Corruption verdict. That verdict is going to be closely watched in south korea. Markets are waiting with bated breath, on the fed speakers at jackson hole. Be payingen will attention to tomorrow here in the u. S. There were some jitters in the markets. Ceilingk about the debt rattling investors. The dow off 30 points. Off 1 . Aq also s p down 2 10 of 1 . The declines are there but not as much as you might expect. Most investors are on the sidelines awaiting janet yellen and her comment. Yes. We are pushing pause. Talku can say anything to down that rising euro. In asia, prettier than brawl wall street. We have rallied for eight of the past 10 sessions. It has been a decent two weeks but we are flat for stocks. The kiwi, two days of losses. Spikes may continue to exit if we break below 72. We are just at a whisper from that now. And markets not going anywhere. We have been stuck in this tight range for three months. Mostly we will see any kind of breakthrough. 79 for the aussie. A key watcher is going to be oil prices. Harvey,ct of hurricane could that actually disrupt the oil markets . And japan Inflation Numbers coming out this hour expecting to rise. Equity market signaling some gains here. 109. Thank you. First up President Trump has run new Republican Leaders blaming them for a debt ceiling. It will now require cooperation with the democrats. Three other directors were forced to leave the board installing another person in his place. Mumbai. Ose 2 in they have been struggling with infighting. Uber Investor Benchmark has asked a court to block Travis Kalanick from selling board seats. They say it is hindering the search for his successor as ceo. He accused him of duping the firm to win three additional board seats. The Court Filing Claims his actions have caused potential ceo candidates to step away. And the trial of samsung de reaches aer conclusion, denying corruption accused of funneling millions of dollars to a friend in return for government favors. His defense has been that he wasnt involved in decisionmaking. The case has not hurt the company. It launched the new galaxy s8 smartphone. Global news 24 hours a day powered by 2700 journalists and analysts. This is bloomberg. Expectations from market moving news out of the jackson hole. This year pretty low. With janet yellen and mario ,raghi expected to speak traders are watching closely. Kathleen, a beautiful backdrop behind you. What is going to be the big question banks are going to be asking . There are always a couple different levels. Beautiful setting. Some ways a secluded place for central bankers to gather. Over the years, more and more focus. They have used this venue to send some kind of message. The topic of the conference is making Global Growth more dynamic. Is sospoken part of that we can boost inflation because central bankers are having a hard time even with better growth. Look at europe and japan. Inflation just is not seem to cooperate. Kaplan. To rob looking at this question of growth and inflation he sees some risks there. Is anbalization opportunity for the u. S. To grow faster. In light of these demographic trends. Probably immigration in an appropriate way. It is probably an opportunity for the united states. Trade is an opportunity. The biggest risk is we dont analyze the reason for slow growth as well as we should. We may be pick we pick policies that may be create lost opportunity. Course, some of these risks he is talking about, demographics, there is nothing a central bank can do for an aging population. They can take steps to help offset it. Core seems to be set. It is Balance Sheet reduction. Differenthi is in a position. Even though they want to start normalizing, bear in mind this is a venue they know they have a chance to Say Something that could be something they want the markets to know. The topic of Janet Yellens speech is unexpected. Someone said it makes perfect sense. How is that . Financial stability. Was why . Ion i got why dont we hear about the Balance Sheet or Interest Rates. Janet yellen is sending a signal may be there is concern growing about excesses. Chair,spoke with the fed he has been pounding the table about holding more capital. About taking steps that will send us into another crisis as it did a few years ago. He says he is in agreement with the idea your low rates can be driving this. He says i dont know why she chose that topic but he thinks it is appropriate. Some of these regulations should be rolled back at a time when the bank capital, which he is stride on this, it is not at a high level as it has been in the past and banks may want to roll it back. I think it is interesting to hear what janet yellen says when you think of it in that context. Thank you. We are going to be back with you later. She is going to be joined by the global former bank of israel frank talking about global Monetary Policy coming up in half an hour. Now a closer look at how the markets reacted including volatile stock trading. Sideline. Staying on a the potential hurricane on the golf driving oil trades. Direction. For we had swings between gains and losses. If you go to the final close the losers one out. It was close to unchanged. We had lower than average volume which indicates we are in the peak of the summer vacation. Wall street takes those last two weeks of the month off. The market snapshot, yields rose. Gold was slightly lower. And energy, a big focus. We saw oil fall that natural gas futures soar. Hurricane harvey now pointed at texas. That is bullish for some fuel suppliers for oil, it has depressed the bond price. Demand is going to be down. Lets look at the vix. We go into the bloomberg. Overpeople have made money betting on the calm of the market. Now we are seeing a surge in the total number of contracts, betting that volatility is low. The it will take off, and either side could win. That is going to be volatility and these contracts are continuing to be a hot vehicle to be in. Economic data was not enough to move the market one way or the other. We had fresh data on the jobless rate. Fell tosting home sales an 11 month low. That also interesting. The jobless rate for a year low. What is interesting, that the continuing jobs data shows tightening labor market which is what the fed wants to see. Live from new york, thank you. And it is time to remove risk from your portfolios. We find out why. This is bloomberg. I have not lost faith that inflation may get that to its 2 target. You have to understand that cyclical forces and the models that would have suggested what the cyclical forces should have are being offset by new forces, which you can only understand by looking at industries and talking to ceos. Those are having an effect on inflation. The price of goods has been falling. Maybe that is due to technology. Services, you see those rates are actually staying 2 and higher. ,n the context of the economy you have to be careful getting too focused on a point estimate as opposed to the broader trends that you see. Theree big names out speaking to us at the jackson hole symposium. Investors are going to be following that news. That matters less to this person , and this guest weve got active stock picker. Essentiallyalk is noise to you in many ways. What i thought was interesting is, and the notes before the interview me you are looking for places where not only are you trying to make money but where you dont want to lose money either. Is that something new for you . Know. I have done this 25 years. As of late has that picked up . Especially when people dont Pay Attention to risk, i Pay Attention to it. We have to wait risk and reward. A lot of people are weighing risk. They are looking at between passive and active investment. What are the risks people are not looking at when they do that . On the lowy focuses entry cost. It is cheap. Think about the high exit cost. As much flow seen going to pass it as today. Who is going to be the buyer . Who are you going to sell to. It is a house of cards. It is a ponzi scheme. When people try to get out, who are you going to redeem to . You are the market. People dont understand. You could be faced with redemption risk. The bid could widen so much that the way out, you could lose. Entry cost is not the same as the exit cost. Do you see that risk around the corner . You never know when it manifests. This is what happened in the late 1980s us 80s. Buying insurance cause the market to fall. Investors, it was an asset class. Now you see the redemptions building. When somebody sees with the smart money is doing, now it becomes an avalanche. What everybody tries to redeem, you never know what will spark this. Lets talk about the specific stock sectors you are interested in. You like tech but you are not in the stocks. Why is that . They feel overvalued. Ast because you dont take valuation risk risk is risk. It doesnt mean you have reduced it. Nokia, jimsoft, alto. Much more reasonable valuations. Similar growth rates. I dont have to pay up for them. There is a way to play tech without owning saying. G. Owning saying fan amazonow you dont own but you have looked at it. The market cap gap there has closed. It is more because alibaba has risen rather than amazon has fallen. What do you make of the closing of that gap . Terrific isas a this model. The chinese have adopted ecommerce. You never have the same brick and mortar infrastructure that you have in america, which has a big legacy. I would say the market for alibaba is larger, way sooner than for amazon in the u. S. Or abroad. That is the advantage. Space. Ey dominate that i can understand the Business Model of alibaba. The reason why we have stayed away from owning that company even though we research it, the Corporate Governance risk. Like the Ownership Structure and the transfer pricing potential. That source of risk, i need to get paid for it. Until i dont, i wont own it. Business. Eat it has a challenged model. In your notes you said similar picture here when it comes to 10 sent, the stock darling for so many across the world. Most say it is in their portfolio. You see that income and revenue growing. What are you seeing . 10 sent a fantastic company. It has done very well. You also want to be careful. A companys best days are behind it rather than ahead of that. It is defendant not just on its messaging but video games. They can be hit or miss. While it is a hit, earnings are doing extremely well. What if you have a miss . That risk is not in these valuations. If i can get other stocks like china mobile, where people are worried about earnings risk, and getting a company with a very strong talent sheet, why would not go for that than chase with everybody else wants to head up . You dont have to pay the highest price. You can only make money if you bargain. You have to look elsewhere. This is how i invest. We love hearing contrarian calls. Lets talk about tech. What is another big conviction call . If you ask someone about investment ideas, very few people will say i will put money in cash. It is the most vilified as set out there. Someday it will be a glorified asset. People dont even think of it as an asset class. The reason why you want to think about cash. Lot and itet falls a is right for that correction the only asset class is cash. Think about 2008 and 2002. The only person beside someone who can short who made out like a bandit in a falling market is Warren Buffett because he was sitting on loads of cash. Its not just to have high cash but own cashrich companies. You can own the stock and participate in the off cell of the business. Discount or ignore the fundamentals of the equity rally as well. Take a look at Global Growth. We see this recovery. Earnings per share worldwide. We are near records and continue to rise. Leg toot give an extra the equity rally which may mean we dont need that much money . There is always good news. Whenever there is good news people can justify why the markets go up. My job is to think about what is a thing that can go wrong. Improving,gs keep Balance Sheets keep deteriorating and nobody is calling out these teams engaging in Financial Engineering through debtfinanced growth or back shares. When you look at both of those things in conjunction, risk has gone up more than the return potential of the market. As a contrary or in investor who risk,to get paid to take i took it in japan in 2012. When you are paid to test risk take risk it is ok but when you are not you should stay away from it. Great to have you here in the studio. One feature on the bloomberg we would like to bring to your attention, our interactive tv function. You can watch us live and see previous interviews, and dive into the bloomberg functions we talk about. This is for bloomberg subscribers only. This is bloomberg. A check of the business headlines. Soft inc. Is spending again. The evaluation is said to have risen to 20 billion after the investment making it the fifth most valuable tech startup in the world. Said to be exploring options that could range from spending off its virtualreality arm to a full scale of the whole company. It is working with advisers on bringing in a strategic investor. Payment processor square will support merchants ands showcase its own wares. It is aimed at raising squares presence among shoppers. And samsung, the verdict coming up friday. Counting you down to the open stocks. Havelizing a bit, we Inflation Numbers for the month of july. It looks like it was in line with estimates when it comes to core cpi. This is excluding fresh food for year on year rising 0. 5 . Edging higher from what we saw. , inchingcore cbi higher. We are seeing 0. 1 . The same story when it comes to japan. That positive output, we are going to see prices edge higher as well as food prices. Possiblyding to that to that picture is the japanese yen. You can see unchanged reaction here. Ofsaw a slight strengthening the yen ahead of these numbers the yen has been strengthening for the last several weeks. The decline in the u. S. Dollar complicating matters for japan. Holding steady. Lets get to the first word news with courtney collins. Theirst up, passing on benefits of Higher Energy prices. Paying shareholders the entire half of the net income. It is worth 2 billion and raises expectations. Came in at 2. 4 billion. Ahead of the one and a half billion. India intensifying scrutiny of Chinese Tech Companies amid concerns the browse the browser is leaking data. Indian cyberspace must be secured. Two Dozen Companies were told to provide details of their safety and security practices. Well as global names such as apple and samsung. Indias top court says citizens have a fundamental right to privacy, derailing plans to use use theork to ruling will affect the program along with Global Corporations working in india such as google, facebook, and uber. And at least 12 people were killed, that in the strongest storm to hit the area in five years creating torrential rain. To victims were in an underground garage. Gamingn says growth revenue may be down. Global news 24 hours a day powered by 2700 journalists and analysts in 120 countries. This is bloomberg. Thank you. Now the samsung empire billionaire is going to earn his learn his fate today. He may be sent to prison for 12 years. , tell mehe courthouse or their protesters now outside . Local media have been reporting they will start gathering closer to the time of the verdict being read this afternoon. We are expecting a panel of three judges to give that verdict. It will probably be just after markets close before we hear a verdict. Has gripped the nation. Not just because of the feeling of change, but because it involves one of koreas richest most powerful men and the wider scandal which has involved the former president and led to her ousting and impeachment. This case has wider implications. To give you some idea of how saw hundreds coming down to the court early this week for the 30 Seats Available to get tickets to see the verdict happening later today. Prosecutors are asking for a 12 year criminal sentence. This is the harshest that any prosecutor has asked for for a major civil leader. That may gave give the sense of the mood here. They say samsung gave millions to organizations controlled by a close friend for government upport which they say ended causing him to consolidate. He denies these charges including bribery, embezzlement and hiding assets. He did confirm that money was given to the organization but denied they were for political favors. What happens next if we do see jay y. Lee convicted . We saw record profits for samsung. Is there a need for a plan b . What is the plan b . Even if he is incarcerated the business is doing fine. They share price has been marching higher. Just shotprice has ever higher. The wider implications that this case has for a conglomerate in the country in general. Their top 10 in south korea, they basically own 27 of all business assets here. You can see that quite clearly. The wider implications, it sends a message. They are serious about trying to reform. The mood is pushing for that as well. Convicted, it sends a message to watch their step about what they are doing. We will come back to you in just a minute. We want to talk about the trial and its implications with author tony mitchell. We will talk more about what to expect coming up later on this afternoon in just half an hour on daybreak asia. We are back at jackson hole where we hear from someone who knows a thing or two about Central Banks. This is bloomberg. Lets get back to jackson hole the top central bankers are with mario draghi, scheduled to speak on friday. Jacob frankel of the bank of israel, he is chairman of j. P. Morgan chase international. Perhaps today the most important thing i can tell you is he has been at the Kansas City Fed symposium for 33 years in a row. Longe not been here that but it would not be jackson hole without you. I started in high school. That is my line. Vast, so manythis cycles. Quite 10 years. We are coming up on a decade since the financial crisis started. Banks with super aggressive rate cuts. Here we are. They are having trouble. Why . Flex when t