week. will they or will they not raise the interest rates? pimm: we will talk about how low can oil prices go? goldman sachs says $20 a barrel is not out of the question. focus on netflix. they're planning to take on hollywood and win its first all square. a move that could reshape the movie business. ♪ pimm: good afternoon, i am pimm fox. liu.: i am betty let's look at how the markets are trading. it has been volatile this week and is today. s&p futures are recovering, but lower. in the green, up 20 points. the nasdaq is off, but smaller. 1/10 of 1%.

what was dragging down the index was energy shares. look at exxon, transocean -- those stocks are still lower and waiting on the indexes. oil prices have been dropping. they are still in the red right now. they are also recovering from their lows. brent is off by 1.4%. part of that reason is continuing concern about the oversupply, the stockpiles we are seeing around the world, particularly in the united states where supplies are 100 million barrels above the five-year seasonal average. 100 million barrels. that is going to take a long time to work through. you: inventory builds in see what habits to the price when we get that information. thehe u.s. treasury market, yields moved lower to 18 on the 10-year.

294 on the 30-year. everyone is waiting for the federal reserve's rate decision next week. let's look at currencies. 1.13, the euro strengthens against the dollar. the euro is unchanged at 1.20. the pound sterling is 1.2 432 against the dollar. does look at the top stories. the nation aress marking the tragic events that happened on this day 14 years ago, the 9/11 attacks. at the white house president obama and michelle obama observed a moment of silence at 8:46 a.m. at that is when the hijacked airplanes slammed into the north tower of the world trade center. in lower manhattan victim's families read the names of those that were killed when the towers collapsed. remembrances are also taking place at the pentagon and the

national memorial in pennsylvania. the attack on september 11 killed nearly 3000 people. ashton carter had a warning for terrorists today. >> after 14 years, and forever more, terrorists who threaten us will learn this simple yet unbending truth. no matter how long it takes, no matter where they may hide, they will not escape the long arm of justice. man: on thursday, a florida was arrested for planning a terror attack on 9/11. the stock market roller coaster is making americans a little queasy about spending. consumer sentiment fell to the lowest level in a year. the reading from michigan showed the biggest one-month decline in three years. households were gloomy about job and wage increase prospects. betty: evidence that inflation

is not a threat. wholesale prices were little changed last month. higher food prices were offset by following fuel prices. ine races rose 3/10 of 1% august. that poses a dilemma for the federal reserve who wants to see inflation close to 2% before raising interest rates. a harvard economic professor tells bloomberg policymakers want to cover their bases. offhe models have been so 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. betty: fed policy makers meet next week. lates been near zero cents 2008. the federal government is ending withade-long relationship the waldorf-astoria. it is under chinese ownership.

that has chinese officials worried about espionage. the switch was officially announced today. presidents and staff. at the new york dallas hotel meetinghe annual u.n. in september. that is owned by the koreans. is cuttingan sachs its forecast a they see a global abundance in 2016 because of growing opec production. prices could drop as low as $20 a barrel. toy're trimming their 2016 $45 a barrel for west texas intermediate, down from a projection in may of $57. it is slashing brent crude predictions to 40 $9.5 a barrel, to $49.50$62 -- a barrel, down from $62. walmart's

battles will affect what you can buy in the store. pimm: how netflix will reshape the movie business. investors are one weekend and one jewish holiday away from the next federal reserve rate meeting. with the weakening chinese in the and no inflation united states, some are at a loss by the federal reserve consider raising rates now. >> if you really don't know that you have room to raise it for a while, why are you starting? it is asymmetric. if we see in-flight they can raise rates. if you go in the wrong direction inflation, we see they can raise rates. if you go on the wrong direction it is harder to do something about it. i am lost on the strategy. betty: some of the best minds have said that the fed to should

hold off. mohamed el-erian said that although the fed has solid domestic reasons to raise rates next week, it cannot ignore the worsening international context. 51-40 nine, it is that close. the hominid is joining us this morning. it is always good to see you. does that mean that everything next four trading days? mohammed: it is about their assessment of the risks and how nervous they are about making a policy mistakes -- a policy mistake. that is a judgment call, and for us to be able to guess it is hard. it depends on the dynamics in the room and on what janet yellen, at the end of the day,

feels about the probability of a policy mistake. what is very hard, betty, is you can make a mistake on either side. that is why this is one of the closest calls i can remember for the fed. betty: how many of them do you think are undecided? of them i expect most are. the reason is it is not a domestic case. the domestic case for raising rates is solid and has been for a while. they should have moved when both the domestic and international elements were aligned. they did not. now they have a tug-of-war. the domestic case is strong, but the international case is flashing yellow telling them to be careful. pimm: i wonder if you could talk about the yield curves selling at the short end and buying at the long end. is that a trend you think will continue? mohamed: i think that reflects the notion that if they do not move now, they will move in

december. people are realizing this would be part of the loosest tightening in fed history. the fed wants us to stop obsessing about the first hike. about the first hike and look at the journey. this is going to be a very shallow pass. it is going to be very dated depicted, stop and go, not the old days of hikes at every meeting. the terminal point will be below history. with the fed is encouraging us to do is to stop obsessing about the timing of the first hike and look at the journey. if you put it in that context, that means you will get the behavior of the curve you are seeing. betty: goldman sachs, i don't know if you saw the report last night, goldman released a report for they said, speaking of volatility, that is why we will not see the fed raise rates. all of the volatility in the last several weeks equals three

interest-rate hikes. can you see that? because volatility has gone up, financial conditions have heightened. the market has done some of the work that the fed would want to do. they are right there. i think, it is part of a broader issue. we are the midst of transitioning volatility paradigms. we're going from a world in which markets were comfortable, the central banks could repress volatility, and in a world where central banks are comfortable -- are less comfortable repressing volatility. that is an important transition. pimm: i spoke yesterday with talked tannenbaum and he about how technology is a game changer because it is sucking huge amounts of capital away from other businesses, and it becomes a cyclical process.

what assets do you see attracting more money? mohamed: that is usually right. there's something very exciting going on in the tech space. the ability to disrupt businesses. book what airbnb did to helton. -- to hilton. we're not building buildings without taxis. not without buildings or taxis. you can disrupt from another world. i do not think that means you are crowding out other sources of funding. there are lots of capitals available -- there's lots of capital available for the right opportunities. the problem is that economic are-taking in certain areas not high enough, so they are not using capital. is that a psychological or

behavioral issue? what is that went to? mohamed: it is linked to the uncertainty about the future. people do not have enough clarity about whether the ,conomy will reach a velocity and they're worried about international demand. it is linked to uncertainty about policies. worldy, this is a special in which the winner takes all when it comes to certain technological innovations. you want to keep cash on your balance sheet to be able to move when the opportunity arrives. that is why we are seeing economic risk-taking here and financial risk-taking has been up here. put out another estimate where they said given the supply situation, we are 100 million barrels above the five-year average. the elf it will not scale back -- the outfit will not scale

back. they say oil at $20. is that reasonable? first, it is possible. the oil market has been unhinged. fors like the market emerging market currencies. they have been unhinged. they have had an earthquake. they had an earthquake on the supply side and demand side. changed their producer. the pricing dynamics have changed. they are right in saying do not underestimate the potential for volatility. i think $20 is aggressive. i do not think oil will go down to $20 unless there is a major global ice and economic catastrophe. they're saying it is more volatile for oil, just like foreign-exchange, in the american market. betty: doesn't a lot of that depend on china? we heard the premier say they

are on track for 7% growth. he promises the world that. mohamed: so far, the this or option in china has been .inancial more than economic if the chinese policymakers are right they believe they can contain disruption to the financial sector, meaning it will not impact household behavior. that it doesn't disrupt household behavior. i'm a buyer of the notion financial stability will continue. 6%.at 7% or 7.5%, more of but i think they can soft land the domestic economy. financial instability will continue because there is a bubble in the equity market. pimm: you mentioned emerging markets and i would like to get your thoughts and a variety of them, starting with brazil after the rating was lowered on brazil's debt to junk status. anamed: brazil is stuck in

inflationary environment where they cannot gain control of the growth dynamics or inflation dynamics. policies become more difficult, which accentuates policies tomonetary come more difficult, which accentuatesit -- policies. that means that much more political boldness in terms of taking measures. i do not see that happening anytime soon. i remain worried on brazil. betty: we are going to leave it there. thank you for joining us. columnist-erian our and former ceo of pimco. pimm: still ahead on the bloomberg "market day." we are following markets on this friday, 9/11. betty: here is a look at some of

the big gainers. ♪

pimm: this is the bloomberg "market day." i am pimm fox. betty: i am betty liu. we are making our way back from the lows of the session with julie hyman. julie: we're back from the lows in the session. we have had a drifting up and down over the past couple of sessions. a set cannot find direction. we are seeing stocks overall gain traction. energy remains a drag, and the stock story of the day.

the s&p 500 biggest movers -- kroger and best buy are leaving on a percentage basis, but there are more deep declines on the negative side of the ledger. all 10 of the worst performers are energy stocks. to see oil pullback. something else interesting that caught my eye is the default swaps on investment-grade debt on energy companies. bloomberg intelligence highlighted this in this chart here this is a market index of .ll ingress meant great debt the credit default flops. the chances investors are putting on it that it could default. it is relatively low and has remained relatively stable. this is what is happened to energy investment-grade debt. we had a peak of ago, and it has recently.ng back investors are placing a high chance. the previous week was in march.

it has come roaring back. there's a gap between energy c vs and the rest of the market cbs -- between energy cds and the rest of the market cds. production not cut back quickly, they say the mid stream companies could be affect did. these are the companies that transport oil and fuel products around the country. these countries listed here got downgraded and are declining. one energy sector got an upgrade from j.p. morgan, chevron. they are not much, but holding up better than the rest of the energy group. betty: thank you so much. julie hyman with a look at the market. look let's give you a ahead. the shares of walmart are down 25%.

betty: the retail giant is hitting its suppliers with fees. how it could affect the products you see on the shelves at walmart. ♪

betty: this is the bloomberg "market day." i am betty liu. pimm: i am pimm fox. betty: walmart is known for extracting the lowest prices from suppliers. they are taking it to a new level. pimm: walmart is hitting suppliers with fees and reducing how frequently some are being paid. what can you tell us? says that this is part of a companywide review that they have been doing about how they run their business. the u.s. business is not doing well. they are trying to revive it and reclaim margins. they sent out letters to

suppliers saying they would impose fees on many of them. for using at warehouse, a distribution center, to be in a store. they wanted to link when they are paid to win their inventory moves. if it takes 90 days for your inventory to move, you get paid every 90 days instead of 30 days like in the past. if you are a big company, like procter & gamble, procter & gamble, i household names that do billions of dollars with walmart. this could add up to a lot of money for a supplier. the change in payments for a smaller supplier could also be drastic if you are expecting to ,e paid every 30 days and now you are getting paid every 90 days. betty: this seems unfair. how are they able to do this? is it because their walmart?

pimm: i like how betty thinks they are going to be fair. it is not about being fair, it is about making money. shannon: the suppliers are all upset. none of them wanted to be quoted . they were afraid of backlash. they don't know what to do. some of them were kind of coming to me hoping that they could raise awareness. pimm: are there concerns that if afraid that if people here it could hurt their business? shannon: i said their walmart, they are big, tough, and are known for squeezing every last penny out of suppliers. they said, they were known for negotiating hard on price, but not known for renegotiating payment terms and tacking on fees. chargeompanies do warehouse and stocking fees, but

now they say that you we are arty giving you a rock-bottom price and you want us to pay interest fees on top of that? it is in line with industry. in some places, macy's was pointed out as retailer that is known for charging additional extra fees. is not that that it walmart has done anything crazy, they have done something crazy for walmart. pimm: thank you very much. that is it for me. ahead,we have more including a closer look at verizon and its run on mobile tv. ♪

betty: welcome back to the bloomberg market day. let's get a look at the stories making headlines at this hour. human rights activists say the u.s. should accept more of the migrants being -- and fleeing

the syrian war. president obama wants the u.s. to take in 10,000 syrian refugees. than.s. accepted fewer 5000 so far. it takes upuse says to two years for refugees to clear security. european governments still working on a plan to cope with the migrant crisis. austria and greece closed sections of the main road between vienna and the hungarian border. asylum are walking toward the capital. the mayor of baltimore wants to seek reelection next year. stephanie rawlings-blake has been under fire since april. freddie gray died from a severed spine after being injured in police custody. the first trial for one of the six officers charged in his death starts next month. a judge ruled thursday that all six trials will be held in baltimore. 11 of the republican candidates

will make it into prime time for next week's presidential debate among them, carly fiorina. she was not among the 10 candidates picked for the debate last month. cnn compiled poles and she was the lead candidate. the debate will air wednesday night at 8:00 eastern time from the reagan library in california. candidates below 2% support will take part in an earlier event, the happy hour event. joe biden making it clear that his decision about running for president is more emotional than political. he appeared last night on stephen colbert's new late-night show it he is not ready to commit to a white house run . >> i don't think any man or woman should run for president unless they know exactly why they want to be president and they can look at the folks out there and say i promise you, you

have my whole heart, full soul, my energy and passion to do this. betty: he and his family are still reeling from the death of his son in late may. he has run for president twice in his career. next half hour, his goldman sachs correct by saying all the recent market volatility is the equivalent of three interest rate hikes? we will explore that question. house republicans taking two more votes today on president obama's nuclear deal with iran. will they pull out all the stops to block the agreement? we will speak with michael turner of ohio. verizon plans to usher in a new era for mobile tv. the company starting its streaming service aimed at millennials who are choosing to watch tv on their phones and tablets. the service is called go 90. it will rely on mobile ads.

in this day and age, verizon faces a very crowded market. they must compete against netflix, who luke on hbo, amazon and callous others. andulu, hbo, amazon countless others. this is interesting. , what do you make of this new product? paul: this is another attempt by verizon and other telecommuters income base -- telecommuters and videoies to get into the business. we saw at&t make a big acquisition and buy directv. verizon has chosen not to go that route. they are looking to license

content, create a mobile first platform and try to attract subscriber -- free users. betty: as we mentioned, this is an increasingly crowded market. it's interesting to me that they are taking a chapter out of the old traditional media book. this will be advertiser supported. this is like broadcast television. they want to get to the 18-34-year-olds who are used to using their service and they will try to upsell them. i would just guess that is part of the strategy here. betty: maybe. targeted tonitely the 18-24-year-olds. we have this great bar chart. it shows you how much people are watching their video on mobile phones. if you are 16-19, 63% of video consumed on mobile.

look at this. if you are 45-59, looked the other way. 70% on tv or desktop. do you see any of that flipping as these teenagers get older? >> i don't. it's been an issue for the big media -- we've seen a pronounced weakness in the media stocks. even disney with espn said they are losing subscribers to the almighty espn. that was like a canary in the coal mine who said this is starting to hit the bottom line. you have a verizon turnaround going with a mobile first product. >> i was surprised that the investors were surprised. trees don't grow to the sky. go from 10-12% growth to 8-9% growth. which most media companies would take and run with.

growing. are still >> on the bar chart, i would love to know how much of that is youtube video. not all video is graded equal. it's one thing to have a television program. another to watch a minute 30 of a dog playing a piano in the morning. betty: when will the heat peak dog video?- hit peak. video how much is aol going to be able to power that and help verizon get ahead of its competitors like amazon or these other plays out there from hbo and apple? >> one of the reasons rise and bought a well the video product aol was forught

their video product. allows internet advertising to be bought and sold electronically. that is a really efficient way to sell internet advertising. that's what verizon's buying, that advertising technology. verizon knew they need to get more into the online video business through an ad supported platform, which is what they just announced. in fairness to tim armstrong, this was his strategy. he comes out of the sales side, he knows how to monetize that. with a powerful method about rhythms to sell in the online space. or as a meyer comes out of product and does not know the monetization part. betty: people are wondering if it's about arianna huffington, their content. it's about their technology. >> that would be my guess.

that is the mouse trap they have. key to digital, how you will get money for it. they have invested in that. betty: netflix, the first mover in creating this content to be streamed online, coming up with this first theatrical release. they will release it in some theaters, but this is not a play for movie ticket sales. it's for subscribers. >> it is a big move for netflix. they were the first to create their own original content, recognizing to drive subscriber growth, they cannot rely on old movies and tv shows. it's one thing to create a tv show. it's another to actually fund a motion picture. this is their first foray into that. a big move for them.

they are releasing it to theaters because they want to be part of the oscar -- >> the main theaters will not show it because they see it as competition. they only have to get it in one to be eligible for oscars. it's interesting how this plays against hbo, their big rival. want to so much they sell a ticket, they want to have more people subscribe to netflix. in some ways, it may be brilliant. on the other hand, i worry that they have such success with house of cards right out of the box that they made it almost look easy to do really serious television. it's not that easy. >> you can spend a lot of money and not be successful. we will see. betty: is hollywood applauding this or are they a bit fearful of this? >> the long-term game plan here netflix isis not --

a competitor to broadcast and cable networks. they try to position themselves as a complementary service. we see cord cutting and pay-tv subscribers continue a trend of decline. where are those people going? a lot of them are going over the top. more competitive. >> there are a lot of agents in los angeles calling netflix about their talent. it racesywood walk -- the budget and increases the amount of people are getting paid. hollywood is saying this is great. this is good for me and my clients. betty: one more person in the pool will bring in others. thank you so much for joining me. much more ahead on the bloomberg market day. has a rate hike already

occurred? goldman sachs says yes. the equivalent of three rate hikes. we will discuss that, next. ♪

betty: welcome back to the bloomberg market day. let's get a quick check on how the markets are trading with julie hyman. starting off with a commodity. soybeans. julie: mixing it up a bit. we teenager medic move in soybeans for a dramatic move from the usda. they raised their forecast for this country's soybean crop because of favorable weather. the upper midwest had an ideal growing season in terms of timing of rain, other parts of

the midwest had cool weather and just the right time. bringing the forecast to nearly match the record crop that we had last year. that is putting pressure on these soybean prices. something that caught the eye of a lot of commodity traders. it's having an effect on a number of packaged food companies. if you look at the stocks in reaction, general mills rising sessionighs of the after seeing the input cost decline. we had some food companies reacting. conagra rising to the highs of the session. up 1.3%. you see the leg up it had after we got that soybean forecast. bloomberg intelligence looking at the price-to-earnings ratio, the forward pe versus the s&p

500. it looks relatively high right now. in part because we've had a lot of activist involvement in these stocks that has driven them higher. that's looking at the two of them in comparison with each other. we can see the spread in the forward pe's at the highest they have been in quite some time. i also wanted to mention one other food related stock. the best performer in the s&p 500. talking about kroger, up nearly 5% today after earnings came out ahead of estimates. raising its forecast for the full year. the company said same-store sales growth is relatively strong. they tried to make some efforts to control costs. those bore fruit. they are adding 20,000 new jobs. this is a company that has been in a performer. that is continuing. betty: thank you so much. julie hyman with a look at all the markets, including some of

the commodities. now, a look at the european market close. i want to bring in mark barton from london. stocks with their biggest weekly gain in two months. next week's federal reserve policy meeting -- investors confident that china will stabilize its financial markets and economy. that is the first price knees and -- first rise in asian shares in four weeks. 5% stock 600 has rebounded since dropping 5% on august 24. that was its biggest decline in seven years. is 13% below april record. let's have a sneak peek at the big moving equities across europe. lower. drugmaker, 5.4% it's in talks to bite -- tdc,sed fedex farm

danish telecom company, 7.7% lower today. companies telecoms scrapped the merger of their danish businesses. will be less competition in the market. it ends the prospects of that competition. glenn core one of the big decliners last week. it has rebounded this week come almost rising 10%. the company will sell shares. it wants to reduce its $30 billion debt pile. stocks fell on friday, but over the week, they rose. the biggest weekly advance in two months. betty: shares of softbank

dropped on the news that the president try to take the company private. it would have been the world's biggest management buyout ever, costing $70 billion. said henese billionaire entered talks with and oversee partner to take his flagship comedy private. the stock price has fallen sharply this year. sources tell bloomberg he scrapped the privatization plan on a disagreement over financing terms. a spokeswoman declined to comment in tokyo friday. the fed.rget according to goldman sachs, the recent stockmarket market selloff and increasing corporate farming costs and the rise of the dollar have caused financial conditions the equivalent of three fed rake heights -- rate

hikes. describe why they say it is equal to three rate hikes. >> they took the fed macro model estimated what is this rise, how does that compare to past movements in the fed funds rate and how do each of those affected u.s. economic growth? what they found is that, basically, for each hundred basis points to the fed funds rate goes up, their index will go up 150 basis points. their index has gone up about 50 basis points. that is roughly equivalent to 325 basis point fed rate hikes. point fed rate

hikes. it incorporates a lot of different variables. stock market, credit spreads, different things going on. a lot of fed banks maintain various versions of these financial conditions indices. the thing that is unique about goldman, it puts more weight on the exchange rate than the other ones do. the big rise in the dollar we have seen over the last several leading their index to show a bigger tightening that some of the other fed bank indices. the reason why the goldman one is a good one to watch is the new york fed president used to be the chief u.s. economist at goldman sachs. he used to use this index a lot 10 years ago. i was going through his old research reports and you can see these charts featured very prominently. betty: are they reliable? are they very correlated with what the fed eventually does?

is it considered a pretty reliable credible predictor? >> good question. usually, what happens is the fed raises rates and that tightening financial conditions. you would see that in the index as a response to the fed's move. we are seeing the fed has not moved yet, but the indexes tightening. markets are tightening in advance of the move. predicting the move, perhaps. dudley has been talking a lot about financial conditions in several speeches over the last several months. out, if thepointing fed raises rates and financial conditions do not tighten, they might need to go faster. if they raise rates and financial conditions tighten too much, they might go slower. we are in a situation where this is happening before the fed has

even moved. how are they going to respond to that. that's why we've been talking a lot about one and done, the idea of the fed raises rates and then on hold for a while. this could turn into a known and done situation if we see this tightening maintained. betty: or even get tighter. about thisalking could be the loosest tightening policy that we've seen by the fed. any of the goldman economists say what would this mean for the financial markets if the conditions index shows a three interest rate hike tightening in the markets but we tighten anyway? do any of them say what could be the impact? >> if they do end up tightening, you would probably expect the markets to tighten even more.

that is an argument for not tightening. you are starting to see this argument more and more. by not tightening, the fed will prolong this uncertainty and that will keep the markets more volatile. i don't know if there's as straightforward of an argument there as looking at the financial conditions index and assessing the changes based on the fed's move. betty: you will run into trouble if you do it and if you don't do it. thank you so much for joining us. tune in next wednesday on bloomberg tv and radio. dalio, be talking to ray one of the world's most successful investors. don't miss that primetime special on "surveillance." six clock p.m. on wednesday, said trevor 16.

we will be back. on wednesday, september 16. ♪

betty: welcome back to the bloomberg market day. these headlines just coming across our bloomberg terminal on the iranian nuclear deal. the house has gone on the record against the iran deal. they passed a measure limiting the ability to lift sanctions on iran. this was their attempt to block this deal. it is likely not going to work. the president will continue to implement the iranian nuclear deal that he put together a few weeks ago. thisll speak more about with one republican opposed to this, michael turner of ohio. that interview is next. ♪ we live in a pick and choose world.

choose, choose, choose. but at bedtime? ...why settle for this? enter sleep number...right now all beds on sale! sleepiq technology tells you how well you slept and what adjustments you can make. you like the bed soft. he's more hardcore. so your sleep goes from good to great to wow! only at a sleep number store. don't miss the final days of the biggest sale of the year! with the c2 queen mattress just $599.99. ends sunday! know better sleep with sleep number. betty: it is 10:00 a.m. in san francisco. mark: this is the bloomberg marketing. u.s. stocks moved back-and-forth as investors turned their

invention that turned their attention to next week's meeting. betty: could the price of crude oil fall as low as two dollars a barrel? mark: we will talk with mike turner of ohio about what is next for the iranian nuclear agreement. the republican-led house has just gone on record in its vote against it. betty: good afternoon. mark: welcome back. let's begin with a look at the markets at this moment in time on this friday, september 11. stocks erasing earlier losses. s&p on its best -- on track towards best week since july.