italy is most stressed as europe tests banks. we speak to former e.c.b. president jean-claude trichet. and i quit. we consider the quit rate. good morning, everyone. this is "bloomberg surveillance." we're live from our world headquarters in new york. it is monday, october 27. i'm tom keene. joining me is scarlet fu and brendan greeley. right now let's get to our top headlines. here is scarlet fu. >> in brazil, the president promising great changes after winning a second term. she was re-elected with 52% of the vote, defeating the opposition candidate. rousseff says the challenge of pulling the country out of recession and slowing down inflation that is above the central bank's target. investors are skeptical. brazil's stock fell 7% last week on speculation she would be re-elected. in ukraine, they easily defeated russian supporters

from eastern ukraine. president poroshenko brokered a cease-fire that allowed the voting to take place. ukraine has been battling pro-russian rebels for seven months now. >> most european banks that failed the e.c.b. stress test have already been let off for good behavior. 25 banks were found with a capital shortfall. of those, only eight lenders haven't plugged their capital gap, either that or satisfy the e.c.b. with plans to get smaller. this is the deputy general. he talked about the impact on italian banks. >> i think that the exercise has shown the italian bank system is in good health, is strong. we need further work. >> italian banks seem to have the biggest problems. $32 billion capital shortfall, only $8 billion remains. half of it is in italy. and jean-claude trichet, former

e.c.b. president, will join us at 7:00 a.m. this morning on bloomberg television. >> new york and new jersey are coming under fire for new policies on ebola. new york says that travelers coming from west africa who had exposure to ebola will be quarantined at home for 21 days. new jersey's policy is even stricter. a nurse who returned from africa is now being quarantined in a newark hospital. here's new jersey governor chris christie on fox. >> i don't believe, when you're dealing with something as serious as this, that we can count on a voluntary system. this is government's job. if anything else, the government's job is to protect the safety and health of our ate zens, and so we've taken this action, and i absolutely have no second thoughts about it. >> the white house expressed concern to both new jersey and new york. it warned the consequences of "policies not grounded in science." >> this is a really moving debate right now, isn't it? we'll talk about this more on "surveillance" this morning. in baseball, turning to the

world series, the san francisco giants are one win away from their third title in five seasons. madison bumgarner threw a four-hit shutout as the giants beat the royals 5-0. the giants now lead the series three games to two. san francisco can wrap it up tomorrow night. that's when they'll play game six in kansas city. i haven't seen it. >> 5-0? >> 5-0. >> tennis? >> i'm a red sox fan. i'm not engaged in the series. >> you have a problem with baseball f. you're not engaged -- if your team is not playing, you aren't engaged, period. >> well there, we are. top headlines this morning, let's get to the data check. we look at bonds, currencies, commodities, not much of a story here, a churn. ruble gets my attention. futures negative. carbons migrate, i would call it. this is on the second screen, please. this is an amazing number versus where we were eight, nine, 10 days ago.

we're not in the 17,000 in the dow, but there it is. we've had stronger yen in the recent, and brazil has a little bit of celebration. brendan greeley will give us wisdom on brazil. let's go to the bloomberg terminal and do what we can do. we can switch any series into like eight, nine, 10 currencies. here is the brazilian stock market in u.s. stock dollars. i did not go long here. moon shot, commodities, right? >> that's when you went long, right there at the top. >> scarlet says, ah, you're way behind, get in, boom! there we go. and this is the staff, but the line in brazil looks like about that. and that's the currency. currencies matter. >> the butterfly flapping its wing between the atlantic. as this is about managing

expectations. the y expected him to do right thing, and he did not depart significantly from his predecessor. we expected rousseff to do the same. she did not. >> and also china also stopped growing fast as well. there's also that to consider. >> scarlet fu not subject to the great man theory. >> well there, it is, and we will look at this through the hour as well. it has been a weekend of international elections. the conservatives, they do well in uruguay. liberals in brazil. then there's ukraine, and tunisia was really, really interesting, very important. we'll have much more on that through the week, i'm sure. th us, too, from u.b.s., julian, they put him on his own separate floor to keep him separate in equities and drivetiffs. do you guys ever talk to each other at u.b.s., or is there like a chinese wall between you? >> all the time. in fact, --

>> how do you use strategy? >> they have two floors. >> how do you use mr. manuel's work in economics? >> one of the great things that's been driving the u.s. economy of late has been the wealth effect through equities, and so having had julian been so optimistic and i'd argue correct on the equity outlook has actually helped our forecast in consumer spending and household formation. >> let's recalibrate on a machine morning. can you still be long? can you still be optimistic given the elections and everything else we've seen? >> i think you can. i think when you look at this year, it's tempered realism, but still optimism. rates are lower. hopefully they'll move up as a sign of normalization. with earnings growing, there's still room for stock prices to work in 2015. >> we're a week and a half away from the turmoil, the day that the 10-year yield fell below 2%. everyone and everything seems

to have refound its footing. where's the natural value, the natural position for equities? where should it be? i mean, the v.i.x. has gone back down to 16.11. that seems relatively low compared to the way it was trending before the flight. >> well, again, sometimes, especially with volatility, you have a recent bias. if you look back several months before that, 16 was actually at the higher end of the range, and we'd argue that you've shifted slightly higher, simply because between the fed and the real concern is european growth and what kind of effect that's going to have. so we think volatility is a little higher. >> in your research, you talk a lot about monthly differences. october is just a volatile month. things get better in november and december. should we be focused on what month it is? >> no, no. i mean, the seasons do tend to work, but if you go back and you came in completely bullish, january, january was an out of the month. you have to be cognizant of the world around you. >> how does it unfold in the

equity market? alan greenspan used to make a big deal about this. there are so many distortions in your world. do you just throw a sign, equity dynamics, try to focus on the basics? >> we look at earnings a lot. u.b.s. is very good at actually integrating the analysts up into the macro side, and it's something we spend a lot of time focused on. you know, i think one of the important things to bear in mind is for economics, we think volatility is actually good. one of the arguments we've been making as an economics team is the low level of volatility has actually been bad, and as the u.s. has traditionally been willing to accept a higher amount of volatility in the macro economy for a higher trend growth rate, and if you want to see an organization or group that's not been willing to do that, it's europe. europe doesn't allow for a lot of volatile knit their economy. therefore, they have a much more stagnant economy. the u.s. has always been on the other side tv until the post-crisis environment. >>ly volatility is good.

does it like what we've been getting? >> probably not the way we've been getting, and the reason is we've been getting it. growth has picked up. the recent move on wednesday was actually timing consistency. everyone saw gasoline prices dropping. they expected the u.s. consumer went out and spent a lot of money, but gasoline prices didn't drop for the time period the retail sales report was for. >> gotcha. >> you're seeing this happening, and you don't understand they happen at two different times, one just took a little longer to get to you. it's like like looking up and seeing the sun and then seeing a planet that it is further out and not realize you're seeing something delayed, you know, if you're looking at the plan the growth. >> are we allowed to do astronomy on a monday? >> it's not hard math. >> i mean, u.b.s. also has a different mandate than the fed.

you're willing to accept a much higher rate of unemployment than the fed s. you're at 7%. >> what i'm saying is, we say that the natural rate is seven. whether i say it, if i'm right, the fed can't do anything about it anyway, right? it's just a matter of whether you're willing to accept that maybe something structurally has changed in the labor market. i think it's interesting. everyone is talking about the weak level wages, but if you guess this right, we should be starting to see the improvement now, whereas if the fed is right, we're not going to see it for three or four years. >> some of the die natural oiks a monday morning. >> coming up, the results of the long-awaited stress test of european banks are out. jean-claude trichet, former president of the european central bank, will join "surveillance" at 7:00 a.m. eastern time on bloomberg television and radio. this is "bloomberg surveillance" from bloomberg television, streaming on your tablet, your smartphone, and bloomberg.com. ♪

>> good morning, everyone. "bloomberg surveillance" looking at st. paul's cathedral in london. our new headquarters is just to the right of that. i mean, just to the right of that. they're building it between the buildings of st. paul's cathedral, right next to manchester house. really looking forward to that occupancy here in about 24 months. we say good morning, everyone. it is "bloomberg surveillance." brendan greeley with me. scarlet fu as well. scarlet is looking at europe right now. what do you have? >> the euro strengthening this morning, 126.80. spanish bonds are rising after most european banks passed stress tests. regulators found the biggest capital hole in the region's banking system is in italy. hans nichols joins from us frankfurt with the latest. we have 25 out of 130 banks that failed the stress test.

i was going back and checking the track record in the past. in 2010, seven out of 91 banks failed. that was a failure rate of about 7.7%. 2011, eight out of 90 banks failed, 8.9% failure rate. 2013, 19% failure rate. is that why analysts are seeing this latest stress test as more effective? >> well, there is a concerted effort by the e.c.b. good morning, scarlet, to make the stress tests more rigorous. what we got is basically two batches. the 25 banks that have failed, within that, there are a lot of technical failures, which is to say banks that have failed as of the beginning of the year, but in the interim period, raised a lot of money and they're fine now. we're left with about eight banks. those eight banks, we know most of them are in the southern part in greece and italy, they have a 6.1 billion euro shortfall. here's the question that europe is waking up to now, and it's really why we're seeing potentially some of the stocks a little bit lower. what do you do about all the banks that just barely passed?

i asked a central banker, and here was his response. they one has passed, have to do much more work. competition becoming much more fierce, which means leaning back and relaxing is not the right attitude. we think given the challenges we're having, digitalization, as well as very low interest is a in the german market challenge for banks and they need to do something about that. >> that's the issue, really. what do you do about the just marginal, the students that have bare the squeaked by? they know so much more about them, and next month they'll be the sheriff in town, regulating all the banks for the eurozone. tom, scarlet? >> i like the way you put that, passing is not surviving.

do we then presume there will be consolidation in eye italian banks? >> there's still some talk from analysts and organizers about combining some german banks. >> especially those exposed to the shipping industry, they're not that strong. give them their due there. on the market, the italian bank, the world's oldest bank, which i'm sure tom has visited, they clearly have problems, and there is a lot there. you can see the spot where tom had two gelatos outside that bank. there's a lot of talk about them hiring u.b.s. for strategic mergers. >> what is the to-do list now for europe after these, you know, fictional or tangible stress tests? now what?

>> two things. one, the bank that didn't fail, that did fail, need to come up with a plan and then implement that plan from six to nine months. it's just a handful of banks that failed. the larger issue, in which no one will really give you a straight answer at the e.c.b., what do these banks now have to o to increase lending? you need structure jal reforms. you hear that from the germans, and b, you need to do something to stimulate aggregate demand. that means more spending, which there may not be an appetite for in brussels. we're still at the same stalemate, and that is anemic growth. banks are healthier, but they still don't have animal experience to satisfy. >> hans, i don't know. i feel lining you tap a german on the shoulder, and turns around and says structural reform. looking at the press conference, i was really struck by -- >> well, he says that in one word, one word, it's one long

word. >> you know, i was struck by how often they use words in the press conference like strkt and regular russ. they really seem like they have something to prove. i've got a quote from the press conference after the stress test. the scenario of deflation is not there. this is in the test stress, because indeed we don't consider that deflation is going happen. are they still grading on a curve? not so much of a curve, but a time worm, because all these criteria were established a good nine months ago because you had russia and parts of ukraine, before you had the speck tech of deflation. their counter argument, and it's fair, is that they had enough built in sort of doomsday scenarios, economic contraction at 7%, the fact they didn't get the technicals of how grim the economy looks right now, the fact that they didn't get the technicals entirely right doesn't matter, because overall the stress test

s were sufficiently stressful. >> hans nichols, thank you so much for giving us the perspective. hans nichols joining from us frankfurt this morning. >> coming up, an important conversation. this was a second e.c.b. president, jean-claude trichet at the top of our 7:00 hour on bloomberg television, radio worldwide. we'll talk to trichet about the stress test, but much more jean-claude trichet on the future of europe. stay with us. ♪

>> good morning, everyone. "bloomberg surveillance," i'm tom keene. greeley and if you have decided to stop by. sounds like a band. it was a great band.

>> we started it off, and then you joined us. >> something like that. greeley and if you have. >> are you the drummer? >> i'm the lead singer, of course. >> we say good morning. really international relations this morning with four international elections. a lot to talk about, but part of this is our morning must-read about an election to come. here's brendan greeley. >> i found somebody who shares my apathy about the midterm elections. in the "f.t.," almost without exception the campaigns have been dispiriting, and the content absent, yet the mindless money continues to flow. >> we're not inspired, but i do think it's kind of funny, whenever i travel to europe, i have to remind people that whatever you might think of the tea party in europe, they make up 30% to 40% of the republican votes, right? it's not as if they're a small proportion of the u.s. population. at u.b.s., we think most likely the republicans are going to take the senate, and then that

will lead to a little bit more partisanship as we turn our attention to the presidential lection. the president will say i'd like to veto that. and then there will be attempts at things like the medical device tax and things like that. there are things where apparently republicans and democrats both are concerned about something, but nothing big. >> the sun is going to come up in the west. drew, when you look at your europe forecast and the migration around, how much is government spending pointing you to that? i mean, it's a big part of your debate right now, or your analysis. >> well, i think it's less spending and more of the taxing. i think one of the big headlines recently was that we brought in the most amount of taxes in the history of the republic. usually when you're saying you brought in the most amount of taxes in the history of the republic, the republic doesn't last too long.

>> our twitter question of the day is do elections matter for the economy? julian, i want to put this to you. do elections matter for the economy? they matter for the matters in the immediate day after. >> there's always an element of psychology to it. if you look at at approval ratings, they're so low from both the congress and the president, and yes, we could have an apathetic outcome, but could people's distaste for washington sink lower? it's hard to see it, actually. >> i've always been very skeptical. i'm interested in your thoughts. scarlet, with you running the equity desk for bloomberg news for years, like religion, you have to trot out 12-page research reports linking the election to the markets. >> the presidential cycle, all of that. >> have you ever seen it? >> it always comes out that way. it's just another thing on the calendar that people get excited about. >> the senior guy goes, you have to write about the elections. is it like chewing glass? >> last election i had a lot of

fun with t. as an economist goes, i got to do regressions on presidential elections. >> you're such a wonk. >> coming from the king of wonks. >> thank you. wonkdom. earl of >> three regressions in the truth, that's a rock sang. aun maybe your band can sing it. >> we're going to stick with the election theme, because coming up, rousseff wins again in brazil. will she be able to fix the economy? ♪

>> good morning, everyone. ater on slain slain, a conversation with jean-claude trichet, the former e.c.b. president, lots to talk about, the stress test, the future of his europe. jean-claude trichet, of course, on the elections in ukraine. ruble right now at 42, an ever-weaker russian ruble, one of the examples of weakness in europe. looking forward to that conversation. let's get to our top headlines this morning. here's scarlet. >> toyota's global sales rise almost 3% in the first nine months of 2014. a spokesman says worldwide

delivery has climbed to 7.6 million vehicles through september. volkswagen, balingting for worldwide leadership, reported sales of 7.4 million. former microsoft c.e.o. steve ballmer could be in line for about $1 billion in tax benefits after buying the l.a. clippers. that's according to the "financial times." ballmer bought the team in may for $2 billion. he could claim about half the known e under a little tax. a second term, rouseff defeated opposition candidate neves. neves was seen as the more business-friendly candidate. rousseff has the challenge of pulling out of recession. and staying with brazil, our single best chart is on the country, because rousseff has her work cut out for her. given the economic reality, let's pull up our single best

chart. the white line shows a percentage of brazilians who think the economy will improve. it was in steady decline since the second quarter of 2013 and bottomed in the third quarter of this year. since then, it began recovering in the first round of election campaigning. >> great chart. >> radio, tv advertising, all of that began in mid august, and then the second round began in october. the contrasting he yellow line shows analysts -- >> yeah, that is not a record low. it is the exact opposite of how i feel about the american election. the more i watch campaigning, the more depressed i feel about everything. >> it really shows the future as a brick and where they were, and that yellow line, it shows they're nowhere near. >> people feel better, because whatever she was saying in her campaign advertise ams, seems to have struck a chord. >> it also may be -- well, here, let's take a look. you were just there.

you took a look at the country. what did rousseff win? what's her prize? >> the euphoric feeling of a lot of brazilians starts with the campaign, and what's so interesting down there is you don't buy ad time. you're given ad time by the broadcasters, and then you get 10 minutes a night to put on hollywood-style movies, talking about how wonderful the country is. that is one of the reasons. people get really, really tied up in this thinking, wow, the country is going really well. if you look at the numbers, unemployment is at a record low, and as contract last four years, people have seen real income gains of 10%. ordinary brazilians actually have very little to complain about. they have a transfer program, sort of listed 35, 36 million

brazilians out of poverty. >> was he going to, or was that just an acquisition? the campaign got kind of ugly. >> she was campaigning, whether he was going to curtail that particular program or reorganize it, people weren't clear. he was saying, no, this is not part of my strategy, but no, i won't be cutting back to people who need it most. >> i want to bring up a quote from last night in her acceptance speech. they're capable of moving our society, you know, there was actually a different quote where she basically said it's easier to change when you have just a little bit of a mandate. >> a narrow margin. >> than a huge mandate. >> i'm struck by the idea that you may win re-election and promise change. >> it's interesting. her entire campaign platform was having been around change, her party been there the last 12 years. what's really interesting about what she said last night,

allowing them to do more, that may be the idea that she still actually talked to the opposition. >> one of the things i learned about the argentinian stead, it's all about the leaders involved. what was so interesting about nieves, he was going to bring back one of the stars at the annual classic book commanding. i mean, there's a name that investors knew from the past. how does this new regime or the second administration, how do they even begin to address foreign investors? >> it's an entire cottage industry centered around debating who will be the new finance minister. there's a number of names thrown into the hat. >> it's something that people are looking to. they've had real problems in terms of calming the markets. this morning, we've seen them down 7%, 8%, getting a name out there that will calm the

markets. >> there's going to be a change of regime no matter what. >> absolutely. she's promised huge changes. last night, her energy, her energy mining minister said he was stepping down. she promised wholesale change. we don't know the names yet. >> do we know what her theme is versus what we saw? >> change. >> audacity? >> hope? >> >> hope. >> no, she talked about becoming more efficient, and one of the things she put forward is she wants to look at political reform. one of the big struggles she faces, corruption. she's trying to deal with that. >> what's great about this, we have two guys on the desk -- scarlet and i are tethered. underneath the desk, i have a pair of handcuffs around my right ankle. greeley, world cup, brazil, whenever he wants to go. when you get off the airplane, when you go in the restaurants, what do you actually feel there away from the fat cats? >> hunger, because i see fantastic -- it will be the first response.

but no, there is -- there's a huge world disparity. that has been really growing dramatically. >> it's worse than it was. >> yes. >> and then you were away from the centers, right? i was outside of sao paolo, but i called a friend last night, and i said did you vote? who did you vote for? i'm not going to tell you, but i will tell you this. under rousseff, at least we know how bad it's going to get. it's not a ringing endorsement. >> yeah, but at the same time, dilma has managed to maintain record low unemployment, even as g.d.p. shrank in the first half. drew, what is she doing correctly, if anything? >> at this point, it's the devil you know, right? that's appears the important thing. if you know how bad it's going to get, then you have some sort of downside. you can price that in. if you vote for someone knew, ou become more conservative.

the systematic degrading, i'll say. this is the e.t.f. on the brazilian ibovespa rolling over. do you frame the growth economy, both of you, but drew particularly, let's start with you, do you frame the growth economy as a new 4% or new 3%, those days of 6% and 7% just gone? >> it seems like everyone is kind of slowing in terms of the trend growth. you know, if it's not the developed countries developing the things that boost productivity, then who's it going to be? i mean, it usually doesn't come out of the lesser countries. it tens to come from us and move down. >> i think you just described the new mediocrity. it's a great phrase. >> thank you. now go somewhere exotic again. >> where are you heading to next, seriously? >> working on north africa. >> turn united states? >> yes. >> to me, that was the most

interesting election of the four. >> yeah. >> yeah, the secular victory. >> not official yet, right? >> no. >> the tannest of our correspondents. >> i'll take that. >> our twitter question wraps that all together, because we're asking, do elections matter for the economy? whether it's in tunisia, brazil, ukraine or here in the u.s., the midterms coming up. do elections matter for the zphe tweeter us. ♪

>> good morning, everyone. good monday morning. jean-claude trichet with us at 7:00 a.m. this morning, a very important discussion with the second president of the european central bank. of course, now mario draghi, and yes, we'll ask jean-claude trichet about what he didn't do, which is growth policies in europe. that is front and center. markets have cleared, and with it, one way or the other, julian emanuel suggests a temperature of the global and u.s. porridge is just right. goldilocks would know, a goldilocks market. victor, wander in here. let's look at the porridge heating up. this is the ruble off the ukraine election. this has happened just as scarlet fu gave top headlines.

that's a ruble 42, and it's one of those tea leaves of the economist magazine with a canary laying on its back. how many canaries are in the coal mine right now? >> most of them are outside in ukraine, russia, even in brazil. that chart of sub-growth g.d.p. , it's what's bothering u.s. stocks at the moment. >> is there a canary in the u.s. equity markets? >> at the moment, there really sent. >> i agree. >> you know, that's i guess part of the frustration. >> with the porridge analogy, which i really like. when you work with drew matus in economics, the porridge is part of the friction of the economy. >> the deficit is better? >> yes. >> you don't have tuna salad or chicken salad. > sorry, it's different.

>> with the porridge being just about right, you don't need incredible growth going forward. you just need good growth, and the g.d.p. that's growing owards 3% as u.b.s. expects. >> does it need to be a broader consumer recovery as well? >> we certainly like that. >> we're going to be seeing more of that with this plunge in gasoline prices. >> lot of people don't feel good about this five years worth of bull market, and in fact, that's the kind of thing giving the underlying conditions that's going to elongate the bull market. >> at the same point, everyone says it's a 1% recovery, but the 1% aren't buying 17 million-plus cars on an annualized basis. so something is happening

there, and we're seeing very few layoffs, and i think it's just a matter of time before those people who aren't seeing lay jfs begin to say, you know what, i'm confident enough that i can keep spending the money i'm making. >> i got to ask you about earnings too, because you've got a lot of large companies walking down expectations the next year, whether it's i.b.m., whether it's coca-cola, whether it's mcdonald's. is that just a simple reset of expectations because of the end of the year or something more symptomatic spending a lot of time and effort on things like buybacks, but not addressing structural problems? >> for the most part, it's actually currency relate. >> ok. >> it's a very large move for the big rally in the dollar, and that's part of the walk back, but it results in more uncertainty. >> very quickly, the most important headline, as scarlet mentions, the restructuring of coke acoal a. they had a headline of executives compensated off of revenue. to me that's a nominal g.d.p. story. everybody is struggling to grow. do you guys just assume the

nominal g.d.p. will click in with better, real growth and etter, bigger inflation? >> you'll get the inflation you need. >> and to your expertise, that solves the problem. who's the coca-cola? >> mcdonald's, i mean, his world solves a lot of those corporate problems, doesn't it? >> it does, but again, when you look at valuations in the u.s. equity markets, you still need that incremental feel better about europe. >> feel better is what we're all looking for right now. our twitter question of the day, do elections matter for the economy? tweet us @bsurveillance.

>> it is 6:45, and i'm going call it. i already have the quote. morning from drew matus, one percenters aren't buying 17 million cars. that says everything you need to know about the recovery. >> get on twitter right now. >> right now. >> i paraphrase. check it with drew first. we're going to look at photos. his is the brazilian president celebrating her win. here's what i think is really important. on the left there, you have dilma. on the right, it's lula. the guy we wish had gotten re-elected, yes. when she ran for her first term, she was really running for a second term for lula. she was engineered to be his successor. she didn't have that much experience in national politics. this is the first time she's won on her own. in her first term, she failed to achieve what lula had, which is beating expectations and creating growth. number two photo, we're going to look at mayor bill de blasio

of new york. he is eating a meatball. oh, he's ordering a meatball. he's ordering a meatball in the restaurant where a man who now has ebola ate about a week ago. >> this is one of his pit stops before he actually came down with the fever and was checked into a hospital. >> they did a photo. >> de blasio did not have ebola. >> they did a photo shoot of me riday. >> politicians are desperate not to look like rick pir. he was seen as not been quick enough, the response was not adequate in texas, so now everyone is going crazy. >> we have to focus on this is a story that's really moving his morning.

>> the way civil liberties are being tramped on, because she's in isolation. she doesn't have a fever. we'll continue to monitor that story. this number one photo, is atlanta. >> beautiful. >> if you have young daughters, you will recognize this as the pivotal scene in "tangled." >> true. have you seen it? >> no. >> how did you get away with not seeing "tangled?" >> we're a "frozen." we're all "frozen" families now. >> everyone wants the powers. that's why -- >> the twitter question friday morning is what percentage will go as elsa and what percentage will go as ana for halloween. >> i love how i'm the only woman on the set and i've not seen "frozen." everyone else has seen it and knows about elsa and the

snowman. >> at 8:00 this morning, we're going to have a sing along. >> my scientific analysis -- >> "let it go," right? >> oh, my two daughters run around the house singing it. they do the elsa and ana parts, and then they fight over who does the part. and then my son plays the role in it somehow. i don't know how he's weaseled his way in. >> he might be the reindeer. >> there's room for a snowman. >> i narrowly avoided going dressed as a snowman for halloween this year. >> i was going to be fiat money, but i knew i would scare veryone. >> this is funny. >> there are going to be so many else. >> this weekend, i got a look at "let it go," did it with four flats, in the key of d flat. are you kidding me? nobody can "let it go," too

many black keys, so i'm buying that we music to see can't play "let it go." i mean, as you know -- >> this is tom keene's weekend. we just summed it up right there. >> my decision is there is i play the ukulele. i'm not sure why you're talking about this. >> the executive -- >> amen. i'm sorry. >> do you know what this is worth to the future? the executives at disney hit a home run with this thing. >> that's a home run. we'll be right back on "bloomberg surveillance." ♪

>> good morning, everyone. coming up here in about eight minutes, jean-claude trichet, an important conversation on those stress tests, but far more mr. trichet on the future of his european union. jean-claude trichet, and for that matter, mario draghi in search of economic growth, a little bit of inflation would really help right now, it's on "bloomberg surveillance." jean-claude trichet, really looking forward to that. futures negative, and brendan greeley, the ruble shows ever more of that tension in russia.

>> it doesn't seem to matter. do something, like it will actually change the mind about things. >> no, it's a toggle swith. at some point it will? >> it's totally binary, it's ine. >> is u.b.s. -- >> the team from u.b.s. with us, drew and julian. did you work on where the trip point is on ruble, or, for that matter, on oil? >> oil is the critical issue here. >> more than the currency? >> yeah, yeah, you start trending below 75 on west texas thout a supply response, and that's when you think you get rule. >> with a minuscule print, mr. $5 even away from manuel's comments. >> one of the many gauges shows the quit rate, the rate at

which workers walk away. it's not quite where it was before the recession. americans don't feel bold. drew matus says this is the indicator to watch. drew, do you have your resume ready? >> janet yellen received her job, i'll take that one. >> do you give forward guidance? no, because it's worthless. if you're going to give people numbers and then back away from them, you're not really accomplishing anything. the quit rate in our mind is the canary in the coal mine, sflite no one is going to pay you more simply because there's another job out there. they've got an idea of what they're going pay for that salary. where it becomes important is if you go, you know, bloomberg, i've had it with you, go into this other shop, and they go, no, no, we want to keep you, right? that's when wages start going up. thelyness of people to walk away from their job rather than stick with the job. >> the quit rate is something to watch here as did you to the jobs report here in, i believe

it is in two fridays. forex report right now. ruble in real moving. ruble 42.20, that is a stunning number. stay with us. a conversation with jean-claude trichet. ♪

>> with international elections

in brazil, uruguay, ukraine and tunisia, monday morning brings a pro-europe ukraine business as usual in brazil. italy is most stressed, as european tests banks. we speak to former e.c.b. president jean-claude trichet. and there's chaos over ebola quarn teens. cris sandee cuomo, they flat out agree, then disagree. i think this monday morning they're agreeing. we'll have much more in this hour. good morning, everyone. this is "bloomberg surveillance." we're live from new york. it is monday, october 27. i'm too many kohn. joining me, scarlet fu and brendan greeley. let's get to news head leans this morning. >> investors making it clear where they stand on the election results in brazil. esident dilma rousseff won 52% of the vote. rousseff has an e.t.f. that tracks brazilian stock down 8%

in premarket trading right now. she's promising great change in her second term. in ukraine, a victory for supporters of the european union. pro-european parties will be forming a coalition government after defeating those who backed closer ties with russia. the voting took place in the midst of a cease-fire in the fighting with pro russian rebels. here's ukraine's president, petro poroshenko. >> the result of the election bring the firm victory of old democratic, pro european, pro ukrainian forces. there's a lot of opportunities to develop, to present the program. >> one problem for poroshenko, how to avoid marginaling residents. russia's president says those rights, the rights of those europeans, must be looked at. >> more than two dozen banks have failed the e.c.b.'s stress

test, but they have a chance to make up for it. only eight of the banks haven't already plugged capital gaps or agreeps to get smaller. just $8 billion remains from a $32 billion shortfall. banks in italy account for half of that. to talk about it and many more things, former president of the "bloomberg join surveillance" coming up. new rules on ebola in new york. anyone coming from west africa who had exposure to ebola will be quarantined at home for 21 days. even while, in new jersey, a nurse who returned is now being quarantined in a newark hospital. here's new jersey governor chris christie on fox. >> i don't believe that we can count on a voluntary system. this is government's job. if anything else, the government's job is to protect the safety and health of our citizens. and so we've taken this action, and i absolutely have no second thoughts about it.

>> the white house says the new policies made discourage health workers going to africa to help and warn with "policies not grounded in science." >> let's look at the baseball and the world series. there's been breaking news. san francisco just one win away from a third title in five seasons. bumgarner threw a four-hit shoutout. they defeated the royals 5-0. they lead the series three games to two. san francisco can wrap it up tomorrow night. game six is in kansas city. some movement here in brazil, the real just spiking weaker moments ago. we quoted that 15 minutes ago. we've got a real reversal. brazilian real blows through to new weakness, 2.53. that will be worth watching. >> it's just so clurebl crucial. it's called the real because they wanted it to be a believable currency. they might as well have called it the no, seriously, this is a real currency. to watch it slide is really important for brazilians.

>> it is the junk edition. we've got other corporate breaking news. scarlet fu does that better than anyone. >> merck just reporting results. what's interesting here is third quarter sales fell 4%. they missed estimates. the company is reducing its full-year revenue forecast to a lower range. yet at the same time, on the bottom line, earnings per share, that beat analyst estimates, and it boosted its e.p.s. forecast as well. the effect of all the financial engineering, the cost cutting, this is not just merck, this is any company in the u.s., has been helping to support the bottom line even as revenue line continues to struggle. >> giving us perspective in this hour, drew t. matus, senior economist, and julian emanuel joining us on equities and drivetives. what is the summation so far on earnings, julian? pretty good, right? >> it's ok. basically you had overoptimism at the end of the summer, which was temped by this dollar rally, and you're really coming in sort of where you want to be, around 5% e.p.s. growth, about 3.75% in terms of

revenue. i would say that some of these companies walking down next year, it's expected, actually it's normal when you look at the cycle. people start out over optimistic, and it then it gets tempered. >> are we done with all the seasonal factors that seem to trip us up? >> i think we are. drew would probably be -- they've done a lot of work on that. >> i mean, he thinks. if you look at the first quarter, the anomaly was the g.d.p. print. i'm not sure i agree we didn't grow. i think we probably did. >> one of the things we've been tracking here is the bifurcation of the american consumer. people either shop the dollar store or they're shopping more expensive than target. do you see that sort of fixing itself as the recovery continues, or is that a long-term trend we have to watch for? >> it depends on who you believe. there's two lines of thought. one is that we're just going through a structural change, that was kind of one of the

news of the middle class, and it's been shut down. when we recover, it will all go back to normal. the other is that in kind of the environment where we're living in, there's return for education, and therefore, you're going to have this constant split with people moving. >> who do you believe? >> you can't count out the american middle class, and that the middle class in many ways is mismeasured and that we spend too much time trying to create a middle class and not enough time trying to move everyone forward. >> that is the case, where brazil or the varied nations of urope. >> jean-claude tritcht, a single distinction is europe's banks are fragile, note the stress test this weekend. jean-claude trichet is a former e.c.b. president and joins us from paris. president trichet, when i look at these stress tests, there

has to be action now. where should we look for action on this monday after the stress test? >> well, first of all, i think he stress test themselves, they are gone in a professional and credible manner, and they are admitting to confirm that most of the banks in europe uld resist extraordinarily different drummer, if i may. it seems to me that normally we should now see banks that would be more credible and more able to lend. that is the first point, which is extremely important. >> the credibility of these banks is different than in the united states. what would you like to take from u.s. banking and its transparency and bring over to the different experiment that

is europe? >> as you know, you have not a unified supervisory authority. everything was depending on each particular nation, which makes a big difference with the united states of america, of course. but now precisely, we have these structural change, and you have a single authority which is the e.c.b., and i trust that it changes the game considerably. and my understanding is that what has been done precisely, in the oncluded overall balance sheet of the banks in the worst scenario. all these do confirm that on the 25 billion euros are missing in the various banks, and you have 25 banks that did not succeed on the 25.

half of them have still a lack of capital, because the other ones have already settled the matter. it seems to me, all taken into account, it's a very big, important jump in the direction of credibility, trance parns a for the best. >> president trichet, we have seen the european union tested here. the london school of economics even questions the future of the european union. what is the action plan for chancellor merkel now? what is the action plan for the bundesbank. as the most powerful in europe, what can germany do? >> well, i think first of all, it is want only germany. all of the countries have their homework to do, and be sure that they do all what they can to get the growth potential and

to have maximum amount of growth and jobs. but in the particular case of germany, it seems to me that germany having a very big surplus, around 7.5% of the g.d.p., has a taste for increasing demand in a convincing way. hope both through increases that they make, and also investment. so the two engines in my opinion for activating this domestic demand in germany will have just scored it. of course, it is not only germany. all the countries have gone, and market economy was called for them to, again, activate their domestic demand. >> president trichet, you own the word brutal. you kind the word brutal. you were internationally known

for the word brutal. when i look at currency moves, do we need a currency war as the only solution for europe in every weaker euro? >> first of all, when i look all around the world, in japan, in the u.s. and in europe, i see that they have a weak urrency. if they're all trying to get a weaker currency, then we are not going in the right direction. it is really a case for having a policy which would be as accommodating as possible in the period to come, and that, of course, has as a consequence, relatively less currency in comparison with the

u.s. dollar. don't forget we have today work our own situation, we have a value superior vis-a-vis the u.s. dollar to the value of the euro. it was 1.17. i think, again, it would normal that the market will anticipate igher -- i would say long-standing monetary policy in europe with the u.s. >> you mentioned inflation. you also talked about the stress test as extremely professional and credible, yet how can they be credible if the banks are not tested for a eflationary environment? i think as i just said, the central bank has a policy which is very highly accommodating, and you can see the interest rates in europe which are much

more the united states of america. the difference between the u.s. rates and the german risk-free rates are around 140 basis points. again, i really trust that we e doing all that we can to get out of these low level of interest rate. but again, what counts is the growth and jobs. and again, i trust what i have the done by the e.c.b. and tour. don't forget, the banks in europe are finally seeing 80% of the economy, which is totally different from the u.s., where the banks are 20% f the u.s.

you called them tools. a couple of years ago, you said in the face of the crisis, we felt abandoned by conventional tools. it's been a couple of years. have we mixed the tools? i think we are still working to better understand the way the global economy and our continental economy are functioning. it's true that at the time of the crisis, i was struck by the three quarters we had our traditional monitoring not functioning and not telling us exactly what was happening in the real economy. we had to rely very much on seals, ntact with the with the various anecdotes that we could get in order to have a etter sentiment.

i think a lot of progress has been made. >> pleased to have you with us today, the former president of the european central bank. i thought his currency comments there were really something. >> it's too bad we didn't have more time. there were a lot more questions. >> the currency, his brutal moves was really something. >> coming back, we're going discuss brazil and ukraine elections and look ahead to midterms. our twitter question of the day, do elections matter for the economy? ♪

>> good morning from new york city. "bloomberg surveillance," i'm tom keene. scarlet fu and brendan greeley with me. marblingts not in the mood, unless you're looking at brazil, where we real weakness. also, dollar-ruble, ruble weakening dramatically. all of this against the back drop of a stress test and what we just heard from jean-claude trichet. joining us now, there's the ruble. really beginning to weaken. joining us, jonathan farrell from our london news bureau.

you heard about the brutal currency markets. within your reporting and the people that you speak with is the euro, the new weapon for bankers in europe? they thought about what they did in 2011 when they hiked interest rates in the european central bank, with c.p.e. running around 2.5%. that's considered an epic fail by a lot of people in this market. you look back at trichet's era at the e.c.b., as much of a missed opportunity and maybe even a failure in itself, tom. i think that maybe they have a little bit to answer for. i know that seems like strong language, but a lot of people will be on the phone with me saying the exact same thing. >> i love talking to you, john, because you always have opinions, and it's always clear what they are. i want to go back to the interview as well. he defended the process of the stress test.

but there has been some concern they don't allow for deflation or larger global geopolitical problems. were these stress tests or discomfort tests? >> i think in fair tonight e.c.b., they were put on the end of the books in 2030, and the situation with russia wasn't even on the radar at that point. but the deflation question is important. it was posed to the e.c.b. president, he was asked, why wasn't deflation part of the adverse scenario? he this said it wasn't in there because we don't think it's going happen. it's not good enough. it's an issue of credibility. what you've got to look at is how much the banks have done over the last 12 months. the strength of the balance sheet by over 200 billion euros, they raised 16 billion euros to strengthen their balance sheet. the banks in europe have taken these tests seriously, although there's been tainted by a lot of cynicism as well, because you look at the past failures of the tests, 2010, irish banks

were passed, and within months they needed bailing out. 2011, a lender, and within months it faced bankruptcy. these tests are actually tainted with a little bit of failure in the past. >> you're usually on the phone with people in the city. do they feel confident that the test did what they needed to? >> i think the e.c.b. had a lot of balancing to do, brendan. when i was talking to people in anticipation of the results, you were never going see a bloodbath. you were never going see the e.c.b. come out and fail some of germany's biggest lenders. why not? because you'd create a massive bloodbath in itself. there was a balancing act. the e.c.b. has done a lot of due diligence ark lot of homework. for everyone else, it's up to them to go away, look at the data and work out the banking system. you've got to say, whatever you think of the test, credible or not, the last 12 months, the bank has been a stronger play. >> jonathan, thank you so much from our news bureau. drew matus with us, julian manuel as well.

drew, you heard president trichet's thoughts there. i thought it was pretty much, but there were really interesting dynamics on currency. what did you hear? everyone can grow by weakening in the currency. >> jean-claude trichet, who i pursue as more let growth and the courage we've seen from mario draghi in the last three years. >> well, i mean, to be honest with you, i think it took a lot more courage than 2011. it might have been the wrong thing, but i think he was trying to get things moving in the right direction, and he didn't get to it in the interview, but perhaps he cease a normalization having been in europe's best interest, and the closer to normal you are, the better off you'll be. >> normal is the recession? >> well, yeah, we're about as far away from it as we can be.

do you think negative deposit rates would work? >> i'm very skeptical of negative rates. i'm very skeptical that zero rates are helpful. that's why i've become a little more sympathetic to the guy trying to hike rates in 2011. >> we flagged a quote from the conference afterwards, which was, you know, we didn't include deflation in the stress test because we don't see it as plausible or as likely. hat is your feeling on that? >> basically you had brutal from trichet. you had whatever it takes from mario draghi. >> yeah, we'll see. >> that took europe away from the brink a couple of years ago, no question about it. but for my mind, the most important thing that trichet said was you need to stimulate domestic demand in germany. that's the linchpin to do so whole thing. we've been begging for this to happen for three years. ow do you do that?

they can't make the basic structure they need to, much less the stimulus? >> i'm fascinated -- >> no one likes t. >> essential what will julian just said is exactly what we say about the u.s., except we're down to 1% deprothe or less. we're at about 3% growth. i mean, 3% is the normal american economy. we're pretty close to normal? >> we're a lot closer than people would like to believe. you talk about income inequality when you're looking around at the landscape that permanent ates around you. >> i think people want it to be very close to normal, because they'll see a much more normal, stable growth environment. >> particularly after the comments, you were a little bit fired up. that was a more fired up tradition. >> yeah, it was.

all right, coming up on "surveillance," we're going to discuss the controversial response to ebola right here on "bloomberg surveillance." ♪

>♪ ♪ ♪ ♪

>> this is "bloomberg surveillance." it's time for our morning must-read -- mine is from "the wall street journal" - no one talks about a currency were anymore. the strong dollar has yet to materially affect u.s. equities. it is marginal.

70% of the s&p 500 revenues come from domestic sources. from that point of view, we are relaxed about it for now but obviously there could be a tipping point. drew is ready to bite. >> i can hear your teeth grinding. >> markets are forward-looking. what it'scy has done done because everyone expecting a rate hike in 2015. and weakeny from it the dollar is not going to help europe and it will not help anyone else. the u.s. has no choice but to pull up everyone else with it. despite the arguments you hear to the contrary, higher u.s. rates will help the global economy because strengthening the dollar will be able to pull up everybody else with it. i don't get this argument. everyone thought quantitative easing heard everyone and they say now that we are done with quantitative easing that will hurt everyone.

can we go back to the taylor rule? can i be alan greenspan? >> the balance sheet is the biggest risk to the global environment. if anyone thinks it's anything else, they are not paying attention. we have $3 trillion more in the u.s. economy then we need every tool the fed has put out there to control the size of the balance sheet, they have had to back away from. with a coherent strategy that includes multiple tools that will work for more than three months, there is an issue there. you -- is sure to upset my morning must-read from "the new york times." the professor from princeton weighing in on a little need for

stimulus print are we clear any need for stimulus? >> we don't need stimulus in the united states. part of the reason we have been doing so well because the budget deficit has been coming down. >> what would be wrong with fixing a few bridges here in there and working on infrastructure? >> if you try to get to the jersey shore this summer with all the improvements going on, i would like to not stop every five feet. let's hope the new jersey turnpike is done by thanksgiving because otherwise we will all sit on 95. >> amen, because i'm going down to maryland on that weekend. this is anecdotal. german small,oth is compliant constantly about road quality in germany and here we know there is investment to be made. you cannot draw a distinction between stimulus and infrastructure investment? >> infrastructure investment can

best be done through some sort of public-private partnership but not with the government directing things. who knows best what we need? person day byage day or the companies that use the facilities or the u.s. government who is going to try to pick a winner and not -- and probably not pick one. that with that plays certain winners who go bankrupt and who is left footing the bill? it's you and i. we have to be cautious as to who is making the decision. >> that was stimulus, not infrastructure. you think the government cannot make decisions on an protector? ,> i think the government it's difficult for them to make good decisions on anything. . >> thank you both. let me do a data check. the vix atwith

16.11. a huge weakness in the resilient riel this morning. >> we are keeping an eye on earnings. merck fell four percent in the quarter. this is "bloomberg surveillance." policy on how to treat travelers exposed to ebola, new york and new jersey are now allowing inbound travelers expose of the virus in west africa to be quarantined in their homes. in new jersey, this rule does not extend to out-of-state residents which means that a nurse required to stay in a tent at a new york hospital is not being moved. she is lashing out at both new york and new jersey governors are facing criticism from the white house. our next guest once u.s. leaders to keep the politics out and let science to the ground work it comes to ebola policies. is the founding dean of the national school of tropical medicine and alar college and he joins us now from boston. bank of virginia guest.

i want to start my first question asking you whether the measures we have taken like the quarantine policy and funneling travelers through five airports if that's consistent with the science on ebola? >> it does help to restrict air traffic. somee a lot of issues with of the policies being done at the state level. making its own decision on how to manage ebola patients and policies are being made that are not necessarily grounded in science and i am concerned about that. institutional our response, you have been ourcially critical of how community area hospitals are not capable of dealing with this kind of outbreak. >> these decisions are never made in isolation. healthe local state agencies working with the federal agency, the centers for disease control. in an ideal situation, they are working together to solve these

problems. in the end if you look at what happened in dallas, there was no transmission in the dallas community. it was the hospital workers who ultimately got sick. when you are out in the community, the amount of virus in your body is very low and people are not transmitting it from person to person. that is the same case in monrovia liberia. and liberia. it's only when you are taking care of very sick individuals because the virus starts to prove fluoride -- to proliferate. it's when an individuals in the advanced stages of the diseases. hospital workers and taking care of your loved one at home is most important. we have to keep that in mind. unfortunately, policy decisions have been made in new york and new jersey and illinois that have no basis in virology. i think we are missing opportunities here. >> we know that l view in new york was a lot that are per

paired than the hospital in texas. how do we ensure that all hospitals are prepared to do the right hand of triage to identify and treat ebola patients? >> i think any hospital in the united states should be able to identify, diagnose, and triage a suspected ebola patient. i think that's where it stops. i do not think most acute care hospitals in the united states can manage.complicated ebola patients they should then be triaged to specialty referral hospitals that have been set up nationwide. >> do you just assume that we to 7000from 5000 or so to 10,000 to 20,000 affected by ebola? it depends on how things go when we are reaching a critical period right now where the curve could really start to take off. that is what we have to be

careful of. that's the reason why president obama sent in 4000 troops into liberia and why the u.k. prime ministers sending troops to sierra leone. . is to create an infrastructure -- it is to create an upper structure. to the world health organization, if you can get 70% of ebola patients in isolation and treatment and practice burials safely, you will see the epidemic turned down. if it doesn't, we will have to rely on interventions like vaccines. >> which nation are you focused on to staunch the vector of that curve? >> it's that to happen and liberia and sierra leone and to some extent any. this is ground zero for ebola. we have a case in mali and we were able to obtain it there and senegal and nigeria. it is a matter of putting the right kind of health system in place to manage very sick ebola

patients. >> thank you so much for joining us this morning from boston. we will be right back on "bloomberg surveillance." we will take a look at it elections. this is our twitter question -- ♪

this ismorning,

"bloomberg surveillance." and there is washington, d.c. believe it or not, midterm elections are one week away. it is a race to the end as candidates fight for every last voter next tuesday. there is an election. >> i completely missed that it's here. >> it is here. it's more balanced in idaho. >> the republicans have a strategy to dominate digital. betty liu joins us for more. two years ago, that's what the obama campaign did. thank the obama campaign for lighting a fire at the gop. the republicans felt they were nowhere in social media or in digital after the obama campaign wiped the floor with them on their strategy. the republican national committee decided they were

going to gather as much information and as much data as possible and house it under one roof and that was going to help campaigns around the country. that was the desire but the reality is a lot different as it usually is. let's start with skepticism i'll in-- about republicans general in silicon valley. they see silicon valley in the democratic rocket. -- democratic pocket. there was skepticism on the cheap digital officer was hired. he said to hire directors from the silicon valley and they said we will stay with our political consultants and stay with them. it has been a struggle over the last two years. we will check who is the chief digital officer at the rnc. >> i talked to him in 2004 and at the time, they were way ahead of the democrats and he was running the outrage. the key thing that obama learned from the republicans was the

chuck defeo idea that you can get people to do something, not just be online. >> it translated into action. that has been really hard for republicans. aserally, they are not seen the most tech savvy and they are very insular in many respects and relied on various consulting firms and it's been hard to change that behavior. the reality has been different than the desire. >> our twitter question today wrapped this up and posted it in the perspective of what it means for the economy. do elections matter for the economy? what does defeo say about that? >> part of the outreach by the republicans that it will improve the economy and they have a better policy. they will improve on the immigration front, they will improve on funneling money into tax breaks and reforms, tax

reforms. that plays in as well into the data they are gathering. >> thank you so much. in about 15" begins minutes and you will be joined by who else? >> we've got sharon john, the ceo of build a bear. >> tom is familiar with that one. that begins at 8:00 a.m. and we will be right back on "bloomberg surveillance." ♪

>> good morning, everyone, futures are negative two. tobias left of it joins us tomorrow from citigroup. -- tobias lefkowitz joins us tomorrow. he has been a bowl. --golub pullsle them out of earnings. share buybacks are almost a three percent effect on earnings. whoever won the elections

yesterday in brazil is going to inherit a box of problems. some of those problems were created by herself. one of the biggest issues of the campaign was this social program. she said she was going to hold onto it and said nieves would get rid of it but why does it have such resonance in brazil? >> this program started about a decade ago and was reunifying a bunch of other programs to make it straightforward to other people to get cash transfers from the state to drag them out of extreme poverty. that was 36 million brazilians. all of those people felt politically -- felt politically disenfranchised. it was a relationship with apartheid of lula and now dilma. that was instrumental in her winning support in the impoverished neighborhoods in the north of the country. >> the traditional way to look

at brazil is you have the industrial core and the south surrounded by india when you look at development levels. >> absolutely, you see that in the election results. dilma did incredibly well in the underdeveloped areas. ula and is back pre-l you see the massive failure of brazil. then we curved upward. --n the markets perceived are they just looking at the capitals or is it all of brazil? >> i think they are looking more at the capitals. >> it's the belgium part. >> the difference between how ordinary brazilians perceive their economy going forward versus how the market sees it. opponentacked her

saying he will trouble unemployment and there has been a 10% rise in real income down there. think my life is not that bad at the moment and you might vote for more of the same as a brazilian. >> how much are people excited about the upcoming olympics? >> it's a continuation of the idea that brazil will take its place on the world stage. while i was down there, i looked at one of the companies building the olympic village. during the world cup, there was a huge amount of controversy over the cost of the stadiums. it's interesting to think that the olympics will be this huge public event and yet the financing is private. that has been something that will hopefully help the government get through this. has anybody ever seen an olympic experiment that's been successful? >> london, apparently.

>> six years after they have their limits, what happens? >> the olympic village down there was financed with private money and that will be 3.5 thousand apartments sold on the private market may just open the sales of month ago. asy will sell as much of -- $800,000. there is a subway line there and there is an entirely new suburb that will bill you built their. cup, youh the world have this huge disparity between the scale of the ambition of what they want to do what they actually may be able to pull off. tom has been eagerly watching the venue for the sailing competition. >> i am all over this. >> it has been up problem with sailors practicing. >> it's a scandal. >> they won't move the venue. ise said this will be a total disaster but they have

walked to that back and they see there have been improvements. >> the world cup was not a catastrophe. it was expensive but not a catastrophe. >> it came right down to the wire. >> i got bored after germany beat brazil. this goes for england and the united states. we have greater ability to look east and west. we look west to asia countries to europe, etc and we have had this huge difficulty looking north and south. canada to an extent but we have had a reticence about americans looking at south american looking at brazil. is there a change coming up? if i went out on the street, how many people would be engaged in brazil? i'm not sure many. >> that's not something many americans will be talking about for a country that size. they have a big issue being on the world stage. >> it may change the weight

brazil is engaged with the world. one of the problem of the lula era is that they pulled back trade agreements and have the west coast of latin america looking east. >> they hitched their wagon to china. when china slowed down, there went brazil. >> do you see that they have missed a chance on trade? >> they struggle with these really plunging commodity prices. their involvement with other countries over things like iron ore and soybeans relies on the fact that they can get a decent market for those commodities. market,cannot get that it will not encourage them to trade overseas. >> let's bring in our twitter question and answers. we asked you -- do elections matter for the economy? it could relate to anywhere in the world. some of the answers -- >> there are too many syllables

in their. >> how about this one? - >> that sounds vaguely conspiratorial. >> final answer -- >> that's great. with all due respect, they are having a bang up week at 5:00 p.m. agenda. get to the you are taking a look at another election? >> i think tunisia is a huge deal. i read a lot about over the weekend. it is stuck between algeria and liberia and they decided to go secular after a two-year islam experiment. though they have made a

secular choice, they are sending a lot of fighters to isis. you have volunteers who don't feel and franchise by what is going on there. >> you are about ready to wander into that area. the arab spring started in tunisia and it is the last experiment of democracy standing. >> you go back four years to see whether the region would look like this now. i'm reading more to get up on speed. >> i am watching ebola. that's my agenda today and i'm not watching new jersey and new york. i'm watching it in west africa is that's the real problem we have to worry about. what we are looking at here is theater and their is an unchanged global problem. washe mayor of new york eating meatballs of the same place the dr. who came down with a virus eight.

a --te. >> this is a critical moment. economicagenda, cut data, pending home sales for the month of september and that comes out after the market opens at 10:00 a.m. and the consensus is for increase of one percent from august and from a year ago, a two-putt -- a two point two percent increase. the federal reserve is also coming out with its holocene meetings, october 29, at 2 p.m.. >> 3 -- halloween. -- 3 -- halloween. i can wondering whether refinance my house in maryland. >> you have a full-time job so you have one up on ben bernanke. >> yes, that is one of my many advantages over ben bernanke. thank you. >> thanks for joining us this morning. let's get a quick data check. >> futures are negative for in the ruble is moving and the

brazilian real is moving. surveillance" continues on radio and "in the loop" is up next. ♪

>> good morning on this monday, october 27.

midterm elections are now just a week away. are the kochonors brothers m sheldon adelson that we will tell you about the gop donor that almost no one knows about. staying on elections, i will dive into the gop digital strategy going into the boat and how the gop is using big data. the rnc chief digital officer will be joining me in just a few moments. peer to peer lending seems like it is taking off with people like mohamed el-erian and the crown pendant getting into the game -- and crump ended getting pandite game vikram getting into the game. most of the banks that fail the ecb stress tests have been let off the hook. tonti five european banks fail but only eight are still on the list to raise capital. the others either plugged to the cap are satisfied ec