headquarters in new york i am alix steel in for mark crumpton. this is "bottom line today president obama prepares to lay out his strategy to combat islamic states. will apple have a glittering upgrade for its latest gadget release? to our viewers in the united states and those joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines.

michael mckee tells us why the obvious jobs number doesn't change the overall economic .icture peter cook is following the latest developments on inversion and we begin with phil mattingly, the obama administration's strategy to deal with syria and iraq. >> administration officials and the president himself have been working for weeks to describe what exactly they are doing to counter the rise of the islamic state in iraq but also in syria. on wednesday the president himself will give remarks to the nation where he will lay out what the administration has done up to this point and what we can expect going forward. administration officials say there will not be any jarring new announcements. expansion of bombings

into syria. they do believe the president will work to explain the threats and what is at stake for u.s. armed forces. take a look at what he said just yesterday. asking i'm going to be the american people to understand is this is a serious threat. we have the capacity to deal with it. i am going to be asking congress to make sure they understand and support what our plan is. it will require some resources i suspect above what we are currently doing. >> you see the president definitely looking for some buy-in. tomorrow he will be meeting with congressional leaders, laying out exactly what he is going to say for them. we will see what their responses tomorrow afternoon. u.s. expanded its airstrikes in iraq and is this what we can expect more of what's to come and how congress might react to something like that? >> he has been supportive of what the administration has done. what you have seen as a gradual

expansion of that air campaign. win after islamic state militants and what you have seen now is each one of these campaigns has been bolstering iraq he defenses and kurdish moving forward. the big question, will this extend into syria? the -- administration officials saying he is not ready to make that announcement. when that decision is made we will know about it. up to this point it looks like the president has not weighed in on it. much.nk you so phil mattingly outside of the white house. the debatements in over tax of versions. chuck schumer is floating his own plan to punish companies that move overseas for taxes. his plan takes aim at companies that moved long ago.

you are talking back to 1994. i don't want to editorialize but that seems crazy. , if inversions are unpopular today he is making the case they should have been unpopular 20 years ago. is thely his proposal most painful of all the of version fixes offered up by lawmakers because it does cover the most number of companies, as many as 73 in all. that is how many companies have engaged in inversion transactions since 1994. his proposal here would not ban inversions but what it would do is make the economics more difficult. there wouldn't be as many tax advantages for companies going forward from this point on. he is dealing with the companies that are talking about it at this point. he is thinking about going back all the way to 1994. it would mean tyco international . companies that did inversions

way back in the 1990's. chuck schumer knows this proposal is very difficult right now in this congressional because republicans don't like in versions but they say the real solution is andrehensive tax reform only that is how we should address these issues. this is a political document as much as anything. the bigger player is the treasury secretary. we take will have a strong legal and policy basis but will not be a substitute for meaningful legislation. it can only affect part of the economics. only a change in the lock and shut the door and only tax reform can solve the problems in our tax code that leads to inversions. >> that was the treasury secretary earlier today speaking at a debate here on reforming the corporate tax code, saying

he sees no opportunities in the short term. he is urging congress to act on a comprehensive fix. if congress can't then this administration is planning to deal with inversion on its own. that is why jack lew is the more important player. >> he walked through a tight rope here. he wants to put forth a fix but doesn't want to take the heat off congress to pass something more comprehensive. >> he would much rather have this off his plate and there is agreement among democrats and republicans that inversions are not good and the ultimate solution is a reform of the entire corporate tax code. that is a long way off so the pressure will be on jack lew to come up with something to deal with these kinds of transactions in the short term. the question is how far do they go, how painful it will be, and how far back they will go.

>> a bit of a difference there. thank you so much. turn to the economy. august payrolls were certainly a disappointment but did they ?hange michael mckee says it would be a mistake to actually that that way. move thet enough to needle on any final fed policies. >> 142,000 jobs. the fed won't raise rates until the end of next year? no. first, growth. we need growth to get jobs and we are getting it after the awful first quarter. second quarter likely to be to 4.5%.en third quarter is running well over three percent. retail sales have been disappointing but that may be starting to change. how is back-to-school going? the international check -- international council of shopping centers said the last

week of august was up over 5% over the same week a year ago. how many jobs are there in america? the labor department's job opening index is accelerating since the spring. 3.3 million openings. they are not noisy but there is no doubt the economy is improving at a faster rate. >> it seems to me they're looking at the second quarter, maybe the first half of -- it has been relatively hawkish. >> the truth is we don't know what they are going to do. the truth is they don't know what they are going to do. a new study of the department just minutes ago find the public seems to expect a more accommodative policy than federal market policy participants. they also may be less uncertain about these forecasts than the policymakers are. rate offed funds

1.31%-end of next year. keep in mind what janet yellen told congress. if the economy is stronger increases in the federal fund's target rate could come sooner than the committee currently expects. it could work the other way too. we get new forecast for the policymakers at their next meeting. a very interesting day for market participants. >> thank you so much. coming up congress is back in session. we will take a look at what is on the agenda and how much more work is likely to get done before the midterm election campaign gets started.

make any't extraordinary claims.

>> it is the best way to let the people understand. >> congress is back in session after a five-week summer recess. is most pressing task avoiding a government shutdown on october 1. a former u.s. senator is a bloomberg can chew being editor. he joins me from manchester, new hampshire with more. welcome back to "bottom line." deadlock congress had a midterm vacation. how checked out are they right now? >> very checked out. they will be in session realistically for two weeks. i think the house is targeted next friday at the time they want to get out.

they do have to pass a continuing resolution. the spending amounts are not an issue because they are operating under a budget agreement that was put together last year. there may be a few issues they want to include on that continuing resolution and if there is any hold up those would be the items. >> they are going to be debating campaign issues. >> exactly. everyone wants to bring forward an issue to talk about that they think will reflect well on themselves during the campaign. the house of representatives they are going to have bills on jobs and energy. obviously things that are in the foremost minds of voters right now. the senate aren going to bring up a proposal to change the first amendment after 240 years. the idea freeze each doesn't work for some of the democrats in the senate. they think it may be a good

campaign issue. i doubt it. but it will take up some time in the senate. the two issues that might get done or an effort to get done are a prohibition on internet taxes, due to expire at the end of this month. and the export import bank provides loan subsidies for people that are exporting. it also has a charter that is due to expire and there is general bipartisan support for it but it will be tough to include items like those on a spending resolution without controversy. >> how different are these midterms over other midterms? >> it is always hard to say. this is the off year election for president in the second term, never historically being president obama.

have theepublicans advantage in picking up a couple of house seats and regaining the senate. new hampshire is a tossup. races could flip that the republican camp. that is not unusual. it has the potential to look a lot like 2010. >> you work with multiple administrations. --n you look at things like look at things that president obama has done, would you say his staff is failing him? >> i think they have to a certain degree but at the end of the day that responsibility is the president cost. he hires thatne, staff, he sets the agenda for the staff. he expect the staff to

provide him with information, to talk back to him, to provide contradictory opinions that he can work through? hasink one of the feelings been his inclination to surround himself with people that agree with him. for him to engage publicly. --t goes into the public into the budget debates, which i think he handled very badly. being public about setting a redline for syria. as a result he is dealing with controversies and feeling policy in syria, iraq, ukraine, that in many cases could have been with more focused foreign policy and a better set of strategic and suppose. >> we only have 40 seconds left but what the -- but what opening does this create for our -- for congress?

who can benefit from this? >> i think republicans are in the best position to benefit by tying their democratic opponents , especially those who were incumbents, to the votes for this failed policy. jeanne shaheen has footed with president obama 99% of the time. that is going to cause those incumbents a norm is difficulties in the election. nothing over the next two weeks are going to change that. it is an opportunity to tie up loose ends and get back to the campaign. >> we appreciate it. coming up, slim pickings. retiree is look for new bond investing ideals. we look at what they are willing to do to get those better returns. that is coming up next.

>> tromp entertainment is filing chapter 11 bankruptcy. the filing is set to begin this week and if you recall donald trump back in august had been asking for his name to be removed from trump plaza hotel as well as the tosh munhall. now they planning chapter 11 bankruptcy filing. when you are looking at a bond market and little volatility what is an investor going to do? we looked at what bond buyers are willing to do to eat out gains. taking on more risk would be the solution when you have a low yield environment. >> how do you take on that risk?

you go to high-yield bonds? you don't want to do that at such overvalued levels if you are a professional institutional investor. according to a study investors are more and more willing to compensate the biggest bond .ealers for providing research about 68% of these investors pointed to high-yield debt that are less liquid opportunities as one of their most valuable resources. this is a flip from two years ago when 28% of investors -- >> the easy money environment was here two years ago. what is the big difference? >> there was more potential for to run its course. right now the potential seems it is mathematically limited. investors are starting to say we need to go elsewhere and go beyond the run-of-the-mill basket of bonds.

it has double digit returns for a couple of years now. not see that continuing. how do you position? >> the money is flowing out of where and going into which other asset? >> people are saying they don't want to get less than 1% on 45% of all government bonds out there. fund orre a pension insurance fund, how do you generate more deals? you going to stuff you cannot trade. you going to stuff that maybe from an -- maybe from a foreign country. it is a much bigger return than other forms of debt, including the run-of-the-mill u.s. high-yield bond. them a that brings up liquidity questions. no one is buying it. >> this is the issue. it is that sort of possibility doesn't seem present right now.

what is going to derail this? it seems like the catalyst will be a surprise. in the meantime people need yields. it also shows that the biggest banks are looking for an edge by andiding this research marketing this research as a way to get business. dealer investor relationship has changed forever or is it a temporary blip? shiftre has been a market in the relationship because now dealers cannot use their own capital in the way they used to a this may be one way for them to get an edge to provide trade ideas. these provide ideas for you to generate extra returns. risk-taking is still coming on the corporate bond market. we really appreciate your insight. the hour and that means bloomberg television is on the markets. julie hyman joins us.

>> let's take a look at what is going on with stocks. we are seeing declines across the board and steepest on the s&p 500. energy stocks get pulled down by the price of oil. that is accounting for a lot of the drag on stocks. hertz ceo has stepped down citing personal reasons. under pressure from activist investors who want to out due to operational and account missteps. brian mcdonald is serving as ceo in the interim. we are looking at shares of ford and general motors. morgan stanley said it is cautious on u.s. automakers. morgan stanley said it prefers companies with exposure to autonomous vehicles and advance proposal and -- advance repulsion -- advanced propulsion.

more on theto have markets in 30 minutes.

demo we have some more breaking news for you. the baltimore ravens of the nfl said it terminated ray writes contract. never saw him till monday video that appears to striking his then fiancee in february. the video released by tmc them and thenws elevator in an atlantic city casino. it each hit the other before

rice knocked palmer off her feet into a railing. trish reagan joins me now. exit prize? >> this needed to happen. this video is incredibly disturbing. its firstturbing in incarnation but then we saw the rest of it today. a man attacking a woman in a violent way. the idea that the nfl only gave him two games initially, a pretty outrageous. domestic violence will now trigger a six-game suspension. for the second time you're out for the full year. where is roger goodell and all of this? there are reports that the

nfl likely didn't see that tape ahead of time and there may have been some let's push it under the rug type of thing going on. of questions. we are going to talk about the future of the nfl. we are going to contrast goodale with adam silver, who got out in front of the nba to the whole donald sterling case and questioned whether or not this league can really survive when you have these kinds of issues going on. >> at the end of the day he is still a talented player. what else do you have coming up? >> we will talk a little bit about alibaba. we will talk about what you can expect in that ipo pricing. looks like it will be the biggest ipo in u.s. history. we have a whole ton of stuff we're going to talk about creative the islamic's -- about.

the islamic state. newsis tremendous amazing that finally a team is taking a step forward. >> let's go back and focus on alibaba. the roadshow continues today. show --g and television bloomberg intelligence invites real-time data and contacts, pretty much anything you want to know about. when you take a look at the roadshow, what is going to be the biggest question? some of those risks. a we have already heard about the corporate governance where of hisnder and a few associates really control of lot of the decision-making around the company. is surrounding the split off and the company ended

up being a major destructor. aspect is really around mergers and acquisition. we have seen the company make a number of acquisitions. i think the founder was able to prove his acquisitions. >> it is so crazy. says customers first, employee second, have you heard a u.s. company come out and say that? >> it is an issue. you are dealing with companies from china, with a tremendous entrepreneur from china, and there are obviously going to be some differences. a fascinating valuation, $66 per share. we will see how that prices out. what i find striking is this is an e-commerce company that makes money.

the margins are so significant. you can think of it like google beats ebay meets amazon. e-mail -- google amazon.ay meets if you don't have all those warehouses. it is a middleman. core business has seen competition. they diversify into smaller businesses that have a much lower margin. our lower margins in the future for this company? >> what you need to understand about alibaba and the reason we need to go out and make these things is the pitting of the system. companies going from these pc-based businesses to mobile businesses. mobile audiences are more and more fragmented. we think of them as being

consummate three to alibaba because what it really does is it expands the number of access points. it recommends some of the services, which alibaba plays in and allows them to maintain that audience and maintain the marketing share. >> we appreciated. much more coming up. >> we will talk about the new iwatch is. -- the new iwatch. up next is a latin american country poised to default. we will tell you i a former official under hugo chavez is asking if venezuela should do just that.

>> apple ceo tim cook will announced a bigger screen iphone and perhaps a new wearable gadget. emily chang and cory johnson

will have special coverage from one to 3 p.m. it is time for today's latin american report. a former minister who served under hugo chavez is raising the question to venezuela. he is a public figure in venezuela for more than two decades. he says the current government favors wall street over its own people. why would default be a good it is venezuela prioritizing investors over venezuelans. he raised.uestion the question is are they prioritizing debt payments over imports? they suffer severe shortages and shortages of medicine.

next month they have about $5 billion in coupon payments on bonds. of theion is the cost medicine shortages they have. it is kind of an interesting question because it is a very popular company -- popular country. >> there has to be a reason for that. wouldn't that make the situation even worse? >> it would lose whatever access to markets they have now. it doesn't solve the problems that are causing these disturbances. many people say they need to be devaluing -- they are not resolving the price and balance the creates the lack of production in the country. more importantly venezuela is a place that has assets. they have stations all over the country. maybe there is a question of

they think they can raise about $10 billion then maybe they exposed themselves to the possibility of defaulting. >> what do investors think is going to be happening when they look at the credit default swaps market? are they concerned? scared.are the cds is treating it to the highest in the world -- is trading at the highest in the world. 1200eign bonds are trading reasons points over treasuries. -- 1200 aces points over treasuries. they booted ramirez from his position. he was a market friendly type of person and was looking for a potential to valuation. his got rid of him in position and that scared the market.

hold, ifatches opposition leaders say you should be defaulting -- yes venezuelag should default or is he raising the question? >> he definitely doesn't say they should be doing that. he says investors should restructure their debt. he is posed the question of why is this happening. >> are there any other solutions venezuela may take? in latinis a tradition america to not default on your own debt. has a selective default on predecessors. be surprising to see the president defaulting on chavez's debt. >> it will continue to play out. we really appreciated. iphone will preview

apple's upcoming announcement and talk about using sapphire screens. it will be interesting. ♪

>> tim and his analysts have created strategies. they join me with a preview. i really want to talk about sapphire. there have been lots of rumors that apple is going to use sapphire on your screen, it will be scratch proof or crack proof. this is not like what i have on my finger. the hardest of materials coming from nature but completely scratch proof. contrary to what people thought it is not unbreakable. apple will be

using sapphire on their wearable. unclear if a little they put sapphire on all smartphones. the actual patent they apply for show sapphire lays on top of class. it is a possibility there is glass under there and they put sapphire on it as part of the scratch proof surface. either way apple has put in a huge order with this factory a own now in arizona. it is pretty clear sapphire is going to be a component that will be used by many products in the future. is a $575 million investment in that. how much more expensive will it make the phones? i have heard anywhere from $13 to $100 for sapphire.

>> gorilla glass is about three. when you add the cost of retail to that it can be anywhere from 50 to 100. one option apple can offer with justis the phone glass and if people are willing to pay the extra 50 or 100 with sapphire it would mess up to some degree but i have dropped my iphone and broken it. having said that we really don't know what they are going to do with that until tomorrow. >> i heard there are some ramp-up issues getting the best yields out of the sapphire. be a lead time. what are some of the features that you think will be a wow factor tomorrow?

>> this huge pent up demand for iphones that are larger and have larger screens, especially with -- largertery life screens means more real estate, which means bigger batteries. thing we are starting to hear, which is really wireless is the transactions we are allowed to do at terminals. even though it has been around for a while it hasn't taken off in mobile payments. thatere is any company could drive this and forced the industry in this direction it would be apple. >> would that be enough to appeal to the public and investors who really want something so drastically different? itself will drive

huge sales just for iphone alone. thathave already shown they are going to get into health monitors and i have written about this a couple of times. they collect the data and eventually they will let that data go to my provider. they could take a piece of the payment action. device to use that turn on lights and lots of things were they would get an

extraction. i think that apple is sitting on a powder can of new revenue with these products. we will be waiting tomorrow to see. thank you so much. what we can expect from apple tomorrow. stay with bloomberg for live coverage. tim cook unveils a bigger screen iphone and perhaps a new wearable gadget. emily chang and cory johnson will have special coverage from 1 p.m. to 3 p.m. that is tomorrow on bloomberg. another check on the market, movers on the other side of this break. bottom line returns in just a few minutes.

>> more details in the breaking news we told you about just a few minutes ago. the baltimore ravens terminated the contract of ray right after video emerged showing him punching his wife in an elevator. a $35 million contract with baltimore. he was arrested action february after getting in an altercation with his fiancee. the approachwed writing her out of the casino elevator. there was no video from inside the elevator. rice was suspended for two games in july.

it had not seen the latest video before it sanctioned the running back. that wraps up here for "bottom line." you can get the latest information online. mark crumpton will be back tomorrow and we will have special coverage of the apple event into bertino, california. -- in cupertino, california. on the markets is next. >> it is 56 past the hour, that means bloomberg tv is on the markets. let's take a look at where stocks are trading into the closing bell. we have the clients across the board, at least in part of oil prices. that is striking down energy and stocks. for more what is going on in the markets i am joined by the portfolio manager with peoples washington crossing advices

group. joining us from his office. i want to start out with the oil prices. you would think oil coming down would be a good thing in terms of bringing down prices. it could signal weakening demand. >> when you have supply and demand factors, there has been ample supply for a while now. the demand-side has been weekend in places like china and europe. yet the back-and-forth with the currency. who moves first, who moves fastest? there is a lot on the plate but

the bigger picture is equity prices move up and at some point there is a question about valuations that will come to bearish. >> you have seen weaker data outside of the united states. do you think there is a rebound? we are still near record levels. >> in the long run if the markets does move higher ultimately the market has a really big move. we bottomed out at the u.s. equity market with $9 trillion. we have had a very big move. back into is feeding the economy and a positive way but there are some pockets of recess around the globe.

is back in recession. china, japan, all of those makes decelerating, which the united states more attractive from a growth perspective. you so much. we appreciate it. we are out of time. we will have more on the markets later. "street smart" is next. >> welcome to the most important hour of the session. 60 minutes to close. slightly in the red here. energy companies falling along with oil prices, over-shadowing babba rally. i am trish reagan, and "street smart" starts now.