apple up for a massive upgrade cycle. get out of the courtroom, get on the field, the patriots and dealers -- steelers. good morning, everyone. this is "bloomberg surveillance." i'm tom keene. joining me, our surveillance royalty, olivia sterns. the queen yesterday at the ball on the park. olivia: incredible. tom: it is a big deal that she still goes up there. hundred800% -- a percent. we have the redux because we are with our surveillance royalty, olivia sterns. brendan: brazilian bonds fell after standard and poor cut the

rating to junk. the highest interest rates in nine years and a recession. there is a corruption involving petrobras, the state oil company. no more second-class citizen status for apple tv. the set-top box has taken a backseat to the iphone. tom: i'm buying one. > tim cook has unveiled a major upgrade. >> we believe the future of television is apps. in fact, this transition has already begun. we are spending more and more time on our computers and mobile devices, enjoying great tv content through apps, such as itunes and netflix and hulu. >> and bloombergtv, of course. there is also a bigger i cut

design -- ipad design for business customers. tom: i'm buying one. [laughter] they don't like the iran deal, but they are not bound by the deadline because president obama has not given them details of side agreements. new york governor andrew cuomo is prepared to support raising the state's minimum wage to $15 per hour. he will make the announcement today during an appearance with vice president joe biden. the state senate blocked a move earlier this year. pro football gets underway with the new england patriots taking on the pittsburgh steelers. tom: yes, yes! >> the nfl will bring in more than $12 billion according to the "wall street journal." revenue from corporate

sponsorships is up 15% this year. brady is a think mr. little motivated to do well tonight? >> i would think so. tom: we are motivated to bring you a data check, particularly after the evaporation we saw yesterday. we bounce up again today. stay with bloomberg television and radio through the day to give you market updates. second screen, let's get through this quickly. gold, south. that is my headline today. recent support for gold. real will be ugly today. let's talk brazil. we will go to são paulo in the next hour. olivia, this is back to january 2013. year in price.

this is classic panic in the bond market. olivia: the ratings agency confirmed the panic markets were already indicating. the real off 25%. tom: there seems to be more symbolism. there was the brazilian miracle seven years ago and now we are back. olivia: we are back to junk rating after seven years. tom: the brazilian ten-year apiece. stop gains evaporated overnight. brazil crushed by the s&p ratings downgrade. first, let's it over to london. francine lacqua. isn in london, everyone

focused on brazil. what did you see in research notes this morning? francine: stocks are incredibly , falling not only because of expectations from the fed, but repercussions from merging -- emerging markets. we have a lot of exposure. because of the spotlight we had on brazil's credit rating being cut to junk, a lot of people say this was a knee-jerk reaction that prompted a lot of analysts to cut down on these retail stocks exposed to brazil this morning and that accentuated the decline. a new zealand rate cut, as well. i-30 you and jonathan are going about the mystery of what the bank of england will

do. is there really a mystery? francine: the mystery will not be on interest rates. it will be on how they look at china. you were mentioning new zealand. you see a lot of central banks continuing to adjust monetary policy to combat slowing economic activity. we are not expecting anything real from the bank of england. we will try to get an insight about their view on inflation. see if the turmoil they have seen in china and the emerging markets will delay their interest rate hike. olivia: that is certainly what we want to hear. last summer, we were expecting the bank of england to be the first central bank to tighten. now we are waiting on the fed. what has changed? francine: we have had a lot of disappointing economic data in the u.k. wage growth was there, but it was so minimal. that thebout the fact

u.k. is strong, but services are not as good as expected because of the extra burden of regulation. recent evidence points to disappointing data and manufacturing. that is coupled with turmoil in the fact that the u.k. is such a smaller economy compared to the u.s.. a lot of people are saying, why would you go first? tom: right. there is a price to pay, possibly, for going first. francine lacqua will join us at the net -- top of the next hour. we turn to the american economy. one of our most popular guests with an exceptionally popular -- cautious call on the american economy and number of months ago. on glimmersto date of optimism that you see or do you go with the recent economic data and possibly a growth slowdown? >> glimmers of optimism. the glimmers i would pullout is

that we don't see a recession yet. that is a glimmer of optimism. when you look inside of the ,mployment, the jobs market there is one cohort that is doing better. when you look at the employment when you lookio at people who do not have a high , they haveoma recovered most of their recessionary job losses. americans havene not recovered anything. tom: i'm so glad you brought this up. there was a fabulous chart this weekend showing what you are talking about. the quality of the jobs, the 200,000 jobs per month we are creating, the great theme is that they are lousy jobs. do you buy that ig -- idea?

lakshman: that is what the employment ratio shows. it is on the backs of very cheap labor. if you are banking on a consumer to show up at the holiday season purchasingon, the power is not there. if you are blanking -- banking , theflation to show up reason the phillips curve has failed for so many years is because it is right there in the data come the people who are getting jobs are not earning very much. olivia: this hits on your idea of the two americas, the two different economies. if the fed does raise rates, how does the fed justify that? richard fisher says let's get going. larry summers and richard fisher

could not be farther apart. lakshman: we asked the question in january 2015, if not now, when? since the beginning of the year, we have been decelerating. this is not a forecast, this is a fact. when you look at the coincident together,puts it all it has been slowing since the beginning of the year. at the forward-looking indicators and the slowdown is not over. that is an unusual situation for the fed to hike in. olivia: what you have been thatng at is telling you the economy has been slowing since the start of the year. lakshman: if you look at it on a year-over-year basis, it is at a one-year low e. if you look at gdp and gdi, the government is producing both of those together.

the same quarter, gdi is a 0.6%. both of them are faulty measures. when you put them together, it is at a one-year low. olivia: how about the jobs report --jewel's report yesterday? lakshman: ok. job openings have jumped up and hiring some gone negative. look. the coincident index is at a 16-month low. we are not in a recession yet and we don't see one yet. that is the good news. but the vector, to use your word, is in the wrong direction. tom: we will address the disparities in america coming up in this hour. we have a special treat for you next. gene munster of piper jaffray on apple. everybody is not focused on the iphone. i agree. the magic is the upgrade cycle

of the iphone. we will talk about what that means for the financials of apple with gene munster, next. "bloomberg surveillance." ♪

tom: we say good morning to you across asia from our hong kong news bureau. kong inlear across hong the evening. our top headlines. here is david. >> the justice department is responding to criticism that it is too easy on white-collar criminals. emergency crews in japan say they are overwhelmed by calls for help as flooding spreads.

rain is pushing rivers over their banks and causing landslides. the area north of tokyo is the hardest hit and one person is reported missing. the u.s. open will be an all-swediss semi final. federer is trying to make his first u.s. open final in six years and will face his countrymen stan wawrinka. olivia: yesterday, we got the latest and greatest from tim cook. tom is now on the wait list for the hermes apple watchband. tom: i love the double wrapped one. olivia: david gura has his eye iphone. rose gold investors are not impressed. shares closed down by 2%.

gene munster was front and center at the event. he joins us on the phone from minneapolis. i could not wait for the apple tv. we have been waiting for the big game changing apple tv product for years. this was not the live tv device i was hoping for. what did you make of it? gene: it is a starting point and it is a platform for the living room and they are really trying to lay a foundation for more apps, more aiming -- gaming, better discovery. it is a significant upgrade from where they are at. for the first time ever, apple will start financing the tohone direct can -- consumers. is this a game changer? gene: keep in mind that verizon and at&t are about 20% of apple sales. they don't want to go to hard

after those because it is huge distribution. they are probably testing more for growing this out internationally, where plans like this are more appealing. tom: you are a class act for joining us. how many hours of sleep did you get? gene: about four. tom: we like that. we like having gene munster on sleep. "the new york times" said the iphone is a quiet bomb. do you have to mark down your margins forward after what you observed yesterday? gene: we don't because the changes in the new iphone a relatively subtle. they added this 3-d touch, which is a new way to interface. for the most part, typically on these s cycles, they have better margins. i think there is probably more upside than downside. tom: how did you change your stock price? screaming buy or just acquire

shares? buyinge are aggressively . 60% upside. tom: is that good enough for you, olivia? hermes and thet watch? olivia, help me, here. an did tim cook arrange herememes? i don't know. i'm not the most fashion forward person. i will leave that one to tim cook to answer. olivia: i know a lot about this. i was surprised that they could even get enough leather supplied to do this. they are fabulous looking watches. tom: i thought it was a home run. is the iwatc going to get traction? hgene: it is going to get a meaningful update in a couple weeks with native apps that are

going to make it easier for you to do things with the watch. i think this is probably 2017 where it really goes vertical. tom: one more question, if we could. anthe new ipad, is that imac killer? gene: it will compete with the imac. this is probably going to help shift a little bit more back to the mac. i think the mac is still going to dominate. tom: thank you so much. you made us smarter this morning. what a trooper. this is what we love. this is great ar. our "bloomberg businessweek" cover this week. important comments from apple leadership. that is our simple cover with all of the work we have done over the years on apple. we will continue this conversation coming up. michael wolff will join us on

and in defense of marissa mayer. this is "bloomberg surveillance. ♪

if you are ever in london, take the bridge. it is much longer than you think. 1000 feet. the millennium bridge. and it is a footbridge. it is a success. do you agree? olivia: you take it right over to st. paul's. we are building our new headquarters in london, available in 2018, over to the

left behind those buildings. that is a beautiful shot of your london. let's get to a morning must-read. olivia: i recently bought a home. i'm talking about how landlords are eating the world. this comes from an op-ed by noah smith. he says, landlords are eating the world. location is an inherently scarce commodity. when it becomes more scarce, it puts a break on growth. ,om: it has always been there this is always the way it is. everyone always wants to live in the same square footage. the dynamics of rent and buy in. when has it not been there? olivia: "the economist" discovered that it has been skyrocketing. do make a couple points, saying that this is driving inequality, in the europe and the u.s. what do you think? lakshman: i don't know about the

last 50 years. in the wake of the crisis, access to credit just disappeared. inyou need some money to get and put equity down on something, you have to have some assets in order to do so. you could see how that would exacerbate things. maybe now, if some credit eventually starts to flow, people who were lower down in the economic layer can get some access. i don't know. tom: you were wired into the new york community. olivia was just in austin, texas. low inflation drives migration to cities. lakshman: sure. tom: there is a lot of historical research on that. urban-centeredb with the low-inflation in equity. lakshman: totally. in fact, you saw globally.

look at london. my gosh. and a lot of city centers around the world, you have seen some insane property prices. low-inflation is not going away. wish as we want, it is not going anywhere. tom: let's come back and address inflation in the united states in a moment. in our next hour, we need to look at the thinness of the markets. bart chilton is knee-deep in the reality of regulation. our children will join us. stay with us. ♪

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. tom: it is the dome restoration project. they are taking lead out of the dome. they are going to fix it, fix the cracks, all that.

it sort of looks like the 1860's. lincoln's second inauguration at much the same look to it. a beautiful morning in washington, indeed. let's get to our top headlines. david: standard & poor's has underscored the worsening outlook for brazil. seven years after the country was returned to investment grade, they have been rated at junk. the president is embroiled in a corruption scandal with petrobras. the brazilian real has fallen 30% against the u.s. dollar this year. china wants to make it easier for other nations. it is opening the domestic foreign exchange market to overseas central banks. it has been pushing to become another reserve currency. republicans are still opposed to the iran nuclear deal. they don't want to vote on it

yet because president obama has not given them details of side agreement. republicans say they will consider a separate set of measures. presidential candidates ted cruz and donald trump spoke to a tea party rally against the iran deal. trump blasted the president for not negotiating the release of four americans held by iran. >> if i win the presidency, i guarantee you that those four prisoners are back in our country before i ever take office. i guarantee that. ted cruz said the next president should be willing to rent the iran deal to shreds. -- rip the iran deal to shreds. denmark is suspending rail connections to germany after police stopped hundreds of migrants at its border. nearly 20,000 refugees who entered greece from turkey are

heading north into macedonia. police in new york city are investigating the takedown of a manhattanoutside hotel. the nypd says he was mistaken for a suspect. blake, who is black number retired two years ago. they regret the incident, but the police department has not apologized. tom: this is in the "new york post." on this.ite up he was thrown to the ground, among other things. the commissioner of the new york police department says it is "very disturbing." this is a new york city story, but the point is is that it is not. james blake. bad call. help with this, karen. bad call down here at the bottom on mr. blake. it appears in the article that

he is taking the high road, as always. speaking of a high road, john edwards came up with the phrase, "two americas." a recovered america and a recovering america. then there is another. massively out front on identifying the different cycles .nvolving two parts of america many people in that group would agree with you on your caution on economic growth. you look at employment data, what does it say about two americas? lakshman: i think that the key finding is that wage growth is flat as a pancake. everybody is hoping it is going to go up, but it has not been going up. you see the concentration in jobs growth is very much for the low-paid worker or uneducated worker. tom: there are a lot of people

who are going to buy a new ipad watch.ne or the hermes they are not a part of this discussion, are they? there is a whole other part of america. lakshman: i'm not saying that we are not having growth in the economy and there are people who are doing better in this economy. there are. apple will sell and hermes watchband to those people. we are in a bubble in the city. forget it very as they are in other cities around the world. when you look at growth in the economy, when you talk about all of america, you are seeing long-term growth trends declining for decades. that has been exacerbated by the reaction to the global financial crisis. in london, they are going to talk about the lack of growth. i'm not just saying the fed. i'm saying the reaction to the crisis. the chinese did monetary and

fiscal spending. olivia: printing money. asset prices. lakshman: two-putted in perspective, in china, in three years following the crisis, they used much more concrete than the you nice -- united states used in the entire 20th century. that is a bit of a freak out. to put it mildly. now what is going on? we have global overcapacity. globally, i'm not pinning it on the fed, then you are going to have a lot of extra capacity. growth globally export is near zero. globally, i'm not talking about the u.s. only. export prices are negative across the board, deeply negative. we haven't seen them this negative since the crisis. what is alarming about that is that when we have the crisis,

china was much weaker than it is today. every g-seven economy was in recession. china is a little stronger than it was then. we have that kind of deflation globally. that is kind of a big deal. when we say, ok, come back to two americas, where are we going to get the growth? the thing is is that the policy of qe, for years, they have been pulling demand forward. which exacerbates the low trend growth. , you dom your world agree with michael for rowley of jpmorgan that we are going to a lower terminal rate? lakshman: since 2008, we have been saying that. in the long-term secular decline, what i just said today is that since the beginning of

this year, you are in a cyclical slowdown on top of that. typically, the fed will be tightening when the economy is accelerating, not when it is decelerating. tom: you have a lot of critics on your call years ago in the american recession. you nailed the global mediocre. you were way out front on that. does that come over and be a contagion or filter into the american experiment? olivia: when you have a long-term secular decline --lakshman: when you have a long-term secular decline, it is not a time to be complacent. tom: i want to pin you down on u.s. gdp, where is it? lakshman: it is slowing. it is going to be slowing. it is already very low trend and the direction is down, so you have a problem. please, let's go back because we have revisions to the data and look at the second half of 2012. , gdpwe had our near miss in the second half of 2012 was at 1.25%.

look at it today. it is a 0.25% for half a year. you cannot get closer to a recession. tom: i will give you that. lakshman: what you need to avoid that is super low volatility. is anybody sitting here saying we are going to have super low volatility? [laughter] tom: we need a twitter question of the day. we are asking who is the most powerful person in the nfl? i'm reading cover to cover of the "new york post." i know the answer. the dallas cowboys. come on, help me out! what is his name? jacob, jerod? jason garrett. in thet powerful person world. i'm up to speed on the nfl. go rangers! [laughter] ♪

tom: good morning, everyone. a special announcement. prime time 6:00 p.m. wednesday. michael mckee and myself with dalio of bridgewater. i'm not going to embarrass ray with, what is the euro going to

do or what are the patriots going to do? the conversation next wednesday at 6:00 p.m. a single best chart. we are thrilled to do this. this is the acclaimed weekly index of bloomberg consumer comfort. up we go, the golden years of the 1990's. down we go. we soar to get back to the midpoint. then it does not happen. there is that little bit of recent rollover we are seeing. this goes back to your idea of structural slowdown overlaid on top of a cyclical slowdown. aren't we supposed to have a recession at some point again? every eight years? lakshman: not every eight years. it could be every one year or every 10 years. with your chart, there is the slowdown. i would read what is going on at the end, that is going to continue easing down.

when we look at the expectations or the mexican -- michigan expectation, this is more frequent, this is weekly. they all peaked in january. olivia: all right. lakshman: they were lower in june, they were lower in august. olivia: it is a two dollar gap. how come that has not helped lower income americans? lakshman: because they don't make that much money. most people working are working at the lowest level. i'm not saying it doesn't help. it absolutely helps. it is part of the reason we are in a slowdown, not a recession. olivia: what is the reason wages aren't rising? lakshman: it is lack of growth. there was something going on with productivity. when you look at productivity growth -- olivia: that is technology and innovation. lakshman: i'm not sure. that is a really good question. i'm not going to say i know what is going on. for one year, productivity growth is lower than 0.75%.

for five years, it is you were .5%. tom: david gora, jumping here. david: absolutely. it is something the fed will be looking at going forward, too. lakshman: the fed is all over the place. the phillips curve. it did not happen. the minute they make a fed target of 2%, it plunges. [laughter] with your experience and the book you put out seven or eight years ago, would you explain to arm your mortal audience, including me, why richard fisher is so far apart from larry summers? why is that? lakshman: because, by hook or by crook, he wants to get off zero. tom: financially, that is not acceptable. lakshman: you can't justify it with the phillips curve. you can't justify it with the low productivity curve. except for the facts. olivia: we are six years into an

expansion. even if there has been a 10% correction, stocks are still near record highs. lakshman: no, but fed policy is looking at inflation and employment. olivia: employment looks really good. lakshman: your payroll growth is at a 10-month low year-over-year. the economy has been slowing, which is broader than payrolls, has been slowing since the beginning of the year. growth is very low. when you look at where growth can head, at the end of the day, we talk about this at our last discussion -- it is productivity growth plus demographics. demographics are growing in 0.5%. productivity is growing at 0.5 cent. you don't have anywhere to go. it is important for the fed to get off zero so they can reload. sorry. tom: no, it is great. it is a great conversation. david gora has accepted these

choice photos. are any of these from olivia's last trip? olivia: you are so lucky i did not come back with pictures of myself in a hat. i did go to a wedding in dallas recently and i bought myself a pair of boots for it. i was the only person at this wedding in boots. tom: you are such a tourist. such a tourist. david: the number three photo. this is outside of tokyo. are a from the typhoon real risk. thousands of people having to flee their homes. there is now word that some of this water is going to be radioactive coming from the fukushima area. tom: this goes back to last week when we saw three hurricanes /typhoons in the pacific ocean. that was an amazing photograph area david: the second photo, australian taxi drivers protesting uber outside of

melbourne and sydney. uber -- the city council voted to ban uber in the city. tom: it goes back and forth. page three of the "new york post" today. queens, new york -- they favored uber over the taxis. in brazil, this is another huge battle. david: absolutely. we saw the battle in new york. we had the city council waiting a cap on uber drivers. tom: the summary of what you see, they are going the opposite way in brazil and australia. olivia: maybe this was the final straw for s&p. tom: the could not get an uber to the airport and they cut their rating. you are exceptionally twisted this morning, olivia. [laughter] david: the steam train

yesterday, queen elizabeth celebrating the longest reigning monarch. tom: the symbolism of the queen going to scotland on this day. i think it is just profound. particularly as you look forward to it s&p and the others will do in the coming years. they got the color right. there it was. olivia, please make a comment. seriously. [laughter] tom: you spend a lot of time in london. olivia: beloved. after the scottish referendum, it is important that she went up to scotland. they really thought they might secede. one of the lessons of living in europe is that there really is an important difference between having a head of state and head of government. you can have a separate person who is an operations person, the top minister to read in the

u.s., we conflate these two. we want a president with a fabulous first family who we want to have a beer with and we want to have an effective bureaucrat. [laughter] tom: too much. let's have a twitter question. save us right now. who is the most powerful person in the national football league? patriots-steelers tonight. some of us would suggest mr. brady is after what he did to 2, 3, ander the last for weeks. that will be one of our topics next. stay with us worldwide. "bloomberg surveillance." olivia: you wanted me to weigh in. [laughter] ♪

tom: good morning, everyone. "bloomberg surveillance." let's get to our top headlines. david: record-breaking temperatures and wildfires are making it hard to breathe for many californians. record temperatures past 100 in los angeles.

fresno county officials are warning people to stay inside and asthma clinics say they are overwhelmed by new patients. there is a big recall from fiat chrysler involving potential airbag issues involving ram pickups made from 2012 through 2014. two injuries are known to have been caused by the problems. get ready for two dollar gasoline prices. tom: yes! prices were a gas dollar cheaper over the labor day weekend and they were a year ago. those are your top headlines. tom: it is going to finally have an effect. h2 and you really want to get back to the h3. olivia: hummers? [laughter] tom: let's get to football. olivia: the nfl season kicks off tonight. i'm excited.

everyone is excited. the new england patriots taking on the pittsburgh steelers. tom brady will be on the field after he won that murky back and forth over deflategate. missing from the season kicker will be the commissioner himself. he will not be on the sideline. the bloomberg politics writer wrote, people love the football, but they hate the nfl. this is roger goodell's legacy. is this true? is he ruining football for america? iti don't think he's ruining , but i think people love to hate the commissioner. they hate the big business that the nfl is. but you are excited about the opener. people are going to watch tonight and they will watch on sundays. olivia: is he in danger of losing his job? >> i don't think so. roger goodell works for the owners. olivia: but he bungled deflategate. >> without question. everybody came out looking poorly.

tom brady and the patriots. tom: we saw yesterday the apple rollout. they featured major league baseball. his tv and the nfl still about that sunday moment or can they be more creative? >> it is about the live content absolutely. they are starting to be more creative. they launched a service where for $100 per season, you can watch any game live, as soon as it is over. tom: i'm lost on that. help me. >> it is for revenue. even if 20 people sign up, that is money they would not have had otherwise. the nfl has a much more buttoned up tv approach compared to major league baseball. you will see that starting to loosen up in the next couple years as they look at other opportunities. tom: is that pete roselle age still there? he used to be about matching tape and matching shoes and it was very centrally commanded. >> it is absolutely still

centrally commanded. every sunday, you see guys that are fined because their towel is the wrong color or it is too long. olivia: i've got to go back to the cheating, just one second. this espn story. literally, somebody from the pats team going into the opponents locker room and swiping play sheets. doesn't somebody have to go? nobody is responsible for this? general councils are stamping on tapes. >> a large part of the story from a couple days ago was alleging that a lot of the tom brady punishment was left over from spy gate. tom: who is going to win the super bowl? >> the patriots. tom: there we go. come back. twitter question. we need to hear from you. a great response so far on the nfl. who is the most powerful person in the national football league? that would be eben no

be--williams. brazilian reality what i am watching to open. what i amn peso is watching. stay with us. "bloomberg surveillance." ♪

"bloomberg surveillance."

providel the downgrade a wake-up call for the legislature and a wake-up call did look for a massive upgrade cycle. in defense of marissa mayer, restructuring in silicon valley takes gigabytes of patients. good morning, everyone. this is "bloomberg surveillance ." it is thursday, september 10. i am tom keene. joining me, olivia sterns. let's get to our top headlines. bonds after the rating was cut to junk. the president committed a budget showing a major deficit. -- creditade reading rating has been a decline for seven years. it has fallen 30% against the u.s. dollar this year. the worst performing currency in emerging markets u.

its worst recession in a quarter-century gray television will now be a front burner project for apple. apple tv with a major focus yesterday. the upgraded set-top box features video games, voice recognition and an app store. tim cook says apps are the next big thing in tv. >> we believe the future of television's apps. this transition has already begun. we are spending more and more time on our computers and mobile devices enjoying great tv content through apps such as itunes and netflix and wh hulu. also introduced a bigger ipad designed for business customers. cannot put onans the iran nuclear deal because they have not seen the whole thing. they say did menstruation has not copied them on side deals

between iran and atomic inspectors. the congressional resolution -- democrats could back a presidential be no and pass it cuomo will make the announcement today with joe biden. the republican-controlled state senate blocked his attempt to raise the minimum wage to $10 50 since an hour. and all swiss semi final at the u.s. open. with --s up a match federer is trying to reach the finals for the first time in six years. much.hank you so expect the unexpected. bank of england boring today. no, it is not. the pound moves a little bit stronger. some important headlights. joins us.acqua

i'm quite taken by the gdp markdown in the comments on outside contagion into the united kingdom. what do you see echo francine: these are important comments. inc. of england sent global soon try toey will figure out by the end of the year whether they will raise interest rates. toy mentioned the risk demand and the fact that we've seen all this turmoil in emerging markets may actually mean that they will delay. for the moment, in line with expectations. they voted 8-1. they are talking about u.k. inflation being subdued. core u.k. placing, productivity beginning to increase. ,t is not changing our view yet but we are keeping a close eye on it. tom: i believe my newspaper said september 10.

in seven days, the fed has to act and we see the bank of england doing the kind of things many people say we could hear from the fed. what do you see in the research out of the city? in a trickye fed is position because we handle this emerging market in china turmoil. when you look at research notes, the linkage between gdp and pound strength, sterling strength is almost higher than what you see in the states. the link between the dollar and u.s. gdp. if you are bank of england, you are smaller, taking a lot more risk. it would be quite incredible that they hiked rates before the fed. given what we have seen and given the turmoil, this is what they are saying. we see upside cpi risk relative to the target. so, we have to keep an eye on it. headlines with unexpected

bank of england announcement. we need to bring into people on turmoil. -- two people on turmoil. michael wolff's managing director and cofounder at activate. bart chilton is a former commissioner at cftc. was your on just ruined by this volatility -- you were ruined by yourvolatility -- was august ruined by this volatility? when you look at the moment we had over the last two weeks, is it a good volatility for making money or do you get under the desk and hide? >> it's good for some people, good for people fast enough to be involved in these markets. the guys that were short lost

their shirts. looking at thes volatility between the commodity markets and equity -- there is a big correlation. commodities being down for a year or so. last year, the worst commodity year in her teen years. -- 13 years. tom: bart chilton leaves the cftc and they had their worst your ever. >> these markets are interrelated. when we are talking about brazil and you look at our nor prices, one of their major exports, look at coffee, these commodities are key. tom: can you pulled the correlations we are seeing over to your world effeminate -- your world of m&a? >> when i look at this from the perspective of tech and media and how much tech has made up thenasdaq, you realize

fundamentals of these businesses have not changed. the prices from a share perspective may have, but in reality, the underlying fundamentals are the same. these will continue to be strong growth industries. olivia: does all the recent raise questions for you about how we should be regulating financial markets? >> absolutely. on frank has done more than most people want but has done a good job of making our economy safer. breakers,e circuit whether or not they are coordinated. sometimes they shut down a market. not always identically. two weeks ago, we saw the big crash. at 9:35 a.m., 1000 points off the doubt. -- off the dow. >> you needed to ensure the circuit breakers are harmonized.

they were different than the individual stocks. opportunityitrage there and traders are not getting the right pricing information to make trades. the other thing is insuring these regulations across the world are harmonized. yesterday three deals ulse?at is the pol is there an uptick or are you adjusted? >> we are in a moment, there's so many companies -- the areas i focus on as a consultant in tech and media, there's so many different companies that will either be strategic buyers or finding themselves too small to really go in the next wave. tom: a combination of television properties? >> concentration in television,

you look at the other businesses like tribune and nbc, it was hard for anybody to compete with -- it is the second largest tv -- tom: what is the change in tone of cfos right now? are the assuming janet yellen will act? >> cfos are looking at increasing margins. they are trying to take more of the revenue and bring it to the bottom line. whatever happens with financing in this environment is less relevant to cfos than what will happen with the operating performance of their companies. olivia: did you watch the apple product launch yesterday? >> of course. companyis this a playing catch-up? >> i think they are getting ahead of a couple of things that have shaped them. they are getting ahead of the fact that the replacement cycle for phones has slowed down.

they might be offering an option where consumers can pay $30 a month and trade in their phones once a year. they are getting ahead of the consumerization of business. they are offering a much longer ipad with a stylus. they are going after the most wealthy sector, the people working from their cars, the people delivering. tom: we will come back on this. michael wolff and bart chilton giving you perspective as we get ready for september. coming up, in defense of mers a meyer. -- marissa mayer. patience is required. michael wolff. stay with us. ♪

tom: we say good morning to mohamed el-erian on the west coast for you east coast, michael wolff with activate. silence.e a moment of here is our twitter question. who is the most powerful person in the nfl? we need your informed answer as well. somehow, mr. brady's name make him up -- may come up. richard fisher ripping it up in the financial times.

every time the fed has waited for full employment to be achieved before starting to tighten policy, it has ended up having to tighten so much it has driven the economy in a recession. fisher really coming out in pushingof richmond, boston. many others saying wait. this is the debate as we go the next seven days. olivia: look at what happened in new zealand. they don't want to move to soon and have to reverse. and japan several years ago. tom: that was a huge moment for economic theory. there's two sides to this. this is economy that did grow in the second quarter -- the

interest rates not align with the actual growth rate of the economy. the others and say they missed there with no -- there window. >> what does the market want? do they want symptom or 17 -- september 17? >> i think the volatility in markets does send a chill into september. i could see october. the market wants some sort -- tom: what do chief financial officers want the financiers doing deals? >> what they are looking for is finding ways to improve growth and take that growth to the bottom line. tom: can janet yellen do that with the rate increase? >> it's the opposite. what is different between today and the last time there was a rate increase, rate increases are visible to consumers. consumers have more information, they know what's going on. by the fed signaling that

something is going wrong with the economy becomes a self the --ling processes -- prophecy gelf-fulfillin prophecy. tom: stay with bloomberg across all of our media products as we move to the 17th. he has an opinion. michael tenenbaum. good morning, everyone. "bloomberg surveillance." ♪

tom: bank of england out with an announcement. there was some headlines that were interesting that a reduced forecasts. david: the justice department is responding to critics who say it is too easy on white-collar criminals. justice officials say the new policies will put pressure on companies to cooperate and investigations involving their executives.

emergency crews and japan say they are overwhelmed by walls for help as flooding spreads. heavy rain pushing rivers over the banks and causing landslides. some homes were not from their foundations. an area north of tokyo was hardest hit. time for football fans to put new batteries in the remote. new england faces pittsburgh in the opening game. the leak will bring in more than $12 billion this year. sponsorships up 15%. tom: who else is there? for many supporters of burress and meyer, this challenge requires patience. mayer.orters of marissa yesterday on bloomberg surveillance, scott galloway was simply scathing in his critique , suggestingnagement

mers a meyer should exit now. -- marissa mayer should exit now. hostel wolff is our guest today. he did not appear specifically in defense of yahoo!. with his wonderful perspective, we are so happy you can speak about this. i thought scott was graceful yesterday in hedging his criticism. i know you will be equally as graceful. with the professor galloway get wrong echo michael: i was part of the board that hired marissa mayer. what's happening overall in the technology businesses, the tech company with the best technologists wins, hands down. or is a meyer is one of the top 10 technologists in the valley. over a quarter of the copies revenue comes from mobile. she's brought in great people. users love it. turnarounds take a long time. steve jobs took five years to show progress.

make whitman is still grinding along. you have someone who is extremely visible and it's easy to take potshots at her. usa as a mover and shaker in technology suggest to a ceo that the best process is to be taken out? should yahoo! become a merger candidate? >> at the moment, yahoo! is better off being a standalone company. that core business will start to grow again. it's easy for investors and professors to make calls from the sidelines. tom: there is a tax bill do on alibaba.ba -- due on >> i cannot say was going on within the board. i left a couple years ago.

it is a huge tax bill. the shares are double what they were when she came. olivia: is that because of things she has done to the core business of god who or because people are looking for a spin off of alibaba? michael: it creates no value at all to the core business. the core business is still throwing off hundreds of cash,ns of dollars of already, you have a difference in terms of where it is trading. card ase us the report someone who placed her at yahoo! on how her performance has been. she is wildly usable. are they harmed by her notoriety and visibility? michael: if you look at how difficult it is to get people to

run his company's, look how hard it has been for twitter. -- they arew people product people. if you look at every single one of these companies, whether it is google or amazon, every one of them are run by product people. are very few of them. tom: a woman out of illinois. wisconsin. excuse me. she goes to stanford, shows up, -- achievesademics and i can. she qualified to be an executive . michael: who else can lead a company like this where the important element is the user? that is what it comes down to. she stands for the user. tom: one final question. i have to bring this up. woman expecting twins, said,with some grace look, if she did not have this

issue, maybe this would be a different dialogue. you look at silicon valley them are women still penalized for their response abilities with family life? >> women need to see -- half of yahoos users are women. when he did to see women running these companies. -- we need to see women running these copies. tom: michael wolff with activate. olivia, you were traveling yesterday. this was really something. olivia: he said yahoo! should be euthanized. --t was a play on a tax tom: we will have much more on this in the coming days. we need to look at brazil overnight. standard & poor's cutting the rating.

double b plus. it is back to junk. stay with us. this is "bloomberg surveillance ." ♪

tom: good morning, everyone. futures up today. headlines.r top david: a record-setting drop en brazilian bond prices.

standard & poor's cut results brazil's credit rating to junk. the president presented a budget week ago that showed a major deficit. the currency has fallen 30% against the u.s. dollar this year. the worst performing currency in the emerging markets. china wants to make it easier for other nations to hold assets in its currency. it's opening its domestic foreign exchange to oversee central banks. china has been pushing for the yuan to become another reserve currency at the imf. the bank of england says britain's economic prospects are still upbeat despite market turmoil and the slowdown in china. the bank's voted this week not to change its benchmark interest rate. only one of the nine board members voted for an increase. house of public and still opposed to the iran nuclear deal. they don't want to vote on it by next thursday's deadline.

they say president obama has not given them copies of side agreements between iran and the international arms inspection agency. trump blasted the president for not negotiating the release of four americans held by iran. >> if i win the presidency, i guarantee you that those four prisoners are back in our country before i ever take office. >> he says the next president should be able to rip the iran deal to trends. the crowds of migrants trying to get through are still growing. 's buffing scores of migrants -- denmark is suspending rail connections to germany after police stopped hundreds of migrants. police in new york city say they are investigating the takedown of a former tennis star by eight

-- he was tackled and handcuffed yesterday outside a manhattan hotel. the nypd says he was mistaken for a suspect. he retired from tennis two years ago. says the's office police department has not apologized. tom: the new york post having the commissioner with some sharp comments this morning. it would be the biggest u.s. ipo of the year. first data said to seek $2.5 billion to go public. first data is the company that serve as the plumbing behind the scenes -- they facilitate tom keene's to birgit borman -- trips to -- the biggest equity bet ever. $4.5 billion in

july. they are hoping to turn this out and turn a profit on it. that $2.5 billion offering size which could come as early as this month, we don't know who is going to be in that. kkr will get a piece. olivia: why did it take so long? >> back in 2007, they took the company private. .29.8 billion lbo since then come it has really struggled, especially during the recession. this is the go-between between -- 2300ent processors transactions a second. tom: within your wonderful article, i was taken aback by how small these deals are versus the glory days. why is the ipo market feedback rating versus all the other transactions out there? the bigyou look at

candidates, you are seeing them stay private these days, especially in the tech space. that's one thing that is definitely playing into it. lately, there has been a bit of a question as to when the fed will raise rates. there may have been a bit of a pause. past, a lot of these companies would need this public capital raising round. now, you can get that. you have the likes of uber raising billions of dollars. you don't have to go out. tom: thank you so much. this is reported by bloomberg news. equities,ckered bonds, currencies, commodities, futures. the market evaporating because of bart chilton this morning. 11184.llar,

precursor --eso a i must point out, gold south. gold.er ounce on olivia: this is "bloomberg surveillance." tom: let's turn to brazil. that leads story of a rate cut. at 5:30 last night, brazil has returned to junk status. julia is the sao paulo bureau chief at bloomberg news. indication ofy where the brazilian reality will open this morning? julia: we have some analysts --t night calling it a 390 we are expecting a pretty --

tom: a huge move. that would be remarkable. what was the surprise in this announcement by standard & poor's? julia: people were widely anticipating a downgrade to junk. the timing was a little surprising. the negative outlook from what we heard last night was making the other agencies follow s&p. tom: we have seen the move in the note. a second derivative works -- or acceleration. what will we see in the coming weeks out of the government? julie: that is the biggest question, what this means for the government. if this will make this man together and come up with a fiscal adjustment -- make them band together.

the finance minister was brought in earlier this year. with the mandate of keeping the investment grade. he was on tv giving an interview about what the government will do. we need to remain committed to fiscal adjustment and promising some measures in the coming weeks. olivia: investors were awaiting explanation of the deterioration of fiscal accounts of the central with we learn? >> the central bank had a press conference at 11:00 a.m. today. i believe they just cancel that press conference. they were going to go over the minutes from last week central-bank meeting. a very moving target right now. very amazing news flow as well. when you look at this for the nation, the support for the president is eight or 9% in the polls. can it possibly go to five or 6%?

julie: a good. we will see how it goes now. .- it could she gave an interview last night saying we tried and we will continue working on keeping brazil on the right path. thank you so much. we really appreciate it. theheadline in sao paulo, --a that the real depreciate you and i have seen this before. an object in motion stays in motion. >> brazil has lots of problems. her unemployment rate is 7.5%. iron or is a major exporter. was --e in 2013 tom: what is brazil me to the commodity exchanges that's what is brazil mina to the commodity exchanges? >> you have to be worried about

the price of everything. soybeans -- coffee, soybeans. they are all down significantly. tom: how critical is the price of corn to the psychology of the market? >> there is that interrelationship, but it's not as key as you look at the global economics. look at brazil, 70% of their exports go to china. they are really impacted. olivia: they are more afraid of that and then raising rates. -- van enough and it raising rates. fed raising rates. a wise woman, most interesting electrical engineer from the united kingdom. challengesscuss the

that the united kingdom and europe face. stay with us. ♪

tom: good morning, everyone.

michael mckee and i are way excited about this on bloomberg radio and bloomberg television. p.m.wednesday, six clock -- six clock p.m., surveillance prime time. dalio.rsation with ray i'm not going to ask in what the euro is going to do. .he bigger and broader picture we have had an enormous response to this event. you will see it on bloomberg television, 6:00 p.m. next week. olivia: big market movers before the open. the tail end of earnings season. a couple big movers in early trading this morning, including vox. now trading back above its ipo level. -- including box. they say the top 50,000 customers. on box and these companies we don't know that well, is

there an appetite or urgency to get deals done this auto? people wonder about the whole cloud storage space between box and dropbox and a bunch of other companies out there, we will continue to see these businesses grow much more quickly. they become part of everybody's lives in terms of not just your work life but also your home life. olivia: 43% revenue growth is impressive. shares of krispy kreme doughnuts plunging in the premarket's. sales were slowing. slow sales of packaged foods hurt results. they cut their annual earnings forecast. i robert driving to winston-salem to one of the original krispy kreme's, the hot

sign was on. trouble expanding nationally. this is not unexpected. tom: a challenge story for years. olivia: gluten-free is the way to go. that's where the growth is. tom: the technical construction of the chart is called a downward jelly donut. lemon seeing second quarter profit that just top analyst estimates. he raised the full-year revenue forecast and increased the menswear offering. i go to a lot of yoga classes. i'm seeing guys everywhere and shorts.lemon very popular. lulu lemon bouncing back after

the founder left and shares tanked after that. a lot of analysts upgrading their forecasts. tom: three movers -- olivia: hopefully we will never see tom keene in lulu lemon. hour -- an next update as we move through september 17. features are now flat. ♪

tom: good morning come a point an eventful morning. morning, everyone. an eventful morning. >> wildfires making it hard to breathe for california's. -- for california's. the smoke drifts to populated areas. it is county officials warning and lungth heart problems to stay inside. they are overwhelmed by the quantity of new patients. airbag problems prompting a recall by field chrysler -- fiat chrysler. chrysler says it has caused two injuries. 1.3 million pickup trucks made

between 2012 and 2014 are being recalled. his survey indicates that u.s. copies are finding it hard to fill jobs. -- those arevey the top headlines. tom: chilean peso weaker this morning as we wait for the brazilian riel to open up. to where we are now in our newets, a quiet reality of global wall street with dodd frank a smaller, more nimble banks. it's true inequities and other asset classes as well. or chilton remembers when there was always someone to take your business. we really don't know what

happens if something falls apart. do we? part: the thing you want to see markets from the regulatory perspective is that there is somebody on the other side. those guys are moving from the old floor traders to the high-frequency traders, the prop funds that are there. when using this volatility, it's almost like these guys are grabbing knives out of the air as they are falling. you have to appreciate that they are there on the other side. volatility in august had a certain character to it. a lot of america does not trust the guys wearing the black and gold tie. the wall street guys like part chilton. how do we get the trust back? -- bart chilton. what happened this weekend for purdue football? >> it will be a tough year.

confidence in wall street is key. if you don't have liquidity, you don't have adequate price discovery. that's why when we see these volatile markets coming need to make sure there are some of the on the other side. average investors need to have that confidence. that somebody is not making a false prophet. an observere been of wall street for decades. do you see the same concern there? michael: average investors are not trading their own portfolios anymore. people, regardless of whatever income you are at, you are not treating individual stocks. they're looking at the wealth of their 401(k)s. they have a lot of financial news and they're wondering what's going on. i'm going to cantor

fitzgerald for their 9/11 members this remembrance of event. what is the mystery of etf's given the volatility? >> there's a real question whether or not they played a big role in that 1000 points like we saw a few weeks ago. that's something the securities exchange commission will be looking at in a few weeks. they have a market advisory committee that meets -- they will look at things like whether or not the program operates -- tom: is he onto something with his criticism of the risk. parity game? for average investors, they have never had it better in that markets are cheaper. the transaction costs are much less. >> very low. >> they are quicker.

they will never be as fast as the hft. fidelity offers transactions within one second or your money back. there's all sorts of information out there like never before. there's even analytics out there forever which investors. off-the-shelf analytics. tom: this is one of the great moments in "bloomberg surveillance." lulu lemon, purdue football and etf's at the same time. where else can you do that? >> krispy kreme doughnuts and box tom:. tom:i have to go to radio. olivia: tom will continue on radio and television for the next hour. in the meantime, let's keep the conversation going. when you look at the dow, pledges thousands of points -- thousand points. they are there to stabilize the volatility.

the guys are on the other side. you want to make sure you have these intermediaries. they are not driving it. they are there to dampen the blow. if he did not have anybody on the other side and you were waiting for the actual price because people were holding back , there is good and back about electronic markets. i've always argued that you need appropriate regulation. by a large, these new in amenities are helping -- new intermediaries are helping. they are adding liquidity. transaction costs are a lot less. olivia: you are expertise is in commodities. help us connect the dots. -- you are expertise is in commodities. >> they are interrelated. if you look at things like metals prices and car companies or transportation costs that impact everything, the thing

about commodities that people don't often realize because they are complex, the impact the prices. what people pay for everything they consume. whether it's a krispy kreme doughnut home mortgage or gallon of milk. i like to keep my eyes on krispy kreme. time for the agenda. brazil and this downgrade overnight by s&p. downgrading it to junk. confirming what financial markets already signaling because they have seen the real depreciate. credit yields a spread and the economy thinking. the political component really still very much in play. the ongoing corruption investigation. our bureau chief telling us they canceled the central bank meeting? >> on my agenda, the $15 minimum wage.

governor cuomo set to back that in new york. just amazing to watch how much momentum there has been. unions pushed for it. municipalities around the country having governor cuomo back it. double what the current federal minimum wages. today,her thing to watch the deputy attorney general expanding upon that memorandum yesterday on white-collar crime. olivia: the first thing we heard from loretto lynch. she wants to crack down on white-collar crime. we have two ended with a fun note. .'m wearing green it is the nfl season tonight. the pats are playing the steelers. tom brady is going to be on the field playing.

roger goodell will not be on the sidelines. you, who was the most powerful person in the nfl? "the most powerful is not clear but the weakest is caddell -- is roger goodell." owners whoer, "the commit governments to build stadiums for free." "tom brady, followed by the deflator." >> the most powerful is the fans because they are totally hooked on football, they will be out the year more than ever and second is the sponsors who view football as their most important medium for selling products. everything that went down between spy gate and deflategate shows bob kraft is the most powerful. who knows? i will wear blue tomorrow. >> if they win -- olivia: thank you so much,

michael wolff and part chilton. bart chilton. ♪

>> bloomberg radio and bloomberg television worldwide. we welcome all of you this morning. morning michael fox. >> good morning sticky. tom cole and standard & poor's cut their brazilian credit rating with a negative outlook. president.guered what are the top five things me to look at? let's go over to bank of england up with a boring announcement on the rate cut. at the headlines were a lot bigger. i'll surprised with the headlines and speaking with francine lacqua in london, a real pullback on economic growth and also the idea of outside influences filtering in. dollarioned brazil

reality 3.78. we heard from our news bureau of a much weaker brazilian rialto come this morning. this is the house republicans going back-and-forth with a lack of information that they need to come to a decision. democrats saying they got plenty to keep a presidential veto through and to pass and move on. with that deal, apple, i love the coverage of apple. cory johnson out in san francisco. i love the idea of the underestimation of how the .phone will do with apple maybe the iphone will do better than good. we say good morning bloomberg 1200. the patriots take on the steelers tonight. i believe mr. brady will be allowed to play the game and that is exciting. what are you observing this morning? you've got that long dining room

table, you spread all your newspapers out, what is the one story you're looking at? brazil. mainly because the s&p downgrade to the country's debt. this is a return to that cycle. we'll be talking about big cycles later on today and the cycle in brazil, everyone thought it was broken and they would become that country of the future. it looks like they will be coming. tom: seven years risk on and now we have seven years with junk status happening overnight. bloomberg surveillance bond by cohen resnick. to seize opportunities in commercial real estate, your business needs guidance from industry-leading experts. find out how at cohen resnick.com. ,richards -- anne richards

you got bored with electrical engineering. anne: i did not get bored with it. i found other things in life to go with it as well. tom: you see mark carney come out, boxed into the snow inflation outlook. does that mean the new terminal value is tangible and that the new returns for the equity world is not a percent or 7% but is even south? our country returns depended so who knows with a long-term number should be? acknowledging the fact that no central bank operates in isolation. we are a global and connected world. i think there is a broad connection that most central banks have an inflation target. atbe we should be looking changing the mandates we get our central bank. tom: mr. priest was on

yesterday, will we continue to see use of cash through thick and thin? dividend growth and share buybacks with cash flow? anne: in the u.s. in particular you have seen so much of that going on and in this environment where money is essentially free, i think until we change shareholder management incentives, will continue to see that as that is what the incentives are put in place to do. josh: as -- pimm: as someone that is interested in music, in association with the scottish chamber orchestra. what tilt with a be playing if they were playing to the subject of inflation? anne: what on earth would you say to that one? something calm. a mendelson kind of space. tell us about your view of inflation. anne: inflation is the dog that

has not arced the cycle. we have central banks whose mandate is to keep inflation under control. maybe it was something in the broader market. in a world where there is no inflation, it seems to me that the idea that you hike interest rates just because they are very low and that worries us, it does not seem compelling. i don't see that in this inflationary world we are in, there is any compelling case to raise interest rates anywhere around the world. pimm: so what happens with the federal reserve? tom: we see the tension with larry summers this morning. a huge debate. anne: there is a big debate. those who believe we should have an interest rate hike, their only two arguments. the first is we have hit the 5% unemployment rate which -- japan has run with rates at about that level for 20 odd years without inflation.

that does not seem to be a compelling reason. the other reason, if you don't raise rates you will not be evil to cut them only going to recession. that seems counterintuitive because you will put the country into recession if you get it wrong to raise rates. has the bull market been broken? anne: i think there has been a realization that asset price inflation as opposed to goods inflation has been stretched pretty far and if you are not seeing underlining earnings coming through, continue progress is pretty unlikely. my best guess is the equity markets will continue to bump around. we will not see any dramatic action. we had such a historic moment yesterday for all the united kingdom with the queen traveling to your scotland. it was really something to see this historic moment going back hundreds and hundreds of years.

nichola sturgeon in scotland. whether that mean for the people in scotland? anne: i think the connection that has been made, queen victoria, the previous longest reigning monarch, was the one who really brought scotland back into the royalist fold. 1707, another 130 years for victoria to do that. anne: victoria fell in love with scotland. since then, the royal family has holiday to in scotland every year pretty much ever since. spent largemother part of her time in scotland as well. the fact that she chose to celebrate this day in scotland was significant. tom: how is the economy of scotland doing? there is an uproar in the united kingdom over any number of topics. how is the scottish economy

doing? 2.8% annualized growth in the first quarter of this year which was actually ok. the scottish economy, despite the fact that there are jobs being squeezed out of the oil ,ector which is a big employer low oil prices are unofficial because jobs are created elsewhere. i have been to the mount where they get to show the distillation -- tom: i'm surprised he went there first. pimm: i want to ask ann richards , let's say you get a call from someone in the royal household and they want you to put together a portfolio, what is the first step? $2 millionve to take because that would be chump change from baby george, what do you do? anne: the first, figure out if

there are liquidity requirements. if they need cash, is their income or is a chance of cash for capital? what is the liquidity you need because that dictates how you access some of the underlying drivers. i believe in diversification on a longer-term basis so i like real assets, infrastructure, some hedge in private equities that give you different drivers. i like certain and cody markets and stocks within equity markets -- i like certain would he and stocks within equity markets. what do you do with an apple computer? it is a required own. they are in their own bear market/correction. is it a council of patients? anne: i am an apple fan in terms of the product, not necessarily the stock price.

i have three ipads. i use mobile bloomberg. tom: isn't it something? the clarity of it. anne: it is fantastic. tom: and richards, thank you so much -- anne richards, thank you so much. pimm fox and tom keene, bloomberg surveillance on radio, on television as well. futures are up 20. we need to get brazilian r ial, 3.90. weaker.ially 3.90 on its way to four. ♪

tom: good morning. "bloomberg surveillance." a beautiful view of new york city. a rainy new york city today. let's get to our top headlines. david: a recall from fiat chrysler potential airbag issues . ram pickups made from 2012 to 2014. chrysler says it knows of two injuries caused by the problem. looks like we will be seen to

dollar gas again. the government says gasoline prices will fall another 17% by the holidays to about $2.03 a gallon. average gas prices were a dollar cheaper than they were one year ago over the labor day weekend area to the justice department is responding to criticisms it is too easy on white-collar criminals area prosecuting individuals, not just their companies. they're designed to put pressure on companies who cooperate against their executives. now to julie hyman with some movers. julie: are you a big donut guy? david: i talked about this a little last hour. i grew up in north carolina, home of krispy kreme. dunkin girl a growing up. krispy kreme is what we are talking about. the stock is down after slow sales of packaged food products in particular. bags of donuts and snacks were not selling as well. it also left money in derivative

instruments. i do not know what kind of doughnut derivatives there are. xpo logistics agreeing to buy conway inc.. conway is an ltl company. it gets goods from a bunch of different companies and puts them in one truck. the price on this deal is valued at about $3 billion. that includes debt. 4760 a share. -- $47.60 a share. palo alto networks reported earnings that beat estimates and came out with a forecast ahead of estimates. it is pulling up some of its competitors. particularrtinet in are on the rise. earning season has slowed to a trickle. before it starts up again. this is feeling the breach for now. coming up next, we will hear

from dean maki of barclays now at .72 asset management. surveillance.erg ♪

tom: good morning on bloomberg television, bloomberg radio. thrill to happy with us. joining us in studio, from the breaking news desk, here is bill maloney. william: big turnaround in u.s. futures as european markets fade. as -- nasdaqower,

futures lower by 10.5. futures were lowered by 183 points. on the economic front this morning at 8:30, initial jobless claims estimate 275,000. at 9:45 we have consumer comfort. at 10:00, wholesale in 30 -- wholesale inquiries. after the bell last night, box boosted revenue views. krispy kreme cut your adjusted forecast. shares are down 18% premarket. palo alto networks beat shares higher. watch those resilient etf's. status.brazil to junk lululemon, down 5% following its earnings. below theindicated moving average. some of the key wall street upgrades and downgrades this morning, intuit raised at barclays.

dollar tree cut to underperform. -- seagate rated new cell price target 38 and western digital price target 71 over at ubs. i'm bill maloney. tom: thanks so much. to hear live breaking news over -- bloomberg, you can type squ squa go on your terminal. out there is someone in the headphone space was gotten clobbered on dollar riel. i would say michael tennenbaum is the perfect guy to talk to about the future of hedge funds. pimm: the whole nature of behavioral responses to volatility. michael: i hope so. pimm: you have put together a

concept of how people incorrectly look at volatility. michael: incorrectly is judgmental. but that's ok. people talk about volatility as if it is something unusual, a swan.vent, black i have been in the business over 50 years. you were supposed to say, oh really? anyway, the wide range of prices has been a constant feature since 1962, every five to 10 years there has been a swing in stock prices in the u.s. of 30% to 40%. it gets blamed on something different every time, oil prices , real estate went bad. have characterized

advanced economies forever. is, since this happens all the time, wire we surprised? -- why are we surprised? tom may remember the tulip craze. pimm: he still has that dropped thatn -- bedrock my -- draw, penn. tom: they faced aggregate underperformance for the last number of years. will we see a change had fun business the rest of the clan? michael: some people think hedge funds are an investment strategy. haveeople in our business the cheekiness to say we will charge you more in a fixed fee and take a share of the profits. the implication has to be we do better than others. and some do. there is a real use for hedge

funds, especially in an environment where it's hard to make more than 3% to 5% a year. if you have value added hedge funds, people can improve businesses who come up with new ideas and have to invest -- on how to invest, they are worth it. a lot of people have had a good year or two and as a consequence there is a pressure on fees. if you look at hedge funds as fees, they are under change as we sit here. pimm: could you follow up on this idea of volatility and what you think causes a lot of this? having to do with technology and how it sucks investment dollars. michael: if you look back 100 years, you could have picked up a five-year period when stocks went down 18% the year. you think you would stay employed? sometimes it was up 35% in year. variations depending on what five-year period you picked.

technology has provided new index funds. you have had open-ended for a long time. tom: thank you for coming in today. , greatlyennenbaum appreciating his appearance today. dow futures, -52. 10 year yield, 2.21%. and i are-- pimm looking at the brazilian riel. it's not something we look at all the time. 3.78 is where we were yesterday. we go weaker on brazilian riel and a lot of strategists we speak to talking about 4.00 being a huge emotional break point for brazilian riel. .35.texas, 44 brent crude, up six cents today. , goldftness yesterday

gives it up in a major way. ounce this morning. pimm fox and tom keene. bloomberg surveillance. ♪

david: here are your top headlines. governor jerry brown and democratic leaders have dropped a plan to cut gasoline use in half. moderate democrats in the legislature objected saying the measure went too far. brown will go ahead with other

plans of his bill including a provision to boost energy efficiency in buildings. governor andrew cuomo is prepared to raise the state postman always to $15 per hour. cuomo will make the announcement today in an appearance with vice president joe biden. the state senate blocked cuomo's attempt to raise the minimum to $10.50 per hour. lululemon posted second-quarter profits that beat estimates. lululemon is trying to appeal to customers who where the products outside the spaces. now to julie hyman. loves tovid garre who wear his yoga clothes outside. we have seen a reversal in u.s. futures. they have turned lower along with the rest of global markets where we saw selling in asia in particular overnight. the 10 year yield, 2.2%. we are seeing the euro loses

steam against the dollar and a reversal in crude rising for the first day ahead of the u.s. supplies report coming at 11:00 a.m. in a few moments we are going to get the jobless claims data from tom and pimm. let's get back to them. tom: pimm fox and tom keene. futures at negative seven. we welcome all of you on bloomberg radio and bloomberg television here with economic data. let's go to vinny with coverage. >> jobless claims in line with forecasts. 275,000 last week. inflation data, the import price index down 1.8% in august month over month. a little bit more than forecast year-over-year down by 11.4%. plants -- price in

index down. tom: jobless claims still exceptional below 300,000. pimm fox and tom keene and with us one of the most thoughtful economists in the game, dean maki joins us. at at pointy 70 -- now point72. have you ever seen this polarity? dean: i think the most similar time was in june of 2003. the fed was thinking of cutting rates. there was debate. wall street was evenly split. it is unclear a week before the meeting -- tom: you don't have a professional guess what they are

going to do? dean: i think if the meeting were held today, the fed -- the problem with having a strong stance right now is that the fed has made markets a big part of the decision. if markets rally significantly that may induce the fed to raise rates. is it an anomaly that you would go around the country and listen to people talk about their business and say business is pretty ok and then look at the worry that is being expressed by investors? why does that disconnect exist? dean: part of it is fears coming out of asia, especially china. there is uncertainty about how much the chinese economy is going to slow. how much of a ramification that will have on other economies. we won't see that in the u.s. for a long time. in the u.s. economy looks like it is rolling around well. i think that is what is sponsored will for the disconnect. make ahat is be wrong to

connection between small and mid-cap stocks in the united states? dean: i think there is a divergence. those who are focused on domestic consumption, domestic housing, those companies are doing well. those companies who are trying to export to asia, china, they are running into more headwind. that is a split in the economy that looks like it will continue. pimm: if that split continues, will it show up in asset prices? dean: it will in a relative sense. the stock market is trying to value these companies according to their future sales. it is unclear to what extent this should have a big impact on overall u.s. market valuation. i think that is what investors are struggling with now. tom: i look at the debate of the moment. to me, it is smart phd's like you working in a dynamic space trying to figure out what the future is. where so many people are requesting a static call.

forget about the trajectory, just raise rates once and say we will do it once, sit there and look for more data. why can't janet yellen or mark carney do that? why can't they say, we are at the zero bound, everyone knows we are wrong, once and we are done. dean: i think that is the argument of the more hawkish members of the community. hawkishple who are less , their point is, we are at full employment according to the fed's standard definition. by we still sitting at zero? we can always stop if we need to. pimm: as far as the oil industry in the united states, i believe the house is taking steps to improve the export of crude oil. how will that affect the u.s. economy? dean: i think anytime you loosen retractions like that, it is a positive. the issue is that the oil we

make is not always best for our own refineries. it is hard to say we are economically better off by hindering that trade in some way . i think any step like that is a long-term positive. christoph, bring your camera over here -- tom: christoph, bring your camera over here. i will put this out on bloomberg radio. this is where we have not raised rates. have been atd we the zero bound for ever and ever. dean maki, this is not in your textbooks. dean: it is not something we have seen before and not something that is usually talked about at length in a macroeconomics class for example . we are in a non-precedent situation. i think that is why there is a split among different members and how they view things right now. pimm: what is the biggest mistake you've made over the last 12 months --

tom: not coming on bloomberg surveillance enough. pimm: your biggest triumph? dean: i think the thing that i have been able to call was that the unemployment rate would fall faster than others believed. i think that's going to keep happening. i expectd of next year the unemployment rate will be up 4%. is of the things i highlight the consensus forecast of a stabilization in the unemployment rate here even as growth keeps rolling around, that is never happened before. point72. maki with us, economic indicators got to you by commonwealth financial network. when it's time to change a , call 866-462-3638 or visit commonwealth.com to learn more.

we heard vinny talking about import price index. initial jobless claims coming in. you heard dr. mackey talking about a 4% unemployment rate. later this morning, the index.rg consumer david: it is time for a morning must-read. a big day for fans of the national football league. the next season kicks off tonight at gillette stadium in massachusetts. the patriots play the steelers. tom brady will be in that game. roger goodell, reportedly will not be in that game. is by the must-read former president of northwestern university. he says private colleges would not -- this line stood out to me, we have traveled on a path that has nothing to do with learning, teaching, research and dissemination of knowledge. .e have seen all this movement

the open-ended decision in california. a federal george awarding players many dollars because their images were used by the schools to make money. there is this movement toward my -- what might be a pay for play model. he backs the question, what happens if we get there? you look at all the schools that have big athletic programs there are a number of private schools, stanford, wake, where they are not making a huge amount of money off their teams. julie: maybe it would be more onerous for them. maybe we should stop paying the .fl players how about you stop paying them if they act like idiots? in which case, none of them would get paid. david: these are controversial's things best controversial things you are saying here.

julie: kenneth rogoff will be with us. will you have to say about the nfl? ♪

tom: futures move as they have

up 22 -12. another of -- a lot of top headlines. david: border patrols throughout europe say crowds of migrants trying to get through are still growing. hungary is busting scores of migrants. denmark is suspending rail connections to germany after police stopped hundreds of migrants at its border. nearly 20,000 refugees who entered greece from turkey are heading into macedonia. saysvisor to shinzo abe the central bank should expand its monetary easing program next month. the bank of japan has been trying to boost inflation to 2%. japanese emergency crews say they are overwhelmed by calls for help as flooding spreads. heavy rain is pushing rivers over their banks and causing landslides. north of tokyo is the hardest hit. one person reported missing. julie: i want to bring you this

morning's commentary and i'm focusing on one company. apple. apple had its product announcement yesterday. some new features, the new version of the iphone six which is going to be the six s. the new ipad pro, etc.. shares fell by about 2%. our peter dean iteris said on the day of announcement on average we have seen an increase in 2/10 of 1% but that is largely because on the first product announcement going all the way back it's all in 8.3% gain. it has only risen two of the past eight announcement days. the day after, it rises on average 7/10 of 1% and it is up six of the past eight times. the spoke in investment is out with a note in advance of the

announcement saying that you tend to see this relatively benign performance on the day itself but that is because apple shares usually rise going into the announcement in the three months leading up. we have not seen that this time with the pullback not only in the market overall but in apple shares themselves. they have fallen from their high back in february by about 15%. going into this, there were lowered expectations. you would think that would make them poised to do better but that is not what we have seen, what we saw happen yesterday or from the premarket. as for some of the reviews from the analyst, they are next. -- mixed. there is not really a lot of commentary and some of these analyst notes about the tv because it was underwhelming. the real question for apple

remains after this announcement, is this new version of the iphone going to be enough to drive the product upgrade? to get you to buy another one? 30%hynes saying less than of customers have upgraded to an iphone six to date. it is their most important product. we will see. will be back with dean maki. ♪

tom: good morning. worldwide on bloomberg television and radio. a rainy day in new york. we should make note of our remembrance tomorrow, september 11, the 14th anniversary -- the .4th year of what we saw we'll have coverage and moments of silence for you on bloomberg radio and television. dow futures, -92. pimm fox and tom keene and with us, dean maki of point72 as we .alk about the american economy

where is the biggest mystery in now?conomy important --an let's stand up and do this. the idea here of y equals c plus i equals g. is it exports and imports? dean: i think that is where the big mystery and problems may be. important -- let's stand up and do this. the idea herethe export picturee uncertain. on the other hand, the u.s. consumption.% consumer spending is doing well, -- tom: i have trouble with the , we are noth was global, we do not export and only 15% now. dean: even less than that at this point. tom: it has got to have an effect. dean: the export weakness is having an effect on manufacturers. the manufacturing sector is having a difficult time right now. one thing i would emphasize is the manufacturing sector is not

the business cycle in the u.s. many people mix those things up and say when i sm -- when i sm manufacturing weakens the u.s. economy is weak. the late 1990's, the u.s. economy was growing strongly even with manufacturing index below 50. that was the kind of situation we're in now where we had weakness in asia budged ranks domestically. .om: this is important you have no idea how cool pimm fox's grandmother was. she had a manufacturing vehicle from kalamazoo, michigan. pimm: actually, it was my mother's. a black checker automobile. tom: that is when we had manufacturing in america. pimm: i want to ask something management.2 asset i'm wondering if you can compare that to your time at barclays. whether you are looking for things are thinking

slightly differently because of the change in your role. put more weight on things that are not heavily over to -- advertise overtime. one can get put off base if you're focused on payroll growth or things that can revised overtime. i tend to focus more on things

like claims, i sm's, things that you know are measuring something well. tom: we are thrilled you are with us on bloomberg television and radio. bloomberg surveillance on television and radio rock you by invesco. invesco believes it is time to say goodbye to traditional 6040 stock bond application -- allocation 60/40 stock bond allocation. what invesco and anyone else has to worry about is a new terminal rate. weigh in on the new new, lower interest rates and lower nominal gdp. do you buy the idea that will be a dampened american spirit? dean: i think that potential growth in the u.s. is lower than it has been in the past because of demographics, the population getting older, labor supply growing less. it is also because of productivity growth being slower. it does make sense that the

terminal rate is going to be lower than in the past. i think that argument gets exaggerated. some are talking about a 2% terminal rate. my view is it is more in the 3.5% -- tom: that is a big deal. nicely above people who have thought about a dampened spirit. that is a much more optimistic pace. spirits or no dampened spirit, let's say dean maki wins the lottery, what you do with new money? if someone gives dean maki $1 million, what do you do with it? dean: especially in this kind of environment, i think you want a balanced portfolio. no reason to take big bets with a large block of money like that. pimm: would you buy stocks, bonds? dean: bonds, stocks, foreign and domestic. pimm: slicing and dicing does

not seem to matter if you're talking about major diversification. dean: if you have the time to devote to it, you can make tactical calls but i would only recommend that to people that actually have the time to be focused on this full-time. tom: you came out of the stanford combine where there has been a lot of thought about how the american economy folds into regulation. how do you respond to conservatives who in economics say regulation is getting in the way of our gdp growth? do you buy that angle? that the pendulum does swing back-and-forth on regulation. for example, in the financial markets there was not enough regulation of certain types of securities. before the last financial crisis. it may be swinging a bit too far

the other way were a lot of business that would be profitable and sustainable in the long term may not be getting done. i think this is inevitable that things swing too far one way or another overtime. tom: dean maki, thank you so much. foring with portfolios point72. i'm putting out a chart of brazilian riel. a weaker brazilian riel. trying to get strength. this is 3.90. that is a huge deal to the foreign exchange desk. you think about alan ruskin at deutsche bank on the way to an ever weaker reality -- ever weaker riel. this is going to be down throughout all of the commodity currencies today. pimm: it is latin america's largest economy.

it's going to have an effect. raising theafter -- credit rating to investment grade. seven years later, you just need the bible, seven years later they have lowered it to junk status. zealands idea of new dollar. new zealand links slow down for whatever the reason. thought --ays everyone looks at dairy prices. the answer is -- the fact is mark carney with his headlines today on inflation and the struggle to find, you wonder where we are going to be september 17. pimm: wasn't there a report today that the australian economy did better on unemployment?

tom: you see that, the australian dollar stronger were so many months -- so many the loony, 13273, maybe not as weak as some of the others. resilient riel -- brazilian riel, the major story today. 20.res up to -90. the 10 year yield is coming in 2.20%. the 30 year bond was handed down 2.97. gold really came down yesterday. down 10 .085..40 120 .79.

euro, 112. peso, 16.89. bloomberg market day on television is next. we continue on radio worldwide. good morning. ♪

>> it is in the clock in the evening in tokyo. this is a bloomberg television. welcome, everybody.

good morning, everybody. i am at the bloomberg world headquarters in midtown manhattan and we are less than 30 minutes away from the market open. let's have a look at futures because of the story is interesting. futures trading down, suggesting a lower open. story about two hours ago. s&p 500 futures were up about 40 points from where they are now, suggesting at the time that we would seek stocks rally. the mood has darkened for equities and there is a little bit of a selloff. exacerbating the ups and downs that we have seen in the past three weeks. at the other look story making news. we will get into details in a few minutes. the brazilian real we can stick against the u.s. dollar, ask you can see.