When that news came out. Moves tell you, he really the market. This is. How skittish but the number one story is the are thef Cathay Pacific challenges of asia and china. If you go through the headlines forget about hedging. It was a grim report. Ceo,ine and certainly the who has been in the job for about two years, is under pressure. We will speed to him in half an hour. Lets get to the bloomberg first word news. Taylor donald trump is shaking up his struggling campaign again. Bannon to behen the new ceo. Kellyanne conway will become the campaign manager. All of this is seen as a motion for Paul Manafort and a sign that trump will stick with his aggressive style. To for the people arrested during the coup attempt. Some 38,000 people will be released, including those who showed Good Behavior and have less than two years to serve. 35,000 people had been the kind detained for questioning. Angela merkel joins the campaign jet trail again. It is less than three weeks until the election in germanys eastern region. Polls suggest that the alternative party in germany may win at least 1 5 of the vote. And under new proposals, companies who avoid taxes will be fine. The treasury says new sanctions would make would be enablers think twice. Medal forurth gold the american gymnast simone biles pay she won her latest with a showstopping or exercise set to brazilianthemed music. The u. S. Is out in front with 84 medals. China has 51. Great britain is right behind with 50. Global news 24 hours a day, powered by our 2400 journalists and analysts in more than 120 countries, i am taylor riggs. This is bloomberg. Tom lets get to it. Jason trennert in the next hour. The euro near the 113 level. And oil. We are on a 50 watch on the crude. Yields yesterday were something. Brent crude, 48 69. The yen little weaker over the last 24 hours. Sterling strong. Crisis over. 1. 30 on sterling. Francine and we are winning medals in rio. All good in the u k all good in the u. K. Certainly for the moment, sterling at 1. 30. Gold is down a touch paper emerging markets slipping. Oil down. It is all on that speculation. Tom this is an old look at the sea cci. And goes back to eisenhower the idea of inflationadjusted commodities. Yesterday went down. Massive commodity deflation. There is the china boom. We are about halfway back. There is no one back we looking for lower commodity prices. It puts in scale the little bit of lift we have added recently. Onncine sometimes we are the same page. I also did a correlation between the msci all country world index and the response for the dollar. The white is the price of the dollar. You can see the sweet spot in around december. T this tells us is that this is an oil play. I am showing the dollar, but what i was trying to get to was that it was an oil play. This tells us that the december Interest Rate rise boosted stock. Turnill,ng in richard global chief investment strategist at black rock. First, welcome to the show. We need to talk about bonds, inflation, jobs, and the fed. Underpinning everything is a sense of caution . Richard theres a sense that the dynamics have in driving markets drives reach for yield. Where the environment is a scarcity of high quality yield assets. What you see over time is that toforcing many investors look for alternatives. Where can they get return . In an environment where Global Growth has been ok, the recent data out of the u. S. And europe, with the exception of the u. K. , and asia has been reasonable and good enough. You are seeing gradual flows from the regular yielding assets into riskier assets, driving markets. Francine what will drive markets from now on . Fede is concern that if the hikes andis the fed the markets are not ready, there is a temper tantrum. Richard if we look at the rest of the year, the macro will be critical. You need to see reasonable Economic Data translating itself into improving earnings, particularly in the third and fourth quarter. If we see that come through, we think the market will hold onto its gains and potentially move higher. A lot of good news in the price. When we think about their risks to market, what can 30 off the course, then it is interesting how the tone has changed. We talk about the risk of a global recession, a u. S. Recession. Those risks are still out there, but they have declined. Data has shown that the Global Economy has been remarkably resilient. U. S. Data has been broadly surprising. That relatively benign market environment is increasing. That inflation picks up more rapidly than markets had been anticipating. And if the fed chooses to increase the rate, there should be some caution. That is what youre seeing and markets today. Tom i understand the scenario. I do not see the catalyst. I was taken aback yesterday by the Market Reaction to mr. Dudley. I get it is august and there are only six people at black rock working. But the basic idea of how far people liked president dudley are from the vigilantes of the market, they are just far apart. What will be the catalyst to bring them together . Story ofi think the the summer, in terms of policy and there are two parts. The first looks increasingly likely that policy will remain easy for longer, notwithstanding bill dudleys comments. We willseen that, and get more clues from the fed minutes. But it looks increasingly likely that central bankers are willing to let the economy run hotter, given the asymmetric risk to the market. I think the shortterm message is they are prepared to let the economy run. Tom i understand that we look for an overshoot and i understand the scarcity of bonds, which sir John Templeton called a shortage of bonds. Why cant what we are doing now just keep grinding and Going Forward . Richard i think that is the base case. I think Central Banks can anchor Interest Rates at the short end of look or pay we know there is a huge structural demand for debt at the long end of the curve. From pension funds, from insurance companies, from individuals looking for yield. That is anchoring Interest Rates down. What will break you out is a shift of fiscal policy and increase in supply over time. Distancefeels some away. At the same time, that supply is essentially funded why the Central Banks, if that happens, it underpins the rates. Though we are moving into a reflation mary three inflation environment, it will look longer. Francine how many bubbles will that create . Richard the next 12 months, Interest Rates will remain anchored by loose policy. At the moment i hesitate to use the word bubble. I think you see a significant increase in valuation, which seems rational given what youre saying in Monetary Policy and low growth. The big question will be our Central Banks francine you could argue this is what Central Banks want creating bubbles. By artificially inflating assets, this is the pure definition of a bubble. Richard they do not want to create bubbles but what asset prices to support the economy. They are looking at broad finance conditions, particularly in the u. S. Where asset prices play a role in supporting the economy. I ate look at Central Banks being relatively successful with achieving asset prices. We saw in the end of last year on the back of one rate hike that those are material risks. But given the fragility of the economy today, i think that is a scenario the fed will want to avoid. You for richard, thank now. Global chief investment shouted just at black rock. Coming up, Cathay Pacific shares are down. Chiefak to ivan chu, its executive. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Tom keene is in new york. Lets get to taylor riggs. Taylor there is a report of massive job cuts at cisco. They will dismiss as many as 14,000 employees, including according to crn. They will reportedly announce the cuts in the next few weeks. Analysts say that cisco will show a 2 decline in sales. Barnes nobles has gotten rid of its ceo. The bookseller says he was not a good fit. Other executives will assume the duties for now. Cathay pacific posted profits that plunged 82 . Asias Largest International airline was battered by losses from jet fuel hedges. And passenger yields fell because of competition with chinese airlines. That is your Bloomberg Business flash. You are sticking with Cathay Pacific. Francine we are pay we are pleased to be joined from hong kong by the chief executive, ivan chu. Great to speak with you. Yields are declining. Jet fuel hedges are mounting. How do you reverse this massive slide . The big issues we are chinese are structuring. Every year, we are seeing everywhere, we are seeing the strong dollar. So the market is a it a bit challenging. Demand is related to gdp growth. I think we are seeing short growth here. Have an rather improvement story, but the situation is that we are seeing less demand for front and travel, Business Class travel. Astomers are going to shorthaul hike. And we are seeing security , whichs with terrorism is impacting travel elements. So the demand of travel is slowing. We hope it is a shortterm issue. Supply, on the other hand we are seeing supply on the long haul routes on the pacific and australian routes. Francine if you want to sit and start airline from scratch, what would you do differently . I understand there is pressure from all sides, but some of your competitors are doing better. I think the economic environment theres not a lot we can do about it. What we are doing now is to invest in new routes. Fleet incoming. What we will see in europe and in london is that we will be operating more flights to england. At the moment, we are going five times a day to heathrow. We are going to open a new t5, which will be very good for our customers. We continue to make ourselves competitive. We are going to have very competitive fares, and service will continue to be good. We will also work on the cost. We will keep it the same, if not better. We are investing not just in aircraft but in loungers. The Customer Experience is something we will continue investing in. Francine every time used be to us, you say you will speak to your hedging strategy. Will you ever abandon it . It does not work because the prices are so volatile. You look at the first half because ofl was lost the low price of the fuel. But if you look at the volatility of the field from 30 early in the First Quarter to close to 50, you can see the brent crude u. S. Dollars fluctuate a lot. So managing fuel costs is a very important part of our program. 30 of our costs, we will continue to hash that. Even though we are seeing more of a hedging loss, then next few costs are taking out the hedging a netnd have seen us make costsaving up 20 . That is a big number. Has cost saving on fuel been helpful toward our first halfs performance. Even though the big issue for soft demand. F is Corporate Travel slowing. Is slowing. Avel we hope that will be temporary. But the probability for the second half will still be challenging. Francine are you still enjoying your job . It seems like a tough one, and your predisasters, after three years, step down. Will you be staying on . [laughter] airline is a an particular job or we have a lot of uncontrolled factors. Fuel pricing cannot control. But there are a lot of good things. Tofar as cathay, we continue invest in our product and our new fleet to we have 66 new aircraft, which will make our fleet one of the youngest in the world. We currently have 99 longhaul aircraft, with average years of five. So our product and services is something we are proud of. This year will be the 70th anniversary of the airline, so we will continue to invest in the product and services. Francine it is a tough job. Thank you ivan chu, Cathay Pacific chief executive officer. In the next hour, we speak of Jason Trennert of strategas region best research. We speak to Jason Trennert of strategas research. Francine bloomberg. Rveillance tom is in new york. I am in london. U. K. Get a look at the jobs data. Britishgs head of coverage Simon Kennedy is here. So is Richard Turnill of blackrock. This is good news. There is a glimmer of hope, as one economist told bloomberg, that the razor is not having an immediate effect on the u. K. Labor market. Whether it lasts is a question, but would it have been hard if it was bad news . Tom do you have an angle on unemployment dynamics . Politics is about jobs. We have confidence of this, confidence that. When do we get data that tells Prime Minister made by the people employed . We get a taste of it today, but the Unemployment Rate stayed at 4. 9 in the Second Quarter. Like the u. S. , you will get it over the next month or so. Slowly orange slowly but surely, you will see unemployment you will see employment pick up. Optimists out there will say there is not a big hit, and the economy will fare better. Francine will we find out more with the retail tomorrow . Is that a better benchmark . Simon i think that is a good example. That will at least frame the debate over one of birds are having inflation data. The influenceed from the weaker pound. Francine thank you so much. Simon kennedy from bloomberg paid and Richard Turnill from black rock pay we go to gilts next. Next, we will talk to carlsbergs ceo cees t hart. This is bloomberg. Tom good morning. Francine lacqua in london. I am tom keene in new york. Brent crude on the 50 watch. 48. 75. And a weakerut, yen right away. We will talk sterling and brexit. Have to look at the u. K. Labor market showing strength. Their bank of england inflation forecast at the same time. Plenty more brexit next. Tom lets go to the bloomberg first word news. Taylor donald trump is overhauling his campaign, sending a signal he will not change his style. Stephen bannon, who runs breitbart news. Conway willlyanne be the campaign manager. The moves are seen as a demotion for Paul Manafort. Nobel prizewinning economist paul krugman says american should discount trumps business background. We have this delusion that business experience has a lot to do with running economic policy. They are very different domains. Generally genuinely great businessman generally have no clue about macroeconomics. A particular, the trump style, to borrow a lot of money and then walk away and have some entity go bankrupt that will not work for the next states government. Tolor krugman spoke bloomberg tv. In los angeles, a wildfire has forced more than 80,000 people to flee. The fire forced a shutdown of part of interstate 15, leaving drivers stranded four hours. And a leaked document could make relations worth between germany and turkey. According to an internal estimate, germany views turkey as a central platform for terrorist groups. No response yet from turkey. President suspended Dilma Rousseff has appealed to senators less than two weeks before her impeachment trial. She is accused of using accounting tricks to hide a budget deficit. Global news 24 hours a day, powered by our 2600 journalists and analysts countries. N 120 i am taylor riggs. This is bloomberg. Francine thank you. We want to focus more on brexit, with the u. K. Labor market claimant counts showing more strength than we thought. We also have a great report by bloomberg saying that the bank of england inflation forecast, out 10 days ago, it is are you looking stale. Lets get back to Richard Turnill, chief investment strategist at blackrock. Is this more important than the jobless numbers . Richard the bank of england is prepared to tolerate higher inflation, one of the shifts we have seen the last few weeks. One of the shifts we have seen is that the bank of england is being what more willing to run looser Monetary Policy. So any pickup in inflation, which is associated in a pickup in Inflation Expectations, will be seen as tolerable. We are unlikely to see the bank react to the shortterm numbers. I want to bring it to my bloomberg terminal toncine i want to bring you my bloomberg terminal. This is the difference between wage growth in the u. K. , which is blue and around 2. 5 , and inflation, 0. 6 . What is going on . Richard you have the gradual pickup and wage growth over time. Francine which is a good thing. People should spend more. Richard it is encouraging. What we will see over time is whether we had momentum building around that and what impact brexit has had in terms of the wage Growth Numbers over time. We expect the headline to pick up materially in the u k for two reasons. Sterling has fallen, so import prices will pick up. Secondly, oil price has rise significantly, which plays a role in pushing down on the headline inflation rate. Real wages are likely to, under pressure. Tom lets continue with richard. I want to talk about the ninth anniversary of the crisis. Right now in copenhagen, cees t hart with carlsberg. He is one of the few ceos i know that does not speak off a powerpoint script. Wonderful to speak to you. I want to cut to the chase. One will you move to london . Sterling will be weaker. Will carlsberg migrate to london . Cees t good morning. Youre painting a picture that is attractive for us, as well as the u. K. Is starting to do more. Tom within that is the idea of a global platform. You worked for years with you know ever unilever. What will Multi National food and beverage do . Can you think about building revenue and products . Over the years, if you look at the fastmoving companies the last 20 to 40 years, there have always b