x from bloomberg world headquarters in new york, this is "bottom line." to our viewers here in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines on this story. yang yang examine some of the critical issues we will discuss in 20 15. and details as president obama breaks bread with leaders of both parties to end partisan

gridlock in washington. first, the fate of the affordable care act, also known as obamacare, will once again be in the hands of the u.s. supreme court. justices have decided to hear an appeal of the law. our supreme court reporter joins me on the phone. this appeal deals with subsidies or tax credits. they have helped more than 4 million americans afford insurance. aren't these subsidies the linchpin of the health care law? >> they are really important. without them, most or all of those people could not afford insurance. if they cannot afford insurance, that would mean that only the most to desperate people might buy insurance. that would essentially send the insurance markets what the administration calls a death spiral. hospitals would have fewer people coming to the with insurance.

their costs would be raised. and it would potentially undermine the law. >> you have been covering this from the beginning. this appeal is not about nuance. opponents say the language of the law cannot be interpreted to mean the federal government supersedes the state. >> right. before, it was about a big house additional issue. and now there are four little words that say "established by the state." that means that the subsidies can go to online exchanges established by a state. the issue is that two thirds of the state have not set up for -- have not set up exchanges. the ripple effects look like in the health-care sector if the supreme court rules against the administration. >> as i said, it has the potential -- the word i have heard a lot today is destabilize

-- the potential to destabilize insurance markets, their price, their policies. it could potentially mean that many more people do not have insurance and that is exactly the problem that the obama care law was designed to fix in the first place. >> when the court upheld the affordable care law in 2012, chief justice roberts said it was not up to the justices to rule on the law's fairness. in the hands of lawmakers. >> back to capitol hill and to the states. depending on how this comes out, it may be that states still have the ability to do some things that would deal with the problem. certainly, if the administration loses that in the supreme court one way or another, the legislative and executive branches will have to get back

involved in this. greg, thank you. president obama and republican leaders are pledging to try and find common ground but there is still major hurdles in their way. phil mattingly is there and he joins us with the details. >> good afternoon. in the wake of tuesday's sweeping republican victory, each leader has lay down their markers on what they expect for the next congress to do. as you mentioned, as of now, they are meeting for the first time face-to-face and they are doing so under a cloud about what president obama may do live -- do unilaterally in a few weeks. -- speakerintend weiner said it was akin to the white house and the president playing with matches, potentially poisoning the well for any agreement going forward. while they meet today, this will set an early tone but there is

still a lot of questions to work out if they are going to finally get to the table on anything and get something done. >> both sides spoken about areas where they can work together. what are those exactly? >> there are three the people point to that both sides feel like not only are there areas they can work to get -- work together but progress has been made. some form of tax reform. republicans want to pair corporate with individual tax reform. the white house still sticking on corporate only. you also have trade. republican support the white house position on free trade. for more than the democrats do. so there is fertile ground there. the third is infrastructure spending. they do feel like the republicans are aware of their own districts and own state fault lies on this. those are the three areas right now the they will be focused on. whether or not they can get agreements is an open question. >> do white house officials have any confidence that republican

leaders can bring their conferences along on any potential compromise? >> this is where there is a lot of skepticism when you talk to white house officials. this is where people are very concerned. it starts at the house with speaker john boehner. there is a feeling that john boehner has regularly come to the table with them over the last three years and hasn't been able to bring his conference along to where boehner himself is. obviously, that is a big question. mitch mcconnell taking a leadership role in the senate, will he be able to controlling keep in mind senators like ted cruz should he and the white house agree on something? nobody at the white house is convinced republicans can actually do that. republicans will be on the hook to prove that in the months ahead. >> thank you. now let's get you to the other top stories we are following. detroit won approval of a plan that backers say will allow it to exit its record $18 billion municipal bankruptcy.

federal bankruptcy judge steven rose said he would confirm the plan which does away with $7 billion in debt and and lists charities, creditors and billionaires, such as dan gilbert, in rebuilding the city and fixingshing -- the beleaguered pension system. the city will be on what is called a little bit of a dive for a while. the red allege, the u.s. attorney for the eastern district of new york has emerged as the leading choice to be the next u.s. attorney general. president obama does not plan to make the nomination after he -- until after a trip to china next week. federal reserve chairman janet yellen spoke in paris today. she said central banks must do whatever it takes if governments will not do it -- economieseinvigorate

with inflation. >> the severity force policymakers to respond rapidly bothreatively, employing monetary and fiscal policies to arrest a steep economic downturn and restart the global economy. given this slow and unsteady nature of the recovery, the port of policy remains necessary. >> transocean will delay posting third-quarter results after saying earnings will be hit by --e than two point thirds $2.75 billion in charges. review seas. transocean is the largest fleet of deepwater drilling rigs. rateg up, the u.s. jobless jobs to a six-year low. we will look at today's report to see if the labor market can sustain this momentum despite low wage growth.

bottom line continues in a moment. ♪

>> welcome back. more on jobs. the u.s. unemployment rate for october dropped to a six-year low. michelle gerrard is a chief economist at abr securities. the unemployment rate fell but the labor force participation rate rose. how do you explain that? >> this month, and it hasn't always been the case, the unemployment rate for the right reasons. again, 683,000de people who said they had found work. that was actually more than we had enter the labor force. people leaving the labor force has been a problem. that is what in many cases brought the unemployment rate down. but in this case, people came in

to the labor force, look for work and more than found jobs. that is why the and implement rate fell. >> median household income in the united states is $54,045. incomes4.5% lower than than when the recession began in 2007. we had this conversation before, but when will americans start to see a real acceleration in wages? is that the biggest hurdle right now for the overall u.s. economy? >> it is absolutely an ongoing challenge. but there is actually good news. if you look at those statistics, the latest numbers show, while we are still down from when we enter the recession, we actually improved last year. rise inedian income real terms, which is something we haven't seen before. in other data, we see evidence that middle and lower income earners are starting to see some of the benefits their wages are starting to rise, kind of catching up to upper income

earners. this is an important development. mayives me hope that we actually look ahead to 2015 and think the household sector, the consumers are better than they any point inn at this expansion. >> gas prices are now at the lowest level in the past four years. that means more spending money for americans. will they spend that extra manning -- extra money? >> i think so. i think this is actually going to be a pretty strong holiday season, certainly relative to recent years. lower gas prices gives consumers more wherewithal to spend on christmas on holiday items, but they feel more confident about their financial position. that comes through in the confidence studies, a real improvement in the last month or two. i think that is a very positive development. we have had good job growth.

while the hourly pay is not going up, the fact that more people are working, this is more dollars in the aggregate that can be spent. >> i am speaking with michelle gerrard, chief u.s. economist at rbs. theier this week, manufacturing index rose. we'll be improving consumer sentiment, job growth, and lower gas prices be enough to help u.s. companies as they deal with slow growth in the global markets? >> i think that is an important point. has been-- there concern about what it could mean for the u.s. i think we should not be overly concerned. two thirds of this economy really is consumer spending. the u.s. domestic consumer spending. for all the things we have talked about, i think the u.s. consumer is on a number -- on an uptrend, if you will.

i think the offset a weaker global growth is smaller in terms of a larger emerging positive with respect to domestic demand that i think we'll end up being the bigger story. quite side you think the fed will interpret all of this data? we'll janet yellen and her colleagues see this as a sign to raise interest rates or will it give the fed more reason to keep the rate near zero numeral -- nears zero? point, maybe around the middle of 2015, it will be time to start moving rates off of zero. i don't feel that they feel an urgency to move sooner because wages aren't moving up. inflation is well contained. it is not moving anywhere fast. theon't have to worry about moving sooner than expected. at the same time, with yet another year by next june under our belts perhaps improving

growth, the rationale for continuing to keep rates at zero will continue to weaken. i think that leaves them very much on the path that they have laid out for gradual monetary policy normalization starting in 2015. >> michelle, it's always a pleasure. >> thanks, mark. >> more now on the ruling on detroit's record they grab see. stephen rhodes has approved the city's plan on how to cut it $7 billion debt. andrew dunn joins me with the details. i know it's been a busy afternoon. how is itt case, different from a corporate reorganization? >> as a municipal bankruptcy, one of the things that the judges and the parties involved want to do is make sure that the quality of the city doesn't suffer too much in paying other

creditors, bonds and insurers. there is a great deal of mediation over contesting interests, the pension for retired workers versus the bondholders and the investors in wall street. so there's a great deal of mediation. usually, the pensioners have recently come out a little bit ahead. >> i was the city eventually able to get the bondholders and insurers to agree to this? no one was really happy with the outcome. >> in a bankruptcy, not everybody is ever really happy. >> then you know it's been done right. >> one thing that was important is that steven rose got ahead of the conflicts by appointing gerald rosen, the mediator, who is a chief judge in district. he has a great ill of authority in the area. he was able to get people together in a room, very late sessions, very long sessions sometimes, and compel them to either get on the train or get

in front of the train. [laughter] >> what is next for the city of detroit? >> they have a $1.7 billion revitalization plan spread out over 10 years. simple things like street lights and buses need to be improved, computer systems, information technology. >> things that other municipalities in this country take for granted. >> and the emergency manager who guided a lot of this program was poorlyfrank about how equipped the city was to handle the most basic tasks of administration. on top of that, there is the enormous blight and dilapidated by a drastichind drop in population in the last two decades. .hat will have to be rebuilt mike dugan andr,

the city council, is this a question of do no harm? we are giving you a way out so let us do what we have to do? >> a number of executives took charge of the city for more than a year to guide the administration. now those people, including kevin moore, have lost some of their powers. those powers have been diverted to the mayor and the city government. and they will be responsible for seeing through a lot of this program and making sure it is done properly and efficiently. seed, 16 months, that is unheard of. san bernadino's progress was probably set back a couple of months. it is beginning to end a very swift process. >> discussing the trick, thank you so much. more on the detroit bankruptcy is coming up. charles moore is a turnaround specialist from the detroit area from conway mackenzie, the firm

that was originally brought on to handle the city's bankruptcy. that is coming up in about 10 minutes right here on bottom line. nextxt, julie hyman has a -- the latest on the markets. ♪

>> a jim farley from ford is being sent to run the money-losing european division. farley was once considered in the running for ford's top job. will take farley's marketing job. ford is projecting a $1.2 billion loss in europe this year. you might think of new york city's streets as always being clogged with traffic. but there is a speed limit. . is now being reduced from 30 miles per hour to 25 miles per hour. it applies to all locations where a maximum speed is not is not posted.

on therg television is markets. julie hyman is standing by with the details. >> let's take a look at where stocks are trading right now cap ending the week on a blah note, not really moving decisively one way or the other. however, if there is any gay on the s&p or the dow today, it means they will close at a record, even if that gain is less than a point in the case of the s&p 500 index. in terms of individual stocks, let's look at sears. a big move. most in a jumping the decade after it said it is considering the sale of up to 300 stores to a newly formed real estate investment trust. sears will continue to operate the stores in locations sold to the reit under places.

abercrombie & fitch hit a new low. costs and closing some stores. so far not bearing fruit.

wechsler comeback to the second half-hour of "bottom line" on bloomberg television. it is time now for the commodities report. su keenan is in the newsroom with details. the spotlightng in commodities trading today, advancing the most since june on the latest jobs data showing disappointing job growth. the safe haven in precious metals is back. gold, silver and palladium all of 2% and 3%. the dollar fell as a result. is tracking the

dollar and the treasury market even with today's gains. lows still near a four-year . meanwhile, gold bar when has jumped to a six-year run. investors are piling in on bearish bets. some traders are saying it is the a knee-jerk reaction to dollar tumbling and people buying back their short positions. if you look at the energy price move, oil had been a lot higher. nonetheless, it is still up 8%. traders will focus on the demand story. that is part of the jobs number. the drop in unemployment means more people will be consuming goods and driving. on a weekly basis, oil posted losses again. forecastproduced every

, except for next year. that is according to the outlook released just yesterday. more oilt makes clear than is needed is being produced and that is the big picture story. >> what is the outlook for next week? analysts are forecasting a rising price or holding at these levels, these bounceback levels. 16.34. they are equally divided and predicting staying right where we are. in terms of what happens at that opec meeting coming up at the analystse month, believe that opec will announce production cuts. others say they will stay where they are. >> su keenan with the commodities report. thank you. theay only be november but public discourse has already turned to what can be accomplished next year in 2015. yang yang joins us with what can

be expected in the year ahead. the discussion has already been will there be more gridlock? >> that's right. more gridlock certainly, but this after congressional leaders and the president made at the white house intended to cut through some of that, especially agenda items they can complete this year. the big question is what can they accomplish in the new year in a new congress? both sides have acknowledged there are more issues keeping them apart. so we can expect more headbutting on immigration reform. already speaker boehner and mitch mcconnell have warned the president that going it alone would poison the well. other big-ticket disagreements sure to come up again is republican attempts to cut back portions of the affordable care act, provisions to the the xlank reform law, pipeline.

for the democrats on the president, the issue of increasing the federal minimum wage. it won't come as a surprise to anyone if we see the president bringing out his veto and more frequently in his last two years in office. >> how about areas of agreement? what can they actually compass together in the next two years? >> you are a glass-have-full kind of guy, mark. business, tax reform, and infrastructure are the big areas where both sides are closer together. expect to see some movement on those issues earlier than later. of senator mcconnell's first priorities is to show that congress can indeed work together. so expect legislation on that soon. >> let's stick to the other side. what about the issues they absolutely will be getting all in -- getting on at all? >> that is the challenge of the republican majority. confirming the president's

federal judge and agency leaders, that will be much more difficult. it was already a johns before. since we are on the topic of nominations, potential senate republican presidential you have senator rand paul, senator ted cruz, senator marco rubio all potentially vying to make splashes in the next year. no matter what, official candidate announcements is what i am looking forward most to in the coming year. the u.s.rd today that attorney for the eastern district of new york is a leading -- loretta lynch is a leading nomination. employers are hiring more people yet americans who voted on tuesday signaled they still weren't happy with the economy. ♪

today's approval

of detroit's $7 billion debt cutting plan. charles moore is chief operating at -- why do you believe that the speed with which the bankruptcy process and detroit, 16 months, why is that actually a good thing for the city? bankruptcy is an important process. but until you get on the bankruptcy, you cannot effectuate the revitalization. getting out as soon as possible was a critical initiative and objective of the bankruptcy. marty koepp as was one of the expert witnesses who testified at trial. she said in order to get the reinvestment plan up and running in the first years after bankruptcy, detroit would have to borrow more money.

how does that not put the city back in another fiscal hole? >> the amount being borrowed is actually a small amount. there is really about $270 million that will be borrowed by the city. some of that will go to effectuate the settlements. so the amount, a light of the overall general fund budget, which is about a billion dollars per year, is a modest amount but it will really accelerate the revitalization. >> will detroit need a financial oversight committee? if so, will it be under a state or local jurisdiction? bargain,t of the grand with the money coming in from the state of michigan, there will be a financial review commission. that is an important element. while there is a lot of faith with mayor duggan and the city council, they have to make sure that the practices that were followed in the past don't happen again. >> richard sharon is the president of merit research services in chicago. he told my colleagues, "you

can't treat municipal debt as a risk-free investment." were municipal bond investors taught a painful lesson here? do pensions now trump the bonds? >> all creditors of municipalities, including employees, have him -- have learned important lessons. people have to be cognizant of what the city's ability to pay is and certainly bond investors have come to realize the importance of understanding the --ition of pension as pensions and various employee obligations. >> does what happened in detroit change the template for pensions in america? >> detroit is a unique situation. it has really been declining for decades. thereof,t of for lack of investment has been so extreme. there was no way for detroit to

get out of bankruptcy without reinvestment. unfortunately, there was not much to pay towards bondholders and various other creditors. if other municipalities run into these situations, if there are the same types of circumstances, they could be based in a similar situation. but as we have seen another chapter 9's, that is not always the case. the city manager of stockton, california, which as you know when to its own bankruptcy, said a lesson for other cities is to watch for early signs of deep financial problem and then deal with it before it is too late. but for detroit, the warning signs came decades ago, going back 35 to 40 years. what you think is obvious signs were ignored? >> generally speaking, many times with municipalities, people are not looking ahead. they are really trying to focus on what that year's problems are

. a lot of tactics are used to get through budget issues for a particular year. when you start to put it picture into place that shows longer-term, where things are heading, it puts our reality out there that issues have to be dealt with. with the state of michigan, there were not the tools that atst now with the public 436, the emergency manager law. prior to just recently, even the state had limitations on how early it could act with troubled municipalities. >> everyone in detroit bankruptcy suffered, but the citizens of detroit were caught in the middle of all of this. what is their future look like now? >> we are already starting to see examples of that. for the first time, residents are having their trash picked up on time. not too long ago, in fact, less than a year ago, people had garbage picked up at 1:00 in the morning and it was not

guaranteed it would be picked up. now they get their trash picked up between 7:00 a.m. and 4:00 p.m. four days a week and they have recycling. lights are coming on. the transportation department has improved greatly. these are the types of services that the residents see every day and they are improving. and public safety is a critical element of that. people are starting to see that, with the investment, crime rates are coming down. question roz moore, chief conwayng officer at mackenzie. mr. moore, thank you so much. it is time now for today's latin america report. petrobras headed for its biggest losing streak in a year. four-year low crude prices is affecting the export revenue outlook.

this affected the decision to --e it a increase in subsidy in subsidized refinery gas. as we mentioned earlier, unemployment in the united states has dropped to the lowest level in four years. joins me now for more on the latest jobs number. i spoke to michelle gerrard earlier. she says that dynamic of the rate dropping and the labor force participation rate going up, she says it is going up for the right reasons. >> you want to see the rate to drop along with labor force participation going up. what you typically see in a recovery is the labor force participation rate increasing, which is great. but oftentimes, that means a higher an appointment rate as well. more people are looking for work. or people can't find work. then the higher rate. it begs the question now. here we are looking at the

lowest rate since 2008. does this suggest we need to be looking at raising rates at some point in the future? >> janet yellen and her colleagues at the fed have their thresholds. one was the unemployment rate. it is now below 6%. inflation has not yet reached 2%. is there a disconnect between what they said and what is going to happen? >> that is why they had to change their policy. now we have to watch for inflation, specifically wage inflation because you are not getting it. that is what i find troubling about this. how is it that we are in an environment where, six years after, we have had all kinds of quantitative easing and a low record rates for the longest , aiod of time historically lower unemployment rate, but why aren't we seeing higher wages? thatetically, if there is much demand for workers, it should then translate into higher wages at some point, right? >> at some point, when you have

these stagnant wages, the fed cannot do anything about that. but then it becomes on congress or at least, as we saw on midterm election night, five states decided they would hike the minimum wage because they were tired of waiting. >> i'm not sure that is the answer at all. that said, it hasn't been since 1970inflation so that is a big deal. that is a separate conversation, one that has to be political. we look at the overall economy, how is it that, if there is demand for labor, we are not eating some kind of increase in wages? -- we are not seeing some kind of increase in wages? to see thattinue disinflation because things get cheaper for us here in the u.s.. >> "street smart" at the top of the hour, was on? >> -- who is on? >> >> we will be looking at the latest crackdown.

tom kellerman will be joining me. i have a special interest in this bitcoin and the technology behind it and this sort of underworld. it is absolutely fascinating. did launch the new website, the new silk road. >> "street smart" at the top of the hour. stay with us. "bottom line" continues in a moment. ♪

ex breaking news from the white house. president obama authorizing 1500 more u.s. military personnel for iraq. those personnel will be permitted to go beyond bases in anddad and are built -- erbil. the president is said to be

requesting $5.6 billion more to fight islamic state militants in the region and the pentagon is to set up new operations, a training center in iraq. once again, the president off more u.s. military personnel for iraq. and asking congress for $5.6 billion more to fight. there has been criticism because the islamic state has been gaining ground in areas of iraq erbil.aghdad to revea some members of the senate like john mccain have said that the white house have to do something because the islamic hortense are making moves and gaining -- islamic militants are making moves and gaining ground in iraq. the president requesting from congress $5.6 billion in funding to fight militants.

"bottom line was quick continues in just a moment. ♪

>> 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 note -- edition of "bottom line. go "street smart" at the top of the hour. : 56 past the hour and

that means bloomberg is "on the markets." we are an hour away from the closing bell on this friday. let's take a look at averages. we are seeing a bit of a decline where before we were seeing a little bit of a gain. this morning's jobs report was a little bit mixed. energy had been leading gains earlier in the session. decisive is -- moving.re it is a decision that paints the way for more actively managed -- turning to how this will affect -- howetf universe significant is this? that has been one of the hallmarks of etf's, you are able to look in a transparent way

what buildings are and how they change. the biggest of advantages of etf's. you know what they'll hold everyday so you can do great portfolio allocation. some of that money could come over and say, hey, i want to take advantage of the etf structure along with eaton vance, i like what they are selling. it would be at a premier discount to the net asset value. so it is not that far away from how you do it now and you put in your order and you get it at the end of the day. the question is if this is a solution in search of a problem here at >> what does this achieve by not letting you know what the holdings are b-day? >> it takes advantage of the structural advantage of -- structural advantage of the etf. it will probably come out at a

lower cost, be tax efficient. so they will get that. there is already plenty of actively managed etf's out there and they have not set the world on fire. they have a total of $17 billion in assets. ", with the bill gross rockstar co, with the bill gross rockstar persona. cap our wg, large here is the kicker that crest the s&p last year. it beat it by 9%. it got no new assets. >> is a marketing problem or a cultural shift? >> yes. there's also something called smart data that fills the gap between active and passive. the indices are designed to capitalize on slackers, such as dividends. smart data has soaked up a lot of etf investors' need for off

of. reportedinvestors have to smart data. these are designed to make active kind of things that would attempt to beat the market. $10 billion. is there demand from etf investors? but there is so much money in mutual fans, i can't imagine it coming over. i would assume you get a lot of assets. etf sourceing into today. i like a little nerdiness on friday. that is it for "on the markets." "street smart was quote is next.

>> welcome to the most important hour of the session. this is "street smart." and investors react to the october jobs report. the jobless rate dropping to a six-year low. i will break down those numbers with michelle meyers from bank of america. now.et smart" starts ♪