Transcripts For BLOOMBERG Bloomberg Go 20160915 : vimarsana.

There is an upside risk to the bank of england current forecast. You see that reaction in the market. Gilt still positive on the day come up by two basis points at the moment. The 10 year has taken a beating over the last week, a full basis point on the day pending 0. 91 , pretty much unmoved. Alix more data coming out. The boe sing the impact of august stimulus is encouraging in the secondhalf slowdown, maybe less severe. , but untilt more qe then, it is a wait and see data. Jonathan it is a longterm near nearterm longterm versus nearterm situation. You wonder what this means for the rate debate. I want to cross over to nejra cehic. Confusingt has been isnt the nearterm data points, the conviction around what would what would happen around and brexit vote. John come as you mentioned, we have had a sentiment indicators, the pmi rebounding in august after we saw them a head lower in july. That impact from brexit has been limited, at least for now. Economists change their views on whether the u. K. Will fall into a recession. A number of those pulling those back saying they wont. We got retail sales earlier today which came in better than forecast. It was a little bit of a decline on the not as much had been forecast. Weve got no change to the base rate 0. 25 . No change either to the quantitive easing. One thing that is key is we have seen policymakers indicate that we could see a rate cut later this year. That is what Bloomberg Intelligence was predicting. November might be on the table in terms of further easing. Sterling. On here is it has been unchanged for a lot of the day. It stays that way at the moment. Dropped some 11 against the dollar this year. This has been a part of the reason we have seen resilience in the economy. Weve got people like hsbc saying that sterling will need to keep falling for the economic benefit to persist. David so far so good as far as the u. K. Economy. Might see a downturn if it happens, particularly going back to 2008, how long a delay was it fortunate up in the economy . Nejra that is interesting that you point to 2008, david, particularly, because we are on the eight anniversary of the lehman crisis. Really, a lot of economists that i speak to say that it is difficult to say at the moment when we are going to see that impact fully from brexit. Certainly not before 2017. Looking at sterling, what i was just saying about hsbc saying it needs a sterling weakness to persist to see that healthy economy. If you look at options prices, they are suggesting that a leg lower in the pound cannot be relied on. The cost of hedging against losses is at the least this year. The sterling affect my becoming off. Who knows what the impact might be. At the moment, that 0. 1 growth in the third quarter, that is what a lot of people are focusing on as to whether we are going to see that and if that is going to impact future policy. Jonathan nejra cehic, thank you very much. The big the effects market and that big bearish call on sterling. Deeper, i want to get into the data numbers coming out of the bank of england. Englandbc bank of official, mr. Danny blanchflower. Danny, great to have you with us. I want to key in on this one line, the mpc, the majority expect a rate cut if the august outlook is confirmed. Do you think it will be confirmed . Danny that is a tough one. We have seen some resilience in the last few days, but the early survey done by the bank agents and others confirmed saying they expect to start to cut back on investments and the jobs suggests that we will probably start to see stuff coming in and the hard data. I like the fact that the mpc got its retaliation in first. It did not do anything until october 2008 in the great recession. We know welcome back the economy into a recession in april 2008. I think this is good news. Part of it in the expectations is people are seeing the banks acted. The concern is we will see slowing of the data in early days yet. It takes a wild to measure it. My suspicion is we will see some weakening in the data, as the majority of members on the committee is saying. Jonathan is a little bit of dissent here. The extra guilt purchases were not warranted. There is a narrative emerging in the hindsight, it is a beautiful thing. What is your message to those people . Danny it is pretty strange argument to say that youve put them into desperate them in too soon put them into soon. That we donow until not know the u. K. Entered recession until june 2009. It is silly to say we have to wait until the hard data comes in. The classic thing for a policymaker is think about the asymmetric risk, you do. Omething you did not need to things are better than you thought and you can reverse it later. That looks like a rosy scenario. Think about the 2008 scenario, you need to do something, you did not and things are worse. That doesnt make much sense suggesting they dont understand how you make economic policy. Risks are asymmetric, it is hard to see what the upside risks are. What the upside benefit to u. K. Is of having brexit and doing nothing. Looking back to 2008, it looks like they learned nothing. Data,if you look at the the reason it is better is the weaker sterling. How much more juice do you feel is left with the followthrough from weaker sterling into positive Economic Data . Danny the decline in the pound is having an effect. We may see it coming through a little bit more on import prices. We will see. Some of what we have seen is based, not just on what the bank of england has done, but also on the expectation. Mark carney signaled that it was coming soon. Members of the committee that i was just looking at is a saying if things are bad, we will do more. There is some sort of encouragement, but i think the worry is we will be sitting here and one day the shoe will really drop. Have some really bad data. There are many weeks ahead where we will be watching the data, and we will be hoping that nothing bad happens, realizing that the bank of england steps in if they are ready to do more, but they cannot do everything. We see what Philip Hammond can do to help them. Jonathan we wait until the end of november for that. Lets dig into the all to the mall. Lets dig into the thesis of the shoe drops. Thing tong the right ward off negative rates . Right they doing the thing to ward off negative rates . Danny i think it is silly to rule it out. Weve got other Central Banks that have actually used it. We dont really know what it does, but to rule it out does it make sense. What i say to my students is think about plus. 2. 2 . S that different from it probably isnt. Given that you are sitting at the zero lower bound, you do not have a lot of firepower. Ruling out things is a mistake. We have seen the move in Corporate Bonds and the shenanigans have to go through to tell us which ones they are going to buy. The markets are relatively limited. To say we are ruling something out is probably a mistake. We will see as we go down the road, but what can they do if things get really bad . I would not rule it out. I dont think it is appropriate right now, that it might be later. David playing out the options, its take the other side it lets assume that other side of it. Lets assume they dont get a lot of worse. A lot worse. On negotiations with the eu for breakfast thats for brexit, is that for brexit, doesnt that embolden them . Danny i dont think it does in the sense that we are probably not going to know what the brexit vote actually did. There are two parts to this a surprise from the vote. That had an impact. Bank of england ask. Then we have this test bank of england ask what will happen in the negotiation, so they are going to take a long time. If the news is good and we have , if the datadata continues to be good, that is fine. It takes a really long time to get the data in. Hopefully things will not be worse but dont assume everything is going to be wonderful. That is what mark carney and a majority of the mpc has done. For the first time in a long time, i support them. I think they have done well. Jonathan we are going to wrap this up with a question on sterling. The cable rates completely unmoved off the back of this. It has been a resilient and it is centered around 132. On the one side, we are seeing input costs surge. People are saying current account deficit, weaker pound, that is been that has to be the story. If youre interested, is that a problem for you echo danny problem for you . Danny i dont think is a problem. This is about expectation. Was there anything in the summary the market did not expect . No. Everything fully priced in. The concern is going to be there will be a day of very bad data. Then we will see. At this moment, steady as you go. Hopefully, this is the stepping in of the mpc is helping. It is too early to celebrate. We are going to keep doing this for a while. Jonathan i never celebrate. I dont know how to. Danny at least they acted. David Danny Blanchflower joining us from New Hampshire where he is a professor of economics. He is an important figure in his day. Jonathan he seems to be happy with what they have done. Unchanged the asset purchase program. Coming up, donald trump hits the big apple. The nominee will speak at the Economic Club of new york latest this morning. What will be his message to American Voters . That is coming up next from new york city on top of global markets, this is bloomberg. The British Government has approved a controversial Nuclear Power project. The u. K. Has signed off on a frigid utility edf basel to build two Nuclear Reactors in southwest england it in july, theresa may had unexpectedly decided to review the project. There was concern over the cost and over chinas involvement. The ceasefire appears to be holding in syria. The problem now is getting food, medicine and supplies to rebel held areas. Government troops and rebel forces are preparing to withdraw from one of the main roads leading into the city good Russian Troops would take over city. Russian troops would take over. Conservatives have backed off demand for an immediate vote of the peaking the head of the Internal Revenue service. He had been criticized for the way he handled an investigation into the irs loss treatment of conservative groups. A committee will hold a hearing. A vote is not likely until after the election. Global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. I am and i i am emma chandra and david donald trump is making a speech at the Economic Club of new york. He is expected to hit hard on his plan for Economic Growth which he says will, with policies he is promoting such as cutting taxes for individuals and businesses. Joining us now is marty schenker, bloombergs executive editor. We want to get to economics, before that a little bit of breaking news. Your times New York Times poll. What does it say . Marty it is a dead heat. It is like a did is like a restart. Hillary clinton and donald trump are tied and it plays into the narrative that this is going to be a close race. David lets turn to the economics plan for mr. Trump. We are going to be covering him on bloomberg and what has he said so far . Lets talk about taxes. Marty he has made the case and one that resonates that you need to cut tax rates for businesses down to 15 which is actually something the democrats have also called for. And cut individual rates, the top rate down to 33 . That will increase growth and some are projecting 4 which is double the current rate. David and how much is that going to cost us . Marty the initial proposal was costed out at 10 trillion over 10 years. Trillionome down to 3 but it is troubling to some conservatives in terms of Everything Else that donald trump has suggested he wants to do. How is the money going to come into the coffers . David how reliable are the Growth Numbers . Part of the way they got to the three chicken dollars is that is net of growth got to the 3 trillion is that is net of growth. Marty this is the whole question about how specific his proposals really are. Perhaps well get some clarity today, but dont count on it. So. D we hope mr. Paulson can push him. Lets talk about trade. That is something mr. Trump has been outspoken on. It affects Economic Growth. What is his position . Marty he will probably continue to hit the table hard on having to rip up the nafta and making sure tpp does not happen. That plays into his strength. We had the poll yesterday that showed him ahead in ohio and when you dig down into those numbers, trade is a resident issue for all of those voters who are voting for trump. David you make an appointment point. The New York Times poll is a national poll. It comes down to a handful of battleground states like ohio. What issues like taxes and trade deskor those key voters play for those key voters in ohio and michigan . Marty those Democratic Union voters are moving from the democrats to the republicans and are a source of strength for donald trump. A trade is one of the most important issues for those people. In those battleground states like ohio, florida, they make a big difference. That is where he is playing his cards. David is to trump is playing on dr. Ozs program. Is that behind him . Marty i dont think so. Hillary clinton issued a very detailed medical report. The pressure is going to be on him to try and match that. He is going to resisted. David that is marty schenker. Today, at 11 30 a. M. , donald trump will be speaking at the Economic Club in new york. We will bring you that live. Alix one of the major final economic reports the fed will be looking at before its anticipated meetings next week. If consensus is right, those retail sales might confirm a september rate hike is premature. This is bloomberg. Alix this is the only truck that is going to matter today. It is retail sales ripping out august and energy. Estimates are for rise of 3 10 for a rise of. 3 . The health of good consumer just the health of the Consumer Health of the consumer. What are july stumble, the inputs of this month . We are going to have a big data dump. Nine numbers that are going to tell us a lot about the economy. The most important number is going to be retail sales. Jobs slow down. The consumer hanging in there. I want to add one chart and that is im going to take wanting out, Building Materials because they get into gdp for a separate accounting method. You look at a control group. They have not been strong lately. If that turns around, then that is good news for the economy. The fed will be watching that. About not really worried it another big number, jobless claims, because they have been so low. Are. At where we saying tied aas Yellow Ribbon around the old ogletree. The last time the old oak tree. The last time jobs numbers for this low. He u k, was it alix at the heart of this is an issue of personal income versus personal spending. And moved down but spending the entire. We can see that reflected in the chart. Lois just lower jobless claims how that thats how can that support Consumer Spending . Michael wages have been going up. It is a slow increase but it is starting to pick up and we are seeing wages in salary pick up. It has been a slower development. I was talking to economists in atlanta and they said it seems to be happening. It is taking longer for labor markets to push waging creases into the markets. Jonathan very short question, if i am in the market, can i hit snooze at 8 30 . Michael i would not hit snooze because if you get some strong numbers, then the fed could possibly be persuaded. There are a lot of members who would like to get this out of the way. The question is if you are good enough, when i do it in september . It is not completely off the table. I would not not trade on it. I still favor the fed on hold. Alix michael mckee, kind of like an outlier call. Michael you have to be watching bloomberg at 8 30. Much. An thank you very coming up, u. K. Retail sales soft estimates. Chemical it brexit resilience. Reveals what is driving the u. K. Economy. From new york city, 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. Policymakers indicated there is a chance for a rate cut this year. Fall ail sales suggesting Consumer Confidence remains a resilient in the wake of the brexit vote. We will get you we till sales in about an hour. Swiss National Bank maintains and pledges to intervene in currency markets if needed saying the brexit vote has clouded its view of a global economy. That is what you need to know at this hour. Jon. Ver to market jonathan have a loss of their influence, that is the question. And head the cash open, futures. Arkets up. 25 europe, five days of losses, longest losing streak. At the moment, things pretty steady. The ftse up about. 25 . In the fx market, a bloomberg dollar index showing much action. The story in that even with ebay giving one, putting another rate cut on the table, the cable rate unmoved at 132. 20. The big story in the Asset Classesfiveyear yields coming in by two basis points. Guilds are taking a battering over the last week. The long and continues to tell that story in the u. K. With 30 year yields up. Check out this chart. This is treasuries, five versus 30 and the spread has been widening for the last 10 days. That wider spread the story is as follows good if it is signal, it is showing a market that is starting to price in a little more inflation, or is it noise . Which one is it . Next week there is a big question for this market. Will the boj allow the young market to pick . I want to know one thing, what is on the menu for next week . David dont we all . No,also know, today no, no. Today marks eight years since the Lehman Brothers collapse. Interviewed Elizabeth Moran on how she plans to mark the day. Is marking thee anniversary with a new push to investigate and the jail more than two dozen individuals and corporations for possible criminal prosecution. Tom keene is right here with us to talk about it. This is pretty extraordinary. Just to be specific, one of the people were talking about is bob rubin. He has not been secretary of treasury tom four years ago, sally taking an opposite task from senator warren could what is important is senator warren is correct and so is miss krawczyk. There is a collegiate debate on that societal field. There is a point where is enough is enough is miss crosschecked said years ago. On, you as time moves get to that point in every crisis we just cant look back. Question,s this wheres the line between an honest mistake and stepping over the line . I just interviewed Hank Greenberg who is starting his trial in southern manhattan. Tom this is the heart of the matter. I should be interviewing you. You lived the executive responsibility eight levels below you, you dont know what is going on. You delegate responsibility. The system is going through this at wells fargo. The senator warren point, there is a frustration that some people have not faced some form of multi. Some form of penalty. The ongoing debate dampens the executive spirit. David this gets back to politics. Elizabeth warren is a senator. She is not proposing legislation, she is using the bully pulpit. How much is she influencing a president if it happens to be Hillary Clinton . Tom there is a little bit of that. Think the article is great the next administration should investigate, or is there a fatigue from being 10 years down the road and moving on to other stuff . A look back thing which senator warren loves to do is has it is as you moves on pete we forget we are nine years moves on. We forget that we are nine years on. David it was a long time but on the other hand, it was a problem for the country and for the world. Tom folding it all into where we are right now, the uproar really outraged about the lack of accountability. At wells fargo, it goes to the medias take on executives should be responsible on what is going on in a 10,000 or 100,000 employee organization. David some people were motivating for this are really skeptical of business overall. Capitalism,ou love you will make sure it plays within the rules it tom within the rules. Tom the rules have to be there. Senator warren says rules were broken in response from secretary rubin, ok lets go through the process. I believe we did, right or wrong. The summary is simple, many of these people stayed out of jail. David a fascinating story. Tom keene from radio. You can tune in every day for bloomberg surveillance radio with tom keene and michael mckee. At 12 30 p. M. Today, Elizabeth Warren will be speaking right here on bloomberg television. Onathan thank you very much the big question in the u. K. , are we seeing some brexit resilience. The economy continues to shake off Political Uncertainty and the consumer continues to hit the high string. With us now is Peter Westaway could peter, great to have you with us. I want to key in on the headlines from the bank of england. A majority of the mpc expect a rate cut when the august outlook is confirmed it what is the risk of the august outlook . There mayaybe be some upside risk. The data we have seen has been on the side of stronger. I think there is a tendency out there for people to dismiss the possibility of a sharp u. K. Downturn or a u. K. Recession. As mark carney said i dont think they have been crying wolf at the bank of england. Still a lot of hard data to come out. Couldpossible the banks err on the pessimistic side. I dont think there forecast is a bad one. Maybe it will be a recession, maybe not. The big point is activity slowed down because of this uncertainty shock which is what the brexit vote has been so far. Withhas got nothing to do the longrunning implications of the u. K. Leaving the eu. This is all about uncertainty and firms and households spending less money. Alix what do you think of Market Reaction is when sterling goes nowhere fast . Junior guilt yield at session lows. I think the boe statement was in line with what people were expecting and what we were expecting which was given the tone of the it wouldve been inappropriate for the bank to have cut rates again so soon. For now, everybody is looking at the november meeting when the bank of england works on another report. Looks more carefully at some of this hard data which will come out. The data we have seen so far, a lot of it is on the soft side. The pmi, the people talk about them because they are hard indications of what growth is. They are not always very accurate. The magnitude of the slowdown is uncertain. The bondseems to say market saying yes, we believe you. Jonathan the other story here and i want to talk about the yield curve, we are starting to see some steepening across Government Bond markets. I want to isolate on builds is a thickly on builds specifically. Is that story starring to change . Always trying to base inflation into that curve . Course one of the consequences of the depreciation after the brexit shock is inflation will start to pick up. I dont think that is what is going on with the long end of the yield curve. Mediumterm inflationary prospects around the globe, i dont think there is any meaningful pickup in those inflation impressions here and we dont have enough of that, so i dont think that is the story. For me, the turnaround is what is an happening with the gilt market is more perhaps it got a little bit overboard. It has been a natural buyback. A natural ounce back. Back. Atural bounce jonathan peter, i think a lot of people would agree. I think a lot of people agree that brexit means brexit in people dont know what brexit means. Brexit means brexit and people dont know what brexit means. Peter brexit means brexit means what echo means what . There are two distinct possibilities, the soft version of brexit which has the u. K. Staying in the Single Market or the harder version where trade links are cut off. If anything, the political noises coming out of downing street is that we are going toward the harder version. I think as markets price in that probability more and more, we may see more weakness on the Exchange Rate and more weakness in the real economy data. Jonathan peter, great to have you with us. The cable rate finally finally waking up. A little bit of weakness kicking in. It is as if no one was watching. Up, oils oversupply expected to worsen as nigeria to this as Nigeria Energy stocks. This is bloomberg. David this is bloomberg. Im david westin. Dont miss Donald Trumps q a after his speech with the Economic Club in new york. We will be covering it live at 11 30 a. M. Alix heres your Bloomberg Business flash. U. S. Prosecutors are investigating wells fargo opening more than 2 million focus 2 million bogus accounts. Wells fargo has already agreed to pay 185 million to settle claims related to its sales practices. The bank fired 5300 people involved in the matter. Wells fargo is not commenting on the investigation. Apple is not disclosing how many iphone sevens it has sold that it says the iphone seven plus model sold out in the presale. Presale period. Says itngly, apple cannot be happier with the initial response. Bayer faces the antitrust review as prepares its takeover of monsanto. The deal would create the Worlds Largest chemical maker. Including the u. S. And european union. Bayer and monsanto dont expect the deal in till the end of next year. That is your Bloomberg Business flash. This is bloomberg. Alix permian is the best when it comes to shell but not everybody wants it like ceo bob dudley. Think for bp the obvious place for shale oil is in the United States here to those prices are a little bit pricey for bp. Alix Financial Assets might be pricey, so what about the stock . It is up over 49 over the last year while oil is down 5 , what it is where the most Expensive Oil shocks out there. Joining us now is dan dicker. Author of shale boom, shell bust. What have we learned . Alix you like shale when it wasnt even popular. Youre looking at that permian asset. What are you doing with Energy Stocks . Daniel i have been advising to be out of most of the shale players. We have seen this over and over. People get excited and in the valuations on those stocks did overdone. Stocks hit overdone. Everything that is west, the west side of permian shale, those stocks are well overpriced. Thatve some of these names are trading at levels when oil was at 70 a barrel. Clearly there is too much froth going into these stocks. Alix the money is now in the permian basin. Are you going somewhere else . I am waiting for this to readjust, because what is been happening thats what has been happening is the rebalancing that we expected to happen has moved further down the timeline. As it moves further down the timeline, it means the cycle oil will move further down the timeline. This is not the best time to get involved. We have made some great money when we bought shale in the spring when oil was down in the 30s. E saw a big rally at this point in the cycle, you dont want to be into these. Some of these guys that we thought who were going to be out of the business are coming back, names like sandridge. I never thought these companies would ever get back out of bankruptcy. There is a lot of money chasing shale. Alix Goldman Sachs is talking about this saying it is not just those guys but International Oil companies reengineering their products to make it viable at 50. That prolongs the rebalancing. That is my question for dan. What is causing this . Technology . Dan coats efficiencies have made a difference. We have clearly seen the return to break even for many of these shale places have gone down 10 or 15 a barrel. That is a big deal in terms of profitability. The truth is it has been more of a Financial Engineering play. Everybody knows that oil will rebound. They are trying to get ahead of the curve, in terms of a lot of private Equity Companies who have huge funds that have to put them at work. Alix billions and billions. Daniel must buy assets and are buying assets. Is you look at the overall alix you have nigeria, libya, production might be coming back. We have that relatively bullish number. It didnt matter for the market because it is all about libya and nigeria. If we do have an opec freeze, is a freeze even enough . Numbers, ordemand the acceleration of demand is shrinking over the next several years. That is going to play into it. Weve got the demand picture that is getting weaker and the supply picture is getting weaker. It is not that oil wont rebound, it must. That timeline of that rebound has gotten longer than we expected. Alix but is it the 45 world . Like to 20 back in the daniel unconventional drilling, that is what we really depend on. That only here but the gulf of mexico. The could you talk about Financial Engineering david talk about Financial Engineering. Is this a matter of the money not knowing where to go . Because of so many other alternatives that are so low in their yields. Daniel that is the game i try to play trying to find the value. Some places, there are good values to be had in some of these Oil Companies. How wipents of out the comment but the portfolio has stayed the same. So what you have done is financed turn the company into an acquisition project. It is not an oil company anymore. The stock price is solid. Alix you got triple digit oil next year. When do you see that called . Dan i am pushing it back. Im not sure because im waiting for a few more data points to come in. Barrelook for over 100 and oil in 2017 barrel of oil in 2017. Alix dan, great to talk to you. David it shows. Today marks the eighth anniversary of the lehman collapse. We will show you what has changed. That is next. This is bloomberg. Alix this is bloomberg. I am alix steel. If you had woken up eight years ago, would you have thought we would see these three charts that i will unveiled for you . You have lehman collapsing eight years ago. Central banks cut rates 672 times. Would you have expected we would see this enormous the seed from boj, the fed and the ecb . ThatBalance Sheet has grown over 3000 in eight years. The fed Balance Sheet is over. 4 put 4. 4 trillion. The ecb rising significantly to 3. 76 trillion. Unbelievable numbers that no one wouldve thought possible eight years ago. That had a huge effect on yields. When would you have ever thought we would see negative yields around the world . Swiss, allnds, the right about zero. This was the lowest, negative. 35 . They are moving higher but lets look at the trajectory these yields have had just in the past eight years. And tremendous move below zero cents 2015. If i told you about ages ago that we wouldve seen bank of americas stock at 15, you probably wouldve thought i was crazy. Some of the bank stocks from lehman have not recovered. City and bank of america some of the biggest. 77 , have not been in to recoup those losses since the fallout from lehman. Bank of america, a slew a similar story. An unbelievable move that we have seen. We have seen massive centralbank action again, Interest Rate cuts, 672 times in the last eight years. The fallout continues. The repercussions continue. We have to remember that some of those companies, shares and stocks have not been able to recoup those losses. They dont have a prelehman movement anymore. Thats prelehman moment anymore prelehman moment anymore. Jonathan when he pointed out the sides of the Balance Sheet, if i told you rates were going down to zero, we would still be debating a second rate hike and we only had one since 2006, i think most people would be amazed. We are going to continue this discussion. We will break those numbers as they drop. What it means for the fed . Missoulas chief economist coming up from new york. This is bloomberg. You in november the bank of england leaves rates unchanged, but sees a chance for another cut this year. The pound move lower. Datapoint, a feds bellwether. And donald trump goes before the Economic Club in new york. We look to his big day in the big apple. David welcome to the second hour of bloomberg. I am david westin with Jonathan Ferro and alix steel. Jonathan the big nondecision from the boe i will key in on this line the majority still expect a rate cut if the august outlook is confirmed. The augustconfirm outlook and in the next couple of months . Alix and can you do that when the data is good . We have seen yields back off. 30 minutes, the allimportant datapoint u. S. Retail sales. Auto sales not awesome. Gasoline prices not awesome. David looking forward to the fed next week. Alix absolutely. T minus seven days. We will have much more analysis on the boe policy decision and look at the Market Action with Stephen Gallo, but looking at the market, dow futures around the high of the session. Europe, aeven in little bit of a bounce. We are coming off the longest losing streak in june. The dax largely positive throughout the session. Mainly unchanged. Fx market market, the resilience of sterling. Down by one quarter of 1 . The bank of englands and a rate cut is still on the table. That is the message coming from the u. K. Economy. The vti with a 43 handle. The story in the u. K. , the long end selling off. The story of treasury, five versus 30. You have to go all the way back to 2012 for moves like that. And unbelievable move alix and unbelievable move lets check in with our bloomberg team. Nejra cehic is in london. Carl riccadonna is previewing the key retail Sales Numbers, and Brendan Greeley on donald trump speaking to the Economic Club of the morning, but the news the morning of the morning, so far, boe. Jonathan lets bring in nejra cehic. I joke, a nondecision. Has a change their view on where the economy is headed, or is it still too early . Nejra i think it is still too early. It is what economists expected. A rate cut at some point later this year is still on the cards according to what boe says. They did point to the fact that we had some betterthanexpected data for august with pmis rebounding off the drops in july can we also had retail sales data today that came in better than expected. What they said was it was hard to gauge the longerterm prospects for the economy. This is the thing if we look back to the crisis of 2008, and it is timely, because it is the anniversary of the lehman crisis, it took a while for that to set into the u. K. Economy, and a lot of people are saying ,ith the you u. K. Economy the impact of brexit, it will be the slow burn. Were not seeing the full impact yet. The key take away is, yes, unchanged. We have the prospect of a rate cut. The lower bounds was close to zero. A lot of people saying perhaps 0. 0 0. 1 for the benchmark rate. We got no surprises. But it was interesting that there were a couple of dissenters saying look, the data in august and not warrant the extension of qe, though they did not vote against it this time. Jonathan thank you very much. Datapoint around the fed Carl Riccadonna joins us on what to expect that 8 30 a. M. August car sales pretty weak. Gasoline prices also down. Not good for gas station sales. What can we expect . Good morning. Retail sales not that poised for strong sales in august, which is troubling for the thesis of consumerdriven growth in the back half of the of hit we had weak Overall Economic performance in the first half. We are banking on consumers to extend the expansion into next year, when we have stronger contributions from things like business investment, government, and housing. Nonetheless, if you look at retail sales, we are looking at a headline to climb. Vehicle sales down about 5 in the month. Gasoline prices down about 2. 7 in the month. That says gas station sales should be lower as well. We have to focus on the details x retail x autos retail autos, x gas. Kind of retail sales number do we need to see in the next few months of the year to get to the 2 target . Carl sure, if we want to get the 2 growth target, we need to clock gdp gains of about 3 in the two quarters in the back half of the year, and that means retail sales likely have to be coming in at a 4 annualized pace in the current quarter. That is basically double where they stand given the outcome of the july retail sales report. Alix thanks so much, Carl Riccadonna, chief u. S. Economist for blooming intelligence. Who will benow watching it closely, donald trump he has a big event on economics here in new york city and he will be at the new york Economic Club. First he will deliver remarks, and then he will answer questions from john paulson. We want to go to Brendan Greeley. As we look for to this event at the new york Economic Club, what are the most important things we should be looking for in what mr. Trump has to say . Brendan one thing to keep in it is wherenue finance ministers come to lay out plans. Tom keene is a number of this august institution. It is saying something from the campaign that he will layout what it looks like that what im looking to hear is how he is going to pay for it. Trump gave annka interview to cosmo magazine yes, i am quoting cosmo, where he said he will show what he plans to do with the tax code to get rid of the exemptions. This is where the rubber meets the road. They always say they will get rid of exemptions in the tax code. Them out. Lay i am looking for how he will pay for it. By some estimates, his old plan would cost 12 trillion. He updated it, and now they are more in mind with republicans in congress. They will cost 3 trillion. The question is what they will get rid of to pay for it. David you cover politics as well as economics. Take us into the politics of what is going on to whom is mr. Trump trying to appeal, and what is going on with the battleground states . Brendan that is the right question. We have two Different Things going on todays speech the appeal is donald trump wants to give permission to responsible republicans to vote for him. Look, we have a plan were going to the new york Economic Club. Watch what we are doing for mainstream republicans. As far as the battleground states i do not know if that has to do with what is happening today at the new york Economic Club. That has to do with his trade policy. He is doing a better job of giving republicans permission to vote for him. Who knows what is going on in ohio we have seen are up, down, and he is back to tweeting out poll results. David thank you very much, Brendan Greeley, reporting today from washington. Today at 11 30 a. M. Eastern time, Donald Trumps q a with john paulson after his speech at the Economic Club of new york. We will cover that. Lets look at headlines outside of the business world. , chandra. , chandra. Emma the massachusetts democrat Elizabeth Warren wants to reopen the investigation into two dozen institutions and corporations referred to the Justice Department for possible prosecution. That happened in 2011. She calls the lack of prosecutions outrageous and baffling. Later today, we will talk to senator warren. That is a 12 30 p. M. Eastern time here on bloomberg television. The British Government has approved a controversial Nuclear Power project, signing off on a proposal to build two Nuclear Reactors for 24 billion in southwest inwood. Theresa may had decided to review the project. It was concern over cost and chinas involvement. France whileident lots is the future of europe is at stake because of brexit and other crises. He met with german chancellor Angela Merkel in paris. Global is 24 hours a day global news 24 hours a day powered by more than 150 journalists in 120 countries. Alix i want to look at some european banks these big investment banks actually like qe because it ends up being better for bond issuance, and higher valuations did not give that qe push from the boe. Barclays has 10 of assets in sovereign exposure. Lloyds, 7 . Rbs, 5 . More qe better in some ways. China is ons vacation the rest of the week. Markets are closed today and tomorrow. That is good news for the casino stocks. You will go gamble in a cow. A cow is looking forward to the house macau is looking forward to the holiday weekend. We also want to look at your biotech special this is a small company. We do not typically cover it. It had a huge market cap jump from 550 million to 900 million just today. Reduces pressure on your eyeballs. That is having a huge pop in the p market. Nonetheless, it is all about the retail sales coming up. Jonathan full coverage on bloomberg. We take it to the fx martin the most bearish trade, short sterling. And make sure to tune in at 10 00 a. M. Eastern for interview and laborminister party leader jimmy corbyn. Jonathan from new york city, this is bloomberg. The fx market we go sterling is week after the bank of england kept rates unchanged and play pledged another rate cut is in the cards. In the market, it is the biggest, bearish claim trade on a global fx. Shorts on sterling have climbed to a record high. Theyve started to come off. Are the bears about to capitulate . Join us from london, stephen theo, and in frankfurt, head of currency research. David the data over the last month, yes, one month, but it has been steady. It says they are ok. Sterling,ars for the are they going to capitulate in a big way . Yes, youre right, short sterling is a popular trade. We reckon it is about 70 of the max for that side of the trade. So, it is going to inhibit downside, but our preference over the next three to six months is looking to sell rallies in cable. We do not want to be long sterling as article 50 is invoked, as the brexit negotiations get moving. We expect that in the First Quarter of 2017. Jonathan david, is that the trade for you as well yes, short, but at the end of the day, sell the rallies, sell the rallies is that the trade for you . David what has changed is you need more patience for that. To see what is driving this trade, it is not that the bank of england will introduce negative Interest Rates. It is really the structure of the u. K. Economy and the u. K. Economy is massively dependent on Foreign Direct Investment flows. The longer the brexit negotiations take, the longer the u. K. Has time, actually, to shock. To a possible so, longterm, this will become an issue with the current new policy by the u. K. Government. The u. K. Probably has more time to adjust to this new environment where direct investment flows are not so plentiful, and something has to give to adjust, here, these external imbalances the u. K. Has. We think it will be the currency, but probably not for the next three or four months. Weis rather a longterm bet have here, and you can use the rallies to petition for this longterm bet. Side, theon the right bank of england has given us a floor, a little bit above zero. We can make a basic assumption on the rate side of things. On the structural issues, the vote to lead to the the eu this leave the eu, it sets it to around one. 30. Can you give us more color as to why that has happened . Mr. Gallo it is right. There is a weak position. We will get more 30. I would point out a couple of things we do not really know that big Foreign Investors in the u. K. Have simply fled. We know there was a lot of demand to hedge gdp asset exposures in the runup to the referendum. The hedging flow probably picked up as a result of the referendum, and i would wager a pretty educated opinion that one of the reasons why cable fell was the hedging flow. But we do not have significant evidence yet that Foreign Investors have left the u. K. In droves, and, in fact, as you pointed out, the data for july, august, as suggested that they should either. You have to consider that the boes actions on Monetary Policy support asset prices. We have our floor in cable on a basis tosix month about 1. 26, 1. 27. Reboundat, we expect a to take shape around the summer of next year. We only think that 1. 20 in pounddollar in cable will come into view if there is Something Like a hard brexit, or if the u. K. Does not get its negotiations wrapped up favorably before, say, for example, the german elections next year. 1. 26 four. Hen has a to what extent have the markets overreacted to the political rhetoric leading up to the vote . There was a lot of strong rhetoric rather than clearheaded analysis of the economy. Mr. Kohl there has been definitely some overreaction. You can see that. It is probably not unusual. This outcome had not been expected by market. The currency is, probably, the most liquid component you could play. Nevertheless, going forward, really to find the exact number for the bottom of the sterling rate, of the cable rate, we really need to wait for the numbers. That is exactly the question we need to adjust analyze how much, actually, of these direct investment flows will dry off. I am not saying all direct investment flows will dry off. I think the deal that will be negotiated is cousin turn on the financial industry. Most of the Classical Service industries, and also the goods industry, might not the effected, and the deal might be favorable for the u. K. , Stephen David kohl gallo, youre both sticking with us. Reawakenedility has in the fx market. Find out what currencies are at risk. Plus, chief economist of Mizuho Steve Ricchiuto joins us. That is all ahead. This is bloomberg. Alix this is bloomberg. I am alix steel. The global bond selloff should be having an impact on the fx market but it is a little dicey. The white line, u. S. Rates, climbing higher, but the dollarin, stuck. If anything, the yen is stronger. Lets bring back Stephen Gallo and david kohl. To see a we continue bond selloff, at some point, rerate yen need to lower . Mr. Kohl yes, at some point the yen could profit, but if you look at rate differentials between the u. S. And japan, we should we should adjust for inflation differentials. That means real Interest Rates are going down. Is going inflation down, so real Interest Rate are actually rising. On the real side, the picture is not as cap symmetry as on the nominal side. This has to change. When the bank of japan acts more forcibly and can revise inflation again, this might weaken the yen again, and this is what we expect in the coming weeks. Alix it is a great distinction real rates versus total yield. When we look at the market selloff, one dramatic application has been a pickup in market volatility. Emerging market volatility in fx has been much stronger then developed market fx. Do you expect this to continue, and what is the big loser in that . Mr. Gallo well, we really are very much sidelined until the fed decision is out of the way. If the fed does nothing which is what our house call it call is, no rate hike it is likely that late september into fory october should be good yield and carry. What i would say in the time being in the runup to the fed decision is i do not think you want to belong carry either in g 10 or the emerging market space. Although our house view for the fed next week is unchanged, i think the market impressed implied pricing of around a 10 15 0 chance of a hike chance of a hike is probably too low. I think the odds are probably 50 50. I would not look to be long yen for yield plays in the runup to the fed decision. In david lets bring a talk to me about offsetting softer dollar story with a euro that has been used as a carry trade anyway. What does that mean for the eurodollar, a remarkable currency pair going nowhere . Mr. Kohl for the eurodollar, it is also a dollar story. Will notxpect the fed act in september, but definitely what they will do it if they will prepare the market for rate hikes, and they should be enough to drive the dollar up. Lets see if eurodollar will suffer from that. Our guess is yes, it will suffer as well in the next three months. Alix gentlemen, thank you for your time. Tephen gallo, david kohl still a lot of disagreement in the fx market. Jonathan it is a proper market. Coming up, u. S. Retail sales, will it surprised analysts and put a hike back on the table . Will it, really . From new york, this is bloomberg. Jonathan from new york city, kswissbloomberg go. Of the board and i will give you the other pictures and the other Asset Classes. A rally ahead of this number, twoyear yields coming in, 10 year yields coming in by 10 asus points. The dollar softening up 10 basis points. Alix retail sales if you back out audio auto. That is the theme we saw back in july and much less than estimated. The estimate was for an increase of. 3 . The other key number is the Retail Control Group has direct input into gdp. That is down by. 1 . July was revised even lower, down. 1 . Was alsoll number down,. 3 . Any in point area you look at, this is a disappointment. Jonathan lets get the kneejerk reaction in the market, yields rallying. Yields going down a couple of basis points. Junior rallying. 10 year rallying. E traded 0. 73 treasuries rallying, yields coming in. That means a softer dollar story off the back of what is happening on the yield curve. Beginning with the dollar index, we capture that story, we are softer by. 1 . Eurodollar, now positive on the session trading at 112 at 1. 1273. Alix initial jobless claims coming down to hunt 60,000 jobs, little higher than the previous week. The labor market Still Holding strong. Have potential inflationary data. Producer price index, if you back out eludes back up foods, year on year coming in 1 . Inflation holding. Creep, higher. Not significant today and it is all about those retail sales. Jonathan surely this takes september live. David it gets harder and harder to take it seriously. We are going to get more reaction. She covers Consumer Discretionary and steven ricchiuto. He is a chief economist. You have thoughts this would be a disappointing number. Steven it is a difficult it is a disappointing number for the fed. It shows the acceleration that the people want is not playing out. 2016 is going to be one of the weakest years we have had in four to five years it that is a disappointment 45 years. That is a disappointment. Even though the fed is not tightening rates, shortterm Interest Rates have both moved up. That is doing a lot of the feds work for them. David and does make it harder to get to that heart of the hockey stick that is going to come up. It is going to come up in the second half. What are we looking for now overall for the year . What does this tell us . Well have a growth number south of 2 . In around the range if things do well which i am not sure they 1. 75 . We have been running a closer to 2. 4. I think we will be well south of that for 2016. It is not going to set the stage for dramatically stronger 2017. Jonathan i am looking at 20 charts. Low function on the bloomberg, 20 . They try to leave open the window december could be rate hike. The problem is will they have the data to get there to do it. I dont think they will. That becomes a part of their problem. They have a real consistency issue. We have been talking about raising rates for 36 months. They have only raise rates wants. The markets have done a look like a lot have done a heck of a lot. There is the question of whether or not they go to do something again like they did last year. The ramifications for the market for that will probably be less than they were last year but still being measured. Alix stephen, digging into those retail numbers, in year on year, we have an interesting trend. 16 eating and drinking go up 5 . Department stores down 615 meaning the trend we are seeing in retail sales is nothing new that we are not known. It really supports the retail earnings we have seen recently for q2 and i think it does not bode well for q3 and going into the holiday. A soft environment, driving traffic, really through promotion at any strength that you saw came at the expense of margin. The hundred pound gorilla, amazon, that is taking share. That of the other big issue is going go to christmas, that is the really bigs. Big spend time. Does this bode well with what we are looking for . Foreshadowit does some sort of weakness heading in it will be less strong going to the holidays the people anticipated. It is important for retailers to think. Butsaw strength at walmart, that makes sense to me because youre seeing weakness of luxury and markets trading down. A two. 5 gdpave growth target that means people had retail sales of 4 . Were not going to get that anytime soon. Have you rewritten your gdp growth . Steven were looking at real growth we are looking at real growth at 4 . We need a pickup in the second half of the year. The big concern i have is the automobile manufacturing manufactures coming to a recognition they cannot push sales more. Then discounted so heavily and over the water at the front end of the curve, the costs are going up. We have seen the best strength we are going to see is a go through the balance of the year. David lets talk about businesses, there is an idea that somehow this is going to pick up. You dont buy into that, do you . Steven Corporate America is facing excess supply. There is no reason to buy inventory. You dont have consumers out there. Even look at the surveys from most of the major companies, more layoffs than they have hires. Something is going on in the labor market data between the payroll numbers and what we are seeing in corporate behaviors. I think there is a discrepancy in the data. Hiring and a lot of lowwage jobs. Youre not getting the bang for your buck in those employment numbers of the claims numbers keep on saying. That is the problem for the fed. It argues that we are not going to get inflation acceleration. David square the numbers for me. Job growth and wage growth, youre getting paid more money across the country. Retail numbers, where is the money going . Steven even though it is not devotion inflation, real estate taxes are going up, fees are going up. The amount of money you are paying for health care, because bloomberg is basically shifting that cost of health care from them to you to draw up their earnings in a single digit environment. We are seeing loss less takehome income given where we are in employment and wages. That is being reflected in sales. Part of the problem we have is this need for high returns on a threemonth basis. Against the environment that we are in in terms of costs. The costs are going up. There is no upside Revenue Growth to profits are being squeezed. It is just a downward spiraling cycle. That is the biggest problem we face that people just dont get. That is when the Federal Reserve they are making the biggest mistake they could ever make. Alix it seems like the market is like in the old bad news good news scenario. Cima, your area of expertise, take a look at personal income versus personal spending, yet income has been rising somewhat, but it doesnt match the rise that we have seen in Consumer Spending. Youre looking for a weaker Holiday Season but at some point that is going to roll over to match personal income. Seema i agree with you. Even those that are employed are not confident that if they left they would find another one easily. Savings rates are high. People are spending what they could spend on credit. People are nervous to spend. You dont want to buy things unless you know they are really on sale. That hurts the retailers at the bottom line. What does that say about equity markets . Steven the problem with the equity market is is it expensive is it is expensive. Will Interest Rates rise in order to make the market going to a correction phase . The answer is no. I expect the equity market to in the year you much where it is. We are going to have a little bit of a roller coaster. Hopefully we get a correction so you can go back and buy on the i would not be buying on the 2year note . I think that is exactly where we are. Going forward, what is going to be the pivotal data point that we are going to need to see . David that is the question. Seema it is going to be the retail numbers coming in. You start seeing people reporting. It will give you some color. Steven we are going to look at the Payroll Employment numbers. There is a breakdown in the auto Sales Numbers, it is going to go into the retail Sales Numbers. Is going to go into the gdp numbers and that is going to be a problem. David ford yesterday was not very encouraging. From mizuhod own securities. It has not slashed and more than four years. What it needs and what it means for the fed and your investments. Check this out, shares at apple moving higher at of open looking for a fourth day of gains. They closed at a fivemonth high yesterday. More go is next. This is bloomberg. Alix this is uber go. I am alix steel this is bloomberg. Donald trump speaks to the Economic Club of new york. We will bring that q a at 11 30 a. M. Eastern. U. S. Prosecutors are now investigating wells fargo for opening more than 2 million bogus accounts. That is according to a person familiar with the probe. Wells fargo has agreed to pay 185 million to settle claims relating to its sale i could just. The sale fired 5300 people caught up in the matter. Wells fargo is not commenting. Tim is setting up a pimco is setting up a legal battle. Leaking leaking confidential information to the media. There is a Court Hearing tomorrow in california in which he accuses tim of forcing him to resign. The missions scandal keeps weighing on volkswagen vw lost market share for a 12th straight month. The Company Still accounts for one quarter european vehicle sales rose 9 in august. Vw up more than 6 . That is your Bloomberg Business flash. Jonathan i want to get to this mornings meeting. Here is what i am looking at. Were looking at the spread which has been wider over the last 10 days. A street we have not seen since 2012. It is a wider spread, a deeper yield curve. Joining us is Martin Hegarty, black rock head. Great to have you with us on the program. When it was flattening, i was told there was no signal about what it meant for the economy. Isnt there some signal there now . Is there some signal there now . What we aretin seeing is a potential recalibration of policy as it relates to the long in the yield curves where we are expecting news from the bank of japan next week that we believe may have the potential to stephen japanese yield curves which have been a good bellwether for global yield curves. Once the boj adopted the negative rate policy alongside the qe program that they have, it has created a tremendous global scarcity for long data, highquality assets which has led to significant yield curve flattening across the globe. I will finish the thought at the same time, that has been accompanied by a decline in longterm Inflation Expectations. Part fundamentally driven in part technically driven given the demand for assets. What we are seeing is we are getting a weak pricing of longer data Inflation Expectation higher in line with this recalibration of policy. Jonathan on the recalibration of policy, does it make a difference for you . Lets have a starting point. Does it make a difference to you whether they allow that to happen by adjusting the average maturity in their portfolio . Or they allow that to happen by calling the front end and taking deposit rate deeper into negative territory . Martin if they continue to take the front end to take the front end deeper into negative territory, that has a bigger impact on the currency. There are probably going to do a combination of think they will recalibrate purchases will allow the yield curve is steep and, perhaps by eliminating the ban that they are have been targeting reducing the focus on the long end of the curve. By continuing to take the front and lower front and lower, alix ch cheaper yen when you look at what Morgan Stanley has been expecting, the scenario playing out in japan. It is overdone and was we get willthe boj meeting, we see buying at the long end of the curve. Martin it is a question of finding the right level. I am of the opinion that the bank of japan wants to recalibrate the yield curve something along the lines of where it was in japan in january of this year. When you think about the ramifications that it has four other global yield curves, when combined with the ecbs decision last week not to announce an immediate extension of qe, i think we can continue to see a reduction in the negative term premium that has existed on the back end of yield curves. Alix it has locations here it has implications here in the u. S. As well. Jonathan the question i would ask you, what does it mean for your strategy at the moment . How do you express it . Where werweight think that term premium is significantly repressed. Other of right other we have been inclined to keep overweight positions in over the trajectory of inflation is underpriced. Jonathan is the air will conviction is there a real conviction . Martin inflation pressures are there. They are not running away but there is still a tremendous amount of market dislocation that the is pricing in. We are pricing in one rate of headline cpi for basically the next 10 or 15 years. Along the lines of 1. 4 when you look at the feds inflation target, in terms of the cpi equivalent, that is 2. 3 to 2. 4 . Were currently priced 100 basis points below that for his hot for as far as the eye can see. The pimco, the strategies of the world, that seems to then become the trade of the next few years. Martin what we experienced is a substantial diversification or ft in the supply demand which has resulted in some extreme valuation moves over the last six to 12 months combined with the decline in Energy Prices that we have had, reducing the immediate need for inflation insurance. The longerterm value is there. When you asked about our position, we look for areas of markets where we can harvest risk premium or sell negative risk premium. The negative inflation risk premium priced a long global rate curves right now is ready compelling opportunity is a pretty compelling opportunity. Jonathan Martin Hegarty of black rock. On the back of a soft retail sales it is a front end tour with the front end rallying. David . David coming up, distortions in the bond market and negative rates are affecting liquidity around the world. We show you with charts what is happening. That is coming up on bloomberg. David alix im looking at liquidity in the japanese bond market. This white line is super long. This blue line is liquidity in the 10 year. What we have seen when the boj introduced negative rates is liquidity actually rose and the superlong and. And e at the superlong end again. It is pushing liquidity down the duration curve. The difference between these two is ¥1 trillion. The liquidity in the superlong, it really speaks to the potential where you want to go long. You want to buy the short end and sell the long and. That is where you can get the return. An interesting distortion. If you do see the boj buying more it is going to push the liquidity even further. There is a lot going on. Mine is very simple. Sometimes simplicity sometimes simplicity is nice. Looking at the long versus short in the s p 500. This is a good way to capture where people are, how they are feeling about markets. As this line goes higher, it is above one, that means you got net long position in terms of futures contract. That line is at the highest, roughly since about the beginning of the year. If you take it back, we are almost at levels back to the mid2013 which is a pretty bullish time to be in the stocks before the earnings erosion that happened over the course of 2015. You have to think about why that is. You would think all that we have had, it would be somewhat surprising but this will be important as we going to events like the fed. We got boj coming up. Basically what this means is when you have this kind of asymmetry were people are bullish, that brings it brings up the idea of the outside. It is going to be pretty important. Jonathan Bond Market Liquidity and we talk about noise signaling the market. When there is no liquidity on the benchmark 10 year, what is the curve telling you. The story this year was no liquidity. I cannot keep up with what is happening with the jgbs. David oliver does have a chance because i like olivers head oliver is the winning is the winner. Jonathan we will talk about this coming up in the next hour. Alessio de longis will be here. A soft retail sales performance. Alix we are 30 minutes from the opening well in new york. I amomberg alix steel with Jonathan Ferro and david westin. , that is retail sales for august if you back out cars and gas. Jonathan the first loss. The story for fed is as follows september is not live. David we keep getting soft numbers from the u. S. Economy and yet stocks are up. Futures are up. Alix it was a bad news is good news kind of scenario and the curve continues to stephen. Stephen. Penn steepen. Expect fed to not hike rates anytime this year and we will ask how he is going to allocate. Jonathan futures were decent, they were stronger but we have rolled over just a bit. We stayed positive but marginally. At the moment, the ftse positive but only just, about one third of 1 . In the fx market, ready much unchanged on the session. A little bit of a rollover. The cable rate, the pound is weaker as we traded at 1. 32. The bank of england keeps another rate hike on the table potentially in november. In the bonds market it is about the last few weeks and a curve that continues to steepen. Both on the front and and the long and. The long and selling off, yields higher by two basis points. Checkout gilt in the u. K. , 30 year yield up by seven basis points. Is it about pricing in inflation or is it about the asset purchase programs in japan and the eurozone as well and trying to work out what that means . Alix i truly have no idea what the means what that means. In the u. S. We are focusing on the retail Sales Numbers. In sporting goods, up 1 premarket. 20 higher than consensus. Oppenheimer sees them scooping up competition as sports areority and golf net going. The problem here is outdoor and sports, they see a tempering of sales. Outdoors is about 59 of vf corp. Sales. A downside of the retail environment. Casino stocks taking a run higher. Vegas, they, las were higher for trading relatively flat right now. The idea is that china is on holiday so they are going to go to macau and the casino stock started inching their way higher. Abigail doolittle joins us at the nasdaq and in europe, mark barton is in london. Apple adding points to the dell for three consecutive days and continuing to climb higher. It is amazing, apple popping higher in the premarket and set to open for its fourth day higher in a row, the longest winning streak in more than a month. The initial quantities of the eye plus the iphone seven soldout, consistent with reports there is very Strong Demand at sprint and tmobile. Digitize was saying the orders were much better than expected so lots of bullish news. We do have apple set to open at 82016 high. Apple may be trading higher but soaring and the premarket, airing first articles. Met thisma drug follows an initiation of coverage at Raymond James with a strong buy, making Elliott Wilber look like a genius in that we have the shares of airy pharmaceuticals set to open near record highs. Alix mark barton joining us as well. Futures off the highs of their session and a similar story in europe, equities rolling over. Mark you have the ftse lower, the dax lower. If we close lower today on the stoxx 600, that is the longest losing run since february this year. That tells you the extent of the declines we have seen since last thursdays ecb meeting. , which now has a for somethe problem investors is he was the former cfo in 2010. As a man from the past want to be responsible to turn this Beleaguered Bank around . Shares down. To the bank of england. As john put it very nicely, sterling lower against the dollar. The expectations remained that be a we will cut rates later this year if the economy continues to perform as it is. It also said today the data is better than expected and the second half probably will not be as bad as expected. I want to get to eurozone cpi, it is still low and probably way too low for the ecb,. 2 . The target is 2 or just below. When is the ecb going to hit its target . Will it achieve it by the end of druggies tenure . Tenure . Is alix most people jonathan most people doubt it. Disappointing u. S. Retail sales, that is the news in the United States. Joining us now to break it down is peter bain, ceo and president of the firm managing 250 billion of institutional caption a. Your first thought . A kind of settles the conversation about what is going to happen next week. If you extended a little further , i tend to think about three core components driving the overall activity in the states. It is an intersection of public activity,re political private sector core economic activity, and regulatory activity which is the fed. At different times in the cycle different corners in that cycle dominate. The reason i was thinking about this, was the combination of the anniversary of lehmans bankruptcy coupled with trumps speech today, we have an interesting point with the regulators are going to be, a little less relevant i think for the next three to six months. They keep saying they are datadriven and i do not see a lot of meaningful data that will change the scenario for the regulators. Core activity in the economic and private sector, a little bit soft sales but nothing disastrous. Fineobs report tend to be although the improvement is on the lower end of the wage scale but that helps mitigate inflation. I do not see dominant data coming out of the private sector that will create meaningful imperatives. That leaves us with one critical component that happens to be the public sector, the election. I think what trump does today is worth paying attention to, not that he is always worth paying attention to. Anythan how do you shape kind of Investment Strategy around that . Peter i think you try and be very careful. The reality is, the markets were calm when they thought hillary was sick. I think the market is nervous about that now and what you might see, and from my perspective, if you have an uncertain election with a one a wellknown candidate that people do not trust and an unknown candidate that people are scared of, you design an investment scattered strategy rooted in that it rooted in volatility. This is of interest to us as active managers. Volatility is one good Stock Selection could reemerge and you generate active output for your clients in a meaningful way. That helps on the active side so you may see a resurgence over the next six months. David i wonder if we have a little more certainty with the election in the sense then we think. We are going to have a new president and a new president wants to make an impact on the country. Both of them are talking about spending some real dollars and borrowing some real money to do it. Doesnt that affect the markets come january, february, and march . Peter if there in merges a consensus that it will result in greater deficit, absolutely. The issue becomes, what is going to generate and drive those deficits . The anxiety on the trump side will be the cut issue and what does it mean. Is it the rise of David Stockman . I think the argument over dynamic scoring is an interesting one in terms of calculating what his plan is going to cost. The old investment banker that i keep buried within myself creeps up every now and then. He is building a discounted cash flow set of projections for Government Spending and is trying to weigh in, but that is ok because look what is going to happen with all of these tax cuts. Alix if you take a look at volatility on the bloomberg that green line is what we saw a month ago and the orange line is now. Really right around the election, you are still looking at a fixed under 20. Do you feel like the market has really rated to the possibility of a Trump Presidency and uncertainty . Peter no, i think with they are what they arehink rerating is the impact that the presidency can have, regardless of who is elected. We do need to remember the genius of the founders and the constitution in that there is a lot of checks and balances. I think what they are rerating is what happens in the house of senatorial elections is going to be more important than a customary president ial election, because i think what is readjusting, whoever is elected i think the expectation is they are not going to be able to do as much as they might because the congress will be on high alert. I think that is what is being related. Alix peter bain, ceo and president of all maam. Omam. Donald trump will outline his plan to cut taxes to individuals and businesses today. Feel it cut that top Corporate Tax rate from 35 to 15 . It would lead to 4 annual growth according to an advisor. The foundation says his plan would cost the treasury about 3 billion. You can watch him on bloomberg tv starting at 11 30 eastern. Trump and Hillary Clinton are virtually tied in the latest poll from cbs news. In a twoway matchup among likely voters who support or lean toward a candidate. When thirdparty candidates are included the race is tied with trump and clinton backed i 42 of likely voters. Global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Jonathan thank you very much. Coming up, another read on the u. S. Economy. U. S. Industrial production numbers for august. Alessio de longis will be joining us as we count you down to the cash open, 17 minutes away, futures positive. Jonathan from new york city, this is bloomberg. I am Jonathan Ferro. A slew of data in the United States, Industrial Production softer than expected, nero. 4 . Negative. 4 . Manufacturing production month on month for the month of august comes in at 0. 4. The previous month was 0. 4 as well, revised lower. Surprise, Industrial Production, u. S. Retail sales a downside surprises all as well. 33 and s p 500 futures positive three points. Seem to be numbers pointing to a softening of the u. S. Economy. Joining us is alessio de longis. Welcome back. Take these numbers we just got out on Industrial Production, including the retail Sales Numbers. How important are these . Alessio they are very important. In and of themselves they are not my favorite indicators that combines with my favorite indicators that came earlier this month, the nonfarm payroll report and the hours worked, those indicators seem to be more leading. It is all showing a pretty clear message that the u. S. Economy has passed the peak of its business cycle. It is clearly in a slowdown phase and that has good news in the near term because of consequences for the fed, but it is a reminder of what we have been discussing for the past year, that the economy seems unable to really meaningfully accelerate from here. It we are decelerating and is difficult to sustain these kind of equity valuations without meaningful Earnings Growth coming from the growth side. David the nearer term effect on the fed, september off the table entirely . Alessio absolutely. David what about december . Alessio we remain in the camp that there will be no hike. The dilemma remains between what the fed should do and wants to do. Whole debate about the fed, the fomc is split between the need of a preemptive hike versus the need to be in that data camp. We tend to very much by the argument from bernard where we do not see the risks being that compelling for you to go with a preemptive hike. Lets assume inflation were to surprise you slightly to the upside. The phillips curve is very flat to nonexistent and it would be easy in this low grumble growth environment for the fed low Global Growth environment for the fed to do catch up on hiking. Jonathan how do you express this in the bond market . What happens to the asset purchase programs in japan and running Monetary Policy hard and what that means for the curve . Do we see that continue to play out, this steeper curve, or is this a blip in what has been a five to 10 year flattening story . Alessio it is an interesting question and i have thought about what might be going on. It is my impression, i do not have the actual proven empirical dence, but my progression impression is that this yield curve is steepening. We know the boj has no desire to bear steepen the yield curve. They want to lower the short end and hopefully keep the longer and stable so that on the margin they have more flattening and lower bond yields at the bottom. Why is the yield curve bear steepening across the current steepening . I wonder if the markets are waking up to a possible repricing of fiscal policies globally. As we get closer and closer to the u. S. Election, german election, italian referendum, and some political hurdles to discussions about fiscal policy, as those doors get open you will have a monitor a marginal resteepening of the curve. Jonathan i want to discuss what you just mentioned about the bank of japan are the ones who maintain where we are at the backend but drive the front and lower. They will deliver, i andk they will do nothing next week they will do quite a bit of time of delivering their comprehensive assessment. That will give them the possibility to basically prove that in europe negative yields have been a good thing. Real Interest Rates are falling, and they will probably hint at some changes in the asset purchase program, some sort of different operation twist to get more buying in the value of the curve and less the longer and of the curve with issuance and buying that is coming from the lifers and pension funds, take care of itself. Jonathan you wonder if they will get the fiscal stimulus in. Alessio de longis of Oppenheimer Funds. Could the Oil Supply Glut worsen . Libya and syria are planning to boost their imports. We are nine minutes away. Alix we are putting oil as the future in focus, holding near 44 a barrel. Heres a map that tells a good story. Yesterday we got relatively bullish inventory numbers and this is a chart that tells you why. This is libya and this is a tanker headed to libya from italy. It should make for later on today. This is very key. The National Oil Company of libya saying they can Start Exporting Oil from three of its key reports that could add 300,000 barrels of oil in supply, 600,000 barrels in about four weeks. When you look at nigeria, you have shell and saying they are going to pump and export from nigeria and they were not before. Are we seeing more oversupply coming from opec . Joining us from the cme is phil streible. We are going to have an opec nonofficial meeting in about three weeks. It is a freeze going to be enough . Phil i do not think so. I would have expected volatility to continue and a little bit of a relief rally. We have a top in crude oil your the 48 to 49 level. Right now we are at the 44 level but i do not think it will hold. Traders are performing preparing themselves for a washout lower. Opec has been greedy, they are continuing to export. Most countries are in dire budget situations so only the big players like saudi arabia can come out and try to support market, that i really expect prices to push back below 40. Maybe at that point the fed disappoints in the coming week and we start to see that push back up. Alix we had jeff currie of Goldman Sachs saying we are also seeing the surplus being pushed out to the deficit we are waiting for might not happen because you have big Oil Companies reexamining their projects and making them viable at 50. When does the market start to rebalance . Phil not until below 40, i do not think at all. It is going to take the fed dropping the ball on this interest hike. Just see a little bit of growth and i think the stock market will be the catalyst to lift oil prices up. Gasoline supplies are starting to build as well so oil prices, the path of least resistance, are lower. Alix phil streible, thank you very much. A few minutes away from the opening bell. Jonathan futures stay positive, up 36 points on the dow. The s p 500 down up 1 10 of 1 . Week data, Industrial Production and u. S. Retail sales. What does that mean for the bond curve . It is going steeper but has been driven by what has been happening at the front end. The cash open is up next, this is bloomberg. Jonathan this is bloomberg go. I am Jonathan Ferro. Futures positive in the United States, of about 34 points. Threeres positive about s p futures positive about three. The story in the United States is soft data. Industrial production, manufacturing, and u. S. Retail sales are down across the board. Here is the situation in the other Asset Classes the yield curve on treasuries continues to steepen. The expectations of a move in september come out of the market. The curves deepens, treasuries rally at the front. In the fx market it was a softer dollar story. Or see on dollaryen, one 2. 46, we are unchanged 102. 46, we are unchanged. Lets strip back the equity story. Alix it was also a story of stronger u. S. Equities that that appears to have turned just a touch. All Major Industries are relatively flat but weakness across the board. Is 2121 on the s p, the 100 day moving average. We might see a particular washout in terms of technical positions but we have not reached that level. The s p closed yesterday at a twomonth low, continuing a bit of that softness. Lets take a look at apple and twitter, apple higher by 2 . Will not bene seven available for walk in customers. It does not indicate how many phones were sold in preorder, but nonetheless, enough to help the stock. This will be the fourth day of gains, adding 69 points over the last three days. Helping keep the dow lifted and helping with the nasdaq. Twitter moving higher, over 1 . It is the first nfl game stream tonight. Jonathan is talking about, it is the story across all of markets today and it has to do with the steepening of the yield curve. This is the story. The spread widening for about 10 days, about 127 basis points. The idea the fed will not hike any time soon, you buy the front end, but because they are not hiking perhaps that pushes up expectations Inflation Expectations down the road. Those yields back up. You hear pimco echoing this strategy, selling out there treasuries and buying inflation linked bonds. We have not seen this kind of spread widening consecutively since 2012. Guess what happened . You saw primary dealers offloading a ton of securities to the fed, 30 year bonds to the fed, a very different scenario. Coming off thee back of some very tight spreads and that is the story. We have gone from a bull flatten or to a there are steep and are in the last couple of weeks. We have just discussed the yield curve and we talked earlier about this what this bears the been needs for the market steepeneepen bear means for the market. Phil we are not adjusting alessio we are not adjusting as a result of this bears deepening. The main view we are expressing is more related to the cyclical dynamics i alluded to earlier. We see this kind of disconnect. A cyclical drop off where in develop markets growth is lower. More Earnings Growth seems very limited. On the other side we see increasing Risk Appetite and increasing Risk Appetite especially going into credit and emerging markets. We play that dichotomy exactly in that way. As we have expressed in the past, we like it emergingmarket equities as our primary way to get equity exposure. We are underweight particularly with europe and we like credit, high yield and loans. It is the type of environment low volatility, poor growth, but policy support. It is kind of a no news is good news scenario. Where you can be aggressively risk because you do not have a catalyst at this stage. It is a bit of a status quo scenario but with low volatility, there are still attractive yields. You want to be neutral too long risk in some pockets of the market. David if emerging markets are where you like to go for the risk, how do you handle fx risk . Phil we take it in an active manner alessio we take it in an active minute. We do not hedge on a systematic basis and we hedge what we want to hedge, and we take exposure or increased fx exposure to where we want to take them. We separate the equity and currency decision altogether. Alix when we do have a selloff of global bonds we have the yield curve steepening and you are taking the risk. Do the yields elsewhere become too appealing that you do not need to take the risk . Moreio it creates opportunity i think in some of the solid emerging markets in ,he sense that the appetite from a japanese point, there was a flood of money into e. M. Whether it was directly because of japan or as a result of japan buying mostly treasuries and fixed income investors buying emerging markets. That is more the flow we have seen. One investor crowds out the other. With this repricing of the jgb curve, some may stay and you may get some weakness in emergingmarket yields. We see them as Value Creation opportunities because again, if we are right we do not see this bears deepening being much more severe. We still believe these are normal corrections like the ones we had in march last year went bunds sold off. We remain generally in the low yield environment, low growth, low inflation or the scarcity of safe assets is compelling so the demand of the private sector remains there to support treasury yields globally. David when you go into emerging markets, you have geopolitical risk that varies among emerging markets. Where do you find that risk appealing or acceptable, and where do you get nervous . Alessio the geopolitical risk is particularly priced and valuations of any asset class. You also see directly in the implied yields of currencies so it is by no surprise that countries like turkey or south or the geopolitical risk is the strongest at the moment, that is where the yields are. Especially with the case of south africa, many currency. Aluations metrics seem cheap it is a judgment you have to make. The risks are there and that is why the yields are there. You say, and i paid to take the risk . Risk is there and the question is, at what price am i willing to take this . And further we also want to see some signs of the cyclical backdrop is supportive. With a very shortterm horizon of how to play the week ahead, if we see next week from the boj that they are actively looking for that curve to steep steepen butissue they pummel the front end and take rates deeper into the negative territory, is that positive or negative for the banks . Alessio it should be positive. It should be a net positive for the banks. It is really hard to say because usually they will touch all sorts of conditions and layering mechanisms so one has to really assess what part of the Banking System and how much will be impacted. I think there should be an environment of, or should not be a very disruptive environment, especially because they have done a very good job of signaling this in the past few days. David thank you so much, alessio de longis, Oppenheimer Funds portfolio manager. We will look at what todays u. S. Retail Industrial Production numbers mean for the years growth output. Apple is on the way up again as a continuation of a story from a few years ago if you days ago. They are going to help drive the dow up. David this is bloomberg. Im david westin. Ating up, Elizabeth Warren 12 30 p. M. Eastern time on bloomberg tv. From new york city, this is bloomberg. We are 12 minute into the trading session in the United States, the dow marginally outperforming the s p 500. The s p 500 largely unchanged off the back of some pretty soft data in the United States. Manufacturing, industrial numberion, and a soft from retail purchases. On the nasdaq, positive one quarter of 1 . Lets head over there with Abigail Doolittle. Rie pharmaceutical shares are soaring since their glaucoma drug at a critical point. They have reversed the year and the stock is up 40 year to date. Bear shortageh this year of about 18 . Also trading higher are the shares of bluebird bio. Analysts saying that two platforms within the company are likely to intersect. Higher, acorn on an upgrade at Piper Jaffray to overweight. That volume trends are positive, putting the business on sustainable footing, something that everybody wants to hear with the stock down about 25 year to date. Alix Abigail Doolittle joining us from the nasdaq. Throughout the morning we have been getting major data releases ahead of the feds next meeting. The big one, the large delay equine in retail sales. Carl riccadonna joins us. Do we need to rerate our growth expectations for the back of the year . Carl Consensus Forecast for gdp is just below 4 . If we look at the quarterly change in retail sales, in the headline number we need to see about 4 growth to hit the reasonable expectations of hitting the Consensus Forecast. We are running below 2 right now at 1. 8 . That tells me that in the coming days we will see analysts lowering their expectations. Some are even looking at 3 plus gdp in the second half of this year and that does not seem tenable. In addition to retail sales you had Industrial Production out also corroborating this notion that it is still a sluggish economy in the second half. Alix we have seen september rate hike expectations move lower but does this move december as a question mark as well . Carl i am still in the december camp. Since the last recession we have seen only three quarters where Consumer Spending topped 4 . In the prior two quarters, consumers paused to catch their breath and it appears that is the case again now. It creates real questions as to whether we are accelerating to trend growth were better on a sustained basis. If we are not doing that, fed has to ask why they need to be tightening policy. Jonathan september 21 the statement comes out and you get to write it. What is the message . Carl the line from chair yellens jackson hole address sums it up perfectly. Basically, the case for former policy nominee normalization is strengthening. You acknowledge the economy is underperforming and that is where you needed to be for a september rate hike, but you are confident that things are moving in the right direction. It is just taking longer to get there. David not all retail Sales Numbers are created equal and the Fourth Quarter going into christmas is particularly important. How important is that . Carl it could come back. To save q3 puts a heavy burden on the september report so that does not seem likely. David q4 . Carl it is possible that what we need to focus on his Household Employment income simply is not accelerating. I mentioned these two prior quarters when we saw 4 or better Consumer Spending and then they paused to catch their breath. Income growth is simply not strong enough. If you look at aggregate Income Growth which we always focus on on jobs friday, it is decelerating slightly, not in a way we should be raising the red flags and panicking but we should be looking at that data and saying and less Income Growth is excel it is hard to see a sustained pickup in Consumer Spending. Thought a few months ago we would have seen personal income move higher to match the spending and now it seems that spending will meet the lower income. Carl spending will be constrained by income and you will not have an income acceleration until you see some faster Economic Growth. I think all this is coming but it is certainly materializing more slowly than a lot of economists have been anticipating. Alix to put it nicely. Jonathan september is dead, Carl Riccadonna. Coming up is bloomberg markets. Mark do we have a show for you . The former ecb president will join us on a day that inflation in the eurozone is stuck at. 2 . Is he going to hit his target . Mr. Draghi, by the end of his tenure. Rlie bean ball join us charlie been will join its. Calling for fiscal measures rather than a focus on Monetary Policy. Then we are going to talk to robert burrow, Harvard University president of economics, ranked as one of the most influential economists in the world. We are wrapping it up with jeremy corbyn, the leader of the labour party. We asked when should we invoke i think we need to set out with the negotiation position as first and the government has not do that done that. We have had conflicting statements between the brexit sector and the prime minister. Mark david, beat that. It but icannot beat will rise you a trump. Donald trump will be talking about his tax plan in a couple of hours and the economic benefits he thinks that plan might give us. This is bloomberg. David this is bloomberg. I and david westin. Donald trump is talking to the economic hall of new york and he will be taking questions from john paulson. He is expecting to hit hard on his economic land. Brendan greeley joins us from washington. Still with us is Carl Riccadonna. Set the stage for us. Whats currently looking forward to hearing . Brendan he said he is going to release how to pay for it. He released his childcare plan but there is a small footnote in aboutan where he says, two thirds of the entire Tax Reform Program will be offset by increases in economic activity. The remaining one third will be offset by minor changes in the current trajectory of federal spending, excluding social therity and medicare. Question is, how are you going to pay for this . It is two thirds smoke, one third mirror. David there is an issue about how you calculate this net cost and how many assumptions you can make about future growth making up in volume. What do economists think . Carl it is the way it should be scored. You cannot take the absolute price tag, you have to consider the economic implications, but it is extremely difficult to model these kinds of changes. If we are looking at underlying indicatingojections gdp accelerating toward 4 , that does not seem likely in an old industrialized economy like the u. S. If we are looking at 4 gdp growth i would say these price tags might not be very accurate. David you have to look also at trade because mr. Trump has some strong views about trade and what that might do to gdp growth. Carl we have heard lots of rhetoric about renegotiating trade agreements and import tariffs, but we need to see some hard underlying details to assess what the implications will be and we have not gotten that yet. I think today will be more focused on tax policy. Point you could have fiscal stimulus that we 1930st seen since the but we still have protectionism rhetoric from trump and clinton. Brendan what carl is talking about is dynamic scoring. The problem with dynamic scoring is that there is nothing inherently wrong with it. We should be calculating the effect of our policies on growth. The problem is, dynamic scoring has been pushed by republicans in congress for years now and what it means is they calculate the effect of tax cuts on growth but do not calculate the effect of spending cuts on growth. Any economist will tell you these both have an effect. And you really have to get into the weeds and argue about whose multipliers are reusing, what kind of benefits do you get when you increase spending and decrease taxes . We could all sit around and discuss this but it does not seem to be part of the political conversation. I do not see anything that is actually going to point out the scoring effect, the ultimate future dynamic effect of these changes in trade policy. Up,dan carl following the dynamic scoring is important and if you cut taxes people have more disposable income. It works all along the curve until you get to a point where the benefit they simply fades out. The point here, if we are talking about a massive bump up in military spending and also these other social programs he is pulling for, you cannot get the money to pay for that just through these dynamic adjustments unless you use some really inappropriate assumptions. You want a big expansion of government you need a big expansion of tax revenue. Trumpdo not miss donald speaking at the Economic Club in new york. We will be covering it live, 11 30 a. M. Eastern. Coming at 12 30, we have an interview with massachusetts senator Elizabeth Warren and later, Stephen Schwarzman will join bloomberg at 4 00. 26 minutesonathan and, stocks marginally positive in the United States and a bond curve that continues to steepen. 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. It is a clock a. M. In new york and 10 00 p. M. In hong kong. Iron julie hyman in for vonnie quinn. Welcome to bloomberg markets. Julie we are going to take you from new york to london and cover stories out of washington, germany, and brazil in the next hour hour. Bank of england policymakers said it is a chance of another rate cut this year. Anniversary of the bankruptcy soon, we look at year wasare 8 financial crisis. Wall street is dipping back into risky crisis era security. Julie golfsmith becomes the next victim as the sport o popularity of the sport begins to fade