nejra: helen driver, head of global equities at aviva investors. thank you so much.the bloomberg in case you are following president trump and his tax cuts, a story saying that trump will get his tax cuts , according to the vast majority of economists in bloomberg's monthly poll of economists. vonnie: still ahead, the campaign to unseat german chancellor angela merkel underway. but a number of her own party tells bloomberg why the quiet leader deserves a fourth term. this is bloomberg. ♪ vonnie: live from bloomberg world of quarters in new york, i'm vonnie quinn. nejra: live from london, i'm nejra cehic with the european close just minutes away, six weeks to go before federal elections that will determine if german chancellor angela merkel will win a fourth term. earlier today, guy johnson and matt miller spoke to a member of askedrty, elmar brok, and why she will win. situationthe german is very good. we have the highest numbers of employed people in the history of our country. a relatively quiet situation our country, the refugee question is under control, and ther

joining us is lucy macdonald, chief investment officer, global equities at allianz global investors.restingly from the imf about china's being filled much by debt. that is exactly the case was that we are seeing debt everywhere in the world as being the major determinant of growth. that has been the case since the financial crisis, but particularly so in china, which has really driven excess growth, over 6%. that has helped the rest of the world, for sure. pointing out this debt is there and will need to be financed over time is a good caution, i think. it is a common picture around the world, the growth is fuelled by debt. where is the dividing line? read as a become manageable and healthy to keep the economy growing, and being into dangerous territory? we had a very clear number at 90% of gdp. that proved to be not entirely clear that it was an exact number. we are now in the hundreds of percent. 250% we are talking in china and similar levels house where in the world. it comes down to the ability to finance that debt. that is affected by how close the economy is affected by how cl

s&p is of 18%. -- embraceline is if the global equity rally before it is over. it while it is here, you cannot participate. and now: that was then is now. we have to look forward. i think we are still in this global equity rally that has another three or four innings to go and that's the most important call. there are other calls that are just important. notfact that people are able to embrace this is why it will keep going forward. when other guests talk about global recovery, that is when it is time to go. alix: when you say by anything -- when you say by anything, who will take on risk? i am saying isat get past the ideas that the markets are overvalued and there is a looming disaster happening. go find in the company's you want to invest in invest about worrying about the macro trends will derail everything. that is not what is going to have been the next six months. jonathan: you made it this that europe aslong to the it would -- europe equity and not the strength of the euro at at the same time? mike wilson: no, there are always things you need to be caugh

global equities at the moment near all-time highs.on fixation going with changes, the communications director, anthony scaramucci gone on the first day of chief of staff john kelly's first day in the office. gone after 10 days. we have the reserve bank of australia out with an interest-rate decision. we had the bank of england also. don't forget, the most important data point of the month. haidi: the front end of the week has been positive. slower, but still pretty robust. japan data also coming in better than expected. u.s.ding it off with the jobs numbers. in terms of the markets, asia is doing much better than the lackluster session we had, low volumes, and not much momentum when it comes to wall street. over here, we are seeing that commodities rally and the renewed u.s. dollar weakness driving the emerging-market rally higher. shanghai and hong kong are just getting online. sophie: looks like we had stocks on the mainland as well as hong kong extending gains. the hang seng rising about 1/10 of a percent higher for a second day. y

we are joined now by the monday asset management head of global equity.r, last certain extent, it masked an opportunity for everyone to take some money off the table. what we have got is -- markets are no longer stretched, if anything, what we learned last global stress index. what did you do last week? >> very little. high, so itre quite is pretty unlikely that the geopolitical escalation that we saw last week is going to bring this momentum to an end. we have seen it already subside this week. i think everyone is wondering what is going to bring this particular cycle to an end. personally, i think it is unlikely. in the short-term, these risks will pop up. we have seen it with this spot with north korea. there isn't some dramatic event, and i think that is , ultimately, the market is going to shrug these kind of events off. anna: in terms of where the markets head with his information, with the geopolitical news flow we have seen, if markets are looking for a reason to sell, if investors think we are seeing late cycle evaluations, this act has a time to

with s&p global equity research. >>> those strong economic numbers we talked about and a rise in tech stocks which were bolstered by apple hitting a high, led to gains on wall street including a fourth straight winning session for the s&p 500. the dow rose 27 points to 21,892. the nasdaq rose 66 and s&p added 11. and now, to harvey. where the flood waters in the houston area began to recede slightly, but the storm is far batte ne as it moved eastwa te louisiana better. an additional 10,000 national guard troops are being deployed to texas, bringing the total to 25,000. and as harvey moves east, the concerns it could have on the energy industry is sarting to grow again. brian sullivan is in pas dadena texare >> hurricane harvey may have left the houston and galveston area, but it sent another reminder today it is still active and still dangerous. the hurricane swung to the east, smasf beaumont and port ar th along with southwest louisiana. many reporting rapidly rising waters and asking for help. it may add to concerve supplies beaumont and port arthur are home to four big oil refinery

lucy macdonald, cio from global equities at allianz.miller and guy johnson are up next as the european market opens. ♪ track your pack. set a curfew, or two. make dinner-time device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. introducing xfinity xfi. amazing speed, coverage and control. change the way you wifi. xfinity. the future of awesome. ♪ guy: good morning, you are watching "bloomberg: its, the european open." cash opens in 20 minutes time. first trade in the day coming up. i'm guy johnson in london, matt miller is in berlin. unwind and relax, to dovish -- two dovish fed presidents want to continue the shrinking of the balance sheet. what does that mean about the possibility of a rate hike in december? that is an open question.

equities are probably some of the most compared to the global equity markets.enerally global equities are stretch but the u.s. is the most stressed. plus, the risks are measure centric. you have the debt ceiling and the fed balance sheet reduction and the hotel is the turmoil that is never going away. all of those issues mean it is likely the cause of with the version will come from the u.s. next. joe: at the beginning of the year, we talked and you were optimistic about a lot of things. your point to good news and the rebound in europe, which has clearly come to fruition. have seen this lately were a lot those postelection terms have faded like the dollar, but u.s. equities holding just fine. what now? what is for the rest of the year? mark: the easy gains have been made. the real theme this year was returning global growth. combined with excess liquidity. excess liquidity is not quite there anymore. we saw stocks with these and earnings were not being rewarded. that is the first time we have seen that since 2007, almost a decade. on top of that, we see credit

earnings has been quite strong in the second quarter and that's providing a nice support for us and global equity, the bank of england, all eyes on that, what are we expecting? there has been a lot of increasing anticipation of a rate hike from the bank of england. we believe that actually, without much sign of wage growth coming through, that actually the bank of england will stay on pause this year. the markets are slowly waking up to that, but it won't be until we get some clarity from tomorrow's meeting that the bank of england unlikely to raise rates this year in our view. we will keep a close eye on that and you will be back to talk us through the paper stories. alex, thank you. still to come: would you let someone stay in your home forfree if would you let someone stay in your home for free if they agreed it look after your pets? stay with us, you're with business live from bbc news. prices in the shops continued to fall last month, despite recent rises in inflation. food prices are going up, but they're going up less quickly. the price of non—food items continues to fall. rachel lund is h

as you can see, a bit of a return of an appetite for risk in global equities, asian shares rallying,uesday after a slight easing of tensions between the us and north korea. prompting investors to move back towards riskier assets which fell last week. mckay, boosted by growth figures out yesterday, the strongest japan has seen two years, the stronger dollar against the yen boosting exports. us stocks recovering from the sell—off last week, the snp by the hundred, the biggest single day percentage gain it has seen since april, technology shares including apple giving the index its biggest boost. that positive sentiment has been setting the tone for the european markets. perhaps not a stronger performance in london, certainly on the continent, frankfurt as well reacting to the german growth figures out. let's take a look at what wall street has in store. here's michelle fleury. a lot of attention on tuesday like many days of the week will be paid to the retail sector. the big economic data of the day as the retail sales report from the department of commerce, it will measure the overall

with global equities at these all-time record highs and how much things have changed, shanghai and hongrkets just opened. let's get today. about how shanghai marches to the beat of its own drum. they are joining the off-peak, if you will, or the off paste session we are seeing so far this friday. at the moment, shanghai is very much in line. what -- david: at the moment, shanghai is very much in line. let me get started with the renminbi. the median forecast of the market is playing a little catch up because of the string we have seen over the past four or five sessions or so. what we have seen in the last few minutes -- let me see if we can get a shorter term look at this -- there we go. erased all ofy the strength it has put on since a.m.utoff of 4:00 or 5:00 668.19.ar at we will continue to follow this closely, but you take us back cointreau days, we are basically back to levels at the start of the week. let's take a look at how things are shaping down. across equity markets, we are poised for the first weekly drop in five weeks. hang seng off by 1.4%, 400 points, the biggest drop so

alex, head of global equity income, joining us. quite a quarter. a record quarter.s this evidence of a synchronized global growth we are witnessing? >> 100%. when you look at the numbers you see every sector in the u.s. increasing. nine out of 10 german companies, three quarters of japanese companies. q2 into this year is a strong. period. mark: the u.k. bucking the trend. it stands out. >> currency for starters. we base our index in dollars and that is looking at different growers. in the u.k. we have seen specifics. deal, berkeley a year ago. underlying 6% growth. not a disaster. mark: europe dominates the index in the second quarter -- is that seasonal? >> a lot of big swiss or german name's pay big so it is a key year for investors to get it right. vonnie: in the u.s., the global index, the dividend indexes at a three-year high which is impressive. and profits at this point -- is there a correction coming, particularly when you consider that dividends are being paid out at an increasing rate, that is not money being plowed back into the company? >> a good questi

it's global equities not yus u.s., global >> when you talk about the equity premium, that's what w meople will pay. what level of interest rates stops the rally then. >> so 275 is the number where we can still get multiple expansion. above three is where you have a hard time making progress. why? because at 3%, the alternative asset becomes attractive, so we talked about pension funds at 3%, there's a flood of money that wants to go back to bonds how narrow the world is. 40, 50 points makes a big difference where does central bank missteps play into this >> the fed is doing their job. they've been tightening since 2014 they'll ultimate ly end this cycle. that's the way all cycles end. i think this year, more than any other, they've made the decision, they're going all the way. we're going to hike a couple more times we're doing balance sheet reduction. they're going the distance, so to me, it's not a matter of when, it's if. could be as herbally as late next year. we could see the feds tightening start to have a real impact op the economy and of course, on markets. i'm not one of the

even though equities are only 2% off their peak, stress will feature to equity and globally.s of stress should investors keep their eye on in the short-term? hit: i think this could across a lot of assets. emerging markets have also had a very good run. this is not a sign that the world is turning bearish or there is massive panic. it needs there has been extreme complacency and people have been forced to invest because of low volatility. this implies there might be a correction across many assets, whether it is global equities or credit, they can also for in the short-term. it is important to remember and any risk adverse market, it doesn't go in a straight line. the weekly closes are important. there will be a lot of people checking into the market in today's or reading the weekly reports. bite managed to do a little of a they say, people may say this is only a short-term thing. i think it could be very negative next week. yvonne: it is good to get your context on that. more about the north korean tensions and their implications when it comes to the economy, particularly in

also noting, as the dow has set all these records, the global equity market is also doing quite well. it's up 12% year to date and trading at a record today as well. if you look at the u.s. market versus the global market, market share is declining. this turco's back to 2010. the u.s. market cap -- this chart goes back to 2010. the u.s. market, particularly this year, has been declining. one is the declining value of the u.s. market. also, we have seen u.s. stocks global markets have gained even more. on the u.s. dollar topic, if you look at the dollar and the trend we have seen, we have been down this year, a percent. we have had -- 8%. we have had a little bit of a rebound. now to a story we have been watching in the last 15 minutes or so. remember, we had a report from bloomberg news that united athnologies was looking rockwell and interested in making an acquisition. now, dow jones is reporting that united tech has made an offer of less ban $140 a share for rockwell. foress than $140 a share rockwell. the two sides are still in talks, according to that report. a further leg up tha

appreciate it. >>> and i also want to get the market's point of view on this with our global equities fund manager. richard, we usually see the sable e saber rattling from north korea every couple months and now it's more frequent and usually markets tend to shake it off is this time different >> we'll have to wait and see. clearly tensions have been escalating and some of the rhetoric we heard from trump yesterday was unsettling but i think markets have taken it in their stride certainly markets continue to focus on what we've seen in other companies. so this backdrop will continue for some time. >> and we are in the midst of summer trading and volatility has been low could this be the black swan that we've all been fearing but in a way been waiting for? >> i think potentially there is always the risk of that. and we certainly have been in a very benign environment as far as volatility is concerned i think markets do need to price some of this in and i think what we've seen today is a reflection of that. >> the swiss up against the euro to the tune of 1%. we're seeing the yen up agai

from a chicken farm what are you watching, rick santelli >> i'm watching the whole setup between global equitieshat's going on with interest rates we're going to go back to 1989 in japan see if we can find some similarities all after the break. >>> the dow closing in on 22,000, that milestone, does it mean stocks keep flying higher or is a key indicator suggesting a pull back is coming? shares of under armour are getting slammed again. the new forecast for the stock is coming up and there is unusual activity in the semistocks could mean a big pay day we'll tell you about that at halftime report. we'll see you then >> we'll see you then. thank you. let's get to rick santelli and get the "santelli exchange." >> hi, carl. you know, it was about 28 years ago that the japanese stock market was darn close to 40,000. the exact number, 38,900, somewhere in that area it's currently in the 19s. so half way back and about 28 years. now granted, back then many lost decades ago. there wasn't the hit a button move, money move capital and hit three buttons and trade on four different continents but there is st

tensions around the peninsula, sapping global equity markets. oil is up.data and this is bloomberg. ♪ who knew that phones would start doing everything? entertaining us, getting us back on track and finding us dates. phones really have changed. so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that. see how much you can save when you choose by the gig or unlimited. call or go to xfinitymobile.com. xfinity mobile. it's a new kind of network, designed to save you money. a warning from south korea, they caution the north against launching a missile against wong. -- guam. becomes the latest fomc member to criticize the fed. lining up a bid for the second-largest u.s. cable company, charter. this is "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. inflation tomorrow. we have a lot of earnings in europe. tom: a jumble today. dominant constant talking about what james bullard said about the mystery of inflation.

part of the reason we have seen global equity market in recent years, we have seen risk assets rally the fact there is excess liquidity, excess capital, too few returns. that has been provided by many global central banks, major central banks pumping extra liquidity. -- fed hasn't been reducing the balance sheet. i am concerned by how the market takes this initially. it is true the central banks are pumping in enough liquidity. but i still think the markets might struggle a little bit. guy: interesting to see if they do, whether the december hike comes through and that is delivered at the back end of this year. i have the chart up on the screen -- big reaction in the chinese currency as a result of the trade data we saw coming through. what are the implications of that for the european session? much it was impressive how dollar reaction to the data. this trade imbalance with the u.s., important to note that while exports and imports disappointed expectations, they are still both high you run your growth numbers and that is a positive sign for the trade pickup. maybe not accelerating

people who do not know what to do with their money so we have a high level of consumer interest in global equitiesevating these valuations. if you get this level growth slowdown in the second half of the year because of the lack of tax reform, you're going to see these markets coming off once again. the bounceback after the initial enthusiasm that we were not going to get nuclear war, that is a good thing, i think that will be slightly short-lived. anna: why the skepticism on the global growth story? we were looking -- the economy looks like it is on the way. when you consider how well the global economy has done in the second quarter. ian: the trouble is this is the peak of the year. this is the slowdown. this got has been asian based, based on the stimulus we had last year in china feeding through to the rest of asia and into things like the eurozone growth numbers. we are starting to see that inventory overhang be replaced and now we have got the scope for things to slow again. as china's tightening comes in and that credit impulse starts to get less of the stimulus coming through. for us, you

concerns piling up about nuclear armageddon have wiped out a trillion dollars in global equities since tuesday. the nuclear nervousness impacting asia, europe, we are seeing a recovery in the united states after three down days. as investors, where to they find a place to duck for cover? they bolted to safe havens, this is weird, the japanese yen is jumping, and, in fact, i was reading earlier, it's at eight week high against other currencies. why would japan's currency be the safe haven considering they're right there in the region that appears to be heating up. >>> who knows? the market does what the market does. gold is also climbing. gold as we see, has climbed about, i guess this is a two-month high right now. gold at $1295. it may hit the $1300 level. yields on u.s. debt, treasuries falling as investors snapped up the treasuries. the yield is falling down. 2.1%. that looks like a fear trade right there. let's look at the volatility or fear index, it is down 2% after flashing the brightest red signal since election day. right now just flat. we call it thamp it's at 16, but three d

global equities at all-time highs.eeper into the u.k., where are they getting the money to spend you -- spend? the ticker on this is 53.91. that is total consumer credit at the bank of england. where are they going? 200 billion pounds, up 15%. the high street is barring what we are seeing. not necessarily the big blockbuster name, hsbc, we are going to other financial and divisions. we had a look at with the competition saying, expected that the gilt treasury spread continue to widen. as you wait for the bank of england, this is thursday. guy: matt mentioned what is happening with bp. direct line insurance beating expectations. beating estimates. 4.78 this morning. bsm up by 4.2%. rolls-royce holdings, lower on concern surrounding its outlook. numbers of by 4%. bp is also rising. they have now just dropped out of my list. it is somewhere -- initially it was higher. there you go. 1.63% on the back of its numbers as well. -- at of individual stocks bunch of individual stocks this morning. matt: anthony scaramucci was rem

and japan are top global equity markets, but europe has underperformed recently.ng we have to monitor. matt: why are you bond european value versus growth? europe the argument for if you have an improving economy them and the valuations are attractive. that is the dominant narrative i here for european equities. if you look deeper into the market, most of the value lies within value, the financial sector, the energy sector, some of the other parts that make up the value when next. that is the part of the market where the majority of the cheapness of europe is concentrated. positiverting to get momentum. it has underperformed for a decade and we think that is starting to turn around in a long-term view. guy: why are you short u.k. inflation? andrew: brexit remains a challenging dynamic. you will have politicians coming back from holidays, going into negotiations, and we expect more negative useful. breakevens are more optimistically priced assets related to the uk's economy. expecting inflation to remain at similar levels predicted in 2007. matt: that was fun. we s

survey from the bank of america fund managers showing something interesting in the movement of global equitiesa little bit about this. this is the very closely watched bank of america survey, global money managers. they manage in the order of $600 billion, all of them together. it tells us a lot about positioning. in the latest survey it characterizes it as the anglo-saxon political angst. people wanting to pull money out of the u.k. over threat of brexit, and the u.s. over the sovereign risk associated with trump and his inability to carry through reforms. and instead, move their money toward europe, a more optimistic place in terms of economic recovery. this is largely an equity position. they bring that money into europe. interestingly, we have not seen that reflecting itself and prices. have a look at g #btv 4921. european equities are continuing to lag u.s. equities in recent months. despite the money moving into europe we have not yet seen an uptick in prices in the stocks, which may give indication there is further to run from the european equities perspective, if more of this money con

global equities are up, near all-time highs.xports, 20% rise helping the equity story. bund market down three pips. what can you do for a bond market story? flat as a pancake. bloomberg's first word news. its get to juliette saly. juliette: thank you. alan has said equity bears hunting for excess in the stock market might be better off worrying about bond prices. the former fed chairman warned this would be were the actual bubble is and when it pops, it will be bad for everyone. in an interview, greenspan said the real problem is that when the bond market bubble collapses, long-term interest rates will rise. the u.s. has said it will combat the distortions to the world economy created by china's economic system, especially in markets of steel and aluminum. in a report, trade representatives offer the senate primary goal is to extend -- imposing duties on china for dumping goods at low prices or unfairly subsidizing chinese firms. the report comes days after tense trade talks in washington. the trump sanctioned venezuela's , accu

we will examine what that will mean for the equity markets and global oil market.is bloomberg. ♪ we check our phones 85 times a day. so it only made sense to create a network that keeps up. introducing xfinity mobile. it combines america's largest, most reliable 4g lte with the most wifi hotspots nationwide. saving you money wherever you check your phone. yeah, even there. see how much you can save when you choose by the gig or unlimited. call, or go to xfinitymobile.com. xfinity mobile. it's a new kind of network designed to save you money. i enjoy the fresher things in life.o. fresh towels. fresh soaps. and of course, tripadvisor's freshest, lowest... ...prices. so if you're anything like me... ...you'll want to check tripadvisor. we now instantly compare prices... ...from over 200 booking sites... ...to find you the lowest price... ...on the hotel you want. go on, try something fresh. tripadvisor. the latest reviews. the lowest prices. yvonne: 7:30 a.m. friday. away from asia's first major market open. betty: does not look welcoming at all. it is 7:30 p.m. frida

outside japan, there is no central bank buying of equities comes the that is a better barometer of globalow yields around 6%, three times treasury yields, so the chances of a severe correction in equities prices here is quite low. recent credit spreads are generating massive cash at the moment, which is good for shareholders. now?ere do you see values shifting away from the u.s. towards this part of the world? >> i think north asia could have a good 18 months here it monetary policy will remain accommodative. the economies are doing well on global trade. lastly, the positioning of clients has been very much in g7 and north asia has the hallmarks of good value, good earnings, and central banks which will remain accommodative. china and money market rates, that spike last week, what did you make of that? was that a policy missteps, what you watching for? >> these types of jobs are mainly to do with banks finding a sudden shortfall. is running open market operations, so it has changed how it moves short-term rates, and you will get these blips now and then. >> great to get your view there. o

it's from etfs as well, and money is not going into global equities >> do you think the markets are calibrated for the two issues you've been bringing up, insider/outsider do you think there's more room any advice for investors at this point? your final thought >> i've sold some stock and turned a little bearish amid all these numbers. if these trends continue, it can't be good. >> got you charles, never minces words. thanks for your thoughts today carl, back to you. >> all right thank you, rick santelli >>> squawk alley is coming up next don't go away. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn. >>> welcome back to "squawk on the street." real estate is standing out at the best performing s&p 500 sector and by a wide margin. nearly all components

outperformance over the past five years, global equities and u.s. equities.med. years, talking about most of these currencies around the world, the dollar had a big rally from 2014 through the end of last year. the currencies and the stock markets are to perform. if you flip that trade around now -- jonathan: i wonder how europe is going to involve. i saw the spanish 10 year at a record low yield, despite the fact that the ecb is on a slow-moving grind to removing accommodation. jon: europe was a surprise to the upside recently. we will do ok, but there is too much optimism now as it relates to europe. there is risk there, focusing particularly on italy. with the ecb likely to taper their purchases relatively soon, we think that that's a good sale at these levels. generally overall we feel europe is ok. still political risk. we think there you have, as opposed to the u.s., where the labor market is tight, basically the out put cap is gone, but they have one in big chunks of europe. so we don't see the inflation picking up anytime soon. they will have easy mon

jumping come of the six-month average has stayed elevated, although volatility levels globally and equitye been low. i we going to approach the level we saw a earlier in the month after president trump's comments on fire and fury? we are already seeing movements on vix futures. futures also gaining ground. ,hey reached the highest level the closing level on august 8, which was right after president trump's fire and fury comment. where will the market volatility go from here? will it last. that is the key question given global volatility not that long lasting in the recent spat with north korea earlier this year. >> that's right. the latest missile does, as south korea -- our korean economy editor joins us from seoul, korea. what is the discussion around defense allocations and south korea? >> the south korean government released its budget proposal for next year. it plans to increase defense spending by 3%, the biggest gains since 2009. it also compares with the 4% gain we saw in the previous term. the south korean government plans to invest more in upgrading the country's weapons systems

investing for retirement so we have long term views we think one of the best places in the globe and global equityarkets is in the emerging market they've had a great year this year but we see a very powerful ee lixir, easy monetary policy and easy financial conditions. >> walk us through the emerging market hypothesis she just made there, which emerging markets do you think represent the greatest value? >> the private global real estate market which we operate our strat by has been to develop market we don't advise on emerging market because we don't believe you're getting enough of a risk premium -- >> it's really real estate you're looking. >> we're private real estate. >> when you say develop asia, i assume you're talking about singapore and japan, are you talking about china? >> we do consider china close -- >> hong kong obviously is developed. >> agreed. >> australia as well. >> your call on real estate it seems like you're getting a little more cautious, taking the foot off the gas pedal is that a fair metaphor to use what are you seeing and what kinds of properties are you pulling away fro

the gains this year have really been front loaded any time you have double digit returns from global equities in the first six months you have to sort of faketake a step back ank yourself, is this sustainable? the earnings have been driving the bulk of the games. i have a hard time believing this pace will be sustained. >> mustafa, how about you? is that a pocket where you can still find good value? >> i believe so. when you look at the small caps on an absolute basis, they look to be more expensive they provide much higher growth expectations, about 18% earnings growth compared to 11%-12% s&p given their superior earnings growth prospects, i believe small caps is a better place to be >> why haven't they participated to the same degree as the big companies? >> in regards to the u.s. small caps, look at it i think earlier on after the trump rally, they participated with the expectation of a lot of tax benefits and bigger beneficiaries of trump that's why small caps rallied quite a lot. when expectation starts to come down, small caps significantly started to lag right now, there is not much ex

global equities, we will be watching jackson hole at the end of the week, where global central bankers, taking a close watch over policy, the fed balance sheet unwind, and where is the inflation? let's get over to sophie with a look at markets coming online. sophie: chinese stocks and the hang seng barking the regional trend, adding .3%, extending a 2-d advance as hong kong shares rise. won stronger given that fixed from the pboc. unicom, the stock resuming trade along with companies investing into the $11.7 billion share sale. its parent jumping 10% in shanghai. unac china jumping after forecasting first half profit has risen 15 times after a series of acquisitions. due to report earnings on august 31. the singapore logistics operator, hna setting a date for of vote on the take over cwt. it is a heavy earnings day for hong kong. the hang seng index breakdown by sector, of .5%, telcos leading gains, i.t. stocks also higher. slightly lower along with staples and utilities. for the most part, a bright spot when it comes to shares in hong kong and china. haidi: we will take it. thank you

this compiles a number of global equity benchmarks.gn yield, brent crude, gold, as well as dollar-yen. you can see that risk appetite is really waning. this is a big index. if you dig into various parts of the market, you can see that that is reflected. we saw u.s. stocks drop yesterday. the vix has gone to its highest level since president trump was elected. if we look at the vstoxx index, look at that spike. it has dropped back below, but it hit its highest since april. european stocks heading for their worst week since november. money coming out of equities. if we take a look at dollar-yen, this is a good reflection of where risk is going. 1.0896. it has dropped below the trend line. this is where we are. that is going to be key as well. a lot of analysts say the risk is in symmetric -- is a symmetric. jump inhat bigger yields. perhaps dollar-yen could pick up. and what happens in the treasury markets, very important to what is happening in the credit space as well. there has been talk about the slump in junk bonds. we have seen tho

mild risk off tone for global equities.the ftse 100 down by 4%. all 19stoxx 600, industry groups in negative territory. the story of the bond markets, yields make fresh lows in 2017. u.s. 10-year down 10 basis points. the fx market, a weaker dollar story continues to emerge. the yen with a bid. sometimes you cannot explain this stuff. missile over japan, the yen with a bid... let's get you to the headlines. let's cross over to taylor riggs. taylor: president trump this morning says all options are on the table when it comes to north korea. the white house issued a statement today after a missile flew over japan and landed in the pacific. the president said north korea has signaled contempt for the united nations and is increasing its isolation. in the u.s., tropical storm harvey is not letting up on houston, the fourth-largest city in the u.s. being inundated by floodwaters. more rain is in the forecast. harvey is out in the gulf of mexico and is set to cross the short tomorrow on the texas-louisiana order. offshore oil and

on the equity side, we are constructed globally on the emerging markets and europe's where we see --e we see corporate earnings outpaced the estimates. and then lastly, i would say we are investing our clients and opportunistic coinvestment opportunities, particularly in the real state space, where we have invested our climates in four thirds park avenue -- 432 park avenue and another luxury condo in boston. half $1 billion invested in real estate. just to sum up -- fixed income corp., global equities, coinvestment opportunities, private equity, and strategic opportunities as well. david: give us a sense of your profile for your typical investor client. where do they live? what do they look like? ida: our clients have a minimum net worth of $25 million or greater, although most of our clients are sent to millionaires. ourerve a third of millionaire clients. they are global and they have family members living in multiple geographies around the world and cities unparalleled global network really helps these clients. what is unique about citi private bank is that we sit and said institu

underneath, the global asset management umbra look, that is where we are focused right now with the global equitiesly -- the banks are demonstrably cheap. banks have underperformed largely for macro reasons and to the curve has been flattening, but i think it is a little bit of a misnomer. it does not put the same pressure on the bank margarines -- margins that people think. they do not to compete for deposits at this point. there are so many excess reserves in the system, and even as the fed raises interest rates very gradually, is that all in the next couple months, and you see the flattening of the yield curve, check at a local bank. the deposit interest rates are not going up, because they do not have to compete for reserves. i think the macro argument against banks is overplayed. they are demonstrably cheap. itlike tech largely because is a premium sector trading at an average multiple, so to all over -- oliver's point, you have to be selective because some names have had big run ups. you have to be a little bit more selective. tech has gone from being fairly undervalued to being in line with

we are taking on the risk in global equities. we had been explicitly overweight in u.s. these.eutralized that. we are neutral in terms of overall allocations. to bring this back to the retail numbers, let's talk about the u.s. consumer. consumerroom for the to continue to expand when we don't have the wage pressure western mark to the have the money to spend? erosionere is always an with inflation. what you see is labor markets are tightening. you are starting to see wage growth pickup. you are starting to see evidence that personal income is expanding. consumer balance sheets are the best they've that in 30 years. the wherewithal to spend money is probably at a high point. david: are we seeing wage growth pickup western mark -- pick up? mike: it's happening at a moderate rates. the more evidence that it is broad-based. there had been a question or all of the wage growth was coming from the top. we do see some lower wage pressure. that matters more for conception. joanathan: when the retailers are -- how do you play that story outside amazon? mike: we are neutral on retail in g

equities. again, the global economy continues to gather some strength. s tough to be outright bearish on equities, even though you think you should be more conservative. vonnie: left-sided to some parts of the markets where it is find to be invested. and you also mentioned the global upturn. perhaps there are other countries whose equity markets may look more attractive. >> we have a slight bias toward europe in some of our international portfolios. broad there are a lot of asset classes that are demonstrably cheap, and you can cheapness.lative europe looks cheaper to us, japan looks cheaper, emerging markets. uys"e are no screaming "b out there in the equity markets, but europe is a better sector. we tend to favor value, places like banks are very worried about the slope of the yield curve. i think that is something they should not be worried about. they should be looking at the outright cheapness of the banks. so there are places to be defensive, but there are still some pockets of value in a market that is overall not that attractive. vonnie: what do y

out today the dow the dollar down 7% this year, joining us now is wells fargo investment senior global equityir janet yellen. >> i don't think this is going to be all that exciting, of a jackson hole visit this time, because i think really what market wants to hear is what is the fed going to do in 2018 they hinted going to do three hikes clearly bond market at least in my opinion thinks three hikes in a modest growth economy headwind i don't think 220, market equity market looking for comments about 2018, i don't think we are going to see any strong dollar comments, you know really, all in all,, usually tr currency market is volatile i am sure ecb is hearing a lot from exporters in eurozone about the -- the your aro being strong, so really it hasn't moved that much i don't think we are going to hear a strong dollar statement. >> kevin kelly one of the things that surprised me over the last few weeks, was the minutes from fed the talk about how they can't calculate inflation right thinking about revisit howing they addressed inflation what are your thoughts on what came out on that are you go

. >>> let's check in on the global markets. u.s. equity futures under selling pressure after a minor selloff yesterday. they turned around this morning. they are now higher actually dow futures are up 18 1/2 points s&p futures up 3 nasdaq futures up 3. i was going to say after a minor selloff yesterday when you had outsized moves in groups like consumer staples after negative earnings from hormel and smucker. the whole foods deal hurting grocers. overall a sluggish, lower volume trade yesterday resulting in another day of delines we'll see if the gains today can hold jackson hole will be the big market focus janet yellen's speech at 10:00, draghi's speech at 3:00. >> the nasdaq had its fifth negative session in six, but down 0.1%. for the week as a whole, still nearly up a percent. that does kind of paint the picture of august for the u.s. markets. there's been many more individual down days than up days but it hasn't been too pronounced for the month as a whole, as we approach the end of august, we're down, but down sort of 1.2, 1.3% for

global fixed income, infrastructure, real assets, global equities.multi-assets and a more active in robust way of looking at how one establishes the risks profile. jonathan: the portfolio construction thing is an issue. th correlation between the bond market and the equity markete, if you try and be diversified, the things that used to work may not work this time around. if you think fixed income and that universe is really overpriced, where is the hedge in the portfolio? where does the diversification come from if you expect on markets and equities to become incredibly correlated? steve: i think we are getting divergence in the fixed income markets and the equity markets. we are getting significantly different information. when those markets disagree, i go with the bond market. there is a some softness in the u.s. economic data. not recessionary. we think the fed is on hold to the end of this year he would we want to know what information we will get from the federal reserve in terms of the details of how they are going to allow the unwind of their

fundg global and an equity have built up more than 9% this year. also higher by about 7%. netflix has agreed to acquire the publisher of comic books together. netflix and miller's world said they will bring critically acclaimed franchises the film, series and kid shows. the terms were not disclosed. it was discovered by mark miller. the purchase is the first ever by netflix. bloomberg business flash update. julia: what you need to know to gear up for tomorrow's trading day. from new york, this is bloomberg. ♪ scarlet: another update on u.s. equities, making record highs. don't miss this -- to pain reports trade balance data. china reports import exports over the next. julia: now looking at south african legislators at the low confidence motion on the president 8 p.m. eastern. scarlet: bob is this a phone? or a little internet machine? [ phone ringing ] hi mom. it makes you wonder... shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra c

>> we have seen hk benefited from the strong surge in equities globally. rmers in the first half. it has definitely helped on the equities trading side. >> you kind of see that when the stock goes in tandem with what we see with the rest of the market. the exchange really high hopes when it came to the derivatives business. it's all revenue fall from 22% in the first half. ?hat is the response >> they blame the low volatility few months, it was a surprise. it seems to underpin the lighting in green hong kong. that is going to be the big challenge for the exchange. charles williams said he is unlikely that they will win the rpl, which has all of the exchanges salivating. what is the latest on this? been seenng has not as the top favorite to win the ipl. -- the ipo. without that in place it will be difficult if not impossible to win the bid. they will continue trying. he did not sound hopeful that it would happen. >> all right. bit aboutlittle earnings, coming up next, speaking exclusively with charles lee later on in the show. sydney.. in and how markets are

i'm plugged into equities- trade confirmed- and i have global access 24/7. can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. >>> we're back, let's look ahead to other big earnings reports, kraft and heinz, go pro, shake shack. >> i'm long viacom like this one, judge look at the performance and entire space as far as the companies delivering this kind of content and so forth. got to like viacom and its performed well into the earnings. >> i'm looking they are announcing tonight, seeing what boeing did last week, what the demand is they are seeing they are more narrow body big exposure to emerging markets so we'll get -- >> act vision has one of the -- i don't know why i don't own this thing stock has been on a tear -- >> you own any of those? >> i should. i will the next time you ask me that question, i will be in the space because i don't think e sports will be a come and go fad like online poker. i think it's the future -- >> i agree. >> i think these companies are now bei

because if you look at the general context, then clearly yes, there was a global synchronized recovery and this would support equitieslook at the quarter ahead, the question is, can we see an acceleration in the momentum? we are a trend growth globally but can we see an acceleration from here? with current valuation levels, can we really expect a dramatic boost from here? i would be careful in seeing that happening. francine: if the fed is going to remain patient and listen to robert kaplan and get the increases pushed off, marvin, what does that mean for the trajectory of the u.s. dollar. that the dollar will weaken further in 2017 and 2018? >> no i don't think that is likely. is a broad range trade environment and the dollar is near bottom at current levels. this does reflect to some extent the heart of your question. a misperception about the relative shifts in monetary policy that we are seeing. we are seen an increase in hawkishness and other central banks but we would leave that as them removing the insurance policies that they effectively put in earlier. if you think about where the fed was three years ago --

equities are higher, why? they are higher because of the data. chinese data, u.s. data, european data, globalpportive of equity market eluate in sand the central banks have been rather minas event -- munificent. you are on course for your eighth straight months of rain, the longest winning streak in a decade and the asian market. breere talking about market adth. the starlets of the markets have given the margins. you have china factory index showing robust growth, bloomberg dollars index is up .1 of 1%. it is day three of the rally, almost like a big rather moment. e is worth more to the market. we are underpricing the propensity for the u.s. to hike rates. these are the currencies, the yuan by 2%. douglas morrison was just with me, they are not bothered by the value of the yuan, that does not impact china growth story at all. you have the gap in features 6.5%. storm harvey has closed 23% of the overall production gasoline portction in the u.s., arthur is closed my guess , theding its gain longest-running gains since 2013. you have the bond markets, anb -- bunds are down. wrod. -- to the fir

we're expressing that an an overweight equities globally >> you know, it's hard to argue with that, benree with everything you said with regard to it seems as though there's some runway left. my next question is when i look at the landscape, i guess i see things, for example, tesla is going to be bringing an eight-year junk deal, i believe it's going to be about $1.5 billion. it's going to have yields a little bit over 5% they are six notches below ford, i believe d minus by s&p do you think that that is a good value? are we at the point now where six notches below ford is something that people should invest in? >> you know, the key for in terms of asset allocation is to take that information and try to map it into is this a source of vulnerability for the economy, for financial markets. and i think, you know, that's something we take very seriously. when we look at the evolution of the cycle, we see labor markets that are tight, we see private credit, particularly for firms so, with you know, debt to ebidta ratios have been extra elevated so the question is, is that a significant sourc

we have seen a deep correlation between yen weakness/strength versus the impact on equities. globalrs consider that japanese monetary policy may be lagging behind the won and u.s. modestope because of inflation in japan. struggling to reset the 2% inflation rate. , the verye of that large short position of the japanese yen at the moment is hoping for the yen to depreciate. so far the yen has been just hovering around 110 also. sooner or later, i suspect the short covering yen may occur and the dead could push up the yen a lot. , [indiscernible] the japanese stock market. i expect some adjustment of the stock market may occur. so far corporate profits in japan is doing quite ok, so that may support the stock market so the adjustment in the stock market in september could be rather moderate in japan. i want you to talk about that adjustment, though. far do you and how think that adjustment would go? appreciates the yen say by 10%, the stock market in japan tends to go more than 10%, normally around 15%. by this time, i rather suspect the appreciation of the yen by 10% may push down th

equity market. we have more from global growth, next. this is bloomberg. ♪ haidi: this is bloomberg markets : asia. i am haidi lun in sydney. i am a shot salamat in hong kong. the indian government has hired for bing banks -- four banks. citigroup jeffries and yes bank working on the offerings. two dollars $.63. $2.63. haidi: evergrande reporting profits that saw 250% lifted by a booming sales and prices. core profit was a fraction over $4 billion on revenue of almost $18 billion. evergrande has been targeted by short-sellers for its high level of debt. the stock has managed to jump 370 percent this year, fueled by share buybacks and plans for a backdoor listing. rishaad: samsung is to invest $7 billion in china to meet surging demand for memory chips, spread over three years in its existing plant. it drove earnings to a record in last quarter. samsung had 41% of the market through march. more than double that of toshiba , which developed the technology. getting back to our top story for the markets, north korea firing that ballistic mis