Futures seem to be negative. In a repeat of yesterday, down in the european session about dow. Points on the then we come back up as things start to unwind. Be interesting to see. Kicked back nicely yesterday. Pause or are we seeing a rotation or minitemper tantrum . That. Ll be dissecting we have some great guests for tabckling the feds. Scott e joined with minors. He will reveal his big call on year note. Plus, later were going to head buenes ares. But first, youre standing by to market. The it felt a little bit down this morning but except you look at commodities. Governors brainards speech. Struck by her. Ne they were. Wasfollow through to europe as follows. Three days of losses. We snap that up. Yesterday, a softer dollar session. Little reverted just a bit with the bloomberg dollar index up by quarter of 1 . Happening on the cable rate. Down by half of 1 . Inflation in the United Kingdom came below estimates. Downside surprise potentially the door if they so wish to cut rates again at the bank of england. Hats a narrative in the city of london today. Commodity market, the iea. Hey say thats likely to persist. Ts because not just the precise side of the equation. Thats a story for us. Another story is what happens the bond market. Rate hike is starting to field away and yields just coming in. 2. 5 basis y about points. We trade at 2. 366 , alix. Yes, we do. Yesterday we had a decidedly brainards ove after speech, right . Are we looking at a regime into higherhe market yield out of the risk for yield today just a pause . Well, i think this really three nearly two to weeks ago when jgb began to reverse. Quiet riot in the jgb market. Really the follow on from that post the ecb meeting in which there was really no signs qe. Any further weve got selloff through the uk markets. Ond finally on friday into the u. S. So i think were in a period at the markets ere will test the upside yields on these Government Bond markets to what point things have to turn around and be much more dovish. Markets, equity markets will probably trade very quietly. Nd more importantly the boj meeting next week. The question is, how do you find those uncorrelated assets . At bank of a look america multistrategy index one day percentage move, this should be the calm. You shouldnt see big moves in the kind of correlation, sean. We do see a go if pickup involved . Good l, its a really question. Unfortunately Global Equity markets have been gripped for the best part of the last 1824 months. Tend k the places you do to hang out or hide in is probably in places like in the market. Te share possibly also in parts of korea and taiwan. Even i would probably suggest asian as well. They have got large accounts, foreigners dont own very much of their bond market, and a degree of immunity to what weve seen in terms of Monetary Policy. Countries have been loosening and cutting rates in rate in of the fed rates over the last year. Theres an independence of Central Bank Policy compared to feds. Sean i was talking about this earlier today. Fact that for the him this isnt about the fed. Ecb does t what the with qe. You mentioned the quiet tantrum a month ago. About were reporting today the boj is looking to consider to tweak all abandonments from bonds. Vernment how critical is that going to be for you in the coming week . I think its really important. I would take away from this and ecb meeting is that the implementation of further negative deposit rates is off the table. That really has been a big rally for banks. Secondly, the Central Banks want flexibility at the long end in terms of issuance. I think having a range of duration that would suit the and secondly ultimately this has got to be forgiveness inbt which bond jgb issues go out 00, 200 years and almost into perpetuals in order that the debt is counciled. Thats really the realistic from all of this. And i think what youve just mentioned the Halfway House boj in terms of the ultimate policy action which is debt cancellation. Sean, you mentioned potential strength in china. We got some numbers that were encouraging. Outperformance from the chinese economy overnight. Fundamentals at this point take over or are the voices coming out of the central markets loud that the will only respond to those . Very l, i think its a lot of time t is spent analyzing the commentary. The second largest central bank also produces quarterly statements. If you read between the lines what the pboc has been doing, doing its own back door qe. Its been as tkra mastic as what e have seen in the bank of england over the last 18 months. Its just been very quiet and very subtle. Easing policy that china has done has been incredibly good for the economy. Provided e for mouse amounts of liquidity for the corporate sector and what i is a big big eing change in solvency. Worry about uge indebtedness of companies. In s been slowly receding china. Got quite a big regime shift also being taking place there as well. You also brought up global banks. What weve seen is that global versus say local utilities have started to perform. Thesis hold sway if we do see the boj step back on its to purchase assets . Well, i think whats happened japan in the last three weeks is very subtle. Brought us into this collapse of yield curves in negative and he positive rates. Theyve been the first to see a yield curve. The and thats really led this sort of rally in financials. So i think what the boj is saying to the rest of the world having its not good flat yield curves and, clearly, the pain has been taken in the Banking System in japan has been very very deep. I think that theres been a 180 reversal in opinion there. As i said, we probably are now oing to see this yield curve stablize in japan be steeper for lot longer than perhaps the markets have assumed maybe 12 months ago. Sean, thank you very much for being with us today. Darby, jeffreys chief Global Equity strategist. Alix and look at some movers in oil. Oil is down. Having flat yield curve seven years later. Okay. Oil. Today down bymove about 2 . You see this drop off. Eia, iea saying the surplus ill last longer than anticipated. Part of that is due to more supplies coming online. He other part is really due to weaker demand. Year low in two part because in india and china. Demand, as g market well as the developed market demand really taking a back seat. Hat having an impact on oil related stocks. If you look at european oil stocks, theyre getting hit a here. E bit shell off by about 1 . Here in the u. S. One of the premarket movers is anadarco. Million elling 35 shares in order to buy some assets fromep water freeport deep water gold. This will add about 5 billion cash flow over five year. Going to use that to fund some delaware in the basin. Not the debt market. Really interesting trend in the guys. Ale, lets get an update on whats making headlines outside of the business world. Emma . Thank you, alix. Endary clinton is trying to speculation about her health. The democratic president ial andidate is suffering from pneumonia. Video sunday appeared to show her almost stumbling as she was by staff and van secret service agents. Clinton told cnn she was overheated, but when she sat and had some water, she felt better. On husband spoke last night charlie rose. More than one occasion over the last many, many years same sort of things happened to her hen she just got severely dehydrated. Shes worked like a demon. Not only secretary of state and is a senator in the year since. Can watch all of charlie rose interview with former president bill clinton tonight bloomberg at 7 00 p. M. Eastern time. Planes were sent to send a message to china. Flew over south korea accompanied by south korean fighter jets. The u. S. Pacific command said it a show of solidarity. Several days after north koreas test. Nuclear weapons the cease fire in syrias civil war appears to be holding. Activists are on monitoring groups say there have been only minor violations. Truce was brokered by the u. S. And russia. The goal is to last for seven day. Sraeli warplanes struck syrian artillery positions. Israel said antiaircraft fired missed. Planes but global news. 24 hours a day powered by more than 2600 journalists and in more than 120 country. This is bloomberg. Thanks, emma. Up, taking down the hawks. Brainard gets the final of the september meeting. From new york city, this is bloomberg. From new york city this is bloomberg. Debate where ke the Federal Reserve governor cold water on the potential for a rate hike. The asymmetry in the conventional policy tool kit would lead me to expect policy in favor ed somewhat of guarding against downside to raising ve wraeuts to guard against up side risks. Message potentially for the fed hawks. The dove on the fed continues to dovish. Thats a surprise. Lets bring in the professor of economics for harvard. Why are we surprised that a doves a dove . Well because weve been seeing others in the fed system titan. Towards eric rosengreen, head of the williams of the fed, these guys the signaling that maybe time had come to tighten. There was speculation that brainard would also move in that direction but no no. Month of the march, Stanley Fisher came out and said inflation pressure weres to emerge. They were beginning to stir. Ael brainard said completely the opposite and risk went to the downside. She won out. Out again . A win i think the fomc just keeps excuses not to raise rates. They did that at every meeting year. Stan fisher and jackson hole had the same message, the time has start tightening. The people who dont want to the en just dont see adverse consequences of running ith zero rates or long the curve. Lets talk about the adverse consequences. Where are they right now . I think there are two things. One is the inflation pressure. Inflation doubt that is rising. If you look at core cpi which is the feds chosen number, but if you look at the core cpi, 2. 2 . P if you look back a year ago, it 1. 7 . Omething like so its beginning to tighten because the labor markets are markets are duct tight. But as a practical matter, this. You look at its been a long time that youve had really low rates. Really had a problem with inflation. 2. 2 inkphraeugs historically is not a problem. That they see al metric risk if they raise theyll be blamed for it. Absolutely. Thats a Political Risk for them. At some point they have to do there to do. I think their strategy is to keep rates very low. They raise rates by 25, 0, 75 basis points over the next 12 months, rates will still be exceptionally low. Theres going to continue to be on inflation. E i think theyre heading higher rate of a inflation so that once theyve otten to, say, an inflation rate of 3 , 3. 5 , thats when short term k up the rates. Why do they want to do that . So that if the economy turns cut those rates. Right now theyve got no ability rates if the economy goes soft. They would say theyre just and trying to anticipate the problem that theyre gonna face if the down. Y turns but i think the other thing that theyre missing is all of the effects of investors reaching for yield. A serious thats problem. Once these markets turn and long start to move up, theyre gonna be a lot of folks who get because they have taken Duration Risk at very low rates. T we see securities which idea, is the fed and economists like yourself able to appropriately model actual u. S. Growth . Appropriately . Probably not. Know is if they keep Interest Rates real Interest Rates negative, which doing, if they keep real Interest Rates negative, inflation is just gonna keep creeping up. It doesnt have to get to the kind of scary numbers we had a ago. E of decades if it gets to 3 , 3. 5 , then respond, push up rates and that will put them in a position. Its a risky strategy. One thing the feds proved is asset values up. They havent shown they can get the economy growing at a more brisk pace. A problem with the transmission mechanism . No. Did conomists, they really bring about recovery. We wouldnt had qe, have seen the kind of growth and prices. Anism was asset so the whole strategy was to upve up equity prices, drive home prices so people felt wealthier. And if they felt wealthier they spent money. So they can produce 3 , 4 real measure it, y we but they can and have been able to drive down the unemployment drive up the economy. Us. Youre sticking with coming up, what a donald Trump Presidency could mean for growth. Economy and gdp could be gang buster. Plus later guggenheims scott joins us with his big call on the u. S. Ten year yield. Professor of economics at harvard is with us. There is some rhetoric out there that if trump is elected president there will be a huge ever us unlike we have seen since fdr. Do you buy that kind of potential . I dont think we have any he would do as president. I dont know anybody who is about economics. So i dont think we can project any of those things. Interesting though is republican president ial nominee talking about major stimulus not in the conversation has been budget, deficit reduction. Weve seen gdp continue to rise as gdp continues to kind of fall. Happening . Gdp is not falling. Debt to gdp has been stable for the last few years because of he sequester, because of tax increases. But now its rising again. Nd its projected, weve ratio. D our debt to gdp doubled it. That white line there is the debt to gdp and blue line is gdp. Ent see the white line going up. I dont see the case for the line declining. Rising. Gdp is its rose 1. 5 in the first half rate. Is year at an annual its projected by most experts to rise more than 3 going the next quarter. So what is your prescription for growth . Moral bus growth across the country . Is it stimulus . Doing tax d be reform. That would help. There are various market reforms do. T we could i think ab licensing. Licensing is a serious barrier jobs, moving ging from one place to the next. Hats grown dramatically over the last decade. So we ought to be reexamining of and trying to roll some that back. Is part of the issue though that we dont know how to more . Re u. S. Growth any we dont know how to measure productivity . Is that part its not a question of nor more. Problem. N a perpetual there are two things that make it hard to measure whats appening to real growth and to productivity. But he government tries, doesnt get it. One of them is quality improvements. Seeing day were improvements in the quality of the goods and services and yet captured in not our statistics. Nd new products, things that are adding real value. And again, we dont see that in statistics. So as i have been studying that imf recently in detail and convinced that we are just substantially underestimating doing. L were and i think and that also overestimatingre inflation. Should dea that the fed 1. 8 when from 1. 6 to we probably cant measure plus or minus 2 . Nutty. Ust there you go. Marty, really good to have you with us. Feldstein, y professor af economics at harvard university. Your upbeat view. All right. Coming up, it is a Journey Towards 1 . Guggenheims chief guggenheim Investment Officer with a 250 billion under management explains how we get there out of the ten year. This is bloomberg. This is bloomberg go. Markets. T a look at the globalry right now futures negative. We take another leg low in the of minutes. It was just in positive territory. Dax holds steady. Fx market yesterday, weaker story. Today flipped on its head. You have a bloomberg dollar that story up by 0. 03 . Iea. Headline is from the thats set to persist. Percentage two points 45 handle wti, 47. Bonds market if youre suffering from rate hike took a lady who took stress levels down. Leal brainard, taking out the fed hawks ahead of next 21 fed september decision. But for me, theres another big decision that day. Boj. The the big question is what do they do with their Asset Purchase Program . Me is the e behind yield curve. This one here where the long end yield curve starts to come up and the curve itself steepens. Question is whether they extend the change the qe program that curve to continue to steepen. Weve been looking at this and reporting today here at the average range of maturities that they look at currently from 7 to 12. Adjusted or dropped altogether. Speculation, alix, is that the make a japan is going to change next week. The question is whether they continue to allow that curve to steepen. If they want more flexibility in order to do that, to help the banks as to help well. Heres the other news you need to know. Unexpectedly unchanged in august. Consumer price growth less than. 007 forecasted by economists. The rate though is still the late 2014. Ce both import prices and factory most since the 2011. And chinas economy strained. Factory output and investment all exceeding estimates. Industrial production rising from a year earlier in august. Over 10. 5 s climbing last month. And people are talking about the International Agency said the surplus in Global Oil Markets will last for longer than thought. Y persisting into 2017. Growth slumps d and supply proves resilience. Thats what you need to know at hour. David . Thank you very much, alix. Were going to turn now to the election. Days to go, our Political Team is focusing right ow on just what will determine whether donald trump or Hillary Clinton moves into the white in january. Our political reporter tells us central in the battleground states of pennsylvania, ohio an michigan. Equation up here. I didnt think i would be looking at algebra when i was politic. Take us through it. So every Campaign Looks at electorate in the same way. All these bells and whistles oing on, all these campaign strategies. Its this equation. Base voters. Voters that you know will turn out. They already support you. Then you have what they call the gotv or get out the vote voters. Supporters theyre less likely to vote so game. This is a turnout this is where ground out matters. Then you have independents, you have to change their mind. You add those up and you can hit your win number. Briefly apply this equation to pennsylvania, ohio and michigan. Political the analysts say donald trump has to win pennsylvania, probably has ohio. N so apply it to pennsylvania. Exactly. So what we did, my colleague sasha and i, we looked at the basic math of pennsylvania and e found that Hillary Clinton and the democrats have such an advantage there, that she coul