michael: robert kaplan, thank you very much for joining us. in new york. mckeethat was michael speaking with dallas fed president robert kaplan. coming up, you have china striking back. china will impose additional tariffs on u.s. goods, shaking up the market on this friday. we do bring you somber news. --id cope, the cash david david koch has died. he used his fortune to transform american politics. he was 79. ♪ alix: here is what i am watching. that is the markets after china hits back on the u.s. with tariffs on $75 billion of imports. this will take effect in two stages. one september 1, one december 15, echoing the tariffs that were going to put on china goods from the u.s.. we are going back up to 25% on autos. we are going to see an additional 5% tariff on u.s. soybeans, and we will see for the first time of 5% tariff on crude oil imports. crude oil imports had been removed from any tariff impact. now they are getting wrapped up into the tariff war. we did hear from st. louis fed president jim bullard about the trade war and about monet

robert kaplan sat down with mike mckee and said he doesn't believe monetary policy will solve the problemsthe u.s. economy. robert: i talked to businesses today. about,e said something availability, cost, and capital is not my problem. you guys are not my problem. my problem is trade uncertainty and other issues related to that. here's the issue. if you look out over the horizon and the job of a central banker is not to look at what the situation is today, but what it is going to be, if the policy-setting is too tight, then eventually you are going to see credit tighten. you will see that ultimately tighten financial conditions which will impact the economy. i think my job is to look ahead and balance these risks and try to make risk management decisions so the policy is more appropriate. if it is too tight, it may seem innocuous, but i think that will lead to a tightening of financial conditions down the road. searchre you a hammer in of a nail here? people expect that fed rate cuts -- it is not going to do that? robert: quite the contrary. i've been very vocal in saying the fulcrum or th

then watch out for robert kaplan and patrick harker. later today on bloomberg television as markets continue to try to gauge the federal reserve's next move. let's get now to bloomberg's first word news. takes.ever it that is what new zealand central bank governor says he will do to support the economy. invoking mario draghi's famous said thedrian orr inflationary impact of this month's rate cut before considering further easing. >> everyone is telling us the global growth is slowing. let's get ahead of this. let's reduce the possibility of having to do more later. we are pleased with where we are. >> italy's centerleft democrats have until tuesday to form a coalition with the five-star movement after the country's president said he was giving more time to form majority. sergio mattarella has the power to appoint a president or hold elections. a host of the largest global exchanges are stepping up their calling for saudi aramco. senior officials have been pitching the saudi oil giant in recent weeks. global news 24 hours a day powered b

louis fed president james bullard, dallas fed president robert kaplan and philly fed president patrickarper. yields on pre-to high-yield municipal bonds are reaching record lows as central banks rush to cut interest rates. what it means for investors looking to take on riskier deals next. this is bloomberg. ♪ shery: this is bloomberg markets. i'm shery ahn in new york. amanda: i'm amanda lang in toronto. yield municipal bonds are hitting record lows pushing investors into increasingly risky deals. many of these high-risk deals aren't even rated. that could leave investors exposed to big lost if the economy should stall. amanda albright wrote this story today that is definitely worth a look on the terminal. it's interesting because you note in your story that those bonds are rated, they are actually safer than other parts of the market. they have a very low default rate. do we know how much of this market right now is not rated? >> unrated that can be hard to track. sector issuance is up. it amounted for the most in at least a decade. we are seeing risky borrowers come in with very larg

coming up, an interview with dallas fed president robert kaplan with steve live from jackson hole joinings for the entire final hour, is mark leeman mark, it does feel like there's a little more optimism out there around the u.s. consumer and the overall economy even with the yield curve inverted again how do you see it? >> i think there's plenty of negativity we have moved from neutral to negative over the last month ago. some signs are more positive and the conversations having with managers more and more are like we don't see the kind of negativity we are fearful of that gives me hope and optimism for the fourth quarter for a better end of the year. >> all right let's drill down on the stories we are watching today. of course, bob pisani tracking the market action. phil la biowith the latest on boeing i was just talking about that stock. courtney reagan focusing on the retail earnings. bob, first you on the market. >> hello, david. the markets are still moving roughly in relation to bond yields and of course, we saw the yield curve briefly inverted the market also weakened shortly afte

then you will want to watch for robert kaplan later today right here on bloomberg.ondon, this is surveillance. ♪ viviana: this is is bloomberg surveillance p let's get the bloomberg is this flash. hasbro is becoming a full-fledged toy company. they spent $4 billion to buy entertainment one. that gives children bands like peppa pig to expand into foreign markets. it is hasbro's biggest deal ever. bank -- the u.s. sec is accusing them of hiring overseas officials to win business. the hiring taking place in russia and the asian-pacific region. deutsche bank is neither denying nor admitting the regulators claims. to german automaker once secure assets to key technology in the world plus largest car market. with interested in firms an interesting electric vehicles. scarlet: let's get to our morning must-read. it comes from scott minard, who up -- hethat who heads is discussing the epic bond rally. he said cutting rates may contribute to a dangerous asset double. i hate to admit the ugly truth, but the bubble, in particular, the sovereign debts around the world. the categ

kevin: that was dallas fed president robert kaplan seemingly pushing back on one of the central bank'sgest critics, president trump. the president has kept up his criticism as the federal reserve gathers for their meeting in jackson hole. now central bankers will have another economic concern to consider. china's promise to retaliate with additional tariffs on $75 billion worth of american goods. joining us is our panel, sarah kim, former senior advisor in the trump administration, and a democratic strategist. a busy morning on the u.s. and china economic front. the president not just responding in terms of the chinese development but also to jay powell. what you say to folks who are saying when is this dispute going to end? sarah: no one should be surprised by china or chairman powell today. i think chairman powell has been intent on continuing to manipulate the interest rates against the united states favor. he should have announced a cut today. as a relates to china, they were always going to implement another round of tariffs because the united states had already done so. specifica

we will talk with robert kaplan, loretta mester, and patrick harker. we'll get a view from various regional feds about how the economy is doing in their area. i asked esther george about whether or not the former kansas city fed region was suffering, and she was saying they really don't see a lot of weakness at this point. , the minutes are one thing. basically, powell is having to speak for the committee. as you just highlighted, the committee is not on the same page. powell, when he speaks tomorrow, is going to be speaking for himself. how big do you think a gap there is in speaking for himself and speaking for the committee? michael: i think he's going to try very hard to at least show not much of a gap at all. the problem is if you start talking about the need for rate cuts, then you start to talk about an economy that is slowing, and it could become a warning from a fed president that snowballs into a self fulfilling prophecy. so he's got a tough job in explaining why the fed might want to cut rates again without saying that the economy is in bad

there is the powell speech tomorrow morning before that loretta mester and james bullard and robert kaplan this afternoon as well gita gopinath. economist and mark carney a big interview from the bank of england. >> thank you, steve liesman in jackson hole no animals were harmed in the filming of this. let's go back to the markets do you think we're setting up in terms of what we actually get in september? >> i mean, it's really interesting when you listen to fed official itself. they're being proactive. they're saying, look, this is where we want to be. they don't want to be reactive to a market that is telling everybody, if you don't get this cut, it will be a big sell-off to my mind right now the market will not like if we don't get a rate cut in september. if we get it, powell says, guys we are stopping now. >> it sounds like there are a lot of downside risks. >> if the cuts aren't there, in the short term, the markets could sell-off >> i would agree in the short term the mark will be disappointed remember, the market is up 18% this year. so you could have a little disappointment and a

we have robert kaplan coming on, the dallas federal reserve president.row morning we'll have the keynote speech from federal reserve chairman jay powell. and later also that morning, we have horrloretta midwester and a gopnof and at 5:00 or 5:30 tomorrow afternoon, we'll sit down with the bank of england governor, mark carney. carl >> steve, i know, obviously, powell is the main event, but do you expected bulllard's comments to offset or be markedly different from what george and harker are said today? >> well, i think jim is one who wants to do additional rate cuts and i think it's worthwhile for everybody to take a step back and say, wait a second, there's a lot of commentary to come. one of the great things about jackson hole, all of these presidents do speak and we get a snapshot in time of how the federal reserves s do feel ab things it seems like powell's a little more oriented towards taking insurance cuts out, whereas some of these other members are not bullard may be a person who's a little bit more on the side of where powell wants to be and wo

a good place relative to the mandates that we're asked to achieve >> now, dallas fed president robert kaplanaid he wants to avoid cutting rates if he can, but he says he is open minded about rate cuts. he also is concerned that the big decline we had in bond yields is sending a fed a message it should not ignore the comments from the three fed presidents highlight the divisions in the overall rate setting on the committee about where to set rates eight of ten voting members, you remember, supported a rate cut, but two of them dissented. minutes of the meeting that were released yesterday show that there's more support for these dissenters from the nonvoters. all of this raises the stakes for fed chairman jerome powell, who will deliver a keynote speech tomorrow at the jackson hole summit. here are some of the issues he has to deal with in deciding what to do with rates. first, he has to navigate between u.s. growth at trend, but global economies are weak. consumer strong, manufacturing slowing. fomc members divided between a hold and between cutting interest rates so, guys, we have that spee

series ofgreat interviews, first james bullard, and then robert kaplan, loretta mester, patrick harkerall on later today on bloomberg television. bloomberg radio is live on your mobile device anywhere in the world. in the london area, you can tuning on dab digital radio. this is bloomberg. ♪ ♪ matt: welcome back to "bloomberg markets." this is the european open, right now 15 minutes from the cash equities open and looking at gains across the board in terms of the equity index futures. expect a positive open at the start of trade as well. trade wars and an economic slowdown, that's the background of this year's g7 meeting in the french surfing resort of biarritz. adding to the worries, disagreement over how to deal with iran and the increasing chance of a no deal brexit. joining us to discuss, bloomberg markr international editor champion. alan, what will angela merkel's role be here? she's typically been since the election of donald trump sort of the leader of the free world at these big summits. does she continue holding that mantle? alan: she will continue to try, definitely, but she

robert kaplan and much, much more throughout the day. hexcng ibasst. "t ehae"s ck in two. that.ree access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ >>> welcome back the congressional budget office raising its forecast budget deficits and lowering interest rate projections over the next decade that. doesn't seem to make any sense thcbo director saying the nation's out list is fiscally challenging. this is just one of the many changes since july we're also watching that rise in market volatility and session fears. david wessel is here david, i know that's a lot to mention, but let's just start with the cbo numbers today what do you think we learned from this update >> well, mostly cbo was just catchi

we will speak with james bullard, robert kaplan, loretta mester, and patrick harker. interestingly monday, it was obfuscation. today a whole new one. romaine: i have been practicing outward. caroline: a member of the reserve bank of india used a rare 18th-century word to discredit estimates in economic growth in india. the oxford visionary says the word is used to describe some thing is worthless. here is the word. romaine: it is all you. you are a pro. wow. i'm glad you got the read. what is interesting about this, this is not the first time the word popped up. right? caroline: yes. you know who else used it? romaine: in that u.k. desk in the u.k. -- in the u.k. you think about how people fret over powell and the words and phrases he uses, the most complicated phrase is what? neutral? far from neutral? can you imagine having to parse that? caroline: they had to use the turn of phrase maintain a translucent. they are big thinkers in the indian central bank. romaine: are they cutting or raising? what does it mean? caroline: no idea. romaine: we will peel back the veil

we have robert kaplan this afternoon at 3:00 eastern time tomorrow back here on "squawk," we're talkingmesster. a chief economist also in "squawk on the street" and mark carney 5:30 p.m. eastern time. the outgoing governor of the bank of england. >> that's our favorite shot of you out there leaseman, you know, you know that. >> reporter: it's the only good one of me. i need these big mountains behind me to make me look good. >> you remember what we did that one year, i don't know if we still have it, we can dig that out. we had bigfoot every once in a while, turn around, he's never been cited. those are doctored videos usually. that's a place where he can definitely -- >> more likely in time's square, joe, than here >> that's not a real big foot. he's next to elmo. they're dating which is weird >> we have 18 elk, joe we saw a pass yesterday. so we have -- we do have some wild life out here that's different from the wild life you are used to back in new york, joe. >> i am so not used to wild life in new york as you know. talk to sorkin over here he's out every night anyway. >> reporter:

james bullard, robert kaplan, still to come though, former boj webers joined the show as await key inflation data from japan and ask what the latest reading might mean for monetary policy. chinaortant earnings from after results in telecom and energy. this is bloomberg. ♪ paul: this is "daybreak asia." >> a bumpy day on wall street for stocks and bonds in the regular session. we are seeing more volatility in after hours trading. su keenan has more on this. quite a busy day trying to keep up with fed speak and also a different series of data. su: very whipsawed. if we look at the snapshot, you did notice what things emerge, we are waiting to hear from jay powell. s&p 500 financials were among the big gainers. the cac, the losers. let's go to the big movers. boeing getting a big jump from an analyst, they may put the max jet back into service. a lot of investors pleased. two analysts coming out with positive comments on a possible buyout of alexion pharmaceuticals. earnings. it seems to be bucking the tide of this department store -- of department store woes. going into the bloomberg real quic

we had robert kaplan saying he doesn't want to cut rates.oncerned that the fed is higher than the rest of the yield curve. then another this morning who said maybe not so much bullard wants to cut rates a whole bunch of opinions. not only about what to d with policy, but why to do it bullard wants to address inflation. kaplan wants to address the yield curve. patrick harker is worried about excess leverage in the system. esther george says the economy is doing well, why do we need to cut rates now? this is the thing the chairman has to deal with he cannot get too far ahead of his committee. i think he hints at rates coming lower. it's important, i think, to note that he is bringing up these '95 and '98 examples in both cases three rate couts. the first over seven months. the first over a few months. three rate cuts. that's how the fed chairman is looking for the outlook for policy. >> steve, those instances, the fed resumed raising rates again after those three rate cuts, right? this is an interim step if you hear that message from powell ri

course, comes ahead of the fed's annual symposium in jackson hole, we ohmy and we will hear from robert kaplanhursday at 3:00 p.m. on "closing bell" the big speech is jay powell on friday and whether he will build on the guidance he gave at his last news conference after the rate cut, suggesting maybe they're drinkithinking about mo aggressive rate talks because the recession talk heated up, the bond market action, the stock market volatility. that's certainly what the market is hoping for. >> important to point out the dissents because in the press conference the chairman has to kind of reflect the feeling in the room, right? when he is talking about the outlook, you have to give a nod to the fact the entire committee did not want to cut rates last time even. >> including in boston who has spoken out recently, yesterday on the wires did not sound like he was there yet in terms of a rate cut. >> that's right. >> so may dissent again. and how will powell sort of handle that, and how is that discussion inside the fed? how worried were certain members about the outlook? >> three days of lots of h

tom: this goes back to my book of the summer last year, "asia's cauldron," by robert kaplan. , explaingesr us. derek: i think that is exactly right. what you have in a protracted environment is you have to take a look at the supply chain and say, where is this coming from? where can we go that is a safe harbor? you see a flight to places like vietnam. i think a lot of that is oversimplified. we have had reporting in recent weeks where you start to see trump and his allies mentioned vietnam and start saying, what are they doing and what is their trade deficit? looking attention and to see where this place is safe, the in moves toward you -- eye moves toward you and have you escaped it? it is not as simple as a lot of people think. instead, you are just trying to stay one step ahead of a president who when he looks and puts that laser eye on you, things could happen. francine: i was told by chief executive that the basic resources-- a basic executive in china, leaders think they were about to sign a deal or president trump could sign a deal tomorrow but he wants to game this out because by

fed rate cut expectations with another key member of the federal reserve, dallas fed president robert kaplanfed summit in jackson hole with steve. all starts at 3:00 p.m. eastern. david was okay yesterday, so we invited him back david faber joining me 3:00 p.m. "squawk alley" up next in the meantime, dow's down 70 don't go away. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade >>> good thursday morning! it is 9:00 a.m. in jackson hole, wyoming. it's 11:00 a.m. on wall street and "squawk on the street" is -- "squawk alley" is live ♪ ♪ ♪ >>> good thursday

think about policy it just so happened that the way it worked out we had esther george and then robert kaplanaid you know what it's not so clear to us we should be cutting rates. up know, i stepped back and i said -- trying to think of other times when the fed has moved those times it's been clear to me what the fed should do and why they're doing it, even if i agreed or not. sort of understood it. summarizing what greg just said. the next moves are not so obvious. the data i put up about global manufacturing -- >> you think the last move was obvious? >> maybe taking back december, yeah. so i -- i don't see -- the only reason to do so, a couple reasons. one, the global structure of things, can you be so far from where europe is? >> why should we be the beaken in a world that maintains positive interest rates? >> you know i asked the fed folks that i think i talked to five or six of them there. pretty much same answer. when you look at the u.s. economy. >> right. >> they -- you can say -- say the same data two ways we're running short of our 2% inflation goal or, we're real close to our 2% inf

robert kaplan said this yesterday. i assume he's right.ate is the highest rate on the yield curve? >> yes wome well, i see the curve's trading up a little today. but yeah, basically. >> be clear what that means. overnight money. if you lend me money overnight, i pay you more than if you lend me money for ten years >> yes. >> that's weird. right? >> yeah. so i mean, obviously, a down draft in global yields and we're going to talk about that and trade war, all that. >> yeah. >> the fed i think needs to stay consistent with where yields are trading. >> so let's put that aside and come back to that argument what's your economic outlook how much concern do you have for the economy? how much recession concern do you have >> i think consumption looks pretty good. obviously labor markets continue to do well in the u.s. and we'll keep an eye on that. some of the retail sales that came out last week. very good. i guess some this week, too. so you know, all of that looks good i think the question is, looking forward, you know, how much risk are we fa

dallas fed president robert kaplan has been on the wires. least hawkish of all fed presidents who have been interviewed, he basically said we're unemployment report a way from this great consumer narrative crumbling. and i think that is where powell's thinking is. we had a survey come out yesterday morning from market on the surface side of the economy, 80% of the economy said that employment growth slowed to a 10-year low. so charles's point if he is going to be preemptive he will have to broadcast he is standing ready to get in front of data, not behind the curve as the fed so notoriously has been in prior cycles. stuart: he did say he wants to sustain the expansion, and as charles said he does not want to be responsible and allow our economy to go into recession. ash raised the question, was it a strong enough statement of intent down the road? since we raised those issues, now the dow industrials are down 107 points. you will expect this. you can expect a yo-yo up and down. danielle, you got to say i would expect a lot of algorithm tradi