good mning, 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.

brazil, last night, cut to jump. junk.ign rating cut to let's have a look at some of today's top headlines. americans filed -- fewer americans filed for unemployment. the job -- they dropped and have been under 300,000 for under six months. that is billable economist associate with a healthy job market. 5.1% at the end employment rate, some people we are say at -- say we are at full of inflation. jpmorgan says prices will rise more, averages 4.4%. the bank says fewer distress sales keep home prices rising. ,ere second straight month american spot more cars than the chinese did. u.s. buyers are encouraged by a lower gas prices and the stock market collapse in china that potential buyers out of the market. it is time for the addition of five things to watch. julie hyman is with me.

and peter chair is here, head of capital. number 1 -- the boe, lots to talk about that we will start england boe, bank of policymakers indicated they do not believe the market turmoil signs ofines -- and slowing economy will derail the british economy. implication that they are on track to raise benchmark interest rates from .5 percentage point sometime in 2016. more than anything else, this sharply contrast with what we heard from mario draghi last week to downgraded expectations of both economic growth and inflation in europe. future: i think it's interesting to see england acting as an island saying, we are ok figuratively and literally. fed should hike rates next week and we should look at our own domestic economy and focus on that. i think we are the feds easy policy that has been part of the

volatility and stock market. i think rising rates with help rather than harm. julie: the fed has acknowledged what is going on around the globe but they have seemed to maintain a similar stance to the in that they- boe, are monitoring but not the second outlook at this point. that has been consistent with the comments. erik: the pound has been on the rebound in the past four or five days after weakening during that market turmoil and it's spiked briefly and settled back to where it was before the boe announcement. what puzzles me, peter, and maybe there is more at work than just what we heard from the monetary policy committee at the boe, yes, of course, britain is an island for the u.s. economy is more of an island than the british economy. peter: i think we should become people raising rates. i think there will be strong dollar pressure on the back. second, wepricey and

have become a service oriented economy. i think the strong dollar does not have the same impact. you will get your haircut and that person will charge you whatever. i think we are strong enough and i think that we are service oriented so we should be able to deal with the rate hike. julie: let's talk about something else that could be an island according to some. apple at number two. they had a symbiotic relationship with wireless carriers, verizon, at&t, sprint and others overseas. they helped to spread the apple gospel, so to speak but they are going head-to-head with the very own iphoneth their financing plan. $32.14 a month to consumers and you can upgrade every year. this is in line with similar plans that the carriers offer now, moving away from the subscription model. where funds are subsidized. apple is sort of saying that if you will not subsidize our phones, we might as well sell it direct ourselves. furthermore, one way or

the other, we are all apple users, and it appears to want to own that relationship with the customer in a way that the carriers previously owned it. we all feel attached to our devices, but beyond the itunes store or the apple store, we don't have that much of a direct relationship with apple. now we will. peter: i think the carriers are finally saying, we provide what you really need. youhave these devices, but need our bandwidth, you need 5g coming up. i think carriers are starting to say, it was great that apple introduced the products, but now you need us as much as any the device. it will be in interesting battle. julie: it will be interesting in terms of customer service because carriers are not well known for their service. apple is better known. does apple elevate it or get dragged down by the same challenges that the carriers have? face: they will have to many more people on a daily basis, so it will be interesting. erik: number three, and hedge

funds have been power players and stocks, credit, and commodities and i cannot treasuries. i will show you this chart, peter, it says it all. austria bond inventory, the blue line, shrink hedge fund holdings as measured by treasury holdings. sort of a proxy for hedge funds and they are rising in the caribbean. at the same time, the chart does not blistered it because the lines would have been too many, treasury holdings are flatlining. q he is over and eventually the treasury inventory will decline but it will take time. peter: i think it represents one, the need for liquidity, so hedge funds have to be in liquid products as credit becomes less liquid. they have stopped intevac boy and i think they are seeing a lot more activity in venue issue process from hedge funds. at the same time, i keep seeing in some of the articles that brings back long-term capital. we saw very aggressive hedge

fund activity that they had not previously been in and i think that is adding to volatility. erik: i want to test an analogy. calendar get hedge funds in the treasury market the way we look at the oil market? hedge funds have become the shale producers of the bond market. in other words, their life this linking producers and the fed is like saudi arabia and the banks are like the rest of opec. peter: not a bad analogy because you have long-term buyers and the sovereign wealth funds and they are becoming the sellers. i think the hedge funds do exasperate some of the moves because of the loss rate. if you are losing good money, you have to put yourself in another position and that aggravates this link and we are seeing that frequently now. numberswitching gears at four, it is time somebody went to jail, don't you think? justice department told prosecutors on no uncertain terms that starting now, they have a new target and white-collar criminal cases.

individuals, the criminals themselves. this came to a memo and it marks a break from the approach under eric holder which targeted companies. there has been a lot of grassroots complaining about this very issue. moreyou have not seen people go to jail for financial related crimes. peter: i am biased because most of the people i know have been very good. it is the bad apple that spoils the bush. peter: at the same time, there has been so much pressure from regulators that you see small companies go out of business and you see almost and the knowledge from within some parts of the central bankers that they have gone too far. this pushes us and the wrong direction. we have to get back to functional e -- functional capital markets to make people able to do their job and this may be the wrong direction. erik: one question to raise before number five, what is this going to result in? time over the past

years in the quote -- in the talking to period, u.s. attorneys, brewer when he was number two at the doj, and they always say, listen, if we could broadcast cases against additional's -- against individuals, we would have, so targeting individuals is priority over companies. i don't know how much it will change and it runs the risk that you will get some irresponsible prosecution. if it proves to be a failed peoples lives.ns peter: at the same time, the justice department could get bogged down. erik: they have to prove intent. peter: right. pay back a lote of the problems, let's move on and figure out where the bad apples are but this sounds more witchhunty. erik: loretta lynch appears to feel devoted -- to feel differently. number five, brazil sovereign

debt rating went to a junk. double b plus and darkening the outlook for this country already in recession. and facing a political prices and presidential impeachment. all amid a corruption scandal. we welcome one of our correspondents in brazil, jolie. she is in our sao paulo bureau. julia, so many angles. the immediate implications for the brazilian economy, let's start there. the immediate implications, as the finance minister said yesterday to local to be, it is lessening. people will pull money off. there are people who cannot have junk rated holdings. some of them are not going to wait for a second downgrade to move, so we will seek investment deteriorate further. especially move the currency which are defaulted this morning. -- already faltered this morning. erik: we have seen the bond ,arket reaction accordingly

selling off, peter, is there a we can drop into what is going on economically speaking and the performance of the financial markets and what we see happening across the ocean? big part of the oil trade. this little oil crisis, it is having an impact. every country that relied heavily on oil is in trouble. brazil having trouble, iraq and saudi arabia and iran having trouble and even china to some degree. they have to raise currency. it is a gradual phenomenon where all the countries that were big oil producers are a country -- are in trouble and it is filtering through. julie: i wanted to ask what it means for brazil's leadership, the president, who recently survived a challenge and election and here she is facing this downgrade. have we heard anything from the leadership of brazil? julia: both the finance minister and rousseff spoke yesterday after the downgrade.

they said the government would work toward validation and try to send a message that we need to work together and that they need congress to pass the measures they are putting forward. they are doing a political coordination meeting right now and it remains to be seen what they can actually put forward and accomplish. erik: julia, the scandal around scandal seems to have become a major impediment to the finance minister. he wants to get the reform measures passed and sort out brazil's fiscal situation r and presumablyou -- and presumably rousseff does as what. she is under so much pressure that it appears to use the term we apply to congress, gridlock down there. julia: it definitely has. there are politicians who have been implied in the scandal, so it is making the situation that much worse and the president

already has about my month into the government approval ratings at 8%. she is in a pretty difficult situation. erik: will the downgrade be a catalyst for anything? anybodying to motivate whether it is in the government or a position to change behavior? hope of somes the analysts. that this'll be a wake-up call. it needs to be solved right now or things will continue to get worse. at the same time, analysts are saying that this will weaken it further because people brought into preserved investment-grade and they have failed to do, and some lawmakers will say, this is done and we don't need -- we just need to try to get out of recession. erik: thank you. coming up on bloomberg television, the bank of england keeps interest rates unchanged. will the fed follow suit? you will hear from a former british central banker who says now is not the time. ♪

erik: good morning.

you are watching bloomberg television. i am erik schatzker. futures pointing to a down day raise in 1%. julie hyman sitting beside me and peter tchir. julie: we have a reversal in futures with an increase and then coming down. in have been so volatile. .1 of the past 14 sessions the s&p 500 has closed, not during the session but closed with a move of at least 1.3%, up and down. we have seen that takes about 25 for 12 of the past 13, so volatility is being seen even when you look at futures. there is a fertility. a fragility.e is erik: it doesn't happen often. julie: no, but becoming more the past weeks.

in terms of movers, cbs is one of them. it is one of the media stocks that has been battered since the beginning of august. over deutsche bank and analyst saying that the multiple is depressed and he expects accelerating earnings growth and cost pressures easing, ad revenue expectations are achievable and showtimes should be an earnings driver as we have seen. we will take -- quick breakl take a and when we come back, we'll talk about mark carney and why he wants to raise interest rates with the sign of a weakening british economy. ♪

erik: i am erik schatzker and we

will take a moment to check on top headlines. record-breaking temperatures and stubborn wildfires making it hard to breathe for californians. they soared to triple digits in los angeles and inland areas with smoke buyers drifting into populated areas. asthma clinics say they are overwhelmed with heart and lung troubles and they are being warned to stay inside. emergency crews in japan say they are overwhelmed by calls for help as splitting spreads. heavy rain is causing landslides and some homes were not from their foundations. an area north of tokyo is the hardest hit and one person reported missing. time for football fans to put batteries in the remote. nfl kicks off tonight when patriots faced pittsburgh. "the wall street journal" says it will bring in more than $12 billion and sponsorships are up 15%. those are the latest headlines. here's a look at futures as we

head to a quick commercial break. the s&p 500 futures suggest the market will open down and they are trading lower by almost .4 of 1%, and pretty much the same feature across the board. you know what -- i will show a what is happening with the brazilian real. it was downgraded last night and then has a junk credit rating. a failure on the part of dilma rousseff and the finance minister to keep investment rating which has had obvious implications for the brazilian real. still ahead, what you need to be watching before the opening bell in new york city. we will be back after the break on this rainy day in the big apple. ♪

erik: bloomberg television and we are minutes away from the market open. i am erik schatzker. here is scarlet fu. scarlet: we have to big day.

another emerging market seemingly falling apart. brazil joining china and questions do not and. is ill here.chir bloomberg's executive editor tracy pauli is also here to tell us which moving markets as we head toward the opening bell. tracy: i am. shall we start with brazil? things getting real? [laughter] scarlet: you cannot resist. tracy: it is down quite a bit and stocks are down. the weird thing is that if you look at a lot of investors and analysts, they say this was priced in, so here's the price of cbs protection for brazilian government bonds which has been taking up. a lot of investors, at least in the bond market, tell you that this is not expected. perhaps we got the downgrade a little bit earlier than anticipated. not to say that this will not be painful. we have been talking a lot about

emerging that have borrowed in dollars. this is the kind of pain they do not need, downgrade combined with a strengthening dollar and potential interest rate rise in the u.s. and that spells pain for emerging markets and emerging markets governments and those who have engaged in trading. erik: it definitely works for sovereigns. peter: for sovereigns i think you are good, especially in big countries. oil related problems are just spreading wider as more countries can survive -- cannot survive without higher oil prices or budgets. scarlet: people were not expecting this. ais has been percolating for little bit but they continue to shock the market. in termsou worry about of liquidity when it comes to brazilian corporate debt or sovereign debt? peter: i think the corporate debt has become liquid so people thated positions and

brings you down to selling sovereign debt potentially and looking at the equities. is eventhe problem people start looking at what is next? this happen to brazil, but it was the next domino to fall? i think that is way get this spreading brisk and why we will see a pressure on the s&p 500 futures and short-term at least. erik: number two. tracy: if you ever wanted to see a chart of chinese affect intervention, i have something for you. the chinese currency in the offshore market currently heading for a record gain. this is probably driven by intervention by the regulators. the idea says that they want to a, shakeout speculators that have been betting the you and will fall in value and -- that volume andll fall in compare offshore rate with onshore rate. more intervention in that market. if you are currency trader now, you must have the stomach of steel because no one can predict

this action. scarlet: we were talking about falling dominoes, is the hong kong dollar next? peter: that is potentially a risk. you look at whatever they can get out of and china is a mess stocke whether it is the market manipulating and a currency and their blatant about it. i think it makes it hard to judge value. it means we wind up trading into what you can trading and out of what you can trading and hedging. this theme of risk reduction, fewer prediction and they are happening globally. scarlet: there is opening bell. opening are waiting for trades on the dow jones, nasdaq and s&p 500, so we will be back to show you what is happening. meanwhile, let's get to number three. tracy: number three, record day in the corporate bond market yesterday. a bunch of companies who have been holding off on selling new debt because of turmoil in markets all caps the markets

together. we had about $27 billion of issuance which would make it one ,f the busiest days of the year ask you see on your screen. a lot of companies are rushing to lock in low borrowing costs ahead of a potential rate rise and getting stuff done where and when they can. the interesting thing is that was still a lot of investor demand from what was a huge flunk of new paper coming into the market despite weakness in the corporate bond market. investors want that new issue, that you issue at spot. erik: why, peter? peter: we had two weeks of little issuance and 10 days of the role of no corporate issuance and people have money saved up. bringne is being told, debt to market and do it ahead of the fomc, so i suspect we will see potential yesterday's record broken in the next days as there is a huge push post summer to get deals on the table. there are a lot of big stock buybacks announced earlier and some m&a deals that have not

been financed. i would not be shocked to see some $10 billion, really megadeals get announced in the next few days as people rushed to get ahead of the fomc. tchir that is peter who will stay for us for a moment. we say goodbye to tracy. thank you. scarlet: let's check in with julie hyman in equities. it looks like we have a second day of declines. julie: that's a big, however. we had the reversal and features that had been climbing and we had a big swing downward. looks like that downward momentum is intact as the regular session does begin. only barely asked all three majors are down, less than .1 of 1%. we will see what happens as the session progresses. next commodity trading. oil is higher, so we will see if that is enough to support the markets as energy stocks are on the rise. in terms of individual stocks, a

deal in the logistics industry. xpo logistics a going to buy conway for $3 billion, all-cash deal. isway rising to 47.31, 47.60 the agreed upon price. operated, lessl than truckload and get shipments from different manufacturers, providers, goods to put in its tracks to create one single truck load. xp oh has been rolling of various other types of logistic companies. we are looking at cyber security as palo alto networks comes to earnings that topped analyst estimates and came out with the forecast of the estimates. shares are higher and had been pulling fire more significantly but -- fire i've more significantly but looks like advances have abated. day two after the latest product announcement, shares only up about .4 of 1% and that is after declining 2%.

i have been looking through research to see how the stock tends to perform and it rises according to research in the three months heading into its various product launches and then tends to fault a little bit after the actual launch happens. erik: thank you very much. in the upstate on u.s. equities. it has been a big day for market moves around the globe, including britain. mark carney wants to raise rates in the u.k. they take away from bank of england's monetary policy announcement early this morning. the boe indicated that healthy expansion remains the base case scenario for the u.k. economy. he is now in economics professor at dartmouth college and still with us is peter tchir had a macro strategy. you have had a chance to look at commentary, what do you make of it? >> has a strong feeling of seven years ago where people start to worry about raising rates when

the world appears to be selling. if you look in the minutes, they basically say, ignore china, that does not matter, ignore the fact that industrial production and export data in the last few days slowed pneumatically. the labor market is slowing, pm eyes slowing, but we want to raise rates. mmm, interesting. erik: you aren't -- you are accusing -- danny: he has been saying the same thing for about three years . saying that inflation will rise, we will raise rates, close to raising rates, the market has not believed him and they have not done so. it really does strike me, has a little feeling of 2008. where i heard mervyn king in 2008 say for the u.k., the u.s. is irrelevant. what happens in the u.s. does not matter and in september 2008, i voted for a 50 basis point cut in the committee said we really worry about raising

inflation. the worry is where asp attorney -- we are at a turning point, yes, they want to normalize, yes, raise rates, but the credibility is not there. the economy in the u.k. appears to be slowing quickly and they even have it in the minutes but they say, let's just ignore it. scarlet: peter, any circumstances in which the boe may raise rates before the fed if they do not move? peter: i think they are probably on target to be does if the fed doesn't. i still think we could actually hike rates. i disagree and i think we should hike rates and people want to get out this zero bound. it is not helping the economy anymore. it is frustrating people and i don't think .25 of a point will make a difference, what, $60,000? people are not making business decisions and i think it would be a good plan, if you have plans, gets a work and put them in actions. seven years of zero interest

rates have not created a while economy. that's why something different. erik: dan, what do you say? danny: i disagree. to say that you raised by 25 basis points will not make much of a difference? reason to notthe raise 25 basis points. we are in a series situation. the world economy is volatile, propped up on monetary stimulus, particularly in the u.s. the skill of labor market slack is huge when you look at hidden unemployment and underemployment. the imf, the world bank, larry anders, martin wolf, me, large numbers of people on the committee are very worried that if you pull the proper way in these volatile times, that may cause a problem. go back to 2008, so do not worry about the u.s. slowing. , do notsay today is worry about china slowing, do not worry about other countries, including news england -- new

zealand are cutting, and the sinn fein dollar does not hurt intel, of course it does. this is not the right time to raise rates. we need to wait and watch. if this is the wrong time to raise and they will not raise. scarlet: what indication do you have that janet yellen and her colleagues would listen to the world bank, to the, to you, to -- to the imf, to you, to martin wolf? the minutes. read few people are worried that the slack is much higher than it is indicated by the unemployment rate. there is no wage growth, and the take away that stimulus, the potential would be quite damaging. think about the market, 20% probability to a rate rise. that would be a surprise to the markets. it is unclear what the market would do, but between the time when the decision is announced and janet gives a press conference, presuming lots of movement in the market, all they

will say, did you expect this to happen? you knew it was going to be a surprise, so central-bank, you should air on the side of caution and all the other banks that raised have to cut, not only do they have to cut, they have to go to negative. peter: i have seen a change in market attitude. up until this next meeting, everybody has been hopeful that they will keep rates within the market. i think they hope that we rally on the back of it. what has gone on this past three weeks or we had this campus in correction, the right of flash crash, everyone now realizes that delaying means everyone will be afraid of the next flash crash. we might get a brief rally when they do not raise rates and then we so often see more we this. the model has changed and what the market is looking for has changed and janet yellen has been a good job. erik: thank you. thank you both. still ahead on bloomberg television, we await that decision from the fed next week.

chief market charges david service will be here. ♪

erik: welcome back. i am erik schatzker. scarlet: i am erik through. erik: the fed meets next week and they may raise policy rates after almost a decade. unemployment at 5.1 percent and david zervos will talk about the september transition. scarlet: he says, stay clear of the u.s. asset markets for now. you agree with what peter wasn't saying that there is a paradigm shift in the markets in terms of what we anticipate the fed will do and how they would react? peter i do not agree with 100%. i think we come out more on the same side but i think his argument that the market would somehow like the fed to reinforce this recovery by raising rates in boosting optimism is a hard to want to

get my head around. i'm more sympathetic to peter's arguments been danny's arguments. i think the biggest -- erik: danny blanche fowler was with us. david: the most compelling , iton to go is uncertainty is like a y2k moment. you want to wake up and know you will be off zero, that you're a long clock will go off, that the money markets are going to continue to function and also, we have to remember that this is the greatest monetary policy experiment in history. we are unwinding it and all that will happen in the front end of the market, the repose, rate, dealingund with an accident reserves, all of those things are new in a rate rising environment and the markets are rightfully very nervous about the fed's ability to manage the mechanics of it. i think getting the mechanics out of the way and getting the list up off of people's radar to talk about trajectory is a huge

step scarlet: forward from the release of uncertainty. scarlet:does more time make the mechanics easier? david: not at all. funny thing is easier the doves talk about how 25 points will one of the markets but they want the fed to go in september. in any model, whether it is -- you can have the most -- two years for, you would have no impact differential, so we are really talking about splitting hairs and everybody is up in arms over the fact that this could go back to 2008. their reason,of entrap me at any time, one of the things is a 25 basis points were to roll this economy over, if it wasn't really a david stockman-like roach motel built on sort of false footings, 25 basis points would pull us into the ground -- wouldn't you want to know that all of this has been built on false set of footings now? so we can solve problems and was no accident

did not work. i would rather know that now they keep waiting. have much bigger problems than 25. i don't think that is the case but i think the market would like to know the answers about how we would operate at five the above zero. years,or the past five you have framed investing in simple terms. monetary policy divergence. you have termed it very neatly in terms of lovers and haters. where does the love the long now most -- belong now most? and if anybody deserves to be hated, who is it? [laughter] spent 2015 with opening remarks and we are not a big fan of investing heavily in the u.s. asset complex, bonds or stocks. this is a transition period and it will be complicated. we are unwinding the greatest monetary policy experiment. i think we have the playbook on how qe operates --

and you know it happened in the u.k. and u.s. it might fall because we can print 25 basis points as the roach motel collapsing and we will find that out. for now, while we do it, we push these risk assets kind, and reflate the economy and pick repair balance sheets and create jobs and growth. things are looking up in europe, in my opinion. german data has been coming in stronger and the japanese data continues to be back and forth but at the end of the day, we are talking about and nikkei back in 2012 that was at 8000 and today it is close to 20,000. we are talking about the dax, particularly, was in the 8000 region and the got up to 12000 and now it is 10.5. these are prophecies that are pushing and we think the qe is more just a dab as a tailwind in investing, -- we think the qe is more interesting in tell wind investing. scarlet: we say they are driving up asset prices, is that any part of the statement that is

true? david: say that again -- scarlet: central banks are cropping up prices. but the elite money, smart money , they're the ones pulling the money from the markets. david: a lot of people issue debt to buy stocks, so insiders buying their own stock and you could complain that is bad because they are leveraging balance sheets inappropriately, but a lot of the stock buying has come from companies themselves. i do not think this has been a thet money kind of run from market. i think smart money that was in the u.s. stock trade for five years was nervous about the transition much like we were. they have said, ok, we do not want to be here and we have said that, but that does not mean that we will turn around and start love the u.s. stock market once the transition ends and we can realize exactly how this experiment will get the wound. i think i could be quite -- i could find 2016-2017 to be a positive, lover-filled time

period in u.s. assets in the federal reserve has done what i think it has done which is create a long and sustaining real recovery. you so: david, thank much for your perspective and we will wait to see what happens on 16 erik:. still ahead, the lure of money and perceived in college sports. how one small school in upstate new york is trying to step up their game and what it hopes to win. ♪

scarlet: coming up next week on bloomberg's "surveillance," a primetime conversation with radel he is, coming up at 6:00 p.m. wednesday on september 16. ray dalio i am scarlet fu. erik: i am erik schatzker. sports revenue generating money for colleges. scarlet: in the upstate's goal

is betting big and some are questioning the school's priorities. bloomberg has the story. the college hockey season starts soon and these student-athletes at towne bank colegate are only too happy to show off their skills. the team is one of several at the athletic programs at the upstate school where this arena has hosted games for more than 50 years. colegate may be a small liberal arts college, but it is expending vick on the hockey program and beyond. constructing a new $38 million brink financed by debt and a lot of aluminized donations. >> if you are talking to prospective students and they come to visit and the front door they go through to the greek is that sports arena in which they will compete, you are likely not to get them. >> undergraduate tuition will rise for a third of the new

facility at ok work attendance has cost her sent in five years. the rest will be financed by former students. >> we have a tremendously connected and passionate alumni network. cost says rising education pressures colleges to increase nonacademic spending. hockeyw facility like a rink is going to really help us recruit those students and differentiate ourselves from other institutions where facility is important to recruiting. >> this athletic bonds raise could make universities invest more in projects with uncertain returns. does a school at colgate need to spend $40 million on a new ice hockey rink? murray: it does not need to, but it believes it brings a greater interest, more donations, more applications. the evidence is not clear that that will happen. >> the fight between athletics over school resources reflects a broader debate about educational

priorities. in 2013, dozens of kobe professors demand this will change their priorities in an open letter written by inc. was professor peter. professionby english either. needed tohink there be rebalancing of sports culture at colgate with academic culture. >> it has taken over a lot more space and a lot more resources than certainly when i was playing college sports. >> while some faculty continue to focus on finding that better hockey playerse look forward to a first season in their new home. if it helps the performance on alummni that fund it will receive their own award. bragging rights. scarlet: cornell will still be them. alumni do donate because of

this, what does that mean for donations for the other part of new york? >> the fundraisers have been telling us that they will only give to sports. it does mean that some of the wealthy donors are not being cap at some of these schools for academic related incident thence and -- incidents. scarlet: lost opportunity. thank you. we have much more coming up in the next hour. more on education and sports. --re will be here to invest to discuss his investment funds in charter schools. ♪

scarlet: 10:00 a.m. in new york, 11:00 p.m. in tokyo. erik: you are watching bloomberg television, folks.

scarlet: good thursday morning. i am scarlet fu. erik: i am erik schatzker. let's show you financial markets. stocks have been in focus because of all utility but they are flatlining. futures earlier suggested we would see a big droplet with liquidity arrived at 9:30 with opening of the new york stock exchange and nasdaq, that did not happen. a bit of a mixed picture today. quite a bit different from what withve seen in recent days the vicks about 25 and stocks gyrating all over the place as they did in premarket this morning. scarlet: part of the reason there is no business is because of brazil. late life -- late last night, s&p 500 downloading result rating status to junk. double be plus. that shows a stronger dollar and a weaker real. erik: some people have been

anticipating the weakening of ofzilian or the downgrade credit conditions for some time. for that, but things happen when s&p 500 index moves to downgrade. there are investors who have to make -- forced into positions as a result. scarlet: i'm glad you bring up credit stocks because if you take a look at bloomberg tominals, there is a chart show the cds market reaction. the bold white line is brazil's five year line. scarlet: cost of protecting against the default and other lines show countries in the double b plus club. this over the past one year, so in september, you actually had resumed cdf trading below turkey, so cheaper to ensure against turkey. it caught up in march and take a look at what happened in the last couple of days.

the white line surpassed the aligned and that means more sensitive to protect the brazilian default against the russian default which all along has been outlier with russia trading at a much higher multiple web-based price when it comes to trading. erik: both of those countries impacted by weaker oil prices and both the recession. scarlet: that is the perspective on brazil, let's get the top stories at this hour. fewer americans filing for unemployment benefits last week. initial jobless claims adopted 275000 and they have been under 300,000 for six months and that is the level economist associate with a healthy job market. housing, jpmorgan says comp prices will rise more than originally forecasted. the average price increase, 4.4%. the bank says rising demand and fewer distress sales will keep prices moving north. erik: no more second-class citizen status for apple television. tousually took a backseat

the iphone when it comes to promotion and development. now they have unveiled a major upgrade and in has syria voice recognition, video games and an app store. >> 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 to be suchcontent through apps as itunes, netflix, hulu. erik: i will also introduce the newest version of the iphone's and the biggest ipad designed for corporate customers. the federal government says caol production will decline to almost a three decade low. this is the seven-time the forecast and natural gas cut into the share of the generation mark. almost one third of republicans in the survey are supporting donald trump's presidential bid. in the cnn poll shows him at 32% and dr. carson at second at 19%.

none of the other had a double approval rating showing. on the democratic side, bernie sanders leading hillary clinton for the first time in iowa. it shows up just one percentage point ahead, well within the margin of error, or the dead heat. scarlet: i guess her apologizing did not make a difference. erik: i'm not sure if the quinnipiac poll was done before or after. probably why is she apologized in any case. get ready for two dollars gasoline. gas prices will fall another 17% by the holidays. about $2.43 on average. were one dollar cheaper than one year ago over the labor day weekend. the national football league returns with the patriots taking on the pittsburgh steelers. corporate sponsors do not appear to be turned off by deflategate and other controversies. tom brady will be there. "the roster journal" says they will bring in more than $12

billion this year with revenue from corporate sponsorships up 15%. those are your top stories. much more coming up in the next half hour on "bloomberg television." they did for apple yesterday. it unveiled a new line of products in san francisco and for the families, they do not disappoint. questions swirled around united exit yesterday, what does that mean for delta and americans? si joins usgas to talk about schools on tennis. will talkng up, we about the fallout from the scandal at united airlines. -- will otherlect rivals take advantage and can then you ceo out of a railroad do better than his disciple to? ♪

scarlet: good morning. welcome back. i am scarlet fu. erik: i am erik schatzker. scarlet: stocks fluctuated between gains and losses. little change if you look at the index -- the dow jones, s&p 500 and nasdaq. we will bring julie hyman in for context. erik: those are just benchmarks. julie: they always are, thankfully for us. andnasdaq is in the green the dow jones and s&p 500 down. all of them with very little change. i will quantify them quickly on my bloomberg terminal. looks like we are seeing volume of little bit lower than it has been over the past 20 days. the s&p 500 as 17%, more characteristic of this week whereas during that mostly down period of the prior up weeks, looks at we are trying -- trade

-- trending 70% lower than the 20 day average for the s&p 500. there are individual stocks on the move. i picked the trio of losers today. let's start with lululemon, it raiselyst estimates and profit forecast for the full year. the third-quarter forecast is below what analysts anticipate. what those analysts are telling us is that that means the company is really going to have --lockbuster fourth quarter going to have to have a blockbuster fourth quarter to meet earnings. they have been pledging to foreign markets and update its fashions because we are getting this sort of yoga mat the street and they're trying to capitalize. shares are taking a big hit, down 10% on that potential holiday pressure that the company is feeling. let's take a look at the gaming companies, the casinos. price targets being cut over and susquehanna. wynn in las vegas are lower and

analysts say there is a lack of a clear stabilization in the cal with two-year trends continuing to deteriorate just as they have been. we have seen along slumped in the cow. finally, dollar tree being downgraded to underperform from neutral. analysts are not convinced of the wisdom of dollar tree acquiring family dollar. there are execution risks and the shares are down by about 2%. scarlet: julie hyman, thank you so much. i love the benefit lululemon, downward dogs. working his magic. erik: meantime, apple's event in san francisco did not disappoint apple fans. investors, another story. the anticipated iphones and thes, and ipad pro with activated -- force activated to be, and much more. josh got a behind-the-scenes look at what it takes to make a feature like the new iphone's 3-d touch and josh shared his

experience with me yesterday. josh: the first is that they have been incredibly busy out there. keynotes or minor keynotes are usually a little bit of a software upgrade. 's'years.e josh: there is a lot of hardware upgrades, doggie doors, a lot of stuff. i saw a lot of that early and hard about how it came about. what they are really excited about is 3-d patch. that was more in depth and i got into the design studio emily heard the making of the future which is kind of unusual for them to reveal. erik: it is pretty clear apple believes 3-d touch is a big deal. are they right or is it some kind of an incremental thing and not really a game changer like the curved edges on the samsung phone? josh: it's a lot more than curved edges. the truth is that multitouch,

which they introduced in 2007 with the first phone when you pension move your fingers around -- erik: game changer. josh: nobody had ever done it before. now there is a new way to use your phone. i would not say it is that big a leap, but it is a pretty big leap. instead of constantly using them to get back on, you are actually just telling the phone through want to do,t you you want to go and it comes up. for the first minute or two using it, you'd think it is weird. after a couple of minutes, it is intuitive. what i found messing around with the phones is that i was saving a lot of time and the phone was very smart based on previous behavior about where i wanted to go, so when i pressed the phone who the most me likely people i was to call and i could present and that was that. erik: it sounds, from the way you describe it, that the home button may not be around for long. josh: i don't know. i asked them and they said

maybe. we will see. i did not get a sense that the button will go away. what really was clear was that they were obsessed with trying to make the phone, which was pretty easy to use, even easier. erik: you talk about the fact that they have a lot going on, 's'year.an i think to myself, somebody not long ago with someone in your position visiting, we were kind of like the kid do unwraps the chocolate are in "charlie and the chocolate factory," finds the golden ticket and spent the day with willy wonka. is apple pass that or are we passed that? josh: i think it is a different company. the steve jobs' apple with show up periodically, lift the curtain and blow your mind. here, it is a very complicated company serving multiple fire wes is against multiple -- multiple ios against multiple devices and it has great resources. if you are following the company , theyou seek consistently

are working on so much stuff. what they are smart about is 3-d touch inevitably that wherever there is a touch screen, you can imagine how that will get incorporated. we have seen a little bit of the force touch on the apple watch and that was incorporated into imax. what they also described and they were very insistent, they are working on so many different ideas as so many different times that you really do not know where they will go next and he says, of himself, the key is to get designers to learn your things, try new things. 80% may be thrown over the shoulder and not be useful, but you never know what the right 20% will be. behind that curtain that i talk about, there is an industrial design studio and there are things that can be great, colossal failures, but the key is that they are constantly trying to experiment with new hardware, software, and they have confidence that at some point something will come out of it. erik: were you able to pick up

tents on where apple will go next? josh: no. they're pretty careful. they spend a lot of money and time to unveil what they are up to right now. they do itned is how and how they manage their people which is not in a linear way. projects do not start with a whistle and end with the tape. it is much more like music where they have a bunch of people in the design and engineering studio's strumming guitars. sometimes they get songs, sometimes they do not but they are faithful to that method. it is interesting. it is the thing you think any company could copy and nobody is bothered. -- and nobody has bothered to. band, all these people whom you spend time with, how do they compare to other management teams? josh: they do not do a lot of meetings. one of the things on he was insistent on, well, i said, walking through your structure. as soon as i said the word meets, there was a look of scorn -- what are you talking about?

they play with prototypes. they gather around with stuff in their hands and sometimes on a table, print out to a while, but when they talk, it is about product. there is little conversation around process because they have had the same process for 20 years. a lot of the people working have been together for most of those years. i have described the feedback process asked a series of i think they so relate in ways that are different from other management teams. they have 13-hour meeting a week at the beginning on monday. they all sit down, -- they have one, three-hour meeting a week at the beginning on monday, and they all sit down and after, it is possible they won't talk for a long time because they are doing project work. erik: steve jobs wanted to change the world. how did these guys define success? josh: it is very easy now that you are the largest company in the world with $200 billion cash

on hand to start shifting where you are. one of the things i've learned from johnny i is that he is vigilant about keeping his eye on what success has been for ,pple which is making easy beautiful things. things that they confiscated experiences and render them simple and intuitive. he said there is a lot of other stuff going on. he said they are vertically integrated, horizontally integrated, and a lot to do and people deserve. he feels there is enough faith in him with that goal that he can continue his work without any impediments. i think that they believe that is the way to go. erik: a rare visit to the apple design center. lucky josh, editor of "business week." abouts not to talk apple's new products and prosper, the seal of applico. alex, welcome. clearly, apple has a lot at stake with the iphone, but --

and maybe this 3-d touch feature they announced yesterday is important, but what i am more interested in talking about is -- and i think scarlet fu shares this view -- how powerful could typepad pro be? -- could the ipad pro be? alex: it depends a nice segment enterprise market but if you look at health care, they are clearly trying to move a lot into there. you saw that with some of the things they announced with the apple watch. erik: that is more consumer. alex: right, and they also brought microsoft on stage about the ipad pro which was a big deal. scarlet: considering that microsoft makes the surface. alex: exactly. i think it is a good signal that microsoft will give it away or not put its priority on windows being everywhere and only having office on windows or microsoft products. ok, well,re saying,

that is not necessarily bulking -- working so well, so we will bring office to everywhere and all the phones we can get it on. i think that the ipad pro and the bigger screen size and utilities that they will get from office will definitely give them more of the sovereign for the enterprise. scarlet: apple's design team was telling our editor josh that they use the word inevitable a lot when they try to come up with new designs. would opening up apple tv to outside app developers inevitable? would say so. usually it takes a couple of years before these development platforms, if you think about the iphone and iphone first coming up commented about 1.5 years before they opened up the app store on the currency so you have to get enough of these devices in the market to consumers, the critical mass, and the developers want to make software for the iphone or the apple tv. erik: your company applico is part of the apple echo system. what are you most excited about and what are you staring energies and greater powers

toward? alex: there is so much. everybody sees the announcement as "consumer products and hardware products coming out. i really think apple did a developeres the app community possibly more than consumers because they have opened up so many new possibilities with the force touch you were talking about. that brings any dynamic to how you design apps for the iphone and the things you do with the obviously, pro, and the app store for apple tv. they have really done a lot and they have embraced their app developer community well which led to their success. erik: does it raise costs for developers? the 3-d touch is called 3-d touch for a reason. not just because it gives you this sort of 3-d field as you look into the applications on your phone. it adds almost an exit dimension to the challenge of program.

it creates a nice challenge for designers, engineers, product managers to say how can we rethink some of the user experience is that we had before? happily make better experiences then say android, which they are clearly going after in a targeted manner now with their android app to switch over to the iphone. scarlet: is there a lot of ideas in the pipeline when it comes to ipad pro or apple tv? alex: even last night, we got people contacting us wanting ipad pro apps already. erik: what you think it represents that apple has, i guess, overcome some of steve jobs' tabboos? the apple pencil, for example, a stylus and clearly, vigorous grains and steve jobs never wanted to go with the bigger iphone screen and i you have a tablet that is the size of an encyclopedia. well, you have to give credit to the team that they are

looking to make apple their own and take a lot of the amazing things that steve did for the company which is unprecedented. erik: what is the next tablet you think they overcome? you think they overcome? but itusiness pharrell, would be interesting to see something with apple and cars. -- this is far out, but it would be interesting to see something with apple and cars. they're working on side project that do not go in your, but it would be great to see that in the future. scarlet: alex already begun about what apps they can come up with. thank you. erik: the ceo of applico. scarlet: still ahead, a tennis icon becomes a fund manager of sorts. stops by to explain how he is helping to make an impact in education and we would talk about some tennis. ♪

scarlet: a look at top storiesscarlet: on bloomberg television. we begin with their bright -- airbag problems prompting situations. the driver side bags could inflate and chrysler says it has cost at least two injuries. more than one point 3 million pickup trucks between 2012 and 2014 are affected. arece in new york city investigated the takedown of a former tennis star. james blake says he was tackled a hotel and outside they say he was mistaken for a suspect. blake is half black and retired from tennis two years ago. the opposite is expected to be reassigned and the mayor's office say they regret the incident but the police department has not apologized. city menus will include warnings about salt. the numeral fx chain restaurants of salt shaker symbols following and the art of with more than the recommended dose of recommended sodium which is about a teaspoon. really?

that little project will show up on everything. can you imagine anything that does not have it? tok: i think it is helping know how much salt and sugar we are taking in. scarlet: i am already cutting down on trans fats, now solved, everything will be bland. little, the by american food landscape and food industry is being transformed. on the: coming up bloomberg market day, which airlines will benefit from all the turmoil at united airlines. the winners, losers, where does delta stand and how about american actors eeo was ousted -- after the ceo was ousted? ♪

this is a great place to work. not because they have yoga meetings and a juice bar. because they're getting comcast business internet. comcast business offers convenient installation appointments that work around your schedule. and it takes- done. - about an hour. get reliable internet that's up to five times faster than dsl from the phone company. call 800-501-6000 to switch today. perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. scarlet: this is bloomberg market day. i am scarlet fu with erik schatzker. we have welcomed the management

shakeup at united airlines, but is it too late for oscar munoz who is the next railroad guy? erik: his most recent position was operated at cfx. scarlet: what opportunities does it present to united's competitors? joins us from fort lauderdale, florida. seth, you believe that this program is the final straw because he was kind of do to be replaced anyway. tell us about the problems talking united and if it is because of the leader or because of structural issues within the industry. seth: you might ask, is it the jockey or the horse? in other words, is it off jeff smisekna's fault that united is an operational laggard or is there something about united that makes it harder airline to run and it is a fair question. go back to the 1980's or 1990's, lets anerally lags, american and delta, the least successful financially airline

of those that survived. there were others far worse and there are things about united -- it has higher labor costs and delta and american, that is a fact that the other two airlines went through bankruptcy more recently in got to reset the clock. not a lot the ceo can do about that. united's head, although there are in a big metro area, united does not have pubs where they dominate the city in a way that american does and how delta does in atlanta and minneapolis. not a lot to change about real estate, but on the other hand, united has made mistakes in recent years. we are talking about these flights through columbia to please newark. jeff smisekna threatened to is used -- to reduce flight team in houston which is the date of -- ub and theybig h restore them in time for the oil bust and a little bit of both,

the horse and jockey. erik: some of the people we talked yesterday about jeff what theyay that went believe took place was this program will with david samson, the former chairman of the new york port authority of new york and new jersey, was an outlier situation. in your experience covering the airline industry, have you seen more of those kinds of backroom deals between airlines and the people who sort of have authority over the hubs out of which they fly? seth: interesting question because i mentioned a minute ago, but much bigger ways, airlines do this publicly and very legally. i mentioned what united insulted in houston a couple of years ago even if it was to the own detriment. americans threatened that if charlotte would not keep the exemption on some school taxes -- stuff -- that's the that's what i mentioned back room. that stuff is all at least in

the public domain and it should be, a disagreement. each side is incentivized to ask for different things. finally, they have to resolve it and either they come to a consensus or they do not. what we know or at least we think we know what to united and jeff smisekna and perhaps other executives and david samson was completely -- the flight was public, but the reason for the was secret. seth: absolutely and completely inappropriate and allegations are correct. is it the only time in history this has happened? no. commonplace in this part of the world, something like launching thatket for a reason like is not common either. is somebody getting an upgrade edition not be getting, or something along those lines, yes, probably so, but they're definitely pushes the balance of the idea of launching a flight that should not have otherwise exist is not something that happens every day.

at least not in this part of the world. scarlet: you are a known entity inside the airline industry, you have caught -- you have taught whatmic courses, tell us the feeling is probably like inside delta, inside american? are they rubbing their hands together thinking this smells opportunity, especially when they are competing on price? have it does and they already taken advantage. continental, prior to the merger with united, sitting in manhattan, spent a couple of decades retraining people. hey, come over to newark, continental has a good operation and they were successful. now delta, they have been going back to the same corporations, to big banks saying, do you want to get there on time and not lose your bag? come over to laguardia instead. american is sort of integrating itself at u.s. airways and already farther down some

respects with that merger. turning its operation around and in a place like chicago, united and american go head-to-head at o'hare, you would think that if anything, american would struggle more because it is earlier in their merger but they have, so far anyway and the story is not over, done a better job. they sensed that opportunity. the change of the ceo, i don't know if that there are many customers saying they will fight united or not because there is a new ceo, but they went to get there on time with backs and united has been physically less likely to do that. anythingwe will see if changes with oscar minas at the helm. thank you so much. erik: let's take a look at top stories. the hungarian army is conducting exercises today near the serbian border. this could indicate soldiers will join police in trying to control arriving groups of migrants. they detained more than 3300 people yesterday for illegally crossing the border. the highest daily figure this

year. the suspended service to and from hungary saying congestion trains arriving: migrants. on capitol hill, conservative house republicans do not want the boat to disapprove the iranian nuclear deal before the 17 -- this of him are 17 deadline. they do not like it but they say they are not bound by next week's deadline because president obama has not given them details about side agreements with iran and the national arms inspection agency. meantime, iran is aching it clear that the accord with the west would not mean improving ties between america. the leader says america is still "a great satan and determined to undermine iran." he says israel would not exist 25 years from now. if the former cuban leader allows it, the senior vatican official tells bloomberg there will little advance notice of the meeting if it happens at all. pope francis has acted as a mediator between the united states and cuba and he will

later visit philadelphia, new york, and washington. look at top stories at the moment. scarlet: still ahead, how social is impacting tennis? agassi will talk about his investment fund and what they are doing for charter schools. ♪

scarlet:scarlet: welcome back. one hour into the u.s. trading day which means it is time to get caught up on action around the world. let's begin overnight in asia where greg is across the board. the nikkei and hang seng down more than 2.5% and the shanghai composite losing 1.4%. story, china's brokerage industry hit hard by

government efforts to prop up market stability. julia filed this report from hong kong. juliette the brokerage: industry being hit by government effort cap of stability. three of china's biggest brokerages have all tumbled twice as fast as benchmark indices since the beginning of july. security firms having doing and national service of the stock market and at the same time, revealing the risk and getting hit by a plunging volume due to restrictions on speculative trading. they lost a dramatic reversal from just eight months ago when the value of pacific shares were almost on par with swiss tank ubs. >> erik: u.s. stocks ever burst earlier losses but not the case in europe or mark barton stands by. it is all over.

three days of game equated to a 3% rise. it has gone to a screeching halt. after the biggest increase yesterday in six years, both china producing prices biggest slump in six years as well, really putting the cat amongst the pigeons when it comes to declines among markets today. one of the big concerns is the other acronym, the letter within the acronym, that downgraded to junk by standard of cause and poses the question, who will be next? the policy meeting next week leads to the question of canada's global economy with stand higher interest rates? most of european markets are trading lower today on the question of higher interest rates. we are minutes from the bank of england's latest policy meeting today. the bank of england is not deterred by recent global market turmoil. yes, the rates are not changed at .5%, does that mean we are approaching the day went rates had higher? economists suggest we will see

the first rate hike in february and traders are not so sanguine. they say possibly the last three months of next year. this goes against we can -- recent economic data which theested a slowdown within u.k. economy. there is a flight to safety today with spano -- with spanish and italian rising and german yield declining as well. julie, over to you. you, mark.k u.s. stocks rising to the highest of the session but there has been a little bit of volatility in the early session. he started out a little bit lower and moved unchanged but kept fluctuating. in 11 of the past 14 sessions, s&p 500 has at least 1.2% up or down. we have seen these wide swings and we're not that wide yet today. we have seen that bouncing around. take a look at the map on my terminal for sectors on the move. much more green on the screen as stocks rise.

tech, health care, and financials are helping could you be to the gains. health care was one of the biggest drives yesterday, so rebounded from the losses that they experienced. wanted to note the movement in energy. a little bit higher and had been one of the biggest drags. rebound inissible oil prices. it snapped a three-game losing streak, so up about one point8% or 1.9 -- 1.8% or 1.9% and rebounding. we get the supplies report out at 11:00 a.m. and i will bring you the numbers and we will see if there is a change in direction. copper having a three-game winning streak which is the longest since june. a3 day rebound after long losses in copper and gold snapping a five-day losing streak and finally getting traction, up about .501%. .5 ofard mark talking --

1%. you heard mark talking about europe and over here, we are seeing selling in treasuries as the yield bumps up by .8 of 1% and 2.2% is what we are saying that 10 year yield -- is where we are seeing that 10 year yield. fast,t: try saying that 10 year yield. julie hyman with the latest. erik: can the private help -- can the private sector help educate me the kids and make money at the same time? that is the promise of social impact investing and andre agassi is involved. he started for charter school through his charitable foundation and since 2011, managing partner of an investment firm that helps put them into better facilities. assi arerner and ags here to talk charter schools, their fund, and eventually, a little tennis given the fact that we are in the midst of a super exciting u.s. open. let's begin with this -- how does it work?

i think people need to understand the mechanics of your business proposition. no question. the single impediment to the scaling of our charter school operators is actual facility component. scarlet: the physical building. andre: they cannot access public dollars, so they have to incubate new boys and girls club, but we have done writing capital and put together business model that we have sold to build the structure for the best in class operators and how it would be abridged ownership on their half. we have or be customers thrilled about it and we are scaling it and appoint over 550 million over the last 2.5-three years and we built over 50 schools at this point and scaling at a great rate. scarlet: the schools do not own the buildings, the fund owns them? abndre: porsche window of time. bobbie: not initially. we are focused on impediment growth which is infrastructure. when you take a look at education, there is daunting

challenges. we have left daunting challenges like health care and housing to the government and philanthropy and there is 50 years of proof that they are ineffective at scaling and impacting. they tend to be reacted more than proactive. oft year, we dropped one way kids out of high school. a terrible thing because they are eight times more likely to go to jail. we spent $30,000 a year to incarcerate and entree and i came together because he shared a passion and frustration for public education and we recognize that charter schools are not the panacea to the problem but part of the solution. erik: here is one of the questions up at the goldman and sacks has their own social impact investing group. similar work to what you are doing. i have got to see one of the schools they support in newark. can you investors, including high net individuals who may come to your project there with the bank of america merrill lynch platform, make as much money and as good a return on a

risk-adjusted races in your product as they can in and on social impact that? the challenge in most instances when we approach and tell them we will do profits of purpose, the immediate response is anytime you superimposed as a cytometric on a financial trading, you sacrifice a yield. we refute that social impact is not massive glass, it is a risk filter that recognizes that making the -- making money and societal change in enough be inclusive. -- exclusive. you can drive but it returns to other investment opportunities because we are not speculating on demand. most speculate, but value investing means you are focused existingrket losing demand going unmet. we focus on societal issues like education and housing with a huge demand for service. scarlet: you have been involved in education for a while. what was the turning point for you to go from nonprofit to a for-profit wrapped?

gone away fromot philanthropy. i have a big foundation that i do a lot of things with philanthropy but it is not a scale of sustainable solution. when i met with bobby, it took me three months to get comfortable with the idea and it came down to a question -- what is the alternative if i do not do it? not building hundreds of thousands of schools were those who know how to educate our future? when i recognize that was an unconscionable decision, i said win for it and it is a everybody. erik: this project is not running charter schools, but you have to have a view on charter schools as an alternative to public schools as part of the project. the reason i waste question is in part because mark zuckerberg, as it was documented in "the new york times" was not so long ago, he talked harsh points about

charter schools in new jersey and he along with other people had to recalibrate how they feel about the charter school alternative for public schools. andre: fair question and right point. i built a charter school philanthropic way and i was among the top shelf that was able to outrace my mistakes. 80%-80 5% of charter schools do not outperform district peers, but the top 50% have outperformed. we are not interested in the scaling the bureaucracy or failing schools, we are interested in those who know what they are doing, partnering and giving them tools to reach children. scarlet: how does demand for social impact investing involves since you found the first funding in 2011? booybby: there has been a shift our peopleder value recognize that make you money and change need to be exclusive. social responsible practices and ethics are at the center of any organization, so we are encouraged. the first fund was about $200

million, took about one year, and we raised it in less in the second fund. erik: thank you. we appreciate you spending time. we would like to talk a little tennis. we will talk a little tennis and come back. -- we will take a little break and come back. ♪

scarlet: a shameless plug. coming up next week on "surveillance," a prime time onversation with ray dalio september 16 about the fomc announcement. erik: we are back with tennis legend andrea agassi. ndre, i feel like you would want to be that yourself because there is no american in the sum of finals again. andre: i am not as insecure as my wife, i only needed to win

twice. it is unfortunate, you would think we would have more, but i think there are reasons for that and they are all named the tennis players now. the game has come a long ways but i would love to see american come through. thelet: is there something way about how tennis is played among the american youth that has deprived us of elite male tennis talent? andre: i think we need to raise these kids with the slow discipline tennis because with the spin of athleticism, no matter what surface, you have these long and difficult rallies and your game adjusted those scenarios. we grew up on hard courts and that was great in my time, me, pete, connors, we played aggressive and forward. it is not apply any time -- anymore with the strings and a lot of other reasons. erik: given your work in charter schools and philanthropy, you understand well personification of incoming american society. how can an american tennis be as

good as it is going to be if it remains a rich man's game? bige: no doubt that is the component. getting a racket in kids hands is a big deal. i think our federation -- erik: they were card. do have a lot of resources, but we are a big country. we've got to find a way. hand,d more rockets in public parks, clay courts, infrastructure. i cannot promise you that that is an easy solution. it feels as difficult as scaly my mission in education sometimes. scarlet: a long to-do list. when you watch the u.s. open, who do you watch? watch moret to enjoyably than before because i do not -- scarlet: you are not stressed. andre: it's nice. i love watching the intimacy of what these people do so well, even on the women's side. watching what serena is about to accomplish is amazing.

again, fred berger is beautiful adalwhat he does and n is unbelievable. it is a lot to appreciate. rer was talking about facing off against you when he -- when you are 36. do you want to see him when? him win allt to see the time. watching him making someone look silly is such a pleasure. he goes from a tennis match to watching an artist. it is an amazing experience. scarlet: who will win it all? called djokovic to win every slam this year, but feder er is playing surprisingly better than he ever has and that

is saying unlawful. if jack of h the slightest pull off, you have to look at fed's delivery. erik: so much attention has been paid to serena and how she is under compensated, what that's solve the problem issue is the grand slam? heard herave never complain about lack of resources. until i hear her complaint, i don't think there is much of a deficit. erik: an argument for others to have. two-time u.s. open champion and multiple grand slam title. scarlet: and a very busy man. education and busy watching a great tournament. for joining us. i am erik schatzker. scarlet: i am scarlet fu. market day continues after a quick break. ♪

>> is 11:00 a.m. in new york. the bloomberg market day. stock prices in the united states move higher. jobless claims report signal

health in the labor market. >> credit rating, junk. america's's largest economy makes the deepest recession in a quarter-century. logistics.o of xpo's annual revenue will be taken to $16 billion. the details of the deal. ♪ scarlet: good morning, everyone. pimm fox: and i am pimm fox. julie has got breaking news on oil inventories. up 2.5 7timated million barrels.