too close to call in scotland. we will see what is at stake. and is the clock ticking on luxury watchmakers? they are getting unexpected competition from apple's smart watch. good morning. this is "bloomberg surveillance ," live from our world headquarters in new york. i'm scarlet fu. joining us today is olivia sterns and adam johnson. tom keene is on assignment, taking a rare day off as well. >> as he should. >> and he is on radio. >> and while, you are in tiffany blue. good to have you on the set. >> good to be here. a u.k. unemployment falls to six-year low. 6.1%. are 6.2.lmost -- we you can understand why the bank of england is talking about -- >> fastest-growing economy in the g7 this year.

>> a different story in china. slowing growth has prompted the , at 81 billion dollars, to the bank. >> another sign of stimulus. >> they are calling it qe with chinese characteristics. one economist called it that. >> tv with chinese characteristics. >> it is not full-blown qe, but it is chinese style qe. >> i don't even know what to make of that. bpi, 8:30, u.s., that is our latest read on inflation. this creeping in at 1.9%. the fed's index, pce core, at 1.5%. it is moving closer to 2%. the fed coming out at 2:00 with its latest statement. this is the two-day meeting that happens today.

and we get janet yellen at 2:30. >> it is the language we are looking for. significant underutilization, considerable time. >> earnings today, general mills, r, and fedex, which reports at 7:30. president obama is traveling to tampa to meet with the u.s. central command, and janet yellen -- if you are a markets guy or gal, that is what you are focused on. >> on the heels of that, let's show you what is going on in the markets now ahead of the fed announcement. futures little changed. no one wants to get ahead of the fed announcement this afternoon. the 10-year yield at 2.75%. -- at 2.5%. it is still below 2.6%. -- crude oil, 94.81.

it got a big lift yesterday on signs opec may cut production. >> this is probably the least talked about story of all the big picture stuff, the fact that we are still consuming more oil by 1.6% than we did last year, but the rate of close -- the rate of close -- the rate of growth is slowing. as we become less dependent on the mideast. >> but given all the political risks, the rise of the islamic state, it is incredible to see how resilient oil prices have been. they are ignoring geopolitical issues. forhose are our data checks this morning. let's get to the front page where we scan the newspapers and check the websites. we have the first front-page story for you. the white house top military adviser raising the possibility that u.s. ground troops might be

deployed to fight the islamic states, going counter to what the president has said. general martin dempsey testified before the senate armed services committee and said he is confident that the u.s. select coalition will win. back to theould go president to ask for those ground troops. >> we have had a lot of guests on the show. i was speaking to the former allied supreme commander of nato, who is calling for 10,000 troops on the ground. a lot of people are saying it will be inevitable that we have to get american soldiers on the ground. the question is why we are not seeing more regional troops on the ground area >> -- on the ground. --we don't even know that who is involved. in the coalition. >> the u.s. air force accounts for 70% of the activity there. the u.s. navy, about another 25%. it is still the u.s.

isthe white house says it the responsibility of military advisers to plan for all possibilities, so they are acting with an abundance of caution. >> remember when george bush flew onto the carrier and announced, "mission accomplished"? later,n a few years president obama said it effectively, "i ended the war in iraq" over and over. >> for all intents and purposes, john kerry is now saying that you can call it against -- that you can call it a war against isis. -- 3000ent offensive soldiers are going to west africa to fight ebola. thepresident went to centers for disease control in atlanta to be briefed on the epidemic. what are the numbers now? , but as you point

out, there may be that same number also infected. 3000 ground troops -- there are 1000 ground troops in iraq, and we are sending 3000 ground troops to west africa to deal with ebola. i don't mean to diminish what is happening in west africa. but it is very telling right now. where the priorities are. >> this is the largest response we have ever had to an international epidemic. and it could get to 20,000 if the world health organization predictions come to fruition. >> it is spiraling out of control. the world health organization is hauling this a pandemic, and emergency for months. we are finally seeing reaction. met in the white house with the former dr. who had ebola. >> who was flown to atlanta, who recovered. >> the president moving on that front. -- last front-page story

boeing and elon musk splitting for the space capsule. -- the spacetract taxi. this is a huge win for elon musk and spacex. emily chang spoke with one of the elon musk's former colleagues, so take a listen. >> you compare compelling startups to colts. startups be like colts? >> they should not be in the sense of believing something that is wrong, but it is always a good sign if there is an intense understanding of something that is true that few other people do. my paypal fanned -- my paypal friend elon musk is motivated by the idea that they will build rockets that will get human beings to mars and the next 15 years or so.

>> up until now, nasa has relied on the russian soyuz rockets. this will mean we do not have to take a russian rocket to get to the u.s. space shuttle -- to get to the u.s. space station. long in programs were place before crimea and sanctions. it is cool that nasa is giving these contracts to prior companies -- to private companies. it is a huge victory for elon musk and a big step forward to getting a man on mars. >> those are our front-page stories this morning. >> i want to point out, you can see more of emily chang's interview with the president of clarion capital on "studio 1.0." ont would be 1:00 eastern bloomberg west. it is fed day today. market, payhe

attention. we will get the announcement at 2:00, and then get a press conference from janet yellen herself. our guest host for the hour, ward mccarthy. you have been a very busy guy. you are parsing language. you are getting into prepositions. >> it is going to get into language today. the fed is in a slow, gradual process, moving toward the day when they will finally initiate the first rate liftoff. that is what all of the financial markets are focused on. today they want to see how far do they go with this. i think they will take small but necessary steps by removing what i would call time-dependent line which, like insuperable period -- like considerable period, that will still leave it in big thatas to when they --

will still leave it ambiguous as to when they start raising rates. >> but the battleship has turned? >> a long time ago, and it is considering to -- it is continuing to go in the same direction. and will get to the point in 2015 when we will start raising rates. they will have a stable balance sheet in the fourth quarter, so the next step is started getting rates back to normal. >> but they are leaving himself enough -- but they are leaving themselves enough wiggle room. 25-pointoff suggests a -- rate liftoff suggests 25 basis points. >> what it ambiguous is when they are going to do it. there has been a lot of discussion between a number of people at the fed about maybe we should do it in the fourth quarter or toward the middle of the year, and the most important people, the most important one being janet yellen, have refused

to put a timeframe on it. the markets will not react well, but i think that then that will be when janet yellen steps in at the press conference in puts everything into a context that will be calling. >> -- into a context that will be calming. >> you cover retail and consumers. is the consumer ready for liftoff? is the american consumer ready for a rate hike? >> i think the american consumer is still reticent to notice that while there has been some good economic data in the last few years in general, they are still sluggish. they still have a hangover. they still remember. it is still too soon. >> time for our twitter question of the day. who communicates better? bernanke?en or ben @bsurveillance.

the hour, wardor .ccarthy and morty singer >> we start with sony, a big loss on the horizon. expecting a much bigger loss in the current fiscal year, more than $2 billion. the electronics maker previously forecast a loss of $467 million. breakdown ofis a its smart phone business. credit suisse under scrutiny by the federal reserve. u.s. regulators are concerned with what he considers risky loans. they received a letter from the fed demanding the bank address problems with this underwriting and sale of high interest rates alone. an activist purchase -- an activist pushes for a dupont breakup. that is according to "the wall street journal."

these days, that is plenty to get the board to listen. that is your company news. >> coming up on "surveillance," just under one day before we get the decision on the future of scotland's, the latest on what you need to know before tomorrow's vote. this is "bloomberg surveillance ." ♪

>> coming up later this morning, robert pittman, the ceo of clear channel communications, will be joining erik schatzker's "market makers" team. coming up at 11:00 a.m. eastern time. this is "bloomberg surveillance

." i'm scarlet fu, with olivia sterns and adam johnson. tom keene is on assignment. >> we are less than one day away away -- for more on scotland, as they ready what annad be a historic vote, joins us live. is too closew it to call. any sense of whether the mood is shifting as we come down to the wire? art go it really it -- >> it really is coming down to the wire. we have three pulls out overnight that all gave the know cap a lead. a lead by just four points. no cap, 48% to the yes camp. account all of this

camp isnformation, no being put ahead by only a few percentage points. camp and the yes camp hitting the streets. trying to persuade the undecided voters to come around to their way of thinking. >> has the number of undecided voters decreased in the run-up to the actual vote? previously they were tilting more toward the yes camp. after they show that the yes camp was getting momentum, they started switching over. what are you hearing? >> every different polling ofpany has a different level undecided voters. some of the pullers have suggested that the undecideds are only at 5%. others suggest 25%. there are also different types of undecideds.

some are more convincingly undecided than others. there is a great deal of difficulty in pulling around something like this because there is not much precedent to look at. thing called a spiral of silence, which means when one option becomes uncool to speak out in favor of. that is something they are having trouble correcting for, so the statistics become very complicated. >> we have so many guests coming in on the show to talk about what a disaster it would be for london and for scotland if they were to divorce because the economies are so tied at the hip. but with rbs and so many big banks threatening to leave scotland, massive questions about what scotland would do with its own currency, is he your sense that this will be a decision determined by economic logic, or is this one of nationalist fervor? an interesting question, one that is incredibly

difficult. we talked to scotland's first billionaire a little bit earlier during our european programming. he made his billions selling sports and leisure wear. he is now a philanthropists. -- he is now a philanthropists. are working -- he says some are voting with their hearts, others with their heads. you find a bit of everything in scotland. we are in scotland. we bring you a special treat. i hope you like loud music with your morning coffee because this is john. the scotland parade. i hope you like this kind of thing with your breakfast cereal. ] agpipes play >> fantastic.

well done on the bagpipes. just to clarify, bloomberg television is not coming out in favor. >> i am going to be making the haggis for breakfast. guests, ward mccarthy, who we have just learned can actually play the bagpipes. >> i can play the bagpipes. >> can you play "scotland the brave" >> >> of course. >> do you think scotland will leave? >> it is a shame to have the thet, 50/50, when you have patriotism and useful zoo birds as well as social media, i am worried it could tip the balance. >> what is the fallout? >> people would wake up the next morning wondering and realizing

thethinking for some of salient points, what happened to the economy. >> when we come back, we will be joined by a man who was on the become janet yellen. instead, he became himself. richard clareida. ♪

>> this is "bloomberg surveillance." time for our morning must three.

times, "take york a breath, isis and the arab world." friedmanticle, george includes the best strategy rests in doing as little as possible and force a regional powers into the fray, then in maintaining the balance of power in the coalition. i am not sure, but it is worth debating." tom friedman is saying we are not dismissing isis, but that what we are doing is acting out of fear and gliding over essential questions. overt in their involvement in combating isis. why is turkey not doing more publicly to combat isis? why is saudi arabia not doing more? why aren't you seeing any arab or persian countries putting boots on the ground? state, theislamic

guardians of islam, why aren't they sending troops in? >> saudi arabia is playing a role, but no one is sure what it is. >> remember, these are surprisingly well-organized, because this is the old guard that goes back to saddam hussein. that is part of the issue. able do not want to go up against it. our twitter question of the day -- who communicates better, janet yellen or ben bernanke? please tweet us @bsurveillance. ♪

>> this is "bloomberg surveillance." i'm scarlet fu with olivia sterns and adam johnson. tom keene is on assignment. >> hundreds of californians are forced from their homes by a fast-moving wildfire that has

square miles. at least 1600 houses are threatened. some 2400 firefighters are at the scene, but they say they are losing ground. forwill enlist a small army the holidays, planning to hire 95,000 workers to deal with the surge in deliveries. many gifts arrived after christmas last year because ups was not ready for the boom in -- ne shopping, which the cofounder of paypal has advice for tech giants. peter thiel spoke with emily chang and says hewlett-packard, acting and yahoo! are against innovation. >> i would argue that hp and yahoo! are not even really technology companies at all. they were technology companies withe 1970's and 1980's

hp, and in the 1990's with yahoo!. today they are fundamentally invested against technology, against innovation. be fixed?oo! and hp >> there are all kinds of things we can do to streamline them. it is probably a mistake for them to radically reinvent themselves. >> you mention marissa mayer. what do you think her chances are of turning it around? by far theshe is best ceo yahoo! has had in a decade. she should not be evaluated on whether she comes in and does something new. that is setting her up for failure. if you can improve those incrementally and make them work, that is fantastic. >> i would be curious to know whether he is short hp and yahoo!. you can see emily chang's interview with the president of at 1:00 eastern

on bloomberg west. that is a call to arms in effect of those two companies. >> he is basically young thing -- he is basically lumping hp and yahoo!. is saying marissa mayer does not need to reinvent the wheel, she just needs to improve the existing business. >> where our market trading's? >> speaking of investors, we have the fed announcement at 2:00 p.m. when janet yellen hosts a news conference. not much of a new -- not much of a move futures. the 10-year coming down. drifting from 2.6% at the end of last week, now down to 2.57%. nymex crude consolidating after 80ig move up yesterday, $94

six cents. >> everything we talk about is fed, said, said. our guest host, ward mccarthy, describes what he thinks about the timing of potential rate hikes. -- withlation unemployment at 6.2%, those are moving closer to the fed targets. why would change be so ambiguous and distant? >> says janet yellen wants you to look behind -- wants you to look behind the headline numbers. long-term unemployment is still high. people are employed for a long time. we also have a number of people working part-time that would rather work full-time. also, average hourly earnings are creeping a little bit higher. they are still at the low end of a long-term range, and that is a reflection of the price of labor. she wants to make sure that the economy is really robust to four

she starts raising rates, and that is why she wants to be ambiguous and make no predetermined judgments at this point because it is not clear when the appropriate time will be. >> what do you think she really needs to see on the dashboard before she lifts her foot off the brake? >> she needs to see hourly earnings growing a lot faster. she wants to see continued improvement in the dashboard figures for the labor market. when push comes to shove, inflation will finally push the fed over the edge and get them to raise rates because the fed has not met its inflation target for about 2.5 years now. they cannot really say that a mandate atis this point. >> with all that, what is priced into bonds versus what is priced into equities? >> of markets are expecting something similar, and that is that the fed will start to raise rates. next year. middle of

and then do it at a slow pace. isnkly, i don't think that what is going to happen. i think the fed will start raising rates later rather than sooner. some people are thinking it will happen in the first quarter. when they finally do get around notaising rates, they will raise rates rapidly. >> you are saying it will be on the back half of 2015? i amthink the reason different is primarily because of my interpretation of what janet yellen will look for before she is willing to raise rates. and also when i think it is likely we will see inflation reached the 2% target. i think that is probably one year away. >> i just want to link this. 101 professor -- is there still enough slack in the labor economy that you do not have the wage price spiral yet? >> there is still enough slack

in the labor economy and commodity markets. global commodity markets are still in a real funk, and that gradually filters through to our inflation numbers. we had a pretty good rally in commodity prices in january and february, and since june commodity prices have hit the skids. there is an indication we will start seeing a slowdown in cpi in the months ahead. >> gdp forecasts were cut for developed markets, including the u.s. and europe, citing things like geopolitical tensions in the ukraine and middle east as big factors. if the economy starts to slow down and lose momentum, does that push rate hikes off even further from the second half of 2015? >> if it starts to slow down again, i would say so for sure because the fed has invested so much in getting the economy back toward normal, that is why they call it a policy normalization.

they are waiting for the economy to finish the normalization process. when you look around the world, we have at best as the strongest economy. if we start losing momentum, the rest of the world will be in a biggeredicament -- a predicament than we are now? >> where are you on the rate curve? >>, we the middle of the curve. frankly, we have seen lower rates. the lower end of the curve will give ground as the fed finally finally as the fed lifts rates. >> who do you think is the better communicator? ben bernanke or janet yellen? what do you think? >> i think they both have their own style. ben bernanke took us well down the path of transparency during his tenure at the fed. janet yellen has picked up the baton and she is taking us further down the path. difference styles, but you have

to give them both a lot of credit. >> and there is a huge contrast between janet yellen and alan greenspan. >> actually got her into trouble. that first press conference, she said, "in six months" -- whoa, take it easy. >> tweet us. who is a better communicator, janet yellen or ben bernanke? why are so many people across the globe feeling blue about the economy? we will show you the results in today's single best chart. this is "bloomberg surveillance ." ♪

>> this is "bloomberg surveillance." scarlet fu with olivia sterns and adam johnson. adam has our top online. -- our top headlines. a senate panel yesterday criticized the national highway traffic safety administration. investigators say key evidence was overlooked for years. withheldy says gm

information. -- customerervice service workers want to organize. votedan airlines agents overwhelmingly for union representation. some were brought in by a recent merger of us airways. the nfl domestic abuse scandal sidelines a superstar. minnesota vikings deactivated running back adrian peterson, charged with child abuse. rice case areay being slammed including by pepsi, budweiser, and mcdonald's. >> they did not actually say they would boycott or pull any money, they just expressed concern. >>. is on the cover of the "daily news." not a flattering picture of roger goodell. the concern is whether he acted soon enough or hard enough to read when the ray rice scandal first came out, he suspended him

for two weeks. wait a minute, you suspended a guy who smoked pot for two weeks. so that an beating your wife the same thing? not good. for ourime, it is time single best chart, highlighting different views of the economy depending on where you live. the great recession ended five years ago, the people in advance economies still are not feeling the improvement, according to the pew research center. almost two thirds of people in bad.ced countries say only one third said good. emerging countries' perceptions are not much good. brazil had only 32% of people saying positive. the developing world is optimistic in comparison. i found it interesting that 89% of chinese are positive about their country's economy, even it slows down.ow

>> gdp is still growing at whatever, 7.5%, 7.6%. >> the only two developing markets that said the global economy is improving were germany and israel. >> i want to bring in an expert on everything that the countries are spending. turbulence in the region, some would assume that the gcc is not doing well, but it is actually doing fantastic. the entrepreneurialism going on in those countries from people who have come to that region from other parts of the arab world and from europe, and frankly there are 2 billion within a six-hour flight of dubai. so tourism is really driving the economy. >> but despite all of the

violence, there is no slowdown in shopping at dubai? >> it is at an all-time high. people from asia, russia, europe, africa. they have three huge airlines bringing people in. >> and we are going in the next hour over to frankfurt, where hans nichols met with the ceo's of airbus and qatar airways. your take onget all of this, ward. consumer spending drives so much of the u.s. economy, 70% or thereabouts. how has the contribution of consumer spending changed gdp since the crisis? >> u.s. spending has been stable, around 2% for a number of years now, which is a of the u.s. economy. typical of the u.s.

economy. people leveraged their standard of living with home equity loans. they were also much more footloose and fancy free with credit. since the financial crisis, consumers have been trying to restructure their balance sheet, using credit much more -- in a much more careful way. measures useful when we have such a wide inequality gap? you have such a big gap between the haves and the have-nots. >> the gap is going to take time to narrow simply because of the nature of this recovery. at is one of the things janet yellen is talking about. a lot of people are in the labor force and have been, and they are just fine. what other people who lost their job several years ago have not been able to get back in. a you want to have more of wellspring of consumer spending, you need to have a broader distribution of drops -- you need to have a broader distribution of jobs.

time heals all wounds, and that is one of the things she wants, is more time, before she starts to slow things down by raising rates. >> an interesting segue to what is coming up in our next walk. apple has got -- in our next block. a new calorie counting device. "his is "bloomberg surveillance on bloomberg television, streaming on your phone and tablet. ♪

>> coming up in the next hour of "bloomberg surveillance," it is fed day. have with us,we richard clarida from pimco. that brings us to our twitter question of the day. who communicates better, janet yellen or ben bernanke echo tweet us @bsurveillance. yellen will be giving a news conference today at 2:30 p.m. this afternoon.

>> apple's new watch stole the show at last week's debut. at least ceo tim cook thought so. is the first new device develops totally under his watch. here he is why he thinks you should be excited. >> the apple watch is the most personal device we have ever created. i think it takes us into a whole different area. intense team working on this for three years. is accurate, sleek, and it can count calories. is this the end -- mortimer singer has some thoughts. is this the death knell for the windup watch? >> i think absolutely not. >> thank you. thateryone is saying they're quaking in their boots, and the opposite is true. had the time they problem was with the big quartz crisis in the 1980's when they

thought the japanese would steal their business, and it did not happen. think by the nature of that, it is about fashion, about season into new products to season, year to year. at ans case, if you look old ipod, you might see that that now feels dated. you might where a 10 --- you might wear a 10-year-old watch, ipad.t use a 10-year-old it is something they have to take a hard look at, which is why they invited all the fashion editors for the first time to the launch. >> they always make the point this is something you would pass on to the next generation. you are not going to pass on an

old ipod. someaybe there is, to extent, the luxury watchmaker should be threatened because apple did come out with 18 karat gold watches. they are trying to push into the higher end. >> they are actually trying to do that. they have a phone that is made of gold and that has its place, but ultimately people want something that is an heirloom. i think they may transition technology as an heirloom. >> we talk about the next generation passing on -- a lot of people in the younger generation do not wear a watch at all. they just use their smart phone. so they do not have that habit. >> you are so kind to put me in the younger generation. i just recently lost my watch. >> but like many things in life, some things are an acquired taste. i think over time people appreciate things of great

beauty. they are into beautiful things in their own way, so i think? -- so i think -- >> isn't this a threat to the midmarket planners? >> it is a threat to the midmarket players in the short-term. over time the fact that the fashion watch, as it is so-called in the industry, will be able to thrive. they will also adapt and create their own version of this. >> a rolex that count calories? >> possibly, yes. lots of thingsre to look out for. i don't think this apple watch will be the one that really steals the show. >> if i could get a cartier that could text message, then we would be talking. >> i have to talk about this totally absurd story about the u2 album. >> that was combined with the software. >> a lot of people did not want

the album that was downloaded onto websites and slowed down and crashed the apple store, so now apple is showing you how to effectively deinvite from your account. band that was born in 1976. why is apple, trying to be a hipster, adding half a billion free albums? the 40-something guys instead of the hipsters. >> making that decision as a gen xer, clearly. >> why didn't they go with -- >> that is true. mortimer singer, thank you for joining us. ward mccarthy as well. let's give you a forex report. we have the fed decision coming

out, the yen holding a six-year low versus the dollar-pound. euro-dollar, little changed at one point 2956. ♪

>> waiting on the fed.

what is the timetable for raising interest rates? we will hear from janet yellen in a few hours. >> voters decide in scotland whether to declare independence from the u.k.. we will see what is at stake. investors are starting to take their money out and move it back to the u.s. good morning. this is "bloomberg surveillance ," live from our world headquarters in new york. morning, adams johnson and olivia sterns. tom keene is on assignment. our guest host for the hour is richard clarida, global strategic advisor with pimco. is on the the fed agenda, adam. >> as a matter of fact, the u.k. got some important data. unemployment -- unemployment fell to a six-year low. a different story in china, --re growth has prompted

here in the u.s., we get vpi, our read on inflation coming out at 8:30. then we get the interpretation from the fed. at 2:00 we get the statement. at 2:30 we get the press conference. general mills will be coming out momentarily. fedex beat estimates, comes out at 7:30. president obama visiting u.s. central command in florida. having alen will be press conference at 2:30. thiset, have you seen cross? did reaffirmlls its forecast and has become efforts that has begun efforts for further cuts. >> is our guys that just bought a little bunny shaped makers.

adam johnson getting with the times. let's get you a data check right now as we anticipate the fed announcement at 2:00 p.m. futures little changed, stuck in the neutral zone before that announcement. -- 10-year yield, two point 2.57%. certainly recovering a little bit. >> i hope that means the no vote will win the day tomorrow. >> officially as a tv program, we do not have a -- >> we will keep you up-to-date. let's get to the money news. expecting --ow sony expecting a bigger lost,

more than $2 billion. the catalyst for the revision is a write-down of its smart business. an activist investor pushes for a dupont breakup. it says it has tried to persuade dupont for one year. $1.6 billion stake in dupont. in the increasingly crowded world of technology, the cofounder of paypal sees one clear leader. asked them to compare the current giants of the tech world. >> do you have any concern at companies like google, facebook, apple, amazon, could ever become too powerful. >> i think this has not happened in the technology area because

-- >> do you think someday google, facebook, amazon will not be as dominant as they are? >> i think they will be dominant for a file. -- for a while because they're great businesses. see one or the other becoming more dominant than the rest? >> it is difficult to judge this, but if i had to pick one, i do tend to think of google as the one that is on an incredible arc. >> huai? >> i think the core search monopolies is very powerful, and we are trying to extend it into other areas. google is probably the one to watch. >> you could see more of emily chang's interview on "studio 1.0" this afternoon at 1:00 eastern on bloomberg west. hopees not have a lot of pinned on yahoo! and hp. timeshould not waste their

on reinventing the wheel. >> i want to know is he short. something else you are going to want to watch. bloomberg television in 2:15, that is when the fed issued its policy statement. at 2:30.len speaks we will see what she has to say. economistarida, chief at treasury under president bush, great to have you here. >> good morning. >> the key question is when does inflation accelerate in off that it triggers legitimate change at the fed. what do you think? is an inflation target or. the fed focuses on core inflation and expected inflation, so they are looking at a variety of indicators. the markets are anticipating a fed hike that commences in 2015, and that would be consistent with the dataflow flow we are seeing right now.

obviously if everyone is wrong and we get a burst in inflation, that could mediate sooner. that is not what i see. >> we had some disappointing industrial reduction numbers coming out. alas job report did not look good. do you think that is changing janet yellen's thinking? >> i don't think one or two data points would do it. on balance, the flow has been positive in the u.s. as i pointed out in a recent piece, the fed will be looking at wages quite closely. in particular, if it does not show up in inflation -- i think we need to be looking at wage developments as well. >> give us your forecast in terms of what will change at 2:30 p.m. >> there are a couple of things. we will get information about the fed's own forecast for its own policy rate. the so-called blue dots chart. >> to clarify, each dot represents a member of the fed,

but anonymous, and where that person -- >> where he or she thinks policy rates will be. for the first time the fed will be telling us where they think rates will be in 2017. up until now we have only known where the fed exit will be in with a policy rate of 2.25%. there is a lot of debate over whether or not they keyboard do not keep the so-called considerable time phrase. i think it is a close call, but my bed is that they do keep it in this statement -- my bet is that they keep it in this statement. i would be surprised if they take considerable time. >> is this a clarification or a change to the fed's policy? >> for the last several weeks you have begun to see the bond market pricing in a little bit of a shift at this meeting. you have seen a rise in yields in part because the fed will

beginning that information on future rates. that to some extent that has been priced in. janet as your press conference may try to take -- the fed is did.ing its policy >> you and bill gross run the largest hedge fund. what the fed will say in the last 12 or 18 months, or this new guidance for goes out to 2017 -- what do you at pimco key on more? >> right now the markets have keyed off 2017 and beyond. beyond that is really where you will get a range of disagreement. >> do you think the biggest threat is that janet yellen waits too long to hike or goes

too soon? >> excellent question. my own personal opinion i think is that the fed is in a good spot. i think janet yellen is in a good spot. she's very capable, inherited a good set of initial conditions. , i am not worried about the problem. the fed waiting too long to hike. so long as you monitor where inflation expectations are and wage developments, they are basically where they want to be. >> so you are acknowledging there is a difference between -- >> not at all. i did not say that. no., bolivia, but -- good, olivia, but no. perhaps of at neurotic focus on the words considerable time, and i think to the extent that phraseology is left -- remember, at her march press conference, chair

yellen was asked how long is a considerable time and she said six months. i think the folks who are more dovish will look to see if the element stays. clearly if it is taken out in conjunction with the 2017. shifting up, that will be viewed as a hawkish communication from the fed. >> the statement comes out at 2:00 p.m. and the press conference at 2:30. the question is, what does fed taper mean for emerging markets? we will discuss that yet -- we will discuss that next. who communicates better, janet yellen or ben bernanke? tweet us @bsurveillance. ♪

>> this is "bloomberg surveillance." i am scarlet fu with olivia sterns in adam johnson. increasing pressure to raise interest rates sooner rather than later. everyone is focused on the 2:00 p.m. announcement and the 2:30 news conference. we will bring back one of our more popular single best chart, brought to our -- brought to her -- brought to us by richard clarida. can you give us some perspective

on this? what is the historical ofationship between the rise labor share and overall economic cycle? is it different? >> on average, labor share has been roughly confident -- constant until recently, 60% of income. typically in a recession, labor share will, after peaking, decline and fall in the first two years of recovery, and then it has a u-turn and recovers. thus far it has not recovered, so a big question i am trying to answer and i think the fed is looking at is that will we start to see workers get a real wage in excess of inflation? if we do, that is good for workers. the question is, does it show up in inflation? not necessarily. in the last three economic recoveries, we had an increase in labor share at no real increase in inflation. that is why you have to be more careful and some are saying the fed will have to hike rates if wages go up.

so far we have not seen the wage increase yet. >> but there is a little bit of a pickup. >> there is, and in the past wage increases have coincided with slower productivity. when you see about that when you hear about the record profits, good for companies, but that means workers are getting a smaller share. >> what you are sort of getting at in a backdoor way is -- a return on capital, you can see the growth rate, and that is perhaps why the share of labor income is smaller. tolooking at data going back 16th france -- certainly in the the u.s.e that in data, on average over the past 50 years workers have gotten their share of productivity gains. in the last 10 or so, the picardy point has been relative. >> workers have a smaller slice of the pie, the lowest since

1960. >> is that skewed by the fact that there are all these hedge fund guys literally making multi-billions? >> let's put it this way. their compensation is included as wage income. >> let's point out that calpers -- ow pulling out of >> we will hear from the ceo's of airbus and cutter airways. ♪

>> this is "merck surveillance" and i'm scarlet fu -- "bloomberg surveillance" and scarlet fu. get top headlines this morning. >> the top white house military adviser says troops might be needed to defeat the islamic state. a joint chiefs chairman told the senate legal asked president obama for ground forces if

airstrikes are not enough. but we should point out that general dempsey is confident that they can, in his words, wide-out the militants. a senate panel yesterday criticized the national highway traffic safety administration. key evidence was overlooked for years. the agencies chief says g.m. withheld that information. and the nfl domestic abuse scandal sidelined superstar. the minnesota vikings deactivated running back adrian peterson. he is charged with child abuse. the case is being slammed by a number of sponsors, including pepsico, mcdonald's, and others. i wonder how much of this has .een happening dirtyhink that is the

secret, that it has always been happening there and now it is coming to the forefront. everyone is exclaiming shock, but is the nfl all that shocked? you have been following this story. years difference is, 20 ago, you did not have video cameras in elevators. easy tolot more distribute. >> yes, and the viral i expect. >> and roger goodell has everyone telling them that yes to clean up his acts, but basically he's got 1500 athletes that some might say is borderline criminal behavior -- i >> it's not fair to paint the entire nfl with this brush. i understand what you are saying, but it's a complex issue. >> it's a pretty straightforward issue, but the nfl has been behind the time on this. >> you are right. there is nothing very complex about a man hitting a woman. all right, different topic.

the fed is expected to announce the end of this trillion dollar buying program. if the fed is not supplying the sugar, is not good for those assets abroad. pablo, great to have you here. i believe it's your first time on surveillance. our emerging markets necessarily a good place to be if the fed is pulling back all of the sugar? , thatit does it very fast is going to be it for the emerging markets. raise the rates because of ?nflation the world is living on one

engine because of the u.s.. if growth is there, then i can -- then it might not be that bad. >> the latest numbers out of china, it looks like a little bit of slowdown, but there is a huge differentiation taking place in monetary policy around the world. mario draghi in europe is getting prepared to put his foot even further down on the pedal. won't that to some extent mitigate the taper on the emerging markets? look does, i mean, if you at any kind of model that gives you a fair price for the curves, you will see that those that are linked to u.s. rates will be a little bit flat and other curves are little more attractive. having said that, it is very important to monitor that it is not only as phenomenon in

emerging markets. that is where we try to make a difference. like you mentioned china. i want to get your take on the central bank injecting $81 million into the central banks. some are calling it chinese style qe, or qe with chinese characteristics. is that a move to make in how foreign investors perceive china? >> question is whether we will see something like that in the fed going forward. timenject, but at the same slow down the economy to contain some critic excesses. it is trial and error. you see how things are moving. see a little bit of financial excesses, you might start. is a very, this

apropos conversation for pimco, because bloomberg is talking about how bill gross has effectively taken some of these bonds and sold them, and now diverting the higher yields into spain like brazil, italy, . can you give us some context? >> well, certainly. in particular with the drug you press conference -- the mario draghi press conference over to morehe ecb heading into negative territory and adding a qe program of its own, that is theortive of the ecb as periphery of europe. and we take notice of that as we invest. i will leave it at that. >> which is exactly what you were saying. pablo, thank you for joining us. these come back. >> scotland is threatening divorce after a 300 year union.

we discussed the economic cost. this is bloomberg surveillance. we are back in two minutes. ♪

>> this is "bloomberg surveillance" and i'm scarlet fu with -- tom keene is not here. adam johnson is here. tom keene is on assignment. a 65% rise in alibaba by the end of the year. some are wagering that yahoo! could reach $20 per share. highached an eight year last week. and the wall street journal says creditgulators think failingight be making

loans. american airlines agents voting overwhelmingly for union representation. it affects nearly 15,000 employees. that is your company news. >> we want to stay with the airline theme because hans nichols has been talking to a couple of people in the industry. >> hans nichols is someone i'm very jealous of, because he was able to sit down with two ceo's for something i would love to talk about. we are talking about the a 380. airbus has just delivered four of them. it is a gorgeous aircraft. and it can sit up to 800 53 people. -- 853 people. us now.hols joins you win the award for the best interviews of the day. tell us what they told you. qatar is making a radical

bed. seatsre only making eight in this plane. when we talked to the co about saidthe strategy is, he customers don't want all that much. listen to how he put it outside his new plane. >> we do not have any flashy stuff. very clean, good lines, nice colors, and maximum comfort. -- then you can get in any other airplane. and we have all of the amenities that the passenger requires. dothe question is, what passengers require? in the gulf states, they're going in the other direction. we have emirates going one way and [closing bell] going the other.

can you tell us the latest on the left onto -- they let top -- on the lufthansa strike. havel the carriers challenges in part because of their labor laws and rate -- labor regulations. they're competing above and below. the low-cost airlines are putting pressure on them. lufthansa has done -- i don't want to say blaming, but they have talked about their pressure. the averted strikes earlier this week. --s is a company in distress i don't want to say in distress, but it has its challenges. >> he has a difficult job to do. we hold them in high esteem. but friends disagree. i disagree that gulf carriers

-- with because that they have. >> what is the cause? >> i don't want to get into politics, what i know what his causes and i feel sorry for him. and i ensure -- and i'm sure he with me, very much, but -- and i'm sure he envies me, very much, because we do not have to take the crap of unions for the >> i don't know if we can take -- that word on television. lufthansa has a challenge on his aunt, as do all of the european carriers. -- on his hands, as do all of the european carriers. >> let me know and we will go right in a 380 together. >> fedex results just came out, olivia and adam. $2.10 earnings per share

versus the consensus of $1.96. we should be clear there is a $.15 boost from share buybacks and lower pension expenses that help the bottom line. it did reaffirm its full-year forecast and revenue topped analyst estimates. 11.8 billion dollars versus the justices -- the consensus of just over $11.5 billion. >> i'm just trying to follow if they go through the terminal looking at the old matrix based. it looks like 4% growth for fedex? >> they said 6% year over year, and in terms of profit, it is 210 over 196. give you confidence

in the health of the economy? >> absolutely. i remember during my days at treasury we were trying to monitor real terms of the economy. walmart is another memorial you'd get a pretty prompt read on activity. that was obviously a positive. >> what else should rekey on? -- should we keep on? >> we need to move on buybacks, because there is a move toward another tranche of buybacks as well. >> that gets to the engineering, but 6% topline growth. cheap to borrow and money back to shareholders. david cameron making a final -- >> david cameron making a final impassioned plea for a no vote to vote three -- to vote for after 300 years.

too close to call. john, thanks for joining us. what do you think will be the ?allout if we do get a yes vote >> is bad for britain, for england and the united kingdom, but very bad for scotland already, as boswell said the scott is theo a road to england. pay taxes almost one third higher in scotland at than in england. the divorce will be very expensive, and to this advantage of both. i cannot understand. really, one might ask why you have cameron pleading for a no vote, when he gave them this referendum.

he failed to give the british people a red -- a referendum on europe, which he promised with a guarantee. he gives it to scotland. one can only think there are two reasons. one, it would get rid of the 54 left wing feeds and colin out of the english parliament, and -- the 54 left wing seats out of the english parliament. and he gives more for the european union. >> let's pick up where you left off right there. my morning read tyson the european union as well. -- ties in the european union as well. it would be like spain or portugal before the ecb's commitment to save zero. -- to save that euros.

certainly, there is a financial logic that they know side is relying on. decided. not abouts at the moment are -- the yes votes at the moment about 49%. i think they will decide in a no vote largely. but it has led to the dissolution of europe. it has made independence and secession a fashionable, democratic ross us. belgium, encourage and even texans in america. if you can have a democratic vote in the united kingdom about democratic secession, why don't we? you look to the dissolution of nationhood.

just as russia is breathing on europe store trying to recover its empire. as far as the sterling goes, scotland will enjoy a euros sterling. >> we will be right back. ♪

but i'm scarlet fu with adam johnson and olivia sterns. tom keene is on assignment. we've been talking about the scottish vote, which takes place tomorrow at 10 p.m. local time. >> richard glared at joining us from pimco. what are your thoughts? how was the british market digesting all of this? >> i think you have seen it in guilt and in charges. and in charges. what happens? do they relocate to london? i'm not an expert, but it appears the scottish people have not answered those questions either. it is a total crapshoot. >> and it seems the bank of england is moving toward normalizing interest rates. if scotland does move ahead with a yes vote, what does that mean for policy echo -- policy?

>> what i understand is that they would continue to use the pound as a currency, sort of like panama uses the dollar. but you are obviously very much a junior partner in that sense. and then you get into the problem that the eurozone has. my guess is that the bank of england would probably nor scotland, but scotland would probably not want to be ignored. >> know, and saying you cannot do it without our consent. actinge asking -- are much more pro-european. but you cannot assume they will be let into the eu. also, what will be the effect of nato? -- scotlandish comes up with the currency of its own? >> in a scenario where they do opt out, they will have two choices. one is, to essentially of a

currency board were they are using the pound. or the other is as you say, olivia, to use currency of their own. all of these transactions are the nominated in pounds, select create another quagmire. i don't think this has been well thought through by the 6 million people in scotland. >> we're talking about shifting alliances. and there are many issues. you are right. that brings me to my morning must-read from mort zuckerman. only a masochist would embrace a 35% tax rate rather than 12% in, let's say, ireland. richard, your thoughts on that? inversions are really a symptom of a larger problem. the corporate tax code. many yearsved over

with special provisions, so inversions like any tax strategy, take advantage of these loopholes. says we need to have better tax code, better tax reform, but we never seem to get it. a last time we had reform on taxes was in 1987. >> i remember that. i wrote my junior paper in princeton about that. who communicates better, janet yellen or ben bernanke? tweet us. ♪

>> coming up tomorrow, mario covelli, founder of gamco will be joining us. --t is he doing now we echo what is he doing now? and we will have the benefit of the fed statement as well. he is joining us tomorrow at 7:00 a.m. i'm scarlet fu with adam johnson and olivia sterns. tom keene is on assignment. because richard glared is here, we want to get straight to our twitter question of the day and the answers to it. who communicates better, janet

orlen and ben bernanke? -- ben bernanke echo one of the answers, neither. >> do you agree with that, richard? >> i would not agree with that. i would say that forward policy has far as worked. but it is a new tool of the fed, and in terms of who is the better communicator, bernanke had eight years and yell and has had eight months. she is off to a good start for the >> it's not a fair comparison is what you are -- >> it's not a fair comparison is what you are saying? she is off to a great start. >> here is another. >> did ben bernanke not listen as well as janet yellen? >> i would not say that. both come from academic

tradition and economics are quite good at pretending not to listen even when they are. >> and you worked with greenspan . >> not at the fed. but i interacted with him. i never saw him in action with board meetings. i thought his testimony. and he himself commented on some of his long-winded answers. the classic rings dan line that he said -- greenspan line that he said to senators is, "if you understood what i said, you -- "if you understood what i said, i misspoke." it is a very complex collection of facts and productions. always averse to oversimplifying a complex subject. >> do you think he could survive world todayracter after >> 140 pages.

>> one of the answers is a volker. i will be going to a conference within this week. of myl volcker is one heroes, and really, one of the giants of 20th century economic history. he inherited an economy within 18% inflation rate and the worst recession of 35 years. he broke the back of inflation and set the stage for global prosperity for the next 30 years. quite an achievement. hero.you are my >> he is the keynote speaker at the conference where you are headed tonight. >> and he got a lot of heat for what he did at the time. >> o, my goodness, farmers were coming in with tractors and throwing two by fours at the fed. answernt to get to the -- another answer. asked toke i'm being

choose between ferris bueller's teacher and charlie brown's teacher. janet yellen, with her efforts to bring normal americans and jurors preachers -- into her speeches is trying to change that perception, is and she? >> i think so. she gave a very thoughtful interview profile, i believe, in the new yorker in the spring. and she went into some of those considerations. she and bernanke were absolutely right. all of these terms, guidance, rates, yields, they seem abstract. but they need to be working properly for the economy to thrive. and we are in difficult circumstances with the global financial crisis under bernanke. degree of difficulty has to factor in. >> i think it is incredibly -- incredible where we have come. we are in this new era. i think about the impact it's having on europe.

how do you see this playing out in the rest of the world? what mario draghi is now trying to do? excellent point. mario draghi himself has moved the ecb much toward -- much more for forward guidance than it ever happened under touché -- et, and mario draghi has shown that he is prepared to provide guidance ahead of his committee. that was apparent in 2012 in the willr and he said the ecb do whatever it takes, and then he got his committee to agree. but that was a bold move. and it changed the dynamic in europe from the eurozone on the precipice to at least now with towering -- with borrowing power. the statement comes out at 2:00 and the press conference at

2:30 p.m. what will you be listening for? of bernanke'se innovation, the press conferences are at least as important as the statement. youook at the statement, as said, and in the press conference, which is all q and a, and very little scripted up front. i will be looking for any new wants the chair provides relative to the perception of the statement. the statement will come out and we will see where bond yields and stocks go. yellen will see that, and then she will have 45 minutes to either reinforce that view, or take the other side. bernanke did that, and i think yellen will also do that. >> you have just defined a new spread for us. the yellen statement spread. >> we want a chart on that, clarida.larinet -- think you for joining us. in the meantime, let's get to some company headlines. the space taxi, boeing and

spacex will make history. the u.s.he first time has used commercial ventures to fly humans into space. boeing will get up to 4.2 billion dollars under the deal, while spacex could see up to $2.6 billion. and more changes for microsoft. the software giant will raise its dividend by 11%. its quarterly dividend will increase by three cents to $.31 per share. it will also replace two longtime directors when they retire this year. and peter teele says social media are fine, but he thinks society needs bigger ideas to make the world better. in interview with emily chang, the capital hes manages will give birth to new innovation. -- yourfounders cents

founder sense philosophy is, we wanted 140 cards and we got characters instead. theacebook has changed world, why won't twitter? >> a company like twitter will not be enough to take our civilization to the next level. a company like facebook is not enough. we need many different kinds of things. flying cars alone are not enough either. >> do you worry that facebook could get distracted with internet data, drug company saw virtual-reality echo -- virtual-reality? >> you have to do new things because you don't want to be in static mode, you don't want to do too many. you want just the right number of things. >> you can see more of that interview on studio one point l -- studio 1.0 this afternoon. let's get to the agenda. of course, it is the fed.

markets are at a standstill right now. await the most anticipated news conference since last year. >> and specifically because we will get guidance on 2017 for the first time. >> yes, the 2017 economic forecast, the announcement coming out at 2 p.m. smith'scer colby birthday. >> happy birthday, colby. >> and the scottish referendum overnight, just four points vote, but thees margins are too close to call. what would they do in terms of defense? would they still recognize the queen? it looks like they are prepared to. they agenda right here in usa. here is a statement from the nfl. this is something that a lot of,

not just companies, but people have to wrestle with. >> a lot of damage control. up next.erg -- great to be with you. ♪

>> good morning. it is wednesday, september 17. you are in the loop, and i'm betty liu. -- ruthate developer

ratner joins me in a few minutes on how the fed is playing out on the ground, in housing, and the economy. astronaut captain mark kelly will be weighing in on the big win for elon musk and his company. plus, the rates for your holiday deliveries. ups have a big run for their money. but did they make any money? here's a look at top headlines. the u.s. and china going in different directions on economic stimulus. fed chairman janet yellen expected to announce a reduction in the bond buying program, and in the meantime, china's central bank is adding stimulus because of concerns over a slowdown. phelps' company has launched a campaign for dupont to break up. citup