pretty bad. Imf world bank, not many phones. Not many planes. Tom we have news right now, this does continue on, we are now indicating challenges. German confidence is actually very very low. Emerging markets and also because of the influence that russia is having in the middle east. Expecting 6. 5. Tom you see that in futures as well. You see it in yields. Breaking also getting news from volkswagen, so they are progressing 1 billion a year. Tom vonnie quinn is in new york. Vonnie good morning. There has never been anything like this in the brewing industry. Sab miller is being bought by ab inbev. One out of every three beers sold will come from one company. In china, imports are now on the longest losing streak, they fell for the 11th month in a row. Plus, domestic demand in china has been falling. There are reports that Russias Embassy has been hit by fire. A Russian News Agency says there was damage but no injury. There is report of Russian Military action in syria. A newrland is imposing leverage ratio on the companys biggest bank. They will have to have capital equal to 5 of total assets. Has easier terms. Berkeley is searching for the ceo and it has led to another u. S. Investment banker. Former jpmorgan banker jeff isly is now just daily now favored to be the ceo. Back to you in london. Tom thank you. Lets look at equities bonds. We have seen a major change here in the markets this morning. 11, 10. E seen a jump on Interest Rates in the last two days. Doing an american data check in london, that is strange. Churning, your is see it much more in the red, but showing the eurodollar 1. 13. We are the correlation of some fix allenges with the vi yesterday in the u. S. , we sawx. Oil give way. It is now 50 a barrel. There is so much to catch up on here. Most of the markets are links to economic eight. This means two things. It you willbly, probably have to wait to raise Interest Rates, and it also means that the u. K. Is not growing as we thought it was. Tom we do need to speak to a guest who is better than good on economic growth. Better than good on economic inflation. He won the nobel prize for humility. [laughter] lets bringing the expert of a professor and welcome christopher p Cerritos Christopher is a rights. It is still unclear as to whether this is brought in by energy or whether this is something more worrying that is underlined the fact that we havent had inflation. To worryer i used about inflation, but im not really worried about it anymore. It is lower than the target rates, i think that is what the Central Banks should try to get to, 2 , sooner than they are doing now, especially the european bank. Generally, they dont seem concerned. They needtion burdening with responsibilities and bring it over to government. While robert spoke about this years ago at the London School of economics. Where is the will for some form of constructed stimulus . Way, we are in a worse than that. Had we had done it six months ago or a year ago, i would say we did need stimulus, but the central bank works hard and pushed as much as they could, it as much as they should have done, but they didnt. So now we are in a position with mostloyment with industrial countries in the world that we shouldnt push it anymore now. Let me bring up a chart on u. K. Inflation. Lets show the rate of change. It is down below the zero level going back to 1988. This makes David Blanchflower look good. It makes a lot of economists who are not inflationistas look good. This may be the wakeup call, right . When you look at growth and you look at the markets, there were some of the markets that were third checks in terms of balances, and because of all this qe the market hasnt been at this third check. So maybe when you look at the lack of inflation, it means the government needs to do something more. Christopher whether we like it or not, markets will be rising tightly. Talk whenduring this suddenly government came in and theyre losing policy, there will be confusion in the market. We dont know if this is a trend to yet, i doubt it is a trend. Management versus pushing the economy quickly. Expectations,age within the economic model that you and many others use, is that model broken . Do we have to go to a different equation or reaction function to jumpstart what society wants . Christopher i wouldnt say the model is broken. The model does need to be extended to bring in more emerging markets, they have become much more important than they used to be. Two financial factors, which we learned at the last tom we learned a lot about the financial factors in the model. Do you know where the riskfree rate is right now . Francine is there a riskfree rate . At the moment . News is that the u. S. Treasury is positive this morning. Are you concerned about a policy mistake . We do see so much risk out here and the imf people were nervous. Policyre nervous about mistakes and emerging markets, a lot of debt issued to china that we dont know what it will become, what makes you nervous . I am nervous about policy mistakes, im saying that is maybe why it is time to lose the policy now. That our economy, especially in the u. S. And the couldour economy stabilize close to zero inflation, qe and unemployment rates are high, lets wait. In the European Central bank, i would continue qe. Three hoursd spend with this professor, but lets go back to oil and the animal spirit of the moment. We have a wonderful surveillance for you today. Theing us in a moment is chief strategist Stephanie Flanders. And david folkertslandau is with us later. From lender with from london with vonnie quinn. This is bloomberg surveillance. Tom i am trying to stay abreast of what is going on in new york. All i know is that mr. Utley state in the dugout last night. Of course the grievous injury to the shortstop is galvanizing new york. Vonnie quinn is there with the business flash. Debt indell will add to order to take over emc. As part of 867 billion agreement, they will put in 3 billion in equity, and management will put in 1 billion. Another sign of a slowdown in china. Since 2012. Ate the Chinese Government has caught a tax on car purchases to revive the market. Anheuserbusch in bath has agreed to buy sab miller. They rejected several earlier offers. One out of every three beers sold globally will come from one company. Francine, back to you in london. Welcome Andrew Holland. Great to have you on the program. When you look at this deal, this does make sense. Did they overpay for it . Andrew i dont think they did, no. I think most of us who have been writing about this have been 4345 pounds as the likely share, and we have come in at 44 pounds. That is a reasonable price. It goes to regulatory and shareholders, it looks like shareholders are on board. Regulation . You have to big antitrust issues in the u. S. And china. There is a mechanism which will sort that out, which will enable course to enable control for the jb, they are the only realistic buyer of that. Out, ies sort itself make it sound easy but it im sure will be reasonably straightforward. How, at a premium, is this transaction . We estimated it down at 17. 2. A staple or discretionary item . Andrew it is a staple. [laughter] tom most consumers would agree. Range we have had a wide , the deals between 15 and 17 times, those have been emerging market overly deals, so thinking about mexico. Tom i just dont get it. That is the big regulator he issue. You will not have budweiser miller in the same portfolio. Course too to coors. Tom what are your favorite beers . Christopher not those. Something with more punch. Thinking this go sour. Christopher a real ale from a good english pub. If you go back to the debt is huge, it could be as high as 70 billion. Andrew yes, it is. The banks love lending to this industry. , it allins are high stacks up. Tom it is a slow in rate debt . Is that going to kill them down the road . Andrew probably not. I think initially it will be a with whatthen judging happened with anheuserbusch in 20082009, they will be looking to refinance. That weld you advise have to make this to survive, i might being too cynical . The executives in this will make themselves very wealthy. We saw this earlier, we just have combinations. He is speechless. Francine what tom is trying to but we are m a not sure it is for the right reasons. Should we be worried that we have big groups coming together at this time when we may see higher Interest Rates . You should worry about the macro environment and , more of theeneral corporate moves without worrying about you should be looking beyond the shortterm. Christopher pissarides, thank you so much. And Andrew Holland on the beer transaction of the moment. Boggle the mind. Tomorrow, one of the great optimists will join us. He has been a persistent euro optimist. He does reassert that in his weekend note. From london in new york, this is bloomberg surveillance. Francine welcome back, this is and iterg surveillance is time for the morning mustread. Tom we have a very special guest next hour and we have the Nobel LaureateChristopher Pissarides with us now. This is from julie folkers lend out. From david folkertslandau. He will be with us in the next hour. Ors crisis could be smooth it could be associated with three current financial crisis is. During this transition, the magnitude of net capital outflows from the periphery will continue to depress real Interest Rates in industrial countries at every phrase of the business cycle. That is talking about money flowing out and importing deflation into the economy. We have seen that space and by chance we are having david folkertslandau with us today with the morning mustread, by chance. Looks theit fact that they have been part of the imf, they think they are growth, they are convening conferences, they do talk about it. It shows they do want to get closer to the core of financial services. However, there is a lot of work to be done in china. ,t is controlled by the state most of them are state they are building and getting huge portfolios. All of those things tom lets continue this discussion with Christopher Pissarides coming up in the next hour. Coming up we will have david folkertslandau with us. This is a rare moment. We are glad to have him. Stay with us from london. Francine this is bloomberg surveillance, iamb here with tom keene. Lets get to vonnie quinn in new york. Record we do have a breaking deal in the beer industry. Ab inbev has agreed to buy sab 106 billion. Sab miller projected several earlier offers from ab inbev. Hillary clinton faces off against another democratic contender tonight. She will be center stage in las vegas where cnn will hold the debate. Face off against Bernie Sanders, three others will be looking for a breakout moment. Webb andmalley, jim lincoln chafee. Debate,contentious nearly two thirds of those iranvoted for Supreme Leaders says the leaders. Is up to protests are spreading across turkey after the bombings. Security measures were inadequate. The original death toll was 100, but it could rise. Turkey will hold parliamentary elections in three weeks. Back to you in london. Tom we see the markets move a little bit, i noticed the real correlation is only in the Interest Rate market. And five basis points from the joy of the past couple of days. Francine mario draghi has really been saying we dont need that at all. Tom here is what you need to about our next guest. She survived being a speechwriter for lawrence summers. Wrotenie flanders verbiage for the resident of harvard, she has moved on to an acclaimed career in his this jpmorgan,is now with she is a chief strategist but there it is. The u. K. Data. For someone like me to see negative inflation is a wow moment. What is the significance of what we have observed this morning. Stephanie it tells us that we have been around zero for several months, just as we have in the states. Us that the emerging market worries and the falling Commodity Prices over the last few months, it has had an effect on global inflation. It is pushing down inflation. Deflation ining the u. K. What is interesting, and you will have noticed this, it is the contrast between the domestic pricing in the u. K. Versus the u. S. Be u. K. Looks like it may the only country in this crisis that has managed to generate some of its own deflationary pressure. Nothing too dramatic, but sharper than we have seen in the u. S. , and that is something to look at. Fuel is down. Closing prices were also down. The Service Sector was up a touch. What does that mean, are we thinking at the middle of next year . Or does it push back behind even further . Stephanie we did have a long time when we did have above they lookedtion, through that and it was helpful in some ways for the u. K. To have some inflation in the post crisis time. Now we have the opposite when we whenve some domestic wages are picking up at the same time when we are importing disinflation. They will want to look through it. Is coming with growth productivity at last, so we could argue that if you have labor costs for companies not going up, that gives a little bit more room. Background, of jpmorgan, mike you for only suggest that this could lead to a new Interest Rate, does that order on we are at 2 . Stephanie that is one of the key things that the u. K. With some extra growth, they have to theed growth similar u. S. We do have more inflation in the growth. People might worry about the eurozone. Because they have low nominal gdp. Tom there is no street i have laston in the u. K. In the three days that isnt a construction street. Francine you are right, but a lot of the time that is because the work has been delayed. Tom from the 14th century . [laughter] overall, there is a lot of foreign money coming into this. Rest just london with the of the u. K. Flat on its back . Stephanie if you look at delayed Market Growth in liverpool and manchester, we did talk about the north powerhouse, but there is a feeling of greater optimism in other parts of the u. K. , not everywhere. I do see commercial property cant who now think you make money in london because the market has gone up so much, going to Shopping Centers in yorkshire and things like that. Francine should the bank of england look through . Christopher i think so. The worst thing would be to raise rates and then realized it was a mistake. I think they should wait and i what with stephanie that should worry them more is what is happening with wages. But productivity is back, that is good news. Christopher it has been doing small wiggles in the u. K. For the last seven years. It may be down next month. We have to wait and see. Productivity hasnt really risen at all since 2008. Tom we make the statement that banker ofen is the the world. Do you see any correlation of the Interest Rate . Stephanie remember, he tried to have socialism in one country. Could make a stronger case in the u. K. For a year,ise going into next i think a world in which the fed has put off having a rate rise if we were there next year, it would be hard for the u. K. To go at that alone. The bank of japan might be loosening more. What we saw in lima is that your former employer saw stagnation. Im sorry, but the data doesnt show that, but they do tend towards we do see Central Bank Governors or finance ministers, a lot of them are saying that it will be painful but they do want the Interest Rate hike to happen. Stephanie a lot of them are saying it is hanging over us, and they want us to go for it. But you make a good point that not a single Central Market bank has managed to make a rate hike stick since 2011. , theoyal bank of australia royal bank of canada, none of managed to raise rates and not reverse themselves. That is a heavy burden. Tom Stephanie Flanders is with us and Christopher Pissarides as well. Week, thisater this is 6 00 new york time. To talk about the overlays in economic and financial system. Vonnie quinn is in new york. This is bloomberg surveillance. Francine this is bloomberg surveillance, iamb here with tom keene. The pound is at the weakest level since may. Deflation is under 0 . Tom this is stunning data this morning. Francine what does it mean for the bank of england . Delay, delay, delay. We have two main stories. And leverage ratios in switzerland. Yes, they are two separate stories speaking to the same thing. We have a regulator that doesnt want a repeat of dealing out barclays, wen at have a bank with an identity crisis. What do we look like and what kind of person do we need to lead the bank . It looks like they may have found their man. Francine they are looking at a former investment banker from jpmorgan. Guy, andhad a retail they said he couldnt do the job he goes he doesnt do investment banking. Is maybe a lot more about mood and culture. Turned off bye where you came from and what he did, but you had another guy who tried to change the culture. At the very top of the bank at our clays, i spoke to John Mcfarlane the day he was fired and he wanted someone quicker and more aggressive. Taley. At guy may be jes s tom buried in this is a market move. You drink the under the table at a local pub. Apple juice. Up forore has sale. This is a fire sale. You have to think about this. They are traitors. They sold their company at the top of the market. Assets of whatll could be at the bottom of the market. Tom they have got to be going, it is our time. There are a lot of people who say that tom i was pretending to be jon ferro and say, folks, what you everyonew is that is saying, 20 a ton for copper. Mean ton say ton they ne. The camera men are offended. They are having a London Metals Exchange thing. Is the gloomiest week since the financial crisis. I think a lot of people would say that. Francine we did have a couple of names for people who were interested. There are people interested. Assets,u want to bu