markets are flashing mixed signals about what they think janet yellen and company will do. mark: the world's two largest beer makers are discussing a merger. what the deal could mean for the industry. national women's hockey league will pay players a salary, making it the first pro hockey league in north america for women to do so. ♪ mark: good day from bloomberg world headquarters in new york. i mark crumpton here with scarlet fu. oil rallies boosting stocks. scarlet: it is t -24 right now. let's get straight to a look at the markets. mark, you mention oil prices giving the stock market a boost. we see this energy stocks helping to power up the s&p 500, getting two thirds of 1%.

if you come inside the bloomberg terminal to look at the breakdown in terms of volume by sector, the different colored ours represent one of the 10 industry groups in the s&p 500. the one i am noticing here is the consumer staples group trade volume in that sector is pretty much in line with the 20 day average. as for the other nine sectors, they are below average, some as much as the 2% when it comes to the telecoms group and as little as 6.7% when it comes to energy. energy is the key story here. if you look at oil prices, green arrows there. 46.62crude up by 4.6% to a barrel. you also had shanghai stock market rebound yesterday, bolstering sentiment since china is one of the biggest consumers of energy products and metals as well. looking at treasuries before the fed decision tomorrow, prices higher for the most part, yields lower.

the 10-year unchanged at 2.28%. the 30-year at .07%. inflation data in the u.s. and europe showed the kleins and little change respectively. it's not at 2% and that is something they will have to take into effect as well. as scarlet mentioned, we are less than 24 hours away. bloomberg television will have all the details on the fed meeting beginning tomorrow. let's look at the top stories we are following at this hour. president obama has urged the u.s. congress to take action on the budget. in an address to the business roundtable, the president said republicans should agree to negotiate a budget that centers on spending and not hold it hostage to ideological issues such as planned parenthood. obama: the notion that we play chicken with an $18 trillion economy and global markets that are already skittish all because of an issue

around a woman's health provider that receives less than $.20 out of every thousand dollars in the federal budget, that's not good policy making. mark: federal agencies run out of money two weeks from today. after today the house of representatives has only five work days left in washington this month. scarlet: it has been nine years since the federal reserve raised interest rates. we will find out tomorrow at the central bank is ready to do it again. policymakers have begun their meeting and the question is, are markets ready for an interest rate increase. we ask a former u.s. chief economist at morgan stanley -- >> if the federal reserve officials were convinced that market participants understood they would keep policy accommodative for a long time, but not at a zero interest rate, they would be willing to tighten tomorrow. if they are not sure that market participants understand that, they will worry about the shock. scarlet: the goldman sachs ceo

says if it were up to him, he would not raise rates. economic data right now don't support the case for a rate increase. mark: inflation is staying below the level of federal reserve wands. economists say that fed policymakers are caught between evidence of strengthening economy and persistently low inflation. scarlet: that inflation report also showed a drop in airfares in august for the second month in a row. prices were down a little more than 3%. in the last year, airfares have declined in average 6%. mark: it's a deal that would create a real mega-brewer. anheuser-busch inbev plans a takeover offer of sabmiller. sabilmiller is said to be open o these talks. the company would control about half of the industry's profits. scarlet: yale university is collecting interest from a bond

whend 367 years ago, hundred $53 from the dutch water authority, among the oldest bonds that still pay interest. it was issued in 1648 to pay for a small pier. i love that story. mark: this time tomorrow the u.s. federal reserve will have made one of the most important decisions since the financial crisis whether to raise interest rates for the first time as scarlet mention, in nine years. scarlet: investors and economists remain divided over what janet yellen and company will do to help us look at possible -- yellen and company will do. been calling for a september rate increase for over a year. are you still standing by that given the volatility we saw in august and percolation in market over the last few days? >> it's difficult to come up with a prediction on the evo of it coming right. there is less than a 50% chance

they will actually make the move tomorrow afternoon. outlook going forward, one that drives their expectations that has also- created the possibility of some fundamental problems, as china's neighbors begin to slow down in other emerging markets, we are very sensitive to what the fed does, a little bit on edge. i don't think the fed wants to add to that financial instability. mark: is this about what might happen in the united states, to wall street, or is this more global? i think the fed would tell you that they focus on the fundamentals, they don't necessarily calibrate their policy to what the markets do. they are trying to understand what the impact on the overall economic picture might be from all of this happening. certainly our direct exposure to china is minimal. fed is happy with what

happened to this point. we have low unemployment. we have good progress in our economy. the question is, can we sustain it? scarlet: where is the inflation? if you look at a chart where you back out food and fuel costs's, consumer prices have met or exceeded the 2% target only a quarter of the time in the past two decades. are you in agreement with economists who say the fed should lower its inflation target to 1.5%? inflation. some anyone who pays rent tells you that is going up by 3% per year. once you remove the impact of falling energy prices over the last 12 months, you get a normal level. read anyhere near 2% central bank, including the fed, has a hard time of meeting its target because inflation is globally determined. influenceus -- fed's is greatest within the united states. are they able to get to 2% without straining themselves?

ofk: are you in the camp people who say perhaps the federal reserve has not paid enough attention to inflation, but has been more concerned about the jobs front? >> i would not go that far. they have been watching both and expecting that is unemployment comes down, we would see more lift from wages, which has not occurred yet. they have been watching both sides. they have been concerned that after six years of expansion, if they are going to raise interest rates, they don't want to have to turn around and go back later on. scarlet: janet yellen has been silent for the last two months, not really showing her hand in terms of what is going to happen. also going back and recalibrating her models. tomorrow at the news conference she will have to speak up and tell us what the plan is, what the vision is there. do you expect another revival of tomunication where they try really make clear their goal even as they remain data dependent?

>> that will be must-see television. i will say that janet, irregardless of [no audio] message thate whatever happens, the fed will raise interest rates very carefully and very slowly. tomorrow, a will be accompanied by a statement that we may hold off for a while as we wait for international development to settle. if we don't go, we are getting close to full employment, we are potentially going to see inflation down the road, and i would get us to move. i certainly think they want to keep markets from going too far and thinking they will raise rates. scarlet: is that what is priced into the market right now? mark: right now the market is not expecting anything from tomorrow. the next time the fed has a press conference is december and now would be the next likely candidate if they pass tomorrow. mark: are financial markets vulnerable because of what's going on? >> they always are. this is an element of uncertainty they have had to digest.

during the summer it seemed a sure bet they would move. now it's more of a question, another reason why the fed might not move. they have not had a chance to foreshadow this efficiently. chief economist with northern trust, former fed economist joining us. tomorrow, live coverage of the fed decision with a special report set for 2:00 p.m. new york time followed by the janet yellen news conference at 2:30 on bloomberg television and radio. scarlet: still ahead, where hedge fund titans put their own money. ♪

scarlet: we will head over to bloomberg's julie hyman for a look at the markets. stocks are looking at their best two-day gain so far this month right now. julie: it could come to a

screeching halt tomorrow, depending on what we hear from the fed. it seems like the consensus at this point is we will not get a rate rise tomorrow. however, we are seeing stocks rise today largely on the strength of energy stocks and material stocks which are gaining with the underlying commodities. in terms of individual winners we are watching today, take a look at fitbit. this is on the news that target is going to offer fitbits to its 335,000 u.s. employees are it -- employees. company saying, corporate services right now generate less than 10% of revenue but it's one of the fastest-growing parts of the business. you can see the shares of 11% rate sometimes we see outside gains because it is heavily shorted stock. today we are watching yahoo and alibaba.

analyst saidthe bloomberg intelligence, they talked about the irs notes that list spinoff issues under consideration. analysts say it's probably not aimed at stopping yahoo!'s spin off of that alibaba stake but may be targeting future deals that have not been outlined yet. we're seeing a bit of relief for ali indo stocks. scarlet: a lot of people looking at yahoo! as a proxy for alibaba. looking at the s&p 500, there are 109 stocks down, 391 that are up. julie: i'm looking at the dow as well. had some interesting push and pull today. talking about a quarter of 1%. the company is delaying the big software upgrade for the apple watch before its actual launch. it is having trouble fixing bugs. saying it will take longer than expected to fix them.

on the other hand, the early reviews of the operating system have been positive. in addition to that, rbc analysts are the latest to come out and say they think this new apple upgrade iphone upgrade positive for to be apple. analysts at j.p. morgan yesterday said it would be possible for margins. already apple is stand out when it comes to margins. these are apple operating margins for its handsets. where talking about 28% margin last quarter. it is sort of best in class. analysts are saying this program could be good for margins, good for cash flow. revenues, number of iphones sold, etc. scarlet: thank you so much for the latest on the individual movers within the stock market. who manages the wealth of hedge fund managers themselves? they don't always put their money where they are putting their clients' money. these enclaves that often live within the manager's from are

called single-family offices. they are not without controversy. mark: critics say managers should eat their own cooking. joining us now, reporter margaret collins. family offices have been around for years. your article tells us they have exploded. why? arearet: family offices businesses set up by people who have so much money that they need to hire their own staff. mark: what a shame. margaret: they needed to run their multiple homes, handle their taxes, and invest their money so it lasts over generations. as we have seen the number of alien there's expand around the globe, we have seen a number of them set up family offices. you have served a brennan -- are gates, and now we seeing in recent years hedge fund managers and private equity managers as well. scarletmark: conflicts -- are te any? at thet: when you look

family offices set up by hedge fund managers, several things are conflict of interest. hedge fund managers who have family offices are also running the money of outside investors. the potential for conflicts of interest that had been raised our, if you have a family office based in the same place as you hedge fund, how are you allocating the expenses for office staff, research support staff, how is that being paid for, are there any overlapping investments, if you invest in a small company and it turns into a bigger one, how do you handle that? of, how the question much money of the managers is still in the hedge fund? many managers attract investors by saying, i'm a great investor, come invest with me. scarlet: it sounds like the problems and investment firm would face. many of the hedge fund managers we talked to said they have strict policies related to trades and they pay all the expenses for staff.

this is something investors don't always ask questions about and they may want to. it seems to be a bit secretive as well. why is that so? margaret: the role of family offices is extremely secretive. some are protective of their own families and kids. they don't always want to tell people when they are buying real estate property or setting up a trust and seeding it with certain things for their grandchildren. mark: don't folks want that transparency if they are trusting you and investing their own money? don't they want to know what is going on? margaret: that is one of the questions that has been raised, how many of these hedge fund managers have said to their investors, i have this other legal entity on the side, this is how i handle the investments in that and it is separate from the arm in this way and that way. how involved are federal regulators in all of this, if at all? margaret: this is one of the things about family offices in general. they are even more loosely regulated than private funds like a hedge fund or private

equity fund. that is some of the appeal to very wealthy people. if you're only managing the money within the family office for blood relatives, you don't have to register with the -- you don't have to disclose your assets under management or some of the investments you are making. mark: you don't have to disclose 5% stakes or 10% stakes? is this on the agency's radars? have there been any controversies? margaret: we did ask the sec about this. they said they are noticing the growth of family offices and looking into it. their main area of focus would be, are there any overlapping investments, and how and when is that disclosed. so much.et: thank you you can read margaret's story on bloomberg.com. textbook prices are sky high. how some startups are helping students to hit the books without breaking the bank. ♪

scarlet: college textbook prices have soared in recent years. several new initiatives are helping students hit the books without breaking the bank. bloomberg's willem marx takes a look. reporter: there's nothing like a trip to the campus co-op bookstore to bring them back to reality. college textbook costs have nearly doubled in the last decade and the internet that so revolutionized all the media is only now starting to impact major players in this multibillion-dollar market. >> this is a human genetics book. this is $250. for $44.this

one of many savvy students looking to pay less. he bought his entire required reading list new from the bookstore on campus he would have paialmost $587. but by borrowing, renting, and sourcing free versions online, he saved himself $500. >> publishers deserve some money. they are the ones who made the book or published it. but in the end, it should be at an affordable level for college students. anorter: this is increasingly common strategy. 82% of students in paris and shop online thanks to a growing number of textbook aggregators and rental sites. comparison shop online thanks to a growing number of textbook aggregators and rental sites. >> the publishing industry can raise prices with very little backlash from consumers. finally we are reaching the point where students have hit

their limit. average: bookstores say annual costs have fallen nearly $100 in the past five years. but textbooks and other learning materials remain prohibitively pricey for many students. professors are piloting a course that eliminates publisher textbooks altogether. >> this is a barrier for students and we don't want to have them making choices about buying the textbook or paying gas and electric. to save each of their students more than $100, rene and her fellow professor worked all summer on a new textbook, relying on open source materials that cost them nothing. >> not only our students going to save money, but instead of going to a publisher that will offer a book that is generic, now we can make it specific for students. reporter: back at uconn, student organizer says a similar program

here would require an entirely new mindset from faculty and administrators. >> a lot of times professors, especially at a research university like yukon, their primary concern is not a textbook itself and how to make it more affordable for their students, it's doing their research. reporter: the most book smart students are doing their research into online prices, creating a competitive market with increased choice and decreased cost. scarlet: procrastinators may be textbook publishers' best friends. if you comparison shop, you must've done that with lead time. mark: we were both sitting here watching that and we were making it does seem outrageous. higher education costs so much and then your grades are going to slip because you can't afford a book? scarlet: most are like, i've already put this much into my education, what's a couple hundred every semester? mark: that could be the

difference if you live off between keeping your lights on or something. scarlet: i was a humanities major. i did not have any of those superheavy science textbooks to deal with. mark: i got a job in the bookstore. and i got free books. scarlet: employee discount. mark: employee take any book you want. scarlet: employee privilege. mark crumpton, thank you very much. mark: i'm taking my script and i'm going. scarlet: we have much more coming up. the world plus two biggest beer makers discussing a merger. what the deal could mean for the global industry. ♪

scarlet: welcome back to the bloomberg "market day." i am scarlet fu. president obama will meet with the litter -- leader of israel, come november.

white house press secretary took about the visit. >> mr. netanyahu's visit to the united is the impression of the between enduring bonds the united states and israel, and the uncooperative cooperation -- and the cooperation. scarlet: given a fierce critic nuclear deal. earlier this year he addressed congress to try to derail it. the census bureau, 33 million people were uninsured in 2013. that is down from almost 32 million -- 42 million 2013. secretary resizing china for the land reclamation projects in the china agency.

he calls them out of step. china's actions have put it at odds with the economic and the philippines. carter calls for an immediate and reformation by all nations. the u.s. weighing an offer from russia to have military to military talks on the situation in syria. that is according to john kerry. the white house, state department and the pentagon are all considering it. those are your top stories. in the business world, a possible make a deal brewing in beer industry. if the deal goes through, it would create a company that would control half of the industry's profits. earlier today mark crumpton campbell inatthew london and the senior analyst for bloomberg intelligence in princeton. the reason it makes sense is because the brewing industry is fairly growing. by some measures it is

shrinking. what do they do? they consolidate. this is a very big consolidation between two companies that are extremely large. it comes from the basic logic, gets bigger, cut costs. is that necessarily the recipe for success, especially in that business? >> yes, it is. this is about another thing also. key trendsds -- two is cracked, locally produced beers. i think that is sab miller's strength, and also, i believe most of the emerging growth areas will see the lion share of the growth. they know that. that is why it is looking at africa, southeast asia for growth platforms. mark: talk to us about antitrust

.oncerns is the deal going to clear regulators? >> the overlap between the businesses, despite how big they are is not as big as you might think. the particular problem is in the u.s. where the combined market orre without any assets anything like that would be well over 50%. well though will be in-depth antitrust inquiries all over the beld, the u.s. seems to where people are focusing in terms of a geography that could derail the transaction unless there are very substantial asset sales. on our story on the bloomberg terminal and at bloomberg.com we spoke to an investor who said -- and analyst the exposuree seen to emerging markets over the past few months as a drag on its share price. how much of a drag? it probably is true and it is

hard to quantify that of the emerging growth markets in the near term are sluggish. a look at china and the oil dependent nations that have the demographic growth of the future. think it multinationals look beyond what's will look beyond -- what will happen next year. it is decades in the future about where the growth will be. it will be in the region where the middle class is rising. will we see more growth in the beer industry as a result of this proposal? >> that is a good question. the really are not many left. four are really just left. the two moving towards the merger, heineken, and a fifth of

mostly coors and the america. furtherry hard to see deal. they are controlled by funding that would be pretty reluctant to give up control. it may be this is the last big beer deal. does not mean there cannot be something else in the beer space. occasionally about pepsi and coca-cola getting involved somehow. things thats to come in bottles, there are many more deals to come. beer, im not so sure. i am not so sure. mark: what will we see in the liquor store as a result? >> that is a great question. , all of us unless there are developments that go along with disapproval, you probably would see higher prices because you would have a situation where two companies would produce seven of the top

10 beers in the u.s.. as normally led to high price volatility. high price flexibility no doubt. at some point, the possible ripple effect you just discussed, are they going to be felt the consumers. will that be something the consumers will have to pony up ?ore money you g >> i think that is something the regulators will look at very, very closely. the error is the consumer products. something that i think no politicians want them to be seen making more expensive. -- pretty easy to attack and say my opponent let the price of." up. i think they will be crawling all over this and doing everything they can, if the deal doesn't eventually get approved.

we should note that as many steps down the road that it does not impact consumers negatively. that was matthew campbell in london and can shake, senior analyst in print them. coming up, president obama speaks to business leaders at the white house business roundtable. ♪

scarlet: welcome back to the bloomberg "market day." i am scarlet fu. a check on how commodity prices have settled. we bring in alix steel.

we have to start with deal. oi. a big, big move. here is what got markets so bullish. there was a huge inventory dropped by 2.1 billion barrels. refiners are using more crude. will not be as bad as we think. scarlet: that is the distinction. there will still be a surplus. alix: yes. here is where it gets interesting. the surplus moving from the oil to the product. acrossa product will gasoline. the summer season so inventories will start building. eventually you have a glutton of products margin. they will not buy any more crude. it is just moving to a different location. what was also interesting is refinery utilization was up 2.2%. this is the maintenance season

when everyone shuts down. that was a very surprising number, meaning it will not last. we are not really in the peak of refinery season. asklet: i like how you wayne the follow-through on refineries. the profit margin is what has saved them fr. alix: absolutely. if the margin slip, they will suffer quite a bit. especially if the export ban is lifted. that could wind up hurting refiners. taking a look at base metals. copper has recovered because china's government recovered overnight. a little bit more bullish sentiment. i want to talk about think. copper for sure.

saying they see 3.8 percent demand growth for china, much bigger than other there. nc is doing- zi something really cool. take a look into the bloomberg terminal, and you can see it is -- d4 worker. much steeper prices right now than what traders are expecting. that is an anonymously steve kerr. that is making financial contractions more expensive -- more attractive. buy it and store it and sell it later. minus the cost of storing it. it is so advantageous to even do that. we -- if you want some proof, take a look at the inventories versus the zinc price. inventories have been rising as it has fallen off of a cliff. commerce trade -- commerzbank

brought this to my attention. since august 10, they have added 190,000 tons, 45%. you can see the increase their. scarlet: this correlates perfectly with what michael hague was talking about last week. head of global commodities. we were asking about the oversupply of medals around the world, is there anything of which there is not enough of? this is what he said. let's not many of them but if i have to trade off of something like that, think is in it -deficit- zinc is in a deficit. scarlet: go long zinc. alix: this is a financial transaction. what we are seeing is purely financial.

commerzbank said the reason they know that is because the inventory build has primarily taken place on the london metal exchange warehouse in new orleans here in the u.s., and that is operated by metals owned by glencore, the biggest traitor and one of the biggest producers in the world. they are saying because of that, it means they could be participating in the financial transactions, meaning it has nothing to do with fundamentals. fascinating. scarlet: i love the fact that there is an outlier and commodities. probably everyone will flock to it as a result creating this crowded trade in the process. >> absolutely. alix steel will be back at the top of the next hour to take us through the market closed. .e begin with the chrysler a tentative agreement on a new contract with united auto workers.

they celebrated last night but revealed little about the deal. they did say it eventually does away with the two-tiered structure. the union will now try to reach similar agreements with or and general motors. news corp. is diving deeper into web advertising. 86 -- up to 86 million more if they meet performance objectives. anp in talks to buy stars controlled by john malone. the talks may not result in an acquisition. would aned, they leverage on negotiating fees from pay-tv carriers. those are your top stories. nhlays to go before the new season begins. for women that love hockey, this is a big year. the national women hockey league kicks off the inaugural season. the first to pay its

players a salary. jointly is the league commissioner and founder, danny riley. u.s., and4 across the more than 70 players under contract. there is a minimum salary, free agency, right? >> yes. everything the men's professional team has, we have as well. the final four teams will play. and 18 game season. october.cking off in we are so excited. there has been a lot of hard work that goes into it. seeing it all come to reality as then such an exciting moments. scarlet: in march they will play the trophy game? there was a previous league in 1999 tohat existed from 2007. you are not related here. >> no we are not. scarlet: you will have an

advantage, you are competitive. where the cost of the equipment is basically covered. saying we have a salary cap and an average salary. minimum is 10,000 per year. the highest-paid player this $22,000l make around for the six-month season. a huge step or the women's game of hockey. just paying the women for fees the worst -- best at what they do. have a: they basically full-time job as well? >> for the most part they love a full-time job as well. we are not making the. of an 82e full grind game season, but definitely a first. scarlet: that would be a tall order, especially those with a family as well. hockey 15playing

years ago and i will be trying out for a team this weekend. what inspired you to go from playing college hockey to starting a professional women's league? >> a lot of my friends were playing in other league after they were done with their college career. there is just a huge missed opportunity for continued development. they speak in development when they are 27 years old. there is all that miss development and missed opportunity for the players to reach their peak. it started out as an idea. before i knew it, the hockey community was behind me. i started reaching out to my network. they were like this is what you have to do. just keep going. how did you go about finding funding? funded theprivately first year. a lot of people see this as a business opportunity.

are looking for the right sponsors to go on board and support what we're doing here. scarlet: you are wheeling and dealing in trying to market this eons hockey women, which is a little bit of a limited market. what do you find as the biggest misconception rocco >> that it is a limited market may be the misconception. 13% of hockey registration is comprised of girls and women. a third are in the northeast here. did you watch the gold-medal of course disappointment for the u.s. team, but a great hockey game. a lot of people will not say they do not watch because it was men or women but because it was a great hockey game. the most-watched event on nbc, which says a lot the sport. the game has evolved over the past 10 years.

the game on the ice, the actual product, the women have really done this for themselves. evolved so much. what i was told people, during the olympics some people were and would not realize they were watching a women's game until the zoomed in and golf the mascara. -- saw the missouri. for at: that was shocking lot of people who did not realize the athleticism was there. you are manager for new york riveter's and you will be playing in brookland. you will play not the same brink. -- rink. will play at aviator sports in brooklyn. are looking to sell it out

and brought the house. we are so excited to bring hockley to -- hockey to brooklyn. final question, some of your fellow commissioners in pro sports have had a rough year. roger goodell, and others. how do you think any professional women's league would benefit from having a woman run a show? >> i don't really think it is male or female. i think it is really getting the job done and setting yourself up for success and having a troop around you supporting you and helping with those big decisions. beennk gary bettman has very helpful with hourly. he was very supportive from the grassroots level all the way to the pros. i know he sees something in the future. i think -- you may have a bad

rap but tops in my book. scarlet: commissioner of the national women's hockey league. their season begins october 11. be sure -- be sure to tune in for primetime bloomberg surveillance vessel. keene and mike mckee will speak with ray dalia. much more in a minute. ♪

scarlet: this is bloomberg "market day." the you saw thoughts are doing ahead of the market rate decision by the fed. force apple to delay the launch of the new watch operating system at the last minute. awful as it is taking longer to fix that expected. it is supposed to let third-party apps run more quickly on the watch. tolett-packard preparing split into. it will eliminate as many as 33,000 jobs. become tober it will stand-alone businesses. one that deals high-end technology and the other that holds personal computers. toys "r" us will hire fewer employees this year. taking on 40,000 temporary workers. will"r" us will live --

rely more on existing workers. they are in the middle of a turnaround your after three years of falling sales. much more coming up in the final hour of the trading day. u.s. stocks are holding onto gains in the final hour. a reminder that as we count you wen to the fomc decision have live coverage with a special report set for 2:00 eastern time followed by janet yellen's news conference that on bloomberg0 television bloomberg radio. ♪

scarlet: it is said and san francisco. the federal reserve begins the highly anticipated today meeting. a look at how the markets are reacting to the crucial decision

of whether or not to begin raising rates. alix: ken ben carson trump the donald? the gop candidates taking the stage for the second republican debate. ♪ scarlet: that afternoon. i am scarlet fu here with alix steel. -- goo afternoon. dalix: trading right around the highs of the session when it comes to the s&p. it has also climbed above the short-term moving average. showing a little bit of momentum , optimism when it comes to equities. you look at some of the sectors, energy is a best performer because of the jump in oil prices. , over look at financial the past few days they have done fairly well. yesterday on the heels of the

big selloff in the two-year treasury. this is the today intraday chart for the s&p 500 financials index. we are at our session high right now. up 2.2% today alone. good point you make about the two-year as well. j.p. morgan came out with a note saying this yield right here shows markets can handle a fed hike, a small bump in the treasury market. that,f america is going saying that outside selloff is anticipation of china might ease some more due to a fed rate hike that there will be a trickle-down effect. china, japan, you name it. what i wanted to point out as was, the great chart that put together in this story. it showed thanks over the rate rise coming at the worst time for u.s. earnings.

profit fell for the first time since 2009. the economy is doing ok. lookingral reserve is to normalize, tighten policy. since world war ii profit growth has fallen by roughly half in the one year following the interest rate increase. not necessarily a good sign. cannot really afford that if you look at what interest rates are at right now. interesting because the probability factor is quite low. showinglooking at wirp, the probability of a rate hike through the next few months, 28% probability of a move come tomorrow. that has never hiked when has in under 50% since 1990 or. the day before the rate hike in 1994 and 2004, the probability always above 70 percent.

theing that -- seeing that, market truly not expecting a rate hike. positioned -- not believed and truly believed they had moved the rate hike to wait her on. alix: investors anxiously awaiting tomorrow's key target decision. for more, we are joined by a senior investment managing. how do you explain this? the two-year yield of .8%? it is not always right. i think this time they have called it wrong. i think we see a rate hike tomorrow. the economy, if she says 25 basis points tomorrow, that is strength in the economy, confident in the economy. that is what the markets need right now. i think it would be good for the market to have a rate rise tomorrow. torlet: what would it do

economies overseas and markets overseas? >> that is harder. maybe it moves it forward to later in the year from slightly early in the year. it is a fine run thing about the decision tomorrow. a number of people have been watching bloomberg all day. rightk the conditions are . do it now, she is worried about something else. there is always something to worry about. the real concern is double yield. you have the u.s. 10 year, u.k. 10-year and german tenure, and they pretty much move in tandem. the german tenure is a little bit weaker. 10-year is a little bit weaker. >> if we see a rate rise

tomorrow, we will see that move. probably fairly static. the market down a little bit. controlling inflation when it eventually comes back around. that is actually not a bad thing for the long end of the u.s. treasury market. this may be the biggest nonevent we have been talking about for quite some time. signal the change in direction. scarlet: there is the real economy affect to consider. the bank of england came out with no change either. the language was interesting. they signal they are not overly concerned that the development in china. >> i do not know how much they talk, but i imagine there is some chat. at the end of the day, the job of both of these is the

financial stability. you get your own economy right. you get the response right to what is happening at home first and worry about everything else later. i think it is a sensible attitude by mark carney and janet yellen should take a close look at. to pumpe you able enough money into the system to offset a potential rate type? global fx reserves following. can you do it? atmario draghi is very good verbally supporting the markets as well. i think he can. the ecb raised 2.5 times during difficultordinary policy. the fed changed five times. i think it comes down to how much the germans will live with.

chat withinot of germany. my boss is german and always word about what the ecb will do. there is room for a lot more there before it really becomes a problem. has some of the anxiety died down after the data shows it is doing ok? qe isgree with you, ecb having a bigger impact, a lot quicker than the fed has in its round of policy easing. this is supposed to be something that happens once in a blue moon . you have to get out of it. alix: how do you position yourself with this uncertainty? >> we are short the front end of the curve in the u.s. we are long 30 years. we are looking for a flatter curve everywhere. you are putting more money

toward this. credit.rather buy i am quite happy buying the more risky and of high-yield credit. probably in europe. i think the problems in the u.s. are well written about and still here. scarlet: how about risk extending to the markets? what are you looking at outside of europe and outside the u.s.? >> married you have to be very selective. you need to see the policy response from china before you get into the markets in a big way from a debt holders perspective. we have gotten a little bit into india. that is an interesting market. the reforms are strong. you are starting to see an improvement in the stock market. australialaces like that is suffering badly from china slowdown.

if you want to fund this, i think it is great opportunity. alix: if we do not get a rate hike from janet yellen tomorrow, what will they do? >> if she puts rates of, it is all about the statement at 2:45. if it is dovish, it will support. if it is hawkish, i think it will support. i think the risk around that is very high. in cash thing you can count on for sure is more volatility. joining us in new york this afternoon. don't miss this special report, the fed decides that took eastern time tomorrow. the news conference begins at 2:30. alix: a look at other stories making headlines at this hour -- president obama will meet with prime minister of israel november 9 area they will discuss iran nuclear accord

among other topics. the visits is the deep demonstration of the deep and enduring bonds between the united states and israel, as well as the unprecedented operation to further enhance israel's security. alix: he has been a fierce critic of the iraq accord and earlier this year he addressed congress in an effort to derail the deal. ticking with the clock toward a government shutdown, president obama is urging congress to take action on the budget. not holding it hostage to ideological issues such as planned parenthood. federal agencies run out of money to week from today. after today the house only has five working days left in washington this month. good here again with that. the u.s. homebuilders confidence of a 10 year high. homebuilders growth will drive

growth for the next year. readings from the sentiment month, theat 62 this highest level since october 2005. readings greater than 50 reported favorable market conditions. scarlet: in the past year there has been little change of the number of americans living in poverty. it is just under 15%, meaning no statistical change from a year ago. a family of four is centered to be in poverty if it is below 24,000 per year. alix: inflation thing below what the federal consumer bureau once. fed policymakers will consider the inflation rate today and tomorrow while they decide whether to raise interest rates. obamacare help to lower the amount of people uninsured in 2013. that is down from almost 22

million in 2013. last year was the first people began enrolling and health exchanges. alix: a deal on tap to make the biggest merger in brewing history. anheuser in bed buy s.a.p.a move to miller. a state caps off forced authorities to suspend 25% -- tax for one day only. that is because they overestimated last year. under the constitution, this will trigger an automatic since engine of any new taxes. they do go back to 25% tomorrow. those are some of your top stories. alix: tune in tonight for a prime time loop -- bloomberg surveillance special. tom keene has not slept in days.

he will be joined with michael mckee. we will be right back here on the bloomberg "market day." ♪

scarlet: welcome back to the bloomberg "market day." i am scarlet fu here with alix steel. going to julie hyman. 45 minutes that in trading, and you will art on potential m&a. is almost happy hour. we have been talking about the potential year -- fear dear -- beer deal throughout the day. the offer has not been made as of yet. it would be the largest in the history of the beer industry. here is how the principles are

trading. anheuser-busch is on the rise as well. there is owns 27% another large shareholder as well. investor.rge african they would need to sign off on this deal because he is another large shareholder of sav miller. we are watching other beer makers. miller. there is talk we would have to see sab miller exit the joint venture with molson coors in the united states. what is so striking to me

is what it really points out is is much beer industry struggling with the rise of craft beer and how it is trying to combat that. it is. it is a matter of wine and crafts fear becoming more popular. people turning away from the cheaper beers if you will. ino, being lower trace drinking. we had seen what has been a promising market these promising. what has also left me is how can validate it that the industry is. take a look at the bloomberg terminal. this is the market share data. you are looking at anheuser-busch inbev. this is a 21% or so market share, at least that is 2014. sab miller 9.7. heineken at number three. if you look at the concentration in the u.s., 45%.

that is why we linked that investors shares. commanding share of the market. thank you so much. in the meantime, we're breaking news. alix: bloomberg has learned energy transfer equity closer to winning the takeover offer for williams. if it they did combine, it would create the largest operator infrastructure for moving oil and natural gas in the united states. we're seeing a lot of companies like williams wanting to change the business structure and try of companies they do not own in the unit. inrgy transfer partners came about nine months ago to make an offer. they said we do not what you to do that area leading us by you is a better dear for sale -- steel for shareholders. they offered $64 per share.

we do not know if they have abandoned the plan or if it did was raised. this was a deal in the midstream side of energy area as we go over the energy sector, you still do not see the big guys really involved. it is a pipeline company but not the big players you would expect. alix: a good point but midpoint is where it is being made. so in some ways you have seen a better bid. the issue is they have been getting so much money from creditors and equity shareholders issuing new debt they do not really need a savior yet. they can still produce even though oil prices are so low because cash prices have come down so much.

they are good for now, but at some point if they wind up getting a capital squeeze, they will need to find a buyer for asset sales. we could see m&a. scarlet: they also have the refiner that is subsidizing everything else. alix: right. years ago they do not want to buy a multibillion-dollar deal. a little bit gun shy. this could be a really big deal for the midstream transportation sector. perhaps the lion williams. we do have more breaking news for you. julie hyman with those headlines. this has to do with the expedia acquisition of orbits. it looks like it will get antitrust approval. we are seeing very dramatic reaction in the stocks. the big and you can see spike in shares right now. right now they are up by about 3% or so. also looking at the ticker. 6%.e shares up by about

we talked about the environment being a little bit tougher on antitrust market, investors seeing this as good news. a still ahead, what you should be watching for is the second primetime televised debate. all of the answers coming up. ♪

alix: tonight republican candidates will gather on age for the second national televised debate. recent poll showed donald trump and ben carson taking the lead. halperin joins us live from the leg and library in california area this debate, the second among republican candidates boils down to the established candidate versus the outsiders, the trump, the ben carson.

>> it does. it has now become really clear there are these two big tears. donald trump and everyone else. we have been talking for a long time now whether this would be the debate were people in the lower tier decide to take on donald trump. another one is whether anyone decides to take on ben carson, gaining altitude at a faster rate than donald trump even. last night a relatively polite affair. tonight may look like a bloodbath. -- last time a relatively polite affair. blankfeinhad lloyd saying in an interview that the thought of trump's finger on the button blows his mind. what does he need to do, if anything, to expand his base for a wider appeal? >> there are a lot of people in the establishment who are never

going to have donald trump be their candidate. i would act more he has success more there will be a surging on the part of blankfein to say who can we support in spite of donald trump? he does not need to expand his race. he are ready has more than enough votes to do that. i do not think trump will ever try to win over people like lloyd blankfein. he will never be able to, he is never going to try. scarlet: probably counting on the fact that they will have to adopt to him more likely. what about carly fiorina? she did very well but most accounts. hearare you looking to from her in order to have resonance among ewers and potential voters? and potentialrs voters?

>> she has been in a public bath with donald trump. maybe the only candidate who is not been hurt by donald trump. the comments about her looks. she said something like donald trump will hear a lot from me tonight. the question number two, ken carly fiorina not only take on trumpet in a direct way but resent a contrast yet so she is someone who was never served in public office. can she be a more credible version of donald trump? scarlet: tune in tonight at 5:00 eastern for " with all due respect" posting a one-hour special covering the debate. ♪ sure, tv has evolved over the years.

it's gotten squarer. brighter. bigger. it's gotten thinner. even curvier. but what's next?

for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. alix: we want to get straight to the look at the top headlines this afternoon imperative the price of oil hit a one-week high after inventories declined. stockpiles fell by more than 2

million barrels last week. major oiled theirs are looking to capitalize after the longest lasting blood in 30 years by hiring tanks to store crude on small islands. they are responding to opportunities in the market. it is allowing to it is to access storage to lock in a profit. you by now, you store, you sell later. britain is pushing a draft resolution to move against vessels trying to smuggle in migrants through the high seas off libya. they propose resolution would allow the eu operation in the mediterranean. italy can already see and destroy smuggler vessels, but

germany and britain need secret council approval. fedex is cutting its forecast. reduced outlook follows disappointing results for the latest quarter. graff: our expectations are dependent on key external factors, including fuel prices and the pace of growth in the global economy, particularly in alix: the u.s. industrial production. alix:fedex announced it is hiring -- particularly in the u.s. industrial production. fedex has announced that it will be hiring a thousand new employees for the holiday season. university paid more than $27,000 to buy the bound as an artifact. it was issued in 1548 to pay for a small pier. that is some of your top

stories. we are just a day away to find out whether the fed will lose to raise rates. today, tom keene and mike mckee's boat to vince reinhardt. >> we just heard that the federal reserve is below the inflation goals. , weif you cost pressures don't see that building. and the external dimension is such that import prices are going down. there is not a lot of pressure for the fed to act. mortals the to mere wire the what in the debate. -- the why or the what in the

debate. dividesthe thing that the two camps? >> this is the end of the summer. the way to think about it is the first day at summer camp when you bring the kids out to the end of the dock and you tell them it will be really nice once they are in the lake. some jump right in. some of them just put the toes in the water. and some of them just stand there insurer. --t is the fomc right now stan there and shiver. that is the phone see right now. they are nervous about being zero. they still want to be accommodated, but they can do that by raising rates gradually. just the first time is really hard. so the issue is what is the shock of hitting the water? if the federal reserve officials were convinced that market the

two disciplines -- market participants word keep rates accommodated but not at zero, they would tighten tomorrow. participants are worried about the shock. tom: yields have come in off the cpi report fractionally, but nevertheless directionally. up nineelds in gold dollars as well. not much of a reaction. but every little bit here seems to be important. in sure mentalre in putting together the teal book for members of the fed as they go into their meeting. you basically set out in different options. here are the things you could do. so if you were writing the argument for moving now, what would it be? vince: it is pretty straightforward. the argument for moving is in

implement rate is within must people's reasonable estimate of the nat -- unemployment that there would be inflation pressures emerging if inflation continues -- if on a planet continues to fall. and you want to keep inflation expectations anchored. michael: how about for staying on hold? , easy, too, in that the dollar is appreciating. financial conditions have tightened. the markets have done a lot the work for you. even as market participants don't expect policy action and that you are particularly responsivebout the -- the response of first policy actions. tom: we know there is america booming, doing really well. and there is a huge body of america that feels disenfranchised.

like what we see with jeremy corbett in the united kingdom and such. do the two americas dialogue of her fit in that table at the echoes building? vince: the first thing you have to do is empathize. the job of the federal reserve is to deliver maximum employment and stable prices. that is a general macroeconomic goal. and issues about income inequality, the declining label share of income are serious macro concerns, serious issues for the political economy. but i don't know what level of the federal funds rate makes income were equal. and so you got to do the headline job, try to deliver the best economy can. all else equal, it is an argument for testing were the is.ral rate it is an argument for going in a little longer in terms of policy accommodation as long as

inflation is well-maintained. alix: that was vince reinhardt, visiting scholar of the american enterprise institute and former the federal reserve monetary affairs division. i want to bring in joe weisenthal. we will take a look on how the fed is falling short of its inflation will. not just now but the much across the goal. joe: this has been the briefing. everybody knows they are doing all right on the employment side. they are getting pretty close to what to be ought -- what ought to be full implement paired but they don't seem to be trending in the right direction. if you look historically, they have almost always been below their target on inflation rather than about it. one question that it raises is 2% really a target? the economy acts more like it is a ceiling than a target. potentialthere are expeditions for why you see this

chart, witches the fed efficient target never being hit over the last 20 years. part of it is technological advances. i zeroed in on oil. you have better equipment for fracking. you have more supplied. oil prices go down. that is deflationary. joe: look at japan were the inflation rate is really low and you see really low on employment unemployment.inte these big factors -- and it's questionable whether central bankers understand what causes inflation. alix: we are going to get needy and gritty and get into inflation. clock :00 p.m. eastern. we will be talking to james smit.

he has some very strong words on what the fed should do tomorrow. coming up, cisco's new ceo, chuck robin, says garrity for consolidation in the tech industry. how the company is positioning itself ♪.

julie: the dow almost up 1% today. it does seem to have less to do with rates and more to do with

what is going on in the energy market. you can see telecom is the only group that is down. a pretty broad-based rally as we reach the highs of the session. front away energy stocks are the best performers today. that is as we see the underlying lower prices higher. both showing a drawdown. covering thesed to inventory data week by week. if you look at the oil price reaction, reaction saw a little bit of a late lower in the oil prices. and then we saw them kind of shoot up. so this is a leg lover and then a big leg higher in the drawdown and inventories. so it was unexpected. alix: particularly because we are in refining minutes now. refineries have shut down.

you would think that we would by 2%. rise you would not see a big product build. but you did. but how long can it really last is a question. julie: and that we are 100 million barrels above the average at this time. there is still a lot of inventory to work down. all of that said, if you look at the energy stocks in today's chesapeake energy up 9.6% today. it is one of the worst performers of the year. but we see other materials rising today. gold rising today. we see a rally today. can super -- consumer price data its in the u.s. showing benign. i want to bring up the fed funds probability monitor on the bloomberg terminal.

i know this is a favorite of years as well. 20% chance of an increase in rates tomorrow. it has been fluctuating today. with that inflation number this morning, you would be a little bit lower. if you look at the treasury market as well, you can see how that is reflected, how that perception is reflected. we see a lot of gyrations in a pretty narrow range. there is still a little bit of question of what to expect mark. alix: -- to expect tomorrow. ago, it was 48%. julie: in part because of the devaluation of the chinese yuan. in a bug has forced apple to delay the launch of its new watch operating system at the last moment. apple says the bug is taking longer to fix than expected. the new operating system is

supposed to let their party apps run more quickly on the apple watch. and target wants its employees to shape up. it is offering fitbit activity trackers to its 335,000 employees in the u.s.. the idea is to improve worker fitness and reduce health care costs. rival is closeer to raising funds to give the company a valuation of almost 5 million -- $5 billion. president obama has invited a muslim schoolboy who was arrested for bringing a homemade clock to school to the white house. automated mohammed was detained after teachers reported him to cops. the president says -- and those are some of your top stories. tech titans have gathered at the

dream force conference in san francisco where emily chang spoke with chuck robbins. is,ourse, the top question potential fed rate hike tomorrow, does robbins have any comment on that? have: it is the first am i met him. he has only been in the job for two months. he is known as an secure, a guy who has been with cisco for 17 years, but who has a big job ahead of him. when he joined the company, cisco was on top of the world. since then, there have been dramatic shifts in the industry. i did ask him about a potential rate hike, when it would mean for cisco, and whether they have ample cash on hand. mr. robbins: we definitely have ample cash. when things get tough with the markets, that is good for us.

we have great strength. we have great bounce sheet strength. typically, when there are challenges, we gain market share. while we don't want to see that, it tends to be get for us. and some of the valuations may become more rational as well. valuations not very rational right now. things are quite expensive. certainly seems very well-prepared. he followed up by saying that this means, the fact that they have cash on hand, he thinks they will as inquisitive as they have been in very serious. they have made over a hundred deals in the last several years. this is a company that is out there looking to buy. about otherlking things moving in the tech market, a stark contrast when you look at hewlett-packard in those layoffs that we heard about yesterday. did he have any comment on that? emily: 30,000 people being laid off potentially at hp enterprise. i did tell him about him.

microsoft have had layoffs. of these tech giants are perry back. he would not give me a specific answer as to whether we will see more layoffs at cisco. but i did ask him how happy is he. hp,robbins: in the case of marco soft and others, we'll have to make decisions relative to our own business. coming off a record quarter, the pace of change is going to require us to manage our business more effectively. so what we are thinking about our more portfolio decisions. what i don't want to do is put the company in a position where way forward invested too much so that we have to take a large action. so we are going to take advantage of the technology to completely digitize a company, which we think will make us more efficient, greater productivity. we are very comfortable with that. emily: i did push them a little bit. does that mean more laughs are no layoffs or what? and he would give me a specific

answer. but it is certainly something that he is thinking about, the size of cisco's business. it sort of ballooned as other technet -- tech giants have risen. alix: good stuff. thank you so much. furthermore, tune in tonight at 4:30 p.m. we are watching the markets in the last few minutes of trading one day before the fed decision. ♪

>> i wouldn't do it unless i was compelled to do it. polled by, gosh, they have been low too long, it really enters into the pressure on the politics. i think it should be data-driven

if you are the fed. lord like fine speaking at a wall street journal viewpoints conversation earlier today. what does it mean for the technicals of the market? u.s. stocks are rallying. what does it mean on a technical basis? katie stockton is the chief technical strategists. a great perspective to get into the fed meeting. obviously, the august 24 low is important for the s&p 500. is,e we saw the lowest ebb we have seen contraction volatility. that has yielded what we call trying a pattern, sort of narrowing formation for the s&p 500 and what that tends to proceed is another spike in volatility. , it doesn't give

us a directional bias. it is a neutral formation. in and of itself and that is what we are going into -- neutral formation in and of itself. that is what we are going into. we will expect some volatility tomorrow. what i am going to be paying attention to are the boundaries of their formation, meaning resistance and support, areas of potential selling pressure and buying pressure. alix: the two areas of the triangle on that chart. katie: the boundaries. , 1937.downside so the intraday action is sure to be volatile, but it is really the close that matters in my work. alix: when it does break out, how violent as it? as violently as the move that preceded the pattern.

the august move was very explosive and quite unusual for the market. but that does tend to happen at times. the other thing that has been moving in the market into the fed, a big break at yesterday. the highest level since 2011. technically, how does the breakout look to you? it does suggest that investors are anticipating the fed to move, whether it be tomorrow or later this year. what that means for equities's tpg. alix: we were just looking at the trendline versus the two-year yield. at what point does the two-year he yield become? overextended kate -- become overextended? is hard to say exactly at what point that will stop. maybe is 1%. that could be a psychological

level for. i'm not sure. but we will have to watch the indicators. alix: what stocks leading the market have really been about tech? if you look at the nasdaq, is the 12-month moving average versus the nasdaq but also the resistance we have seen from 2000 versus now. we are kind of above that neville -- that level. katie: it is important to view this move within a broader long-term context. a long-termuch uptrend despite the correction we have seen. it shows where the correction is coming from. the retreat from the resistance in 2000. my point is to say that, if we were to recover, if we were to see the major indices return to new highs, that is a big deal from a technical standpoint. it is not just a short-term fake out -- short-term breakout.

but also some overseas indices. alix: tomorrow at 2:00, what chart will you be watching? katie: i will have to be s&ptinizing the smp -- the levels. ahead on "what you missed." we will be breaking down what the fed should be paying attention to when it comes to inflation. smith.e words from jim he has strong feelings on what the fed to do tomorrow. don't miss it. ♪

alix: we are moments away from the closing bell. i'm alix steel.

joe: and i'm joe weisenthal. alix: u.s. stocks adding to yesterday's rally. policymakers began a debate on raising rates. oil rising to a one-week high. joe: stress tests. one day to go before we find out the that decision on interest rates which will put global markets to the test. alix: the holy grail of 2% inflation is the fed goal unattainable? what do google and amazon have to do with inflation misses? we have to begin with the markets. stocks closing around the high in the session. extending the rally for a second day. it has been a lot of momentum in terms of stocks and treasuries that perhaps can handle a fed rate hike. joe: