is negative rates, are negative rates art of the solution?ohn: i think they are part of the experimental toolkit. central banks, much like many economic actors today, are in the experimental drug phase of monetary policy. we don't have a counterfactual to tell us how successful central banks have been. the fact that we have positive growth around the globe, we have avoided a major crisis, we've significantly shored up the western banking system, suggests they should at least be given a b minus for their efforts. whether negative rates are the right and only tool is unlikely to be the case. i think we're seeing the limits of it because of the impact on the banking system. the appetite of effectively charging for deposits or banking services across the border, the broader population, you have between one third and one half of net interest is typically earned on the liability side. if you've got negative rates, that is taken away. while it is clear that central bankers want to control the banking system, what they don't want is a lossmaking bank

to be negative.anning to do anything in that direction. but we certainly fall the debates and we certainly follow the theory of negative interest rates. with negative rates, i spoke to at the council of foreign relations in new york and much when it started. and we had a conversation with you a number of months ago, maybe half a year ago. i can't remember now. what you learned about negative rates in the crucible of the markets? professor fischer: we've learned that the central banks, which are implementing them -- therefore five of them -- basically think they are quite successful. and they are staying with that approach. possibly with the exception of japan. they are thinking it through and they will come back. to try and make negative rates work what -- better. we are in a world where they seem to work. i think one of the most interesting development i have seen in theory is a paper that says yes, they work up to a certain point. and then they become counterproductive. tom: precisely. that is a cr

we are not talking about negative one, negative two, negative three. it is negative little bit.hy would you telegraph that? he said they will do all they can. he said they were going into negative territory. if you want to stay above, the market will start waiting for that. danny: i think so. mariana has been saying, why would you say we are not going to do it, and then rates, and then market conditions start to worsen, and then you end up going there? that might actually generate some panic. i think it was a mistake to say, we are not going to go there. that was not right. he should have said for now, the effective look appears to be zero. i don't want to go there, but we don't rule it out. we will think about the consequences. it is like we are at the zero lower bound but not 0.5. the other thing is we don't know what fiscal response will be. probably just found his office yesterday. we have no idea what the fiscal authorities are going to do. we have no idea will happen to the status supposing the data keeps falling fast. it will be like catching a falling knife. how do you s

as far as negative rates, it is kind of controversial.hey have not proven out so well in japan or in europe, certain not for banks profitability. what you think about that decision? >> i'm very sympathetic to the notion that negative interest rates are sufficiently peculiar. you do not use them lightly. they give rise to a slower economy or even a mild recession, that may not rise to the extremity of concern to want to take you there. i'm sympathetic not too much to pre-committing not to go there -- i think the professor makes a point and i regard -- but i would not rush to go there myself, so i suppose i cannot fault them for not doing it at the bank of england. clear he does not want to go to negative interest rates at what he is going to do is to add a new term funding ism to ensure the rate cut passed on to households and businesses. is there precedent for this being effective? >> i think there is a real issue in that regard. sectorsish -- household are fairly heavily indebted. a lot of that is mortgage debt. a lot is related to short

that's really negative. however we are turning the cycle hopefully for these institutions as they restructure and cutting the costs. they're generating capital from disposing of loan books and that is something that investors are looking through today. it's notted a bad. and there's a bit of a mixture of stories going on here. revenue environment very weak. operationally, they're attempting to do the best that they can in this difficult world . jonathan: thank you, richard. the low rate story is something that's planned into all of the bank earnings and now in thick as well. alix: that story is going to be front and center when the b.o.e. comes out with the rate decision tomorrow. let's bring in lucy. the u.k. services, it was really decides mall, falling the most since 2009. talk us through the u.k. economy since brexit. >> it's really negative because there are huge u.k. computer, three quarters. it's not that it's the largest component, it is by far the largest component. that is going to be a huge proble

buying,hases, bond cutting negative rates. it does set up for a little disappointment if they do not get to where the market wants them to be. so far -- mac os the bank of japan disappoints, we could see the yen pop up like a spring. >> we could. it depends on what the u.s. does in the interim. you could get a double sort of bubble out of that if the boj does ease, the fed should surprise, i think, if they do so in september you could see a real pop at a dollar-yen. nejra: i remember looking at the probabilities of where the yen was going to go a week ago come the direction of travel was pushing much more toward a strengthening rather than a weakening yen. do you think that has changed? >> a little. a lot has to do with fischer's comments in jackson hole. it remains to be seen, both he and yellen have stressed data dependence. as the data goes forward, will that support the argument that the fed does want to get to normalization? they really knew the economy in the data to support it. nejra: i want to look at sterling. just ge

they will not go into negative territory.s. that is self-defeating. also draghi started talk about -- there is a shift toward being very careful about the effects of negative interest rates. now central bankers know that it can create a qe drop. they prefer buying assets. even buying assets -- not the perfect measure. caroline: sticking with that, if you're looking at the yields, crushing low for the united kingdom despite losing some of the credit rating. how much has qe helped? yields are currently at record lows. when you're looking at the 10 year. -- really help the overall economy? alberto: quinn central banks talk about this, the market moves earlier, that goes up with the fed and ecb. part of the action is already priced in. they will move even lower. you'll see a conversion of guilds toward the sovereign. the other thing that will move lower is sterling because it export valveajor and the major economy even though the u.k. is not really a net exporter. sterling can move still a lot lower. it is still fairly valued com

are you uneasy with negative rates?ark carney honesty would never go negative, but he may have to. >> yeah. i guess he will search a long way to find a banker who is enthusiastic about negative interest rates. i don't like the idea, either. i'm afraid going back to our conversation five minutes ago, i am personally in favor of trying to lift over time the level of inflation that we target, because my concern is that negative interest rate set up all kinds of perverse incentives to hold excess cash, which is , and they alsog mean that the central bank is not really in control. once you reach the lower band you don't know how the economy will respond and you are pushing on a piece of string the banking system. i think what we really need to learn from this is that we probably got used to trying to target an inflation rate which is so low that for quite a large period you may find yourself at the lower end and out of control. tom: sir howard, you know as anyone the idea of momentum and inertial force. i look at negative ra

likely to remain a significant negative for the pound, but negatives already in the price.: oil are a pricing in. stays with us.v anna: up next on the program, dealing with the fallout. losing a bonus as the mining giant deals with the collapse. we take you to a closer look at the stock reactions to this story. that is next. and this is bloomberg. ♪ ♪ manus: it is just after 6:30 a.m. in london. you are looking at a beautiful shot at the emperor's palace. dollar trades, what happens next from the bank of japan? we will to you more of that very surely. anna: we are getting numbers from the french telecom company, the conglomerate reporting a net loss for the first half of the year, 28 million euros. first half operating profit though with 57 million. what is really interesting here is the comments giving about secession, there are pointing two deputy ceos. confirming the outlook. the focused on succession rather than the numbers here. succession,ring for that is the expectation for many months now. one of his sons and nephews joined the board back in april. and he said he wo

territory. >> no on the negative situation. i've been clear on that. if anyone write in whatever you want to take that off the table for me. okay. there's -- i'm not trying to be clever in the way i'm answering that question. >> yes, he was. peter rose is right head of market strategy. >> what do you make of carney's actions. >> i think he did a really good job. there's a real realization that central bank policy is not really going to solve the issues that brexit has sort of uncovered. businesses are concerned about investment. they're concerned about trade. they're concerned about financial services passport. that's not going to be fixed by liquidity injection and loan which demand has hardly been reaching out to. i think carney did a good job of explaining this is sort of a stopg stopgap. move to a fiscal type of solution. he was on the local media giving more sort of a folk mom and pop type interview. just explaining what he was doing and why. really try to address the issues of the every day british public and reassuring t

francine: the question was on negative rates. how long will we have negative rates?ow much of an inconvenience is it for you? roland: i have no idea how long we are going to have negative rates, but i think any wise person should prepare themselves for an extended period of time with negative rates. for us, it's going to be a challenge just like any other bank. the advantage we have are two. one, we have already more efficient cost structure which allows us to withstand this storm longer than others. that's one. and secondly, i think we are a step ahead when it comes to a more innovative environment that will allow us more efficiency gains and faster developments of traditional and new services for customers. customers willing to pay above-market quality service market so we have both flexibility on the cost structure and two, the ability to generate further revenues other than interest margin. francine: thank you roland boekhout. the ing diba c.e.o. now let's bring in chris wiehler. chris, it's tough, and we were talking before we went to the c.e.o. of ing that this

negative interest rates make it hard for european banks to compete.ulationblems with and nonperforming loans, especially in italy. this is why, in general, we are cautious on european equities. vonnie: so where do you turn to? europeanetting out of equities completely or are you keeping your toe in the water because things are cheap there? christoph: equities in general -- it is hard to be too upbeat on equities here, because valuations are pretty demanding. this is especially true in the u.s. the only demand comes from buybacks there. this is only a short-term position. longer term, we see the risk dominating. vonnie: as you say, it is short term. sounds like you are flailing around a little. you say bread products or where it is at the moment, what do you mean by that? christoph: if you compare valuation of the stock market to thecorporate bond market, risk return looks more attractive in the corporate bond market. so we would prefer to buy .orporate bonds in the eurozone and the u.k., they are supported by central bank buying. this spreads to the u

we certainly follow the debates and the series of negative interest rates. >> with the negative ratese to you pretty much when it and we had a conversation with you may be a half a year ago i cannot remember. have you learned about negative rates in the crucible of the markets? you have you learned in the last banks whichentral are implementing them, there are four or five of them, based we think they're quite successful and are staying with that approach, possibly with the exception of japan, thinking it through and they have said they will come back to try and make .egative rates work better one of the interesting , theopments i have seen work of to a certain point and productive.counter tom: precisely. that is a critical point. an outright scam. he is not a public official anymore, i understand, but there was a raging debate about the efficacy of negative interest ,ates for central banks government, and banking itself. what about efficacy for savers and that the? >> clearly there are different responses to negative rates. they are very difficult to deal with and accept. typically,

negativity has been with american politics since the invention. you take the constitutional convention. the constitution is, you know, recommended out of the convention and the anti-federalists go on the scathing attack. they don't like the document, they raise doubts about it, and the end result is the bill of rights which is actually a pretty good thing. that is a classic example of how attacks work. it has been part of the fabric of american attacks. andrew jackson faced attack, lincoln faced attacks. buwithin the current environment there is a platform of television. when television came in the 1950s and the first campaign was 1952 though truman made a get out the vote appeal in 1948 but few people had television. '52 was the first tv campaign. there were negative ads. stevenson didn't air ads thinking they were not necessary. basically there was a steady state period from '64 to about '84 where you had 20-30 percent of ads were negative. starting in '88 you start seeing a big increase. it continues to increase to this day. 2012 was the most n

>> when you've got a deeply negative term premium on japanese and german debt, when you have negativey, you are dragging down hour-long and. you're keeping the fed anchored at the short end. we need global growth and that's why i watch the overseas data like italian banks with a german ppi data, things like that. david: take us to india because we have spoken about china and growth there. it's still fairly good but it's a little off. can india help drive the global gdp that you need? india is more of a closed economy and their problems are more internal.they have a lot of -- debt ande state-controlled which is a problem, a lack of investment growth and bureaucratic red tape. they cannot rely on the consumption but they have tremendous strength potentially in certain areas of the tech industry. they have grown and they are growing. india is coming off a low base and that is why but it is i largely closed economy in terms of its global financial impact. david: thank you for being with us today. alix: reflation is the key. disney is looking for that, reporting after the closing bell . wi

so should they go to negative greats? should don't think they head to negative rates. it is unfortunate the governor made that call. it is legitimate to think it would work for an individual voter. but the point is that negative rates effectiveness depends critically on the structure of your financials. in japan and italy, you have a large set of small favors to put a lot of money in traditional bank accounts. and a lot of elderly people with ordinary risk. result, when you do that, the negative offset from the political pain offsets whatever positives you get. the u.k. is more like switzerland. if you can call it that. settingn active risk set of favors. it has a more flexible financial system. and also in this specific context, it would matter more in the u.k. fan japan. so i chile think negative rates in the u.k. would have less negative offset then they did in japan. and therefore, i think the governor is wrong to rule it out. policythink that since has the aspect of, what are you going to do next -- concentrating on saying, we can't cut rates any further and then

the red circle is when the yields when negative.eaving out the 10 year yield down to a negative rate. if there are more little itty --ty -- jeff, help me out how did i do? i nailed it. do? are the elite going to if you have another 200 banks to do this? it is a serious problem over the long-term. they're having to take increasingly extreme measures. monetary policy with the euro. tom: when it is additive and , is it now fix it or are they terrified about 2017? are probably they looking down the barrel of the next few years and not knowing where the earnings are going to come from. bankis not just one small taking the decision. for the system as a whole, it is too early to say, but the ramifications could be serious. francine: does this shed light on a problem for the banks? stephen: it shows that the banks are coping with a profitability crisis. it is not a systemic balance sheet crisis, it is a profitability crisis. germany finds itself in a bit of a dilemma. one of the reasons why domestic interest rates fall and germany is becaus

the negative interest rates. not a huge surprise. we did get some indications a few weeks ago so what has investors worried now. >> reporter: i think the fact the profit machine is doing all the operations with the small and medium size enterprise sector. here in germany is doing so badly has actually shocked investors. i have to say here operating profit and that segments is down 35% compared to last year. and the middle bank was or is actually as i said, a profit machine. they are concentrating hugely on operations with that segment of the industry, but here clients are very about the go political risks out there and also the negative interest rate environment eating the profits here. that is one of the big drags for the shares today. the other big drag is of course the profit guidance. it's no longer valid for this year. previously commencement was aiming at reaching a profit of 1 billion or more than 1 billion like last year. this is off the table now. they officially said it will be lower than last year. this is also weighing bi

i look at negative rates as a chronic x-axis. it is not we are at negative rates. how long we have been here. -- the just the tenured tenure rates. it is getting old -- specifically when looking at the short-term rates. the ramifications are simple. don't we just have to clear the balance sheets? isn't that what this is about, the denial of the need to clear the reset balance sheets? >> yes, what we have seen is since the crisis, too little d rep -- deleveraging, unfortunately. report, not much deleveraging. rates,e of low interest the deposition has not been cleared and we still have quite a lot of other people as well. you're right that unless we clear off some of the debt, we will be faced with a chronic position of negative or zero interest rates for quite a long time and that have a bad concert in that when people will look at the uncertainty in the economy, suppose we do face a recession. what will the central bank do? they are at the lower band already. problemds back into a -- a problem of confidence. the calvary can ride over and rescue you. >> that was ho

is the efficacy of negative rates really at the edge? vincent: yes.aws about what both central banks can do from here. the july meeting of the boj raise more questions about that. the market was concluded that maybe the boj had run out of ammunition. this is not a good situation for the boj to be in. we want to fight the idea of the next meeting. what can they do? they can still cut rates. the impact on the currency has been questioned. there is a lot of residents at home that hurt the banks. there.s not i think what the boj should do is to look at -- basically announced measures that will help the banks and possibly support bank lending, including the banks that are close to the end of road will be shipped toward that. and toward the bank lending channel. caroline: where does begin go from here? could it hit the 100 mark before we see any significant action come from the boj? vincent: the market will test below 100.pushing we will see what they do. in the near term, yes. i think there is a downside. if risk conditions get shakier, which is possible i

rising, just in and out of positive and negative territory. the ftse is negative.e expecting a flat open. gilt is opening as well. let's find out all the things we need to know with elliott gotkine. elliott: as you were suggesting, a flat direction. overall we are pretty much lower. it hasn't been a great week for the stoxx 600, down about 3% of the week. that has been about corporate news earnings we have had in a number of companies. this is the picture. on the whole, slightly negative, but as you say, we are about that across europe. the u.k. is trading at this, the chart this week on the 10 year bonds. gilt is pretty much flat as well. giltield on the 10 year has been rising this week as investors have been looking to sell their bonds to the bank of england. it's a 60 billion pound program. t's ever so slightly higher at .33%. some of the stocks you alluded the world's largest shipping line. newspapers are saying they are looking at splitting themselves and two, to transport and energy. one of the most important comments is that it's evaluating its option. movi

it is wanting to talk about negative rates, it is another thing to understand the duration of negative rates. that is where you get into the debate. you can have adam posen at the peter institute suggesting there is some benefit to negative rates and his colleague being a lot more questioning about the value. this is a very heated debate right now. what i would focus on is the basic idea that nation the nation, it is a different experiment will stop denmark is different than germany. nejra: i have a question on negative rates relating to the fed. i know janet yellen has pretty much rolled them out. what i am wondering as a european looking in, it is there enough ammunition for the fed where we could see another recession in the u.s.? lookst look to qe, to just to for guidance without resulting -- resorting to negative rates? tom: there are people putting out probabilities of a recession forthere is a respect nejra how long our cycle has been. i want to make clear, i hear very little out right what we nmbr recession. with that out there, there is a real debate about what the toolkit hav

joe: when you start with a negative yield, you can't really triple further negative.we have been talking jgb's and the selloff is illustrated well when you put it binds.o -- bunds. that they have, up and surpassed at some point the bunds. i have just which dover to price, excuse me. they came up and surpassed the yield. joe: this chart, you will see a lot of the reason that people are anxious and think the boj is nearing the possible limits of what it can buy. that is the white line, boj government debt holdings as of the last reading. that is why they are talking bonds,ssuing forty-year literally reaching the end of the market. is 60 day price volatility going back to 2009, volatility is at its highest level in several years. scarlet: the boj owns almost a third of outstanding debt. is the widow maker trade going to end? coming up, the question between consumer confidence and the presidential election. we will discuss. this is bloomberg. ♪ mark: let's get to first word news. election day is more than 90 days away, but hillary clinton is already making plans for the w

up next, negative rates a reality.k says it will start charging customers to hold their cash. full details, next. and stay tuned for our new political briefing. at 9:30, we are launching brexit: what next? we bring you all the analysis around the eu. this is bloomberg. ♪ guy: welcome back. a quick look at the gmm function to show you what's going on around the world. asian markets have rallied, and you can see it clearly in hong kong despite the data. seeing some of the related currencies doing well, and that is because oil is fading ap, wti up, little bit on the rally, but still close to 5%. the european curves are flattening out that we did see the back into bed, just beginning to reverse. the gmm is a great way to start your day -- let's talk about what else we should be paying attention to with tom mackenzie. tom: thanks. j.p. morgan investment unit said it will liquidate a japan focused fund after a surge investor withdrawals following a four performance. ,t will liquidate after assets following significant redemp

it would have a profound negative impact on the japanese side as well putting a lot of negativity orhe scenario that the boj and the government are thinking about. guy: thank you for joining us. it will be interesting to see what the impact of this typhoon -- potential he on another major typhoon hitting the country. the second in almost as many weeks. stay tuned or that. up next, we will go back to germany as angela merkel prepares for the bratislava eu summit next month. the vice chancellor says instability around the brexit could cause big problems. that story is next. this is bloomberg. ♪ guy: welcome back. is 8:42 a.m. in london. let us get you a bloomberg business flash. christine: the ceo of fiat chrysler says samsung electronics is a possible strategic partner. his comments come amid in buyers ofrom several the cars component unit. >> we have a good relationship with samsung as a supplier and as a strategic partner. i have a good relationship with him. membership on the board of exeter. i have made no comment on the samsung deal at all. that it is an was opportunity that has

anna: and mark carney seems to have ruled out negative interest rate.paribas stays with us. arguing the case for a rate hike ahead of janet yellen's speech later. we look closer at who thinks it is time to move. this is bloomberg. ♪ anna: patiently, gradually and cautiously. robert kaplan makes his case for a rate hike, speaking to bloomberg in jackson hole ahead of janet yellen's speech. the struggle to spare inflation. japanese isis fall. -- japanese prices fall. accelerating costs. volkswagen is said to pay u.s. dealerships $1.2 billion. ♪ anna: welcome to countdown. i am anna edwards. that check of the features, what they are expecting to see. hour away from -- we are expect a negative open, the euro stoxx 50 down by 3%. -- down by .3%. that could be where equity markets have kicked in this morning. we all wait for janet yellen. sentiment to be the -- much expectation around this event, despite the fact that -- let's throw up the risk radar. we'll show you where we are in various asset classes. taking the edge of the asian trading session. asia-paci

>> he was pretty negative client. if you have -- he was pretty negative on it.een in the music industry for a wild, you tend to glorify what it was before. likeif you are a big shot the beatles, there is a sense of camaraderie with your other artists. he does not feel that way anymore. byproductow that as a of how he feels in his life for the byproduct of the music industry is something he does not like. lisa: bloomberg business week is online and on stands right now. we will be back next week. ♪ ♪ >> coming up on "bloomberg best" the stories that shape the week in business around the world. walmart makes a deal to add online strength. clinton layout economic blueprints. >> upon taking office, i will issue a temporary moratorium on new agency regulations. >> we will work with both parties to pass the biggest investment in new, good paying jobs since world war ii. >> earnings season continues and will take a tour behind the numbers. >> the chinese consumer is very, very healthy. >>

they moved and basically negative. up 1% across the board, these three, and now gone back to where they were before. >> bottom line to that is -- >> bottom line to that is -- >> same as we were before she started talking today? >> yes. >> nothing changed? but the market doesn't believe anything's going to happen until at least december or 2017. >> by the way, in a range in the s&p. 2147 by 2193 for the last 32 sessions. that's basically the middle of july, and you have to go back to early june to find a week where the s&p lost more than 1%. we're in a stasis here. and today's remarks really didn't change that dynamic at all. >> bring in paul crepe, founder of investment research view from the peak thinking now is the time to reposition your port follow your before a fed-induced correction. paul, good to see you. >> good to be here. >> almost like people want to see a rate hike actually happen before they will actually believe it's coming down the pike. >> doesn't matter, because jon made the point articulately. they're

angie: she did not mention negative yields, but there's a lot of academic argument for negative yieldalso diversifying asset purchases. do you think we will see that in the u.s. in the fed? to behat we can see >> not on the cards in terms of the debate in the academic community. it has happened. and inpe in a major way, japan. i covered japan to one of the unfortunate episodes that happened this year is negative rates caused a major problem ground credit transmission and bank profitability. there was a backlash from major brinks -- banks for the boj which is why they entered a study period to figure out whether negative rates do more harm than good. angie: and for the consumer class, it means they have to save more if they want to retire. >> there's also the signaling thing around negative rates. when you go to when extreme of actually going to negative rates, it is to an extent a shot to the consumer sector.it is saying, we have a real problem here . we can debate how real the problems are in europe and japan, but i think that's land the american side and the other side of the atlant

but he is no fan of negative rates. he didn't say we're not going to have negative rates.s very difficult for me to think that the secondary market has enough horsepower to take rates negative that don't start out negative. or doesn't result from the central bank having a benchmark negative. why? the answer is easy. who are they going to sell it too? we saw 2 and 3 year paper get very close in the secondary markets. single digits yields and this is not a good thing. on one hand you read one story about the bank of england and this wonderful idea that this is going to mix what ails them and they're not sure what ails them yet because of the issue of how post brexit world will stack up is yet unknown but even more to the point when you look across the seas, why is there a surprise here? a you can't find the paper and maybe the bigger answer is deutsche bank. look at these banks, italian or german. historic times. negative rates aren't fixing their balance sheets and what investors are going to want to pepper more money into an institution whose prognosis and diagnosis for ma

francine: do you have a problem with negative rates?n: less so in japan than the u.k., for different reasons. i have some sense that negative rates is not a reasonable policy in medium to longer term. comfortable with negative yields in japanese currency. desperate circumstances call for desperate measures in some circumstances. francine: this is the 10-year for japan, the u.k. and purple, and you can see around here is when governor kuroda surprised markets and goes into negative rates. i think it was february 2 or february 3. he keeps on saying or justifying them by saying, longer-term, they will have the desired impact. there a huge difference between the result that the market wants and how quickly they want it and these policies taking effect. john: when you consider the issue of 2% inflation, to have that as a sustainable rate in the medium-term, you have to have markets believing you are going to be able to do it. credible, has to be and before you put in new policies that don't have the desired result, they swiftly lose their cr

the other thing, negative interest rates.e counterproductive because interest rates are going negative. that is a natural reaction. >> coming up, two sides to every story. this is bloomberg. ♪ yvonne: a hong kong student activist has been given community service. they were convicted last month of illegally taking part in a protest that triggered the occupy central movement and 2014. -- in 2014. a third activist was also given hours of community service. here is a china stock for the bulls and bears. china's answer to twitter has rewarded investors quite well. the short sellers are looking their wounds. >> they want this to turn the corner. you have the stock at a record high but you also have short that's at a record high -- short high.t a record it had positive earnings results for second quarter last week. $.16.ed eps, we were expecting $.11. revenue and user growth has been steady. ofrd quarter balance upwards 100 73 million u.s. dollars better than expected. they are adding tv and video partnerships and growing their user

you see that as a negative? been looking at all these surpluses over the countries in the past and it is not been is fixed -- not particularly beneficial to growth. we do observe that if we just look at the data and add purchases and balance sheet expenses to market countries in the developed world, there is a reasonable correlation, whether that is high-yield or equities. we have observed some correspondence, not just in oil-producing countries. it is very much china as well. david: talk about india. they benefit from a low oil price. in your projections they are heavily dependent on india. how dependent is that upon that low oil price? >> it certainly would be a support. you can see it for china and japan, so they are a number of countries which we worry about where low oil prices are the stabilizing force. in the case of india, the oil prices are really just one piece of the puzzle. it had a change of government which brought on a number of reforms, may be slightly underwhelming but a return of confidence in

>> there is a lot of concern about negative impact of negative rates. the banking sector, that is going to be encouraging. i don't see that so much as a limitation, if it helps. as you said, there is some scoped to cut the rate. caroline: only for basis points. to qe: it would come down by more assets. we'll come back -- quantitative easing for the last several years it ever lower interest rates really make a difference when it comes economic growth? we are not so sure. anna: it made a difference when it came to stock appetite and we are seeing the ftse 100 with a spike. even his mother for the 250 starting to encroach on the balancing act, getting back to where was before the brexit decision. on one of guys in johnson's favored points, one about the fx issue and we have the ftse 100 up 8% on the year. we are down 1% on the ftse 250. when you pull it in -- put it in dollar terms, we are down 4% on the ftse 250 in dollar terms. what are foreign investors who are about half of the market in the u.k. doing to hedge themselves? getting themselves into a che

that is a negative yield grinding ever more negative. francine: i like that you are looking at german yields. the dollar is weakening and it has to do with the binary market, global growth and the fed will wait or, you actually will hike sooner -- it seems every day, they decide. oil, as wet to crude are expecting a day to update. one of the themes today is the bombshell of american productivity or the lack thereof. here is a chart on the bloomberg , it is extraordinary. i didn't know this chart until i looked it up. compensation within the productivity specifics. it comes down over the last 30 years. down we go. you can see the sickness in the new rollover to compensation is revised yesterday. wrote a fabulous detailed piece on this yesterday and his summary and simple -- the decade that we loved was an outlier. 1996-2005. it wasn't normal. it was the outlier. and that is a great theme and piece of attention of american politics right now. francine: the outlier in the gk. is the extra mature ilt.this goes back to the fact that the progr

it is not just negative interest rates.e huge amount of assets that they have been buying. the side effects are two significant. commotion ofthe the emperor's possible applibdication. i think this fits not only for the emperor, but other members of the japanese elite. it is the idea of the proper station of institutions within japan. what is the proper station in modern japan of the bank of japan. what level of proper independence do they have? >> they are an independent central bank. there are people from the treasury at those meetings. in the past there has been perhaps a little bit more attention. we sense that the policy of the bank was just one part of the policy. the emperor, however, we have to remember, a japan he has no political role whatsoever which raises the question is wordation is the correct because he has nothing to do with politics. it should not really make that much difference for politics going forward. tom: let's go to a chart here of japanese yen. i guess the question is simply we did not get to 100.

any given day, they can be interpreted positively or negatively for us.'t think they are true, but because there is a lot of noise, we seem to excessively respond to any particular type of noise because we are such a bellwether for the economy. we look after it hundred 40 pounds -- 840 billion pounds of money. a staggering amount of extra money. you would not think so from the results, but the consequence of that, anything that moves, whether it is property or bond has an impact on our business. a sense about the capital strength of the business, the solvency. behind that and where are you looking in terms of the performance going over? ratio went down, and we paid almost 600 million pounds of dividend. that is the principal reason the ratio went down. the capital service is 5.3 million. surpluses.uge if you are holding that amount of surplus capital, that would be a significant -- a really significant -- >> let's talk a little bit about risk within the portfolio. saw derisk on a number of areas. given the uncertainty that you see at the moment, you are l

there is a lot of speculation that negative rates have not been enough, that in fact it has had a negativempact. perhaps needing a little bit more firepower, perhaps in the form of helicopter money. that debate continues. the markets.eck at mumbai has been trading for almost 20 minutes now, but it is joining the rest of asia. gains seeing fractional in hong kong. the topics once again, you are gains ong games -- big the heel of a weaker yen. itsef: in the middle east, is just under two hours away from the opening of the emirates markets, dubai and abu dhabi. a mixed picture, slightly more positive than negative. to buy up why more than half of than halfi up by more of 1%. that rally,tinuing best-performing index this month. that, we are expecting final confirmed list of stocks from the ftse emerging markets. a lot of that has driven the interest from foreign investors. overall, the bloomberg benchmark gcc 200 index losing just a little bit of steam, but on the month it has been able to outperform the emerging markets msci index somewhat. let's check in on the first word headlines from arou

we don't have the same country running negative rates and not running negative rates so you can get ae on well, how strong is the economy. so the u.s. that has positive rates is doing better than europe and japan that has negative rates so that would be an argument that it's not working but again you don't know how bad europe and japan would have been had they not tried negative rates. lisa: up next making sure america's tech giants are playing by the rules and marissa mayer's next career move. >> welcome to "bloomberg businessweek." i am coming from the inside headquarters of the magazine, and we speak to black lives matter founder, and also a fashion designer who believes people can come in all shapes and sizes. and ringo starr and why he voted for brexit? all of that coming up in "bloomberg businessweek." ♪ i am here with managing editor who came up with this issue. there are so many must reads in this issue. the one thing i have to mention is tony fernandez. his dream was always to become the head of an outline. >> that was a funny anecdote where he says, i wanted to know, -- he s

are you uneasy with negative rates?sed we wouldn't go into negative territory but he might have to. >> you will search a long way to find a banker who is enthusiastic about negative rates. >> but as an economist? >> well, i don't like the idea and i'm afraid, going back to our conversation five minutes ago, i am personally in favor of trying to lift over time the level of inflation that we target. because my concern is that negative interest rates set up perverse incentives in society. people hold excess cash which is not a good thing and it also means that the central bank is not really in control. once you reach the lower band, you don't know how the economy will respond. you are pushing on a piece of string. so i think that what we need to learn from this is that we probably got used to trying to target an inflation rate that is so low that for a large amount of the cycle you may find yourself at the lower band and therefore out of control. and that is what i don't like. >> is there any possibility that the u.k. reta

we are exhausted from the negativity on both sides.y is very qualified, competent, she has proven that in various venues. president obama has done a good of a job as any individual can. he is well-meaning, there is no malice in his heart in trying to accomplish a difficult and impossible job. so let's move on from all the degreessm and find the that we can move as a group. i think everyone is ready to do that, including us. that is what we are advising donald to do. he will do it. he is better than all the negativism that is out there, and that is the message we are trying to get to him. the very least, you and i can move on to talk about the details of his economic plan. both candidates say they will reject the transpacific partnership and reworked trade deals that cost american jobs. both candidates say they will prioritize infrastructure spending. given that, what is special, what stands out about the trump plan? tom: all of these plans are really complicated. they would not be complicated if we had a dictatorship. i haveividual cou

negative interest rates were adopted.here is no way to say exactly what they are going to do. they are going to have this conference of review ahead of this next meeting, and then we will see maybe a new framework. tom: do they have time for the word "copper hints if." -- for the word "comprehensive." definitely we believe abenomics is losing steam. it is a very lovely country, very clean, very happy. i don't think there's a sense of panic in the streets. definitely mr. abe has to come through beyond the fiscal stimulus package are -- stimulus package. francine: thank you very much, brian fowler. japan, it kind of feels like a slow burn. reforms arey-side slow going in terms of effects. -- and monetary policy can buy time. we've seen the same in europe. if action isn't taken, then you will not see growth. supply-side changes in making those big changes. we have not seen that in japan. tom: rick lacaille with us. we will continue with getting you ready with our economic analysis. will look at finance. brad hintz joining us

people are very negative.a is very clear that a lot of people are positioned against the british pound right now. the dollar is weakening. and the market continues to price out the possibility of a rate hike from the fed further and further and further. 2016 is pretty much done and 2017 is looking shaky. we just don't know. it could be one and done. when do people start to think, this is a pair? the dollar side of it is starting to scare me a little bit. >> the amount of people shorting the pound, how negative people are. the pound versus the dollar will 1.25,o about 1.20 to which is still in the very early stages of the brexit fallout. we've just in the bank of england turning from a passive to an active central bank. we expect more action out of them, potentially in the form of more quantitative easing and potentially in another interest rate cut. is badeconomic data enough, does the bank of england step over the border and go negative question mark guy: they have made a very clear that that is not going to

and you keep the focus on the negative of your opponent which he calls crooked hillary. why is he scattering his attacks? it just diminishes them. you can't attack with more than one person with much effect because it looks like groucho marx. >> that's what is perplexing to everybody. i don't know. if he would just shut up, quit attacking and responding to everybody that says anything even partially negative toward him and focus on the economy and focus on hillary clinton. the race would be done. but he is not doing that. and again, i go back to, i've been in a 16-person primary. and just trying to break out

bankshares did very well because they didn't cut rates more negative. stronger yen is a problem for the exporters. they need to strike the balance and hopefully the fiscal situation is not that much of a -- it should help. they have to be more creative. francine: do we need japan to do better for the world economy or is it isolated? geraldine: i believe it is somewhat isolated. it is more like a test case for the frontier of monetary policy. we've had a weak japan for a number of decades and this has never stopped the world from going forward. francine: thank you for your insight. up next, as pmi suggests britain's service sector is shrinking at the fastest pace in seven years, nearly all economists are expecting a rate cut today. brexit, economic growth, and the bank of england. stocks subdued, pound weakening. this is bloomberg. "the puls♪ francine: welcome to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua. let's get the bloomberg first word news with nejra cehic. nejra: siemens has raised its earnings outlook f

we don't have the same country running negative rates and not running negative rates so you can get ae on well, how strong is the economy. so the u.s. that has positive rates is doing better than europe and japan that has negative rates so that would be an argument that it's not working but again you don't know how bad europe and japan would have been had they not tried negative rates. lisa: up next, making sure america's tech giants are playing by the rules, and marissa mayer's next career move. ♪ >> welcomed by business week. i'm coming to you from inside the new york headquarters and in this week's issue, we speak to black lives that are cofounder and a fashion designer who truly believes people can come in all shapes and sizes and then, ringo starr and why he voted for brexit. all that coming up in bloomberg businessweek. ♪ i'm here with jim ellis who really came out with this issue. there are so many must-see interviews in this edition. dream wasia ceo, his always to become the hair that is head of an airline. like that was a funny anecdote in that interview where i wanted to kno

the one negative ways more than a two stronger ones.data-dependency, but is not completely symmetric. jon: how do get from a to b? , that iss probably where some of the data surprises and volatility and lack of inflation have the biggest impact on the longer-term outlook. the fed says we are seeing the improvement, the low unemployment rate, but inflation is not picking up as much as we would like it to. what is going on? first of all, they think it neutral unemployment rate is lower. and because gdp is not as strong as they would like it to see, they conclude that monetary -- room to the fed some keep rates lower for longer. jon: the productivity debate, how does that play into this? we talked about how low productivity damages potential outlook. but it is getting to the lower part. quicker because productivity is lower and inflation pressures are going to build quicker. why isn't the fed having that debate right now? >> i think there are two different --productivity is lower. inflationprescient -- pressure is building up earlier. long

. >> i mean, people love negative you know media won't always have negative things he explained himself why he did it and that should be enough. >> reporter: you know, one of the redskins newest player is no new player at allch a veteran from the 49ers formerly

one of the big opposing arguments was that protective labor legislation would be negatively impacted if the e.r.a. were to be passed. this one would have also been published around 1923 or 1924. these women now have the right to vote, and they're presenting to susan b. anthony the bill of rights, and she is -- this image is not captioned here, but it would have been in the equal rights magazine and susan b. anthony is going down the list of rights that women still do not have. you all still have a lot of work to do. the national women's party firmly believed that. nina alander once said that political cartooning gave her a sense of power that nothing else did. i don't think she ever intended to become a political cartoonist. she was an artist. she was a painter. she always believed that was her path. over the course of more than ten years she ended up drawing more than 200 cartoons for the national women's party. images that resonated with women that created a new image for women as somebody they could look up to and relate to. her perspective became important to the overall success