there is uncertainty six days from the fed meeting. we consider one and done. and it is the 14th year of remembrance of september 11, 2000 one. good morning, everyone. this is "bloomberg surveillance." i'm tom. joining me, david westin this morning. it is a great day in new york, 14th year of ceremonies and moments of silence. ago with 14 years charlie gibson on that moment. david: thanks for having me. all of us were thinking about where we were 14 years ago. i was watching as the traffic copter went into the first building, then watching as the plane -- as the traffic copter filmed the first plane going in, and then the second. tom: it just was extraordinary. we will have coverage all day on bloomberg television and bloomberg radio. i can say to all of you

worldwide, please make a visit to lower manhattan. the drama there, and the improvement in the architecture, the new architecture, in the last two years has been extraordinary. let's go to top headlines with david gora. -- thewe could see forecast for crude has been lowered once again. goldman is trimming a 2016 estimate for a west texas crude to $45 a barrel. that is down from the may projection of $57. it is also slashing its brent crude prediction. the iran nuclear deal will be formally adopted the next month now that it has survived a congressional challenge. send the democrats and the president obama a major foreign-policy victory. republicans were two votes short of what they needed to pass a resolution of disapproval.

worldple around the should know that today's outcome was clear, decisive, and final. there is no doubt that the congress will allow this historic agreement to go forward. efforts by the opponents were soundly rejected, much larger than people thought. david: the plan to -- i read must start taking steps to comply, but opponents say they will keep fighting or human rights activists say the u.s. should accept more migrants fleeing the syrian war, but the obama administrations say security issues of slow the process. president obama wants the u.s. to take in 10,000 syrian refugees in the next two years. than.s. has accepted less 1500 since the syrian war started two years ago. saysuropean union official governments are green -- are in agreement on migrants there.

they will shelter 160,000 refugees. 11 of the republican candidates will make it into prime time for presidential debate. among them, carly fiorina, who was not among the 10 picks for the debate last month on fox. of thepiled polls leading candidates. the debate will air wednesday night at 8:00 eastern in the reagan library in california. those are the top headlines. tom: let's set a data check for you. not much going on in the market this morning. indonesia gets my attention, but futures are negative four -- are negative for. fix, 23 point -- 24.3. gold is weaker. there is the indonesian rupee. know you carry rupee in your

wallet every day. let's go to the bloomberg terminal. back three dollar, and four decades with all the drama back then. here is the strong dollar of the late 1990's. before -- because we set this up, the log chart, this distance some of the strong dollar distance, we can equate over here. this is how far back we are to that 1990's dollar. where the dollar affects the american economy. it is going to be bad for imports, right? tom: it changes import export dynamics, but i wonder about the knocked down effects for any of the other countries. we will touch on that for much of "surveillance here can we begin coverage with a forecast of commodity meltdown. jeffrey currie months ago framed

$39 per barrel. his team at goldman sachs looks for oil to move, as low as 20. , theore importantly ramifications affect all commodity producers. eswar prasad is professor at cornell university and at brookings institution. he is the former head of the imf china division and joins us this morning. is the commodities super cycle over? is the commodity gain done? it suddenly does not look good for a con -- for commodities. china actually does manage to leave out of this economy away from investment, which means less demand for economy -- for commodities. either way i see much weakness. tom: we are going to talk to you

en later about china. i believe one dollar 95 send gasoline is a good thing. it has got to be great. eswar: one of the reasons we are seeing weakness in oil, the supply response coming from the u.s. barrel, a lot0 a of production has come online in the less two years is not going to be economical. this will mean a structural shift. potentialo there is a winner for new year -- for u.s. manufacturers. eswar: there has been a good net positive. david co there is a resurgence that this leads to. eswar: the question is how low oil can go before there is a negative effect.

there is so much weakness around the world that it is less clear. tom: bring up the chart that we did on oil at the top of the hour, showing the $20 mark. to me, the important point of this good research is that we do not go back to 60, 80. everybody is bringing down there one and two-year fuse on oil. what does this signal? it signal structural weakness, largely because -- the big question that still remains, the supply on oil states at $20 a barrel because than a lot of production is not economical. within that microeconomics, does it hearken back to the instabilities that we saw in 1994 and 1997, and then on to the drama of 1998? eswar: oil at $30 or $40 a barrel is good for the u.s.

economy, keep some production online, but the problem if it goes below that -- it could be a net negative. david co and apart from the economics, there could be geopolitical issues. if you look at nigeria, venezuela, it puts a lot of pressure on them when they are getting most of their revenues out of oil. eswar: absolutely. many of these companies -- many of these countries' economies are based exclusively on oil. some of the other countries you mentioned -- this will put the squeeze on them and the problem becomes social and economic instability. tom: how do you fold in global central-bank action? it seems like not a currency war but almost a central-bank war of reducing interest rates within deflation from the commodities. is it a central-bank war right

now? eswar: i think central banks are being squeezed because there is not much room. especially if you take these economies weather is not room for any other policy, central banks are the only game in town. so there is this increasing imbalance with the u.s. trying to think about raising interest rates, looking for when that will happen, and the rest of the world counting on central banks for economic growth. it is great to see this curious configuration of currencies in particular. as we see the divergence intensifying. of cornellprasad university. coming up, ken rogoff will join us in the next hour from harvard. we will pay remembrance as well to september 11. our twitter question of the day. we are simply asking, on goldman sachs, how low do you think oil can go? coming up next, can verizon succeed where others

have failed in global tv. this is "bloomberg surveillance ." ♪

tom: somber events in lower manhattan today. we look at ground zero this morning. it is spectacular. if you have not attended the wonderful architecture of the new ground zero, it is extraordinary. i visited a few weeks ago. many going up to see the freedom tower in new york city. david westin joins me. cornell university, eswar prasad. let's get to top headlines. the financial post says

the purchase price is expected to be about $13 billion. the unit is the largest financier in the north american commercial truck and trailer segment. bloomberg news is reporting droppedires merger fund 4.2% in august as stocks tanked worldwide. paulson's advantage hedge fund. ellen pao will not appeal her gender determination case. court costs are $276,000. the lawsuit claims bill colleagues preyed on her and she was not promoted because she claims mistreatment. we are joined now by paul sweeney from bloomberg's intelligence unit.

verizon is making an announcement this morning, and time will tell how important it is. they will have a new mobile streaming service, free to your telephone. example ofis another what we have been talking about for 10 or 15 years, which is the convergence of technology and media, and we are seeing it happen. we have seen so many deals where we have seen media companies like time warner and hbo taking their content direct to consumers, engaging technology, the internet, bringing their content to consumers. now you have verizon trying to get to -- david: but this is different because unlike hbo, which is subscription based, this will be free over the air like broadcast tv supported by advertising. paul: they are trying to offer this free, make it an ad-supported model, and if they get enough traction in terms of subscribers, i expect they will charge. tom: can i ask a dumb question

? does anybody want this? i am texting right now, bumping into people like an idiot. how am i going to do this with tv? paul: everybody looks at one company and they look at netflix and they see over 50 million subscribers globally that are paying for streaming video, and we know that people are consuming more content via the internet primarily via their mobile devices. this is where technology and media is coming together. we have seen lots of examples where consumers are changing their behavior. david: and they are not calling it verizon, they are not calling it verizon fio's. they are calling it go 90. you turn your cell phone 90 degrees to watch the video. tom: that is so lame, we need to bring in david gura, the closest thing to a millennial. would you help me here? it is like digital diary. it is insane.

david: is there evidence indicating people want to watch shows of any length on a smart phone, on a small tablet? paul: there absolutely is and we see it across the board. it really is a global phenomenon. you see all the content players, hollywood studios reconfiguring content so that it plays on mobile devices. they are upgrading technology. brady want to watch tom beat the steelers on a mobile phone? bei want to watch duke beaten in basketball? know, isrts, as we really the must-see tv left on broadcast. david: espn is one of the offerings on this new device. paul: one of the challenges for verizon, the big challenges they do not own any content.

at&t went out and spend billions directvirectv because has relationships with the hollywood studios and the broadcast and cable networks. verizon is trying to piece together an offering. tom: the mobile phone is treated differently in china, isn't it? can you imagine mobile tv across the billions of people in china? eswar: i would hate to see the streets of beijing with people looking at their cell phones. china again, the mobile phone has become much more important of a part of people's lives. you will see this demand especially in china for many more things to be done. we see this as being the way of the future, but the implications for human relationships and how things work in the streets, i fear it. david: going back to paul's point of how many announcements we are seeing, a lot of media companies do not know where it is going and they want to try everything because something

might work. the -- those are the experiments that make the mobile phone risk work. david: you see this overall in media. there is a fairly limited audience, but they are really engaged. it was smart, well recorded, it had a certain amount of -- -- iss that one verizon that what verizon wants, a limited audience? paul: no, they want to sell advertising. david: it makes the deal worth it. paul: exactly. tom: are you optimistic or -- paul: i am very optimistic because i see the other side of the equation where the broadcast and cable networks are seeing real constriction on their business. tom: paul sweeney from bloomberg intelligence on a new experiment.

eswar prasad is with us from cornell. in the next hour, ken rogoff china, on the most interesting foreign exchange markets of 2015. from new york city on this september 11, it is "bloomberg surveillance." ♪

is not juster 11 about new york city. here outside the pentagon, there is a wonderful memorial to the flight from dallas that was heading for los angeles and did a sharp turnaround and created such devastation at our department of defense. we remember september 11. good morning, everyone. ."loomberg surveillance

we welcome you all to our efforts today. david westin has the morning must-read. david: the thing that struck me this morning came out of "usa today." we all expected another major attack and it did not happen. but it came back in a different form, in isis, in beheadings, in burning people to death. it is a much harder formed to respond to. tom: we are making that response right now p general allen will be speaking about isis. eswar prasad is with us from cornell university, and the search here away from the military and the terror of economic growth. how do we bring stability and

economic growth to some of these geographies, particularly the middle east. to $20 a oil goes barrel, that will heighten the social and economic instability in the region. but the problem is many of these countries need governance reforms. those are very difficult even in good times. david: we saw that with the errors spring. we thought everything was -- with the arab spring. we thought everything was fine. ,swar: countries like venezuela government problems are very hard to fix. economic stress is going to make it much worse. tom: when we talk about the rule of law there, give us an update on the rule of law in china. is it there gekko eswar: they have a very different -- is it there? they have a very

different definition of the rule of law. haveudiciary is going to dominance over the communist party of china. it is a very different notion here. the government can be taken to the court. in china that is off the table. you need a functioning legal system to make property. tom: it is equivalent to the aristocracies of the middle east. thanhey no different china in rule of law? eswar: there is no question of the functioning legal system because of the monarchies taking dominance over every aspect of life there. david: i was in hong kong a while ago talking to one of those leading dissidents who campaigned in favor of china's admission to the wto. he said the reason they did that is if they join the wto they would have to have the rule of law. tom: let me ask you quickly here , a question of rule of law, one of your expertise, david.

are we naive about what we see in the middle east and what we see in china? david: realistically, we do not have rule of law. you do not have a judiciary and an independent bar. the united states is almost unique. we have always turned to the courts. you played left wing for the canadians, right? is "bloomberg surveillance good morning. ♪."

tom: it is september 11. we will have coverage of the remembrances in lower manhattan, the pentagon, and in pennsylvania throughout the morning. joining me on bloomberg

surveillance this morning, david weston. wonderful to have you here. right now to our headlines with david gura. locateo the bank has that has lowered its forecast once again a growing opec production for goldman is trimming its 2016 estimate for west texas crude to $45 a barrel. may a production of -- the prediction of $60. carly fiorina will make it to prime time in the next presidential republican debate. she was not among the 10 candidates fox picks for its debate last month. cnn added her after compiling polls from the last two months. 11 candidates will be on the stage at the reagan library in california. the others would take part in an event earlier in the evening. clearden is making it that his decision about running

for president is more emotional than political. the vice president appeared on stephen colbert's new late-night show. biden says he is not ready to commit for a white house run. joseph biden: i do not think any man or woman should run for president unless, number one, they know exactly why they would want to be president. two, they can look at the folks out there and say i promise you you have my whole heart, my whole soul, my energy, and my passion to do this. co biden says he and his family are reeling from the death of his son. a big weekend ahead for netflix, its first original movie's filmed -- screened at the toronto film festival. this is its chance at its first academy award. it gets people accustomed to watching new theater-quality

films at home. the patriots started the nfl season with the way they ended the last one, with a victory, defeating pittsburgh 28-21 last night. rew fordy th touchdowns. tom: start the game earlier. it was great to see that. he is motivated to do well. david: i am a lions fan. you know where brady played college ball. michigan. tom: lions fan? david: there are not many of us. tom: we have breaking news on the russian central bank. the russian central bank does not raise rates. inflation and the weakening ruble is a great challenge there. they do not do anything. to septemberrward 17 when we will have a lot more

on what the u.s. federal reserve bank will do. dollar-ruble,he 67.78. marketthe current multiple is too optimistic despite the selloff. the market is pricing in earnings that will not materialize. according to a new study, they might just be right. let's check in with director of research richard dobbs, one of the authors of the research. tell us about this study. you think there has been a boom for 30 years, and it is about to go the other way. had a wonderful 30 years of corporate profits, growing --e times -- a wonderful period. as we see the picture going forward, the economic environment, interest rates cannot get any cheaper. tax rates will have come down.

labor rates that have been driven down -- the real thing that will happen is we are seeing a change in competition. the rise of emerging markets companies that are going to be half the largest companies in the world are going to bring a different competitive dynamic. you look at emerging market companies, the typical return on investment capital is about half that of the u.s. companies and the european companies because they prioritize profitability, growth rather than profitability. only one heree who is not an economist, but my recollection is when you have this reduction in essentially monopoly rents, it benefits consumers. it is bad for the companies because margins go down. but it is good for consumers. richard: one of the other disruptions we are seeing on competition is tech companies. if people were to pay traditional phone rates to skype calls, it would cost them $40

billion more. issues with a good news for consumers. his is a great story -- tom: richard, i hate you. it is 104 pages of reading for the weekend. this is phenomenal. hillary clinton coined the phrase for me of "fair trade." can we have fair new competition if we do not have fair trade? richard: fair trade also includes small to medium-size enterprises. see small to medium-size enterprises competing, too, the cousin of platforms. -- because of platforms here and we can see that the small companies are all going to be part of that. that is an interesting dynamic. tom: eswar prasad and joseph stiglitz talks about the global discontent that is out there.

is there a new discontent? eswar: american companies around the world are going to have to adapt. certain segments of the markets and industries, emerging markets are adding -- are moving up the value chain. now it is moving up the value added chain and competing at every level with american and german companies. the landscape is going to be very strong, but this is great for consumers at large. positiveis as a very development. but certainly workers are going to be hurt, and it will be a difficult process. tom: david weston, how can workers be hurt anymore? david: there is a huge problem with income inequality in this country and around the world, which can give rise to social instability. even within this new world, there are some new companies. think apple, with very large margins. they are making good profits.

richard: certain players are going to do well. with this widening of the googlesn -- the apples, are doing well, but the average company is not. , itthe last 30 years double, variability in terms of that. david: how interesting. where do we go next? u.s. companies, european companies need to realize the world is changing. david: if you are a ceo, what do you do? richard: you need to understand where companies are. : interest rates have gone down -- richard: you are able to do that in a way you were not able to before. companies need to be paranoid. competition,he new

what do you and don barton say when you go to beijing to consult people? what do you tell them? richard: the chinese are becoming global players. tom: but they just went through massive devaluation and are heading to some form of soft or modestly hard landing. it is not going well, so can they find a new business model? richard: everyone talks about china falling from 7% to 6%. let's remember, 6% growth when you are that they is not that why -- when you are that big is not that wide. tom: coming up, brazil's crisis. it escalates. that is the subject of today's single best chart. we have a semi-long chart. that is the only way that eswar prasad would come on the set. "bloomberg surveillance" on this

september 11. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." tom keene and david weston joining us today. eswar prasad from cornell university. it is a good time to talk to professor prasad about a single

best chart. we saw the rating cut earlier today. indonesia is the emerging market du jour. our single best chart indicates the dampened animal spirit of brazil and the immense challenge they half. slope matters. -- the immense challenge they have. slope matters. the boom through the 90's is described by the red line, and then it flat out stops. there is really a history of economic mismanagement in brazil, compounded by the political instability right now. commodities are hurting brazil. you think about the weak demand from major export markets like china. tom: richard, i saw you on the front row of the world cup. you guys go down there -- how do you consult the government or

private business to modernize in richard: november, brazil has some pretty good winners, too. think about anheuser-busch, one of the best run beer companies in the world. brazilians now -- tom: how do they extend that into best practices? these few companies are doing really well. how do you roll that out? david: there are real problems with economic management under president rousseff. it will be interesting weather the downturn numbers really heits their hand, whether will have the flex ability do what he wanted to do. richard: the commodities problem -- everything, the slowdown in china, will be picked commodities. out the finance ministers of the chicago school, are

different been what you knew. does austerity in brazil work the same way with the austerity with mixed results that we saw in europe? think what mr. joakim do, austerity to is an important part of it. i think it is crucial to show that the fiscal policies are on a sustainable part, not to squeeze it in the short run, but make it sustainable. tom: i have to rip up the script. sad, speak tosa the brazilian people on why they should maintain confidence in their finance minister. the governmentw structure in brazil is a real problem. macroeconomic policies are working well, and that can

provide stability. nothing else works. these two technocrats are doing their best in different circumstances, and they need support. tom: eswar prasad, thank you so much. let's go to top photos. david: number 3 -- campbell soup with keurig. tom: so you put the stuff in the cup and the broth gets pushed through? nobody cleans the coffee machine, but you have to clean -- david: this does not sound appetizing to me, and i like tomato soup, but this does now sound good. -- this does not sound good. now we haver 2 --

new photos of pluto. showing the surface of it. -- whenanother photo you see pluto eclipsing the sun, you can see the atmosphere around it. david: how can you not call that a planet when you look at that? you now have found an atmosphere around it. perhaps that debate will wage again. i am told it is coming, the atmosphere. there it is. the halo effect of the atmosphere around pluto. you have pluto eclipsing the sun, and that is the halo effect around it. tom: the satellite and the sun. david: we can send a satellite that far out, to take a picture, and then send it back -- tom: i put this photo in a class thatthe ranger photo

showed across the moonscape. and some of the great man's efforts as well. yesterday we had a rainy afternoon, and somebody captured the amazing photograph of a tradew ending where the towers once stood in lower manhattan. just a beautiful photograph. tom: there is a superb photograph of the brooklyn bridge, and everybody remember where they were working -- where they were walking on september 11. good morning to you, worldwide, on "bloomberg surveillance." ♪

tom: good morning, everyone. this is special. it is sold out. forget about tickets. dalia, michael mckee, and tom keene. that is not a typo. p.m. on bloomberg television. i am not going to ask him what the euro is going to do, etc., etc. a broader conversation on the future of america and of our economic system. good morning, everyone.

"bloomberg surveillance." tom keene with david weston this morning. petro brought billions of outstanding securities following a downgrade by s&p. a scandal set some of its suppliers into bankruptcy. rescuers in japan are in a certain -- in a desperate search for 22 missing people in a flooded city. the weather cleared today northeast of tokyo. two days of heavy rains caused and drove people to rooftops. three deaths have been reported. government estimate -- --ernment investigators say an engine caught fire tuesday while a british airways jet was taking off from las vegas. it was built by general electric or debris was found on the runway, and that has never happened since this engine was

introduced 20 years ago. tom: i did an interview years ago on airlines. the pros look at them as two engines with a hunk of metal straps to them. david: in ancient times i represented a titanium company, and they are desperately trying to figure out, is that one of our rotors? tom: we need to look at the engineering that is china. this friday we focus on the economic politics of china. in the next hour, ken rogoff will join us. now, eswar prasad of cornell university, the former head of the international monetary fund, china division. richard dobbs also joins us. , what ishe moment distinctive about the september

-- this september? issuesthere are bigger looming in the background, like cyber security and geopolitical issues. on the economic front, they are trying to make progress. move got misinterpreted, and they are trying to pull back because there has been a pushback from the u.s. to move forward on the bilateral investment treaty. thegeopolitical issue is -- geopolitical issues and the cyber security issues will dominate the conversation. tom: let me ask you a simple question -- is the economic system and the linkage of there to their private banks, to the it a normalis function? eswar: it is not a normal functioning economy. the problems they face in the financial system, they are trying to move things in the right direction. but their view of stabilization

is different from you and i might have. .hey want a free market david: think about the politics. it must be a different summit that xi will have in washington than three months ago. he had a lot more cards in his hand, didn't he? eswar: there is a subtle shift in the u.s. balance of power and with china. slowing down, the fumbling of the exchange rate live, and the u.s. economy is doing very well. that makes it to the difference, both in bilateral and multilateral negotiations. david: what is going on as far as you know in beijing? has been very aggressive, one of the strongest leaders in china we have seen in some time. does this limit his flexibility? does it affect his power and authority within the regime?

market willtock have a direct effect on the economy, but it does have a perception that they are not managing the economy well. rogoffu and i and ken can talk all day about foreign exchange. let's talk to someone in the real world, richard dobbs. you see a moving currency from depreciation or devaluation to depreciation, to the new appreciation of the renminbi. what instability does that bring to business? richard: first of all, there are the fluctuations that are the problem. challenge is when the economy is not good and it depreciates too much, small and medium-size enterprises stop being competitive in china. wages are going up. the good news is the government has enough money.

these banks are effectively instruments of government policy. the real estate loans that they made are probably bad, but the good news is the government is behind them. the government are using them. tom: eswar prasad, what will you listen for in the dialogue as the president visits washington? the key issue is what he says about his plans to further default because they have made some progress on market reforms. they are trying to free up the exchange rate. faces isproblem china there is some progress in financial markets, that nothing else is moving. state enterprises, in the form of the household registration system, that has to start moving. my fear about china is that it is a very unbalanced process going on right now. the financial market, the institutional support is not there for that. tom: professor, thank you so

much. richard dobbs, thank you for joining us today. we need to look at the four next change market. -- theonesian repeal indonesian rupiah moving this morning. stay with us. ♪

announcer: this is "bloomberg surveillance." tom: goldman sachs stuns with a

call for $20 oil amid global oversupply. rogoff andr, kenneth there is great uncertainty six days from the fed meeting. we consider one and done. it is the 14th year of remembrance of september 11, 2001. good morning, everyone. this is "bloomberg surveillance ," live from new york. i'm tom keene. joining me this money, david westin. wonderful to have you here. 14 years on, we will look at lower manhattan today. moments of silence on bloomberg radio and television. it really takes us back 14 years. you were with charlie gibson at the time. charlie gibson, and then we brought in peter jennings after. it was shocking. reports came in from all over, and we did not know what could be true and what could be false. tom: the news business changed on that day and in the three or four days following.

david: it changed in an important sense that we may have lost. all of us remembered immediately why we were doing what we were doing. there was no question that it mattered. tom: wonderful to have you with us this morning. top headlines this morning with david gura. david: we could see a barrel of oil go for just $20. once again, goldman sachs sees a global abundance. global is trimming its projection to $45 a barrel. it is slashing its 2016 brent crude prediction from $60 a barrel -- from $62 a barrel to $49.50. senate democrats yesterday handed president obama a major foreign-policy victory. a republican resolution phil two votes short of the 60 needed to disapprove of the iran deal. mitch mcconnell says they might try again. we will revisit

the issue next week and see if maybe any folks want to change their minds and give us a chance to remove the procedural roadblock. and give the president what he has been asking for. david: the plan to keep iran from building atomic weapons starts october 19. opponents say they will keep fighting. human rights activists say the u.s. should accept more of the migrants fleeing the syrian war. president obama wants to take in 10,000 refugees in the next year. since 9/11ouse says it has taken up to two years for refugees to clear security. the european union official says the continent posco government the continent posco governments are close to reaching a deal there. 11 republican candidates will

make it into prime time for the next week's presidential debate. carly fiorina will join them. she did not take place in the debate last month on fox. the debate will air on wednesday night at 8:00 eastern in the reagan library in california. hbo has released the first image showing robert de niro and michelle pfeiffer as bernie and ruth madoff. investors out of $65 billion. those are your top headlines. tom: we all know people in new york city directly affected by that, by bernie made off. david: when it is too good to be true, it is probably too good to be true. datalet's look at the check right now. equities, bonds, currencies, commodities. 1.1272. advances

hour, howard ward is with us, the chief investment officer of gamco. the bears are out in force on this friday. and ken rogoff is with us, from harvard university, on emerging markets. i believe chair yellen has a new announcement to make on september 17. did you ever imagine oil from $100 to $40, or somewhere in the vicinity? ken: i think it is very hard to predict commodity prices. there are these incredible fluctuations, and it happens. it is possible. it will probably be over 100 will some day, but we probably be over 100 when it happens. does the cheaper oil

price mean for america? it has got to be a plus-plus-plus. i think it is a plus-plus-minus. it is better for europe and japan, but it is good for the united states. tom: howard, do you love the boat on exxon, or are you under the oil desk now, hiding? oilrd: if i had no exposure, i would use this weakness to accumulate some. fortunately, energy stocks are correlated to the price of crude, so you are making a bet on the price of oil when that happens. with all due respect to goldman sachs' call for $20 oil, when it was $80 or $90, i do not think they thought it was going to go to $40.

given the response to what is happening, it has been slower than expected. over the next 12 months we will be looking at a higher price of oil. is: what is important here they have a vision out 2, 3, and five years, so they are not worried about where it will be in three weeks. david: other investors like warren buffett are looking out 5, 10, 50 years. howard: they are looking at different prices. when prices are down, you want to buy. unfortunately, the price of crude fell so quickly, down 50% peak.from the june 2014 tom: ken rogoff, you have been upfront about saying do not look at just fiscal debt, there is private economy debt as well.

exposed to the private debt you worry about in your book? ken: it has a lot of corporate dollar debt, and when the exchange rate tanked by 60% or something, obviously that is problematic. that is one of the elements going on in brazil. so government debt is not worrisome, but there is certainly a lot of corporate debt. and private debt has grown, not at the levels we see in advanced countries, but it is one of many problems in brazil. david: it seems to me brazil is one of the things many of us have not paid attention to. it is the second largest economy in the western hemisphere, 10 times the size of greece. they are looking at some pretty lean times for some time, don't you think? ken: they are. it is a combination of two things. -- the leadings things, global commodity prices

have fallen, but unfortunately, a lot of counterproductive policies did not matter so much when the economy was growing anyway. now there is nothing to fall back on. they are also having trouble with their fiscal policy, their monetary policy, because they were not -- now she is sort of in a jam because president rousseff will have limited resources to appeal to this and double down. the finance minister wanted to go the other way with more austerity programs, but will he be up to do that? ken: they are not sustainable. they have been downgraded to junk and something needs to happen. he was brought in and it was very brave of him to come in when he did not have the political support to do anything. david: but he had a good job in the private sector. ken: he is a very brave man and

it is very tough. the central bank at the same time, they have not really reform did enough. it is like arthur burns trying vulgar, and saying after all this change i will not inflate anymore. tom: when do you go in in overweight, large cap, international stocks and emerging-market stocks? is there a trigger that you look for? howard: timing the stock market is pretty hard to do. few people do it. tom: share prices are on sale. howard: i do not know if they are on sale or not. we have had a correction, maybe down 8% now. that was overdue. a lot of stocks are down 20%, some more. you have an economy of about 3% growth. i cannot believe that the stock

market stays down for very long or goes much lower. you want to go where the fear is the greatest, and right now that is in the copies that have international exposure. tom: we are thrilled to have you with us. i had four out of seven children call in in the last 48 hours. their iphones are broken, did you know that? it has to do with apple. for 5:00 set my alarm this morning and it did not go off. tom: ken rogoff with us as well. our twitter question this morning goes to goldman and their call for $20 oil. how low do you think oil can go? stay with us. ♪

tom: september 11, in pennsylvania. but first, there will be remembrances in washington this morning. in new york city, we will have this on bloomberg radio and bloomberg television for you. moments of silence. i cannot say enough about the reconstruction and the reinvigoration of the site in lower manhattan. it is september 11, 2015. time for the morning must-read. we look at the recent volatility in the market. gary shilling, speaking of $20

oil, he says simply -- tom: howard ward is with us, with gamco. i agree with that. the yield curve is not streaming to the economic slowdown, is it? howard: in fact, yesterday i did an economic review of the world, going to my bloomberg ecf sec, e regional bloomberg survey for growth. on a regional basis around the world, the expectations are for better growth next year than this year. not worse, better. it makes sense because there is a lot of stimulus in the pipeline with lower rates. i think europe is getting

better, and even the emerging markets, particularly with the commodities side, the expectation as a block is for higher. tom: ken rogoff, i have not spoken to you since lagarde coined the phrase "new mediocre ." how do you define new mediocre? at worldou are looking growth over the last 15 years, china is coming down from 8%, 9% to 6%. that is just a giant effect on their global growth workout. i am not so sure about the united states, europe, japan. that is much debated. i think the united states is at the tail end of coming out of a financial crisis, the deleveraging cycle. someday europe will come out, someday japan will come out. i am not sure that this is evenly spread around the globe. david: do you see any other

people who can step up and increase the growth and take up some of the slack? ken: some of the slack. china is just historic in the size and the ambition. chinaot necessarily think -- someday africa will, but it will be a while. tom: ken rogoff is with us, and howard ward from gamco. and a parlor game of the fed is fast approaching. coming up, ken rogoff on janet yellen. ♪

tom: program note. we have had an exceptional response to a conversation with ray dally oh. -- with ray dalio. michael mckee and myself, with , a broader discussion on the american economy. it is "bloomberg surveillance." with me today, david westin on

september 11. wonderful to have you on september 11. let's get to top headlines. here is david gura. david: a fired citigroup currency trader is taking a swipe at his former employer. barry stinson prompted front running for exchange orders. the managing director at the lender was fired amid a probe into rate rigging. bloomberg news has learned that a plan was scrapped three months ago. the reason, they could not agree on financing conditions. it was a tough august for john paulson's hedge funds. the billionaire's merger fund dropped 4.2% in august as stocks tank worldwide. paulson's advantage hedge fund also fell less month. those are top headlines.

an outstanding return for mr. paulson. he has done a lot better than many others. let's turn to what you want to know about september 17. pay 715 -- deep off --ogue off -- to rog none of us know about this except maybe the phd's and the fed. they will be attuned to it on september 17. we want to know about one and done. everybody has asked me to ask you this question. the pros talk about trajectories and the measured responses, as chairman greenspan used, so famously. what is so hard about doing the rate off the zero bound and saying we are going to sit there? what is the harm in doing that?

ken: what is the logic in doing it? i have a lot of trouble with the idea of let's do it now and then we will hold our breath and leave everyone in suspense. if you do not know that you have room to raise it for a while, why are you starting now? it is very asymmetric. if you go in the wrong direction, it is harder to do something about it. i am just lost at the strategy. i would like to point out that the emphasis that they give on our models predict that inflation is coming -- the model has not been very good for a long time, since the financial crisis. why you would want to rely on that and not more on seeing inflation, i do not understand. wiser in these last seven years. economy, andlobal

certainly the american economy. should we still do something, like what professor blanche are -- professor blanchard talked about? ken: he had the idea of raising inflation rates from 4% -- 24% from 2%. that is dubious because it creates so much uncertainty. i think overshooting on inflation is the least of our concerns. david: what is the real downside? if they go up 25 basis points, they can reverse it the next month. will it really have that much of an effect on the economy? ken: you are trying to create some certainty of what your path is to have a reaction function. 2%, it is devalued just 2%. but that people are, what are you doing? what uncertainty doesn't resolve? -- what uncertainty does it resolve? david: howard ward, how much

does this affect equity markets? howard: after the first day or two, none. but i would be curious to ask, when the fed meets next week, are they going to be talking about the global financial market, volatility? are they going to be talking about any concern about potentially harming emerging-market currencies and the debt issue that many countries have, especially those that have issued debt denominated dollars, not having the commodities declining? not it is there but anywhere near the top of the list. the main issue is will u.s. growth continue. tom: mark carney and the bank of england come out with the headline, "essentially there is no inflation," and that is the end of the discussion. what is the first order

condition for chair yellen? after your think models have been so off for so long, your ship has been thrown around in the storm and you do not know where you are when you land, you want to see inflation more than usual. tom: can stan fischer provide that humility that you speak of to the fed? ken: he is a great mind and gives good counterpoints to people who say never raise the interest rate, let's not do it until 2017. if to me, it is not a 50/50 you only think you can move once and then have to wait. david westin has 14 questions. howard ward is with us as well, from gamco. the book you need to read. everybody owns it. even more amazing, a lot of people read it cover to cover. a book that changed the discussion of academics. "this time is different." it is september 11.

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we say good morning to you. if tom keene and david west. goldman sachs analyst think it could happen. the forecast for crude has been lowered. there is a global abundance in 2016. they are trimming their estimates for west texas crude. that is down from a main production. carly fiorina will make it into prime time in the next presidential debate. the former hewlett-packard ceo was not among the 10 candidates last month. cnn piled -- compiled polls. stagedidates will be on next wednesday night at the reagan library in california. joe biden is making it clear that his decision for running for president is more emotional than political.

he appeared on the new stephen colbert late-night show. he said he is not yet ready to commit to a white house one -- run. >> i don't think you should do know exactly why they would want to be president and two, they can look at people and say i promise you you have my whole heart and my whole soul and my energy and my passion. here is family are still reeling from the death of his son oh in late may. he has run for president twice before. the director of national terra changeay hackers may strategy. new cyberattacks might alter electronic data instead of just stealing it. he told a house panel that seen as a tool of war to destabilize the west. the new england patriots started the new season at the way they

finished the last one. they beat whispered in foxboro. tom brady threw four touchdown passes. young brady is a little motivated this year. brazil is in a true crisis. they have a plunging real. we welcome marco. it is wonderful to have you with us. thani want to know more anything is what will be the color of austerity in brazil? taxt about increasing receipts or will there be cuts in spending? marco: good morning. it's good to be with you. things have already started. billion.cut of 78

that is a little bit more than 1% of our gdp. when we look ahead, there is not that much to cut. need a fiscal adjustment, you will have to remember that we have a very high tax at this point. the adjustment will be tough. david: this is david westin in new york. what does this mean for the finance minister? can he still pursue this? : he can pursue that. i think he could extend his agenda. 2016 ando talk about 2017. everything that had to be done was already done. we have to take care of the reforms. now we are talking about huge reforms.

we have to take into account efficiencies in brazil. this would increase efficiency. am: the you just assume depreciation? is that a given? depending on a very important variable, the five-year cdf. it prices in to the downgrade. this is a psychological level. everythinghave priced. tom: thank you so much. he is in brazil. that we do a day to check on equities, bonds, and currencies. i am going to call it a constructive friday. the euro is stronger.

so much for the parity in it crude oil. i noticed that gold is reverting to weakness today. that is one of the movers that we see this week. this is bloomberg "surveillance here co --." apple font an yesterday. he has been of -- one of the most optimistic bulls. american unique use of cash, howard ward has been very right for a long time. a september gloom this sends on cupertino. his entire house is one big apple store. what did you make of the

marketing campaign? howard: yes. that's great. the bottom line is all these new devices are not financially material. iphone.y is the it has been the iphone for the next few years. 70% of the prophets, it's about the iphone. follow these other things can fill in the gap in its about the iphone. that had ae company tremendous growth as you know. they have $200 billion in cash. they are entering a mature stage. tom: you nailed the use of cash. stock? or blue-chip is it a growth stock? howard: i think the performance

of the stock is going to depend. there is going to be a little bit of growth. the dividend and the share buybacks are going to be important components. the days of tremendous wealth creation are probably over. i own the stock. i think it's going to be a reasonably good performer over a length of years. ken: the announcement we had this week did not drive me into an apple store right away. at some point, they must feel pressure about bringing in a new product? howard: the new product issue is nothing can be big enough. they want to be like netflix. they could buy disney with their cash. about 1/5evenues are of apples.

netflix is 2.5% of apple. how'd you move the needle? it all comes back to the iphone. that has to be successful. tom: shares are on sale. the rates are up today. correction in a great bull market? is this a more cautious move? howard: a lot of risk has been taken off. i think this is an ongoing correction. this is a continuing market. 2% rates, 2% growth. that's what i would focus on. earnings,rnie's, -- you've got to like that stock. tom: can is with us from harvard. should americans fear a new globalization where we manage

globalization right now to keep america robust? ken: that's a complex question. tom: you've got 42 seconds. our standard of living is rising much more than we measure it. when people say the whole class is no better off than 25 years ago, i think that's just the wrong read of the numbers. it's very disruptive. it has happened very fast on the jobs front and income distribution. absolutely not. there are things like social networking which you can be sarcastic about, but people find great benefit. continue this discussion. futures are negative six. the 10 year yield is to 20%. we've got much more view on bloomberg television this morning.

we are thrilled to bring you necklace came in. he is -- nicholas came in. this september 11. ' tom: good morning.

david: we have a couple of stocks moved before the trading opens. there is an independent investigation by the board into internal controls over revenue recognition. tom:is going to shave the price down. tom:that has a certain glow to it. let's take a look at amd. this was raised to market performance. tom: it's under two dollars per share. that was a big name years ago. i look at intel. you and i remember when the stocks, everybody quoted them everyday. is there life and future in semi conductors? howard: i own some intel and

texas instruments. it's surviving. not by a lot. it's one of the situations where you can look at the intel research budget and it's going to be tom: bigger than their sales. a 3% dividend to get your attention. , it's asemi conductors tough business. declining prices every year. most of it is a commodity oriented business. intel is more about the pc thing. i think about one third of their revenues from data centers. rowing at a double-digit rate of them. david: why are they not buffeted by all of this growth in a smart phones and tablets? howard: they sort of miss the boat. they have continuously missed the boat. they may be getting some traction in the arena.

this is showing some status. they have not exceeded. they have tried. david: we have been talking about oil all morning. we are seeing this being downgraded. earlier the mention phillips 66 deal. within that is all of the servicing. and it will be refining moving around a lot of petroleum. think, it's not such a moment. tom: the refiners are really holding up quite well. there was a big energy conference in new york this week. the consensus among the nobody thinksthat the price of crude is going to $20. nobody thinks it's going to be

lower 12 months or not. they are all expected to be $70. tom: we saw goldman sachs lowered their views. goldman sachs is well under $50 on their terminal view. that gets us to our question. the news from jeff kerry and his ism, goldman says $20 oil possible. how low do you think oil can go? ♪

tom: good morning everyone. they have $56 million of outstanding securities, making it the largest effort is sure following a downgraded by s&p. they are facing a graft scandal. oil supplies outside opec will decline next year for the most in two decades. that is according to the international energy agency. u.s. shale output.

the new policy at walmart is making suppliers hopping mad. to paypany once vendors for space on its shelves and in its warehouses. some vendors wanted better deal. walmart says it's only trying to simplify its relationships. those are the top headlines. david: we are joined by howard ward and 10 from our. you have been outspoken about the degree of leverage in china. they are going to have to sort it out. how overleveraged is it? how much leverage to the have to take out before they get back in a safe zone? i don't think it's just a matter of safe zones with china. they are growing at a phenomenal rate. they are managing a very complicated economy. they have gone on for years and years, without having a big

financial crisis to bring it to a halt. it's very hard to do. when that happens, there are pockets of doubt. problem,s not such a we don't really know. inid: unlike where we were 2008, they have very large reserves. they could just write a check? can, although they have been writing a lot of checks. it's not clear exactly how much liquid reserves they have free. there is a lot of debate about that. broader question about their shipping. over 50% of gdp investment, we can't go on like that forever. when you try to transform the economy, it's very hard to do it gently. are one of the world's

experts on this. i have read every word. floating and managed floating. do you have a confidence that china can devalue and then manage a depreciation and then reverse and appreciate as we have seen the last two weeks? ken: they have a lot of reserves. you have hit on the weakness in their system. the exchange rate is not as flexible as it needs to be. what i think our advice back in the day was, why don't you make it more flexible while you are strong? that is what singapore did. idea that a guy like you saying to china, you need to freely float? ken: nothing happens quickly in

china. have class every year, we had a debate about should you move faster or slower? i think they should move faster. they have that in the plans, but it hasn't been happening. the economy is weak. david: the united states has been a putting pressure on them for some time. you should bring it back up some. ken: we want them to appreciate. the specialuch is killing rights issue to them? it's a lot of credibility. that is part of why they devalued. i think you should think of it as the people inside of china who would like to liberalize the market and use that as a lever to move things along. tom: how you play this as an investor? do you still go back to the calculus? can you be bold enough with the emerging markets to challenge

and acquire china shares or brazil shares? i would be extremely into chinesering shares or resilient shares. in the emerging markets, i would rather buy a mexican stock or a south african stock. there are other places where you can find stocks to buy. the whole chinese thing i find troubling. the data is so problematic. we don't really know what's going on. tom: do you agree with that? ken: i'm interested. i look at academic studies. they don't show it to be bad. i don't see how it could be so smooth. david: i just don't know if i can trust the numbers. you are right about that. that have to come down to a more sustainable level.

i'm assuming that is south of 31. how many years will that take? ken: a lot of years. what replaces the plug-in of that reduced investment? do you just assume consumption? howard: you hope. maybe not all. ken: it is much less on jobs. when you move away from a precedent -- investment to consumption. we don't say multiplier on friday. that's too much math. part of the issue is slowing down corporate profits. that puts pressure on the political regime. tom: all right. let's get to the twitter answers of the day. $20 oil isman says possible.

this is the first answer. oil prices are inversely coordinated with the renewable energy. someday. $10. one, this will balance in 2016. $40. tom: one more. isn't boosting economic growth, there is a serious crisis. tom: do you think that can help? can that pull us out of a new mediocre? david: not permanently. they have been fantastic for europe. i think it is helpful here. russia, brazil are getting hammered. it's creating a lot of volatility. just in the united states.

i thought you meant the island of manhattan. let's look at our agenda. my agenda is to get ready for next week. i thought can was brilliant on our fed policy. it has been a parlor game. i am more not buy. i know that david westin is worn out by it. this is deadly serious and we will give you coverage through next thursday. the university of michigan. it has been coming back up from its lows. tired of the fed a discussion in, this may be one of the best data points before they get together on the 17th. tom: this speaks of a new confidence. the american consumer is not paying attention to headline issues in china. they just don't do that.

the american consumer is coming to life. there is rain in new york. david: my agenda is the u.s. open. the women's semi finals were postponed. serena is closer to getting a calendar grand slam. it's a good time in new york. on this day of remembrance, i will be with michael mckee. he was at ground zero 14 years ago. he will be with you on bloomberg. on the radio. thank you so much for being with us. back. ward, come it will be a while. was this fun? david: a lot of fun. tom: you got michigan four

times. right now, futures are at negative five we continue on the radio and television worldwide. good morning. ♪ .

michael: good morning. another volatile week of trading comes to a somber end as we mark the 14th anniversary of 9/11 -- today on "surveillance." i am michael mckee, along with tom keene. moments of silence throughout the morning as new york remembers the terrorist attacks of 2001. markets are lower out of the world, except in china, which finished up .1 percent today. mimihe u.s., the s&p 500 e- futures are trading lower right now. the dows off point to 5%. .4%.q down in europe, the stoxx 600 is off .8%% -- 2.81 points,