Day. The little bit of china a little bit of japan, a little bit of brexit. We shaken up and see what happens. Tom we are were shaking up cocktails this weekend. The way this week is well. One of them took the numbers back to 1896. It is hot, hot, hot. And i am not going to do august. Im fascinated by the japan releases. Francine yeah, and that puts a lot of pressure on governor kuroda, as if he didnt have enough. Lets get to nejra cehic. Nejra the uks exit from the European Union could be delayed until 2019, according to the sunday times. They say new departments set up for the transition may not be ready to start negotiations as early as protected. Because of that, it may be late next year before the u. K. Invokes article 50, a part of the eu agreement that gives the country two years to leave the bloc. Operations have resumes at john f. Kennedy airport after reports of gunfire led to two terminals being evacuated. Police determined that no shots were actually fired. They havent said what led the initial report. Fighting in aleppo has killed dozens of civilians, according to a Monitoring Group based in the u. K. Syrian and russian bombers hit rebel held areas in the city, killing at least 46 people. Meanwhile, rebel shelling held areas killed nine. Three student protest leaders in hong kong have avoided prison sentences. A judge sentenced them to community service. Two years ago, protesters occupied key thoroughfares for 11 weeks, demanding unrestricted elections for hong kongs leader. At the summer olympics, jamaicas sprinter you seybold ran into the history books, with his recordsetting title in 100 meters. He beat the u. S. For the gold. The winning time was 9. 81 seconds. The u. S. Is still on top with 69 metals; china is second with 45; Great Britain is third with 38. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Im nejra cehic. This is bloomberg. Tom thanks so much. Lets look at our data check. Equities, bonds, currencies, commodities. Euro has done nothing since time began. Hsbc 1. 50 , we will be joined in the next hour, looking forward to that on shortterm paper and the fixes that 11. 93 . It will blow through stronger yen, you wonder what that will do. this is my asset class data check, i just added the yen and you can see, we havent really talked about how a significant china could be. We had some pretty terrible data. Tom talking about sterling. This needs a little explanation. I for this up in my head. This is very cool. The red line is above the white line to the left. Real gdp is higher than nominal abenomics,n before and that is a great signal of deflation. Deflation. To total the white line is above the red line. Thats a success of abenomics. The green 4 and you were supposed to get there, and what i would suggest is this is a chart that shows what would have happened if abenomics hadnt happened. I think thats an important idea that should be a credit to mr. Abe. What would it be like if they continued their policies . Francine what i also liked is that that is the defense line of a lot of central bankers, it will certainly serve governor kuroda. I was trying to figure out this morning what it meant for the future is. The blue line you can see here is wti crude future prices. Is crude long positions. What this chart tells you you can see the big divergence that Money Managers are increasing our prices since the most since january. The white line is that that. You can say that speculators are increasing that, which is driving up the price of wti. Japan grew less than forecast. Important one. 0. 7 . Issing estimates of lets get more on all of this with larry hathaway. We have so much to talk to about. China, japan, and oil. Are you concerned about japan . Tom was pointing out that they would have been in worse shape but they arent in any better shape. Not necessarily. The green line, nominal gdp, that target is elusive and probably out of reach. First of all, its a fully employed economy. Unemployment is at very low levels. It hasnt been this high in several decades. The economy is not going to grow. The labor force itself is shrinking and productivity growth is modest. The potential rate of growth in japan in terms of what we saw in the print today, when you are fully employed you cant grow faster than your potential. Fiscal policy will ease, and that is the attempt to take inflation higher. I dont think we should be disappointed, is performing pretty well. Francine unemployment was going down. Almost full employment, Something Like that. My chart was going like this, which means that they really have a demographic problem. Of course they do. It it does reflect i dont think japan will open up masculine aggression anytime sheet, itse bojs about trying to get nominal inflation up, but they are pretty inflation will resistant. The import Price Inflation in that is slipping away. Tom i want to get to a theme good morning that we have had her five hours today, the idea of the japan is occasion of the rest of the world. We will show this later with Carl Weinberg. This is deflation in japan, hawaii chart were sloped matters. Back in the late 90s of where they got on deflation, and then we roll over to a little bit of a pickup where they take over. Japan is it doing all that bad. The great fear is export deflation strategy to the rest of the world. Is that a legitimate fear . On a big so. Japan is too small to matter. Distant, distant fourth. There is affecting inflation in the United States or elsewhere. The world doesnt import that much, japan is where its safe and falling export prices may have an impact. But that is really a rounding error. Tom will this be a fee that jackson hole, this conundrum of trying to reflate . Be theink it ought to lets leave that for a moment. The issue is we have reached the limits on Monetary Policy. Diminishing returns arrive the long time ago. Inflation is pretty invariant, it just isnt as sensitive as it used to be, whether its japan or the United States, and if you are concerned about getting inflation close to the target, you probably need to think about other things, and what everyone is thinking about is the greater policy mistakes. Tom that is the key phrase in this analysis, the old formulas dont work like they used to. Francine right. But maybe the helicopter doesnt land. Is that the final frontier of Monetary Policy, that they will give it one last go to see whether helicopter money will do something for inflation . Helicopter money is a loaded phrase at it means Different Things to different people, but to some extent there is fiscal expansion ring subsidized by Monetary Policy, maybe not as directly as some of the althoughr analogies there is more fiscal maneuvering and japan will begin to utilize it you may see it in the u. S. After the november elections youll definitely see it with theresa may if she has her way. From that perspective we are going toward a fiscal 11 extension, which is one of the reasons risk assets are so bad. Hathaway. We will continue here this morning, Carl Weinberg will join us, he has been way out front on the struggles of the japanese economy to get that animal spirit back. From london, from new york, this is bloomberg. Francine happy monday. Tom keene is in new york. We will get back to currencies, but first lets get straight to Corporate News and a Bloomberg Business flash. Nejra francine, william hill has rejected an improved to takeover offer. The bid is valued at more than 4 billion. William hill chairman gareth davis says the offers continue to undervalue the company. Private equity firm kkr has emerged as a potential bidder for Entertainment One, according to people familiar with the matter. Entertainment one owns the cartoon character peppa pig. Last week it rejected a 3. 1 billion takeover from itv. Are takingondon longer to sell than they did before the brexit vote. A property website says homes are staying on the market five days more than it may. Homeowners in london have tried to encourage buyers by cutting the average asking price almost 4 just about 1 million. Thats a Bloomberg Business flash. Francine this is what i picked up for my morning mustread. We know theresa may is in switzerland for her annual holiday,a nd this is what the sunday time editors have been writing. This is after they also got sources at whitehall over the last couple weeks to say, actually, brexit wont happen until 2019. In their column this morning, how to make good on her promise is doubtless high on this is mays to do list. The country still has confidence in her ability to keep a level head; so far she has hardly put a foot wrong. Two things. It is true, she has really been a safe pair of hands, but we havent negotiated yet. And it is quite interesting that she is the second Prime Minister ever to hold in switzerland tom i assume she, like you, are at the piano bar. I assume she went to Davos Francine she hikes, she doesnt hang out. Tom i hike, too. What happens in september . Is there a jumpoff for this new government . Is there a catalyst in september . Francine we dont know, and this is one of the issues. We dont know how ministers are going to approach this. Theresa may has repeatedly said brexit is brexit, but has not said when she will invoke it. September, nothing really happened. We dont know whether we will find out about the negotiating tactics are not. Whats clear is that there will be a summit. The eu will be preparing ground, even if we believe the sunday times saying that the minister is on our side, they arent even ready to think about you. We are in the middle of a stalemate. The eu might begin a contingency plans, but it cant plan for the exit until article 50 is invoked. Fore is no legal basis acting on any preliminary decisions. This government has chosen to postpone the decision, maybe later into 2017. A few weeks ago that would have drawn the ire of european leaders who wanted britain to get on with it. I think they are now both on holiday but are also likely to be consumed by other things. They begin to realize that brexit means something for the u. K. , but not very much for the eu. They probably have more patience than we thought they might have had back in late june. Tom the markets are going to tell her what to do; that is my experience as politicians meander along and all of a sudden the markets speak. He will show this chart a lot. This is sterling 54 days on for brexit. That chartlarry, tells me we are going through 129 to a weaker 128. Can the currency be the catalyst for action by politicians . What the currency is telling us is that investors, particularly those who bring money into participate in the u. K. Economy and its relationship to europe, are on hold. They dont know what the future looks like; they dont know the conditions under which brexit will occur, much less what the final blueprint is like. Given that the u. K. Runs an external deficit, that by extension means an insufficient capital flowed to keep the currency at its prevailing value. Will that weakness force the end of theresa may or anyone else . You cant really force their hand. That she is looking at economic weakness and responding to a fiscal policy, not necessarily what the brexit means. Tom halfway there, and i think fireworks will go off. Larry hathaway, an important conversation on japan and on england. Pimco, the flatout best shortterm paper guy in the world. Anthony could send the on Janet Yellens twoyear yield. This is bloomberg. Tom good morning. Francine is in london; tom keene in new york. We welcome brak michael mckee. He has been on scaring america, looking for the roots of his campaign. You founded in donald trump supporters. Indeed. And i know francine knows the narrative of the brexit voter. Less educated, white workers who had been left behind by globalization, and that has been the narrative people attach to donald trump. But Jonathan Rothwell is a researcher at gallup. He has a huge database, 87,000 americans, to drill down deep and find what the real views of donald trump are. Trump supporters are more likely to work in bluecollar fields with pledge education, with less education, but across the overall population, support for trump correlated with higher not lower income,. They are less likely to be unemployed and to be still in the labor force. The individual data do not suggest those who view trump favorably are confronting a normally High Economic distressed by regular measures. Tom are they romney supporters . Are these people that have moved from rummy to trump . It doesnt appear that way. People who believe in manufacturing areas are no less likely to support trump. An influx of immigration doesnt affect their support. Where they are affected white mortality is high in their area, and intergenerational mobility is lower. They feel the effects of the economy, but in a more nuanced way. The thing that correlates most is people who live in highly segregated, white areas with few immigrants, far from the mexican border. Race does appear to play a role. Francine we were talking before, and it is the same fear that fuels trumpism as brexit, that you pointed out that the u. K. Feeling toward the eu is much more vigilant than what the trump was dealing with. I think that is right. In the case of Great Britain, you have had a love hate relationship or ambivalent relationship with europe that spans quite literally centuries, and that is what the u. K. Has prided itself on, being separate from europe. I think that intended to create a broader class of voters who could have entertained brexit, and to ultimately did. I dont see that so much of the trump phenomenon. Francine lets look at the latest polls. Its a 35 chance that donald trump gets elected . Chancet now, a 13 according to the calculations with the number of people make here, when they put all the polls together, Hillary Clinton has a 90 chance. That thesekey is findings suggest finding a solution to these peoples angst will be difficult. Tom i would go with that, and i like the idea of how people conflate popular vote with the electoral vote. The statebystate analysis he is behind all key states. Tom francine . Francine thank you. Preparing for a raft of economic data. And new reports show londons property is being hit. We go into that analysis. This is bloomberg. Tom good monday morning, everyone. Bloomberg surveillance. Right to our first word news in london. Here is nejra cehic. Nejra thomas has ratcheted up his attack against the news media. He claims up having on him. Im not running against crooked Hillary Clinton, im running against the crooked media. Nejra trump said that if the media did not put false me aning into the words, he would be beating clinton by 20 . There is the second night of unrest in the lucky, wisconsin after Police Killed a black man. Shot. St one person was there was not the widespread destruction of property. In switzerland, a man who trained passengers on the with the burning liquid has died of burns. Police say there is no indication that the suspect has ties to terrorists. , lochte was among u. S. Swimmers rocked i can point robbed at come point. Gunpoint. Bloomberg. Francine a number of u. K. Property trusts remain frozen in the wake of the u. K. Referendum. Aberdeen Asset Management has reopened its property fund. Ceo joins us. There was so much concerned post brexit that some of these frozeny funds had to be and was subject of something very ugly out there. Was it just lack of liquidity . It was a big surprise, i guess, the referendum vote. I think there was an automatic reader across and concerns about london, occupiers, and how that might affect real estate. The reality is they hold very little in the London Central market. Fundine you reopened the fairly quickly. A lot of you competitors to not require . Did not. Why . For a week. Ded we put as evolution on the fun. It is a slightly different profile of what we have done to some others. Be opened up after week, gain some liquidity in the fund. Tom bring up the future. Bring it up. This is what we are looking at cranes in the sky at our headquarters in london. They brought down the scaffolding. It is gorgeous. Aght around the corner is building that wells fargo just put 400 billion into. I assume that is currency driven. Do you have, in your head, a level on Sterling Ruby have a feeding frenzy of purchase. We are seeing people come into the u. K. Market because of weakness of currency. Actually, a lot of money has been coming in already. Tom agreed. A lot of money from overseas buyers. That has been happening for 23 years. Actually, if you look at the last 23 years, the peak of the market was 20142015. I think we will continue to see some softness in the market. Ones of 120eet sterling. I get that. Halfway there. Maybe it is 124. Onyou print a 125 handle sterling, what do animals like you do . For us, we are in the slightly different position. Funde managing pension money, essentially. If we look to sell into the market, this is not a particularly bad time to sell. We went to get liquidity a few weeks ago, it was how much money is available. The market has softened slightly. Tom to me this is doom and as governor king said on bloomberg surveillance, if you have a onetime adjustment in sterling, it will be like the golf courses 30 years ago. Francine it could be. These dusty golf from 20 years ago. What is land value like in Central London . It has gone through the floor. Im not sure that is the case. Sharp a very quick and reaction to what happened postreferendum. I think what is happening now is. Eople are calming down a bit a concern you might have is shorttermreact to signals and overreact to the longterm. There are concerns that they postpone triggering article 50 until late next year. Does that cause more problems for property . Certainly people continue to be uncertain in the Property Market. The appraisers are looking for evidence over time. Softened as well postreferendum vote. You get into the lack of evidence, depreciation uncertainty