>> this is "bloomberg surveillance." x this morning, the fed is on -- this everyone who is at home listening to us today on this .oliday, here is the trade markets have turned south. the dow is down by 19 points. higher during much of the futures trading hours. in europe, they have turned south as well. by .4%.x 600 is off the british over the weekend, the labour party

putting jeremy corban in as their leader. looking forft and radical economic changes there. the dax in germany is 15 points lower now, just under .2%. everybody watching the dollar. the dollar index is lower this morning by just .1%. the u.s. trade weighted dollar is something we need to teac kep an eye on. the five-year going for 1.5 percent once you rounded off. the two-year is at 71 basis points. topping the list of things we're watching today, volatility. the vix fell. volatility lower this morning despite the fed ahead. congress is back trying to find

a way not to shut down the government in two weeks. last shutdown hit the economy hard. china, more weak economic data. credit is growing there. tom sees may be tiny green shoot out there? tom: yes. a little bit of a green shoot. what an ugly win for the denver broncos. >> that was terrible. we enjoyed the mets, and still managed to pull things out. wonderful worda for our sponsors and then i will pull up a chart. "bloomberg surveillance" is brought to you by our resident tax advisory. your business needs. for out and sign up insights.

over here and i want to look at the support on the chinese index. this is an important chart. you mention this earlier. this breakdown of key support of chinese index. let me put that out as we do on the terminal right now. of expectback story the unexpected, whether it is international relations or markets. >> given the way china is, it will probably be october 17 before we have any idea about what is going on in china. that is their next gdp report. bring in our guest. we can act confused but he cannot. there is so much to think about if you are the fed open market committee but even more on wall street investment committee.

mike, i am thinking from thursday afternoon, it is all about strategy. for the next four days for you, it is all about. got to just survive until 2:00 in the afternoon. >> sure. these are range bound. a bear and get a bear and get across and they bowl and get a crush. if you look at some of the moves, they seem to happen with a -- with little rhyme or reason. the market pivots around. technicals are very much in play. tom: i think it is important to look of a terminal. the dow here to date, -8%. the s&p 500, -8%. did you know the nasdaq composite is actually green on the screen your today? i never would have guessed that. 12 months trailing.

the world is coming to an end 3.3%. it is terrible. we are not even close to a correction. >> that is part of the issue with the fed. should they be reacting to help you? >> the fed, as we all know, has pretty aggressive policies over the last several years. one of the things that has been a clear beneficiary, equities. the fed is not supposed to care so much about equities but of course they will take whatever works. it would be easy to dismiss that they will not care about equities but ultimately come i think they really do. one of the questions going into this week and a possible hike here is how much will they look into the rearview mirror and see the vix and global equities selloff in a strong way and how

much they actually care about it. the key question in my ?ind is, have they fallen because everyone is starting to discount a real slow down or recession ahead. or is it because everyone is starting to discount the fact that money was not -- will not be as cheap. how much of this is real? >> i think it is more former than the latter. gross shares are deflating. .ust like last fall the convergence of that with a , you know, it is adding factors up to help get a risk off. but i definitely think it is more the fact that central-bank policy here and abroad can be aggressive and consistently so.

whether the global growth picture will fall in spite of those policy responses is a huge question haunting risk assets. what did we do before we had the vix? did we measure volatility and related to our central-bank 10 years ago? >> the vix started around 1990. caredow, how much the fed about realized volatility in the the 1970 passes and 1980's, i am not sure how much they did. yellen has the vix index on one screen and the move which measures volatility on another screen. tom: really, you think janet yellen -- can i do a shameless plug? vix index?

would you agree with that? she probably does. i will send it out on the radio plus at. it is basically the vix for bonds. tom: what does this mean for the market? just stand aside or use it as opportunity for capital? i do not think the world is coming to an end and i do not take we necessarily need an amazing amount of fantastic economic angst to happen to keep equity prices in this environment, even against a rate hike. i think the case is on that you have central banks around the world and to a certain degree, fiscal policy makers the extraordinarily preemptive on making sure we do not get into a

deflationary spiral. tom: and the fed can push against that? >> exactly. that is where the rubber will meet the road. one thing i have been arguing is the qe coming out of japan and europe right now, it is a lot bigger than what qe3 was at its peak. that is on. for all of the world passes problems, that helps suppress our treasury yields. if you look at where the two-year and the 10 year have months, the last few volatility and equity markets have been really boring. you have to distinguish because fx is really where, as the prior guest was suggesting, it is really where a lot of diversions and central-bank policy and economic conditions are express these days. tom: do you express a stronger

dollar? do you think there will be a stronger dollar because there are weaker currencies? there has been paired in my mind, when you think about, are we going to get to one to one with the euro, i would probably say no. all theire fed, for lack of direct discussion on the dollar. we welcome all of you on bloomberg television and bloomberg radio worldwide. days weexciting set of have got for you this week. we will have special fed coverage. that thursday. michael mckee, are you going to be in washington? michael: on thursday, yes. ♪

tom: good morning, everyone. so much is going on in international relations and economic as we go to the fed day thursday. -- top headlines, in the red this morning, down 1.9%. the longest rally since june. this is after week chinese industrial production week concerns over an economic slowdown in the world's's

largest consumer of copper. copperhead finish higher in four straight sessions. copper's nexts move, the chief market strategist joins us from the cme. there has been some recovery over the course of september in copper. what happened to make it fall off this morning? >> you make a great point when you talk about chinese data affecting copper. that has been the story not only since the devaluation but also since mid-2014 when you saw some out of large chinese solar giant hitting copper at 7.5% at that point. the largest purchaser of copper is china. if the weakness comes in any a veryhan 7%, there is high correlation to copper prices and what china's gdp looks like.

to talk to you about the supply. we have reports coming out that tighter supply has actually been happening. supply in chinese warehouse is not monitored by exchanges dropped. looking ahead, how do you think this will prop up rises of copper? it will do that much. what you could see in a weird yout of fundamentals, if hear people talk about the fed's relationship to copper, there is correlation.rse the room for that tightening could prop copper up. the correlation is not broken down. it is a total global commodities story. the only support that gives to copper is copper is an energy

intensive industry. it is much more important where copper supply goes. broadly used industrial metal. it will be a supply and demand story. >> thanks, bob iaccino. us live from mobile, alabama, the location of the new factory at 9:00 a.m. eastern on bloomberg television and radio. good morning. ♪

tom: good morning, everyone. on television and radio worldwide, we say good morning to all of you. brought to you by invesco. .ay hello to alternatives it is a core part of modern portfolios. learn more at invesco.com.

joining us live in the studio for today's call, here is bill maloney. good morning. markets reversed to the early gains. now trading lower by .9%. dow futures now negative. crude futures little changed. on the u.s. economic front, no major reports schedules. holdings $6.5 billion include me debt.luding shares are down as much as 46% premarket. she goes in talks with pe firms. a key upgrades and downgrades this morning. barclays, alexi on. cut equal weight.

goldman sachs, with a price target of 50. i am bill maloney. tom: thank you. bloomberg terminal. michael: a brief correction here. malcolm will be the new prime minister there. i'm reading more analysis. --probably means we lose the the best named finance minister in the world. we are 10 days away or so. michael: this is your official program for finance, economics, politics, and hockey. tom: it was great to see a great

goalie for the new york rangers to futures are mixed here. valley nonvolatile this morning. michael with us. we continue our discussion. how should our listeners use the vix? asymmetric and only when there is a lot of fear out there is it valued. transfer the way your family or your friends in your neighborhood should use this? >> it is a little more nuanced. what i like to look at is when , how thingsurbulent have turned. what often happens when you get a big volatility spike, the vix curve is normally upwardly slow. in other words, the futures are higher than the spot market.

that is often a good signal for a market bottom. what has been interesting since we started the volatility, the vix curve did get inverted but the vix futures really stayed elevated and still really are. a rot -- a lot of times even on upmarket days, the vix futures were continuing to climb higher. it is very different than what we had last october, where the vix converted an eight or nine days later, went back to its normal self. time, it is a very different condition. enjoyed losing money betting on a fed meeting. everyone seems to enjoy that moment. want to be anot las vegas bookie on this one. tom: the only way to learn this is to enjoy losing. >> could you imagine how that

would move? you'reke the nfl when watching the broncos this week. all the advertisements for the fantasy leagues. >> a smart note from bloomberg intelligence here, you asked the question of what you can do without the vix. he says you can realize volatility. they track almost exactly. michael, once the fed does or does not do whatever it is going to do, you have to start worrying about things like earnings. uprd quarter is coming pretty soon, earnings. they are not supposed to be very good. then you look at projections for the first quarter. fourth quarter, they start to really improve. if the fed is discounting 12 months ahead because they are trying to forecast when monetary policy will hit, what is american business telling them? >> on the economic front, i

think what is happening this year domestically is we're seeing a little did of a replay last year. in gdp.le q1 you saw that in earnings. the q2 print that got revise two came ino, what really pretty strong, i think things will be on track. if you look at the overall complexion of economic statistics domestically, it has been pretty good. if that continues and we can pull off a decent gdp through the end of the year, my guess is the earnings growth will track that. we will be able to basically beat analyst expectations. in other words, we will get to 119 on the s&p 500 for the year on earnings. that basically means 5% year on year earnings growth. over the last three or four years in theory should be enough to keep the markets upward trajectory. tom: we will run out of time.

mike, thank you so much. what a morning. absolutely extraordinary what weise seen international relations. stay with us on television and radio. "bloomberg surveillance." ♪

michael: you are looking at live pictures of new york city on this monday morning. headlines.o the top there will be a new prime minister in australia. the former cabinet minister will become australia's sixth later

in eight years. he defeated the prime minister and the ballot of liberal lawmakers. he condemned tony abbott's economy. wildfire. peopleldfire has killed and hundreds of phones and businesses. several thousand people have had to flee their homes. google hired an auto industry executive to head up its unit. he worked for ford. self driving cars have already logged more than one million miles. those are your top headlines. >> waiting, waiting, waiting. s&p futures down just a little bit, verily in the red.

yields have been down as well for a while, waiting or janet yellen to see what she will do thursday. the euro is also unchanged. chinamex crude found otherwise unchanged. let's get back to tom and mike in the radio studio. tom: good morning, everyone. thrilled you are with us this morning. john herman join -- will join us here in moments. up with bloomberg surveillance this morning. looking at a 50-50 scenario. you note a change. >> definitely a change. a global recession starting in 2016 led by china is the global economic team's main scenario. timelyelihood of it

policy response seems to be diminishing. tom: the meetings in peru, we need to define what a recession is third it is not negative gdp. it.eed to really explain classes it is basically 3.5% gdp worldwide, which is considered a global recession. rate, thatt implications for the rest of the world. tom: that brings on an effect here. we say good morning to all of you. so beneficial about the fed. what i would do. try to get smarter and of course, stunning news out of britain and what we see out of australia. what did you work on this in terms of this crazy american economy? >> i tried to gain some perspective on what is the shape of the american cycle this

decade. we are in the sweet spot. we have low rates, consumer risk appetites are finally starting to turn around a little bit. when you try to get perspective and look at it over the course of the entire decade and beyond, you see we have a struggling labor force, a horrible demographic and we cannot get an immigration policy done here. structural unemployment, and other things. this there is a track on spirit we have the worst recovery since the 1950's in consumer spending and residential construction and business spending on equipment, on exports, government spending. across the board. tom: steve roach has spoken about this. with the consumer, is the theory of a dampened american spirit --t you have,

>> i am a happy guy. tom: i know that. the idea of a new america, has -- is any event shared with the federal reserve? >> the fed has been really slow to pick up on longer-term macro themes. on, structure their guns look, if we do not have an inflation we want to see, we are not moving or they may not have anticipated the movements of the economy but at the end, they were focus on inflation. things.pick i think the thing is, we have market-based measures of inflation. that inflation headline is 0% and core is 1%. significantly below the fed target. here we go. you read the story that rich miller wrote today about what

stanley fischer said a couple of years ago as the head of the bank of israel. he reiterated in jackson hole. what inflation is today does not matter. a year from now matters. when you look at the last 12 months, you have oil prices falling. that is going to drop out. >> we have also had steady service sector. even if you had a normalization and even if it is flattened out and the effects watch out, we have basically very flat under cpi measure and other measures, a very contained inflation. >> laser forecast 12 years from now? >> looking past that, in america, the largest fraction of people working are 850 and older. savers, not spenders. they are saving for retirement. up that.not ramping they are deleveraging. you have an economy growing kind

of what it is doing. this year, i think we come close to 2.5. next year, i think we and up around 2.5, maybe a touch better. you end up in that kind of the world. how much inflation do you get in a world like that? >> give me your numbers. what is potential growth? force, thethe labor working age population is only -- only growing 60 basis points. my view, when you get six years away from now, it will be flat to slightly negative. my view on potential is 1.5 on potential. of arguingosition the fed's point of view. low of potential growth, it does not take as much to get inflation. 12 months from now, what is your inflation number #-- number?

>> they take little day trips and they go to restaurants. >> give me a number on inflation. >> we have surplus. you get no inflation. tom: very quickly, where is inflation? >> i think it will stay low. before the stuff in china started happening, it is three rate hikes, the first quarter of 2017 before the crazy stuff happened in china. than two.wrist more tom: that is a wild statement. talk about only three what -- three rate hikes way out. >> no economic indicators today. they would be brought to you by commonwealth financial network. when it is time to change the conversation talk about the deal are ready to listen. commonwealth.com. we are going to get retail sales

before the fed meets. that is something to look for tomorrow at 8.30. that will be an important last way to point. tom: you heard john talked about a more subdued number. brendan: we will take a second for a morning must-read. wrotesor from poland today eastern europe is having a crisis of change. society, he writes, has become capable of moral and clinical challenges of the type posed by the influx of refugees today that have yet to come to terms with murderous past. -- remy is here from bloomberg noise -- bloomberg news. i went to high school in germany and every high school student in

germany has to go to a concentration camp site and understand what their own a history involves. the argument is what i found compelling. they're much more prepared to have a conversation about refugees. german an outpouring of support, people donating clothing, food, any and. between that and eastern european companies that have not had to have the conversation, it is stark. we are seeing a divide. it is really with this refugee crisis east and west. remi: the question i have is the murderous past. wee in the united states, as talk about refugees right now, we are allowed to have 1500 and. is maybe 10,000 or so. do we have to have a murderous past? and would like to think not. >> whose responsibility is this?

is everybody's's responsibility. danielup tomorrow, jurgen, the vice-chairman of ihs will be talking. much more. good morning. ♪

tom: good morning, everyone. a lot is going on today, particularly in international let's look at- top headlines. dust trying to make a deal with refugees. attempting to slow down the influx. redistributing refugees. the county clerk in kentucky jailed for refusing to grant same-sex marriage licenses is back at work. kim davis says she will not interfere if her deputies issue licenses. she says she will not authorize them and questions whether they are valid. fort walker will call sweeping restrictions on labor unions according to the associated press. walker will oppose limiting unions for federal government workers. he wants to make it more difficult for unions to organize. remy: we next go to futures in

focus. alibaba went up since september 19, 2014. $16 per share. 35% in its first day of trade enclosed above $93. it changed quite a bit since then. do not look at -- do not look now but shares are poised to open below this morning following in the premarket. the stock could fall another 50% looking atvels area analyst actions right now, we will head over for a round of three stocks. let's take a closer look at alibaba. at least another 50% as volume growth. consumer spending is falling, which is hurting the company. alibaba should be valued closer to ebay. one interesting thing to note, 45 of 52 analysts rate alibaba $98 .20 two cents.

plan could's iphone boost shares by 50%. the shares could be valued at 11 times earnings value. interesting notes crossing the bloomberg terminal right now. apple is doing with the iphone 6 s, turns out online demand is beating the company's preorder forecast. the iphone success they say is seeing online demand exceptionally strong. from comments are coming spokeswoman trudy miller appeared on pace to beat last year's 10 million units for the first weekend. finally, supervalu in focus, the change of supermarkets and arm is is across the united states. off its amight spin lot in the near future. you can see that the market is up by nearly 4%. this movement might help unlock value.

thedon: the elephant in room is the chinese consumer, both looking at apple and looking at the teacher of alibaba as well. very much in play. coming up, airbus ceo tom joins us live where airbus has planned it -- planted a new factory. is monday, september 14. good morning on bloomberg surveillance. ♪

tom: good morning, everyone. this morning, "bloomberg surveillance" brought to you by invesco. walter davis is available to answer your questions on alternative investments. submit your questions online. now, john.right >> have you done any christmas shopping yet? i do not necessarily trust surveys but 14% of americans have started. i hate people so organized.

tom: you mentioned a weaker american consumer. what you expect from retail sales this week? john: every decade has a longer-term global thing to it. this year next year and the year after, it is our sweet spot. not every month will be a great retail. to is noit will be ok question about that. we think it is ok. or 27.ar, around 26 into 2018 at 2020, we decelerate or let me go through some stuff on this. my core view on inflation for the next four or five years is that we will be fluctuating and gradually around 1.5%. and we will fluctuate around 1.5. uswill be very hard to get to 2% or higher. you will have to have a meaningful and sustained increase in wages.

82% of private sector. the wages this year are right now. stanley fischer, this sky was hiking rates at the bank of israel. in the may had to cut rates. the same thing they have to do with sweden. starting to early will be a mistake. another point. tons of mutual respect, but just a couple of things. we have the normal cycle, which means in a business and a recession, you/companies. they get put out of work and any matchup demand and supply. this time around, all this qe helps tons of companies stay in business globally. .ore global supply

tom: john kept going back to help governments are using ofply-side solutions instead command solutions. john: on the one hand, thank goodness. employedmore people than otherwise. we have more supply capacity relative to demand growth. as a result, you have ava nine time for inflation. here is another interesting thing. i went back to it used to be the goldman sachs economist. at bill dudley's remarks, in 2004 before greenspan pulled the trigger, if you read it back then, my core view, he said, is not hiking

until 2005. he comes back and says, i'm telling you i'm going back in june. we are now expected to go in june. he is classically a dovish guy. janet yellen is the same way. before, probably have to cut again. francisco, of the wall street journal, said so what. if we are data dependent and the data go one way, we should do one thing. if they go the other way, we should be prepared to do that. quite side great. in the last series of minutes, they said all but one person said they needed to wait and get more data. in july, they said nearly

everyone said we needed more data. tom: stan fischer, an acclaimed economic. economist, why are we struggling with everyone saying we need a vector, we need a measure here the reality is a good part of the world is saying, are you nuts? say that is all you will do and then wait for the data. adamant that is not the thing to do. >> they want to manage market expectations. they have struggled with the

unemployment rates come down twice as fast. we think we are going down to the next year. handled byhe three the end of 2017, all by all these dynamics, labor force dynamics there it if they will just zone in on that and say, we are behind the curve we should be hiking rates, if you look at the broader economy, i get a kick out of it. to your point, he is saying, close to full employment. it was not for the fact the participant -- or dissipation has fallen, you would not be close. tom: john, thank you so much. john: i cannot understand it. it is a monday morning. this is a big week. if we are getting this excited on a monday morning, and the weather is finally getting useful in new york, and we are getting this pumped up, you know

it will be a big exchange with the fed. >> this reminds me of the old linebacker when asked what it is like to play in the ultimate game. if this is the ultimate game, he asked, why are they playing it again next year? we are excited but we will be doing this again. the blood will get boiling as the months go in. it will get more contentious spirit we have got to hang in there and keep going. tom: you have been very kind to be with us. some terrific granularity on the call. with yourr here camera. this is our reality here. sending us out these emotional headlines from australia. we need to review this. i know we are going on television here in the next 20 minutes. terminal plays -- pays tribute

to the conservative prime minister and says this is an important day in the life of a nation. for us in new york, it may not be a big deal but this is a huge attempt to keep a government in australia this morning. >> the conservatives in australia are concerned at this point that they are not going to win another election because the economy is in bad shape. tom: you have got the announcement. >> we talked on surveillance this morning and he said they need to switch to demand led growth. that is a fiscal solution and not a central bank monetary policy solution. you ever see this headline out of america? culture of leadership will be consultative? i am trying to see that headline coming out.

>> you remember we had that from our politicians are they wanted a kinder and gentler america. everyone pledges that then push comes to shove. tom cole and the australian dollar is unchanged. headlines, malcolm has been sworn in. has been an extraordinary weekend between what we see in australia and doing so well for the labour party in the united kingdom. was amazing to see that perspective. joining us tomorrow, radio and television worldwide, daniel will join us. booknow him from his other , the >>, on capitalism. book for 15 years

ago, talking about england from the 1930's, maybe a bit like it is. michael mckee and tom keene was economic scared another hour of "bloomberg surveillance."

tom: good morning, everyone. what a day it has been after what a weekend. the news on the united kingdom, mr. corbin taking over. the labour party, they follow on to a change of the labour party. the conservative government in australia. he will see much on that in an interview in sydney in moments. michael mckee and tom keene on bloomberg television worldwide. about. a lot to talk .he markets all in all churning when you look at some of the currency pairs, clearly, the kind of markets where every bit matters. to you this money by interactive brokers group the winner of the 2015 word for the best retail platform.

mike come we have got the end 120 and 24. slightly weaker. the dx why index really does not do it here just a little bit stronger. i would notice after an ugly friday, it is better. dollar is aan stronger aussie dollar. a drop move off of that announcement. a little bit stronger. a shameless transition. we call it a segue in broadcasting. classic maybe because commodity prices might change. i have set up our next guest for you. spoken to uso has very much about the end of commodities, where is the bid in

commodities? let's get the backdrop here i want to mention your work and others in this criminal act of trying to do commodities strategy. everyone has aged a little bit, i think. $10, $15 per barrel. goldman sachs, $39 to 20. great respect, yes, we go down. he says we clear and then come right back where you have taken a more measured look. you have adjusted that in the last few days? >> no. i think we are going to be either the winter season or sometimes we forget that the weather turns cold. tom: it does. >> exactly. also, production is down in the u.s. with take it will be a more balanced market. tom: away from that, it has got

iron or purely see the changes in the australian government. what is the bank of america merrill lynch on those industrial metals that are the back owner of australia passes economy? notn industrial metals do do great. the correction there is only just starting. we have seen some minds being closed down or announcements in closed down. we made the announcement last week. in oil, the response has been much more immediate and the bounce was much smaller to begin with. remember, we think about metal. china consumes half of world's metals. or in china, iron it is two times that of the u.s. the average chinese consumes 1/8 of the oil. 1/5 of the average japanese. it is a much smaller consumption rate.

tom: i didn't know this. malcolm will become the sixth prime minister in eight years. >> five years, i read. a lot of turnover as we try to do with these economic conditions. let's take a step back. what is your view of china passes economy and the demand going forward? >> clearly, the chinese economy is slowing down meaningfully and we have had that for a while. a lot of indicators have been pretty soft. at this point, i think the chinese government will lose some more measures and it will make the economy of fiscal package. i'm not saying things will be great. betting against china for the last 25 years has been necessarily a winning strategy.

>> how important is what francisco saying? is china switching to a more demand led economy, do we need to keep measuring the sector as the number-one thing for them going forward? >> that is a good point. if you are moving toward a service economy, cars on the roads, at the end of the day, we consume a lot of oil here. as to the europeans and the japanese. we still take the view that chinese growth should be averaging six or 7% next year.

things should kind of hold up. citigroup's cases. week, a 50-50last recession. now moving to be a basis point scenario. do you agree we could see three dp?4% global g >> the issue with gdp, nominal firms are growing. averaged 8% growth. in the last four years, we have averaged .8. tom: this is why we love francisco. this is the animal spirits are real gdp plus inflation on top of that and nominal gdp.

the you adjust back to dollar. the key question for you as a commodity guy is, currencies, the nexus of what we should watch for. and what janet yellen has to watch. absolutely. we see yet another fourth wave of deflation. we have massive strength against the yen and then against the euro and then against commodity currencies. tom: what does david study? i know he did not sleep all weekend. you think of david working. does janet yellen on thursday have to filter in a guesstimate of a late 1990's strong dollar? francisco: the employment it is going down. the core of the core inflation is starting to pick up. the're not thinking about

third round of fed and what they do in international markets. it is not really their job either here they have said that. i am not sure the fed will factor in necessarily, that the fed is most likely this week. look, it is very possible they met -- they may have to slow down the rate hikes in the first round. on the flipside, i think the biggest challenge we will face, there may not be any out there. there may not be enough dollars. tom: down we go. we are not there yet, but you have got to wonder.

michael: the economy did well with a stronger dollar in the late 1990's. francisco: i think it is a great point. in thenomy did very well 1990's. the strong dollar obviously at some point my end up destroying some jobs in america. are we at that point? the answer is, probably not. are not in a space where the strength of the dollar will be. tom cole and see a currency were. are we in a commodity work? --= war? i do not think that is necessarily the case. look, thek if you depreciation is helping

suppliers. you might say some commodities are in a commodity work. thermal coal is the best example. australia, and south africa have been rushing to depreciate currencies. what has been the most effective is worldwide on the coal markets . the u.s. coal sector has been priced out. tom: you see that with some bankruptcies as well. kali david wu will join us on the currency markets. it is pretty quiet this morning. yields in, futures up one. quiet future as well. gold, 11.04 grounds. -- per ounce. ♪

brendan: australia has a new prime minister. the liberal party on australia's finishing internal vote. in mcdonald's joins us from sydney. .alcolm has just been sworn in he promised a more intelligent and honest conversation in the economy and what does that conversation sound like? >> that is a good question.

the vote was held a short time ago. tony abbotthere his ability to produce some kind of economic narrative that voters would understand. is now what malcolm saying he will do it he says it is an exciting time for australia. plenty of opportunities but of course a lot of challenges. he says what he needs to do is to explain to people how to make the most of those opportunities and how to work with challenges. brandon: i am looking right now at the trade balances with various countries. china's exports in the first quarter -- australia's exports to the first quarter to china are $16 billion. that is basically the some of the other three competitors. japan, south korea, and the united states. is the real question right now

something that no prime minister can deal with, which is the slowdown in china? >> that is right. i think if you look across, for example, australia is the most exposed country to china of any developed country. there is a big issue there about all the commodity sports the country sends there. and what it has been trying to do is to stimulate other sectors. the currency has fallen quite a lot. interest rates are at a record low. these things are helping but not enough. we do not have them cooking up any slack in terms of investing in new industries and new service. whoever is in charge has to face up to that challenge and work at how best to deal with it. rendon: tony abbott's approval rating has dropped. to have any idea what a budget would look like?

>> not really. it is very early days yet. indication is that he will speak with the major policies abbott has held. mcdonald froman sydney. there is a new prime minister. coming up, gideon rose of foreign affairs. good morning. ♪

tom: good morning. it is a changed united kingdom. a bombshell over the weekend of a change in labor probably -- labour party politics. it is forever in modern history different. mike, that was really something to read over the weekend and get on what francine lacqua and jon ferro and others read every day and live every

day in the united kingdom. it is really something, really quite a change. >> what is interesting is the inward,arty has turned perhaps a little bit like the republican party here. what -- a notto a widely held view of how things should go but how they held in the party. we will see how people vote. london isoorway in just outside st. paul's cathedral. now.e joined right when i think of commodities in your world and the london turmoil, it all comes back to the london metals exchange. what is that london metals exchange? >> it is the premier place where metals are created. it is a main hub for liquidity. tom cole and my experience is one commodity houses low up, it

starts with margins in the mystery of who owns what. do you have confidence right now of who owns all the copper and what the margin exposure is? >> no. it is hard to tell pure the one thing with copper is this is a metal that, it is going to stay week -- weak. declines in production will also ultimately did support price. we do not necessarily track all of that in huge detail. tom: victor, come on over here. >> just getting comfortable. tom: in the copper chart, i will put this out on bloomberg radio plus, it is a real steady move downward. is there a tipping point where this gets ugly?

>> the one thing to remember about copper is even if we have a surplus that last for a year or two, it is not a metal by 2020. it is one of the few metals out there, one of the clear metals out there, where the declines .ill kick in sooner or later slide to they move so quickly and others do not? >> copper is an indicator of the economy. clearly going back to china, the slowing chinese growth, it is probably affecting the price. we may see some indication of copper assets in china as well, which has been a big holder of the metal. it is coming out of china, which, as we said before -- >> i want to get a weather report.

tom: joining us now, the bloomberg surveillance weatherman. are talking about el niño. i keep reading experts on this including the folks in australia who keep saying this will be the strongest el niño that they have measured. what does that mean for commodities? >> the first thing that means is we could have a warm winter. the biggest effect it will have oil.be on natural gas and the two commodities and of course, el niño will affect the crops. how el niño hits different parts of the world. it affects the crops of wheat and corn and those commodities. change investment strategies? >> the thing with medium-term

weather forecast is they've carry a very high range of uncertainty. ispping a coin sometimes taking a view on el niño. most of the trading that happens in the energy space, whether it is gas or oil, it is always a one-week or two week or three week range. trade on aink they three month range on whether. tom: i want to quickly go over the impact on the u.s. economy. am i right that $1.99 for gasoline is good for america? good forgenerally very america. it is not great for north dakota. that is a small part of the economy. one issue we have with the u.s., maybe back in 2008, the u.s. is dependent on foreign oil and what will happen is america

became more energy independent. now, what happens is with the collapse, it damages producers. america is no longer hanging on this foreign commodities or oil. it is a neutral effect. it is not a problem, i do not think. , a markett forget strategist tomorrow, we look at 35,000 feet on a little bit of jet fuel was daniel juergen joining us tomorrow. we are thrilled to have him with us and we will speak to him about the commanding heights of what we will see over the united kingdom. this is just phenomenal. what a news flow day we have. you see a retest of lows. , not breakingoil

through support, but nevertheless, a little soggy this morning. futures settled flat. we need to get those open. stay with us. ♪

rem good morning and here are your top headlines. apple says new iphones are doing better than expected. preorders are called exceptionally strong. tole says orders are on pace

sell 10 million in the first weekend. in northern california, firefighters are trying to gain the upper hand on a devastating wildfire. the fire has killed one person and destroyed hundreds of houses and businesses. about 20 miles north of napa valley. several thousand people have had to flee their homes. australia is getting a sixth prime minister in eight years. malcolm will become australia's new leader. he defeated prime minister tony abbott in the ballot of liberal lawmakers. he criticized out of it for the way he handled the economy. talkresident obama will with high school students in iowa today about college cost. comesck to school event just after the release of startling figures of student loans. more than half of college and vocational students failed to pay a single dollar on their loans after seven years. >> still waiting for futures up

just tom: that is the market bell and the opening bell. how with fbi global operation of platforms. michael mckee and tom keene are a thursdayday before fed day. we've got a lot to talk about. we are overwhelmed with internationals. there is a change from a conservative government in australia. there is a soggy opening to the equity markets on sunday evening in china. tracy is here with us. before we get to financial

conditions. through the go economy? are asking if you chinese stocks are moving in tandem with the economy? i think we see a bit of that. beside terrible fixed income number come out on sunday. i think it was the lowest in 15 years. investors are going to be watching that. chinese is are driven by sentiment. tom: you see it, mike. it's gotten very to the news flow. michael: what connection do investors make between the chinese stock market and the chinese economy? people who are in china would say there ain't much of one. tracy: for the recent time of history that was the case. it seems like they are converging now. finally, the stock market is for the real economy is.

i would imagine it's in the past were the heavens diverging a significantly. stocks of ramped up to unbelievable levels. michael: the chinese government has been intervening to prop up the stock market. when you have a situation like that, there is no way to know where it's going to go next. i think that causes a ton of uncertainty in the market. , butught not just in socks we sought west week in the currency market when they intervened on the offshore u.n.. of the expected that kind of thing to happen. it caught people off guard. it's difficult for investors not knowing whether or not the chinese authorities are going to be there and how they will react to investments. we have seen a crackdown on short-sellers and anyone who bets against the market. that is terrible for investor confidence. tom: after a massive devaluation, we have seen a couple of weeks of appreciation.

6.379. can we say they are doing that? the government has manipulated that? anecdotally have heard that. the authorities are behind it in some way. one of the worrying things about getting a bad numbers out of china is there is already a lot of doubt about the truthfulness behind those numbers. we see them coming in below expectations. tom: you wonder how low they are. tell us about financial conditions. tracy: we have the very big fed meeting this week. one thing a lot of people have been looking at going into that meeting is financial conditions. there are a bunch of indices you could look at. we're going to look at the oldman conditions index. thatel: i'm going to send out on the app so people can follow along at home.

tracy: financial conditions are tightening going into a rate rise. tom: why is he so reticent? the goldman sachs mood on what whycentral bank is doing, can they do that if the condition is rising? tracy: this is not what the fed wants. to anquivalent interest-rate hike. we're already tightening conditions. tom: that is because of international events in beginning to the end -- american economy. tracy: it's wider credit spreads. its rates going higher at least in the treasury market. we saw a big pickup in the two year yield. that has the effect of tightening. tom: right now, a very special treat. 50 three acres in alabama, we

set matt miller to gaze at 53 acres of airbus construction. matt: thanks very much. he is the head of airbus. they just opened their first u.s. and you in mobile, alabama. joining us.ch for let me ask about labor costs. it's been a few years now and you are rolling out your first planes. what are labor costs here compared to hamburg or china? >> it's the last thing we have been considering. the costs here are very competitive. make an important strategic decision, this is one of many factors that come into the picture before you make a decision. matt: at one of the other factors? you are close to a nice port. 10 years.ry goes back

we selected mobile. we finally lost it. a greathad built relationship with the community here in mobile with alabamians. we had put a couple of things here. appreciate the support the community was giving us. decision, we took a commercial facility into mobile, alabama. the geographics play a role. there is a competitive labor force for sure. it's not the driving thing. matt: you are talking about an air tanker that was a contract you one with the united states air force and it was initially taken away. do you think there is any possibility for future military production?

yesterday, you have the real estate and you can expand if you want. >> i would not exclude that. we are a large aerospace company. if we have something competitive to offer the air force, this would be something we would consider doing. we can expand it. the logic is go military first and then go commercial. --reversed that la object logic. planesou do have cargo in france and the u.k. and turkey. any plans on marketing that to u.s. buyers? >> it depends on if there is interest. i think i can clearly state that this is the most modern state-of-the-art transport plane that there is in the western world. -- air forceort

should be interested in this plane. matt: you have talked about some enough military assets. entire units. is it possible that you could see a u.s. buyer for some of those assets? >> it's entirely possible. we are concentrating on the flying stuff in defense, combat aircraft,multimission space is an important thing in the future. we are selling off some of the areas that are non-core and not in the leading market position. interests for these from around the world. matt: thank you so much for joining us. tom and mike, back to you in the studio. tom: what a stock. it has been up.

right now, the dow his -59 points. the fix backs up a little bit. it is 24.12.

tom: good morning, everyone.

the market is never -- -56 right now. : tom hayes was found guilty last month of manipulating while working at ups and citigroup. a london judge must decide to let him appeal. itsany is defending position on border checks. they can expect one million migrants this year. they are assuming control of the austrian border. discussingaders are the issue today. bernie sanders has grown to andle-digit leads in islet new hampshire. in newa 22% lead hampshire.

those are your headlines. if equities had their best week since july. investors are speculating on whether the fed will raise interest rates this week. that everything is in the red. it is jumping up. .his is the highest since march they sell risk management software for investors. the stock is rising 9% right now. this that will pay $55 for each share. the offer is 13% above the closing price on friday. includes joining fisted an affiliate of goldman sachs. $458 million.sted

also to talk about, marvin l technology is moving. it is going the other way. integratedy designs circuits for communications related markets. morgan stanley downgraded the stock. it cut the price target $9.50 based on last week's probe into accounting issues. it closed down 16% on friday. let's take a look at shares of h&r block. it got an analyst downgrade. it was downgraded to neutral after hitting its $36 price target. h&r block is down by nearly 1%. it is fairly valued giving the growth prospects and loud -- lack of catalyst to drive shares higher. shares are up 7% this year and they are outperforming the broader markets. back and theme

song is the same. no big moves anywhere, but everybody is waiting to see what happens on september 17. remy and i are going to sit here until janet yellen lets us know what is going on. coming up, we are talking a tennis. this is "bloomberg surveillance" on bloomberg television. ♪

tom: good morning, everyone. the ehrlich unit economics and finance. we look at international relations today. the dow is -94. we will get to brazil in a moment. byomberg is brought to you td ameritrade. committed to helping advisors with the bigger picture. welcome to human finance. brazil, i am looking at not where it was on september 10. it is weaker this morning. you can imagine the government

is managing it. it's a little bit like zambia. that brings in tracy. surveillanceuse of , where else would you get a quote on the zambian currency, which is now at 9.85 to the dollar. it strengthened a little bit this morning. the crisis is over, i guess. tracy: i would argue not christ. michael: this is about the worst performing currency in the world. tracy: this is one worst performers. michael: it gets back to the whole commodities question. were just talking about copper and we were talking about financial conditions. zambia is caught in the crosshairs of those trends. we have a stronger dollar and lower copper prices. and we have glencore cutting production of dramatically. tom: is the hyperbolic sense of

the zambian currency something that could carry on to a more sophisticated a comment like brazil? tracy: you have to view it as one whole unit. one interconnected unit, a hit in one corner has ripple effects to out the system. glencore says it's cutting productions in one of its biggest mines, that has an effect on the economy. moody's is warning today that zambia is in a precarious position as a result just of the glencore action. they are talking about going to the imf. that brings us back to brazil. brazil does not need alone a. politically, they should apply for one. tom: there's that as well. to both of you, as we go to thursday, i am looking at the

bloomberg terminal. this is what my screen looks like. this is the actual launch pad. there is one number. west texas intermediate is down $.77. if we get to thursday with new weakness and oil? michael: tomorrow, we get retail sales. maybe if people spend money than oil prices go back up. it's hard to tell. the fed is looking past the short-term of volatility. tom: what are you searching for about to figure out what's going on? tracy: how markets are positioned going into that meeting. we saw some hedge funds that were piling into two-year treasuries. that would suggest that the height is off the table. -- hike is off the table. we are trying to figure out how people are positioned and how they would take a rate increase if it happens. what we get the market turmoil

that people have predicted for years best and mark is it priced in? there is a lot of discrepancy in terms of expectation. the market has a 20% chance of a rate hike, half of economists say there is a chance. there is a big discrepancy. tom: tracy is getting us started on a monday. look for bloomberg markets, it is a real font of research and wisdom. they bring in all of the different writings on wall street. i spend way too much time watching the drama of the new york jets playing the cleveland browns. there was a small tennis match going on as well. they played the u.s. open finals in prime time last night. tennis joined the ranks of the sports that are driven by television. novak djokovic beat roger federer in for sets. it's interesting that roger

federer is still there at the top after so many years. win that extra major. the one that everybody was talking about was roberta vinci's lead of serena williams. this is in the list of all-time top sports upsets. bloomberg sports is with us. i have to tell you, the postmatch interview with roberta vinci was one of the greatest things i have ever seen. no one was more surprised than her. >> the first thing out of her mouth was i'm sorry. they asked her for how she felt and she apologized to the fans. a lot of people there were on serena's side. she wanted to ride the coattails of tennis history. whatif you scratched out

serena cost tennis by unfortunately losing? >> i'm not sure how much this hurts her bottom line or tennis. it's nice to see history made. for serena, she is the best women's tennis player currently. probably the greatest ever. she may when the australian open. >> we have a lot of fun with football. tom: we have a lot of fun with mohamed el-erian. is a giant new york jets fan. bill gross loves the 49ers. they are below last place, right? michael: the 49ers are going three transition. tom: what did you learn yesterday besides the gold graphics at the middle of the field? it just works. it could not have come sooner

for the nfl. they have had this tumultuous otherason, tom brady and issues. they wanted football to come back so that people would talk about the on-field on it. the giants game was pretty amazing. it was a perfect way to open sunday night primetime. michael: that was a tough one for new york fans. >> if you are a jets fan, you are excited. tom: what i noticed is it shocking how certain players got a little bit older this year. >> it's funny how that works. rule isp.a.t. interesting. it's now much longer. they moved it back. the percentages are a little different. kickers used to convert 99% and now it's 94%. i think it's going to change strategy.

you will see a few more misses and that will have big ramifications. he will see more people going for two points. we've gone one minute and 48 seconds without mentioning how ugly the denver broncos are. michael: this is what i love. peyton manning did not play well. the broncos barely one. they won because of the defensive interception. and the coach said this is exactly what i wanted. tom: i am going to ask a business question. there was a great tweet out that i would see more advertising for fan dual than the rest of it. can you explain to a mere more like me what these gambling things are different from las vegas? children are watching gambling on tv? >> technically, they are not. this is the fantasy principle. 180 dollars and one

$1 million. that's not gambling. >> there is a fantasy sports carveout. when it was made, no one envisioned there would be daily pay money to enter and get money immediately services. they thought of it as the season-long game. tom: informed the parents watching. the reality of kids signing up for this or the addictive nature's of it. >> there are a lot of similarities to gambling for sure. it's just like poker in the way that you will see most of the money people are winning is going to the very elite few. it's nothing were you and i can sign up. tom: do the owners support this? >> absolutely. almost every nfl team has a partnership with either draft kings or fan dual. tom: we have much to talk about.

what a day it's been on television and radio. thanks to our team, especially our london team. this is "bloomberg surveillance." stay with us. ♪

>> welcome to the bloomberg market day. the auto industry is enjoying a banner year in sales.

there are some headwinds ahead. people are gathered in germany for the international auto show. we'll hear from the chairman of volkswagen. it's one of the federal reserve's most anticipated meetings. whether or not to raise interest rates. that will come down a thursday. economists are split on what the decision will be and will stock market volatility play a role? oil production is showing signs of slowing down. we will discuss us what that could do to the u.s. economy. good morning. welcome to the bloomberg market day. i want to get paycheck of where equity markets are. the decision will be coming down at 2:00 on thursday.