thehis is "bottom line," intersection of business and economics with a mainstream perspective. today, the brazilian president will face a pro-business candidate in a runoff next month. then, the u.s. supreme court rejects calls on a nationwide ruling on same-sex marriage. chipotle takes a slice of the pizza market. ♪ to our viewers here in the united states, and for those of you joining us from around the world, welcome. we have full coverage of the stocks in stories making

headlines today. michael mckee examines job creation versus falling wages. peter cook monitors developments come and hang greenberg's lawsuit against the u.s. government. we begin with willem marx, and the victory in the first round of result elections. you -- how are you? >> talk to us about what happened in the first round yesterday. what we saw was the president coming in first. but the candidate who came in second, that was a surprise to most political observers. >> the polls that suggested that he would not be the candidate. was nevest who took the second spot. trailed.ined --

there will be a runoff with those two candidates looking for majority. >> what happened to her campaign? all the polls leading up to that vote put her firmly in second place? >> as the president's campaign saw that she was beginning to threaten her lead, they started to attack her. they had a huge amount of television time -- almost five times as much. they use that to good effect. they put out commercials talking to giver, her desire the central bank autonomy. they said she was in collusion with bankers. it of things that maybe weren't as bad, but did damage to her standing in the polls. we saw her coming in with 21%. >> talk to us about the economic realities and challenges facing

the winner of the presidential election next month. >> over the last four years, we've seen the stock market and currency sliding pretty dramatically. 33% and 22% respectfully. on top of that, you have inflation out of control. that is reallyng affecting businesses here, as well as ordinary consumers. of course, both candidates saying they are going to try to get inflation under control. rousseff had four years, she hasn't managed it. those the kinds of things that people are worried about. >> willem marx joining us from são paulo, brazil. thanks. we will be back later with julia for a roundtable discussion on the brazilian election. that is in today's latin america report, coming up in about 40 minutes, right here on "bottom line." in other news, it is the first monday in october. that means the start of another session for the u.s. supreme court.

the justices cleared the way for an immediate expansion of same-sex marriage, by unexpectedly and tersely turning away appeals from five states who were seeking to prohibit gay and lesbians unions. the court's order effectively makes gay marriage legal in 30 states. without comment, the justices brought to an end to delays in same secondary is -- same-sex marriages in five states. tonight, the debut of bloomberg politics broadcast "with all the respect," will launch at 5:00 new york time. their first guest is mitt romney. mark and john will join me at the bottom of the hour to preview "with all due respect," right here on "bottom line." that means that "taking stock," moves to 5:30 new york time. that starts tonight, only on bloomberg. in other news, the dark days of

the financial crisis came back to light today in a federal courtroom in washington. hank paulson took the stand to defend the aig bailout. he is the first of three star witnesses to testify and hang greenberg's shareholder lawsuit against the federal government. peter cook has more on this case. how did mr. paulson do on the stand today? >> it was clear from watching him that there are few things that hank paulson wants to do less than talk about the financial crisis, after everything he went through. today,on the stand talking about some of those painful, difficult decisions he made us treasury secretary. you can see the anguish in his face as he was talking about some of those decisions. by and large, we heard the same story from hank paulson on the stage that we heard from the start of the financial crisis. the decision to bailout aig was necessary. distasteful, he didn't want to have to make it, but it was the necessary decision to save the

u.s. economy. he stuck to that message throughout the course of his testimony. he didn't get off message. one thing we heard, the notion that perhaps the chinese had offered to throw a financial lifeline. maybe they could have stepped in. there were other options on the table. hank paulson put that to rest. nervous aboutre their current investments in the united states at that time. he did not think there was a legitimate offer on the table from the chinese to come in and save aig. that was perhaps the one new wrinkle we heard. just about two hours in the stand. >> what is the crux of hank greenberg's case? >> he's the biggest air holder -- shareholder of aig at the time of the bailout. he says the terms of the bailout were so onerous and painful to shareholders that they were effectively harmed by the federal government. but this was a taking of their

property. the terms not fair, other banks that received assistance from the federal government had much more generous terms. that in and of itself constitutes a violation by the federal government of their constitutional right to property. they are making that argument that the federal government didn't have the legal right to set it up the way they did, taking an 80% equity stake in the company. >> who is up next? >> we have also witnesses. trying to see a tim geithner might be able to make it from new york to washington this afternoon to begin his testimony. the former new york fed president, and treasury secretary is now likely to testify first thing tomorrow morning. >> peter cook, joining us. thank you. coming up, u.s. businesses access to greater china. he will talk to the undersecretary of commerce for international trade about what the u.s. commerce department is doing to help american companies

gain access to china. stay with us. "bottom line," on bloomberg television continues in just a moment. ♪

>> let's check top stories. hilton is selling the waldorf-astoria hotel. the buyer -- chinese insurance company. the price, almost $2 billion. hilton says it will use the money to buy other u.s. assets. hilton bought the waldorf 42 years ago, and will continue to manage it. that would will undergo a major renovation. ahead of a white house meeting on the able outbreak, federal health officials say the u.s. is weighing whether to institute extra screening at american airports. an american journalist who contracted ebola while working in nigeria arrived at a nebraska hospital where he will be treated. he will be kept in a specialized biocontainment unit, not

specifically to handle this type of illness. things are getting back to normal in hong kong, as pro-democracy protests dwindle. student leaders and government officials held their first direct talks last night. protesters warned they would wrap up demonstrations if concessions were not made on their demands for free elections. that is a look at the top stories in the news at this hour. the u.s. commerce department will kick off a two-day business forum tomorrow here in new york, entitled discovered mobile markets, greater china. the goal is to help u.s. companies gain access to export opportunities in greater china. stephan seelig serves as undersecretary of commerce for international trade at the u.s. department of commerce. he joins me in studio. as your secretary, welcome to "bottom line." gain groundompanies in china when imports rise faster than a sports? >> china is the third largest export market already, behind

mexico and canada. over $122we exported billion of goods to china, which was an all-time record. it has grown every year for the past 20. clearly, there is room to grow. we have made a lot of progress. >> if u.s. companies continue to be at a competitive disadvantage because of the trade deficit with china, how can that help american workers keep their jobs? >> we think the way to address that is to help grow exports, not to limit imports. that is what we are trying to do tomorrow in new york. it is the third such series, with three more to go. we focus on important markets or important industries to help u.s. companies better connect with opportunities to export their goods and services overseas. >> what do american businesses tell you about the chances to expand, to export, to get a market goods and other markets? >> it depends on what the market is. china clearly has complexities and barriers.

that is especially acute for small and medium-size company's, which we are here to help focus on tomorrow. we have commercial trade representatives from a number of offices in china that are here to help them access point can be a difficult market. >> have the chinese been receptive to american overtures, when it comes to talking about trade deficit and currency? is an ongoing project. currency is just one issue. the chinese realize fundamentally they are shifting their economy from and i sort of an economy to a consumer driven economy. if they are going to enjoy the same sort of growth they have in the past, they have to do that in partnership with other major world economies. >> let's talk about a trip that you and the commerce secretary took recently. you were in poland and turkey. you lead a delegation of u.s. business leaders there. why those two countries? presidentsted the

export council. it's made of of 16 ceos representing our most important companies in the united states. over $800inesses come billion of total market capital representative of the pack alone. served as a fact-finding mission to go back and report to the president about opportunities to access global markets, to help american the sale ofrow goods and services overseas, and address any issues they find. >> as you know, some of these missions are fraught with geopolitical risk. there could be domestic political tensions, especially in those two regions. you have turkey in the fight with the islamic state militants , and things going on in poland because of its proximity to russia. how do you navigate through that? >> that is one of the key parts of this mission, which is really around commercial diplomacy.

the secretary has been quite articulate about the importance of commercial diplomacy. that's using commercial and economic leverage to drive diplomatic and strategic agendas for the country. >> how do you promote export expansion while at the same time protecting american jobs? >> i don't think those things are mutually exclusive. the fact is, we need to continue to grow the economy. one way to grow the economy is to grow our exports. growing mystic economy less rapidly, coming out of the financial crisis, looking to global markets, which are often growing more quickly than domestic markets, is a real priority. >> where things stand with congress and lawmakers granting president obama trade promotion authority? authority, can deals go through? can we get the most we are looking for is a country without

the president having that authority? >> the president and secretary have been clear in their support and request for tpa. to get major trade agreements done. the question is not whether those deals can get done without tpp, tpa, the question is can they get done as effectively? we believe that if congress grants the president trade promotion authority, that is the biggest and best way to ensure the best trade deals for our country. >> that authority and really show what it is made of if there aren't any amendments. if there is nothing attached to it. it has to be a straight up-and-down thing. >> that is what tpa is, but not at the exclusion of making sure the congress remains informed about everything we are doing in the context of negotiating those important trade agreements. >> stephan seelig is the undersecretary of commerce for the international commerce department.

thank you for your time and. it, it isor to pull not all about the burritos. expansion is on the menu, with an italian flair. "bottom line," continues in just a second. ♪

>> welcome back. think of chipotle, and you think of tacos and guacamole. yet, the fast casual chain has been a slowly expanding its food with integrity, fast casual model to other types of food. investors are eating it up. carol massar's sampled some of chipotle's latest offerings. and didn't bring any. >> [laughter] i will next time.

first, they expanded into southeast asian food. they did that with chophouse. now, they move into pizza. it involved a secret collaboration with two very well-known boulder-based restauranteurs. this week, they opened up their second location 16 months after opening the first one. start with a crisp, high-fiber crust made from freshly milled fiber -- flower. top with fresh to me to sauce and fresh mozzarella, and bake for two minutes at 1000 degrees. this is chipotle's take on pizza. >> i would say we are doing very well. it is growing faster than chipotle did in the early days. founder -- to pull a chipotle founder partnered with two other restauranteurs to launch a pizza restaurant. the goal was to bring naples to a city near you.

with chipotle's backing, they opened a second fast casual location over the weekend. further expansion plans are in the works. they want to keep the food as accessible as the burritos, tacos, and waccamaw lee made fashionable by their partner. like to pull it, prices are higher than at most fast food restaurants. nevertheless, prices are competitive. a margarita pizza will cost you five dollars and five cents. to $5.50. $3.50 there are no freezers. food is made fresh every day. they are sticklers for details. every location includes a prosciutto slicer, and a unique oven. >> we created to simulate the

perfect spot in traditional ovens. >> you designed this? >> we did. the flour is hand milled on-site. >> we will take pizza to wear was 150 years ago. >> even the environment for the uncooked dough is a priority. >> this is a tempter controlled room to simulate the temperature and humidity of naples. >> scaling these details into new markets as a challenge. they set a target for a rate of expansion, nor will they disclose the terms of the financial deal. they are excited by early results. >> we have heard investors and others say that they think that pizza could be bigger than chipotle itself. if that happens, that is great. >> what i will tell you is that he wouldn't be more specific about expansion plans. he did say chipotle is looking at to markets outside of colorado. see these int to

the same neighborhood or same block. they played to the same demographic. >> i'm about to eat my tie. [laughter] are they looking to expand this model even farther? >> i keep pushing him on this. when they first talked to the store, hef this pizza was impressed with how they did restaurants. he talked to them about doing greek food. maybe we could see something like that. what he did tell me is they are not actively pursuing other ideas. they think about other cuisine that they could do with the chipotle model. the fast casual, fresh food, sustainable food idea. >> this is interesting. -- talk about to pull a chipotle, this is breaking the model. this is not what chipotle was supposed to be about. this was mexican food.

>> the model works with other types of food. you can see the battle in the fast food industry. traditional is having a tough time, folks like to put way -- chipotle are doing well. >> thank you. >> it's 26 minutes after the hour, which means bloomberg is on the markets. scarlet fu is standing by with details. celebration of the september jobs report was short-lived, as was the rally. the s&p 500 is down. it opened higher. the you will notice is small catch is leading the way now. that will drag on the broader market. gold futures continue to rise after falling to as low as 1183 early today. anticipation that chinese buyers will step in on wednesday. individual movers we are watching -- hewlett-packard rallying as much as 6.6%. the company is a splitting into

two parts. hp says this move will allow to better adapt to changing technology, and generate more shareholder value. we will be back on the markets in 30 minutes. more "bottom line," after the break. ♪ . .

i will come back to the second half-hour of "bottom-line" on bloomberg television. we have breaking news at this hour -- a spanish health care worker has been diagnosed with ebola at a madrid hospital where two patients have been treated for the illness. it's the first case of a health worker becoming infected outside of west africa. that the showed medical team diagnosed to treat him was infected -- it was a

nurse who treated a priest that died of ebola last month. this diagnosis adds new dimension to the ebola out rake which has killed more than 3400 people, mostly in getting, sierra leone, and liberia and west africa. we will have more details on this breaking story and bring them to you as soon as we get them. in other news -- it should have been a great job on friday -- 240 8000 jobs created in the united states and a 5.9% unemployment rate. that is creating so many jobs is so key, why are wages actually falling? that's a question for our economics editor, michael mckee. >> it's a luncheon puzzling a lot of people. it comes down to supply and demand, you would think. the weight it is supposed to work, demand goes up, supply goes down and then we see -- the price is not going up like it is supposed to. so what happens? we don't really know at this point because we are still

waiting to see why that is. up,nd for workers is going the supply is going down, but wages are not one rising. this is a conundrum for janet yellen who says we will know it's time to raise rates when we see wages rise. janet yellen thinks there is a lot of discouraged workers coming into the labor force holding down wage growth. the economy has created almost a million jobs in last four months postop -- in the last four months. the participation rate is still falling in the labor force. in recent years, the historical relationship between wages and workers has broken. during the recession, the supply of workers went up and demand went down, but wages did not fall as they should. they did not know up much, but they did not go down. so does janet yellen keep rates low in the hope that this eventually works out or does you

raise rates because there's less in labor market than she thinks. but there's no right answer, is there? >> that is the bottom line. if we are this close to full employment and wages are not rising, they be we are actually this close to full employment. fulled says 5.5% is employment. but we got into the threes during the clinton administration. goldman sachs sent out a note saying not so fast on interest rates. withs say that's crazy, unemployment is low, as the economy strengthens, so will inflation. the fed would normally be tapping the brakes right now and blackrock says it will be happening sooner than many think. we will get some clues to fed think this week when they released their note and there are speeches by 12 of the 17 members of the open market committee. hopefully we can get clarity by the end of the week. you.ank

pop culture, politics and tv -- that is what you can expect on bloomberg voss new broadcast "with all due respect." it makes its debut at 5:00 p.m. today. the hosts join me now for a preview. it's a very busy day for you too. -- didn't puntrt today on gay marriage or did the justices just call a timeout? >> i often object to sports metaphors, but punt is the right thing. even veteran court watchers are surprised by this. i think what happened is you had justice and the four liberal judges being happy with the direction the state courts and federal courts below them are going on gay marriage. they did not want to break in. it's possible justice roberts agreed with them. let's not have the supreme court put its thumb on the scale and let the continued flow go the one direction it has been going. almost 40 states will have

action on why about 40 of the courts. if it reminds me of the controversies surrounding the supreme court surrounding abortion where the criticism of the court was they forced it on the country as opposed to taking a slow go approach. did the court's decision not to rule on the issue of gay marriage but it front and center? are aon't know if there lot of people who are going to want to talk about this during the mid-terms will stop it's almost like the inverse of the 73 decision. the court is mindful of having this issue if all from the bottom up and not running into the kind of criticism the court faced then, which is this is judge-made law coming from the supreme court. this essentially shows deference to lower courts and legislatures state-by-state and avoid the charge of what is sizing the issue further. first guest for your

broadcast is former massachusetts governor and presidential candidate mitt romney. this you want to run again? x i think his interest is where it was four years ago when he was not that key on -- that keen on running. find someone who can win against hillary clinton. i think the people look around is 1, 2say maybe there or three people who have the stature and fundraising capacity but if none of those three run, there's a good chance you will get in the race will stop -- you will get in the race. sex is is a missed opportunity for romney? x there is no doubt people around governor romney field indicated by what has happened over the course of the last couple of years and a lot of criticism has been made about obama, especially foreign policy, has been borne out. there's a lot of buyers remorse that they sent around the country and i think of in a romney would still rather not do this, but he understands that winning this presidential

election in 2016 is huge, not just for the future of the country, but the future of the party and they don't want to blow it again. >> and we will hear from the governor tonight on the new broadcast "with all due respect ." you see the two cohosts there. the show launches tonight at 5:00 new york time, only on bloomberg. that means "taking stock" with pimm fox moves to its new time, half an hour later. 5:30 p.m. new york time. coming up, more on brazil's presidential race. we will look at the next round of voting when we continue with our latin america report will stop -- latin america report. ♪

>> it is time for today's latin america or -- more on brazil's election results. the president will be facing a pro-business candidate in the october 26 runoff will stop --

runoff. he surged in the final week from number three. surprise second-place showing for him. what happened to the other --llenger bastion mark >> other challenger? x during the last week or two, we saw those numbers dropped dramatically. that may be due in large part to television attack ads from the incumbent president who realized she was the main challenger early october or late september. there were at talking about her being in collusion with the bank and the fact they would be giving authority to the central bank would mean ordinary brazilians losing food from the table. attacke quite critical ads and that seems to make a big difference for her showing. >> how have investors been reacting to those results? >> today has been a great way

for the market. the stock index opened up over 8% higher and state-owned companies are searching more than 15%. todayrrency is rallying and it's set to be the best day since 2008 4 brazilian stocks. to thes go back political sphere. what's the next stage of the electoral process? 50% inuse there wasn't the vote, we moved to a second round runoff on october 20 60 stop the two candidates will be facing off and there will be very heavy campaigning over the next he weeks. they are very far apart on a lot of issues facing brazilians. once that vote happens, we will have a new president in brazil. >> why does the market like the challenger? what policy changes are if he should win the presidency?

they have been intervening, changing gas rises, the market wants less intervention and that's what he is promising. he has already named who would be is fine at minister, a well-known name in the markets. he was a central banker in 1999. he seems much more business and ready to get the economy back to what it's supposed to be doing. he wants to bring inflation back down to the actual target. just a more clear framework for the economy. about the next few weeks of campaigning. how competitive and ideological will they be? an indication would be the presidential debates we've seen

in the last few weeks will stop -- last few weeks. there is a big scandal brewing with the state energy company and these are things he is going to try to pound her with quite heavily. he is going to say how does she represent change? whatever slogans involves the word change. since her party has been in power for the last 12 years, what will she be doing differently? a lot of goal is -- a lot of brazilians and the middle class will probably agree with that. >> has the president indicated what her approach to business might be and how she would revive brazil's economy if she were to win a second term? >> she hasn't gotten to specific. she said she will change the finance minister who has been finance minister for the last eight years will stop that got some positive feedback, but the business community is very skeptical because she will not get into the specifics of what she is going to do to revive the economy and bring inflation down.

she has just said she's going to change whatever is not going well, but no clear proposals as to how she's going to do anything. the runoff election is scheduled for next month in brazil. thank you very much. that is your latin american report for this monday. stay with us. on bloomberg television continues in just a moment. ♪

>> welcome back. more now on the brazilian elections -- trish regan joins me. you spent an extensive amount of time in that country. the second lays the nature -- the second-place finisher says those in the government lost their chance to make the country grow. did they? next they are looking at recession right now in brazil, and this comes after four years of stagnation. what is disappointing and surprising about all of this is that at one point, brazil held all the promise in the world. this is supposed to be a china of the western hemisphere. had a large top elation, a population increasingly becoming more educated and affluent. this would be a trick the market for all of our goods. >> what happened? when you are down there, you spoke to some officials and they seemed to hold out so much promise for the future of that country. but cutting people were recognizing all that promise was starting to go away because they had their chance. success and it

was assumed the new president would be able to continue that success will stop she was hand-picked to come into that position. interestingly, a lot of policies he put in place economically did not continue under the new president, so she is -- she has become more protectionist, put up more barriers to entry and this has caused some economic pain. interestingly, nives has gotten the endorsement of the kind of alan greenspan or warren buffett of result. this is a guy who was a -- you is a hedge fund manager but previously worked as a banker in brazil. he has said over the years that during lula, they were hands off when they came to the economy and allow the economic ministers to work their magic. all the worries about putting in place a certain prounion type

regulation there when -- that existed or was feared when lula got elected did not happen. in some ways, lula was the best of both worlds. he was hands-off on the economy. the president has not been able to continue the success, so now you get a guy who is a fiscal conservative coming in. he may very well win this thing will stop >> what do businesses in brazil need from their government? >> they need a lot less red tape. you think we have red tape here, you can't even imagine the amount of red tape you deal with as a business in brazil. just getting a business started there is so challenging and difficult. the tariffs you would encounter if you choose to him work/export , that's significant. if they could try to get out of the way it just be there with the right kind of tax incentives -- they have done it with the

sugarcane industry, great example. the government health that long and brazil became energy independent long before we were even talking about it all stop -- before we were talking about it. there are examples of how it could happen. coming up later, we will look for the market -- look at the market for luxury cigars. the top executives from the davidoff group will be here and will talk about their outlook on the industry. maybe we can have a smoke or to -- maybe not. [laughter] i would not go near the stuff will stop >> we will see you at the top of the hour on "street smart." stay with us. another check on market movers is on the other side of the break. ♪

>> get the latest headlines at the top of the hour on bloomberg radio, streaming on your tablet and at bloomberg.com. that does it for this edition of "online." i'm mark crumpton. on the market is next. i will see you tomorrow. it is 56 past the hour, that means bloomberg television is on the markets. let's get you caught up on where stocks are trading right now. with the s&p 500 little changed -- it had opened higher and it raised its gains will stop it is struggling for direction but small caps are leading the way down, off by .3%. the russell 2000 rebounded hard

on friday but it entered correctional territory last week. the msi emerging markets index is up i 1.3%, not translating into the u.s. markets. as it was one outperform her there. shares of hewlett-packard surging after the company announced it is splitting itself into. one company will focus on present computers and the others will be corporate hardware and servers. it's just the latest in a slew of m&a activity is may 2014 the busiest year since the financial crisis. -- our investing reporter looks at this with us. >> i think this has a lot of analysts scratching their heads. it depends on how the businesses are going to be split and divvied up. on hp's hard numbers revenues and their computers and peripherals and hardware. the one of your guests this morning said the enterprise is

showing the best growth over the past few years -- servers and things like that. itself server industry is becoming very commoditized and it might be hard to find growth in it. continuing as string of spinoffs we have seen -- >> ebay and paypal. >> exactly. meg whitman was like we are not going to split up hp and then you saw the ebay ceo give into pressure. why is there pressure, why are we spending off? why are they using the spinoff method to gain shareholder value? it's really because of the tax implications of the deal. or distributional shares to shareholders as a tax-free way to create war shareholder value and a great way for these companies to get people excited about the company again. it might not be showing real organic rose. >> why the tech industry question mark ebay, you could

call it a retailer or an online off at her, but it is still within the tech space and we heard a lot of talk about ibm as well. with ibm and lenovo's business, they spend that off many years ago. you are seeing lenovo take charge of the laptop computer industry. not a lot of opportunities for organic growth in the tech industry and i think that's what we are seeing. they have historically low tax rates the air to other companies and they might use these spinoffs as an opportunity to take advantage of that. >> what does that say about their valuation? >> they might be valued quite highly. the spinoff in this case is a good opportunity to get investors excited because the high valuations might keep investors away from getting in. >> what were you most surprised by? >> consumer non-cyclicals among consumer staples being at the

top will stop it was led by the altruistic spinoff. because of the big ebay deal and goinge of that, you are to see a lot of communications intact pick up. >> so the spinoffs will be seeing more spinoffs. >> exactly. >> "street smart" is up next. ♪ everyone to the most important hour of the session. 60 minutes to go for the close. coming up, we expect an update on ebola from the white house. we will bring that to you live. is splitting men hp into two different companies. will the winter division be able to stand on its own question mark the waldorf astoria hotel be the biggest chinese property purchase in the u.s.. and finally, lebron james stands to make $50 million from the