both

ways and it comes back to where is the board? they are trying between an iconic ceo and duty to shareholders. their primary duty is to shareholders and making the company work for the long-term. having unhealthy behavior continue is not great for anybody. i think there needs to be a andrity put on finding coo some into help him delegate his responsibilities. julie: where are we going? david: the reason why he is doing it and taking a private is to avoid reporting. the president agrees with him that we should only do it every six months is what the president tweeted out. how realistic is this? not realistic.s the sec has been reluctant to schedule of quarterly reporting. it has been a cornerstone. it serves a place. we have had calls from different

leaders from jamie dimon in terms of getting rid of short-term thinking. i do not think moving from a quarterly to semiannual fixes that. you look at europe, which reports on that basis, and there portfoliopushing for shakeups. this is not the fix others might think. it seems toroblem me is the issue was thinking is more a function of the trading environment been coming from the company's. ies. : i spoke to long-term investors about this issue and they said they really appreciate the volatility around quarterly themngs because it allows to continue to build on thesis and add to positions when the market overreacts or under reacts. they are looking for value and not trying to short the stock but looking for opportunities to

adjust their position. if you take away the quarterly earnings reports, less opportunities to do that. david: brooke soloing, always great -- sullivan, always great to have you. getting a be on growth. jefflk about china with shen. live from new york, this is bloomberg. ♪

>> this is "bloomberg daybreak." i'm julie hyman. alix steel is off today. let's take a look at how equities are faring. s&p futures with again going into the open.

this is following a rally in european stocks being led by basicf the metals and materials producers of underlying prices rebounding. shanghai composite having a rebound after declining 4.5% last week alone. it felt every single day last week. it rebounded in the overnight session come up 1.1%. one of the outliers has a loss today. stocks into the jackson hole meeting, 2.85% is the 10 year yield, little change and below the 3% level that is so closely watched. dollar strengthening against the turkish lira, even as steps trying to help the turkish there and economy. copper still holding out. many other commodities still holding up this morning. cap a bouncing -- copper

bouncing 1.1%. david: time for first word news. taylor: mike pompeo says it is time to and america's longest war. conflict in afghanistan has ground to a stalemate. u.s. and afghan troops have been unable to bring about a conclusive victory. floodingrn india, caused by monsoons has forced more than 900,000 people to flee relief camps. officials worried about the outbreak of disease. the floods are blamed for $2.8 billion of damage. authorities say 341 people have died. in london, the driver whose car hit several people before crashing outside parliament has appeared in court. of suspect is accused attempting to kill police officers and members of the public. he is a british citizen who came from sudan.

the court ordered him to remain in custody. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. thank you very much, taylor. it is arguably the most important economy in the world, but far from the most transparent. china drives global growth, but how can we be sure how fast it is growing and how quickly can we get the data we need? black mark has developed its own approach and where welcomed by jeff shen. welcome to bloomberg. good to have you here. jeff: thank you so much. david: what is the system you put together and how does it work? jeff: we look at the world from a data centric approach. we're looking at traditional data but nontraditional data also.

be gps information around the globe. overall, we get a sense of what is going on in the world now and what can be going on in the future. david: that sounds like an enormous data set. how do you put that together and make sense out of it? jeff: it has to do with combining data and economic theories. it is trying to figure out what can potentially be going on using this type of data. use satellite imaging in china to figure out what is going on in the ground. there are government official statistics that show exactly what is going on in the ground day by day. satellite image comes in and we get a sense of the content on the ground and that can give you if trucks are moving around, more metal moving around. where thehow us

industrial activity is an about the economy. julie: we are in an environment where everyone knows everything. transparency is a good thing but it can be challenging for investors. analysts andof investors trying to do this and get the edge in various ways? jeff: it is getting more and more popular. julie: yeah. jeff: data is the raw material. what you'res on asking with the data. if you ask better questions you can get interesting answers. if you ask a bad question, you can get answers irrelevant to the market. david: let's look at applying the approach to china. we will put up a chart you provided to us. i would love for you to take us through it. it compares three different ways of reflecting chinese growth. gps versus current

pmi. explain this. jeff: the pmi is what people are used to. government gets a sense where the industrial activity is. the blue line is the gps. small-cap level is one component of the gps. the now cast is interesting because it tells you where the economy is, which a lot of times everyone tries to forecast the future. this accounts for data that is not synchronized and it gives you a sense of where things are now. things are looking reasonably similar right now. the interesting thing is when they diverge and that is where ,he markets come around the pmi

but you can get interesting information. julie: there is not a big diversions. ast shows a little underperformance versus the reported upon data. jeff: which is what we see in the satellite image information and it is more high-frequency. it shows a significant slowdown in the economy in the second quarter. it is stabilizing a bit in july and august, but the second-quarter slowdown is more visible in this data. second readis the you gave us on the number of chinese government projecting increased earnings? you provided a chart and it came from the various data sets. it is taking up and it dropped off but is now coming up. this is similar to other information we track in china which is certainly a

second-quarter slowdown visible from earnings from corporate .anagement earning guidance this has stabilized of it and has picked up a bit. it is hard to say if it truly turn the corner, but this is quite different from the broader sentiment towards china which as of today was negative. julie: let's talk more about sentiment. the third chart looks at business sentiment in companies outside of china and talking positively about china, about kind of what they are seeing in terms of demand there. this one is showing a similar shape to the last one. jeff: this is using natural language processing from global companies are you we have phd and we don't like to read we use machines.

it looks for terms related to china to see whether people are turning positive or negative. to your point, it is stabilizing and turning upward. it is interesting to compare the big slide down in 2014 and 2015, where the economy had a bumpy phase. around that time, global sentiment towards chinese companies and the economy overall, there was a small dip and is stabilizing a bit. it is interesting to watch how it will unfold. david: jeff, in a discussion about trade dispute in the united states, i wonder if that might affect the global companies and the way they react. jeff: that is a principal component of explaining negative sentiment towards china over the last three or four months. we have tracked some bloomberg news on how often people talk about trade wars.

that certainly was highly correlated with some of the negative sentiment against china. and are fundamentally, not bad and slowing down a bit. sentiment has been quite negative, whether it is the chinese companies in the second quarter or globally in china. it will be interesting to watch how this will unfold. julie: maybe an opportunity there if you have a perception gap if you will between how people see it and how it is. thank you so much. jeff shen is ceo of systematic equities. andresting chart methodology. coming up, pepsico's biggest deal in eight years. they bought sodastream for $3.2 billion in trying to hedge against a slosoda slowdown.

this is bloomberg. ♪

taylor: this is "bloomberg daybreak." i'm taylor riggs in the hewlett-packard enterprise green room. managerortfolio discussion, coming up. let's get your bloomberg business flash. the french oil giant total has pulled out. the u.s. sanctions counted them to cancel the $5 billion, 20 year agreement to develop a natural gas field. china state owned petroleum corporation has taken over the project. largestof the world's

digital exchanges have joined an effort to stamp out behavior in cryptocurrency. the virtual commodity association was created by bitcoin investors. among the exchanges signing up our usa. -- are usa. crazy rich asians was the clock buster this weekend. it is the first in a quarter century with the largely asian cast. came incame in -- meg second. that is your "bloomberg business flash." pepsi earlier today and announcing it is buying sodastream for $3.2 billion. we welcome the head of our consumer coverage. why is pepsi doing it and why now? timing for the ceo

who is on her way out here cheap announced she would retire in the fall. she had not found the transformational deal that investors had been looking for. some might argue whether this is transformational. billion.g $3.2 while in numbers i would say it is small, it is certainly thinking outside of the box for pepsico. julie: it is interesting that they did not do this a while ago. around astry has been while and is a fairly mature company. the last quarterly earnings report showed the strength in the stock. is it because she is going out and was looking for this kind of future looking deal perhaps to do? there has been speculation that pepsico has been circling this company. maybe the timing does make sense.

certainly soda consumption in the u.s. is at about a 32 year low. this company wants to find new ways to get people still hydrating in different ways. david: it is interesting and ironic that people think of her legacy and part to make pepsi about more than just a beverage company. she was working on snacks and was particularly successful. now that she is on the way out the door, another focusing more on beverages. anne: you think about frito-lay and even as american start to turn away from sugar, they are still unhealthy it comes to snacks. they have also found healthier snacks and got more involved in quaker oatmeal brands which is also a pepsi brand. she has been smart in diversifying away from soda. sodastream, while his soda in the name, most people use it for sparkling water and that is an

area where pepsico wants to go. julie: is interesting the geographical location that it gives it. the biggest is western europe, it is not the united states. there was a big surge in western europe your what is pepsi's existing footprint like? anne: they are all over the world -- europe. what is pepsi's existing footprint like? anne: they are all over the world. they spend a lot of time in europe and africa and the middle east. julie: thank you so much. team herer consumer at bloomberg. joining us over the phone is susquehanna's senior analyst. pablo, thank you for joining us. we have been talking about the timing of this and the strategy

of this for pepsi. to talk from the sodastream point of view, it did well to hold out and not sellout couple of years ago. pablo: that is right. good morning, everyone. from the pepsi point of view, it but also athinking, defensive move. forward thinking in fact that people are doing things online and in the future may be drinking more at home. view, it point of makes sense in longer-term. also. a defensive move assets have moved into a joint venture.

dr. pepper still involved in at home solutions. that is why we call the deal defensive to some extent in thinking long-term and also forward thinking that more people may be making sparkling water at home and even soft drinks. it makes sense on that point of view. sodastream was good to hold out. has is a platform that significant growth potential globally. there are markets in the world where sparkling water is 80% of bottled water, like in germany. people have been switching to the at-home solution. small.u.s., it is more we like the long-term story here from pepsico's perspective. david: in what way is this defensive and forward thinking, concern about increasing issues

with plastic bottles, particularly in the environment? pablo: in western europe, it has resonated that message quite well. the forward thinking is in that sense. , people have the same concerns with soft drinks. it does make sense. it is forward thinking in that sense. for the time being, this is a platform that has been mostly used for sparkling water. even pepsi said there is no plans in the interim for the existing platform. more aggressive in the global sense. are there any

implications for the other smaller carbonated beverage makers? if you look at national beverage, fizz is making a bit of a pop this morning. will there be more deals? pablo: it is a brand that is doing very well at 35% 40%. it is a target for several beverage companies. in thinking long-term, pepsi could expand their bubbly andform into retail sparkling bubbly being made at home. it is good, but it means

longer-term being left out. julie: lots of moving parts here in the beverage industry. beatg up, estee lauder's their forecast. now we are seeing shares positive. more have more on retail broadly and where consumers are spending their dollars. you can always use the bloomberg to interact with the shards shown by using gtv -- charts shown by using gtv . treasury, a warning of a short freeze in the treasury market. you can check this out and all of the other charts on gtv . this is bloomberg. ♪

julie: retail revival. big wins in number and nordstrom

last week on signs of optimism in the consumer sector. estee lauder came out with numbers that be estimates for profits and revenue. it looks like the forecast was hurt by an accounting change, but people looking on the bright side. let's talk more about this with brooke sutherland of bloomberg opinion. when you look at the ensemble of drawl, it is difficult to a conclusion because we have seen diversions in individual companies. : retail canke survive this onslaught from retailers. other e- you have to think outside of the box and be creative if you want to make it in this current environment. we saw that from nordstrom, which experiments with different concepts. they have an inventory free

store where you look and then you order online. they have been experimenting with online pickup in stores. that kind of thing is working with retailers and bring in traffic to the stores. you have jcpenney that is not done enough to innovate. it is living in an old retail world and you are seeing that in its numbers. david: what about macy's? hey have been trying a lot of different things. brooke: they bought a makeup store and have been experimenting with their clothing. part of that was mismanaged expectations and analysts and investors hoping to see too much out of macy's, more than it could deliver. it is spending more in order to make itself competitive with amazon and some other places. for retail investors, that is something you have to change your perspective about.

to stay relevant, you have to spend money. amazon is spending money. julie: walmart is spending money and it looks like it is paying off. interesting measures and partnerships with amazon. target is up. what are the expectations? brooke: this will be a better week for retail. tj is coming up this week. these of these tended to do better in this market. a partnership with amazon. david: thank you so much to brooke sutherland. this is bloomberg. ♪

jonathan: from new york city, meet jonathan. 30 minutes until they start of trading. this is the countdown until the open. -- i am jonathan ferro. 30 minutes until the start of

trading. this is the countdown until the open. coming up, the s&p 500 nearing all-time highs, two days from ranking up the longest bull run on record. gathering in jackson hole, wyoming and elon musk slapping down calls to take time off. the stock slipping in premarket. away from the opening bell after a week of gains, the s&p 500 up 300 points. up .1%. in the bond market, yields are lower. the dollar stronger in g10, back to $114.23. the event of the week, central bankers gathering in jackson hole. markets looking for hints about the fed rate hike path of the outlook on the economy. >> the only thing the fed has to fe