and disney killed three birds with one stone. only a jedi can that do. this is "bloomberg surveillance ," live from our world headquarters in new york. i'm tom keene. joining me, brendan greeley. we will talk about disney in a little bit. they are redoing their star wars product. brendan: they realized they are not just buying movies, they are buying worlds. there is the marvel universe, the star wars universe, and we will see movies forever about this, but also in the parks. tom: what a news morning it is with oil. let's get started with top headlines. here is vonnie quinn. vonnie: company far, far away. the national rate of one point 6% per japanese

consumers and businesses cut spending and asked its fell. that is a set of -- that is a setback for shinzo abe. germany's chancellor angela merkel is saying she is willing to consider debt relief degrees. she made her first public comments since area finance ministers endorsed bailout for greece. she is confident the imf will join bailout. there may be some leeway on the interest rates the greeks are paying on their debt. searchers in indonesia have found the wreckage of a commercial prop just that appeared to have crashed -- prop jet that appeared to have crashed into a mountain. there were 54 people on board. and lost contact with the air traffic control while flying in cloudy weather. he is elected president, donald trump says he would deport all undocumented immigrants from the u.s. the republican presidential candidate laid out his position on immigration in a four-page

document yesterday. he appeared on "meet the press." donald trump: we have to a whole new set of standards. when people come in -- >> so you are going to split up families? donald trump: we will keep the family's together. >> what if -- the iowa state fair is a traditional showcase for candidates. and a major tournament record. he is 20 under. there it is. 20 under. what kind of course is that? the pga. vonnie: tough weather conditions. tom: let's go through this.

1.1101. this becomes important with a 1.1% move. that is how long we have -- we are on oil. brent crude, 49.13. the ruble is weaker. the mexican peso much weaker, 16.46. let's go over to the mac and the bloomberg terminal persian gulf war in the 1990's. this is inflation-adjusted brent. we are back into, pre-china. brendan: we are looking at two realizations. we realized fracking was cheaper, but here is the point where reached where it is impossible -- where it is possible that fracking may get even cheaper, that they can cut costs. the dynamic now is not the

dynamic it was even six months ago. tom: is this lower for longer? this is four years here. one of our themes this week as we look at commodities and the effect upon your life. as vonnie quinn mentioned, japan is really front and center overnight. , the media focus is on lousy economic growth. where the pros are worried, they are worried about manufactured inflation ready made by abenomics. we begin with a fiction known as japan economics, and we need to bring in willie pesek, in tokyo this morning. to me, it is about this new inflation in japan. is it a good inflation? so far, no, because the yen is down 35% in almost three years. any inflation japan is getting is imported, the bad kind. with oil prices low, japan is

still importing inflation. toyota is happy right now. when you talk too small to midsized companies, they are not because they have to in point -- they have to import a lot of goods. trying to get consumers to spend more and companies to invest more. tom: what is the support for abenomics on the street? cabinet is ate about 32%. the thing i hear left and right in japan is we hear a lot about it, ask that sounds great. -- we hear a lot about abenomics , and that sounds great. prices are rising to some extent, so many ways, people are looking around and saying three years into this thing we are hearing about it but not feeling it. rating -- we are waiting for raises to be passed along,

and that is not happening. brendan: it is a frustration government. do they have any stake in that argument? willie: people say abenomics has policy,rows -- monetary fiscal policy, and structural reform. now we have to see there is only one arrow, the bank of japan. we are still waiting for the other two arrows, and it is not happening. companies are having this staring contest with the abe government. they say we will raise rates -- raise raises when you make the economy more competitive and tweak tax rates. corporate executives are waiting for that, so there is this high-stakes staring contest against the government, toward japan, which is not blinking. tom: thank you. our focus this morning, the continued collapse in oil.

give coat talk is with us. she's investment officer -- david kotok is with us. he is an investment officer. figure,ou make the book maybe they will buy it. opus, 3,atest biblical 2, 1. desk] its in the lower corner it says puerto rico. you thought you would sell 12 copies, and instead it is usually successful. david: the book was on amazon live, the final version, july 31. puerto rico defaults on august 1. vonnie: you called it, david. david: bestseller ever since. there are pieces in the book in the versions of

muni credit, and what is a moral obligation bond, a general obligation bond, and how you slice and dice through the market. it is the seven years of the financial history. michael, my colleague, did the heavy lifting. tom: there are lots of charts in here. sverybody's telling me muni are the place to be. david: they are if they are the munis which are going to pay you, and they are not cheap. other munis are dangerous. shameless plug. let's get to oil now. there is no side -- there is no sign of abating on oil. when will oil catch a bid? .avid: this may go lower longer i am an old goat in this business, and i remember in this business when oil was three

before thearrel middle east war when it went to $12 a barrel. that middle east war was in the 70's. we could go back to 15 or 20. this is a downward slope. brendan: my follow-up question to tom's, i do not see the dynamics. i do not understand what is going to bring it back up. there is this hope we will get back to the old dynamics, we just have to figure out how to diminish supply. i do not understand how we are ever going to get back up there. david: hope is not a strategy, it is a myth. we have been through this before but not recently. in our shop, we have been maxx underweight oil since $100, and we would not touch it here. i would add one quick thing on the muni thing. we are working on something , becauseacking munis

there are a dozen states losing revenue. inre is deterioration municipal finance, and you have to slice and dice and dig in the weeds in the oil patch in the muni market. when if ever will we see -- david: the oil price goes down, that means you get the first kick, but then you have to wait for the consumer to wake up and say i am going to have more money longer, i'm going to spend it. vonnie: will it be proportional to the drop in oil, or will it be lesser? david: i think there is a huge boost in consumer spending, and when people begin to accept the fact that this is a permanent shift, not a temporary shift. tom: can you get over 3% gdp with that, and is the fed behind the curve because of the david: iof oil he echo do not think the fed knows what to do with a stronger dollar and weaker oil and capital spending contracting. tom: come on.

it is monday morning. september or december? david: september. they have got to get away from zero. vonnie: do that? why he echo brendan: -- do that -- do they? why? brendan: i am with vonnie quinn. coming up, star wars is really all that matters. the company's new plans to tackle a galaxy far, far away in their theme parks. the "bloomberg surveillance" star wars report. tom: can i read? "if they derive their revenue " -- are young fees asleep yet? ♪

tom: good morning, everyone. "bloomberg surveillance." let's get right to top headlines with vonnie quinn.

vonnie: record-breaking temperatures are pushing flames higher in western wildfires, and crews are trying to put them out. california now has 19 major fires, one of them sending smoke into the san francisco bay area. fires in oregon and washington state are forcing people to leave their home. died asly idaho woman she fell trying to evacuate her home as a brush fire approached. people are more deeply involved --government service government surveillance programs than previously known. according to "the new york times," documents divided by it would snowden described relationships with the nsa and at&t as highly collaborative. remember asis being a giant of the civil rights movement. the longtime naacp chairman died saturday in florida. after his years as a radical student activist, he became a

state lawmaker in georgia. his widow says bond's ashes will be scattered at sea. julian bond was 75 years old. tom: he is an interesting place within our 20th-century history. vonnie: absolutely. tom: before this, after this -- interesting place. brendan: the story of america right now, we have been spending time learning that those times are not behind us. interesting picture on the front of "the new york times" from 1963. tom: this is something that you wanted to talk about. vonnie: do or do not, there is no try. yoda] try not. do, or do not. there is no try. yoda's advice --

lands across the empire. >> we are creating a jaw-dropping new world that represents our largest single themed land expansion ever. [applause] vonnie: we are joined by paul sweeney. comcast is also making an expansion in terms of its theme parks at universal studios. is this a viable long-term counter strategy to losing pay-tv subscribers gekko paul: i think it is. disney over the last 10 or 15 years, their theme parks have received a tremendous amount of capital investment, so they have expanded their business, including their cruise ship business. they laid down a lot of bets around the world, the most notable coming in shanghai in the next year, and opening the park in shanghai. they continue to invest because

they continue to generate steady profits for disney. brendan: i need you to confirm something for me. well i a -- will i be able to get into a millennium falcon? paul: i think you might. disney is going to want to put you where you want to be. vonnie: you can also go around the toy story garden, and get into the ironman stark industries. a lot of great experiences, but disney and comcast both are betting that the consumer will continue to want to spend on one-off experiences. paul: comcast bought nbc and they did not really think much about universal studios in florida, but it has a 30% ebitda margin. brendan: we are planning it out for the future, planning and trip to disney -- planning a trip to disney the way you would

plan for a house. paul: it requires a tremendous amount of capital. have been andou done the star wars experiences, how many times are you going to do those? aren't you going to have to keep coming up with new galaxies? paul: again and again, and nobody does it better than disney. tom: bring up the chart again. we need brendan greeley to help us out with the editorial. [as yoda] judge me by my size, do you? voice] the live experience is important. is this happening to tv? paul: this is a cyclical business. if you have capital to invest, you can generate decent returns.

the cash cow which has been the cable network business -- it is still expected to be a cash cow. investors are not sure with the growth prospects are with the cable network business. companiesd 42% of the are theme parks. you are still looking at the espn story with disney, trying to get comfortable with that. you are looking at the film and production studio, and disney has done great with that with pixar and marvel and now with the upcoming star wars products. the theme park is core to what disney does. i think for comcast, they are sensing this is a good business. if you do have the capital, it can be a good long-term business for them as well. tom: thank you for joining us on monday morning. paul sweeney with bloomberg intelligence. we will talk about amazon in the next hour. in the next hour we will give substantial time to adam parker of morgan stanley. he has been wrong on energy.

sometimes that is the best time to talk to someone, when they have to justify a call gone wrong. adam parker on the equity markets. us. with this is monday morning. worldwide, this is "bloomberg surveillance." ♪

tom: good morning, everyone. from new york city, this is "bloomberg surveillance." a beautiful august weekend in new york. some elevated temperatures. we migrate through this week. let me do a morning must-read. onhunt, a lot of experience campaigns. mr. hunt writing for bloomberg

-- tom: it is a smart essay. brennan,ve about this, it is not hysterical. it was such a pleasure to see an essay that was not hysterical about these hysterical times. brendan: that is the campaign strategy of hillary clinton. that was a good time. do you remember that time? do you want that time back? the question for me back to al is, what drove that? was it the ability to get a budget deal done? tom: the internet boom helping out. david kotok is with us. i was taken by "doonesbury" this weekend. you have written on the effect

of this politics. i do not buy it or it is there any affect? think there is in effect now because market agents are watching a sideshow. looking at oil and china and currencies and central banks and the fed -- until this narrows, the markets are not impacted by these debates. and sandersrges emerges as credible front runners in their parties, or they go fringe and independent and they put the republican and democrat in the middle, then we will have a real free-for-all. markets will not like it. price indo markets not party movements within the party? david: i do not think markets are pricing any of this in now in the markets. markets are looking at the fed and oil. that will change in another six

months. then we will have to hunker down and get narrowly focused. tom: david kotok with us. coming up in the next hour, bloomberg politics editor mark halperin will join us. he reports that the butter cow did melt at the iowa state fair this week. that guy withon the helicopter as well. stay with us, from new york city this monday morning. "bloomberg surveillance." ♪

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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. ♪ ♪ ♪ get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. tom: our twitter question of the day -- is mr. trump good for american democracy? that is a debatable the point, clearly a heated point. he is doing better in the polls,

to say the least. his donald trump good for american democracy? here is vonnie quinn with top headlines. oil slumps price of today. brent crude is trading for a little bit more than $48 a barrel. signs that a worldwide oil glut is ending. china, the blast exposed weaknesses in how the two reels are transported and stored in china. toyota prius factory will stay closed -- toyota's factory will stay closed for three days. its securityng up team in an effort to protect itself against hackers.

by the end of the year, uber staff to quadrupled more than 100 workers. the south african paralympic runner has spent time in prison for shooting his girlfriend. oscar pistorius. he was sentenced in 2014 to a five-year term. from the box office, "straight at of compton," smashed to record for an r-rated movie. "mission impossible" was behind in second place. brendan: do i get my do now that this movie is a business success that people care about? tom: it has to be a business success. do they replicate it?

brendan: we should go to paul sweeney about this when we talk to him next. every time you see success, you see every other studio trying to re-create it. i think the answer is, you pay a little bit of money for a really good movies. tom: people went to movie 9eaters without 7, 8, --year-old children. angela merkel has begun selling the greek bailout package at home. here is what she said on a german network last night. angela merkel: with regard to the extension of maturities and the setting up of interest rates that we possibly have -- or rather not possibly, but definitely -- we have room to maneuver. we extended maturities in previous times, moved forward the repayment rates. it is always possible to do something else, but there is the clear statement that the eurozone cannot allow another

haircut or debt cut. brendan: hans nichols is straight out of berlin here it let's listen to angela merkel. is she observing the first rule of haircuts, that you do not call it a haircut? hans: you call it a haircut light. -- they arege calling it a haircut light. they are citing a senior eu official comment eu advisor, saying they want to tease out the maturities to an average. this is the average of 60-year maturity. there is the inside of the paper. they are calling it a cleansed by -- a clandestine or a secret haircut. brendan: she is selling the steel to the german parliament. bloomberg has some quotes for some of her allies -- from some of her allies -- one of them is that this is what is currently achievable in europe. is she selling this by holding

it between her thumb and forefinger? hans: i think that is a good way to put it. with some distance, she is selling. victory, the idea that you are not going to have an overall debt reduction, that that is a big victory that germany won in the negotiations. they are being a little fuzzy on just what the imf's role is going to be. germany is insisting the imf has given them a firm commitment that they will stay involved after october, yet i have not heard anything from madame lagarde that is firmly saying that they will absolutely support this program. vonnie: exactly, and we do not know when if ever we will get that. the vote in german parliament in the bundestag is wednesday. is it going to pass? hans: it is going to pass. the question is how many defections angela merkel will have.

at -- she could have up to 120 defections this time. she will get her majority, it is just a question of how bruised she will be when she comes out. even some of her key deputies are saying that they will not vote with her. he says he has not made a decision yet. that is his way of saying that he probably has made a decision and is not want to announce it yet on bloomberg television. --ndan: i am sort of shocked was friday the least dramatic finance ministers meeting we have had in two years? hans: probably, but there has been a dramatic reaction. one person said there was no bailout for creditors. there is a lot of comedy, but there is some market react on the debt side today. nichols in berlin.

how changes in china's labor market may have been the final straw in the government's decision 2-d value the you want. we will discuss today's single best chart. this is "bloomberg surveillance ." good morning. ♪

tom: good morning, everyone. " hasmberg surveillance gotten through 38 minutes and 50 seconds without talking about the devaluation. now we go to single best charts with brendan greeley. brendan: that is because we cannot pronounce you on. -- pronounce the yuan. the subject of today's single best chart -- this is from a note from richard to from nomura. we are looking at the ratio of job offers to job seekers. look at the dip in the last year. he writese in red -- that this came as a major shock to the chinese authorities. david kotok is here from cumberland advisors. the difficulty of looking at china is that you do not know

what numbers to take seriously. is this number worth taking seriously? david: it is. he is on point. for years we had this notion of -- 15lion, 18 people million, 18 million people going from urban to rural. nobody is living all of these housing units, and we were speculating about how they were going to get through this and who is going to occupy? what is the bubble coming, that sort of thing. all this is now in play. rural to urban has stopped. that is a major shift. brendan: if rural to urban has stopped, you still have these people living in urban centers. what do you do? shiftntervention can help them toward consumption? david: the chinese government wants to keep them quiet.

the chinese government does not want them in the streets. the chinese government does not want a repeat of tiananmen square. it needs to find things for them to do, and they have this mix of men and women because of former policy. young mene a a lot of without women, a dangerous situation if you do not have them occupied. brendan: this is fascinating because we started at a -- with job offerslooking at to job seekers. within 30 seconds, we were talking about tiananmen. keep: they are trying to the people young, dos file, with energy, and behaving. there is an argument that this is a healthy transformation, that that needs to happen for china. would you agree?

david: it needs to happen, so transformation that is inevitable happens. healthy is a question of how is it managed. they are attempting to manage it . they are attempting also to be part of the world reserve .urrency and growth system they are the second largest economy in the world, the largest goods producing economy in the world. these are massive shifts. are the imfyou right now, are you heartened or disheartened by the way they did it? david: you are surprised but not so surprised, because you put pressure on them to do it. cleany go to a nearly float of a currency? does that happen in a world in which the second-largest economic locks -- economic blocks -- europe just had a great report from haas nichols as to why there will be negative interest rates in the eurozone for the rest of the decade. these are great in balances in

interest rates and currencies worldwide, and china is right in the thick of it. a big thing for the dollar. the dollar gets stronger and sronger. we have no idea how strong our currency -- tom: does that in pinch janet yellen's outcome? david: it does not change september or december. they have to get away from zero because zero is distorting the operation of the money market system. -- they have mean to go up 50 basis point or 75 basis points. it will probably take them the whole year to do it and get stable. our top photos. number 3 -- we go to brazil on sunday, a bit of a reaction there, too. for protesters were asking ssef'sf -- for rou

impeachment. these protests happened in 16 states, and those in rio de janeiro gathered along copacabana beach. you put it really well this morning. there were just enough people on the streets to be a problem, not enough to be a huge problem for her. about half a million. brendan: distributed across several cities. we will be talking with the sao -- bureauau tree chief in the next half hour. what we are looking at right now theoncern over deteriorating economic situation. vonnie: exactly. let's move on to top photo

number two. --tha's vineyard needed president obama and former president bill clinton hit the greens together at a country club on the island. jurek and clinton advisor vernon jordan joined them as well. they were going to celebrate vernon jordan's 80th birthday saturday night at his home on the vineyard. amazed by am always the ex-president's club. there is a heartbreaking anecdote where in the final month of his presidency, george w. bush used to call bill clinton, and they would talk about it because nobody understands what it is like to be a president except another president. exactly. i cannot believe they used the card. -- a cart. from donald trump to

jeb bush to hillary clinton tried the tasty fair that was offered. the 51st iowa state fair. mac,iggest winner was big weighing in at 1166 pounds. brendan: that is the trumpiest trump face. you cannot win as a candidate. you have to go and make yourself look silly. you'd have to grin and bear it. vonnie: i do not understand why it is a source of pride. brendan: we asked, is donald trump not only good for iowa, but good for american democracy? let us know @bsurveillance. ♪

tom: good morning, everyone. and little better take on oil than we saw in the last two hours. here is top headlines with vonnie quinn. vonnie: and air traffic control

center in washington made air over theiserable weekend. the faa is investigating. in south korea, shares of samsung fell to a 10-month low. last week the company unveiled challengeartphones to the iphone. it will not be enough to reverse five-quarter slump. theear-old david denson is first openly gay player affiliated with the major leagues. he is at a low level team with a milwaukee brewers system. believe these still make headlines? tom: that is right where i was going. brendan: i was amazed that in all of baseball -- i was shocked. by that.ned

and also that there is not a in theopenly gay player major leagues. that is amazing. vonnie: it is a big deal in so many sports in the last year. tom: lets rip up the script right now. we can do that with david kotok. particularly on oil currencies, they implode, as we saw this morning. the brazilian real is not open yet. the mexican peso is weaker, russian ruble weaker. now we are going to rip up the script. twice you set on your fanny in sarasota, florida, for a long time with this outage this weekend. david: the flight patterns changed. it took them 3.5 hours to get from sarasota to laguardia. had to go far west. colorado?ad to go to david: just about. 500 flights canceled.

it was a mess. tom: let's go to oil currencies. my experience is that everything is rationalized until it is not. my other experiences that you never see it coming. do you know where the inflection points are? david: you never see an inflection point until it hits you. but you do see the setup for greater volatility. when you think currencies, suppress the interest rates on all those currencies to zero, you remove the function of interest rates to arbitrage difference of opinions in the financial markets. we now not only have zero, we have a negative block. tom: sam fisher would stay -- sam fisher would say that there on thet of distinction balance sheet from 1988, but they defend those down to the currencies. is there a point of more rationalization on the balance sheet? david: there is a port on

every balance sheet, but you cannot say that you cannot see it coming before it hits you. there is no way to forecast abrupt currency changes. the whole idea is to forecast increasing volatility, take hedge positions, dampen your risk profile, and wait for the bomb to drop. brendan: when we look at what happened after the bomb dropped last week, and all of these curencies, was that a reaction to the devaluation of the currency, or what that evaluation said about what the chinese authority thought about the chinese economy? of -- it is a reaction that reflects what they think, but the third piece is the trade flow. the biggest trading relationship is japan/china. what is japan now going to do? my view, they will have more qe, they will do it again. they are down to zero for more years. tom: bring up the mess in chart,

if you -- bring up the mexican chart, if you would. it is a gorgeous chart, and now it is extended. ourdoes that knock on southern border and the adjacency of puerto rico? is in a wholerico different place than mexico. it is part of the united states, uses the u.s. dollar. tom: donald trump mentioned in this weekend, that everybody has to move to mexico. david: the fact of the matter is, we are having a massive global adjustment process. the dollar is the emerging winner, so when you look at mexico or you look at the yen or you look at the euro, or you look at other currencies around the world, one thing is consistent. u.s. dollar -- stronger, stronger, stronger. and the u.k. right behind it. that is the pattern of the

world. tom: adam parker is with us in stanley hour, morgan troubled. brendan: the fragile five to the troubled 10. looking around the world, what country are you most worried about right now? is it malaysia? about asianworried growth. germany and -- they are better markets, better governments. our bias is a strong dollar pattern for strategic periods of time. brendan: it seems like one theme in talking to you is the inability of any country anywhere to do anything about monetary policy. -- do anything but monetary policy. david: because fiscal is broken.

it is broken in greece, france, europe, and here. there is no fiscal policy. zero. tom: but your etf strategy can get you adjusted because it we are seeing emerging markets off of oil. on a stronge still dollar. think about the u.s. market. suppose the u.s. market delivers in earnings in the s&p 500 index, and those dollars have buying power that is 10% better than a year ago worldwide . that is a positive thing. tom: can you buy apple computer this morning? not i bank -- i buy etf's. computeryou buy apple etf's? david: sure.

tom: how about our forex report this morning as we talk up doubt -- as we talk about the malaysian ringgit. stay with us, another hour of "bloomberg surveillance." ♪

announcer: this is "bloomberg surveillance." oil continues its decline

as battled oil currencies move weaker. to will vladimir putin react the collapse of oil? abenomics is not working. we will go to tokyo to address their interesting inflation. adam parker joins us from morgan stanley. will someone show a little low for this bull market? this is "bloomberg surveillance," live from our world headquarters in new york. it is monday, august 17. i am tom keene, with vonnie quinn and brendan greeley. i guess we could talk about oil as it continues to drive south. brendan: we continue to learn new things about what drives the price of oil. this dynamic will not stop. right down to our top headlines with vonnie quinn. vonnie: japan's economy suddenly shifts into rivers, raising questions about what the government can do to rev it up again. fell at a rate of

1.6%. that ends two quarters of growth. exports slumped and spending levels of consumers and businesses fell. zo abe is pledging to revive the world's third-biggest economy. angela made her first public comments is euro finance ministers backed a bailout for greece. vote wednesdays on the $96 billion bailout. an unusual development in the aftermath of an airline tragedy. the wreckage of the turboprop plane was spotted today on indonesian mountainside. he was carrying 54 people. as well as nearly half $1 million in cash. it is unknown if anyone survived . the money was for poor families

in an eastern province. after weeks of one-liners, donald trump gets specific about how he would handle immigration as president. he said he would order the deportation of all undocumented immigrants and would deny their citizenship. he expanded his views on nbc. donald trump: we have to a whole new set of standards. doug: you are going -- >> you are going to deport children? donald trump: we have to keep the families together. they have to go. he stole the show over the weekend at the iowa state fair. a sensational performance at the pga championship. clayton day set a record, finishing 20 under par. he moves up to become the world's top rated offer.

rory mcilroy is gone from the top spot now. tom: interesting to see that as well. most of this hour, about alibaba . i have never seen this. the principles of the firm are going to join in the buyback of the share. jack ma and joseph tsai are going to spend their money to buy back shares. you do not really do that in america. i do not know what to say about that, other than it is a regulatory filing. in yuan.ted i do not want adam parker to talk about this. i do not want him to get in trouble with morgan stanley. it is a chinese thing. brendan: i am trying to figure out what that has to do with their less than stellar earnings report last week. tom: let's do a data check as we ponder this. euro, 1.1085.

we need to go to tokyo, where we have very interesting economic dynamics. we have good nominal gdp, some inflation which brings down to negative real inflation. willie pesek joins us from tokyo. is abenomics working? willie: from where i sit, no, it is not. the yen is down 35% in 2.5 years. abenomics had planned and promised that deflation would be ending, wages would be rising, the economy would be growing at a reasonably good clip. none of that is happening. meeting the inflation we are getting is the bad kind of inflation, the imported inflation. wages are not rising. toyota made $18 billion last wagesnd wage -- raised $33 a month. am: the money question -- is second bout of significant inflation in the yen -- is tokyo

steeled for a 1.30 or ¥1.40? willie: i certainly hope not. it puts the pressure on the bank of japan to do more. corroded-to me is nomics. in some way we have never seen this before, where the government has abdicated its responsibilities on the central bank. when you see the chinese evaluation from last week, the yen will be rising on the currency, and the boj should be doing more. brendan: what is preventing any kind of structural adjustment with abenomics? willie: from the fiscal side, the world's biggest debt is one problem. and japan raised sales taxes last year, so you could argue fiscal policy is moving in reverse. the other problem is that abe

has been distracted. i think the economy right now, we are suffering the fallout from that. a lot distraction and focus on different things then he was elected for. we are still waiting for him to get to the economy. the numbers today mean that the clock is ticking. tom: willie pesek, thank you so much, from our news bureau in tokyo. in new york, the lead story without question is a continued to climb in oil with new weakness in the mexican peso within the last 10 minutes. u.s.parker is the chief equity strategist and is a class act. i love what you do here. you do something really rare. the first sentence of your research report, "our energy over rate is initiated at the beginning of the year and frankly it was a bad call." i admire that you do that. are you still advocating on energy stacks -- on energy stocks?

adam: we are. tom: you so samson energy do what we have been waiting for, which is clear the market. will that be a rapid process which means energy stocks recalibrate higher? adam: i think we have a potential hire move later this year. there are cyclical stocks that are down a lot. was of last year, brent 100. people were bullish on energy. now it is 47 or 48 or whatever it is, and people are bearish. it is usually a good set up to get long. tom: energy experts, are these -- are they seeing these countries act rationally? the ashey did not cut dramatically as one holds. there was more non-us supply than i thought, not just the

iran news, but saudi being and record production. there has been a little bit weaker demand from china, big auto decline there. and lastly, you had a little more u.s. supply with all these guys getting access to more capital. that probably delayed it, but to me the sentiment is horribly negative, and cyclical stocks were down a lot. i think it is a good portfolio, underweight on industrials and materials, overweight on consumers. when you run a balanced or folio, -- a balanced portfolio -- brendan: what about the price of oil says this is cyclical and nonstructural. everything that we learn about oil is that these are fundamental structural changes. adam: typically cyclical businesses have a lot of capital spending and a lot of big change to the profit profile of

the business. it is one of the only sectors in the market were high capital spending gets rewarded as opposed to punished. you have to argue it is not going to be a -- i think the question is how long a down cycle is. the mandate has not been that bad this year. last fall andion other elements have exacerbated it. will we see -- the s&p is interesting, is around 7.5% energy, so it is not one of the more important sectors. tech and financial are more important. look -- thee analysts got too negative, and there has been an up in refiners services.

our experts think it will be sometime in september or october, but then you want to own the np's. tom: oil is cheaper than it was at $80 a barrel when people came by here and said we can begin to buy -- we can begin to "nibble." when you hear that word, run. point.ne quick what people sometimes say, stocks discounted oil now, it might mean that they are discounting at 60 or 70 a year now. tom: our twitter question of the day -- is mr. trump good for american democracy? we have had some interesting responses. ♪

tom: good morning, everyone. "bloomberg surveillance." here is brendan greeley. remember 14you principles, you are given an award. times" looked at the work environment at amazon. i'm going out on an editorial limb, and i find it terrifying. paul sweeney is with us. you run a tight ship on bloomberg intelligence. do would learn anything new about the way amazon is run and

the way silicon valley works? i know it is not a valley company. article,is an amazing and it paints a picture of an extraordinarily demanding workplace. there is an institutional level of high turnover, and you hear in the technology world, that one of the biggest problems they qualifiednding workers and engineers. once you get them, you want to retain them. is -- this related to farther down in silicon valley? is this an extraordinary tech company, or is this the environment out west? paul: they are aiming exceptional company. their capital stock is at an all-time high. from investors standpoint, whatever they are doing is working. but clearly it is a different

culture than what you see in technology companies, where they tried to be supportive and create an environment where they can attract but also retain the best talent. tom: what did you see in the article? you look at 40 amazons. what was distinctive within the article? paul: it is really part of the culture to not only attract people, which is very common. the highest performers are very common for silicon valley. but also to be able to manage those people out, to expect that a lot of them will leave so that you will be left with a very small percentage -- tom: is it a military equivalent? up or out? paul: it seems that way. there are a lot of and a goat for -- a lot of anecdotes from recruiters. vonnie: is he getting away with it because they are in seattle and not silicon valley?

paul: again, it is a very unique culture. i do not think you find that in very many other companies, certainly of that size. if you stick-back -- if you step back from the stock, you can see that whatever these folks are doing is working. brendan: we go to sao paulo after the break. good morning. this is "bloomberg surveillance ." ♪

down goes oil, then it came "surveillance," and it goes down again. 41.77. that is a wild statistic. now top headlines with vonnie quinn. vonnie: record-breaking temperatures are fanning the flames in western wildfires, and draining crews trying to put them out. california has 19 major fires.

one of them is sending smoke into san francisco area. fires in oregon and washington state are forcing people to flee their homes. an elderly idaho woman died when she fell trying to evacuate as a brush fire approached. a new report says at&t's involvement in government surveillance was deeper than first believed. "the new york times" says documents leaked i edward snowden described at&t as "highly collaborative" with the national security agency. and julian bond is being remembered as a giant of the civil rights movement. a longtime naacp chairman died saturday in florida af. after years as a radical student activist, -- he was 75 years old. tom: a little different approach may be that donald trump. i want to bring up our twitter question again. we usually do not do this, but we are doing it this morning.

i have done a scientific analysis. we have a record twitter response. i wonder why. is donald trump good for american democracy? thank you to all of you listening and watching worldwide @bsurveillance. is mr. trump good for american democracy? we thank you for your response. it was the great distortion of central-bank policy that drove rates to impossible lows there it it is still the great distortion. now with a higher yield challenge, with the fed raising rates, adam parker has to worry more about what corporate officers will do. they are a fine company, as everybody mentions. let's talk toothpaste. colgate's to the moon like disney, but less so with a with an 8% or-- 9% dividend growth. adam: our work shows that the sweet spot for dividends is at the 10-year or growing.

people think and believe that it will be perpetual. tom: do i need to pay for double-digit growth, or can i make money long-term rationally with high single-digit dividend rose? adam: high single-digit dividend growth would be a great outcome in the long-term. -- companies tend to be as per year in -- companies that have pay ratios that are too hi, there is the fear that they have to cut them. tom: colgate has gone from $.22 to $.38 dividend. that is called growth. yield, that10-year is 10.7%? adam: people are paying for a low growth dividend level. onare actually underweight

consumer staples because they are generally expensive and a lot of them are missing estimates. a lot of them have high exposure with the strong dollar. tom: verizon, four points of percent yield, killer, with a 3% growth. brendan: i think i am not allowed to talk about verizon. i may say something irresponsible. i want to ask about capital investment. what indicators should we be watching? adam: two things. one would be backlogs in the tech and industrial companies. backlog is a proxy for medium-term demand. machinery, semi conductors, broad-based economically sensitive businesses. books to bills are not above one in semi semi manufacturing. why would a company speculate and build the fact that --

unless they are getting signals from their clients in the medium-term and shorter-term. carl riccadonna at bloomberg intelligence has been banging the drum about basic capacity. if we are not at or close to capacity, there is no reason to spend capital. adam: that's right. to me that is further dividing this issue, where the economic data does not look good but profitability for these companies can remain elevated. i am confident that you will not see a big capital spending pick up until you see book to bills growth. vonnie: howard silverblatt send a note in last night talking about if you take out energy they are up 9% year over year. adam: the government data seems to include r&d and other spending issues. i look at the top 1500 u.s. equities, and capital spending is down in the dollar year over year.

you will see about 2% sales growth, 2% capital spending dollar growth. tom: link your call with ellen zentner's call, which is for a slower fed. what does that do to the profitability of the banks as they figure out what to do with their cash? adam: i think it is kind of mixed. we are overweight financials because we think the risk -- some of the big banks are growing fast. if you get the long income growing, our macro call -- you have slow growth, slow reflation from forming, and you have slow retrenchment from the fed. that is not bad for equities. tom: adam parker, we will talk about the bull market in a bit. , 30's that the tens yield, there were some interesting things last week. we turn to mark halperin in iowa. mark halperin looking at mr. trump, looking at governor bush,

looking at secretary clinton. how about a twitter question? this is a big response. thank you. is donald trump good for american democracy? mark halperin from iowa, next. ♪

tom: what you need to know on an august monday morning. , much much peso weaker. let's listen to our top headlines. vonnie: oil prices on a very

slippery slope and crude trading for just over $48 per barrel. west texas intermediate below $42. no end in site for the worldwide oil glut. now 114 after is those asked lotions of a chemical warehouse in china. 17 people are missing. the disaster is raising questions about how the country handles hazardous materials. uber is reportedly beefing up security to block hackers and prevent attacks on its office and workers. the "financial times" is a uber will quadruple it security staff to handle data security and vetting drivers. citigroup.e of

the justice department is looking at the bank's dealings. they suspect money laundering's at citigroup's maxim group -- mexico unit. "straight outta compton" smashes box office records. it had the biggest opening for an r-rated movie in august. it made nearly $54 million in north america. is a group whowa really transformed a moment in u.s. history. brendan: it really was. this formally a lot -- formula seems so simple and so hard to pull off for hollywood. and movie is well written really good. but it seems to be really, really hard to do. team.'s national soccer

are live in são paulo. our brazilians angry about corruption or are they scared that the real is that 3.48 this morning? >> i think they are angry about many things. there's the perception that corruption is just everywhere. brendan: i had heard there was hope that high-level people are being indicted. is that unprecedented? is that a big deal in brazil? >> that is a really big deal. theave started seeing former brazil president's name,, one of the most popular politicians. people are angry at him, as well. brendan: in the pictures we are seeing right now of the protest, there was one sign that read open road impeachment."

is that an actual possibility? could he be in danger? >> that possibility has come and gone. this time, the protest did mention it much more strongly. word as,is using the no, i will not be impeached. brendan: we are sitting here watching economic data, but there has been great reporting from são paulo about what has been going on in the real brazilian economy. are we seeing an implosion? what would you describe about what is actually going on? >> we had peak unemployment rise. you are seeing the biggest impact in confidence. businesses are not investing, people are not buying as much. people do not know what is going to happen next. tom: what is the linkage of the protest into foreign markets?

do they have an awareness that they are imploding as mexico implodes, as malaysia implodes? >> think the markets have been really sensitive to any political news out of the of more any sign instability. in the past two days, we have seen some improvement. wins in theome senate, but you still have the currency down 25% this year as the worst performing currency in the world. brendan: the business leaders and economists, are they worried more about china than brazil? >> china is a big worry. brazil was hit really hard lest devaluation. yuan china is the biggest trade partner with brazil. tom: very good. a research note on a likely shut down in washington. a little more credence this

morning. let me look at a gated check. equities, futures doing not much. oil, 41.87 a barrel. brendan: this is "bloomberg surveillance." i'm brendan greeley with vonnie quinn and tom keene. iowa.ate fair at from where we sit, there were only two stories on the trail. donald trump and bernie sanders. is that true in iowa? >> they are certainly big players. both of them were here on saturday and made big splashes. jeb bush is a story. scott walker will be at the fair today and he is a big story. hillary clinton was also here on saturday and is a big story. trump and sanders getting a lot of tension, deservedly so, but

there are other people in the race who will be players. brendan: who is doing the best job at this iowa game? you have been watching this for a long time through a lot of cycles. who does it the best? >> hillary clinton has got a very big lead over bernie sanders and martin o'malley. is thissurprising to me is an organization game. the number of people who vote on both sides will be fewer than 200,000. you reach out to regular caucus-goers on a regular basis and if you are donald trump or dr. ben carson, trying to bring in new people, bernie sanders, as well. finding people, identifying them as potential supporters, wemunicating with them, don't know who is doing particularly well, although trump is in that game and that is surprising some people because they thought he was just a splashy candidate.

vonnie: and you got a taste of that. you were in his helicopter and he was giving our rights to people at the iowa fair. and carson approval is that 12%. could you see why in the helicopter? >> i'm sorry, did i what? vonnie: did you see why his popularity is rising as you took that helicopter ride? >> the thing i picked up in the helicopter ride, it was a few kids and one of the mothers getting a ride overlooking the state fair. he is in a good mood. people are trying to appeal to the public, people who win over the voters, when they are in a good mood, that is to his benefit area i don't remember ever seeing him and that good a mood as when he was in the helicopter hovering over the state fair. he sees no reason to even consider backing down or slowing down.

he said he might spend one billion dollars on the race if that's what it takes to win. brendan: everybody likes toys. know about the actual policy that he dropped over the weekend. how finely tuned is his new immigration plan? history akoni and immigration plan, how finely tuned is that immigration plan, how finely tuned is that to the republican base? >> by the standards of a campaign document, it is relatively specific. there were some elements of the policy than need more fleshing out. some will not like it. it is somewhat specific and it is consistent with the way he has talked about immigration issues over the course of his campaign. tom: i saw your twitter photo of fox news's pull. what is the helper in perinription -- hel

prescription for governor bush? >> he is the least affected by trump's rise. he will be closer to $300 million at the end of the year. ash wants to be known someone who fights for veterans and is strong on national security. he wants to be known for his record in florida. he has to figure it how to voters and beo less about the son and brother of former bush presidents. tom: you have been too many iowa fares. will donald trump be a third-party candidate? >> it is too soon to say. i don't think so. i think he wants to be the republican nominee. why would right now, you think about anything else? brendan: we will continue the iowa coverage live from des

moines. thank you, mark, don't eat fried something. television.mberg "bloomberg surveillance." good morning. ♪

tom: good morning, everyone.

"bloomberg surveillance." don't forget the bloomberg commodity index. it is the smartest index. i am proud of the bloomberg commodity index. i am also proud of the next hour of "market makers." cory johnson. we brought him in from drought california. give me the desperation 60 miles from where you live. ory: these are the dog days of august. a rough time in california, but we have four years of drought. it is the worst drought ever known in california. this is the worst drought ever. to thisia has adapted really well. governor jerry brown has led a lot of interesting things,

whether it is putting firefighters to work a lot earlier than they have in, which has helped reduce the acreage of fires. we have seen a couple of fires get norton -- that north of napa recently, though. tom: i go into bakersfield once in a while to see family. cory: that is rough. tom: people growing carrots. cory: in the world of farming, a tremendousn change. 30% of farmers in california are now using drip irrigation which uses less water. vonnie: a lot of people are wondering, how do they work, what do they do, these balls? cory: they are putting a classic -- plastic, biodegradable ball in the reservoirs and let the

reservoirs keep the watery little bit longer. it is these kinds of things that are helping california deal with it. californians are consuming a lot less water. intentional choice people are making about tearing up their lawns and replacing them with rocks and cactuses. brendan: outside of the imperial valley, are we going to see this effect home prices in san francisco, in l.a.? this looks like a shotput. it is a lot heavier, but i'm very strong. it is not heavier. tom: house prices. there were changes in a lot of rules about building houses. now in california, there are a lot of concerns about another el nino, a very wet winter.

we might have some snow for a change. that it mightcern be a warm, but what winter and might not solve problems in the long run. tom: cory johnson, "market makers" in a bit. we have had a record response on a twitter question. it is not, could use shopko the one of these balls? is donald trump good for american democracy? ♪

good money morning, everyone. "bloomberg surveillance." vonnie: the faa wants to make traffic system never goes south again. it started with an outage at a washington area control center. normal airport operations resumed last night. shares of samsung beltway ten-month low and south korea. concerned the new phones will not be enough to reverse samsung's five quarter earnings slump. apple is building a five-your

project, could be a self driving car. "the guardian" says the company is building that car and is looking for self -- testing sites. google is already testing out self driving cars on mountain view streets. tom: very good. oil is weaker, west texas is moving down. the mexican peso is looking for new weakness. tick by tick. for much of wall street, labor day signals a new year. cherubs go back to school. with fond memories of his four-day summer vacation, mel needs to recalibrate and refocus. at morgan strategist stanley. i look at the s&p 500 ended signals this change of the weekend, go to cash, go to cash -- it has been wrong for years.

why is this the time i should go to cash? mel: i don't think it is. to me, the bottom-up numbers are too low. the economy is going to be a little bit better in the second half of the year. sentiment is awful. , i'mu want to romanticize a contrarian bowl, today is the day to do it. when you are missing is the rationalization. tom: all of it is broken, isn't it? mel: i think it is tough. what five or 10 year duration government bonds do you want to buy. vonnie: how long does that continue without gdp getting a bigger boost out of it? we have seen the cost cutting and the buybacks. mel: i think increasingly, it

will be about how long the ranch and can last -- the expansion can last. if it is for two more years, people will get concerned. five more years could be good. if i have a low amplitude. tom: low amplitude is a key thing. we are just going to keep going. going just going to keep and that is what we did with a lower amplitude. mel: i think this is the longest expansion ever. areas from see big the management team or to carry a ration -- deterioration in the credit metrics. allen's anaren i have written about -- allen's ventnor -- elen zentner and i have written a lot about this.

we have models that forecast stock level return. some of those models include technicals. the market level, it really is not a great predictor of overall market level performance. it turns around it is not that easy to forecast the whole market. think at the market level it is very important. we account for that in our forecast. vonnie: did the summer give you pause for thought? any dangers to your bull market thesis? adam: i don't want you to think i am impregnable to data. there are lots of things that make me concerned all the time. i still think i have this slow growth and slow reflation from the fed.

risk remainsggest a slowdown in the u.s. economy. that is a real risk if it happens. tom: where is institutional cash now? one of the rules is follow the money. what is the money doing? adam: i think people prefer other equity reasons to the u.s. they are picking around some of the emerging markets to see if it is a falling knife for an opportunity. -- or an opportunity. i don't think sentiment on u.s. equity is high at all. tom: one of our frequent guests is taking a substantial position in glencore in mining trying to get out in front. the assumption that if you are looking to commodities, you are looking at growth in emerging markets. last week come a we said, we are looking at the wrong growth engine. we should be focusing on the u.s. adam: the u.s. consumer is the

game in town and the world. jobs are improving, housing is improving. delinquencies are not growing, they are coming down in terms of mortgages and credit cards. obligations are low because of low interest rates. i don't think the consumer is in bad shape. when the savings rate goes up, that is an expander and lengthener of the cycle. tom: where are you on gold? do you have a cold call within mining -- gold cal within mining? adam: i don't. 1% of the s&p is metals and mining. most of the companies have not been standouts. tom: it is monday. [laughter] want some in my personal life, but i think it's going to be my crazy grandfather left it

in my shoebox rather than a good investment. tom: adam parker. brendan: adam parker is on team america. yeah! let's take a look at the brazilian real. i am -- there is a lot going on and the question we have not been able to answer quite yet is how significant are these protests? they are significant enough to be worry about. tom: there could be another weekend. is that assumed? brendan: i don't know. you watch the real and that gives you an indication of what is going on. tom: i think it is surreal that there was a protest and 47 eet away there were people hanging out on the beach. vonnie: that is brazil. my focus is going to be the home building confidence index. we are looking for it to rise again. it bounces around a little bit, but we have seen some strength

in housing. don't forget the empire manufacturing. tom: economic data today as we migrate toward september 17. the slide continues for oil. there is no other way to put it. oil went down this morning on a lack of news. that is always the worst outcome . it seems to be watched very closely. the hydrocarbon currencies, , it hasdollar-canada been pretty good. if we were to see candid i give way, that would be an ugly sign. some of the things to follow. i believe we had a twitter weston. it was not on oil or the boston red rocks. vonnie: it is about one of the candidates. tom: i can't remember his name. vonnie: it is donald trump. [laughter] vonnie: is he good for american democracy? some of the answers were too vitriolic to post.

with this agree answer. i hate to say he is good for democracy. i am fascinated about how honesty is about campaign finance. he called marco rubio the personal senator of mark zuckerberg. i feel i feel like just being straightforward about how campaigns are finance is good for america. vonnie: second dancer. we chose this answer. trump candidate, good. president, probably very bad. tom: that is nicely put. giving my opinion, but there are a lot of people who agree. think about how boring it would be if he had not done this. vonnie: i don't know. last answer. i admire him, but no! he wants to stop immigrants and a lot of innovation comes from

immigrants. brendan: that goes to the heart of what he says. a lot of the innovation we are getting in silicon valley area tom: thank you to adam parker. we continue on radio. "market makers" is next. good morning. ♪ . .

announcer: live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. it is monday, august

17. it is a monday in august. you had better be at work. i am olivia sterns, in for stephanie ruhle. cory johnson. corey: here for erik schatzker. we are 90 minutes from the open. olivia: throwing shade at the drought problem. to discuss this new innovation and growing business. that is a shade ball. jack my will take