as oil struggles to find a bid. and warren buffett gets his kicks. buying fuel at 66. this is "bloomberg surveillance ," live from our world headquarters this monday, august 31. i'm tom keene. vonnie quinn. mr. buffett going downstream over the weekend. vonnie: is this a value play or an energy play? tom: i'll be honest, i almost lost track of phillips 66. it will be interesting to talk about. vonnie: as summer driving season comes to a close. right now on this monday, let's get straight to our top headlines. here's vonnie quinn. vonnie: stocks headed for the worst month in more than three years. msci global index down more than 6% in august, and chinese stocks continue the largest two-month selloff since 2008.

there is concern that government intervention to prop up the market will fail. meanwhile, fed vice chairman stanley fischer hinted that raising rates has not been ruled out. mohamed el-erian said investors should not count on the fed to ride to the rescue. market has been conditioned to view the central banks as their best friends, so whenever there is a hiccup, people look to the central bank. i do not think this time around the central bank is going to respond. the fed has reason to not do qe4. a new poll shows bernie sanders is now with hillary clinton and iowa. he has picked up 25 percentage points since january. he opened about his growing momentum on cnn.

bernie sanders: all over this country we are generating enormous enthusiasm. people do not understand why the middle class of this country is collapsing at the same time as almost all of the new income and wealth is going to the top 1%. another poll has donald trump in front at 23%, followed by ben carson, ted cruz, and scott walker. berkshire hathaway has made its most significant energy investment in two years. it has a $4.5 billion stake in the largest oil refiner in the u.s., phillips 66. phillips is up almost 8%. apple is at odds with its silicon valley neighbors over new technology. "the wall street journal" says a new apple operating system will make it easier to block ads on iphones and ipads, which could google,lishers like

generating $70 billion per year. and the doctors have baseball possibly most pricey lineup. the cubs were led to a 2-0 win. counting luxury tax, la's closer to becoming baseball's first team with a $300 million -- $300 million payroll. tom: just great. i would have to dovetail, with the red sox taking two out of three from the mets. the beleaguered teams in september can really get in the way. the cubs are having a great season. i think it is 322 years of underperformance. data do an outstanding check now. equities, bonds, currencies,

commodities. the markets are on the move, futures -20. dow futures -157. everything else is much churns. oil south. to the second screen. let's get right through this. .here is the dow, 16,600 let's go right to the bloomberg terminal. let's look at what stan fischer was talking about. pce.is core this is one of the 27 flavors of measuring inflation, and here is what stan fischer is pushing against. inflation down, and it is going to rise. s says influencing inflation is a recipe for disaster. a smart quote from dr. orphanides.

the silence you heard was the economic world coming to a dead stop as stanley fischer make comments on inflation. "i believe he said little, which is exactly what janet yellen wanted as she keeps her options open." michael mckee moves the fed story into a new month. joining us this morning, harold york. skip york will give us wisdom on your marginal gallon of gas throughout the hour. let me get to the fed first with michael mckee. i wanted of the backstory that was not reported. what was going on that was hidden in the stories? mike: the big raging battle between the kansas city royals and the st. louis cardinals was one topic of discussion, but other than that, is the fed going to do anything on september 17? that was the entire conference. whether or not you could generated, there was some mixed -- whether or not you could generate it, there was some

mixed opinion on that. tom: i read the second volume of scale ski -- i could not figure out where the news was with stanley fischer. mike: the first thing he talked about was inflation. he said there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further. he is looking at the month over month changes, the annualized change, .3 of a percent. that is very low. -- he went on to say we now await the august employment survey, due to be polished on september 4, friday. that is going to be a very -- due to be published on september 4, friday. that is going to be a very important number. we expect another month of good

growth, 220,000. here is the kicker. last four years, august job growth has come in under years it has come in as an under forecast seasonal adjustment problem. if they do not get a good number, it does not matter with public relations. tom: have you seen before this buffoonery of communication? are we over? it was a talk in jackson hole that there is too much communication. mike: that did come up. the more you tell people, the more they get confused and the more they wonder about what is going on. his famous book's fault lines. let's look at oil and how it falls in the policy.

skip, it could not go lower. we are down here at 40. in your world, a different world than and more's at citigroup, do you expect more from economists calling for lower oil prices? skip: where we think we both agree is that we are in a downdraft right now. the first half of the year, non-opec supply came in stronger than anybody expected. it will be tough to beat that and get that momentum back. tom: michael mckee with a great economics perspective, skip york on oil. our lower -- our lower oil are lower oil prices -- will spendink we some of that savings at the pump. the petroleum trade deficit is down $80 billion from where it was a year ago. tom: how much does this fold

into economic forecast? gdpmuch do they bring up because oil is cheap? mike: it depends on the time period on which you are talking. it has been pointed out the latest job in oil prices and gasoline prices comes at a time when we are going back to school shopping, an important time of year. tom: are we? are weak? folks, joining us tomorrow, rachel riley, taker of my money. year -- explain to us what she is trying to say. mike: she said the impact of the rising dollar is much bigger on other countries than the united states, not so much in the united states because traders largely invoiced in dollars, so it does not make a difference for us, the impact on growth in much smaller -- the impact on growth being much smaller.

does stan fischer and the assembled at jackson hole -- do they care about the market? mike: we interviewed five of them on bloomberg television. every single one of them said we are not going to pay attention to the markets. we cannot react to markets because they go up and down. tom: that is such baloney. if we got a retest of the lows, i'm sorry. mike: if it settles down, it is out of the picture. vonnie: they may not be looking at the equity markets as much as the credit markets, but they are completely looking at spreads and inflation and so forth. mike: whatever we are worried at the moment -- greece, whatever. tom: michael mckee, on television and radio. how about our twitter question for this morning. did fed vice chair stan fischer tip his hand? we need to know what you think.

we will look at the bloomberg articles and others on this. stay with us. worldwide, "bloomberg surveillance." ♪

equities, bonds, currencies, commodities. equities futures, -19. the story on the yen is simple -- real concerns about this inflation and renewed inflation in japan. it bears watching as we move into september. let's get the top headlines of bonnie. -- with funny quinn. vonnie: hundreds marched yesterday at a houston suburb. darren goforth was shot in the

back saturday night while putting gas in his police cruiser. he and the -- the suspect and the deputy had never met. have upheld suzuki's request to terminate an agreement with volkswagen. will sell its 20% stake in suzuki. in pro football, tom brady is due back in court today on the deflategate case. roger goodell is also expected to be at the hearing in new york . a judge has told and to settle the dubuque -- sell the dispute. if they cannot, the judge hopes to decide the matter by friday. those are the top headlines. tom: it has gone pretty much as i thought. i am not up to speed on the story other than, as i said many times, i was in boston the day the story wrote. there were three adverbs in the first two paragraphs. expert,uinn, football

on family court, very good. >> let's move it to a different family. and a company with a healthy balance sheet. focused management -- berkshire hathaway, a $4.5 billion stake in phillips 66, more than 10% of the outstanding shares. here with us is vincent piazza. is this an investment and a great value proposition? of low oil?tage what is prompting this right now? vincent: buffett is taking advantage of getting additional exposure to the other value chain. he also learns that she also owns burlington northern, -- he also owns burlington northern. knows very well he has owned psx in the past. it is gaining exposure to a different level of the energy value chain. also in that it with psx is a

master limited partnership which has exposure to pipelines, midstream assets, processing, and the like. so transportation, transportation by rail, by pipeline, exposure to the refining space. berkshire is taking advantage of the lower commodities. tom: what warren buffett loves is to buy history. an iconic image of oklahoma oil going back to 1917. tell us about the company his by? is it the -- tell us the company -- tell us about the company. vincent: roughly 2.2 million barrels of throughput capacity spread across the u.s. tom: does it link into railroad assets? vincent: it is the transportation of crude, the cutting, cracking of crude into gasoline. are there other

opportunities out there like this? skip: he is creating a virtual integrated oil company through his position. other other places you could do that? sure. what you want is a refiner that is exposed to the coast for export purposes. that is one thing phillips 66 has done well. tom: so they are selling oil like you put in your engine abroad. they are not selling a barrel of oil abroad, right? aip: they are not selling barrel of crude oil, but they are running it through a refinery. tom: i am amazed at the refiners. they have not gone down in price. they have done way better than exxon. vincent: it is the lower-cost input into their "manufacturing" process. they crack the crude into gasoline and distillates.

they sell it here domestically or imported from overseas as well -- or imported overseas as well. when spreads narrow, when ti brent narrows, and when crack spreads narrow as well. vonnie: how much, though? 200.ems like i have to buy vincent: wti and brent, and also ti, and the crack spreads for individual products. tom: bring the chart back, if you would. skip york, i was thunderstruck how phillips 66 looks like jpmorgan's chart. why is that? skip: when you have that crude oil export ban in place, you have locked in a six dollar a barrel margin. tom: this is critical. refiners do not care with the price of oil is. skip: gasoline and distillates

are a global commodity. wti is a crude input for the u.s. tom: are they mincing money right now? vincent: they are doing very well. vonnie: talk about the independents. have two have to things. one, you have to sit on top of the oil refinery, or you have that ability to look beyond the u.s. markets. tom: this is what monday is about. i learned a lot. and do we have to 66?""route ♪ get your kicks on route 66 i am told by the control room do not sing. you think? must-read, very

important. china, equity markets, soft, their monday and into tuesday. stay with us. "bloomberg surveillance." ♪

tom: while you were sleeping, shenzhen, one of the two major indices over there, down 3%. front and center, another 6% down, breaks them through two new weakness. that bears watching into this jobs week, the first week of september, i should say. let's get to the morning must-read. that must come from vonnie quinn. read --my morning rest

my morning must-read is from "the financial times ." vonnie: it is an interesting take. it is not the economy itself, not the market selloff, it is the fact that the banks have -- tom: i did this chart the other day. they have high inflation-adjusted interest rates. the financial differential of all this turmoil out there is they have high real rates. they are dropped in the ocean. they are not the market moving events. the other thing that is interesting is the story about how china is not -- tom: i want to dovetail this idea into warren buffett and

phillips 66. should we fear the capital outflows from china buying ?merican hydrocarbons this is part of our history, isn't it? the government has been very reluctant to let chinese companies invest. tom: even on a minority basis? skip: even on a minority basis. they do have some stakes and they are exploring and they are learning how to do cracking and fracking, but there have been cnpc tried toen buy china cal. vonnie: we have learned a lot from them. skip: they are on a learning curve, whether fracking needle furred or the oil in canada. they are trying to use this technology and take it back to china. this forward where we are going, indonesia is an opec power.

oil affectedsian by china? cold they have more on the side than oil side. they are trying to sell into -- on the coal side than the oil side. the economy as a whole might be growing, but the energy intensity ones are growing slower. up, we will bring you highlights from our ,nterview with jackson hole and of course the janet yellen of india. stay with us.

tom: emerging markets, folks. here is india. the indian rupee ready to break through two new weakness. the larger number is a weaker rupee speak to malaysia.

dollar-rupee, 66.40 this morning to a let's get to top headlines vonnie quinn. stocks have not had a month like this since 2012. the msci index is down 6% since august. there is concern that government intervention to prop up the markets will fail. the fed vice chairman stanley fischer hinted that raising interest rates next month has not been ruled out despite the chinese market turmoil. mohamed el-erian said investors should not count on the fed to ride to the rescue. >> the market has been conditioned to view the central banks as their best friends, so whenever there is a hick up, people immediately look to the central bank. i do not think this time around the central bank is going to respond. the fed has reason not to do qe4. vonnie: president obama will

become the first president to visit the alaskan arctic during a three-day trip that begins today. he is expected call -- he is expected to call for aggressive action to fight climate change. senator -- a democratic senator will vote to support the agreement. rico's debt plan is being delayed as the island recovers after a tropical storm. rolled heavy rain on friday. puerto rico is facing a debt burden of $72 billion. rabbiteo streaming site tv will offer more than 400 channels on facebook for free. you will not get the most popular, first run tv shows, but you will be able to watch programs such as "the best of john stuart."

in tennis, the u.s. open begins today here in new york city. but former champion maria sharapova will not be playing. she has a leg injury. she was seated third -- she was seeded third in the open. tom: i thought "the new york fabulous this weekend. it is something in midtown manhattan. they are all there heard all a pulseople, they have of like 40 and they carry 47 tennis rackets. the whole industry. i thinklayed tennis when nixon was president. on to india. vonnie: it is the policy of the , andry, slower inflation

now it is the royal bank of industry -- the royal bank of india cutting interest rates. on slower global growth, tackling persistent slow inflation. >> there is a bankruptcy court which i think would be extremely important because if we can get a good bankruptcy court, we can start moving to stocks and bonds, which is necessary for the infrastructure to finance all the big things that the government plans. vonnie: joining us from mom by is harsha subramaniam. mbai isgina us from mou harsha subramaniam. fromhas india learn similar conundrums, too low-inflation and too low growth? harsha: india faces the problem of low growth, high inflation.

inflation has come down considerably in the last year, but you are still facing a where it believes it has not yet conquered inflation fully. here is the situation that the government finds itself in. on one hand you have the u.s. federal reserve deliberating whether they could be hiking rates. in india, it is believed that need to be lower in india because that is what is required to boost growth, yet the governors of the bank of india want to see the inflation suitably conquered before they move. 75 basis points have already been cut this here. tom: how much is this links to the policies of mr. modi? explained that calculus in india?

harsha: he is on a collision course with the modi government. the government of modi has been trying to contract -- to attract foreign investments, and low interest rates is an important medium of that. he believes that inflation is a problem in india, and it is not so much corporate interest rates going down. one solution to the government that has not been taken too kindly -- these are two opposing points of view between what modi and his ministers think and what governor roger and that's what governor rajan thinks on interest rates. years, the crisis

on the rupee depreciated to nearly 67. the macroeconomic indication on india has improved significantly. is helping prices the economy significantly, and you are seeing the currency wobbling. it is very much within the range where india is able to manage its numbers. tom: harsha subramaniam from mumbai this morning. a boosto give rajan ,his morning, and he teaches iconic there with financial economics. how about a single best chart on what matters to you. gasoline always comes down in september. maybe not. one gallon of gas, two dollars

50 cents. will that price be dropping ever lower soon? that is the subject of a single best chart. it is jobs week. not too early to talk about on a monday. it is "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance."

we welcome you, on economics, finance, and investment. right now let's do some geometry. the single best chart. we have the right guy to help out, skip york. can we get below $1.99 per gallon at a gallon of gas is the topic of our single best chart. four dollars a gallon, down for a couple of coffee -- down for a dollarsoffee, under two , in 2008, 2009. do you buy the idea about automatically gasoline goes down in september? skip: if oil prices stay flatter, then as the gasoline season rolls over, takes downward pressure on price, the question will be, will the u.s. refiner be able to export that gasoline barrel somewhere else in the world? that bites off part of that decline. "catthere is a pontiac in

on a hot tin roof" from 1958. vonnie quinn drives a car like that around. are we driving cars like that? skip: we have seen a rotation away from the small -- not necessarily the small hybrids, but rotating into the suvs. millennial's are coming into the markets. vonnie: what are they transporting in those suvs? tom: black t-shirts. uber i think they are all drivers on the weekends. i think we will probably stay about where we are. we think there will be more weakness coming in. tom: slip in on a monday. stays up all night watching the mtv. music awards on are we going to roll through that low?

skip: you have to remember, in the world where we see that decline, that was a world in which oil demand in the world 3.5 milliong barrels per day. we see oil demand growing. gasoline has been strong globally, so it is hard to imagine that we break through two 2008 levels. vonnie: when is it going to crude oil exports? skip: i like to tell clients 4.5 we already export million barrels of oil's per day. in house is going to vote september. the senate says it will not take it up until january but the momentum has returned for something to happen on the policy. vonnie: will it be a new administration? skip: that is hard to tell.

if you get into sort of after the first quarter, into march or april, then the presidential politics take over and you are looking at a new administration. tom: what is the mood in texas? is there gloom in the air? there is not gloom, but people in houston in particular are getting concerned about the fourth quarter. tom: balance sheet adjustments or what? the first quarter we reduced the positions we wanted to be in, so we released a lot of people in the field. if i have to cut costs now, it will be at the corporate center. tom: what are the engineers doing out of school? texas a&m, georgia tech. are there jobs out there? not so muchit is petroleum engineering, but the energy industry still has two stock young -- still has to stock young engineers.

when you think about -- if you think back five or six years ago, if you were coming out of a school with and promoting -- with a petroleum engineering or chemical engineering degree, you are buying into an international career. you do not have that now, and a lot of them would rather stay here. tom: do we have photos? vonnie: we have three, as usual. we are going to have a look at them now. at the university of texas, a bronze statue of confederate president jefferson davis was taken down near the iconic clock tower. the u.s. -- the student government voted to take it down since it symbolizes racism. the sons of confederate veterans stop the statue from being removed, but a judge ruled against the group. tom: i think of richmond,

virginia, in the heart of confederate history. and that boulevard in richmond is a statement -- i do not know what i think of this. vonnie: it seems to be the summer of taking down confederate -- tower at austin -- it is still there 55 years later. vonnie: let's move to a different state. president obama stated sunday that mount mckinley will be renamed. the president will be visiting alaska for the next three days to address the concerns of alaskan native tribes. and lawmakers are outraged calling it an overreach. i guess it is the precedent

of renaming other geographies and monuments and that. this is erik schatzker on top. photo --umber one top speaking of bloomberg anchors, metvery own brendan greeley a fan of bloomberg surveillance in jackson hole, wyoming. this is outside the jackson mercantile store. tom: brendan is wearing grizzly bear red. when you on a death when you are on a surveillance team, you wear red in the morning because it is a legitimate worry walking around. vonnie: i was wondering where brendan was this morning. it is obvious now. tom: i think he is hiking the woods or the tundra or something. there he is.

the twitterat question. it goes back to jackson hole, but forward into our jobs day coverage -- did fed vice chair fisher tipped his hand? with us, skip york. it is "bloomberg surveillance." ♪

tom: this was not supposed to happen. 6.40, 6.41. overonger chinese renminbi the last couple of days with further strength. they are managing the renminbi weaker. that does not happen. what a big surprise -- 6.38. let's get to our top headlines this morning. here is vonnie quinn. advocates for three jailed journalists are asking egypt for pardons. the court said they were guilty of "reporting false news." they can still appeal. egyptian law says the president cannot issue a partner unless the verdict is final. reached a deal with e pix.

earlier, netflix announced it had dropped epix. netflix wants to develop original movies rather than share films with others. and a runam overcame deficit in the first inning of the little league world series game. by the end of the third inning, the two teams -- it is too much. the victory gave japan its 10th championship. i cannot wait until those guys grow up. for those of you worldwide, it is magical, iconic in america. people,r three of those those young lads will go on to major league baseball. i never made a throw like that when i was 18 years old. bring it in. metal bats -- get rid of them. september is upon us.

it is time for big picture thinking such as where are we on oil. all the markets are moving as well. not a gallon of gasoline, but rather, where is america? the new cartel as compared to the old cartel, opec, or is our future just us against saudi arabia? skip york, vice president of integrated energy. let me begin with where we are in oil. backtake oil and adjusted five or six decades and we are all richer than we used to be, oil is dirt cheap. is it? skip: that is one of the ways to think about it. oil in current day dollars does not reflect its buying power, so when you look at oil and energy in general is cheaper than it was decades ago. tom: the decline that we have seen, the brutal tendency lower, looks a lot like 1986. what is the difference now with

a weaker or fractured opec versus 30 years ago? skip: you have the folks in the gulf states -- tom: is there one half? third, two is one thirds. you have seven or eight other opec members who do not have the funds, and they are just exposed to whatever the oil price is day to day. layoffs athave seen large companies already like exxon. we are going to see more. is it enough to move the needle this friday? skip: i don't think so. decline in at the the rig counts and the number of jobs associated with the rigs, we have 80,000 jobs lost this year, but we are adding 200 to 220 a month. tom: do the big oil companies lose confidence in reduced but

persistent investment just because of market turmoil? skip: if you are one of the big ones like and some mobile or a shell, you are saudi arabia, you are playing this for the long-term. their portfolio is not built on what can i do for the next six months. tom: where is the terminal value of oil, in your opinion? skip: we think that you have to got that you have got to get back up in an oil price environment. tom: it is monday. we need a number. skip: if you get to the middle of the next decade, you have to get back into the $90 range because the important thing that people are forgetting is we are producing 53 million barrels per day of non-opec production right now. half of that will disappear in the next 10 years and it will have to be replaced by something that is more expensive than what is disappearing. the barrels that are disappearing are fully depreciated barrels, running on operating costs. the replacement errol has to have -- the replacement barrel has to have operating costs.

are the replacement barrels right now? how much are they per barrel? the $80 to $85in range. tom: what does that mean for the markets and the american economy on this august monday gekko skip: the economy was kind of ok with $100 oil. it is partly because the u.s. was participating in that renaissance, so the u.s. oil was in some sense buying -- tom: we have got to get back to 60 before we get back to 90. skip: that's right. this is going to be a long flat one for the rest of the year. if we do not see the upward could be2016, we setting ourselves up for upside price volatility. tom: what did that mean for the oil industry in the last three weeks? skip: it has induced that level of uncertainty. there has always been risk in

the oil industry, but now they are having to manage a risk, the next terminal risk that they do not feel that they own. vonnie: not just the oil patch. when the banks decide, come october when there is existing debt and so forth, will a 25-basis point hike happen? skip: what matters on the reserve base lending is what price curve do they put against the reserves, and how many of those reserves still remain commercial at that lower price. i think it is on the margin. it is heading in the direction that eventually -- it is not just one rating, it will be the accumulation down the road. york, thank you so much. a terrific briefing on oil. let's look at the forex report. i mentioned the renminbi earlier.

sterling, down at the bottom, what a surprise last week. the ruble makes it back nicely to 67. a weaker ruble and weaker peso this morning. stay with us. another hour of "bloomberg surveillance."

announcer: this is "bloomberg surveillance." it is aer jackson hole,

data dependent fed. the data that matters for janet yellen and stan fischer is this friday's jobs report. china shares descend as oil struggles to find a bit. when in doubt, vladimir putin needs a better russian economy. this is "bloomberg surveillance ," live from new york. it is monday, august 31. i'm tom keene. with me, vonnie quinn. we get the jobs day on friday. vonnie: what are we going to do in other augusts when he returns to normal? normal ofpposedly what the fed will do on september 17, right? we are thrilled that you are with us on radio and television, world wide. let's get started with top headlines with vonnie quinn. vonnie: it was a month most investors would rather forget. this is the worst month for stocks in more than three years. one global index dropped 6%.

investors in china fear that the government's efforts to prop up stocks will not work. stanley fischer says an interest rate increase next month is not off the table. economist mohamed el-erian says investors should not count on the fed for help. >> the market has been conditioned to view the central banks as their best friends, so whenever there is a bit of a hit cup, people immediately look to bit of a hiccup, people immediately look to the central bank. he thinks the september decision could all come down to this friday's jobs report. iowa's democratic caucuses could be a horse race after all. bernie sanders has seven percentage points over longtime -- severance percentage points away from hillary clinton. sanders: all over this

country we are generating in norma's enthusiasm. people do not -- enormous enthusiasm. people do not understand why the middle class in this country at the same time that almost all income and wealth is going to the top 1%. vonnie: donald trump is leaving the republican field in iowa with 23%, followed by ben carson, ted cruz, and scott walker. warren buffett's company is making its most significant energy investment in two years. berkshire hathaway has a $4.5 billion stake in phillips 66, the nation's largest oil refiner. s&p's energy indexes down 18%. buffett turned 85 yesterday. apple is reportedly at odds with its silicon valley neighbors over new technology. "the wall street journal" says a new apple app will make it easier to block ads iphones and ipads per that could have google

and other companies that want to generate more ad revenue. for the second time in 10 days, all the money for the dodgers did not translate into hits. the doctors were no-hit in front of the fans. the cubs had a 2-0 win. talk about a slap in the face. no hitting a team in front of their fans. tom: i have never seen a no-hitter. i have never been. they seem more frequent than they used to be. i would point out that the dreaded boston red sox crushed the new york mets two games to one. i do not know why i bring that up. to myd sox are reverting childhood. they are that bad. let's have a good data check. equities, bonds, currencies, commodities.

the season is over for the red sox, not for the markets. crude, downex almost a dollar here. some will return this morning as well. as well on saturday, around 12:00 noon, the silence you heard was economic growth coming to a dead stop as stanley fischer made comments on inflation. michael mckee has returned from jackson hole. we move the fed story forward. joining us as well, carl riccadonna from bloomberg intelligence. india 10 years ago stole the show. take us back 10 years and move us to the fault lines that rajan raghurame it mike:

conference andhe said everybody out there, you are ignoring fault lines that are developing in the global economy, and we are going to have trouble ahead. he was not invited back again until this year. now he is the head of the reserve bank of india. brendan greeley sat down and talked with him about it. he said i still see some problems in the world today but it is no longer the responsibility of central banks. it would bean: better if we grew faster. i would also say that central banks have pretty much done what they could do. it is not a view that is universally held by central bankers, but in general across the world, central banks have what they are capable of. no others have to step up. interestingly enough, it does not apply to his bank that hehe pointed out

is the only one who is out there who has to lower inflation. tom: where all are the fault lines -- where are the fault lines? the tone has been set. the book is iconic. where are the fault lines? mike: you still have overvalued equity markets, and a lot hot money has flowed through the equity markets. a lot of that has been going out, causing start market -- stock market dislocations. tom: what did you learn from professor fisher? carl: there was a subtle shot president york fed said is bow, where he would not say it is less likely or more likely we would raise rates going into the september meeting, where dudley said it is less likely going into that interview.

it was a little bit of let's not react to the latest volatility. tom: let's bring the show to a total halt. why does this language, the semantics, matter? from more likely, less likely, to several, a few? carl: the fact that stanley fischer shows the same words as dudley and kind of rolled it back -- ruben,is is like robert problematic -- mike: he outlined the two parameters of what the fed is looking at. one is inflation. he said there is good reason to believe inflation will move higher as the forces holding down inflation dissipate further. therefore cast is inflation is still going to go higher. ir forecast is that

inflation is still going to go higher. everybody is looking at friday as the key to whether the fed moves. if we get a good number, the bets will all start going in the direction of a fed move. we have had lower than expected jobs mongers -- jobs numbers. the seasonal affected number could be a pr problem for them. carl: it is said that this will data because the employment survey period was before all the volatility in the market picked up. they want to see if the volatility continues and if sentiment starts to sour either at household level or -- mike: they will not have that data. if we are still seeing the markets gyrate, then they may hold off. if not, they all, to a person, told us out there that they will

not pay attention to the markets. carl: it is really trying to -- ,onnie: what do we need to see michael, or what did you infer from what stanley fischer is seeing? mike: the average in the last quarter years is 44,000, so if you came in at 180 -- they always get revised higher, but that will be a visual problem for the markets and for the fed if it comes in that low. they are thinking it is going to come in better than 200,000, but that is made a demarcation point for people to start to worry. carl: i think they like 200,000 or better, but i think that with 175,000 or better they are still in the clear. 150,000 or lower, they have a problem. mckee, whatever the jobs report is, how would the market react after what we are seeing the last four weeks? mike: if the jobs report is

strong, it will start pricing in a fed move and you will see bond yield move higher. sox will go lower. do anythingoes not on september 17, then we will see a big rally. people will start to worry again about the fed. backmichael mckee, from jackson hole. mike: they still have problems. the case against further delay. tom: this is such a geek show. i cannot believe it. stay with us, folks. worldwide, "bloomberg surveillance." ♪

tom: what has not moved? how about the 10 year yield. 2.16%. futures -18, dow futures -148. vonnie: china has ditched its mass share of buys. in the last two month, trying to prop up collapsing equity markets. current, -- no capitulation

of china stocks today. could it be that the china rout was due to some kind of malevolence? it is another day of clip flexing signals in china's market. officials last week were -- there was a feeling it was too expensive and ultimately they could not put a flow on the following markets. they have been forced back in because of the sharp fall in prices ahead of an important military parade this week in china. even though officials do not want to intervene, they are having to put a slow on the market. they have no option. vonnie: could it be back to the collapse that we have seen? enda: there is no sign of a slower chinese market yet. we have a visit to the u.s. for president xi in the weeks ahead,

so he may not want to go to the u.s. bringing a falling chinese stock market being blamed for instability around the world. they may find -- executivesiced four -- bring this over to your coverage on economics. if the chinese market falls through to new weakness, what will be the new ramifications on the chinese economy? ada: at the very least, it is dent on confidence at a time that chinese policymakers want to talk of whatever confidence there is in china's economy. we know that the pboc came off last week with across-the-board rate cuts that were designed to put a slow on falling stocks. some people argued that there is a disconnect between the falling

stock market and china's economy. tom: thank you so much. previousioned in the hour, the renminbi is stronger this morning as well, clearly pushing depreciation forces. how about a twitter question. we go back to the weekend and on to friday. did fed chair stanley fischer -- vice chair stanley fischer tip his hand? it is "bloomberg surveillance." ♪

of august,st day this is what you need to know. futures -17, dow futures -146. the rest of the market is churning. as usual, bill gross and jim glass are scheduled to be on bloomberg radio as the jobs coverage comes out friday at 8:30. right now to headlines with vonnie quinn. vonnie: the man accused of killing a sheriff's deputy in

texas will be arraigned today. honor darrenhed to goforth. notsuspect's motive is known. he and the deputy had never met. volkswagen and suzuki are going their separate ways. arbitrators are backing suzuki's request to end the alliance. in six years, there was not a single project to develop green technology. tom brady will miss practice today and will be at a new york court in what is expected to be the last gasp for both sides of deflategate. a judge says he will rule friday if they do not settle. the patriots' season starts 11 days from now. there is a big incentive for them to come to an agreement. tom: the clock is helping brady, right? , bute: you would think so

why they cannot come to some sort of settlement at this point is beyond me. tom: vladimir putin is working out this weekend. medvedev helping out as well. they are vacationing in sochi. as the russian economy tanks. moscow has been very quiet. we need a briefing. the chief emerging markets i remember when the ruble was at 70 last time, dollar-ruble panicked. why is there no panic this time? >> i think it is more gradual this time. 70 itime they got to collapsed. at one point it got to 85 and then came back again. there is less of a sense of panic. the economy is in a bad state. tom: vladimir putin has huge popularity. do you see his popularity

wavering? neil: we are just starting to see the signs -- there was a poll released two weeks ago. it is still by far and away the most popular of any of the major global leaders, but we are starting to see it may have peaked. it impactinguch is the economy, in the sense that people are leaving russia to find jobs elsewhere? neil: because the government has nationalist fever, it has not had much impact in terms of immigration. we have seen most of the educated western liberals kind of leaving. that has probably happened. the people that stayed at home, not much impact can bet we'll rages -- not much impact. but real wages are collapsing. russiau look at how how

dovetails, and frankly into international relations. is exchangey here rates matter per that should be the lesson for all central bankers, whether they are russian, u.s., european, or japanese. the move in the currency is very significant inflation. tom: is russia part of the g7 or the g-8? are they an emerging market, or are they a frontier economy? neil: it depends on how you define it. in terms of income standards -- they are an emerging market. in terms of clout on the global states, i would say none. every august we get vladimir putin saving tigers, fishing. vonnie: when do they swap roles again? how are they managing to keep the ruble low?

wife has the ruble completely collapsed? neil: a weaker ruble helps the government in a sense. thes not helping to repair -- tom: can you comment on the strengths of their banks echo i have been watching for when their banks finally blink. banks areway that the structured, the mid tier banks are the ones to watch. they will just get bailed out by one of the bigger banks. tom: when you look at emerging markets, august, what a month it has been. what will be your tone across all emerging markets? neil: if you go back three months ago, i would say that the consensus was optimistic. literally in the last four weeks, things have switched to

pessimistic. vonnie: how can real gdp be -3.7%, cpi be 15%, and yet there be this much unemployment? neil: bear in mind that the pain is not felt in unemployment, it has been the collapse in real wages. people are keeping their jobs, but there income is lower. what is the litmus paper for the global system. is it brazil, like so many others? mexico will tell us how quickly the u.s. is recovering. at 17.xico is there a further weaker peso that is at the tipping point? neil, thank you so much, with capital economics, on emerging markets. we have a lot going on. hillary clinton's support is plummeting.

these are the shock results of a bloomberg poll, two polls over the weekend. we will discuss it. stay with us. worldwide, "bloomberg surveillance." ♪

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but the best thing you can give your business is comcast business. comcast business. built for business. tom: what should you watch in september? here are bonds, equities, commodities. the australian dollar -- a -- 0.71..171

it would be a big deal. australia has iron or linked into china. that is what i am watching as we get into september. right now, our top headlines with vonnie quinn. goodbye and good riddance. this is the worst month of sales in three years to sales down 6% in the sound has not stopped in china. the government step to prop up stocks will not work in five chilean dollars erased in value shares this month worldwide. president will be the first sitting president to visit the alaskan arctic. he is there to step up the fight against climate change. he is giving close to veto support for the iran nuclear deal. willor murphy says he support the deal could he needs three more votes to avoid using his veto. the island recovers after a

tropical storm. areas rolled in with high rain friday. the governor was given a restructuring plan sunday, but now is given until september 8. he is looking for $72 billion. the electronics giant has out lost $44 billion in market value since april. demand for the new design of galaxy smartphones is weak. samsung shares down more than a percent this month. it is the longest losing streak and more than three decades. the u.s. open tennis championship begins today in new york city. maria share of hope of will not be playing. she has withdrawn from the tournament because of a leg injury. she was seated third. those hoping for a competitive finals will be a little disappointed. tom: andy murray and all the rest of them. vonnie: would you take the russians? tom: no, i usually don't.

i guess yes cap has all the coverage. let me go to the bloomberg terminal and help you get started on the debate of your week. this is core pce 1.7%. here is what is pushing against stanley fischer and janet yellen. inked,nk of england bl so why won't they blink? see aboutard to inflation turning the corner. it is a big story driving inflation. we need to see other service categories contribute to a greater degree. we are not seeing it just yet. as the unemployment rate reince towards i percent and potentially through that by year end, that will start to turn the tide. days of critical is 18 september 17? >> i do not know if there's u.s.

data that matters. also what is going to be very relevant is the post parade china data. once they stop manipulating the financial markets and supporting stocks, what happens in the financial markets? what habits the economic data? they are pursuing a blue skies policy. they are shutting down power plants, steve mills -- steel meals, and order have blue skies during the parade. it is causing huge supply chains disruptions. it is for all these close trading partners with china. vonnie: the a direct impact in the month or two of inflation -- summitaw this around the in the olympics. it is not just inflation numbers. production,al demand figures, and a lot of workers being laid off. tom: i'm a huge fan and supporter of the show. cyprus -- governor of

outstanding researcher at the fed -- he flat-out says to stanley fischer with respect, vice chairman, beware. inflation is a recipe for disaster. discussed that. that was strongly whic language. >> he was enlarging the question mark around inflation. that is yet to be determined. one thing we do know -- inflation is a residual of economic activity. if you have an economy limping itng at half the pace should be growing up, we will see weak inflation. if we are growing well b above go lower.lation will tom: we are checking job stay on friday. the euro turning into 112 point

13. oil runs over three key support, but at 44.43 that gets my attention. point 2.16%.asis this is "bloomberg surveillance." i am vonnie quinn with tom keene. hillary clinton support slipping and i would. -- in iowa. as her front runner's status in sanders with bernie chomping at the bit, phil mattingly is here. what is the slow down in her fortune? phil: if you look at the e-mail situation, democrats have been very wary about what this will have an impact when it comes to hillary clinton in the months ahead. that is not what concerns people in this poll and that should be

considered more problematic than anything else. through the numbers, according to the bloomberg politics-des moines register poll, bernie sanders's favorability is up 25 points in the last two months. 93% of people who support bernie sanders say they support him because they like his ideas, not because they are against eloquent good what this is showing is that not only has hillary clinton lost a third of her support of the last two months come the ideas that bernie sanders brings to the table are more important to the iowa caucus state them what hillary clinton hasn't last couple months. vonnie: what are worries coming out of voters that stick to clinton? people actually like her. they have every confidence that she would win. revolt amongsts

democrats against hillary clinton. i think her campaign is situated thann and it is deeper anybody else's campaign. it is just the ideas that concern most. you bring up ben carson, even more interesting the democratic numbers. --k at republican numbers 95% of republicans in this poll say they are completely unsatisfied or "mad as hell" at current politician. that underscores the numbers you're looking at with donald trump at 22% and ben carson at 18%. andstrength of how to republican candidates are not even clearing double digits. tom: i would go to the republican candidate from chicago -- kanye west. we saw that at the vma's last night. kanye west stepping up as a presence of candidate for four years on. what happened to government experience? mr. west, no government experience. mr. trump, no government

experience. dr. carson, no government experience. how did we get here? phil: i think kanye west clearly took a look at our iowa poll. this is what people are saying and that's what they want. the quote last night -- i think this is a salient point. "listen to the kids, bro." he is going to get a couple of pinocchios less like it he said he was a millenial. as a millenial, that is offensive to me. he does laugh all of that area whatsoever. if you look at the republican primary, the thing that has republican strategists flummoxed and these campaign set up a couple years now for supposedly top-tier candidates like scott walker and jeb bush is that they are not resonating right now. the message of their accomplishments do not seem to matter at all in the early states. i think that is very problematic. even though it is the summer, there is a a lot of time left.

they've not found anything yet that sticks with voters. that is why you see donald trump and ben carson resume. west, buting up kanye baseball guy, explain the ub exclaim ass we go into september the chicago cubs. . is the greatest part of sports where you have a young team who doesn't know what they are doing. they do not understand the history or pressure they should be feeling right now. they are supertalented. , theat catcher skill and the talent level on this team are extreme and they do not know any better. with our mattingly kanye west report. thank you, mr. mattingly as always. he is better than good at baseball. what is the name of the small college in ohio ? the buckeyes?

oh, ohio state. our twitter question of the day -- can the buckeyes beat michigan? the vice chair tip his hand? ♪

worst call of august -- not

the u.s. equity markets. how about parity in the euro? it was supposed to go week. opposite happened. 12 big figures away from where somebody people think it is heading towards parity. a weaker euro. there we are with perspective there. let us stay with globalization. the always brilliant robert j samuelson in "the washington post" on capital flows. they can operate at warp speed. globalization is quietly rewriting the economic rules in ways that suggest we may be losing control over events. from "bloomberg intelligence." i am big on this. there is the capital flow vigilantes. we talk about the drip drip of losing control of economic events. this is something we discussed

last friday, b phillips curve potentially shifting that relationship between inflation and unemployment. what we are seeing is an increasingly globalized world, we have to roll over these developments because later becomes less of a driver of inflation. as soon as something comes in space and -- expensive, you imported. plus or going to guess -12 years, the phillips curve. carl: it is getting flatter and flatter and it will do so as we get increasingly globalized. tom: the stand fisher believe in the phillips curve? -- does stanley fisher believe in the phillips curve? carl: in a sloppy fashion come on but not in a finely tuned manner. vonnie: do we continue to globalize? problematic for the most extensive workers in the world like western europeans and americans. vonnie: will we see more

bilateral trade agreements or trilateral trade agreements? carl: that is what we have seen over the last 20 years. vonnie: we have seen that. more ofu keep putting those trilateral agreements in place, you will see a new landscape in place. tom: speak of globalization and its discontents. bernie sanders, donald trump, they are polarities a part, but their common theme is discontent. carl: they are tapping into discontent of the middle class. you are seeing lower interest rates in the last of which pressure in the economy in general. these are all results of globalization. there be a trade prescription a better policy in america? not: four janet yellen, do pursue a strong dollar policy because he will clobber the average u.s. worker. s a worker of a multinational corporation, where

should i switch production? relative to anyone else coming u.s. workers become more expensive as well. if you blindly dive into raising to claim rates victory over the financial crisis, and the dollar gets parity with the euro, and will allow the fed to win off the back of american workers. tom: coming up later today on bloomberg television, she changed athletics in society -- billie jean king. ♪

tom: good morning. where are we? futures, -15. dow futures down 129. do not want to oversell, nevertheless, a weight to the market as we begin this monday. right now, our top headlines with vonnie quinn. jailed journalists are asking egypt's president to pardon them. the outer zero staffers were sentenced saturday to three years in prison. the court said they were guilty of "reporting false news pickup a gypsum law says the president can issue a pardon unless the verdict is final. hulu will get warm movies for the streaming service. a has reached a multiyear deal with the cable channel at.

that will bring paramount, mgm to hulu. that came as netflix was dropping epics. netflix wants to develop original movies instead of sharing films with other services. movi man who created a movie tt cost cap a nights is dead. wes craven created "a nightmare thenreet" movies and later, the screen series. he was 76. i was terrified. i do not know about you. andn never not what pass mount street without getting a shiver down my back. pass in the home street without getting a shiver down my back. the f one c meeting is always the most important date in

today's dependent world. chieferg intelligence economist carl riccadonna is here to answer the question of delay or no delay. i think the financial market developments are going to overshadow friday's jobs report. we have been in the very trend like zone for job creation year to date with minor fluctuations back in march. we had a week job reports that shot across the bow of policymakers. i see no real reason given the indicators of the labor markets that things will be significantly outside of the trend. you will the choppiness inequities globally. be swayedat they not by economic conditions? carl: they will be swayed in there watching currencies, commodities, and equity markets. vonnie: you think a rally in china will cause a delay? carl: if we see half of what we

saw last week, this will strike fear that they need to wait a little bit longer. i still think of this year, but why go in september? use the opportunity and buy more time. tom: in the study of the economy, view six in an ugly unemployment rate is almost back to average. where is the slack in the job market? carl: we are almost there on the labor front, but we are not there in the inflation front. we saw that in july and that was the discussion. tom: can the fed induced wage inflation? carl: yes, holding the pedal to the metal. paul the throttle forward and -- pulledget it could the throttle forward and they will get it. at 72 basisere points and not much movement on the long end. what is that telling us? carl: we are seeing a reflecting the futures markets for the odds

have increased from now. if we look from september-october, we are almost at 50% chance of a rate increase. i think people are really discounting october and that could be a real possibility that policymakers give us the new forecast in september and say there's going to be a press conference in october. stay tuned. tom: can i ask a dumb question -- are we creating good jobs? 220,000. t as the prediction with an unemployment rate of 5.2%. are those good jobs? most of our viewers and listeners would say no. carl: a lot of those jobs would have to be on the lower end of spectrum with not a lot of benefits to go along with them. we are creating jobs on the higher end of the spectrum with engineers and folks with college degrees and whatnot. it is happening across the board and needs to happen across the board because most of the jobs lost during the recession were

in that lower quality end of the spectrum. vonnie: we also get manufacturing and other data points before the meeting. how important will they be? carl: the isn will be critical because a lot of policymakers are watching for this feedback to make up for the stronger dollar and how that will dampen economic activity. in the isn isty important, but one of the underlying details is new export orders. that is a contraction and telling you that trade is going to be a net negative for the economy in the back half of the year. that matters. most of the economy's service sector, but a lot of that is trade and transportation. likee: now, it also seems there's is more uncertainty than ever before. we found out that q2 was a whole lot better than originally estimated. that tells us there is decent data into q3.

the latest industrial data has shown signs of strengthening. tom: a two-part observation -- crude that's a zero late and crude that says to wait like goldman sachs and what is the argument for this? carl: the finance for the economy matters. to raise rates in the economy will strengthen, i do not buy that argument. it is the cost of investing in capital. tom: if we wait too long? carl: it will take a long time to get to a point where we are restraining the economy. threek we need to get to or 3.5 before we start to tap the break. tom: not that i ever editorialize, but i again for arthur burns and his pipe. but the pie.ation,

let us go to our twitter question. fede: we asked did bes chair fishing tip his hand? -- certainlywer help the market lower this monday morning. so is got that going for him. bullis fall toby. -- weullis volatility stay afloat. --nie: next response inflation is almost certain with the market in china. tom: there's a crew that believes -- let's go in september. vonnie: yes, and he nearly fell off the fence doing it. i guess fisher was on the fence. he holds his cards close to his vest. he wanted september as an option, but by no means was he pounding the table saying let's go in september.

the fed does not have the possibility of completely flipping off the table. they want to hit their mandates, but it's just not there yet. tom: let's get to agendas. why market is not on friday. it's on monday. it's getting the markets open. let us not forget what we went through last week and even the last 10 days. that is the idea of huge volatility with the equity markets. -16 about where we are. this is news dependent and there is not much news out there right now. vonnie: i am watching the migrant crisis. he had not been talking about it too much. chancellor angela merkel is speaking to right now and saying that germany must help those fleeing war. 17107,000 people and they have called an emergency summit. tom: angela merkel across the

bloomberg terminal with headlines right now. all the usual headlines you would want to hear. i do not see any consensus in brussels on what to do. it is a timeless issue. vonnie: i know. and it is heartbreaking, too. to end it on a light no, i am going to keep an eye on the u.s. open. makes the cut. tom: there are always up states. the circus really matters. -- surface really matters. it is not the grass of wimbledon or the clay of the french open. carl: it will be a hot one, that is for sure. tom: the surface matters. this arena playoff all the matches and have everybody else leave? this would be the grand slam. tom: i think so. she is a six-time winner. carl riccadonna, thank you so much again. synthesizing all that we are looking at at across

finance, investment, international relations. we will continue "bloomberg surveillance" on radio and "market makers" on bloomberg television is up next. good morning. ♪

♪ erik: good morning.

i hope you had a good weekend. it is monday in new york city. you are watching "market makers." i'm erik schatzker. stephanie ruhle is out today. what is take a look at where stocks are heading. u.s. equity futures are trading lower. day on thise a down last trading day of august. it has been a brutal one for many. equities globally headed towards the biggest monthly decline in more than three years. why? saide one hand, leaders are signaling raising rates amid turmoil in the chinese markets. in china, we had another decline overnight as you can see here. the stoxx 600, the european benchmark, slightly lower at 0.04%. we will bring you a technical perspective on the markets from renowned numbercrunching tom to mark.