morning. stanley fischer -- alan greenspan on a less productive america. and warren buffett -- you know he loves food stocks. berkshire hathaway shows ultimatein the precision cash parts. it is monday, august 10. i'm tom keene and washington. joining me, brendan greeley and vonnie quinn, in new york. we consider -- we continue to see the low interest rates. to me they are the canary in the coal mine. howdan: we've research on investors look at europe, and they are going to be asking for a higher risk premium coming up very soon for corporate debt. we will see some divergence there as well. vonnie: -26 basis points for the german two-year yield. is average two-year yield 68 points.

tom: it is a backdrop for our conversation with alan greenspan, not a public official right now. chairman greenspan has a lot to say, particularly about the bubble that we see from quantitative easing. stan fischer is the vice-chairman of the fed. he brings to us not only the domestic conversation, but decades of experience in eight -- in international economics. let's get to our top headlines with vonnie quinn. vonnie: coming back to you later in the morning from washington, d.c., with those interviews. violence erupted at the demonstration marking the one-year anniversary of the death of michael brown. the unarmed black man who was killed by a police officer. [gunshots] >> get down. gunfire. police say a man began

shooting at officers and was wounded when police returned fire. the suspect is in critical condition. donald trump is refusing to apologize for comments he made about fox news anchor megyn kelly. he is under fire for how he described her performance last thursday during the debate. he has denied he has done anything wrong and says he has no problem with women. donald trump: women are tremendous. i have had such a amazing relationship with women and in business. they are amazing executives. they are killers. if you say that about a man, it is considered a great honor. a great honor when you say it about a woman. called carly fiorina trump's comments about kelly inappropriate and offensive. warren buffett's berkshire hathaway is in talks to buy

precision cast parts. stocks in china rally for their biggest gain in a month. the shanghai composite index rose almost 5%. chineseulation that government will speed up mergers of state-owned businesses. china may combine its two largest shipping companies. frank gifford is being remembered this morning as a star both on and off the football field. he died sunday. he was 84. gifford had a hall of fame career with the new york giants before becoming a broadcaster. he spent three decades in the booth with al michaels. al michaels: frank was always very calm. he was a calling bank presence, inga very calm an

presence. vonnie: frank gifford, dead at the age of 84. frank gifford in his youth, brendan. when we all go, we want to be remembered for our best days. but his best days were also possibly in the broadcasting booth. that is just an amazing thing that you remember, growing up here, as part of your childhood. warren buffett may be about to pay $30 billion for a company in the aerospace industry. he is in talks to buy precision castparts. michael moore is also a person familiar with the matter. is this a departure for buffett? are we looking at a new berkshire hathaway? berkshire hathaway is changing in a way that buffett has talked about over the last couple of years, moving from the

mutual fund model, the stockpicking model, to having these large conglomerate subsidiaries and being based on heavy industry. brendan: walk me through this pic in particular. why precision castparts? michael: this company makes about 2.7 billion dollars in operating income before taxes, billion on that seems like reasonable cash flow. it has consistent, has been growing through acquisitions, it has high barriers to entry. he is potentially going to use up half of berkshire hathaway's cash to use this, -- to do this, but he does not have many competitors. what competitors does he have, three? michael: and the competitors have been buying up a lot of the smaller ones. they do with the largest aerospace company -- boeing, it

airbus. this is definitely in buffett wheelhouse in terms of the type of company he looks for. brendan: and this is a bet on , a company of air travel. vonnie: what kind of changes would you make? what cost cuts will he make, or will he want to make that many with this kind of company? michael: i think he is going to keep the management. he will not make minor cuts. likee: it is not partnering with a consumer company, right? michael: this is one where he can kind of take a long-term view because part of the reason that precision has gone down is they have missed some forecasts over the last year or so. wall street has not been happy with them. they have been down 20% over the last year, so i think he can take a longer view and allow them to get through some of the lumpiness in their business. they have 30,000

employees, so it is changing the shape of berkshire hathaway as well. it is a big chunk of the business. some of these huge deals that he has made -- he wants these managers of these big units to continue to do acquisitions of their own, to get bigger, because he does not like having a pile of cash sitting there. .e wants this to be used or brendan: thank you, michael moore. for our twitter question of the day, we stick with warren buffett, making a bet on the aerospace industry. is he bullish on manufacturing in america in general? more importantly, are you? let us know the future of america making stuff @bsurveillance. good morning. ♪

brendan: this is "bloomberg surveillance." let's get to vonnie quinn with top headlines. vonnie: u.s. diplomatic officers in turkey have been attacked. the suspect fired shots at the american consulate in istanbul. one of them was caught. there is no claim of responsibility. this act comes one day after six u.s. one means arrived in -- after six u.s. warplanes arrived in turkey. the world to largest beverage company is trying to change the debate over obesity. according to "the new york times," coca-cola is funding scientists who argue that americans to get more exercise and worry less about cutting calories. musk went for a walk

during his indication -- 3 -- during his vacation, it was no ordinary walk. he went for a walk on the wing of a flying biplane. an instagramed on photo. what could go wrong? brendan: thus proving he is a bond villain. what else could we think of elon musk? vonnie: did his wife not join him? brendan: that guy has a gift for promotion. he is amazing. the best -- he is known as being .he best strategist i hope he succeeds. we also have with is on set, hans nichols. every time there is a width of a deal in europe, we go to you. there is a whiff of a deal this morning. there is gekko hans:

-- here is my take on reading through all the papers this morning. to beis no actual reason optimistic, but there is no reason to be pessimistic this morning. we still have not heard from the germans. ministery finance seems to call for a little cold water, deal directly but not hastily. until we hear from the germans, i will not be convinced. heard, andir voices they do not think the deal will be successful, but they will support it anyway. the fact that the finns do not have -- hans: to get to something through the civilian mechanism, 85%, things do not have a blocking coalition there.

they are offering support a little bit the way your own mother would. i think it will work out, sweetheart, and i love all of you. one of the problems we are looking at in europe is this pattern that we have seen so many times, where the greeks say we almost have a deal, it turned out not to be a deal at all, but in the background there is disagreement over what the future of the eurozone would look like, not just this deal, but the new structure. are we going to get to a new lisbon, something that makes the eurozone work? >> we asked about 50 investors, what it would mean for europe more broadly. the large majority of investors were very pessimistic, thinking that this show that further integration is near impossible. this is important because what

is really happening now is what we are seeing in greece -- markets are coming to terms with the fact that it is not so market moving anymore. but it is a publicity failure. it is a publicity failure for the european project, and that is going to make it very tricky for all of these upcoming elections getting a boost from it. brendan: the markets do not -- is the momentum toward come in the next two years, some kind of new arrangement -- physical, anything, legal, within the eurozone? jens: it is difficult because everybody feels pressure from the anti-european parties, so they are getting more cautious. where we need to leadership to be bold, is going in the other direction. vonnie: we are seeing the yields turn a little more negative today. the best that the great

deal in the short term will not work, or is this something bigger that has to do with the fed raising rates? we had the huge route on the back of the qb sentiment, and then we had a major he got where the bond yields spiked up 1%. now over the last several weeks they have been coming down. all the trends in european fixed income have gone to lower yields again. what you are today is a part of that again. i think we really had a big wehout positioning, and now have gone back to the old trend. you have to keep in mind, interest rates are negative, ecb interest rates are negative, and there is no prospect of the ecb changing policy because the fed is going in that direction. brendan: is it possible to argue that european qe is working? growth in thee

eurozone, we have had some better thanh is zero growth, so we have maybe 1.5% or 2% growth. solve all the debt problems, but it is better than having a recession. hans, where does the focus turned out? you are obviously here, but keeping an eye on germany always, does the next country sort of pop its head up? is that maybe spain? hans: the gdp figures are going to get bigger this week. the important thing about greece is that all of these numbers, it affects the denominator because you will have some sort of deal with the primary budget surplus. in terms of what the uncertainty about greece has done to germany and france, that is what i am looking for. do we see that germany has

slowed down not just because of china, because in general eurozone? that is the thing that we are looking for this week. the great concern is the elections in france, and that is thing.rent is there a fundamental realignment of the parties in france? brendan: this is one of the questions that you posed over the summer. -- said they are watching that access to germany and france. lesson from the past few months, that perhaps we should not focus so much on specifics around greece, but more the bigger picture in europe. those negotiations showed a tension between france and germany that we have never really seen before. then what is going on in the other pink countries in terms of politics, what is going on in -- in the other big countries in

terms of politics, what is going on in germany and what is going on in spain. brendan: we are going to talk about donald trump. coming up in the next hour, not donald trump, stanley fischer -- even better -- and alan greenspan, talking with tom in d.c. this is "bloomberg surveillance ." good morning. ♪

tom: good morning, everyone. "bloomberg surveillance," from washington, d.c., this morning. coming up, douglas holtz eakin will join us, and then we will go to a conversation with stanley fischer. now here is brendan greeley.

brendan: everybody wrote their trump piece friday morning after the debate, then they had to rewrite them sunday after he got into a really awkward and defensive fight with megyn kelly. this was a piece that was written before the sunday fight but after the thursday debate. this is from megan mcardle. brendan: so megan sees this, hans nichols, as a cycle that we repeat all the time. i know you spend a lot of time in d.c. i think back to a bumper sticker -- read " rule of therst

debate is that what happens in the second half of the debate stays in the second half of the debate, because everybody goes off to write their lead. we always knew that there were going to be some hiccups, some theater, some craziness in the republican primary. we did not expect it to be this crazy. vonnie: tom, what is the feeling down there? have you been able to speak to anybody in the capital about these remarks? in thishington is august slumber. i believe there are four politicians in washington this monday morning. they are all at the white house. but you really wonder how donald trump would fit into hans nichols' washington. you are the white house correspondent for years. can you imagine donald trump walking the lawn of the white house? hans: it is a difficult one for me to imagine. let me try to reserve my partiality here. it would be easier if donald

trump would put forward some policy ideas that are credible. he has done little been spent his own money to get on the ballot here and he is a third-party candidate. we talked about this in october of 2011. that story was herman cain. have any serious policy proposals? i do not want to disrespect the 999 tax plan, but there were not serious policy proposals. and this is a sideshow. nbc had a survey. donald trump is also a name in germany. he is also somebody people are aware of over there, and a tv star. as a businessman, how do you explain what is going on in america to your friends in germany? hans: trump is the easy one.

the problem that america has from the distance -- it is ferguson, baltimore, structural growth, infrastructure. how do you explain the holland tunnel to a german? mortified that more money is not spent on public infrastructure. donald trump is entertaining and fun, but trump is the easy one. the big ones are racial dynamics right now. vonnie: i'm waiting for the debate to reignite. he was asked for his birth certificate. becauseot provide his he was not running for public office, but now he is, and the guardian asked for it and he said no. hans: congratulations to "the guardian." vonnie: he will have to emerge at some point. continuewe will

talking about donald trump for the foreseeable future. we will continue to talk about -- to talk to hans nichols as long as he is in the u.s. coming up, douglas holds it ends -- douglas holtz eakin joins us from d.c. this is "bloomberg surveillance ." in new york and d.c. ♪

tom: it is a much-needed rain in washington, d.c., this morning, a light drizzle cooling the august of the nations capital. good morning, everyone. "bloomberg surveillance" in

washington. coming up, my conversation with stanley fischer and alan greenspan. but on this monday, important top headlines. here is vonnie. missouri, aerguson, man was critically wounded after opening fire on police. at a rally that marks the one-year anniversary of the death of michael brown, a black man shot by a white police officer. [gunshots] >> gunfire. police in ferguson have been tracking the man when he on police in an unmarked vehicle. hillary clinton will roll out a big ticket policy proposal for her campaign. she will have plenty $350 billion plan to make college more affordable. it includes options for students to graduate with state -- from state colleges without --

greece issay confident that the deal with creditors will be reached. the plan that goes to lawmakers. greece wants a bailout in place soon because the european central bank is due 10 days from now. oil prices are trading near the lowest level in five months. futures fell by more than 1% in new york. the benchmark west texas intermediate is trading below $43.50 per barrel, the lowest since march of 2009. brent crude is slightly above $48. at the box office, "fantastic four" was a flop. the reboot of the franchise took in $26 million, well below estimates. the number one movie for the second week in a row, tom cruise's "mission impossible: rogue nation. those are your top headlines. let's get back to washington, d.c., and tom keene.

tom: vonnie quinn, thank you so much. stanley fischer and alan greenspan are a solid two generations ahead of the youngsters -- dr. holtz eakin that -- hee studied is the president of the american action for him, and joins us for a briefing before our conversations with chairman greenspan. who is stanley fischer? if you were speaking with a friend who knew nothing about economics, how would you describe stanley fischer? thomas: he was the head of a central bank of another country and is now in the united states. he is an all-star. tom: we can talk about the commodity prices and such, but i would suggest that dr. fisher

invented the phrase altra accommodative. which is where we are now. let me lead in with my first question to stand fischer this morning. why are we so afraid to raise interest rates? doug: i don't know. i think they are too data dependent on equity markets, financial markets in general. it should be about the real economy. the real economy is not doing great. a 20 point hike in the funds rate will not change that very much. we had to get back to a more normal bonds rate policy as a way of getting financial markets in better shape going forward. tom: we have a lot of younger students coming out of our schools that we have never seen -- that have never seen a rate increase. that is something that you and i do not know from decades ago. it is not that important whether they raise in september or not. i think they should, but suppose they don't. the real question is, what do you think things will look like

in december of 2015? it is going to be altra accommodative. normal is successes rate increases. dearth ofve this productivity. i will address that with chairman greenspan. ourdoes the success of fiscal policy fold into the surprise of no productivity? doug: we do not succeed without growth. without not succeed growth and productivity. if it goes worse than predicted, you take trillions of dollars off the table in terms of revenue that the government might collect. that means you do things that are much worse. rates, imposein regulations. this is crucial to the future. am: i want to put you in tough position because you were so kind to get up early. you were the economic advisor to senator mccain. how would you advise them all trump -- how would you advise

donald trump today? are you working with him? have you spoken to him? doug: i have not. i have spoken to a lot of the candidates, but not mr. trump. tom: what would be the economic advice? doug: i would like to see more in the way of concrete plans. i am a policy wonk in the end. terms of getting rid of obamacare -- fine, you do that, but what next? i would like to see him rollouts and details, turn it from a personality campaign. tom: whether jeb bush or donald what should walker, be the republican response to the implementation and apparent success of the afford will care act? if you make it illegal to not have insurance and then that should not be the litmus test.

the biggest problem was the cost curve. insurance is how you shift around paying the bill. the bill is too big. the number one thing to -- is to fix the health care delivery system. that should be at the heart of any response. tom: the commodity implosion -- we have all seen it before -- but what is different this time? doug: we are in the wake of a financial crisis, every central bank having spent a lot of its ammunition. tom: douglas holds aiken, -- douglas holtz eakin, thank you so much. coming up, a conversation with the vice chairman of the federal reserve. stanley fischer, then alan greenspan. a very blunt and direct alan greenspan. "bloomberg surveillance" from new york city and are nearly -- and our news bureau in washington. good morning. ♪

tom: good morning, everyone. we welcome you all worldwide to washington, d.c., for a special "bloomberg surveillance" this morning. brennan and vonnie are in new york. i am in washington. we look at domestic and international economics. really looking forward.

many good questions, particularly to stanley fischer. i will sit one of those in at the top of the hour. let's look at our single best chart. here's brendan greeley. brendan: the dow jones reaches down gently as if the moving away.es .13% that was the friday close. this is the subject of our single best chart. this is something technical analysts look at that shows the breakdown in momentum, a sign that an asset's best days are behind them. joseph writes about equities for "bloomberg." who traced this way? joseph: there is a technical this, athat looks at piece of the puzzle. it is a complementary piece of data to offset the fundamental stuff that they look at. when something like this transpires, everyone takes note,

and it could be an inflection point. there are a lot of people either looking to get long and buy the dip here, or they see the process is something negative. brendan: even if you do not think it has anything to do with the fundamentals, you feel like you have to address it because others think it is happening in their algorithms. downmaybe today with the -- with the dow being down seven days in a row -- who knows what it feels like today. it will be something to look at. brendan: when you look at this loss of momentum, do you see an economy that is waiting for september, that is waiting for the fed to do something? jens: the data picture in the the labor market is doing ok, so it is a tricky picture. that is why it is so important to list to what the fed actually says.

we got comments from the fed last week that really moved the market. this is expertly timed. and it will potentially move the market quite a bit. there are also some external forces that are tricky. what is going on in china could be a major headwind for the economy. vonnie: and we are going to talk at length about that. but i want to ask you to douglas thez egan talking about economy. you said you were not so sure with the dollar moving around. it was just that short rate move it would not be a big wouldbut it certainly influence the dollar. the anticipation that the fed will go before other central banks has moved dollar a huge amount over the last year. 50% on a broad -- 15% on a broad basis. it is much more important than the 25 basis point itself. can traders go to the beach until the 17th of

december? jens: not quite yet. the market has to decide one way or the other very soon. brendan: so 50% is where you were a week ago, and you have not changed since the data came out on jobs on friday? jens: i think really now it is about what the fed tells us. the data is mixed. it is about what the fed wants to do. been able tos not make up its mind, so i think it is almost sure that we will get volatility because the market has to shift before september 100%. brendan: so you will be listening to stanley fischer. let me ask. i want to talk about the strength of the dollar. you said in that same note august 4 that you want to buy the short dollar swiss franc call options. why are you hedging against the swiss franc? jens: in general,

countries that have monetary policy where there is nothing going on, that means with a shift in the u.s. it would be a big divergence. dollar the short data plays in a different -- in a lot of different things. brendan: so there are no endogenous problems in switzerland. you do not have them with the franc. jens: in the u.k. they are about to raise rates as well, so the town will not move as much because -- so the dow will not move as much because -- so the pound will not move as much because they have offsetting forces. vonnie: let's take a look now at top photos. number 3 -- yesterday marks the one-year shooting of michael brown in missouri. "dt began as a peaceful

with" erupted in shooting officers. i asked hans nichols how you explain donald trump's germany. explain "how do you ferguson?" i do not have an answer to that. vonnie: number two top photo, a typhoon hit taiwan and east wind andinging torrential rain and massive waves like this one. seven fatalities have confirmed in taiwan. 17 in china. the worst typhoon of the season brought the heaviest rain in more than 100 years. up to 4 million people are now without power. it is very reminiscent of katrina. brendan: these pictures are still stunning when you see them. vonnie: rafting up the river.

number what top photo, this is a happy one. singapore celebrated the 50th anniversary of its independence last night, and the former british colony has transformed itself into one of the world's wealthiest countries. the city states march the occasion with fireworks and a military parade, and attributed it to its leader, lee kwan you. whenever you look at international development, rolando wanting to be the singapore of africa, but then when you look at -- rwanda wanting to be the singapore of africa. but then let's look at all the other countries. thank you so much for walking us through. , thank you for joining us. for our twitter question of the -- warren buffett

is about to play down $30 billion on american manufacturing. are you as bullish as he is on america making stuff? this is "bloomberg surveillance" on bloomberg television. good morning. ♪

tom: good morning, everyone.

"bloomberg surveillance" from new york and washington, d.c. we thank all of you worldwide for your comments. we would talk with stanley ascher at 7:00, and then conversation with alan greenspan as well. here is vonnie quinn with top headlines. vonnie: the first new the reactor to set new safety rules -- to zip has new safety rules since fukushima will go online tomorrow. an earthquake caused a meltdown at the fukushima plant. labelswill remove gender from its children's department. customers complained about signs that designate certain toys for girls, so there will be no gender labels in the toy section or the betting section. beddingthe

section. i'm river capital management topped the midnight manus 2013 field. those are your top headlines. brendan: is second not good enough for us? vonnie: out of 22? i think only number one counts. congratulations. brendan: the shanghai composite is up almost 5% today. jens nordvig is with us. you say pay attention to reserves. going into china or coming out of china right now? which direction. jens: right now if you look at the reserves, the bottom line, money is coming out. we have to be careful about reading the data because if they are doing some technical investing, they are injecting money into the bank.

they are reshuffling what is going on. but if used to that outcome of the trend is outflows. brendan: so we are not looking at reserves so much as we are looking at quantitative easing within china, giving that money to the banks? bolsterey are trying to ' balanceanks sheet. you see that more as shoring up rather than increasing the money supply from the local banks? jens: i think that is right. but if you look at the data picture, we have had some negative data over the weekend. producer prices are going further into deflationary territory. there are week dynamics both on the export and import side, so all the signs are there that we should be i worried about the growth from china. if you look back at the last couple of months where we have been worried about greece, that is the timing proportion of the

euro zone. this is one of the biggest economies in the world. if there is something happening bad in the world, that has global implications. vonnie: what does this mean for the policy on the yuan? we have not even been one percentage point since the beginning of the year. is it pausing on that front? jens: the biggest picture on the currency policy is, they kept their currency incredibly stable against a dollar that has been very strong. all the global perspective, they have a strong currency. the question i get from investors is, and they hold on to the strong currency policy in the face of an economy that is weakening? normally you would say they need to boost the economy, but they have different long-term objectives. they need to rebalance the economy away from export driven growth, and they also want to create a reserve currency. you do not create a reserve

currency by having a weak currency. brendan: the reserve currency fascinates me. them a matter of pride for , or do they get something out of that? jens: i think it is mainly a simple that they have -- a symbol that they have been led into that small club of currencies. what is more important is what trade andn -- is influence in the chinese currency or in dollars? what is going on with the lending flows? those are the big picture issues. one thing that is very important is, the global central banks around the world, will they start to hold chinese bonds? that has not happened yet. that would be the ultimate seal of approval. vonnie: what is the impact of the dollar on china? it is so much cheaper for china to import from those kinds of countries, and yet they are

competitors in the same sense. jens: the biggest linkage goes through the commodities channel. we have this weakness in chinese growth. china is 40% of the global when that demand soffits, you have huge price moves. you see not only -- when that demand softens, you have a huge price move. it is driven down sharply, and that is having a spillover effect in australia and latin america, which is usually impacted by this. brendan: can you tell us what china has to do to make that economy a friendly environment? for financial institutions? jens: transparency is the key word. if you do not know what the rules are, you will not make investments. foreign banks are less willing to put capital to work than they were. most interesting cross

rate as we head to the indices? jens: i think dollar-swiss franc. brendan: thank you for not talking about donald trump. we will get back to tom in d.c. tom: brendan greeley, thank you so much. the forex report -- which is her jens nordvig talk about some of the european dynamics. -- we just heard jens nordvig talk about some of the european dynamics. oil is still the story. less dramatic than friday, but dollar ruble weaker today, 54.27. the mexican peso is weaker. y shows the churn of monday morning. thank you so much. alan greenspan will join us, the former chairman of the fed. and stanley fischer will join us

committee vice-chairman of the fed. we will speak at stanley fischer -- we will speak to stanley fisher. stay with us. "bloomberg surveillance." ♪

announcer: this is "bloomberg surveillance." tom: german and swiss yields

plunge. oil cannot find it bid. america stands alone in this hour. ultray fisher on the accommodation, and alan greenspan on the challenges of a productive america. berkshire is looking at precision castparts. this is "bloomberg surveillance ." it is monday, august 10, from new york and washington, d.c. the challenges that the nation faces is summed up in where oil prices are right now. brendan: it is, and oil plays into airline stocks and play manufacturing, which comes back to warren buffett. manufacturing. which comes back to warren buffett. nail onyou just hit the the head, because berkshire is buying precision castparts, $235

per share in cash. it is valuing the deal at about $32.7 billion -- $37.2 billion. that is a phenomenal amount of money. but it is a huge company, and that is probably a little bit more than half of -- brendan: $10 billion in revenue is what they have. they will have 30,000 new employees, and berkshire hathaway just got 10% larger. according to michael moore, they will not do a lot of cost-cutting immediately. they are looking at a company that they feel is undervalued. vonnie: this will shrink the cash pile for his successor. warren buffett is 84 years old. that is an interesting point. warren buffett slashing the chiller down before he leaves. down 20% year to date,

so warren buffett is definitely getting a companies that is suffering due to stock price. bet here?hat is the is he betting on growth in airplane sales for boeing and is this a broader bet on the american economy? >> i do not know the specifics behind his reasoning, but it looks to me that this is a look at private-sector infrastructure. been -- ifiness has you really are of the believe that we are not getting close to the next recession, interest rates are low, labor costs are the cycle has a lot further to run, and the part of the cycle that has not engaged yet is that type of capital investment. brendan: let's look at the scale of this capital investment.

$37.2 billion -- where does this put the valuation of the company, michael moore? premium, aer 20% significant premium kind of brings it back to where it was at the beginning of the year in terms of stock price, and as you mentioned, bringing down the cash pile significantly for berkshire, and in some ways it makes it easier for the successor because if somebody comes in with a huge cash pile, you face the question of what do you buy? do you do a big capital return to shareholders? but if you have more of a leaner operation with bigger subsidiaries, then there are fewer of those questions. vonnie: you could call this company one of the gems of industrial america. why have the stock price suffered so much? michael: if you take the bull thesis, this is a very lumpy business, and there are cycles. brought lesshave

of that business from the energy companies. vonnie: but the energy portion is less than 20%. further,ecrease that or will he keep it around 20%? michael: it was larger when you in energy inrket the world. that may depend on the outside factors. aircraft has its own cycle. brendan: warren buffett is going donovan,hat -- mark the son of a fighter pilot, played linebacker at villanova, completed his training at ge, like so many other alumnus of that program. back to tom in d.c. tom: thank you so much. it is the most interesting august. the idea of a gentle summer has drifted away. oil continues its dissent.

germany and switzerland reaffirm every negative interest rates. is ass america -- this america awaits september 17. stanley fisher -- stanley fischer led the imf through a financial crisis, and is the fed vice chairman. i am going to rip up the script. we has just seen -- we have just -- are the lowt interest rates that all central banks had -- are they nothing more than an advantage to the haves and an advantage to the capitalists in the plutocracy, so that mr. buffett can do a transaction why other -- while other americans are harmed? stanley: the low interest rates are designed to help the recovery of the economy.

they have done that well. 5, and that 10 to is what they are intended to do. they are also intended to help investment. we would be happier if we saw more physical investment and financial investment probably, ,ut they are doing their job and the fed has handled this very well. i can say that. tom: everything was not your fault. you at-- i sat behind your speech, and i saw the physical force that you put into that phase -- that phrase, ultra accommodative. what is ultra accommodative, and why do we have this reticence worldwide to raise interest rates? stanley: ultra accommodative was said at a time when we thought that zero was as low as you could go. it could not be any more accommodative than zero.

now we know you can go negative as well. but it is extremely, extremely accommodative to not have to pay nominal interest, to be sure, when you make an investment. that is what this monetary policy is about, and it has worked. tom: wider reticence? -- why the reticence? raising rates a little bit -- why the fear? stanley: the interesting situation in which we are is that employment has been rising pretty fast relative to previous performance, and yet inflation is very low. the concern about the situation is not to move for we see inflation as well as in employment -- as well as employment returning to more normal levels, levels which we specified in advance.

duali look back at the mandate of the fed, 1977. that was so complex. one year after that, you had to publish your textbook. now in its 12th edition. is this modern fed trying to do too much within the dual mandate ? are we asking too much of people like you? stanley: it is interesting that the problem is not with the part that is unusual in the dual mandate, namely employment. that is doing just fine. it is with the inflation part. if we were just inflation talkers, we would be in the same situation we are now. we would have to do more, if that were possible. so it is not the dual mandate that is the problem. besides, i do not know the central bank within its heart of hearts that is not looking at output and employment all the

time. even as we only target inflation. they do both. tom: did you follow twitter at all? stanley: i am afraid not. tom: the taylor rule and the trajectory of that is so distant from where central banks are. why is that? calculations suggest that if we put the interest rate right now at the taylor rule, there are quite a that says itles should be, and we would be doing damage to the economy. that is the way the fed behaved in normal times. we still have not returned to normal times. that is simply too high and interest rate, given where we are coming from. not want to put you in a difficult position as a public policy maker, but how do you respond to the study of many economists, this idea of a new terminal rate, that after the

raid moderation we are coming down to lower rates, and possibly some new inflation, lower rates in general? stanley: that is a possibility. there are many possibilities as to where this economy will be moving. where it is moving to is not indicative of what we in the fed do, and how much employment , what the normal unemployment rate will be. anhink of that as interesting possibility. the other possibility, we will have to wait and see. tom: when did you first meet olivier blanchard? or 1975.probably 1974 blanchard said we need to deflate. he was beaten to death within

suggesting an of 4% within that hurdle. are we being too cautious? stanley: we are not being cautious. we are being extremely thensionary, and we have zero interest rate. the problem with the 4% inflation rate is that when we get up there we will find out that there are other phenomenon that come with it, including indexation, which complicate the way you run the economy. i think that olivier, the statement that we need to reflate the economy is correct. we need a 4% inflation rate. tom: well answered. i had such a great response of questions worldwide from economists who want to speak to you. one of the greats is lewis alexandrine -- lewis alexander of nomura. he talks of cumulative progress

versus data dependency, this idea of step-by-step progress getting us to an end result. where do we stand? are we slaves to data dependency? stanley: we had better pay attention to data. tom: inflation is low. stanley: and to expectations. it has to do with the decline of the price of oil and raw materials. these are things that will stabilize at some point, so we are not going to be as low as we are now forever, and we need to be looking ahead as we go. having said that, the data have to drive us, and we have to ask ourselves where are we. -- we arethis issue in this situation with very low inflation. suggest, would detractors of the fed, that we

now have inflation sticking us. should we fear substantial disinflation and outright deflation? we see the 10 year, switzerland, negative interest rates. global deflation and the knock on effects to the united states? stanley: we take account of what is happening abroad. people invest there, they invest here, and we have got to take that into account. so, yes, it is a factor that bothers us. it is not inevitable, it is not bit into the economies -- it is not baked into the economies abroad. but is where we are now. tom: you studied with kindleberger at m.i.t.. you were on the launch at the imf. this idea of the total -- of the capital account at risk -- are we there again, where you,

sitting at the fed, must look at capital shocks to other nations due to the economy and frankly to what madame lagarde identifies it as? stanley: we look at that. duty specified in law is to the american economy. but what happens abroad affects us. the united states, the united dates economy. so we have to ask what is happening there and taking into account to some extent. primarily the u.s. economy depends on itself, not only, but to a considerable extent. we take both of those factors into account. if the risk to the world is slower, that is not good for the u.s. economy. tom: final question to you, vice chairman -- very quickly this morning -- are we running alone now, or is there really a textbook foundation to what you are doing each and every day? stanley: there is certainly a textbook foundation, but we are

to an important extent in a territory that has not been explored before, and we have to think about things as we move ahead. we are not alone. the behavior of the british economy is remarkably similar to that of hours in terms of inflation and unemployment. but there are fewer and fewer that are growing decently. tom: mr. vice chairman, thank you so much. coming up, a conversation with alan greenspan. good morning. ♪

brendan: "bloomberg surveillance this is." -- this is "bloomberg surveillance." vonnie: warren buffett pulls off his biggest deal after berkshire present has parts. it is part of a strategy shift toward manufacturing. a man shot by police in ferguson, missouri, is in

critical condition this morning. officials say he was wounded after opening fire on officers. it happened on the one-year anniversary of michael brown's death. he is the unarmed black teenager who was fatally shot by a white police officer. frank gifford is being remembered as the star both on and off the football field. after his hall of fame career as a new york giants running back, he became a pioneer for athletes switching to broadcasting. frank gifford died yesterday in his connecticut home. he was 84. a wonderful picture on the back of the "new york post," frank gifford. brendan: that is how you want to be remembered, in your prime. is in his prime, and he is with us. we just heard from stanley fischer of the united states federal reserve. very exciting. here is what i heard. know -- what central

bank in its heart of hearts does not look at production." he said in that same paragraph, stanley fischer, that with employment we are doing ok. "it is the inflation that i am worried about." carl: first of all, this is a big star in the column for the blue mandate cap of central-bank policy. he's arguing, even the inflation target of central banks follow a dual mandate. but if you only have an inflation target, like the ecb, for instance, you can be caught flat-footed because inflation is a lagging indicator. that is the policy mistake the ecb made when they tried to raise rates earlier in the cycle and then had to backtrack. the fed having the dual mandate is much more focused on the unemployment rate. even though he expressed concern about a low inflation, the first

words out of his mouth in the interview is "employment is what really matters." if we look all the way back to ratereenspan-led said, the is much more than the inflation rate. vonnie: so they are delighted about how unemployment is performing. not so sure what is going on with inflation right now. carl: there is definitely a lack of confidence about inflation. stanley fischer was quick to point out these transitory factors that are putting inflation down to zero, and he said that will eventually pass. he did not have a lot of confidence that once we get past the energy prices, the drags and whatnot, that the trend in inflation will heat up to any significant degree. in that interview, i did not hear of vice chair that is perceived to be significantly more hawkish than janet yellen. i did not hear any and -- any move --

brendan: we are still trying to touch gingerly to see where the bottom is. carl: you will know where when you see it in your rearview mirror. we will get their wage pressures. 5.20 not know if it is five or 4.5. we are moving the right direction, but with very low precision. vonnie: it is also not quite clear whether a 25 basis point move would have a negative impact on inflationary tendencies. did he give any clue as to whether it would him if there was a 25 basis point increase? carl: there was some allusion to that. he talked about global growth prospects. thes not necessarily that 25 basis point move has a big impact on the economy by itself. it does not.

however, look at what is happening to the dollar. the dollar is having a significant impact, and some economists say that the move of the dollar is equivalent to about 200 basis points in fed hikes. do not ignore the dollar. that was a clear sub message in the interview. brendan: let's talk about that 25 basis point move. i heard a lot of past tense in this point, that it has worked. has this changed your call at all for when the fed is going to move? carl: it has not. the economic data is there. we are hovering right around 50%. this leaves it up to the fed to steer the ship, so that data is cooperating and the fed can make the call. we have to focus on the fed speak over the next couple of weeks. tom keene just asked, are we slaves to data? stanley fischer said we had better pay attention to data.

carl: the economy is going along at 2.25%. we will not get the pickup and capital -- the pickup in capital that he is looking for. you have to watch to see as the economy is accelerating. we are not seeing strong evidence of that strong acceleration yet. areie: what other data going to give us some kind of indication of where u.s. inflation is going? sales latere retail this week. two retail sales reports before the september fed meeting. we get two industrial production reports before the september fed needing. -- before the september fed meeting. is, as weteresting look into the details of last friday's jobs report, it tells us manufacturing production may eat out a positive gain when it -- maybe eke out a positive gain. brendan: with us for the entire

hour is carl riccadonna. almost as important as carl riccadonna, former fed chairman alan greenspan. this is "bloomberg surveillance ." good morning. ♪

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but the best thing you can give your business is comcast business. comcast business. built for business. tom: coming up been moments, my conference with alan greenspan. .op headlines, here is vonnie a huge deal by warren

buffett. his company, berkshire hathaway is buying a company that makes equipment for aerospace and energy industries. donald trump is the top republican printed -- presidential candidate despite criticized remarks in the first debate. he has a double-digit lead over ted cruz. he said megan kelly unfairly targeted him. >> women are tremendous. i have an amazing relationship with women in business. they are killers. when i say that about a man, it is considered an honor. he was disinvited from a

conservative of them because of his remarks. hillary clinton will unveil a platform in her presidential campaign. she will outline her ideas for making college affordable. some superheroes lack muscle. in 26tic four took million dollars, well below expectations. impossible was top for the second straight week. it brought in more than $29 million. tom, you are in washington, d.c. tom: there was a moment we were by why productivity was so good and america running on all cylinders. it is a distant memory.

a quantitative easing bubble in the making. time to speak to alan greenspan. when did you meet stanley fischer? i thought it was fascinating as he addressed some of the challenges. you do not speak about yellen or bernanke policy. you can speak on the conundrum of our nation's productivity. is that something we should fear? alan: it is a serious problem. american productivity is not significantly different from zero growth in the last six to

eight quarters. because of that, you work backwards from the causative chain. the capital investment is inadequate to fund the amount of assets you need. fischer sat in your chair and said that. can government be the catalyst to more investment, to create more jobs that allows for greater productivity? alan: the only catalyst effect that will be useful is not moving forward. you look underneath the data, withyou see is starting 2009, following the crisis, the it, haswe measure divided itself into two significantly different sectors.

one, a life expectancy of more than 20 years, structures, heavy equipment. that which has capitalized over a long period, and a remainder of the economy. the remainder of the economy is not behaving significantly different. you affiliate with republican politics, the mandate to jumpstart infrastructure in america, which leads to long life assets. alan: i have not discussed partisan politics since i joined the fed in 1987. tom: can we break that rule today? alan: no, i will not do that. tom: are you surprised the after you have

struggled raising interest rates? we have the right amount of information with early greenspan and later arthur burns? that is a question i do not think we will know, except in retrospect. we are in a different state than fed i worked with. i am delighted he is there to help out. you wrote a paper, worried about bubbles. we have quantitative easing. how afraid should we be of bubbles, particularly within the bond market? alan: very much us so.

we have a pending bond market double. if we substitute the structure and instead ofs expecting equity return, we have expected interest rate return. that ratio is unstable. what will ultimately determine where it goes is to reach back and to ask ourselves where is the normal interest rate. one thing that occurred to me as , consequence of the crisis which i knew something was brewing, i missed the actual date. something very different was going on. i found they are different

behavioralat economics is covering. it is a behavioral issue. does alan greenspan or stanley fischer, or mr. buffett or gertylarge a name this morning, do you know what the risk-free rate is? you ask yourself what determines interest rates. take a look at people standing in line for a new apple computer. sell -- whatey would they pay to get a petition

closer to deliver a day? that is human time preference. measured by interest rates. as far back as we can get it. of: what is the character this commodity collapse? if we see oil finding -- copper, down as well. the easiest answer is china. signal for america. fundamentally what created the problem with oil is u.s. production. you have a million barrels a day since the last three years. fracking, our

extraordinary insights. it is showing no signs of pulling back despite the issue of much lower oil prices. they are getting costs down lower and lower. tom: you will enjoy your 90th soon, will you play tennis? not likely. our twitter question of the day goes back to the transaction of the morning. manufactured in america. $30 billion was the working number. stay with us.

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tom: good morning, everybody. a light rain. much needed a ross washington. -- needed across washington. we just heard alan greenspan talk to tom. a little more open. i was struck right his focus on behavioral finance. natural look at the rate of interest, what it should be, he said we have to look at human time preference. that is a behavioral question. >> he was talking about mispricing in the bond market. if we are returning to a normal economy with 4% growth, there is going to have to be a significant readjustment in interest rates.

as the markets continue to grapple with this question, interest rates settle. brendan: tom, what did you hear? tom: the generational shift. these are economists used to a certain level. we are moving towards new terminal values, which they did not study in school. there is a new terminal level that we are coming to grasp with. karl: there is a lot of handwringing over the low productivity numbers. i do not think we are in some

new paradigm for productivity. this is the continued hangover from the hangover cycle. productivity is not surprising. through -- you will see the spending of the category. >> this was a fischer that was more hawkish than janet yellen. a one andg to be done.

brendan: we ask about the real investment warren buffett just made. $37 billion in cash on a manufacturer. this is "bloomberg surveillance." morning. ♪

tom: good morning, everyone. the headline on our stanley is sure interview, vice chairman new employment in america. we begin with alibaba today. making their biggest deal yet. spending more than $4.5 billion. nearly 1/5 ofm the company. the company will invest in ollie baba. apple expected to hold a product launch next month. its reboundssh

with its latest phone and ipad models. finished second over the weekend in a fundraiser. a major charity is the big winner. more than $3 million was raised. brendan: hanh's neck goals used to service the white horse -- the white house correspondents. he is sitting with us on the desk. we get to talk to him about his old gig. the republican party is 100% focused on donald trump, which leaves hillary clinton to focus on policy. you want to know what a president is going to do in

office, read the speeches. the details will look different, but she wants to do something with student loan debts. you look at what obama did two weeks ago, that was telegraphed in some speech in iowa in 2000 and. when you want to know what they're going to do, read this teaches. she is not going to get a lot of attacks on this because republicans are fighting amongst themselves. look at any plausible hillary clinton victory, she needs to have youth numbers at a high level like president obama. she needs to retain her support among the women vote. brendan: this is the central challenge. every step is a tick in the box in getting to that check in the box.

--is more a very challenge tom, what did you find out? tom: this is -- everybody escapes in washington in august. what will they come back to? i am fascinated about how washington gets anything done before iowa, before new hampshire. hans: nothing motivates in washington more than the smell of jet fuel. that is why you do not have a deadline until senders are afraid of getting out of town or not getting out of town. brendan: one thing playing well for tron is he says we are losers and we are losing to china and japan.

is there anything to that? what does that mean? to the extent that we are going to assume a strong dollar policy, that is killing x orders and hurting producers. to some extent, we are playing the patsy. if we see china and devaluing their currency. if china reverts to its old model of devaluing the currency, that comes at a cost to the u.s.. you have to think about americans who vacation in the mediterranean. they are not thinking about a 1%. car: i'm going to be listening to some sort of cost control. the college plan is great. are throwing more money at student loans, that inflates college prices.

be cost control. brendan: when you control subsidized student loans, it raises the cost of college. we learned that with housing and we are learning it with college tuition prices. tom: the generational change, i do not see that yet. a lack of suggest is discussion of the economy, the idea the anger of america. chairman greenspan talked about this lack of productivity. that involved -- that eve evolved into an anger. both parties will have to

contend with their flanks on this sense of unease. has easy solutions. maybe carl. he is an economist. it is time to answer our twitter question of the day. warren buffett if he was bullish on manufacturing in america and he is. are you? think it is great that he is investing in aerospace technology. he is preparing for the future. answer, not when worker unions demand irrational contract deals. carl: if the dollar is up 20%, the cost of a u.s. worker has gone up. these international conglomerates, we focus on the

dollar. even though they perceive wages are stagnant. brendan: it is almost as if these are describing china from 10 or five years ago area it is attempting to rebalance. carl says it is a marginal cost issue. just u.s. versus china, but spread around the globe. let's move to our final twitter answer, bullish until the end of the year. exports across the sector will take the tolls.

karl: the export sector is getting clobbered and a lot of beingic producers are inundated by a flood of cheap imports. one rate hike will not kill them, but when they push it through, they need to make it clear that it will be a slow to reject every -- a slow trajectory. they are also being held by weaker commodity prices. that is my agenda today. be -- i want to watch earnings. the first time the merged company will report. brendan: we will see if they will always do what they do. a different kind of a

deal for warren buffett. greece, this deal -- is or something they hope will be a deal. it is a hope. a lack of growth. without question, the common theme from stanley fischer and .lan greenspan the conundrum that we see as america struggles to find the growth we knew before 2006 and towards 2004. it is about growth. there are all of these distractions. , i heardr one thing stanley fischer say it, growth, growth, growth, is what we need to look for.

we need to say thank you to our washington. market makers is next. good morning. ♪

>> live, from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. : you are watching

"market makers." erik: 837 billion dollar deal to buy a corporation. how is he funding it? cash for starters. stephanie: crude trying to climb out of its dive. we are going to speak with the fed vice chair. the definition of must see tv on a monday. erik: stanley fischer with tom.