saturday at jackson hole. it has been a decade since katrina. new orleans is simply not the same. good morning, everyone. this is "bloomberg surveillance." it is thursday. with me, vonnie quinn this morning. 10 years on. it is so hard to believe. people are so delighted with the city to have moved down there. tom: my one memory is the sugar down -- superdome, whatever it is called. vonnie: it is an amazing story of rebirth. tom: much more on the markets. we almost get back to a little bit of normality. vonnie: grief stricken colleagues of two murdered tv

station employees are back at work today. mourners turned out for a vigil to pay their respects. weren parker and ward during an on-air broadcast. >> what we know is that the number of people who have died incidentselated around this country dwarfs any deaths that have been through terrorism. we are willing to spend trillions of dollars to prevent terrorist activities, but we have not been willing, so far, to impose some common sense gun safety measures that could save some lives. vonnie: that was president obama at wpvi in philadelphia.

the suspect took his own life, but not before posting video of the murders on social media. the woman who was wounded is in stable condition this morning. chinese stocks of ended their five-they plunge. almost all the gains in the last 45 minutes of training. the shenzhen composite was up 3.5%. the shanghai composite gained 5%. the chinese government intervened to boost the stock market. to stabilizeted before they parade on september 3, commemorating the end of world war ii. the s&p 500 gained 4.5% yesterday. donald trump says he has plenty of enemies in the hedge fund crowd. he will not be any more popular with one of his proposals on

taxes that has to do with carried interest. much of the money is taxed at a lower capital gains rate. he was asked about carried interest. >> do you want to tax carried interest? >> i would take it out and i would let people that are making hundreds of millions of dollars face him tax. right now, they are paying very little tax and i think it is outrageous. vonnie: he said he wants to cut taxes for the middle class. fidelity express may drop bank of america as a lender for amex cards. and china has been known to produce fakes. watches, movies, designer purchases -- purses. there is now a fake goldman sachs.

it uses the same chinese character as the real goldman sachs. the legit goldman is looking into it. tom: unbelievable that this stuff still happens. there it is. is the bestation form of flattery, right? tom: there were probably be a sanford bernstein and china, as well. let's do a data check. futures up again big two days in a row. everything is acting in a normal fashion, even with commodities a bit of a left. the next screen. vix was still elevated, but much better. that is where we are. we will recalibrate on this in just a bit. two days of better than good dollar.

the german two-year shows a distortion that greets people at jackson hole. grading them, as well, is the american gdp. -- for your moving average four-year moving average of the gdp -- we're just not back to the good feeling we remember. this is that tension. vonnie: can we get back there? how long will it take? .om: it is a raging debate the backdrop for stanley fischer is that we are just under that good feeling we felt before the financial crisis. talk about good feeling. when in doubt, intervene within the hour. intervention in china. china is an artificial market. we begin with our very real nick

in beijing. link the events today between september 3 and it world war ii parade. can you make that linkage? is theink what it shows government it's back to its own normal. the government had intervened for -- in the market for a long time to keep it high. there was some concern in recent stock market was sliding and the government was not stepping in. there was a lot of confusion about whether they were just going to step out. this shows that they intend to keep a firm hand on the market. tom: where did the shares go? if you look at the market, it is fairly heavy weighted -- very heavily weighted to the state

owned companies. there are no shortage of state owned companies that control a lot of these assets. the government has a whole host of buyers it can rely on. tom: thank you so much. that all overlays what we have seen here. william dudley of the fed sends a gift. exhausted bears are: this er this -- are calm morning. first, michael regan of bloomberg news on what we have served in the trenches and overnight. i'm not a big believer in volume analysis. was there a lot of volume yesterday to make a slip? >> absolutely.

this is been the line on wall street for a long time. it is good for the exchanges. it is probably going to be good for the markets. tom: is the consensus all clear? and others were on twitter gaming the idea of a new leg down. what is the strategists' feeling? bullish.wls are still no one is really slashing the forecast yet. tom: there we were with nirvana at 17,000. down we go. there is that gap drop. technical ananias -- analysts make a big deal about it.

we have really barely come back from the carnage of that day. the gap is when you have a closing print. people thought we are bound to retest the low, but it happened so quickly. tom: somebody who is looked at retest is the chief financial officer. is it any easier to be a professor one year on? pasta can use last year syllabus. -- last year's syllabus. [laughter] tom: what we are talking about his artificial markets in china. when we say, who catches a bid coming where does that animal spirit come from? >> they do.

we have a large part of the investment group on vacation right now. the real test case will occur in early september when you start seeing folks coming back, right? this could not have occurred at a better time. with the traders on vacation, the positions were low. there were not long inventory positions sitting around. that is a double-edged sword. if equity couple of markets were at, what does that mean for banks? >> in terms of the risk positions, they would have been low. tom: this is the absolute key question. they were not as exposed as they were two years or 20 years ago. >> that's exactly right. we have seen this before when

you have an event in the summertime. suddenly, when the traders come back, that is when we find out where the market is going to be rebuilding. reacthe retail investors when they open up their savings from august? what will happen with the traders? is everyone fully engaged? i don't think they were fully engaged. >> the biggest question i have for you is what is your rating on fake goldman sachs? [laughter] >> oh my goodness. us andchael regan with he will continue with us into the 7:00 hour. coming up, bonnie will speak to jeffrey yu. are in new york city at our world headquarters. this is surveillance and."

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tom: the yen is important. it is one of the great quality test in the world. a weaker yen today. nowhere near where we need to be to say all clear on these markets. let's get to top headlines. vonnie: president obama will be in new orleans to celebrate the cities come back from katrina. the president plans to meet with the mayor and he is scheduled to speak in the lower ninth ward. windows 10 has been out for less than a month and it is being used by 70 million people on

their devices. microsoft has promised shareholders that it would reach 10 billion users in three years. one of the tube baby pandas born at the washington nationals do has died. said the second panda cub is strong, robust, and behaving normally. tom: that is very sad. to me, it is a big deal. this stuff matters. w luckily there were two. tom: pandas are big. vonnie: apparently, there is a 50% survival rate. tom: really? ok. vonnie: let's turn to currencies. emerging-market currencies under to geofferyording yu.

is stabilizing. what is the medium-term follow-up for emerging-market fx? >> peopling to make a determination whether they want to go back and forth on risk or take the cause as it is and realize the structural issues have not changed and get back into risk off mode. we still believe the fx is the weak link and we really have not seen anything for us to change our minds in the valuation or otherwise. we take the rally as it is an let's be aware that nothing has changed on the ground. mohamed el-erian wrote in "financial times." those who have invested in markets outside their comfort zone feel an urgency to retrench to their own markets. what does that mean for the u.s. dollar? >> that really depends

on how strong home bias is right now. , there has been the perception that the u.s. was going back to a growth economy. home bias is strong. in switzerland and japan, home bias is strong for all the wrong reasons. despite what is going to happen in september with the fed, if the u.s.' growth trajectory is back on track, there is every reason. tom: your research note every morning is arguably the most read on global wall street. about theritten quality of reserves nation to nation? should we believe what is on the balance sheet of russia? should we believe malaysia? reserves,, quality of

as to what they are actually invested in. this applies to a lot of middle eastern currencies, as well. -- their assets are stellar themselves, but it is not something you can liquefy quickly to support your own growth. secondly, it is all about transparency. the imf does a good job. they finally have china on board, as well. we are getting regular gold reserves updates, as well. you don't have an alternative source. i don't think we are there yet. vonnie: there is an idea that china is selling long treasuries. while that have an impact on currency markets? think it does make sense for them to be quite well-funded and have as much cash equivalents as possible to

support liquidity needs on shore . probably, this is not going to be happening on a sustained basis. hand, if there are large orders coming through, maybe people will be looking back at the u.s. to pick up some carry in the u.s. again coming yields have to be rising for the right reasons. you might want to be careful. vonnie: thank you so much for joining us. get started on "surveillance" for today with our twitter question. i we bumped off the bottom of the shanghai slide? you look at equities in china and you wonder where is the bottom?

from new york city, stay with us, "bloomberg surveillance." ♪

tom: another good day. two days in a row. i'm not willing to call bottom, maybe you are. let's move to a morning must-read. if a this was quite good out of "bloomberg foview." a few pundits and commentators have said this one "feels different."

that leaves us to reliable on subjective and unquantifiable emotions. i thought barry was really on to some of the silliness we have seen. what is the difference between analysis and seat-of-the-pants punditry we have all been drowning in? tell is difficult to whether they just dropped a drop of water or whether it affects it. tom: you don't know right away. >> you don't. the commentary of what the issues are, we can identify this. threat of rising rates. we have weak international markets. the issue is going to be the impact -- , what inyu sterner

would suggest the difference is is humility. guys like you have earned humility by enjoying being wrong . what is the worst call you have ever made on a bank. vonnie: tom! tom: i want to know. what is the worst call you've ever made on a bank. >> august 2007. i did the most elegant analysis -- [laughter] show that fixed income pullbacks were 22% on average and lasted on average seven months and i had history to look at and i said this is going to be very painful and will hurt the fixed income. i said, don't worry, we have one year of liquidity and that will make it through the it's acted like an of a downturn. boy, was i wrong. tom: this is the humility, vonnie. vonnie: but this is what the fed is facing. they don't know what to make of

the shanghai slide. >> let's face it, we are manipulating inequity market to improve confidence in china. we don't have any data on something like that. this is a new approach to macro economics. tom: we will talk about the banking industry in a bit. coming up, we go to jackson hole . it is dark out there. grizzly bears alerted. brendan greeley, fresh meat area michael mckee, as well. j hole! ♪

this is a great place to work. not because they have yoga meetings and a juice bar. because they're getting comcast business internet. comcast business offers convenient installation appointments that work around your schedule. and it takes- done. - about an hour. get reliable internet that's up to five times faster than dsl from the phone company. call 800-501-6000 to switch today. perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. tom: american oil finds a bit. $39 up to $40. let's get to our top headlines.

vonnie: a poll released just minutes ago may add to the speculation about vice president joe biden and a run for the white house. the survey shows from québec university. than hillaryer clinton does. it shows he has a higher favorability rating than clinton or bernie sanders. in iowa, clinton was asked about whether joe biden would run. >> he has to make what is a very difficult decision for himself and his family and he should have the space and the opportunity to decide what he wants to do. have goode polls did news for clinton. 45% would choose her to be the party's nominee. 22% would choose sanders. 18% would choose biden.

ended withy slump almost all gains in the last 45 minutes of trading. the shenzhen composite was up more than 3%. the shanghai composite gained more than 5%. the chinese government intervened to boost the stock market. they wanted to stabilize before a parade marking the end of world war ii on september 3. s&p 500 futures are up more than 1% today. there is a new king of the bond market. jeff gundlach has beaten his big-name peers. in the last month, his double line total return bond fund is returning 0.7%. hollywood is finally getting a look at just how many people watch streaming video on netflix. "the wall street journal" says nielsen has been wrapping up a program that measures viewing on

that likes and other online services. it is tracking on most 1000 shows. one of baseball's leaders in the arts of pitching nearly completes another masterpiece. oled theerlander fo talented angels for eight innings, but the no-hitter was broken up with a double at the start of the ninth inning. that is barely fair. it would have been his third no-hitter. tom: unbelievable. vonnie: wow. tom: absolutely superb. baseball getting into the most interesting time of year. it is an interesting time for economists. they are in jackson hole, wyoming. michael mckee, brendan greeley are there. they are in the early morning mist. brendan greeley has run into hawkish and dovish grizzly bears. brendan: all we have run into is purple mountain pitch blackness.

all i can show you is that i am in fact wearing cowboy boots. that is the best proof i can offer of being in jackson hole. of course, events and that being more important than plans. the events are the volatility. yesterday, mike talked to esther george, the president of the kansas city fed, on the bloomberg fed spectrometer. she is assessed as a plus one. , events are more important than plans. it ended up being about wall street. michael: they will talk about the inflation inside the room. outside the room, they are talking about wall street and the question of whether or not the fed is on track to raise rates on september 17. bill dudley suggested volatility might delay a rate increase.

esther georges not buying it. esther: we should expect volatility from time to time. we are in a period of some uncertainty, questions about china, questions about global growth. i think we should expect some volatility. what it means for monetary policy is not yet clear. it is a complication. it is something we watch. i'm not ready to say it has some long-term effect. michael: of course, they still have three weeks until they meet . there will be a lot of data between now and then and a lot can change. she is not ready to make a decision. esther: and that is the problem -- brendan: and that is the problem with being data dependent. we don't really know which is going to be the most important data. we have gdp revisions out today. it is one more thing to look at.

when she was a voting member of the fed, she did vote against the third round of qe. you asked her about it and she pointed out that qe is designed to create asset inflation and it worked almost too well. esther: i always had the sense from the various iterations of qe that we undertook, which were designed to support asset values, to boost asset values, that this could be a consequence . this could be one of the costs. brendan: obviously, qe was a blunt instrument. monetary policy is a blunt instrument. when you hear from the more hawkish members of the fed, what you get is that this is bad monetary policy. but monetary policy is not in a vacuum. if it is the only thing you can do, then you need a blunt instrument like qe or continued

easing. michael: they have made it clear that they want to get out of it and it is a western of timing and if i can. they say, if we delay because of wall street, it looks like we are making policy for wall street and not the economy. brendan: there is this dance. when we talk about the markets and the fed, lisa abramowicz describes the market as a spoiled six-year-old child and when the fed gives the markets a cookie, it has to make sure that the market appreciates it properly. doings the dance we are right now. the markets are throwing a tantrum. the question we are asking is how does the adult handle it? tom: coming up today from wyoming, we will speak to various and sundry french presidents -- fed presidents. also, an extended conversation with the central bank had for india. stay with us worldwide.

"bloomberg surveillance." good morning. ♪

tom: good morning, everyone. let's go into new functionality on the bloomberg terminal. the green line is the fed probability of when they will

raise rates. the yellow line is 60 days ago. this is a lower gas of where interest rates will be out two years and three years. at the same time, a greater likelihood of that september or october or december rate increase. right now, we need a single best chart. vonnie: 10 years since hurricane katrina, the costliest natural disaster in u.s. history. new orleans has rebounded, as tourists and tax collections reach pre-storm levels. venture capital funds are lining up, startups are outpacing those for the u.s. about 471 peree 1000 adults.

david joins us from new orleans in the ninth ward outside a new community center where president obama will speak today. your impressions so far of the city. >> i have been back here a couple of times since hurricane katrina and each time it seems like more and more progress has been made. we visited a buyer taking cue bader where a lot of companies are starting out. this is something the local and state government is pushing for. wase was tourism, there petrochemical's, and transportation along the mississippi river and education. they are trying to refurbish that three-legged stool. vonnie: tell us a little bit more about some of the funds

that are being put to use. venture capitalists are rushing to new orleans. >> it is, but everybody says you still don't have a very's strong local venture capital base. they have to be on the plane a lot going to get funding. there is interest in what is happening, but at a local level, there is not the funding you might like. you are seeing funding coming through the federal and a government and through as well.ns, this is a place that has always had favorable taxes and gives -- incentives and for research and design. tom: we have our stereotypes of louisiana, i think of "true detective" season one. have the stereotypes that were not so elegant been broken? i am glad to hear you are also a fan of the first season of "true detective." very hard. working

not the second. i'm with you. the city and the state are working hard to push the stereotypes away. there is a great deal of after the hurricane, but they are trying to do things in a much more open and transparent fashion. they are pushing for new orleans to be known as the new new orleans. somewhere where biotechnology and digital technology are the focus. vonnie: thank you so much for that. let's take a look at some photos making news. we chose three. friends and fellow journalists are paying tribute to alison parker and adam ward. allison's boyfriend posted touching photos of the two of them. tom: just difficult. there is nothing that can be set. vonnie: spectacularly surprising and tragic. trending on social media, we stand with wdbj.

it is different newsrooms holding up signs showing their solidarity with the news crew which continued to report on the tragedy that happened to their own anchors. our hearts go out to them. spain nearered in valencia to participate in the 70th annual tomatina festival. tomatoes were unloaded. the streets were packed with throwing tomatoes for an hour. it all goes back to 1945? vonnie: it is amazing what pleasure it can give you to throw food, whether it because the highs or -- be custard pies or tomatoes. tom: 1945? that it doesing

not go back to medieval times. vonnie: president obama was not the tallest one in the room. president obama honor the 2015 wnba champions. the team won its third title last year. you wonder what a president does with all the sports memorabilia he gets. tom: where does all of this stuff go? vonnie: he is not allowed to sell it on ebay. tom: there it is. vonnie: what height are you, anyway? 6'5".oday, i am tomorrow, i am maybe 6'4". let's get back to the markets. have we bump stop the bottom of the shanghai slide? , we will, as well speak on american banking and finance.

the february payday. if we are still around in february. stay with us. "bloomberg surveillance." ♪

tom: we have had requests to get him in your. he is an attorney who bills by the syllable. we will talk to him about the dreaded energy space. our top headlines with vonnie quinn. vonnie: thanks, tom. in china, authorities have arrested two dozen people in a deadly warehouse explosion. 139 people were killed in the explosion in tianjin. 11 officials are accused of neglect of duty and abuse of power. walmart will stop selling military guns because demand has dropped. the world's largest retailer plans to replace those weapons with other types of rifles. walmart says it is a business decision. the chinese billionaire is adding triathlons to his growing

efforts. the company organizes ironman triathlon around the world. tom: have you ever done this? vonnie: an ironman triathlon, no. it is on my bucket list. tom: it is on my bucket list, too. the bucket sitting next to the chair with a bottle and it. vonnie: you meant not watch one, be in one? tom: thank you. to $40ut from $4 billion billion. that is from the worst of 2008 to the present and to the future prosperity. it is a new normal, a new bd ocher, and it -- mediocre, and a new great distortion. america is minting money. it is one part cost cutting and one part figuring out the new model. we need an update to get you ready for your new year, which

is at wednesday after labor day. worked a nine day work week for bernstein. he now works a three day work week. is the jpmorgan of this coming october different from the jpmorgan of october 2008? >> of course. tom: in the hallways. building to building? --you have seen jamie dimon the bank came out and it was one of the winners. it was a survivor. you have seen it in terms of taking market share. it is at the top of the table. you are also seeing the expense control and the change to a bottom line management. it has really turned around. jpmorgan is near its cost of capital. i don't want to say it is eating its cost of capital. goldman is above its cost of capital.

then you have a number of them that are struggling. tom: everybody wants to know what brad thinks about credit more aggressive securities analysis of bank of america and their governance issues? service by doing a being so vocal about governance issues? >> no, an equity analyst cannot be too vocal. tom: mike is doing the right thing. a vote for mike mayo. now let's go to brian moynihan. he has a whole different challenge then jamie dimon. >> yes, he does. he still has a powerful capital markets is missed. the issue is that he is not as being cost of capital. we are seeing a shift in the business models. fixed income is still in trouble. the trading businesses are not generating.

it is a business in transition. trade volumes are dropping. they are becoming liquid. risk isdel taking less appearing. we don't know how the model is going to make money. tom: what about retail? vonnie: that's where i was going to go. tom: when was the last time we saw anybody in a retail branch? vonnie: do you concentrate as much on the wall street banks or are there just different boutiques that you focus on. >> we talk about the universal

banks and where they are going, but think of the boutiques. in terms of the hedge fund world , they are not market makers yet. is it an equivalent balance to what was in banking? >> they don't have the obligation to be market makers. seeing is this a new business? bb&t, which at the is nibbling away at the businesses. is it going to be superregional? >> they are one of the winners. this is a name you need to watch going forward. tom: what is the cost cutting pressure.

many bodies are going to go out the door in the next year? >> the model that you have on retail, you turn to the 24 hour branches. it is ridiculous. tom: i don't do that. vonnie: i love the coin counters. >> yes. that model of personal retail. tom: it is done. >> except now we have covered the earth. come on, the cycle is digital. take a check at home, take a picture of it. >> there are still a group of people who use the bank branches. if you notice what you are seeing, you are seeing a wealth management sector that is tied to the bank branch. , whichake that branch could be digital, but can i turn clients who walk in the door,

turn them over to somebody else? tom: go back to the dean whitaker days. >> we tom: are going to try it again. tom:we are going to try it again. not worked five times, let's do it again. correct?s mike mayo should brian moynihan be chairman and ceo or is the case that he should not be, definitely? >> that is a bigger issue .egarding should anyone be ceo i believe in the british model. i like the fact that you don't have two. you don't have one person sitting in both. that is a personal decision. i think that would be the preferred corporate governance. i am on mayo's side. these are very large institutions and you need somebody to be looking over the ceo. tom: very quickly, will we see a lot of layoffs as we go toward

the end of the year? >> that is a function of what is going to happen in terms of what is going on in september. the volatility we are seeing now, is this going to close the window? tom: thank you so much. good morning, everyone. ♪

announcer: this is bloomberg "surveillance." tom: markets find a bid for now.

beijing buys blue chips. stanley fischer speaks saturday. many hawks and doves assemble. a decade since katrina. new orleans is not the same. good morning, this is bloomberg "surveillance," live from new york. thursday, august 27. i'm tom keene. vonnie, 10 years from katrina. david is there. vonnie: i cannot believe it is a decade. tom: a new city. we will get that later on "surveillance." top headlines with, markets. vonnie: the virginia television two employees were murdered observed a moment of silence. weren parker and adam ward

shot to death during a live broadcast. thousands turned out to pay respects. a woman day over interviewing was wounded. police say the attacker was a man who had worked at the station. president obama talked about the tragedy in philadelphia. president obama: the number of people who have died from gun related incidents around this fs and hewar deaths through terrorism. we are willing to spend trillions of dollars to prevent terrorist activities. we have not been willing so far some commonsense sense gun safety measures that could save some lives. vonnie: the suspect took his own life, not before posting the video of the murders on social media. the woman wounded is hospitalized in stable

condition. a poll indicates democrats might be better off with joe biden as their nominee instead of hillary clinton. the vicey shows president polling better against republican candidates. 83% of registered democrats the view joe biden as favorable compared to 76% for mrs. clinton and 54% for bernie sanders. reporters asked miss clinton whether she thinks joe biden will run. mrs. clinton: he has to make a difficult decision. spaceuld have the and opportunity to decide what he wants to do. vonnie: the survey did have good news for mrs. clinton, 45% would choose her to be the nominee, 22% would choose sanders. turns stocks snap their losing streak. the five-day plunge was the worst rout in 20 years.

all of today's gains came in the last hour of trading. shocks rose 3% on the shenzhen and 5% and shanghai. china's government intervened to tost stocks, they want stabilize before ceremonies marking 70 years since the end of world war ii. s&p futures pointing to gains at the open. the index gained 4% yesterday, the biggest one-day advance in four years. fidelity investments may replace american express as a credit card partner. bloomberg reports that may drop bank of america. fidelity would try to find new partners and better terms for one of the top-rated cash back credit cards in the u.s. china has been known for producing knockoffs, there's a fake wall street bank -- did goldman sachs leasing company in shenzhen. not far from hong kong, the company uses the same characters as goldman sachs. english font on its website is similar. it.notk is looking into

sure if i would put my money there. odd.it is you wonder what the ramifications are, how do they go after them? japan with abig in huge rebound in same-store sales in japan. tiffany's up 21%. they cut their forecast and there's a chair into struggling revenue. vonnie quinn will adjust tiffany's' future forecast with a bracelet. vonnie: thank you. the will you please explain tea bracelet? vonnie: i will tell you what it is, it comes in a blue box. vonnie: -- tom: two days in a row of better

than good. euro weaker, dollar stronger. not saying all clear. it is calmer. with robert profusek, global head of m&a at jen's date. -- at jones day. mike reagan joins us. when are you going to go away? mike: you keep sending the car to pick me up. helicopter.eillance mike: anything but jersey transit. tom: nine-day entered a chart -- intra-day chart. what is the level of your research, which is all clear. how many people are saying we clear --

profusek: big rips tend to occur in down drafts. yesterday was the third biggest gain of the current bull market. almost 4%. tom: back to 2009. mr. profusek: the two that were bigger, august 2011 and november 2011. we almost had a bear market. of all bounces, i look back on this and start to get the shakes. october 2008, 7% rip higher. a couple weeks after lehman. higher areof rips what make people nervous. vonnie: what is the comparison we should make, if any.

tuesday we started off higher. tiny bit lower. wednesday, we ended up with 4%. sentiment is the that drops on thursday, friday and monday was way exaggerated. tuesday we retested that low. what i wrote about yesterday, during the really bad time on tuesday, the etf flows showed people were loading into triple leveraged etf's. tom: yuko right to the heart of the matter. i do not like the flash crash comparison. i think it is mickey mouse. we have different leveraged .nstruments creating volatility did you observe that in your reporting. mr. profusek: if you look at the open monday, all sorts of etf's got unhinged from their net asset value. dumpings a lot of

of etf's where cash equities could not keep up. widespread's between what the inherent value of the etf's are. and a lot of screwy things. tom: we hope we don't see you tomorrow. we are thrilled to bring you robert profusek. i want to talk about the state of m&a in a minute. money. this is cheap we are at jackson hole. one big distortion. do you have a sense that we are getting beyond the new mediocre, beyond the great distortion, to some form of normality with the money that feel is your world? that fuels your world. mr. profusek: interest rates are a factor on pricing and multiples more than a fundamental factor. what is driving the last 18 months has been the deleveraging , overall deleveraging and the need to use your balance sheet to do something.

tom: what do you say to a ceo you are counseling. you are a professional, is there a frenzy of i have got to do this,me, too. mr. profusek: yes and no. it is hard to generalize. bigger is better, that is not as what is going on. using the balance sheet. i was on a call last night, someone got a letter from a well-known activist. the main thrust of it was not break up the company and buy back your stock. it wasn't easier balance sheet to buy some stocks. tom: we need to break some news. mr. profusek: i cannot do that. tom: never again, a trap door. getting -- you

is mr. profusek: it all energy companies? commodities are under pressure. the thing about energy, there is one side of it, coal. tom: the other as hydrocarbons. there's been so much capital in the hydrocarbon space. tom: we are going to get that later. mike regan, thank you to you and your equity team. ,ur twitter question of the day we need your opinion about china. stay with us, bloomberg "surveillance." ♪

, tiffany'sant things takes it on the chin. youto popular demand, thank for your e-mails. vonnie quinn, we insist that we show t bracelet video. someone said what is a t bracelet? they come in four sizes, six metals, that they are. stephanie ruhle's t bracelet. 5200 dollars.

the rating is only $525. economy has not taken over the job market yet. we get initial jobless claims, the nonfarm payrolls report. "the monthly bls employment surveys do not ask the right questions. 1995-2000 five the bls did surveys of contingent and alternative work arrangements. they showed that part-time share of the workforce declined from more than 32% to 30's percent in 2005. the bls has not done the survey since because it has not been able to get funding." the perfect gift to talk about the gig economy and whether he senses anything, robert precious

ofusek. it has been a difficult few years. person in position to see bankruptcies and people going out the door. is the geek economy the future or is this a myth? mr. profusek: in my business it is a factor that not a huge factor. we have contract attorneys. in professional services, at least on the legal side, is the amount of younger people you need to produce stuff is reducing by technology. tom: i would be rude if i did not have you respond to the businessweek cover, our lawyers getting dumber? a huge response. most of the young people are smarter than i am. tom: the kids are razor-sharp.

mr. profusek: they are different. the millennial factor, all sorts of things. what is really changing the legal business is technology. it used to be a lot of grinding. the grinding is gone. tom: robert profusek with john's day. coming up, mohamed el-erian at 11:00. ♪

the sweat of monday and tuesday, 1.99 on the 10 year. 2.16.nt moved to .p 17, dow futures up 1.47 let's get to our top headlines. will bepresident obama in new orleans today to celebrate the city's comeback from katrina. saturday will mark 10 years since the hurricane made

landfall in louisiana. the president plans to meet with the mayor and it's scheduled to speak in the lower ninth ward, a neighborhood still recovering. drivers who think an electric car cannot match a gas engine have not tried tesla's "insane mode." a special model of model s is the quickest sedan consumer reports has tested. he four-wheel-drive goes from zero to 60 in 3.5 seconds. one of the baby pandas at washington's national zoo has died. the mother gave birth saturday to two pandas. the second cup is behaving normally. thank goodness for that. tom: that's too bad. this just off twitter from a reliable source, oxford economics has pushed back there bank of england rate rise from early next year on the way to may 2016. that is one of the small tea leaves of change as the elite gather at jackson hole, wyoming.

michael mckee and brendan greeley are in the early morning there. surrounded by hawkish and dovish grizzly bears. brandon? there is a stuffed grizzly bear in the jackson hole office. it is very intimidating. what is not any clearer is what is going to happen when the fed today,nts gather discussing the possibility of leaving the zero bound in september. mike mckee is with me, he's our economics editor. esther george is well-known as a hawk and urging that we leave the zero bound. very interesting what she told mike about the path of liftoff. >> we had been at zero a long time. i think it is reasonable to expect that i give some volatility. i would like the opportunity to

how the economy response -- a more gradual path as opposed to more rapid. brendan: we've heard this before, we do not have enough data. so we do not know what is going to happen when we leave the zero ounds. mike: they are making it clear they are going to do it slowly. wall street pushing back, suggesting you are going to have to wait. volatility, it is inflation or lack thereof that is going to cause the fed to be on hold. esther george told me she's not worried about that. >> i'm not worried about deflation. you have a growing economy, you have a labor market that is doing well in terms of its own recovery.

along with how consumers are responding, those things suggest that deflation is not around the corner. watch for the jobs report september 4. that is going to be important to their decision-making. tom: thank you. really looking forward to that. some breaking news, we mentioned tiffany's earlier. rari is going to come public at some point in their present ceo will retire. in,jor hitter will step the man who saved fiat. vonnie: sergio marchionne is being considered to be chairman as chief executive officer after the ceo retires. the ceo ofchionne is fiat and will stay around.

you do an ipo.w robert pretty sick of jones day has seen every flavor of ipos. it is a small product, there's a balance. it helps to bring in a namebrand ceo. of course.k: one of the biggest issues, there is a lot of phenomenon going on but mergers and creations of ts, usually, they are very complicated, but the biggest issue is who is going to manage this? tom: who is going to run it day-to-day? mr. profusek: and is that guy going to have credibility. i want you to make clear the relationship, jones day has a relationship with one of america's most visible and troubled companies, american apparel. what is that? involvedsek: i'm not

directly. i think they are just trying to stay alive. tom: how do retail workouts happen? there is clothing to be bought. what is different about a retail bankruptcy versus another bankruptcy? mr. profusek: one of the things about retail, this could be something for the future in general, the so-called gray market is interesting. you go into a store, you look at their stocks, you look at where .heir footprint is by graymarket i mean hedge fund community who will land at higher rates and expect a rate of return. for your comments on retail and american apparel. did you see how mr. profusek dodged that? vonnie: he said he would finesse it. be dodged ins will

jackson hole. brendanmckee and greeley are in jackson hole. stay with us. ♪

tom: good morning, everyone. nymex gets a bid. 40 is way away from 80. robert profusek of john's day energy m&a. here's vonnie quinn. since: china's worst rout

1996 is over. the five-day slump ended with almost all of the gains in the last 45 minutes of trading. the shenzhen added more than 3%, the shanghai composite gained 5%. china's government intervened .oday to boost stocks officials want it to stabilize before ceremonies a week from now to mark the end of world war ii. s&p 500 futures pointing higher, the index gained 4% yesterday. the biggest one-day event in four years. donald trump says he has plenty of enemies in hedge funds. one of his proposals will not help that. trump said he would increase taxes on hedge fund managers income caught carried interest. he was asked about it on "with all due respect." >> you want to tax carried interest in the same way? mr. trump: i would take carried interest out and let people pay some tax. right now they are paying very little and it is outrageous.

vonnie: trump said he wants to cut taxes for the middle class. the bond markets have a new king, he has been in his big-name peers. , his total month return bond fund has returned .7%, almost all peers showed losses. hollywood getting a look at how many people watch streaming video on netflix. "the wall street journal" says nielsen is wrapping up a program that measures viewing on netflix and online services. the service is now tracking almost 1000 shows. in of baseball's leaders pitching nearly complete another masterpiece. detroit right-hander justin verlander full's the angels for eight innings in california. the no-hitter was broken up at the start of the ninth with a double that was barely fair. the tigers won. it would have been justin verlander's's third note peter -- no hitter. tom: quite a hit.

he knew that was a great pitch. to look at the bloomberg terminal, america is different. this is the four year moving average of our nation's economic .rowth, real gdp versus the nirvana precrisis, 2006. where we are now. 1999, the glow of the late 1990's. we are nowhere near this arc of prosperity. some of the tension as central bank leaders go to jackson hole. it is a different america. when you add lack of inflation you wonder where the animal spirits are. vonnie: it plays into the discussion about slack. they basically are transforming the discussion at jackson hole. tom: robert profusek with us at jones day. it's get out in front of

right now. nominal gdp or a lack thereof means mergers happen, right? mr. profusek: more mergers. if you do not have organic growth, you've got to grow. you can grow by buying and synergize in. tom: is there a risk of too much concentration? mr. profusek: the government has tightened things up. interesting things is the obama administration was pretty lax in the immediate aftermath of the financial crisis. it has gotten tougher to get things through in washington because there are so many horizontal transactions. yes, there is a risk. honestly from an antitrust standpoint, as a merger, it could be bad for consumers. tom: mark halperin and john heilemann interviewed mr. trump. i don't want to know your politics, but that means attorneys would want to support republican candidates making m&a, not just attorneys but

financiers would want to support republican candidates against the democratic regulatory tone. is mr. trump on appropriate republican candidate for the m&a titans of america? mr. profusek: personally i'm not sure what mr. trump is actually standing for. he wants to take carried interest away. mr. profusek: that is obviously going to get a little push back on the fundraising side of things, maybe. that is a story that has been around for a decade or so. is that really ordinary income, capital gains? as much as i hate to admit it, hillary clinton put out a white paper that had all sorts of interesting stuff for guys like me, including talking about shareholder activism. i've never heard a presidential candidate use those words. tom: you wonder where it will be a year from now. robert profuse act of jones day. r,2 daysheck, calme

in a row, futures up. oil our focused with bob profusek. $40.13 a barrel. vonnie: this is bloomberg "surveillance." the nation's deficit less than a third of what it was four years when the jackson hole symposium was talked of the potential of a ratings downgrade. we are at less than $.5 trillion . does the u.s. have budget leeway? what is the best way to manage that? aaron klein joins us, former to 10.net. currently director of financial regulatory reform initiatives at deep bipartisan policy -- the bipartisan policy center. we have a better budget deficit, why can't we spend more? >> congress has to decide how

much they want to inject into the economy and they have to manage revenue, the difference between that and the deficit. it is a political will question, not economic capacity. vonnie: why isn't the obama administration stressing that the deficit has improved and there is potentially fiscal benefits to that? mr. klein: it is hard to show the physical benefits when a real economic growth has failed to take off. the chart you were showing right before demonstrated that we are not at precrisis levels. whether a question of or not the crisis has fundamentally changed our capacity for economic growth. expertise in regulation. critics will say there is too much regulation or the wrong kind of regulation. how do you respond? this decline: -- mr. klein: the political dialogue is too much regulation or too little, not getting higher quality regulation, which

is what both sides ought to be for. tom: what would you hope for in the coming two or three years from dodd-frank and the other efforts to be sure we do not have a crisis as we had before? : dodd-frank has made progress. one of the key areas is you want more certainty and clarity. people are willing to obey the rules of the road, but you need to know what they are. that is one area where regulars are still putting the finishing touches and need to communicate to the market. the wild ride on wall street has been taxing for a lot of people this week. hopefully one of the good outcomes will be a little bit of clarity as to whether or not the regulations are working during periods of stress. vonnie: not sure the connection. i want to ask you about china and the devaluation of the yuan. it has been a long wish of the treasury of the current administration. when you were there with timothy

geithner, that china ease off of to the u.s. dollar, will this have been enough? not sure this will be enough to stimulate economic growth. you've seen currency manipulation and pegs become a sticking point in the transpacific partnership. china is not a part of that but it is a huge player in the background in terms of what is likely to go for it. i do not think this will alleviate political pressure and i'm not sure it will alleviate economic pressure. -- aaron klein of brookings. robert profusek with jones day. is there still a tone that washington that aaron klein was part of is out to get washington? mr. profusek: i think we have moved beyond it. about the pay ratio thing. you can debate whether or not

that is disclosure or social policy or whatever. to take five years to get that through, some would say that is because of guys like me pushing back. it has got to get done quicker. showed it your clients communicate better with the public to show they have a value add to american society? think most big companies are oriented in that direction. smaller companies, it is a question of allocation of resources, can you afford to tell your story in a generalized way. big companies do a lot through the chamber of commerce. they do other things. and the energy industry. they do things. arell honesty, when you trying to keep your head above water, you've got to prioritize. tom: our twitter question of the day, quite a global wall street

responds. i guess you could take it on a global basis. we look specifically at china. stay with us from new york city, bloomberg "surveillance." ♪

over the bahamas

and moved on a path towards texas. there was a damage along the way, but nothing like what was seen in louisiana. we were prepared but decidedly not, with all sorts of system failures. 10 years ago in new orleans. we've moved on to a better new orleans. a morning must read. vonnie: this is from the founder of bloomberg lp, michael bloomberg writing a piece about how children are leading new orleans' a morning must read. rebirth. "hurricane katrina forced the city and state to confront a broken system as they dealt with other calamities. dismissedschool board teachers and principals that many veterans returned and helped mentor new hires. orleans.ns us from new

he's in the mind toward, where president obama will be speaking later on. this points out how innovative the ideas were. there was nothing to lose. the whole school district was dissolved. i'm standing across from a charter school. there is no other city in america with so many charter schools. school buses, not emblazoned with a new orleans logo, each has a paper with a different charter school's name on it. that is what the city looks like. mentions, aloomberg lot of people saying that has been a good thing with a feeli g failing school district. innovatione us other

network. it is a thriving city, a lot of that from grants and aid. david: $71 billion in federal funding since katrina has been put to mostly good use. the president will be speaking in the building behind me and with community leaders, people who have come back. i mentioned the schools were in poor shape. there were a host of societal problems in the city. crime was a very high. it is higher than most people would like. a lot of innovation has happened of combining with foundations and corporations to find ways to move forward. of: will the governor louisiana at be visible? will bobby jindal have his own set of politics? david: they did open a new hospital yesterday. it was closed for 10 years. governor jindal was at the

opening. he did take the opportunity to speak about the opening of the building and the rebirth of louisiana. thank you so much. from new orleans 10 years on. there as the president speaks at 5:00 p.m. tonight. stay with us, worldwide. ♪

tom: good morning, everyone. brendan greeley is in jackson hole. top headlines. vonnie: tropical storm churning across the atlantic on track to reach puerto rico today. erika bringing heavy rain to the island of antigua and bermuda. closed.and airports are the storm approached south florida by monday. they don't know if it will reach hurricane strength. walmart will no longer sell military style guns like the ar-15 because demand has stopped. walmart says it is a business decision, not a political one.

back on thetting development of smart phones and other devices. dozens of engineers involved with the amazon firestone were dismissed. work on tablets and other projects is being scaled back or stop. i thought that had been done a long time ago. for your e-mails, talking m&a with robert profusek . to come. what is a new normal with mergers and acquisitions. the search for nominal revenues and less about financial engineering. the next normal is one big roll up. robert profusek is with jones day. -schlumberger

deal. mr. profusek: strong guys are going to combine and get stronger. acquisitionsrs and have not been successful. in this case because it is for a different reason where we see a lot of great big successes. i think that the argument that they are unsuccessful is overdone. aol, time warner, you name it. what makes this different from prior periods is it is strategic. are combining in a sensible way, doing it at the right time. thingnot an animal spirit . how do we get better? one of the things that has driven the level of activity is redeployment. getting out of this and getting into that. look at what ge has done, big companieshese

are reconfiguring businesses and using the power of their balance sheet. tom: what is the flexibility of a balance sheet? do you expect we will see substantial reserve or goodwill write-downs? mr. profusek: there has to be. there are boatloads of money invested in fracking in the last five years. they got a pass in april on their reserve based lending structures, kind of like working capital financing for retailers. the fed sent an e-mail that said "in october when you reduce those. those are going to tighten and you will have to see a lot of those people get together. tom: are you trying to hire legal help? oil down, ready, set, merge and acquire. mr. profusek: absolutely. everybody is looking for help in

texas. no question. there are different components. the schlumberger deal is one thing. they did not exactly require a .eak sister that was a sensible strategic move. there are going to be a lot of people who are getting together to survive. there are going to be a lot of loan to own deals, a lot of issues which companies are sold through chapter 11 and all the rest. vonnie: a question mark over whether there will be more job losses. we've seen thousands already. mr. profusek: synergies is a kind term for job losses. tom: thank you. mr. profusek: it is part of it. you can also say it is making you more efficient. see a lot of to deals. you are going to see some job loss. vonnie: what about the pharmaceutical industry? to profusek: pharma is going continue to be on fire.

how can it be any harder than it has been? it is going to be. obamacare is a manifestation of the need to get more efficient. it is because health care has gone too expensive. respond to the field, particularly of liberals, that we could come towards too many combinations? andrewd have a time of mellon. such a merger friendly, including good mergers, it became too concentrated. thereofusek: periodically was standard oil at one point, 11% of the gdp of this country. tom: we are nowhere near that. mr. profusek: that is astonishing. one thing about capital and deployment and our system is when people get too big, think about airlines and everything else, someone starts to compete. unless they have a patent or something that keeps people out legally, if people can compete and raise prices, other people come. tom: do we have competition in

media and cable tv? the wireless phone companies, having 4 left aided by the government. mr. profusek: on this issue, what is it going to be in five years? when you think about it, is capable going to be a factor, is it all going to be wireless? there are so many alternatives. that is one of the fabulous things about technology. alternatives exist. vonnie: are we going to start seeing technology bankruptcies? mr. profusek: i heard a story the other day that said one million people walked into a bar in silicon valley, did not buy anything, and it ones -- it went public. one thing that has always been true is there is very little debt. the giants, apple and all those people, get debt because it makes a more efficient balance sheet. talking about smaller companies, not that much debt. tom: let's turn to china, some

answers to our twitter question. vonnie: here's the first answer, no, only when the chinese secretent ceases its mandate and let stocks trade freely. adamant yesterday on this. vonnie: even the fed does not know what is going on, there is no data to back up what is going on and shanghai. it is true. tom: i think of the china facebook people. the skepticism on how we count what is going on. vonnie: they take it into their own hands. third answer, impossible to tell, focus on opportunities and invest for the long run. a sobering note. tom: pretty straightforward. vonnie: some funny answers come a check them out if you have a twitter account. time for our agenda. keep an eye on the markets all week long.

occasion, special business week comes out online. there is the cover, i wonder what the cover is trying to say? i think bear markets are spreading. tom: all those bears are saying brendan greeley, walk down our road. there's a huge grizzly bear at the lodge at jackson hole. my agenda is the anniversary of katrina. 10 years on. it was appalling when it happened. it happened at the dawn of social media, the immediacy of it all. it has been a success story. thank you to walter isaacson, a native of new orleans, who has given us good perspective over the years. to go to brendan greeley, he has an agenda in jackson hole. to follow your

agenda, that was a transformative moment in america in a city that i have lived in. my agenda is talking to fed president's all day. tomorrow morning, we will have the st. louis fed. he given interview earlier this week where he said when we talk about a path to lift off and leaving zero downs, think about changing what banks are in their excess reserves at the fed. 5 trillion dollars in excess reserves right now. that may be a different path to tightening policy to get them to do something with that money. tom: an important conversation with raghuram rajan of india. brendan: the only central bank governor has to worry about the price of onions, important when you are talking about inflation in india. speaking to him tomorrow afternoon. india, largely unscathed. they do not sell things to china. very unique.

tom: thank you so much. look for coverage on bloomberg television and radio. bob profusek with jones day. we continue on radio. "market makers" is next on bloomberg television. good morning. ♪

erik: good morning.

can you believe it is already thursday? , live in newtzker york city. stephanie ruhle is off today. it is another better day for global financial markets. here is a picture of index futures. s&p futures up about three quarters of a percentage point pointshe dow closed 619 -- closed up 619 point yesterday. the dow is much higher than it used to be but in point terms this translates into the third best up day ever for the dow industrials. you have to go all the way back to 2008 to see something in excess of 619 points. financial markets in china, stocks ended the day in the green after authorities are said to have intervened to help stem the slide of selling. this is as much as anything for th