Building. All of this a couple of weeks away from jackson hole. The conversations are really going to build up ahead of that speech for the fed charean net yellen. If she mentions that, were going to have the same kind of move. David theres more of a raise than people think. Alix the debate continues and were going to chris just from energy to opportunity to real estate from sam zell. Plus were going to speak to the c. E. O. Of the biggest Mining Company of the world, andrew mckenzy. There were the fx market, a great market. Its soft on the d. A. X. Down by a half percent. And this is the spillover from equity into bonds. Yields on treasuries coming in three basis points on a five year. Now just 69 basis points on a two year. Were in three basis points on the u. S. Twoyear. The big move is youre seeing a weaker dollar on the crosses against every single g10 currency. Dollar yen, the biggest mover breaking in at 100. And historically, heres the story. Youve go all the way back to 2013 for levels like this. After thereach of 100 brexit decision but to go back there again ahead of september 21 when you get that b. O. J. Decision where the fecks backing off, is b. O. J. Going to step off . And what can the b. O. J. Going to do . They cannot get that hate rate hike . Ets go to Michael Mckinnie mckee on that fed falling dollar. I want to start with michael, our editor. Mike t not only dollar yen. Its also the swiss, seeing the highest level since brexit. When was the trigger for the weaker dollar . The fed is obviously a component in all of those moves johns talking about, expectations and futures trading havent changed. Traders say technical are at work. And a lot of maturing treasuries should put about 30 million in the market because its not just the yen that is getting stronger today. Ut the fed an issue. He thinks the neutral rate has fallen so far that you cant cut rates enough to get the inflation target of 2 that the feds been looking at. He says a rethink of fed policy is in order and relatively soon because we can wait for the next storm and hope for Better Outcomes or prepare for them now and be ready. He suggests raising it to have some psychological impact on the markets. Alix it was a really fascinating essay and hes not only the one. Charles evans saying weve got to see the whites in inflations eyes before we hike. What kind of trend can we see build into jackson hole into the next fed meeting in september . The fed needs to rethink. Basically it get those einstein comment. All these Central Banks cut, cut, cut and it doesnt seem to be working and there is a rethink going on. Kuroda saying that bank of japan is doing that and jackson hole s going to be a major topic. What do we do now if its not producing inflations . Alix off tool. Thank you, michael. If you want inflation, just go to the you know. Jonathan absolutely. Lets cross over to guy johnson to tuck about postbrexit hard data. Input costs surging. Import costs jumping. Thats the story it seems. Unsurprising in so many ways. Up 4. 3 . The headline number. 6 . No prize post the brexit and the pound plummeting that we are get these kinds of inflation read. The bank of england expects inflation to reach at 2 target. Will the bank just look through this kind of number. They get any kind of stabilization from here, then the bank can look through it. This is a one off hit. And as a result, the bank can look through it and cut rates further from here and maybe the pound goes down even more on. But weve held around the 1 29 level for quiet a while. The big move came with the euro but we retreated on the become of that. Jonathan the big story last week, guy, one week ago exactly today with the bank of england and uncovered operation trying to buy some long dated guild and failing to buy enough to meet the target. Is the bank of england got to pick up whatever it takes to walk away with a target . I think theres a number of things are at play here. Last week, most supplies joined. The market is in a better place going into this auction. We also have as you indicate, a bank that may decide that it wants to get this done at whatever cost. The objective is to get money into the economy to get yields lower. So it has to pay up more, so be it. Jonathan guy johnson, the city of london. Well get more details right here on bloomberg. And to guys point, david, there is an auction this week, 2055 pounds. Were going to get about 1. 25 billion pounds you. Wonder if that extra supplies allow the bank of england do what it needs to do. David well see if they pick themselves back up. Meanwhile back in the United States, weve got equity markets. Yesterday saw new records in all three u. S. Equity incease but the question is whether or not it will continue. Mike, i want to put up a a chart that shows that the last four times, the next day, its sold off. Do we expect that again today . Its obvious theres a lot of caution a. These record levels. Were seeing the futures weaken a little bit today and thats the pattern weve seen over the last five weeks. Its sort of one big step forward and then another step back and then a step forward the next day. Theres tons of caution along the valuations. Unless youre comparing stocks to bonds, they are extended. Compared to bonds, they look like theyre the on game in town. Theres a a couple of big trends going on that you talked about earlier that might make people more comfortable with these valuations. Obviously, the weakening dollar is one of them. If that trend should persist, that could be perceived a as a a bullish sign going further. And oil is the big question mark, rising above 45 a barrel, almost 46 today. And thats been obviously the big story around then, session. If we see a strength in oil on the hopes of an opec agreement, the comfortableness around these valuations will get a little bit stronger. Ecodata a out of the United States and earnings. Wove got home depot who came out earlier this morning, big retail numbers are important. Could they affect the marketplace . Obviously, but im not sure if home depot will be able to ove the macroindex too much. Ecodata is important. But the surprise index that gauge how much data is beating estimates have come down significantly in recent weeks. Well have to see how that goes. David thanks, mike. Now were going to turn to alix. Alix looking at home depot here, yes, the earnings matched estimates. Comp sales were up 4. 7 but sequentially, there was a slowing of growth. Ame store sales were 6. 5 . Nonetheless, the company did increase its full year earnings guidance. And you saw things like the average sale per customer rose and the number of transaction rose. Those are all things when you see the retail growing, rising home prices. People want to spend more on doing up their homes. A total different story when it comes up to b. H. P. , falling 81 . The company is saying commodity price troughed in january meaning that was the bottom and from here, they will move higher. , copperosed to iron ore and oil. And a truly ugly premarket in the morning. Organic companies are delaying results on accounting issues that its not going to meet its 2016 guidance. Theyre looking into worries over whether grnt concessions to some distributor and if they booked the revenue in the correct period. Theyre looking at internal accounting controls. Theres a huge number to the downside. Emma is here with first word news. Pennsylvanias attorney general has been convicted in a perjury and obstruction case. Catt between kain lost her law license accused of leaking grand jury secrets to embarrass a rival prosecutor. Tom wolfe has urged her to resign. More than 20,000 people in southern louisiana have been forced out of their homes by record flooding. At least six people have been killed. Over 48hour period, over two inches of rain fell. Many rivers and creeks are above the flood stage. British Prime Minister has written to chinas president asking to improve trade and strategic relations. It comes a. Crucial time. Last month, she dispelled approval of a 23 billion Nuclear Plant which stunned the projects chinese backers. China told the u. K. To reach a decision as soon as possible and said the relationship is at a crucial juncture. Global news 24 hours a day in more than to countries. This is bloomberg. John . Jonathan thank you very much. Coming up, the big debate of the Federal Reserve. The fed rethink the central bank targets. Well discuss the low rate environment with alberta, head of macrostrategy. Thats coming up next. From new york, and for our viewers worldwide, a weaker dollar in the market. This is bloomberg. Jonathan from new york city, this is bloomberg. Im Jonathan Ferro. The big focus in the fx market losing ground since june as the probability of a u. S. Rate hike this year is below 50 . This is Federal Reserveback of San Francisco president John Williams calling it to rethink the way they operate saying america is going to get a new taste of economic normal joining now from london is a alberta gallow. The bottom line from John Williams over at the San Francisco fed is that the neutral rate is lower then what they thought it was. Another interpretation of some of the comments weve had from the fed is that theyre failing and theyre missing. Hats your take . Theyre looking at increasing in the case of the fed, reducing the neutral Interest Rates and stopping on the path f hikes. And then theres other central bankers are saying this doesnt work. We need fiscal policy. Weve seen the Australian Central Bank and even the e. C. B. Digging their heels and saying this is not working. We should do less of it. We need help from fiscal policy. But the help is not coming in. So were still going to see in my view, more easing. Were going to see the fed not hiking in september. Maybe not even hiking in december. Its a very tough call. And the bank of england will look through inflation and will continue to cut rates over the next six months. Nd they will release the flexibility. David on the other hand, weve had people from blackrock and pimlico saying the market is underappreciating. Are they just wrong . What is the market telling us . I think there is a lot of fear on the market. Theyre fearful about sitting on the back of the monster. Stock market is at a very high levels. So youre afraid that the monster is going to wake up if central bankers change their ind and decide to stop easing. But it still had to increase its easing because theres no other tool. So i think we are getting closer to a turning point in the fault of central bankers. Theyre starting to question themselves for the first time. But i think theres still going to be a long delay. And if the fed steps back, these would put a lot more pressure on other Central Banks in the world to ease. Think about new zealand, australia, 1. 75 , bank of england. These are Central Banks which are still in positive territory weak in economy and thats attracting capital flows. Alix alberto, how can we really move those currency hires . Can we move the kiwi lower without the stronger dollar . But inflation is at the core of this issue. You have to see the whites of inflations eyes. You saw williams saying we can overshoot inflation. How can you position yourself for that fed rhetoric on inflation . Alberto the u. S. Economy is one where you can have some inflation because we are seeing a very good level of employment and consumption is strong. Retail sales, were seeing positive quarters from retailers. However, we need to also think about the slack thats accumulating in the economy over the last years. Were coming from 40 years of overinvestment in mining, in the Energy States in the midwest where now you have people that have no jobs. And not only that, but theyre trained for the wrong types of jobs for half their lifetime. So its very hard for these workers to find other jobs. It takes a long time to retrain them. So workforce participation remains very low. The quality of wages remains low. So its a very different cycle. And we think Interest Rates will stay low. Were still not seeing a big jump in inflation. There could be a game changer here. So if you have very strong physical stimulus, infrastructure spending, depending on which candidate wins, then you can see a little bit of higher inflation later on. So the u. S. Base, the treasuries is the air in the water where you could see some inflation. T its very hard for central bankers to hike aggressively because bond markets and storkts could backfire. Jonathan alberto, great to have you with us. Much more coming up on his thoughts on the market with credit and the b. H. P. s focus today. Rising in tandem with bank. Safe haven assets. The big question is as stimulus comes with collateral effects and what does that mean for the bond market . This is bloomberg. Alix this is bloomberg. Alberto gallow still with us in london. Yesterday, we spoke to rick rieder who said he is reducing treasure. And moving more into the belly of the curve. Whats your in fact investment trategy for credits . Alberto we look only at things which have value in our new macrofunds. Were looking at banks, emerging markets, corporates in the high yield space. We dont have to follow benchmarks so much we dont buy bonds with negative yields. We look at emerging markets but the ones that are not linked to china, we think emerging markets will benefit from a more doggish fed. And we look at european corporates at some special situations in the high yield space and bank debt. What is happening with lower Interest Rates would make banks safer from a credit perspective but less profitable. So even though we are in a zero Interest Rate world, there are a lot of opportunities. The way to capture it is to be very flexible to not follow benchmark. The asset a Management Industry is not really prepared for this environment which most neutral funds being forced to buy negative yielding bonds. Jonathan yesterday with the story here at bloomberg, the coupons getting priority over dividend payouts. More protection then in the past . Alberto we think there is a few reasons to be positive on bank debt although it remains volatile and one reason is regulation. Its creating a much clearer level of priority between equity holders and bond holders putting bombed holders first. The second one is banks are adjusting their Business Models to less volatile mix of revenues. So if you think about deutsche bank, it used to be 50 trading. In the future, its going to be lower. The same for barclays and credit suisse. And youre seeing Capital Raising from a lot of banks including the investment banks. And also the commercial banks. And all of these banks would build a buffer before debt which would make it a good long term investment. Even though some of these news was already somehow in the market, we are seeing a positive impact from the confirmation of these news from regulators. And they were very positive on making banks more profitable. In his last speech, because he has realized its about the transmission mechanism in europe. Its about the banks that have to lead to the lend to the economy. Alix alberto, thank you for oining us. A how do you feel if youre a shareholder and you get that cocoa hmm . Jonathan it will just become real. Home depot has led the dow since the beginning of the bull market. We debate the company next. This is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Jonathan from new york city, this is bloomberg. A big debate over at the Federal Reserve but an empty feeling at the markets. We all miss from the main woman, janet yellen. While this debate continues as to whether there will be a rethink of the policy over targets, theres a void, a vac qume in that debate and thats the thoughts of the only voice that matter, fed charean net yellen herself. And ahead of that speech several weeks away, equity is softer. Fine. The ftse down by a third. And the d. A. X. Down by. 6 . The yields coming in a little bit on the back of this Federal Reserve debate. Were in by about two basis point to about 70. The big move is in the fx market and a big headlines rise right here with the Dollar General ith a 99 handle. The idea for cruteo is if he does nothing, maybe the fed will o something. Youll see a substantially stronger yen and the big move has been completely erased in a matter of months. Alix unbelievable because that level is the brexit panic level. There was no brexit panic over the last 24 hours. That move is that much more incredible. We have some big movers in the stock market. Alynn is in talks to be bought by praxair. It has about 40 of the market share. The issue this may face a antitrust hurdles. There are only four major global suppliers. That could be an issue with the linde tieup. Talk about tieup, monsanto, buyer. The deal that cannot get done and will not die. Buyers said to be making a decision within weeks. Potentially would need raise his bid from 5 to 10 . It could take that bid to shareholders. It did get inside access to its books in early august. Also rounding it out here with one of the energy names and metal names. Gold rising. One you have b. H. P. Up and rio, glencore, all moving higher. Stabilization and oil prices rising. And you have some filings that takes a look at what the big guys owned. Its backwards looking. But the market likes to look at that for what the big players are owning. And freeport shares are added in the last quarter. For now for what you need to know for outside of business, emma is here. 15 prisoners at the Guantanamo BayDetention Center has been sent to the united arab emirates. I