by our digital divide? speed,ot the schwinn 10 we look at bicycles. this is "bloomberg surveillance." we are live from new york. it is friday, august 1. i am tom keene. it joining me, scarlet fu and adam johnson. >> a lot happening. stocks selling off. europe and china down about 1%. this is in spite of better manufacturing data we got out of china. president kirchner denies her country defaulted. today is jobs day. a lot to talk about. at 8:30.ent is out at 945, u.s. pmi. it is followed by the university

of michigan confidence. a lot happening. -- ies have decelerated should say accelerated to the downside over the course of the past our. they are down about half a percent. king and burger procter & gamble are at 7:00. chevron at 8:30. berkshire hathaway after the bell. chrysler's july auto sales up. that is below -- that i stocks, bonds,t currencies, commodities. linkage between the futures. dow futures -110. under 134. the nymex crude, well under.

the six near 17. there is the dow. will have the graphic on that and a moment. dollar-yen, 102.94. gold into $1300. alan krueger is joining us in the 7:00 hour. here is a regular unemployment rate. in 1981.he recession down we go. we roll over to the 6%. the red line is chair yellen's headache. highers a much unemployment rate of 12.7%. cap here versus the gap year. "why" of fed policy right now. they are moving in the same direction and that is the

pushback. we looked at the front pages. we did not know where to begin this morning. scarlet fu will help us out. >> we have the latest on israel versus hamas. the cease-fire started falling apart just hours after it began. in the last 90 minutes or so, we have reports of firing. it is not clear. we have conflicting accounts of the breach. israel says hamas broke the truce. was that it would lead to a lasting agreement. thehe headlines come across terminal. we are getting down to counting rockets. seven rockets from gaza fall in open areas. eight rockets fired at israel. that is from the israeli army. >> i think the death count has been updated to more than 1400

palestinians and more than 60 israelis. right that this was brokered by the egyptians question mark which they were born -- working across borders. it is almost the wrong word to use. they want a lasting -- >> we're going to check in with elliott gotkine to find out the latest. we want to get to our second front-page story. the equity selloff that began in the u.s.. it circles the globe again. >> it is not the baseball trades? big losses on u.s. exchanges. dalles falling almost 2%. the racing gain for the year. 97% of members declined. u.s. futures, sinking lower. >> when we got up this morning, i thought we are going to get a

little pause. over the course of the morning, and spite be better data we got, -- >> we will feature this out with christopher roan. a terrific technician. here are the numbers that matter. we are going to try to give you the markets without a lot of hysteria. haiyan july 16. there is a collection -- correction. 18%. i could have gone a little grammar. grimmer. down 300 points. it is painful and it hurts, but we have gotten so accustomed to all of this fed sugar we think we will only go up. >> you go to cash or do you do something else?

>> are you buying after yesterday's selloff? what are you doing? tweet us. we want to hear from you. i am investedwhat in -- double leverage cash fund. 200% cash. republicans on capitol hill fighting among themselves over immigration. john boehner had to cancel the plan to vote. cruz is urging lawmakers to oppose leaders. this is happening as congress gets ready to get out of town for their five-week recess. today is more of this after they get five hours sleep. in the house. >> they only get five hours sleep the day before they go on recess. last night ande my take is this is a huge defeat tor new post eric can

leadership of the house. >> a handful of republicans have hijacked the party. some fighting within the republican party. >> we have a global market selloff again. a wonderful person to speak to today, graham fisher. he links and markets with finance. us, you get lucky sometimes. a nobelspence is laureate. we will speak about his summer essay. market selloffs, you talk this -- at stanford and migrated to nyu. stanley fischer has been known to throw chalk. >> i never did it. how weael spence on

control our emotions when things go down. >> this is -- there are two things going on worth attention. the markets have not figured out how dangerous the global economy has become. secondly, we have these better than expected gdp reports. monetaryslated in policy. >> two crosscurrents. josh rosslyn, you are shaking your head yes. isyou agree that this possibly global contagion? as a global contagion, no. i agree we have a larger issue. the rate of recovery globally has not been what it has been expected to be. if you look and dig into participation rates, we have real reasons for concerns.

there is too much irrational exuberance. >> what did you mean a moment ago when you said global markets are dangerous? the global economy, the tradable side of it relies on flows of people, information, capital and goods. four are under threat. we are shooting down airplanes. whereis a problem about to fly. cyber security as a bonus contention. tons of tension. the middle east is a disaster. underpinnings, the basic stability that underpins these global flows is questionable. >> there is a wall where investors have to face.

everyone comes back to the idea that there is so much liquidity around the world. as long as the central banks system, thento the path of least resistance is higher. >> that has been true, especially in the united states. and questiono stop whether without functioning infrastructure, those flows make it to end markets and that is the reason we have not seen a stronger recovery, even with all of the increase. quickset think our audience would be fascinated to know how michael spence invest. academics have a strong opinion about how to place capital. formula?he spence >> after the crisis, i became conservative. i went to a specialized small investment house that found a

way to find yields. there is a longer-term set of investments in private equity and absolute return fund. >> thank you for that clarity. this is something we will follow through the entire morning. across equities with bond currencies and commodities. futures are at -13. company news. >> a major new player in the t-mobile bidding war. -- bidding $15 million for a stake in the company. t-mobile has been in talks with sprint on a $32 billion merger. france's number two bank reporting a better order. it rose almost 8%. some general motors dealers say the automaker pressure them to boost sales figures. they were asked to buy more cars

last month. that is how gm showed a 1% gain. july's sales figures are due out later this morning. we will break that for you when they come up. >> when we come back, argentina has slid into the fall for the second time in 13 years. resident kirshner says they did not default. we will debate semantics. who is to say? onoomberg surveillance" bloomberg.com. we will be right back. ♪

>> futures -12. we will keep you abreast of the markets through the morning. part of that is jobs day. later this morning,,'s perez.

he will be with betty liu, in the loop. what a lineup. we speak with tom perez. this friday, this is "bloomberg surveillance." i am tom keene. scarlet, we go south. -- we global contracts have a global selloff. where to start and what is driving it. the timing of a fed interest rate increase. ongoing debt crisis. we will focus on what is next for the latin american nation. josh rosner has written extensively. he is here to provide us guidance. you say there is no global contagion from argentina, but it is part of what investors faced.

why does the default, whether s&p says it defaulted or argentina claims it did not, why does it matter for investors? >> we are going to see if there was a failure to pay and whether there is a represent over a notion of debt that has been is then or argentina most expensive dead to ensure. that would be problematic for the country. for some degree to its trade partners. i don't think it will have a global impact. it is occurring in a faltering economy in a faltering region. it is just adding fuel to the fire of concern. >> you less context. we talk about how argentina has -- on global markets for 13 years. what is it missing by not having

access to that capital? which they have left foreign direct investment on the table. paying the settlements and having access to global capital market, they have lost a $70 billion to gdp at a time where gdp is already faltering. theis going to contract for first time since 2002. gdp is relatively low, two over 45%. it is going to get worse. gdp will rise as debt levels rise and as gdp falls. if it is not cured, we will put them back on the path to a 1989, 1991-style crisis.

>> the supreme court has already said that elliott management is due money. the money was not paid. how can there be any conclusion other than default? >> it is hard to understand, especially when you read the language. bondholders have not been paid until the money is in their pocket. it has not been. it is a bank of new york mellon. it seems to be clear. >> let me bring up a chart. it is one indication of the trauma. spence would not let me do a log chart. there were 14 types of floating

currencies. thergentina part of international system or are they so far outside of that we can separate them? >> i think they are in the completely, but they are not completely disconnected. people are investing in other latin american countries. important companies are located there. they are not disconnected. what they are is going off on the wrong course. >> should the imf step in? >> i do not think so. there is no fundamental basis for an agreement right now. around andas to turn move in a different direction before the imf. >> what is the single he then

you will be watching for that could make things worse? judgments. second, if they do not negotiate a settlement within the next 60 days, you will trigger a default clause, which could lead to an acceleration on payments to the 93% who did take part in the agreements, which would wipe out the entire foreign reserves of the central bank. beyond that, we have other significant problems. the exchange bondholder clauses from 2005 and 2010 also have the same language that was included in the suits that elliott and others one. -- others won. >> it sounds ugly. it also sounded ugly when we were talking greece and we got through that. >> greece decided to be part of

a solution and worked with creditors. we have seen the exact opposite behavior here. >> it is still small, like greece. >> our guest host. >> is the talk about the fault has you down, how to ride away. we are going into the labs of specialized. >> it is michael spence. >> we have the model of the bike that won the tour de france. that is coming up later. does not have training wheels, i am not on it. >> this is "bloomberg surveillance." a selloff friday morning. we are streaming on your phone, your tablet, and on bloomberg.com. ♪

usalan krueger will join later. futures -14. a digression. i thought this was sharp. the success of putinism will depend a great deal on the and russiaputin under him. if you try him sing ukraine, turning it into a basket case that comes big inning -- comes begging to moscow, he will look like a winner. with her inagree one sense. i think it is -- to isolate yourself as a failing economic

strategy, but it may work in the short and medium term. >> as a political strategy? >> yes. of ukraine andut russia this morning. >> how curious that mr. putin gets quieter as he becomes more isolated. sanctions is the really beginning to click in. >> we will continue our discussion on this jobs day. coming up, robot taking away jobs from workers, what kind of workers come out on top. michael spence is here with his answer. this is "bloomberg surveillance." ♪

>> good morning everyone. you see gaza this morning. so much for the truce. this is "bloomberg surveillance."

with me, scarlet fu and adam johnson. a quick data check. markets continued their descent from what we saw yesterday. futures, -13. dow futures, -105. you see this with hydrocarbons -- 32 on west texas intermediate. >> and we are keeping an eye on developments in the middle east. brokeredu.n. cease-fire has been broken. both sides pick the blame on the other. for more, we go to elliott. give us the latest. >> the latest is that, although the israeli government does not have an active policy of saying cease fire is over -- there is no official return to full hostility, they are saying that the cease-fire is over basically. it is hamas who says --

they have blatantly broken the cease-fire, to which they committed. israel is blaming hamas. this is after the 72 hour cease-fire went into effect. >> have we heard anything from john kerry or the united nations,, who are at the forefront of negotiating? >> yes. all of them have signed up to it. we are not hearing any word. phone calls are not frantically going to hamas or the israelis. do not forget, this is not a proper cease-fire. this is meant to be a three-day, temporary humanitarian truce, to allow food and medicine to get gaza,bt the -- to get to

and also to allow breathing space in cairo. >> you have been so good on the fractious nature of hamas. are we speaking to one hamas this morning? >> in terms of the delegation due to go to cairo -- it was hamas and other militant factions. the u.s. and israel consider them terrorist organizations. egypt would be there in the palestinian authority would be there to mediate. we do not have specifics as to who would have provoked the israelis -- as far as the israelis are concerned, that is what happened. do have some headlines from the last 10 minutes or so. tank fire kills at least 27 palestinians in south gaza. this is according to the

associated press. how has the ground or changed? originally, it was to destroy the tunnels. >> israel has been pushing for the demilitarization of gaza. hamas uses to infiltrate israel. i do not think that objective has changed. the forces remain on the ground and the wording of this cease-fire agreement was that israel would not be able to advance beyond its existing positions. it would be able to destroy tunnels behind its lines in ga za. i do not think it has deviated from that initial objective. there are heavy operations to ely, but imas complet do not think that anyone thinks that is an objective. the silence out of the arab world is deafening, according to

the new york times yesterday. is there any sense that israel is cooperating? >> well, overtly, no. not explicitly. we are due to hear from the saudi leaders in the next hour. they have been conspicuous by their silence. the objections -- egyptians have not been silent. the jordanians have been silent. you have the saudi's and to the egyptians and the jordanians on one side. then on the other side, you have the qataris and turkey, who support hamas. not explicitly, but these things are there. we have not heard the usual condemnations of israel united throughout the arab world. >> the silence is deafening.

we will check in with you later as well. >> this is my summer essay. it is from foreign affairs magazine. andrew mcafee and michael spence, on the new world order. a new creative class that is disrupting all we know or knew about labor capital and the betterment of our human ca pital. to the fear of many americans, the new digital capital -- michael spence, congratulations on flogging this on children a month once. why did you write this essay with the two professors at m.i. t.? >> they wrote a really good book in which they try to lay out the evolution of a very powerful digital technology that is changing the world of work, the world of manufacturing, and so on. i have been working in parallel

on the same kinds of things. we got together and thought nsa of this kind might help people to think about it. >> the fear of many and what janet yellen addresses is the slack in the economy. are these americans left behind us permanent losers? >> well, there is hope. it requires significant investment by individuals, by governments, by societies, and getting ready for a very different world of work. t andich service is dominan your ability to deal with value added is knowledge and so on. a combination of robust and 3-d printing will do many of the manual things that we did before. so, we still have people doing manual things. i do not think construction is about to become automated yet. you can, they do say

3-d print most of a building at this stage. >> i will believe it when i see it. spence, you say that people with ideas, rather than workers or investors, will be the scarcest resource. how do i prepare my children to be valuable, productive adults? to get them an ivy league degree? >> that is not a bad start. one of the implications of this is not new. there is a premium on having high-quality education and getting as far up that letter is you can get. d up.oks to be going up an du >> there is more competition from china, from russia, from brazil. >> these are skills that can be traded, if you like. they are services that can be traded. >> i recommend eight weeks of math camp. >> i can understand how that would be the message to your students at nyu.

in the scheme of things, that is a privileged few. what is the message to thousands of americans who are looking at the numbers and do not have a college degree? >> i think we have to help them. , the big challenge is this transition we are in. many americans prepare themselves with society for a world of work that is moving away from them. we have labor markets on equilibrium. their skills on the supply said the do not match with the demand side is asking for. there is no perfect solution for this. for people of all ages, we have to help them close that gap. move toward the demand side of labor. >> it is regression july. this is the first day of august. we're really talking about returns to scale. traditional ways to measure efficiency within the economy. you three academics come over to

the power level. explain the power law and what that means to our viewers. >> power law distributions are basically fat tail distributions. the traditional bell curve has narrow tails. >> if you make most of the gains. >> exactly. a few make most of the gains. the extreme version is winner take all. >> a lot of people that we interview and a lot of what we read -- is that how a lot of americans feel? it is a society of winner take all. should we change that approach? >> i think it is a misperception. winner take all is a misperception. it is true that you will get a facebook or a twitter or a google or something. a few people will get very rich. then there is a whole bunch of other activity, writing apps for

things. a multiplier effect. it is pretty well documented by people who study these things in some detail. >> how does that fit in with extreme competition? this is something that josh roger has written about. i know that you mentioned this as well. >> i will not implicate eric in what i am about to say. i think that the real rock stars, whether in entertainment, on,ts, technology, and so are always going to be there and deserve what they have and so on. ceo's and higher-level management compensation is a different story. they are not all rock stars. we are a country where the difference between what they are paid and what the people in the middle and bottom are paid is very high. i do not think we necessarily want to continue doing that. >> michael spence, nobel

laureate, professor of economics at nyu cool of business, and graham fisher as well. our trigger question is a good one. >> we have intellectual questions. what do we do with the money? are you buying after yesterday's sell-off? stocks open today -- futures down 100 points. futures down too. we will be back with josh and the nobel laureate. ♪

>> breaking news from the world headquarters in new york city. we go to israel. forget about the truce, it lasted just hours. an israeli army soldier, believed to be abducted in gaza. that is from channel to in israel and confirmed by bl oomberg. the israeli army suspects a soldier of abduction. we will follow this through the morning. let's get to other top headlines this morning. american who is infected with ebola is being transferred from west africa to an atlanta hospital. peace corps volunteers have been pulled from the infected countries. money tolth is sending

the infected region. a new report confirms the suspicions of senators. the cia spied on them. the agency's officers had intelligence community computers. the cia chief has apologized. they can listen to angela merkel's conversations, they can surely keep it on shore. the story of baseball's trading deadline -- a farewell to arms. some big-name pitchers are changing teams, as tom blows the bugle. red sox give up the season, trading john lester to oakland. pity the red sox. are they going to do anything? >> it is like when we were kids. there were like 87 people traded yesterday. ice, from tampa bay, going

to the tigers? >> fiu are saying this was great for the red sox. really? >> it is about money. they have to clear the books. everyone is burned by your a-rod. it is your fault. the yankees screwed this up for baseball. the only way long-term contract work is for economists. ce you want to take spen from stanford to nyu, it works. >> play my aps. -- yankees. let's get back to what we do here on "surveillance." we're going to talk about our single best chart. we sell the selloff yesterday and today. the industrial companies are trading at three-month lows. adam johnson put together this chart.

with the help of chris verrone, who will be joining us. this is a shameless plug. a group is trading at three-month lows. that has happened a couple of times in the last year or two years. how has industrial stock are formed? -- performed. it has gone up and seemed to have turnover. >> when a quarter of the sector sold off, it is to be a buying opportunity. >> this is a low chart? >> in theory, yes. when you look at futures down on yields yesterday, that is scary. >> this is your answer to the twitter question. >> do you buy? >> it is reckless endangerment, that is what it is. >> maybe the fed is going to be -- i guess it is still supported. maybe they will be

sitting on the sidelines. >> are you suggesting this market is supported by monetary policy? >> is there any question? >> professor? >> i think it is. >> would you like to disagree? >> no. honestly, both of you guys -- let me ask you, professor, were the fed not involved right now, where would stocks be? >> that is a fairly hard question to answer. lower. >> you have to take that question and kind of move back. were they not involves now, were they not involved five years ago? at the end of the day, you really have to look and say we have a varied type of recovery. it is questionable. you have to question whether the market believes, and that is what i think is going on here. if it is not really expanding,

with all this monetary poluicicy support, where do we go? these are questions we will be attempting to answer. >> i think there are two things. whether the fed is affecting the economic recovery and what else is dragging. and whether it is affecting market prices. in, this trait -- the detroit tigers are unbelievable. >> it is sick. >> david price -- theere's what else is sick, bike that one of the tour de france. we have it here. it is one of the bikes made for the tour de france. >> tiny. >> i can't wait to pick it up. we will be right back. ♪

>> this is "bloomberg surveillance." we're going to head over to adam with a special friday guest. en fromre joined by b specialized bikes. we have the baked that won the tour de france. this thing is unbelievable.

i am picking it up with two fingers. >> that is right. >> i could do it with one. tell me about this bike. it is unbelievable. >> this is the bike that was used to win the tour de france. it won 9 of 21 stages. grams.ave to be 6.1 kilo this is your complete race bike. it is the first bike ever where every size writer is getting the same optimal performance, the lightweight efficiency -- we partnered with mclaren and formula one. bike perform better, we had get real world data. a lot of technology to measure the stresses in the frame. then we could establish performance targets and we built each of those frame sizes

to that specification. >> very tremendously. you have a much thicker frame up here. then, you taper down here. what is inside? >> the whole bike is carbon fiber. we use a lot of technology. we employ technology to maximize the performance to benefit the rider. we're talking about solid modeling technology that we can use to determine optimal shape and carbon fiber layout, so we get the strength and thickness exactly where we need. >> we had a nobel laureate on stage today. how much math is in this bike? >> a ton. we invested in our own wind tunnel. aerodynamics, all kinds of experts have gone into creating this bike. also, the equipment used. >> these things -- we have the shoes right here. this is so light. >> extremely light and there is

a lot of technology. designedergonomically and tested. these have been put in peer-reviewed journals to decrease heart rate. you optimize the way the power goes from the human and into the bicycle. when you're on a bike, it is man and machine. we work to make the rider on e with the bike. graham have five bikes at home. he is thinking about adding a sixth bike. how much would that cost him? about $10,000. we work hard to employ the technology into bikes that are available for many more people. the opening tarmac is about $2000.

the same engineers with the same learning are being employed in other bikes. >> that one is $10,000? >> above this, there is a limited edition that is $20,000. we'll may made it 250 of those and they are all spoken for. >> mine is about $600. it is a mountain bike. this is made in the usa? >> all of the technology is designed in the united states. it is all in silicon valley. then we partner with the very best in terms of manufacturing. wherever they might be. >> tom, how does this compare to your bike? >> i have the firm, strong beach bike. [laughter] in the sand, you have to get the training wheels. this is awesome. >> this is absolutely awesome. i will pick this up. i can use just one finger. i am not going to drop it. >> do not drop it. we will can do the bill. >> thank you for joining us.

>> the me do a forex report. we will not do the italian lira here. the yen is moving. stay with us. ♪

>> good morning everyone.

conservative republicans rebellions their own leadership last night. immigration reform is dead. today is the last hope for legislation to fund our border crisis. we should go to cash. it is a bear market. the dow is down almost 3.4%. there are two americas divided by our great divide. good morning everyone. we're live from our world headquarters in new york on this first day of august. let's get right to our morning brief. adam johnson has that and you go to israel. >> absolutely. the army spokesman has confirmed that the cease-fire is over. we should know that stocks are selling off again, both europe and china. moody'sd also note outlook. u.s. is jobs day in the

personal income and spending will be released. and we have u.s. purchasing manager's index, followed by the university of michigan confidence. s, burger king and procter & gamble at 7:00. did chevron just report? >> chevron eyes that 8:30. .&g just came out it was $.89 for the quarter. they did have a better than expected of bottom line. than are slightly less expected. >> organic sales show some of the challenges. 5, 6, 7%. >> mid single-digit growth is what they see in terms of core e.p.s. >> we should also point out that berkshire hathaway will be reporting. one of the only companies that report after the bell, and they

do it on a friday too. general motors will have their auto sales. chrysler was under the forecast. amazing how optimistic we have become. >> in terms of company news, there is a major new player in the t-mobile game. iliad is bidding for a majority stake in the company. that sent shares of that french company into a tale spend. there have been drawnout talks with sprint on a merger. one day after the biggest bank in france posted its worst loss ever, the number two bank posted numbers better-than-expected. hurt by u.s. fines for violating sanctions. -- chrysler is writing jeep riding jeep to its best sales ever. they scored 41%. it was the 52nd straight monthly sales game. >> we walked in with a truce in

israel and gaza. that truce has been shattered. reports of an israeli soldier -- not sure the right word to use. kidnapped is what channel 2 sa ys. >> abductive? abducted is the way i will put it. the cease-fire is decidedly over. >> it was supposed to be three days. a humanitarian cease-fire. >> this was the entire world coming together to try to create this. you had ban ki-moon and john kerry going back and forth. some of the arab nations working behind the scenes. yet, can't do it. >> let's get to the market. it was sudden yesterday. >> down 317 points yesterday. it was the worst day since february. stocks are down again this morning. chris brown is joining us to try to make sense of this. verrone is joining us

to try to make sense of this. >> this is an opportunity to be a buyer of stock. i do not think we're quite there yet. it is early to make the viable overhaul. at the moment, we're down 3% over the last five trading days. to generate pullback lasted 14 trading days and 6%. we think that there is a little bit more to go. let's also keep in mind seasonality the next 4-5 weeks. >> professors take 4-5 week vacations. let's bring up the bear market. let's identify -- you are great at this -- 17,000 high-end. 10% correction. 18% there market. we are nowhere near that. what is a correction, is it 10%? >> let's think about what

percent of the market is in and up trend? that is nine out of 10 stocks. you do not get bear markets when trend is that strong. pullback, 6% or 7% is reasonable. it has been 426 trading days since we last tested the average. >> that is two years? presumption would be that the s&p at least lists at 200 today. >> what do you say to the cash crew? four people said go to cash. what do you say? >> i say that bull markets do not end with the absence of euphoria. we do not see many signs of euphoria. >> in other words, there is not enough euphoria right now? there's a skepticism? >> even in conversations with

our clients, we still describe most investors as having one foot out the door. very quick to look for a pullback. we will see how fragile sentiment is. it will not take 15% decline. >> is that the case across the world? >> i would say absolutely. in our discussions with clients asia, a similar message. >> professor krueger is with us. go togle is we need to catch because janet yellen is supporting this market. is the central market supporting verrone's equity market? >> they're maintaining low inflation. >> if stocks go up, ok. >> is that a benefit or is that ultimately -- i don't know what the word is? we are just up on ethers and lacking reality? >> it depends how far we are

from sentimental values in the market. obviously, huge crash will not be good for the economy. the fed does not want to bring that about. they want to maintain full employment and stable prices. and it takes into account what is happening in the stock market. that is not the main objective. >> alan krueger, did you sell your faith look -- facebook shares? >> i have not. >> what about your biotech shreaares? >> city economists be telling you what to do? in i-295, it was a tremendous buying opportunity. >> tension on the set of bloomberg surveillance this morning. >> that sets the scene pretty nicely. >> what does washington get wrong? you advised president obama for many years.

what does washington get wrong in looking at wall street? there was anow, tremendous blunder if you look at the prices. washington allowed risks to build up in the financial sector in portions that were unregulated. we did not enforce the regulations that we had. i think that was the most important blunder. we are still paying the price. >> is washington still paying the price for how people feel? >> i would not say that. market that the stock has improved mostly because the economy has improved. companies have been very profitable. lower interest rates will probably help in that environment. fundamentally, we have seen improvement. >> chris, as you know, i am a huge fan of your trend based work. where is the trend most attractive right now? >> what we will see as large

capital technology remaining a leader here. i still think large cap health care. that remains absolutely pures -- an absolute leader. >> how do you maintain? >> how do day-to-day versus my peers? it is groups like hospitals and managed care, software and internet. >> i do not mean to disparage. i want to make that clear. help me out. our twitter question of the day. are you buying after yesterday and this morning's sell-off? we want to know your answer. >> we have gotten a huge response. geopolitics of

ment are front and center. >> they announced a 72 hour cease-fire in gaza last night. it would start margaret a couple hours into it and to the cease-fire has fallen apart. you have rockets and tanks firing, now a suspected abduction of a soldier. john kerry and ban ki-moon or charge put this together. >> israel is conducting extensive searches. we will go to israel and elliott as the defense force spreads out in gaza. futures at -13. stay with us. ♪

>> this is "bloomberg surveillance." adam, we are focused on the market because equity index futures in the u.s. plummeted in the overnight session. they stabilized a bit here. a lower open this morning. >> dow futures are still down 100 points. two hours ago, they were flat. tom, you have the overnight. >> we have some real stability. >> we had the china pmi numbers.

then europe opened for trading. weight of the problem -- i in here. with 2% inflation on the horizon, that is a positive. they might also be pulling back. is that why we are down? is atimately, there readjustment period. we're already starting to see those groups were influenced by liquidity. microcaps that bear the brunt of the selloff. that is not dissimilar from what we saw in 1994, when those same groups sold off first. that is part of the same story. >> the vix is at 17. the average is 20. i think that we are drugged into a 5% rule that is the end of the world. >> i agree. the movement of the vix is reflective of how vulnerable the sentiment still is.

it does not take a big decline to get people nervous. >> this goes into the idea of the great moderation. paul that after the volcker years. >> even though the month-to-month job numbers jump around a huge amount, they're moving at a lower level than they were before the great recession. >> what does this mean for policy in washington? you have to sit on a house in the oval office. >> i play tennis with them. advise a president in a complacent time, that is different. there is no sweat. >> there is tremendous amount of sweat. you are trying to work with congress. >> how can he blame congress? >> let's get a final topic from

chris. what will you look at as a leading indicator? >> i want to see a spike. i want to see more fear come into this market. i feel better buying stocks when we see more people selling them. let's look for a reversal day. higher close. >> thank you for joining us. >> are you buying after yesterday's selloff? ♪

>> good morning everyone. it is job state could we have news from israel. >> the fighting has erupted again in gaza. the cease-fire was announced last night. it is over now. hours after it began. minutes, we have headlines that an israeli soldier has been abducted. the army of israel has confirmed this. we went to get more context from

elliott in tel aviv. tell us makes --help us make sense of these headlines. is there a connection with the broken down cease-fire? >> i think so. this suspected kidnapping must've happened around two hours into the cease-fire. there was heavy shelling into israel. this came after a mortar was fired from gaza to israel that seemed to not do any damage. then, israel started pummeling quite heavily. the health minister in gaza is suggesting that there could be scores of people killed as a result. it seems now that perhaps the reason that israel was hitting the area so hard was a desperate bid to try to recover this soldier who was kidnapped after their soldiers came under attack after the cease-fire had already begun. >> do we have any detail as to

how he was abducted? was this hamas going through the tunnels, overthrew israel? or was it hamas grabbing someone who was already in gaza? >> this was inside the gaza strip. how the soldier was abducted -- report suggested that he would've been abducted around where the israelis were close to a tunnel. of course, if he was taken into hard.el, it will be very extensiveonducting searches in southern gaza in order to find a missing i. d.f. soldier. there will be a lot of fears that if a soldier has been kidnapped, it could be a repeat of what happened with the soldier who was kidnapped inside israel in 2006, held in captivity for five years, until he was eventually freed in

exchange for the release of more than 1000 palestinian prisoners. >> what is the path forward on friday and into the weekend? >> there's only one path where immediateead in the term and that is backward, not forward. you cannot see an israeli delegation sitting around the table. they consider hamas a terrorist organization. you cannot imagine them going to cairo to discuss a more permanent cease-fire when one of its soldiers is being held in captivity by hamas. there's only one way that this will go. for the next few hours, that is backwards, more fighting. >> stay with us. we have alan krueger from princeton, who has been wonderfully varied in his economics. he wrote a book cover to cover. what makes a terrorist? we looklook at hamas,

at them as a terrorist organization. comment on the mindset of terrorism. >> terrorism is a political act. it is an act of political violence. hamas is clearly a terrorist organization. they're not desperately poor. their people who want to bring about political change in any responsible way. message in your book is that this was an upscale event. it is a middle-class and affluent world that was part of the time of al qaeda. can economic programs and policy change behavior in gaza? >> there is a limit to what can be done with economic policy. ultimately, we need to bring about a political solution. if you look through the history of terrorism, it is not only in the middle east. that has been the case throughout history. >> elliott, when previous

cease-fires have collapsed, as this one appears to have, rockets had begun flying immediately. what is it like in the skies of tel aviv? >> there have not been any rockets fired. if i take out my red alarm, which goes out whenever there's a siren, i can see that one was about 25 minutes ago. that was about eight kilometers north of gaza. velocityy event, the or frequency of rocket fire has been diminishing. certainly they are still flying. indeed, this is arguably the first sign of the cease-fire not holding, when it was fired about two hours in. it looks like this is really soldier who was abducted was taken when forces inside of gaza came under fire. so, that seems to be the situation now.

israel will take very seriously one of their men who has been kidnapped. you can see this escalating even further. >> very briefly, before we go -- netansolve of benjamin yahu -- harder now? >> it is hard to see him getting any softer. nevermind that they have been a gang him on to take a tougher line to begin with. this is the worst possible scenario for israel, just having a soldier kidnapped. he would have probably been a reservist. he is probably a normal person working a normal life, called up due to this conflict. if you look at the age of the israeli soldiers who have been killed, they're all in their 20's. that is very probably a young man. it will be a devastating blow to israel and no doubt celebrated by hamas as a significant gain. >> all right.

we will continue to keep you up-to-date on the latest headlines out of the middle east. >> meanwhile, in job stay at home. we are following the market selloff. it seems to have stabilized. are you buying? tweet us.

>> good morning everyone. stay, we have the former chairman of the president's council of economic advisers. washington bailed out detroit, but they have not bailed out

other industries. save small business america. even as a recovering indust ry, the 17 million units annually -- you're thinking about this. both of you served with the president. what does that attitude get wrong about the detroit bailout? >> we're looking back and seeing what we got wrong. the auto bailout has been far more successful than we anticipated. it has been successful for a number of reasons. been thriving under their leadership and merger with fiat. the overall production has been raised by autos. for more than a quarter of the bounceback. if you look at other industries, it is positive. these suppliers are often small companies, so they benefit. >> the multiplier effect is the heart of this discussion. >> there's also the reverse

multiplier. had they allowed the collapse, the supply chain could have been dragged down with it. we would have had a weaker recovery. >> we hear about this from princeton, new jersey. the founding fathers read john locke -- each on their own. it is different from germany. >> you have to do things it you would not otherwise do in the midst of a crisis. a lot more innocent people get hurt it one of the difficult lessons we are drawing is, when is it appropriate for the government to step in? this was so successful, maybe future government will be more activist. >> then they will be too acti vist. interesting. republican or democrat? >> either case. it is important to know why this works so well. there were a whole bunch of conditions. for example, vix financing was

dysfunctional. financing could have been much worse, with much more pain. maybe that will not be the case the future. americanlieve in manufacturing renaissance? >> we are seeing a bounceback. there is no reason we cannot compete around the world. there is a limit to how many jobs in manufacturing can provide. the future of the american workforce is in manufacturing. gaining jobs is better than losing. >> the debate of the moment with immigration is mass failure by republicans in the house -- are we still losing jobs? is the immigration of people coming in threatening american jobs? >> i don't think so. on net, immigration is very positive for the u.s. economy. look no farther than the congressional budget office report. immigration raises economic growth. it reduces the deficit.

you cannot get more of a win w in situation. >> i are we struggling? >> it is a great failure of our politics. there is no better low hanging fruit and immigration. >> one final question. do we still look at the auto industry is detroit? i am having trouble with this. it really is not detroit. >> first of all, it is global. it is north american. you also have the transplant, in ohio, etc. it is a global industry today. >> alan krueger. we need to go to breaking news. >> and m&a. sgms is buying bally technologies. pay $83.30 per share in cash.

slotntific games is a machine company. >> that has been the trend. in the bigger sense, mergers right now -- if you analyze the amount, it is 30% higher than last year. it is oval last year and 30% higher than 2006 with the all-time high. >> 2.6 trillion dollars in deals announced all of the world. it is up 70% from the same time one year ago. it. latest one just adds to in terms of futures, we had seen this big, sharp selloff earlier. it seems to have stabilized a little bit here. >> dow futures are only down 84 points. when we got here, they were flat. there has been an excel a ration. let's do a data check. s&p is down.

the 10 year is up. it was 246 before ms. yellen suggested that we have growth in the economy. crude oil is down despite concerns in israel and ukraine. is "numbered surveillance." ing on youram tablet, smartphone, and bloomberg.com. go pro are down after a net quarterly loss of almost $20 million. much asfour times as when you're ago. first earnings reports of going public. companydealers say the pressured them to boost sales numbers. that is how they showed a gain for the month of june.

and it looks like nevada is the winner of a derby for a tesla factory. they have broken ground near reno. the plant will make batteries for tesla vehicles and create jobs. they say they are checking sites in four other states as well. ofwe are talking jobs ahead the 8:30 jobs report. arew study says companies hiring in grand rapids, but not in sacramento. the manpower ceo is joining us. jeff, why the difference as you look at the cities? >> we have been seeing this. this recovery is a lot different from what we have seen before. typically, you have a slow start. then you would get everybody lifted at the same time. we are seeing the labor market being very spotty. it is getting better, but it depends what companies are in that area and how they are set up from an industry perspective. each city almost has its own dynamic, which is relatively

new. >> i understand how people can go to your website and figure out where the jobs are. how realistic is it to think that people can necessarily pick up and move on the hopes of getting a job somewhere else? what is your dice to people looking in that scenario? >> no doubt, mobility is an issue. we are seeing increasing. the amount of people that we are recruiting who are willing to move, because they have more faith in the economy and are not upside down and their house, is improving. mobility is an issue. particularly with this spotty market. there are still jobs in north dakota. >> what about mobility two countries abroad? if i am a young, highly educated college graduate with stem skills and a willingness to move abroad, where should i be looking? >> it is a great question. china, the amount of research

and development happening in china is a age difference in the global economy. clearly, china is part of that. we are seeing someplace in europe for the u.k. is now doing a lot better. we are seeing some of this movement. we were talking about this two years ago, maybe moving to kiev. probably not in the picture now. there are hotspots in technology. china is one of them. >> let's bring in alan krueger from the president's council of economic advisers. question for somebody in the real world. >> tom and i were talking about the revival of manufacturing. one of the problems is workers are hired three temp company. are you placing many people in manufacturing? >> is a great question. when we look at our book of ness, probably on average of 85 to 90 people are out every day on long-term

assignments. you would probably find 40 or 50% of those would be in manufacturing. those are 50,000 jobs, just from our company alone. clearly, manufacturing and the amount of employment is distorted by the right as a service company. reshoring ofny industrial jobs from china back to the u.s.? >> there clearly is. we have been working with lots of companies doing it. the real issue is that these are smaller companies. you talk about the tesla people. we are not seeing those kinds of plants be put in. we're seeing people from the west coast go to penang and now back to the u.s., but the difference is they are coming back with 150 jobs because they have gotten sufficient. >> thank you for joining us. headlines from

israel. the army says a soldier who was abducted was taken after militants came out of a tunnel. the israeli military is targeting those tunnels right now. we will continue to monitor the someone's. ♪

it is in new york on this

jobs day. happy august 2-year old. -- to you. it is the first day of august. gorgeous. children have eight books on their summer reading list -- they have maybe cracked the cover on their first book. it is august. do some math while you're at it. this is "bloomberg surveillance." atrlet fu, it is jobs day 8:30. >> we want to bring in betty liu, i know that you will have alan krueger. >> a treat for us. >> who else do you have on board? >> that is all we need for jobs day. on the other side of the coin, doug hyatt is joining us. he is the former deputy chief of staff to eric cantor. he is resigning by the end of

august. doug heye is joining us. also, mark from pimco. bill gross has been mouthing off on the markets. bill has said, say goodbye to capital gains, essentially. that 2% growth in this economy is ok, but not good enough. >> we will see what he has to say about the selloff that continues today. let's get to some movers. we will stay on this job stay thing. i am looking at linkedin. they gave a forecast for third-quarter revenue that topped analyst estimates. the stock is moving up. revenue will be as much as $547 million this quarter. projected $541 million. >> i am thrilled with it. it is very powerful. >> i think it is the most boring

website in the world. >> tom, you do not think it works will mobley? bilely. >> is a great way to talk to people. ♪[audio deleted] >> one-sided? >> it can be either way. it has a unique shift. >> it is the stuff that matters. let's talk about go pro. they're getting crest today. the loss -- $19.8 million loss. versus only $5.8 million one year ago. theory made eight cents per share. $24.ipo was 24 -- >> the stock doubled in that time. >> this is the surfing video.

corny collins was surfing using a go pro? >> that is awesome. >> when you go teach at princeton? i was trying to digest the surfing. markets, we want to bring in the twitter question of the day. are you buying after yesterday's sell-off? tweet us. what are you doing? ♪

>> it is never too early to look ahead. a monday, august 4, professor of a financial institutions at columbia business school will be joining us in our 7:00 our. -- hour. the big banks are under some legal pressure and fighting for talent. >> that is why morgan stanley had to up their salaries. >> this is "bloomberg surveillance." krueger, host is alan former chairman of president obama's council of economic advisers. let's start off with company news.

a mobile games maker is getting a $120 million shot in the arm. kabam. is investing in zen recentmade a do acquisitions as well. went in reverse is a year of slowing growth. they topped analyst estimates. there is a client search service for sales professionals. the fourth-quarter forecast also impressed investors. a company is offering prospective drivers $100,000 per month. morning's latest company news. >> with so much going on, futures are -14. there is no policy to the immigration policy. on this job stay, it is an ancient question for americans. in the summer of 2014, the disappearance of children.

do they steal jobs from americans? we have the news overnight of a complete collapse. you witnessed this in the white house. let's review this again, profess or. are the people coming and taking jobs from americans? >> primarily not. they're doing jobs that americans do not want or they bring skills that we need and can put to use. we are also bringing in a lot of entrepreneurs. they're careful analyses that have been done find that immigration has a beneficial effect on the u.s. economy. >> in the politics that you observe, the polarization in washington, is there any hope for a middle ground or compromise after the election on 2016? >> i like to be an optimist, but i think it is hard. if you look at the gerrymandering, a lot of house

republicans have relatively few hispanics. that is affecting the position on these issues. >> i think of the landmark labor research, particularly with mexicans along the border. can you sayism, that nafta was a success? >> i think they were a success. i think, today, we need more immigrants coming from mexico. we have a labor shortage economy if you look at our demographics. i think that nafta helped. >> you have the distinct benefit of working with a number of smart kids at princeton. they worked very hard to get there. how many of the non-us students that you teach are concerned about not being able to stay? >> that is another aspect of our policy that makes no sense. we take the best and brightest and educate them and sent many back. then they can be with us. they would like to stay here. it is very sad as a teacher to see that.

>> there is no difference in this debate. that kid at princeton is going to steal a job from an american. the parents of that kid on the border are going to steal a job from an american. come back with the statistic about how immigrants start the companies that hire workers. 500 companiess&p were founded by an immigrant or the son and daughter of an immigrant. but we are restricting them. they still a lot more jobs that they go back to singapore and start a company there. >> i want to bring in my morning must-read. it has to do with how jobs n umbers do not mean a whole lot because we live in a part-time age. he talks about how larry page and these other wealthy types are speaking about the need for people to work less, and do it more flexible formats.

he says that governments that paid macroeconomic and political decisions to employment levels are shooting the wrong target. it is poverty that governments need to tackle. what do you think? >> that mixes up a whole bunch of things. we need more jobs. that will reduce poverty. we also need more flexible jobs. that will help more women into the job force. it will help men to take more responsibilities at home, which i think men ought to be doing. you not only look at the headline number. you look at work hours and what is going on with economic reasons. weren-foreign payrolls $288,000 last period. what is your forecast? >> is peerless to make forecasts. the revisions are + or -50,000.

one thing that worries me about july is that it is a very seasonal month. the seasonal adjustments are enormous. we are adding a little bit more noise to july 's number given how much the labor market tends to move. >> that is a good tip. a lot of noise in "sharkn ado." >> my friends at the treasury department encouraged me to watch. i think it was kind of for them. they were dealing with the debt ceiling. >> total of 30 of being swallowed by something -- that is exactly the way congress handled the debt ceiling. >> it ends on the empire state building? >> that is a good summary. i do not want to spoil it. >> we should forget about the challenges we have seen and turn right to "sharknado 2."

>> let's get to the agenda now. we look at the stories shaping the day. >> i think there are numbers of ways to go. we have gloomy news in israel. a truce that just evaporates. it is true that everyone is trying with best intentions. i would suggest all of our reporting today is new levels of frustration. >> we will continue to monitor those headlines. you will head over to the radio booth. in terms of my agenda, berkshire hathaway. one of the few companies that announce results on a friday, after the market closes. that will be today at 4:00. we will look at how the company's various acquisitions have done. that is the bulk of their business. >> my agenda is all about markets. futures are down on the heels of

yesterday's 319 point decline. we had chris on at the beginning of the hour. he mentioned that leadership has been big cap pharmaceuticals. you also have to look at what happens. boring stuff like intel is doing well. this other comment is interesting. industrials have been sold off to such an extent that one third of them are at three month lows. nal. has been a buy sig >> futures have stabilized and come back up a little bit. ert's get to the twitt question of the day. here are the answers. normally, buy is the call. the idea of selling july and go away? >> go on vacation. it is august 1. >> another selling opportunity. it is time for the bears to

roar. thank you for that answer. and finally, i will be waiting for the call from yellen. >> will she ride to the rescue? >> she is focused on reducing the unemployment rate and getting people back to work and making sure the inflation rate stays put. >> is the fed doing what they should? >> i think they are. i think their direction is quite clear. the hard part comes when they start trades. that is an area where there is some uncertainty. >> saying it should happen sooner rather than later. fisherous that richard the head of the dallas fed, is not dissent. >> maybe he made his point in his op-ed. >> thank you so much for joining

us. he was a member of president obama's economic team. loop" is up next. we're waiting for the 8:30 jobs number. have a great morning. ♪

>> good morning. it is a big day. it is job stay in america. we're live and in the loop. we have a great show ahead for you.

we have full coverage of the july payroll numbers due in just under 30 minutes. heye willor and doug h be alongside alan krueger. we will see if they provide any common ground on the recovery and immigration. big setback yesterday on that front. we also have bull market coverage from pimco managing director, mark kisesel. we will get his take on whether the fed will raise rates qu icker. first, here's a look at the top headlines this morning. futures indicate that stocks will selloff and that continues. the dow industrial index gave back all of its gains yesterday. down over 300 points. investors are waiting to hear the july jobs report out in half an hour. and sales at chrysler state on the fast-track. they rose 20% in july.