The earthquake in general because in 2009 was the last earthquake and also we have to look at janet yellen and the huge impact we see in markets. Tom certainly francine it is an ancient story for italy. Francine it is. Lets get to the bloomberg first word news. Heres taylor. Taylor turning small mountain towns into rubble. As many as 100 are missing. It was centered around 27 miles from the town of rietti. Rescue crews are searching for anyone who was 2r57ped. The first offenses against targets in syria. To bomb islamic positions near the city of ahe willo. And clearing Islamic State forces and last week a suicide bomber killed more than 50 people in turkey. North korea has successfully launched a missile. Kim jong ills forces are engaged in their annual war games. South korea says the missile flew several hundred miles of japan. And the labour partys leader said he blocked the Brexit Process and voted against any attempted trigger unless the rime minister agrees to hold a vote on the new issue. A new report says many donors of the Clinton Foundation while she was secretary of state and more than half of the outside gave money to the Foundation Clinton calls report a degrees torted portrayal. And more than 120 countries im taylor rigs, this is bloomberg. Tom . Tom thank you, taylor. Chair yellens speech in jacksonhole, thats about as boring as it can get with oil churning off of a threeday very tight trade. If you would. Looking at 210 spread, dominick will join us in the next hour. Thrilled to have doment con stan with us and all in all a turn to markets. Francine yes. I wanted to down 8 . All about jacksonhole, and you can see thats also having an impact on the dollar. And 100. 19, tom. Tom i want to read the bloomberg chart from yesterday. With James Glassman of j. P. Morgan. Forget about negative rates or orthodox, a new Theory Financial stability. This is jobs. This is the employed in america, not population adjusted. The green line is a slope of the good times, and if you take our collective memory and extrapolate it out thats the gap. Thats the challenge every policymaker and president ial candidate has. That gap is jai normous. Its 1520 and 30 million of 25 54yearold both sexes employed. Thats the slack from another time and place. Francine . Francine yes. I really liked that. Tom. Its linked to the feds but i wanted to show you the market correlation. This is an interesting chart showing returns are really starting to move in tandem. Tom yes. Beautifully. Francine so the blue line is one of the many side effects of excessive Monetary Policy is that investors need to operate in a market in which diversification is much harder, so you can see that diversification move hand in hand. So our chart of the quarter. Thats what we talk about day in and day out, tom. Richard kochinos, great to have you here. Richard thank you, very much. When you look at pairings and pairings and currencies, how much is it Monetary Policy driven and how much of sit actual growth . Richard i think most of it you touched on in your last chart. Its irrespective of equities, and any class youre looking at. Really in the better part of the last four or five years has currency markets and miami like tradeoff longterm correlations really questioning whats going on here. Francine what is going on . S it all just cheap money . Richard predominantly now its been a yield and one of the reasons you have equity outperformance and why you have curve flattenings and the aussie dollar and kiwi dollar and to a certain extent, thats big story and then the main story we are facing at jacksonhole, its the shifert whether its there or not. Tom i havent done this in ages. This is synthetic euro back 40 years. Years ago. You take an inverted Deutsche Mark and insert it there. The blue line is parity and the average and where they were the yellow line at 116 are remarkably close. I would suggest, richard, that the pricing of the euro has the a big success, or does euro demand a weaker currency . Rit67ed when it comes to europe, the question is whether we are looking for more growth or stability . Why it cant weaken anymore from here, the dollar, is that youre stuck with surpluses and thats one of the main arguments where investors were short euro in 2014 and 2015 and the surpluses kind of continued with the pressure on it but even though European Data has been over q 2 and q 3 we are starting to see instant ever assistances where its starting to break down and ultimately is the euro going to be the solution . Maybe, maybe not but its got to be a part of the solution Going Forward but short term probably you get some pressure on the euro dollar but its a difficult currency to buy because that certainly doesnt help out on the monetary side. Tom well, our theme through the morning is Financial Stability. Richard its overlooked a little bit by the market. It came to the forefront when you had the european banks under pressure and if market was really starting to consider it but the market is focusing on the risk Going Forward and its something that both as the italian referendum but under 2015 votes so, currently Financial Stability now is fairly low. You can see that across the curves but youre beginning to see it in port geese and italian bonds. Tom our theme is two days before jackson hole, the speech. Much more interesting on jackson hole and on the greater economics and rate markets, dominique con on the of Deutsche Bank our entire 6 00 hour. This is bloomberg. Francine welcome back to bloomberg surveillance. Im Francine Lacqua and tom keene is in new york. I know you have a chart so iceland cutting its rates for the first time in months. If we remind ourselves our friend iceland like a lot of friends in the emerging markets. It went through a default a couple years back and actually raised rates three times and now you can see the reversal because of currency swayings. But a lot of them did the same, raising rates then having to reverse them earlier this year. Tom yes. Lets go to Richard Cochinos right away. This is one of those flappings that they dont near jacksonhole. Central banks have to adjust, dont they . Richard they do. And theres been a significant appreciation. And ooh lot of that is if you look at the yields on the currencies, its high. So its actually just going after yield at this stage and now you see the central fwivepk a certain extent reacting to that. So thats a very important point because the g8 is coming up and theres the thought no one is going to be engaged in the early activation. But to a certain extent, if youre in an environment where everybody is stuck at the lower bound, anybody stuck there tends to be and the Central Banks are being forced to move. Tom francine, jump in here, because youre much better at this that afternoon i am. This is euro iceland i think with a massive collapse and the courage of the icelandic system with the courage to fix the shot and theres that krone err strength rolling over stronger and stronger and stronger today. But butting so much against scanned naveya as well. Francine yes. Tom, look, remember, it comes at a time where the lost capital controls are in the ocess of being dismantled in iceland and we had a communication with the Icelandic Bank where especially if you look at tom keenes chart and this is inspite of you can see its a central bank thats going through a tough time and we will have plenty more on iceland in a moment, tom. Tom richard, before we get to glencore, this once again proves janet yell nch and the central bank to the world. How can she raise rates when someone as distant as iceland says, no. We have to survive . Richard thats basically the 1 million question going into friday. If you look at the bottom lines coming out of them, its difficult to be a central bank alone and to go it looven anymore. Thats more policy and communication. Thats important Going Forward so the u. S. Tends to be better off if the raiding partners are better off as well. Francine profits fell 66 at glencore. Glencore was hurt by lower prices in metals and covering European Mining metals, lynn, great to have you here. If you look at glencore, so basically its a 66 drop but they beatest mats. Shares have rallied because they managed to cut debt. Yes. And at the end of the day you cut costs but youre still operating in the environment with lower commodity prices, and were not really seeing much of a turnaround there, i think it remains a tough icture for this company. Francine is there any up side . Its almost telling the world look, we need to stabilize zinc and i know its not copper but actually the price of zinc rallied. Yes. Its the unusual one. You just dont see this with commodities right now. Think think they have made significant steps and you saw a big gold sale today. But you know, i think theres still a lot to be done for you to see a real turnaround. And to make it profitable again. Tom lynn, the rap on glencore is theres 38 people trading back and forth and thats not reality. This train wreck is 160,000 employees. Is it a Mining Company . Do you compare glencore to rio tinto or is it something truly different . Lynn i think most people think of it as something different. Its part mining and at the moment mineing is really carrying the business. In the last half the Mining Division less money and is likely to continue to struggle. Francine ok, lynn tomas, thank you. Richard stays with us. The bloomberg lp nonexecutive director at glencore. Now, coming up, weve plenty more on this iceland move after the three increases last year. Iceland has cut its rates and that has to do with gains in krona and we have more in the next hour we speak with paul gates at 6 00 a. M. In new york, 11 00 a. M. In london. This is bloomberg. Francine worldwide this is bloomberg surveillance im Francine Lacqua in london and tom keene is in new york. We need to talk a little bit about employeeo politics. The u. S. Vice President Joe Biden has arrived after a coupe attempt. When you look at everything thats going on in turkey, so 2007 Vice President there and theres talk about an extradition and there was that failed coupe. Allegations flying about who actually started it and then you have turkey dealing with the huge iciss bomber, whats the relationship between europe, the u. S. And turkey right now . I would say theres something of a parallel between the u. S. And turkey relations, theres a lot of noise regarding both but the fundamentals will remain until tact because both parties need each other regardless of the deterioration. I hit the its clear the americans are treating this as a judicial not political process and the government, hink in there havent produced the i think bide season there to sooth over relations and with the recognition speaking hawkishly about the americans there in do 34estic consumption. Francine so trying to gain more and more power there, have been parallels made with putin. So does europe need to be tough on one hand but make sure the the iminvestigations hold . Yes, whats happening in berlin and not broadly but specifically and the line is clear, anything short of the death penalty, merkel will turn a blind eye. So all the things i think germany is going to turn a behind eye and i think they think it has utility and they want to make sure it remains intact and they are going to set the bar very, very high before they jeopardize the integrity regardless of whats happening in turkey right now. Tom and i find it remarkable that they are are the two linked . I think its designed to help the fight against iciss and puts turkey in alliance with the americans and you and i both know is the real point o prevent the kurds to british a but the initial narrative is that this is to help the Free Syrian Army in the fight against iciss. Tom at the end of lawrence of arabia where lawrence goes nuts about the borders of the middle east, do you think turkey will acquire more territory for itself, do they need to move their boarders south to provide protection against frackchouse elements . I think thats unlikely, but i do think in a context where youve seen the purges to the Security Intelligence and seen a real undermining with the ability to deal with the pkk within turkey, they are very, very concerned about developments in turkey because that has a complete domestic play with the pkk which is why they are very focused, but i dont think it changes per se. Tom and francine, we are guilty or i should say i am guilty to have we look at france and its big news, the terror attack over the weekend was absolutely horrific and you question how a nation must respond to that. Francine tom, i must agree and theres been a lot of fault against western media in not taking it seriously enough and this was allegation a very young suicide bomber. And we will get back to what we understand about Islamic State right now, tom. Tom yes. We will do that coming up here. A busy hour. In the next hour dr. Dominic konstam will be on and he has written a brilliant note the path forward for federal banks. Dominic konstam goes jacksonhole. We will do too that in our next hour. 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. Tom good morning, everyone, bloomberg sursurks Francine Lacqua in london and im tom keene in new york. And of course were following the earthquake in italy. Taylor . Taylor yes, at least 21 people ve been killed, the 6. 21 magnitude earthquake has destroyed smaller towns, search and rescue are searching for survivors and radio and sad lite links have been damaged. And russia president Vladimir Putin will pete with leaders of france who accuses the ukraine of attacks and the ukraine accuses russia of supporting rebels in the region. And a shift in the defense paul it has maintained for more than six decades and to carry out missions overseas. Troops will take part in the u. S. Peacekeeping in addition sudan and will be allowed to use as other nations come under fire and in the past they have only been allowed loued to shoot. By rding to a memo obtained the news they say the lockheedmartin contract is still rideled with inconsistencies. They will have to decide whether to put the jet into full production. And more than 120 countries, im taylor rigs, this is bloomberg. Tom . Tom thank you. One of the back stories looking forward to Janet Yellens speech on friday is the dollar. She a slave to the dollar, to the movement of the dollar . The idea that chair yellen whatever she wants didnt want a strong dollar . Richard cochinos is with us and also helping out on International Relations particularly advantageous to have mitch here with the earthquake in italy. Richard, i look at the dollar and the assumption that what we want at any cause is stability. Can we have a strong dollar that is not a brutally strong dollar . Richard i think so. I think you can end up with that in the g 10. In emerging marks, its much less clear in my mind so it rem depends on the currency we are talking about in the currency group. The main thing is the investor positioning which we already think is in the emerging markets in the past week and perhaps in the pound sterling that if you get a much stronger dollar there, thats basically going to be kind of an issue and thats going to be something which galvanizes other movements and investor flows as well. Tom all of our staff is wearing Banana Republic this month because you question whether the United Kingdom is going to be the next Banana Republic. If you get the next call, is that discreet to the United Kingdom or does that have knock on effects . Richard for the same reason equities and currencies, you cannot have a move like that and not have it affect currencies as well so to answer that yes, it will affect the euro and any of the other major currencies as well. Francine so i dont use that phrase very often. Its a small state but politically unstable, ouch, tom, its a little bit hurtful because of the capital but what does the u. K. Actually export . Finance. Of the the brexit. [laughter] francine but does the weaker pound mean the u. K. Is less politically strong . Regarding what the government is going to do on fiscal paul , i think the e. C. B. Also in september is going to move towards stimulus. The big question from our perspective is whats happening on the fiscal side. Is this an opportunity for germany to rethink its stance on fiscal paul . The answer to both is no, but thats how id say it works with the economic risk. Francine and brexit is no longer an excuse not to hi grate . Richard i think if you get weaker u. S. Data and you dont ee pressures emerge into q three and q four, its not an excuse to not hike rates its just not an excuse to not hike rates now. So the markets not sure, maybe, maybe not a hike will take place in december. If it takes place in q1 instead of q four, thats not the end of the world in a policymakers perspective. Francine if youre janet yellen tore next president of the United States, i know we havent had great stress because with brexit and only 12 months ago, the state of play is one of its stabilities that is masked by something that could happen thats a lot worse than whats been talked about. Yes. But