ignore a fragile china and the collapse of brazil. economists have never been more polarized. we speak with ethan harris and john ryding and danny blanchflower. martin sorrell on his new media marker. good morning, this is bloomberg "surveillance." .rom new york it is thursday, september 17. i am tom keene. are watching the donald carly show. >> they managed. managed to somehow create substance in the middle of that. tom: you really went after jeb bush. frame how weekly he did. is notink that politics about policy, it is about posture. jeb allowed himself to be shut

up by donald trump. when you allow that on the national stage you look weak. i wish politics wasn't about that, but it is. donald trump, four hours of bloomberg "surveillance." coverage begins at 2:00 p.m. in washington. mike mckee will be in washington this afternoon. now our top headlines. out if few hours we find the fed will raise interest rates for the first time in nine years. policymakers will come out with a statement at 2:00 p.m. eastern janet is hosting a news conference later. the presidential candidates squared off last night for a most three hours. they were at the presidential library in suburban los angeles. donald trump emphasized his

experience in business. mr. trump: i was a businessman who did well. want to do is but that ability into our country to make our country rich again. i can do that, and i'm not sure if anyone else in the group could. commented onina his comments in rolling stone magazine. he says he was not insulting her appearance, it fiorina did not buy it. miss fiorina: mr. trump said he heard mr. bush very clearly and what he said. i think women all over the country heard very clearly what mr. trump said. >> there were 11 candidates in the polls that took part. there was a preliminary debate for numeral for others. general motors has a criminal investigation into faulty ignition switches. gm will pay the justice department 900 million dollars to end the case.

no individual will face criminal charges. gm lawyers and engineers knew about the flaw for years and it has been blamed for more than 100 deaths. a transaction and cable tv. will byse -- altis cablevision. cablevision is one of the top five. it is controlled by a french billionaire. anothergreed to buy u.s. company. oil priceshs says will be low for 15 years p or the forecast is $50 a barrel earlier this month. they say there is so much oil it could fall to $20. datai want to get to the check. jon ferro, it was boring in london. that may do better. i might be more boring. not much to say. do not go on to the second

string, let's go to our chart that shows what we were talk about on "surveillance," with a lack of hysteria. these are the fed meetings we have had this year. venus, earth, mars, jupiter, saturn, lugo is out here. this is a regression, the trend. until 1% on the two-year summer of next year. this is a challenge that chair yellen has. >> it is a killer chart. is the onlye here hint of inflation is uncertainty where people do not know what is going on. when they find out they go back to the expectation. tom: we will talk to ethan lowers and blanchef coming up.

the federal open market community, meaning the impact on the markets begins coverage with sir martin sorrell, the chief executive officer -- and founder of -- i want to get to, sir martin, carl riccadonna has been fabulous in his perspective. explain to me where they are and lloyd blankfein are. why should they do nothing? of today's meeting is yellen's hunt for a not so read october. october. red in july, the fed was concerned about a slowdown in china, and a lack of inflation pressures. that was before the recent fireworks interrup -- fireworks erupted. they're going to pause and air on the side of caution. tom: in 2006, there's nothing in

my text books like this. >> the expectations of a hike are 32%. is the fed paying attention to the actual expectation this morning because it does not want to cause a surprise? they are sensitive to market conditions. janet yellen wants the first hike to be well telegraphed and to be a nonevent in the market. that would not be the case today. >> is it a good thing that that the conditions fed is for it or bad that the fed is concerned? mr. riccadonna: if we look at the economy, it has been flat on its back with pneumonia since the financial crisis. we have been improving, but we sneezed in august. the fed wants to be cautious to make sure the fed is not a relapse. radio, you you go to look at the two-year yield.

this is the redux, greenspan bernanke and yellen, they have never seen a glide test proposed? mr. riccadonna: this is not measured, this is glacial. tom: thank you so much. now, janet yellen and mark carney consider good of economies. economics or politics. sir martin sorrell is in touch 190,000 at wpp. what we haveeen -- seen is an original history in the united kingdom. let's get your take on jeremy corbyn. much like the people screaming of the establishment in the united kingdom. 250,000 associate

members of the labour party. about it being democratic. in one sense it was. the democratic elections, it is basically the union candidate. he is lurching and taking the labour party to the extreme left. from an electoral point of view in 2020 it will be interesting to see what people say. view, iersonal point of would never forgive him for not ating the national anthem the 75th anniversary of the battle of britain. he said that at any future event he will support. sang saying the re -- he the red flag several times. the pub where he celebrated his victory saying it as -- sang it as well.

he is out of touch with the mainstream. tom: totally different from what they do in the united states. to say that you are sitting there or standing there in respectful silence is nonsense. the emotional quotient, the debt of gratitude to the people who died and fought in the second world war -- granted it is a long time off -- but not paying respect in that way is unacceptable. a currentore of republican attitude he has. a british republican. sir sorrell: the interesting within 24 hours he reversed his position. that clearly indicates a mistake. that one event was -- thatat you are saying characterizes our about his leadership? what does the opposition mean in britain? sir sorrell: the opposition can be potent. if you look at the balance of

power in the house of commons, are the biggest party. they have a majority. far, they have defeated one bill. so far, it has not been a major problem. we have a fixed election running through 2020. george osborne is doing a brilliant job as chancellor. -- i am one of the 50% sure, they will be ready for the election. george will probably be the prime minister candidate. he said before the election he would not seek a third term, and it will probably be osborne. >> may hand wringing at the guardian and the spectator, what has he done to tony blair? tony blair do with that party? what did he fail to see coming to set the groundwork for this?

that heell: it is not or peter manson failed to see it . they are threatened by the trade bill that has been passed. they are concerned about the restriction of striking rights. they have to give two weeks notice before a strike. there is control of social media activity. maybe rightfully concerned about their position. corbyn is a union candidate. him to berniee sanders here. i actually think it is very different. he is nowhere near as left-wing as corbyn. foot was a more intellectual figure then corbin. tom: in the middle of the strand is the air force church. has he ever been in that church?

tories have toe be careful. they can't be too triumphant or sneering. they must treat him with some respect. i think the electorate will vote in a different way in 2020. of way that 250,000 out 500,000 people voted in the labour party election. you, so much, sir martin. our twitter question, we have the fed meeting at 2:00 p.m. this afternoon. at 1:55 we will go on era. scheduled toguests be with us. the twitter question is simple. within the power game, will the fed raise rates today and why? good morning. ♪

2:00 a.m. inbe hong kong as they look at a federal reserve meeting 12 hours on the other side of washington. quiet markets right now as we move to this important fed meeting. what a beautiful shot of calhoun. >> a strong earthquake rattled chile. it caused 15 foot waves. least five people were killed. tsunami advisories have been issued for hawaii and california. a suicide bomber targeted police in iraq. 14 people are dead after a pair of explosions in the dead. 43 are wounded. both happened at security

checkpoints. the bombings were similar to previous attacks by the islamic state. president obama meets with three young americans who foiled an attack on a french train last month. the gunman was tied to radical islam. they have already been given france's highest honor. that story still resonates. it will not stop, in a good way. there is nothing to say, but well done. jamie butters has learned general motors will pay $900 due to during a recall faulty ignition switches. it has been linked to over 100 traffic deaths. settlement satisfy investors now? >> it is a bad situation, but

good for investors. most would have been expect eating one billion to 1 billion and a half. even less than $1 billion, that is probably a win for investors. what does it mean in practice? what i hear from colleagues at toyota, it is a pain and a hassle. it is insulting. chrysler,ve gm, fiat and toyota with monitors and house. that is 40% of the market. if honda gets it it is a -- it is at 55%. a slap on the wrist for general motors? most one billion dollars, and that is real money. a billion dollars is a program, it could be a new truck, a new

billion is a real bite. it is more than it costs them to settle for all the people who died. the feinberg fund was $600 million. it is legit. butters, thank you very much. the scale on the general motors versus defined break settlement. martin sorrell is with us. how do you rekindle a brand when jim goes through these ?hallenges sir sorrell: i think they're done a good job and have started to build g.m. in a meaningful way in a market that is recovering. the u.s. market went from 17 million units to 9 million units, it is now back to 17 million units. that -- the review

process will put them under pressure to get the basics right. of: does branding commercials on american football games help restore a brand? are we so jaded that we do not see it? sir sorrell: i thought it was interesting last night that the sponsor of the presidential debate was a tour now fungus. i found that extraordinary. or the advertising rates presidential debates have risen sharply after the success of the first, 20 5 million or whatever it was for the first debate. for live sporting events, people are not about. , withormula one and fifa the controversies surrounding those events, they still draw a high premium for advertising. tom: i'm glad you bring this up. brendan greeley, 10 seconds, fifa update. brendan: we waiting to see if

sepp blatter defines the role by which sepp blatter leaves. "surveillance" fifa update. in our next hour, ethan harris joins us. the bank of america, merrill lynch, and the author on the ship to greenspan. stay with us. this fed day, bloomberg surveillance. ♪

tom: good morning. bloomberg "surveillance." quinn, greeley, vonnie here on this historic day.

my morning must-read and must listen was a successful evening for all "surveillance" claim investors. michael mckee and he went back and forth on tumultuous times. here he is on the fed and why 2:00 p.m. is not important. i do not care if they raise 25 basis points or it moves along the curve. i do not see the reason for it, frankly. 2007, i was watching a bubble happen. it was an asset bubble financing debt. it was an obvious bubble. to thefed gave attention gdp, they missed the whole bubble and we had an economic collapse. we are now in the mid-part of a cycle and they are trying to identify where inflation is.

we have a lot of liquidity. there are glimmers here and there, but basically i think that i worry too much about the short-term debt cycle and not enough about the long-term debt cycle. get it given the asymmetrical risks. look at the world. we are in a world economy. there are countries outside that should be tightening monetary policy. tom: i look like yoda at the beginning of "the empire strikes back." brendan: tired you were. tom: what a great conversation. brendan: what i heard just now listening to radel -- what i heard just now listening to ray dalio is he is watching closely to see if bonds and equities rise together or not. the fed is a huge part of that. long-term rather

than the short-term. focusing on 25 asus points. tom: do you focus on the short-term? sir sorrell: i like to think we focus on the long-term. we are pushed shorter. i do not have control voting rights over the share capital, i wish i did. they are winning at the moment. tom: we will be back. we will speak to him about the global ramifications. 2:00 p.m. and 1:50 five, our coverage of janet yellen and the fed. ♪

tom: they will watch from hong kong and london at 2:00 p.m. times, 7:00 p.m. in the and. an important fed day as we give

you the coverage on bloomberg "surveillance." here is a vonnie quinn. years, that raised interest rates. the caution is whether policymakers will announce a rate hike today. at 2:00 p.m. eastern we will learn the decision on interest rates. 30 minutes later we will hear from fed chair janet yellen. there is a 34% chance of a rate hike. a problem that has bogged down mary barra from the first day she took over. g.m. will settle a criminal investigation into faulty ignition switches, paying $900 million. a jam report said company engineers and laurier's new about the defect for years. jam report said company engineers and lawyers new about the defect for years. it is blamed for 100 deaths. a deal valued at $18 billion, altice buys cablevision.

they are based in new york. altice is controlled by a french billionaire. by settlingalso communications. migrants areary's looking for another back door. they poured into croatia. 6000 refugees have arrived in the past 24 hours. it started after hungary shut their border with serbia. ian police are using tear gas and water cannons. those that enter hungary illegally are being arrested and tried under new laws that make crossing the border illegal. jinping will speak in seattle on a trade program

between u.s. and chinese companies. among those attending are warren buffett. mary barra is also expected. a key issue is whether china plans new limits on access to its market. those are your headlines. up in the debate. brendan: last night's republicans stood on stage and try to make sense of donald trump. they havesame thing been doing all summer. phil mattingly has been watching them all summer. did anything change? lot changed. a it took two minutes for them to start attacking donald trump. one by one, they did not hold for three hours. everyone that was watching when they were talking, and when you talked to campaign managers

afterwards, you realize that donald trump was thrown off. he was exposed on foreign policy. the person who penned him down was carly fiorina. : donald trump said he heard mr. bush very clearly in what he said. i think women all of the country heard clearly what mr. trump said. reference to an rolling stone interview where donald trump reportedly talked about carly fiorina's face thomas saying it was not presidential. carly fiorina's answers were tight and concise all night, which had everyone talking about her performance, not donald trump. brendan: i feel like last night was about body language. i do not think jeb bush got it done. what do you take between jeb bush and donald? phil: they had a really awkward high-five at one point.

you saw jeb bush get three weeks of frustration by donald trump out. lastifficulty jeb bush had night is you never get the last word with donald trump, particularly when you're next to him. he gets in your space, interrupts, never lets you have the last word. that flustered bush, but his team felt good about his overall performance. they felt he stood up to donald trump and try to get key points in. that is better than his performance from the last debate. if you find jeb bush, teach him how to give a high-five. we will go to dallas, but first, we will talk to you about the substance of the debate. i want to throw a substantive quote. this is george pataki talking about his tax plan. mr. pataki: the normal american is being higher taxes because of lou polls.

of loopholes. i would tax not income the same as others. i would lower the rate to 24% to all americans without a special break to the wall street fat cats. , you have done work on taxes. what did you take about the substance from the debate? you are showing the kiddie table debate. talk aboutot much taxes on the grown-up state. we talked about other issues and sensitive issues, but there was a missing tax, economy, wage issue. when you look at the republican debate, donald trump carried interest and stability to tax, both real estate and hedge fund managers at a lower tax rate equal to capital gains on the table. that has always been a democratic talking point that is

now incorporated into the republican debate. republicans say they will close that loophole. there is a caveat, that it must be part of comprehensive tax reforms, lowering capital gains and income taxes overall. that has been hard to come by in previous years. it could be nothing, but this is a $1 billion tax break they are talking about, and $3 trillion of tax revenue being collect it. wasie: the main debate almost three hours, and i waited until the end until we got a tiny discussion about economic issues. is the economy not america's number one concern still? dan: no. there are too many people on stage. it led in people all fighting with each other. you did not see the republicans themselvestrast

with the democrats. not to say he did a bad job, but that is rest of relevant. the economy and government corruption are the two big issues in the republican primary voters. i do not think they got enough air in yesterday. this is an extremely substantive debate in the republican party. a much different field today than four years ago. i think as these candidates start to get out and the field narrows, this debate will strengthen over time. one final point, most of the race does not break until november or december. last night was the beginning of the republican race. a lot of people saw carly fiorina for the first time, and i think there is more to come. undercardn the debate, rick santorum said they do not talk about employees, only employers. when did that filter into the top 10? thatthat is the best point

rick santorum has made in this campaign or the previous campaign four years ago. republicans need to push more businesses, but at the end of the day donald trump has tapped into something. so has ben carson and carly fiorina. the are from outside beltway. americans know that growth is not where it should be. i think it is coming. brendan: you say that carly fiorina has tapped into something. dan clifton in dallas. phil. go to what is carly fiorina do next to build on that? she keeps going. she love interviews all morning, then get back on the campaign .rail whoever prepped her for the debate should be given a senior cabinet level position. she was prepared. policy,rump on foreign

there was not a lot of depth there. he acknowledged that he needed to learn a lot on foreign policy. carly fiorina was prepared with sharp answers, and that will harry her forward. brendan: we will go to the desk. sir martin sorrell -- what are you expecting from the new ringmaster? sir sorrell: i thought it was something that established the candidates better. the disruptors, carly fiorina did well. despite the history, it was extraordinary to look back at the corporate history that was regurgitated last night by donald trump. carly fiorina did well. i thought case like -- i thought that john kasich did well, but he spoke for such a tiny period. i agree that whenever

he speaks, substantive stuff comes out of his mouth, but he on.ot catching my feeble attempt after the last debate to sell him as a candidate is not working. dan: we're going to romp. -- we're going to trump. long time. is a there is very little detail in 's answers. he says he has a lot to learn. i think carly fiorina made good points. tom: martin sorrell with us. we will talk about his business messaging in a digital world. coming up on bloomberg, as we look at the fed day and coverage, we will bring you david blanchflower of dartmouth college. critic ofn a harsh prosperity. ethan harris in the trenches of bank of america merrill lynch with his book on the history of the recent fed. and john ryding will join us.

again, with experience at the bank of england and the fed. we are bringing you smart on this fed day. stay with us on bloomberg "surveillance." ♪

tom: good morning. bloomberg "surveillance." we have the single best chart which speaks to the polls of american businesses. liking at how companies file with treasury. it doesn't sound interesting, but i promise it will be. 1980 on the left, 2010 on the right. you are saying blue and yellow expand. those are partnerships filing with treasury and s corporations. the pink is what we think of as a standard c corporation. the file taxes and pay taxes at the corporate level. that is now less than 50% of business revenue in the united states, it used to be 75%. the blue and yellow are considered pass through corporations, meaning tax liability passes through the corporation and only goes to the owner.

the treasury is missing $100 million in revenue every year. i'm not saying that an s corporation is bad, but we have to be honest in how we are assessing taxes. this was the one other takeaway ipod was stunning, treasury went through and try to figure out who owned partnerships. for 20% of partnerships they could not figure it out. the treasury department does not know who owns the company, that is stunning. --sir sorrell: i have always been anderson's historically, then -- tom: when you sit down with them, you are paying a lot of attention, right? tom: paying too much taxes, is that what you are saying?

sir sorrell: i got in trouble on the bbc saying taxes were a matter of judgment. to be correct, people have because of flexibility in tax rates, can choose in how they structure in a more sophisticated way. that proves that american corporate tax rates on an international basis -- and most of the candidates talked about the tax code, getting rid of the kerry and the deductions, and and the -- of the carry deductions, and having a corporate tax rate that is lower. the reason it has been successful is because the corporate tax rate is low. brendan: i would not say the tax rates are too high, they are too complex. we need simplification. sir sorrell: it allows you to make the judgment.

what has happened is that google, facebook, and amazon have run into trouble because they have aggressively pursued tax dividers. the reason they can is because of the difference in tax rates so you can locate your business in thailand, the u.k., or holland. tom: justin wolff in michigan put out a tweet in the -- on the inequality in the united states. discussion, we are living a plutocracy. is this a gilded age with the candidates? what is happening is that low interest rates have enabled the wealthy and privileged to get more wealthy and more privileged. my own view is that performance rewards performances increasingly. my view on wealth and gaining wealth is that it is fine as

long it is done on the basis of performance. if you succeed you get well paid, if you fail, you suffer. 12: top photos, could we do hours nonstop today? brendan: as long as we're just talking about the republican debate, yes. start: are we going to with the third top photo. arrestedammed was after bringing a homemade clocks to school. teachers thought it was a bomb. he was interrogated and handcuffed. ahmed trendedith after the incident. brendan: that is amazing and heartbreaking. vonnie: 700,000 people took to social media. mark zuckerberg invited him to visit. and he is going to the white house, he accepted the president's invitation. on a bondper size

issued in 1648. it will be paid on monday. in u.s. dollars, it is written on goat skin. tom: isn't the british library the coolest thing in the archives on the north side of london? look at that document. out 20oss took a coupon years ago. vonnie: i'm waiting for the picture of tom two,. no, that is not tom -- picture of tom to come up. no, that is not tom. hockey pucks over the ice. taking a shot at the hovering target. it was made by a canadian sports apparel company.

where you behind this? it is a great company. start soon cannot enough. i think they start in four days or three. brendan: this is where advertising has borrowed from you to. children do trick shots all the time. let's go to our twitter question. this is from our team. our twitter question gets us back to 2:00 p.m. this afternoon. set of a terrific guests. will the fed raised rates today, and why? we need your informed answer. please. ♪

tom: this is the shortest report ever. the markets are dead waiting for 2:00 p.m. this afternoon. is doing wellreal over the last few days, not much to talk about, but important for the forex report. in northern california, investigators want to find out if a devastating wildfire was

caused when a power line came into contact with a tree. it has killed one person and destroyed thousands of homes. 2 people were found dead in their homes in another fire in california. searchers in utah's zions national park is found the bodies of six hikers killed by flash flooding. one person is still missing. it happened north of a small town when 12 people were killed when the flood subway cars. 17% againstres up the december price. october is national sports month. traders are betting that grocery stores will load up to sell bacon and porkchops. what -- there was a small transaction rumor for transaction overnight? vonnie: an $18 billion deal. the founder of the leading

market agency in the u.k.. a cable cowboy, but it is a european cowboy. tom: who is he? no one knows. sir sorrell: a french billionaire, with big interests in israel. he started in the telecoms business. , $3 deal, $16 billion deal billion in equity, $30 billion in debt. does he need to do this? he has a vision for telecom's table operation, global operation. brendan: he was a malone of apprentice. what people in the u.s. want to know, and his reputation as a ruthless cost cutter in france. is there cable service going to be slightly less miserable here? sir sorrell: i think he is

clever and understands the market. he is to be watched and not underestimated. and sab the day before. avi, focused on cost. that is nothing new. we know about that 50 years ago. they're really focused. these are people in the low growth world -- tom: i want to get to the heart of the matter. cable vision said you are not going to sell the reins. is tv dead? what you're saying is not dead? screen viewing is up, it is either flat or up. the use of screens is growing. what is under pressure is having a tv. we saw the cord cutting with espn. that was a seminal moment. one espn is not as strong as it

has been -- when espn was not a strong as it has been. time.e are out of sir martin, i am sorry, thank you for your comment on the united kingdom. we will be back. ♪

tom: janet yellen makes history at 2:00 p.m. action or inaction will reverberated ross america. ignore a fragile china? moremists have never been polarized. heilemann is at the reagan library. this is "bloomberg surveillance." i am tom keene. the debate last night had substance to it. small amounte is a of substance that had to do a tax reform. tax reform. to pass interrupt onceo because he is not a mud thrower. to saidk candidates

things about other candidates and tried to set up a fight. right now, our top headlines, here is vonnie quinn. vonnie: the said will raise interest rates for -- we will find out if the fed will raise interest rates for the first time in nine years. 's news conference will follow. reaction here on bloomberg tv. republican presidential candidates may donald trump there target. trump emphasized his business background. : i am a businessman. i did well. i want to put that ability into

this country to make our country rich again. i can do that. i am not sure anyone else in the group will be able to do that. trump's comment about carly fiorina -- >> he said he heard mr. bush very clearly. women all over this country heard clearly what mr. tom said. trump said. theral motors settling cases on its faulty ignition switches. no individuals will be charged. and engineers knew about the flaw for years. it has been blamed for more than 100 deaths. a u.s. cable operator swept up

by a cable operating company. is being bought by cablevision -- is buying cablevision. they are controlled by --. they bought another u.s. company in may. gorman sachs says a glut of oil may keep prices low. prices, it much oil may take hours to clear the glut. tom: that is a big deal. vonnie: it is not a normal day. tom: i need to do a data check. 10 seconds. nothing will happen until 20030, or something like that.

ethan harris quoting the economist, thomas petty, waiting is the hardest part. his book shows chairman bernanke and dr. harris never thought we this long.ro-bound carl, take a chapter from the book, chapter five, the idea of the communication strategy of fed and that they are blowing smoke. is there over communication? carl: the fed wants to be transparent. we are almost there, but we are not where we need to be. the fed wants to be clear when the first rate hike comes.

did this not happened six months or a year ago? been waiting for the improvement in the economy where they can check a box and say we are out of this lousy recovery. now, they are seeing that in the data. the problem is, right before the meeting, the markets get fragile. we see the bad news out of china. to communicate is compromised by the developments in the markets. that is why there is ambiguity going to the meeting. every economist is uncertain. we are uncertain about the fed. brendan: the markets think there are nothing -- the market thinks nothing is going to happen this afternoon. how does the reaction move around the world? think this ist

going to be as big a deal as everyone is inking. made it clear that hiking is going to be coming. if they go this meeting -- brenda said -- brendan said even just said it is not a big deal. tom: we have a little bit of a disagreement. bring up the inflation chart. here is the reality. yellen in search of inflation. the inflation vector is down now? >> back in march, if the vector is pointing down, he is not comfortable going forward. >> i think williams is pushing for no hike. vonnie: if yellen does come out

in favor of a hike, does she lose her dovish conventional is him? >> her dovish conventional is an is done. it was a little orphan annie bond market. the fed never hike. they have learned from that experience. not moven the fed did is because the economy was so fragile at that time. the difference now, the economy is in better health. hike.re going to in september, maybe october or december. atndan: when we look inflation's refusal to appear, do the old models work? between --ave to have to be tweaked.

it could be one of the sleeper surprises. the fed moves the goal post on the long-term neutral level of unemployment. that could slip into the 4% range. the fed can say we are missing the mandate on both fronts. tom: move the goalposts. this classic illusion of the putting green moving farther and farther out. is it the models used adjusting to a new america, completely removed from macro economics. >> we are just approaching full employment. we have not had inflation pressures yet. it is not in the data. the thing holding inflation low

is import prices. it is this collapse in and pork prices. the fed is trying to figure this out, is it temporary? tom: i am going to call margaret thatcher. this is the international impulse that brings us less inflation. could something else do the job of a rate hike? --ferent forward guidance some other trigger? >> she has a lot of options here. can reinforce the expectations in the markets. that would be a compromise decision between the hawks and the does and the committee. that could happen. tom: there is something wrong here. brian put out and issue.

brendan: can i make him feel better? i am going to take off my type. a confession to make. i lost my type. >> we are going to banter this on television. i lost my tide. -- my tie. perfectly with your suit. tom: we will have more. stay with us. ♪

john: good morning. futures negative four. markets quiet. i offered to give ethan harris my tie and he did not want it. read from must someone we know and love. alan greenspan, and ancient morning must-read. the fomc decided to increase slightly, the pressure on reserve positions.

let me throw this to ethan harris. tos the fed have the tools do what it is deciding to do, the tools our new to achieve the old results. can they get that done? >> they can. they are going to have a quarter that will have a low end and a high end. that vote is a complicated way of saying we are going to hike 25 days. the good old days of fed speak, they're going to raise from zero to 25, from 25 to 50. it will be hard to get the country to go in the middle of the range. something above the low end. the scheme of things, is an important if it is a few basis

points lower than they would like? not really. brendan: what is your first draft of the janet yellen fed? >> it is not that fascinating. , the secondrnanke story. she is focused on getting the recovery and economy in place. not an uber-dove, she is a situational dove. tom: what is sick, i remember where i was february 4, 1994. that is how important that statement was. explain why today is important. >> this is a big event. think of it as a negative event.

the bigger story is the fed is rates,o, when they hike it is basically the fed coming out and saying things are getting normal. the economy has been abnormal for six years. tom: this is such an important discussion. we will continue with our coverage. coming up, craig moffett on cablevision. must listen and watch. ♪

tom: we welcome you to "bloomberg surveillance." our top headlines, here is vonnie quinn. vonnie: at least five people dead. a quake was centered off the northern coast of chile. a million people were evacuated and more than a quarter million are without power.

advisory -- tsunami advisories are out for hawaii and california. suicide bombers target a city in iraq. 33 were wounded. both attacks happened at security checkpoints. no claim of responsibility. president obama will meet the three young americans who foiled an attack on a french train last month. they have already received france's highest honor. brendan: last night, carly and donald got into a fight. jeb had to stand there and watch. >> the one guy who had special interests, that tried to get me to change my views was donald trump. he wanted casino gambling in

florida. and did not get it because i was opposed before, during, and after. i am not going to be bought by anybody. had wantede, if i it, i would have gotten it. know, can jeb get it done? >> i am not sure anything has changed, but jeb bush had a better night last night than he had in cleveland. when he was trying to go toe to toe with trump, he did not make much ground. later on, he had good, solid, humanizing moments. he came across natural and funny.

for him.better night brendan: the subject of the second debate was donald trump. how has he changed the republican party? john says he has transformed the nature of the race. night was a microcosm and crystallization of what the race has been like since donald trump got in. he has blotted out the sun for everyone else. nine of the 10 candidates had a hard time breaking through, even as the moderators in the structure of the debate were trump down.take most were not able to break through. .he exception was carly fiorina she had the highest expectations in the biggest opportunity.

she had the biggest single moment of the debate. that is where she took on trump over the comment he made about her face. >> it seems like everyone is looking for a way to deal with donald trump and she has come up with an actual method to do it. john kasich, marco rubio, they did not get much time to talk. the next time they meet, who will not be on the stage? know the rules of the next debate. it is hard to know. sponsoring organizations have a lot of leeway in terms of deciding how many to let on and what the criteria are. predict.ossible to if you think about who is in the bottom of the top 10, people christie,paul, chris

and scott walker. many of those people could flip off. could end up having another day with 11 people on stage. tom: tell me about the game change of 2016. when does an adult debate show up? john says it is like trying to contemplate a mystery of the cosmos. i do not have an idea. think --no reason to the main reasons this race will changes when candidates drop out. candidates drop out is because they run out of money. the way super pac's work,

candidates who are not polling well still have millions of dollars in super pac's. complicated field into the nomination contest in january, february, march. tom: i cannot say how important that is. brendan: what drags mitt romney into this race? john: nothing. brendan: that was less than 30 seconds. who drops out to become someone else's partner in the race, second person, potential vp? i am sorry, the audio is indecipherable for me. all i am hearing is the word partner. brendan: we will let you go. we are going to go to our twitter question of the day, about the other debate, the one

we have had all summer long. will the fed raise rates? it is september 17. allhas been doing yoga morning in preparation. this is "bloomberg surveillance." ♪

tom: good morning. tom keene, brendan greeley. a terrific lineup of people to give you perspective. our top headlines, here is vonnie quinn. we will find out when

policymakers issue a statement this afternoon, fed chair janet yellen's news conference will follow. as it happens. plus, reaction. no current or former executives will face criminal charges in the case of gm's faulty ignition switches. they will pay $900 billion to settle the investigation. company engineers and lawyers new about the defects for years. the ignition switches are blamed for more than 100 deaths. a major deal to tell you about. altice of france is buying cablevision. of the top is one five cable companies in the nation. it serves more than 3 million customers in the new york metro area. ago, altice bought another u.s. company.

blocked by hungary, migrants looking for another backdoor into europe. reporting the arrival of nearly 6000 refugees in the last 24 hours. police in hungary are using tear gas and water cannons to drive away migrants. -- thosend in renting found entering the country are being arrested. they are fleeing war and poverty in the mideast and africa. some of corporate america's biggest names will hear a speech in seattle. ing, a keye attendant issue they are listening for, whether china has planned new

limits on access to its markets. this is something we are ignoring this morning, the refugee maigret disaster. migrates disaster. disaster. migrant i am proud of this chart. is when the ethan harris was a genius. meetings the fed draped against the two year yield. here is the trend. if you extrapolate out to get to the 1%, august of next year. present this kind of

glide path or are you optimistic that we get back to normal? you stretch the rubber band. rise a the market will bit more than the extrapolation. bond market is skeptical about the fed ability to height rates. -- to hike rates. tom: we are near to our fed decision. arthur burns and allen greenspan did not have to deal with a countdown clock. >> they have these new communication tools. they are telling us they're going to be transparent.

the microscope gets finer. focus ont is the financial markets has gotten stronger. >> this is not a game. that clock is a game. >> the clock is a game. i am going to try to read and needle. the less that gets done, the more we look to the fed to do anything. it is tied to the utter lack of substance. we are not going to get tax reform or structural reform. >> they are sitting around waiting for this to happen.

it is going to be an interesting moment. we are too reliant on the fed now. tom: there is our data check. brendan: this is "bloomberg surveillance." let's continue our discussion on the federal reserve. what it is about. under this discussion is a quote from 1928 of the fear that phd's have. i thought there was nothing worth publishing until the minimax theorem was proved. , he is expertan

at game theory. explain to us the underpinning of the fear of minimizing the maximum worst outcome. >> think about where they have been looking at the world. japan, the, atlantic. they see companies that went through crises. they went into deflation or near deflation. the fed has been focused on minimizing the risk of a japan or european scenario. fed has a minimax approach to things and has become less important. if you believe the day that a strong enough.

is real. why can't they come out and say this is our bet? why are they tentative? data inflation has been weak. it is a forecast. we are going to get a decent acceleration in rages and prices -- in wages and prices. they do not have anything they can grab onto. >> people are looking at the dots. communicationheir tools.

if the fed hikes, does it make you we in europe more likely? >> i thinkp europeo is focused on their own situation. -- i think europe is focused on their own situation. lagging that they are way behind in terms of recovery. brendan: i want to broaden this out historically. arnie sanders had been such strong critic of the alan greenspan moment for a decade. you have made a science of understanding the differences. was bernie sanders right? >> the fed is in a no-win

situation. the the roasting the fed should never hike interest rates. there is no way to keep the two sides happy. would be critical of greenspan in two respects. one is the smoke and mirrors. you have to read between the lines. it is very out of date. was much too complacent around the risk of a housing bubble. those areas, i would be critical of them. the general legacy of alan is good. >> is ethan harris's timeline out that far? >> the story about a post crisis slow recovery was correct for

the first five years of recovery. tom: will the fed raise rates today and why? ♪

anthony could send it will join us. we will speak about the international ramifications. abby joseph cohen will join us. theill speak to abby about ramifications to the equity markets. we have a few movers today. vonnie: cablevision systems is up. we want to take a look at gm. shares higher in the pre-market. they settled the criminal investigation of faulty ignition switches. tom: you get a 4.26 percent yield. now that you can think

of it as a car company again. tom: there was a record on fifth avenue the other day. i counted 47 suburbans in three blocks. brendan: we are talking about yields and it is better and good they can put this behind them. what we are looking at is the department of justice doing what it does. if it finds something criminal, it demands settlement. tom: if you start creating civil or criminal outcomes, that has to dampen economic america for a bit. >> there is a balancing act. speaking, when you

have serious problems in a country, jails should be the result in some cases and not always go for the wallet. often it is not the company at fault, it is individuals. it is very difficult to put somebody behind jail. it is difficult to prosecute a case like that. oracle down 2.4%. first-quarter revenue fell. the bottom line, it did beat. cable television's -- cablevision's share is the big mover.

-- has agreed to acquire, through his company out tease, acquiresion -- -- through altice, cablevision. tom: we are thrilled to bring you craig moffett. good morning. ♪

tom: good morning. we bring you the news around the fed meeting. the french not buying the new york rangers. we want to give them the new york knicks. cablevision has been spun off. altice of france wants it. craig, what is the single thing i need to know about this tonsaction as it compares the buying frenzy we see in cable tv? craig: cost-cutting.

the buying frenzy we have seen up to now with charter and comcast trying to buy twc was about trying to get scale and positioned the business for the future. this is more traditional. tom: i am lost. michael wolff tells me tv will survive. will tv survive? cable companies are not tv companies. they are infrastructure companies. altice likes the infrastructure. acquiring ceo says he expects cablevision will lose 25%, or any cable company will lose 25% of its video customers in the next five years. , there is going

to have to be aggressive price increases on the broadband side of the business. it will be tough. brendan: he is used to operating in a different regulatory environment and a much more competitive environment. what happens when he gets his duopoly here? craig: the regulatory environment here, it is funny to imagine that might turn out to instricter than it is france. right now, that is not the case. i do not think he will have issues with this deal. cablevision has had issues with labor in the past. a very french problem. their mo is to downsize and use technology in place of people.

how do you do that in a market that overlaps the vast majority of cablevision's footprint? you upgraded the cable sector last month to buy. craig: cablevision, we had a sell rating. we were wrong. thought draghi and altice would conclude the value of cablevision was not attractive. times ebita.ng 8.5 you are betting something good can happen. and charter are a different story. they have a more benign,

competitive footprint. tom: thank you. gears two important conversations with ray. he sees stimulus as the only antidote to global retention. >> do you think qe works? >> it is going to work less than that worked last time. we cannot have a big rate rise.

we will have a downturn. the downturn should be worrisome because we do not have asset prices. the purchase of those assets to get premiums up. if there is not an attractive investment relative to bonds, if there is not much spread in something else, you get less effective monetary policy. >> are we there? >> not yet. we are closer to being there. europe is very close. buy -- theu going to bonds are in negative interest rates. close to there. that is why you need more currency depreciation.

is effectiveness in japan there. when a person who is receiving the cash for selling their bonds are indo something, they different between cash and the other asset. there is pressure to move it out of the country. we have high rates in the world. you have to have currency moves. that is the environment we are in. michael mckee joins us. , we came tong currency adjustment as the solution to the world's problems. what is the confidence we will see a dollar stronger in the coming months and quarters?

question is how much of a fed move has already been priced in? the answer may be how much do wall street are's sink the fed is going to raise rates ultimately and how fast. move quicklyant to or far. you talk to people on wall street. they are not believing it. we will not get a currency adjustment that will help the u.s., that is for sure. >> i do not think we should be concerned about the strong dollar. the u.s. is one of the few healthy economies now. we need to get past and look at where everything is right now. the u.s. is pulling the rest of the world. we cannot pull the world on our own. that says a problem.

the market has priced in a lot of what the fed is about to do. the dollar is an upward bias. the dollar will not have these egg, 15% a year moves. -- will not have these big, 15% a year moves. vonnie: will the fed raised rates today and why? here is the first answer we chose. yes, they do not want a bigger bubble in december. tom: mike mckee, you have talked about that. that is the heart of the matter. mike: there is a lot of instability in the market. does that continue if they do not do anything today? the point, iwas guess. the second answer, the fed will not hike. week global economic conditions

point to know. tom: that pushes against --. >> the fed is doing better than expected on their employment mandates. has hitployment rate where they expected it to be six months from now. more than expected improvement there, but less on the inflation died. there is a balancing act there. 1% is still accommodative. tom: that is from ethan harris. the answer tois the countdown clock. we are in a bubble. tom: give us the countdown clock. we have a radio countdown clock as well. --y seriously, true do it

terrific guests coming up. perspectiveve you in conversation on economics on this historic day. more on "bloomberg surveillance." ♪

>> this is bloomberg "surveillance." >> good morning. bloombergwatching "surveillance," that is the capital of the united states. happy fed a. i am michael mckee and in the capital city for today's fed meeting and tom keene is in our new york studios. here is where the markets are as we going to the trade today. s&p 500 index teachers down six points, -- futures down six points and also .3 is .2 move for nasdaq, down 10 points right now. lot going on. the stoxx 600 is unchanged and the dax up 25 points, point 201% as bureau prepares for the decision and trading will be over by then when the fed makes its decision. the bond market not moving at all this morning. you would expect that. 10-year note dealed price that

two point 8% this morning and the five at 1.6% and at an 80 basis point yield. corporate news, all taste wants to buy cablevision consolidation in the industry continues with a $17.7 billion deal. 22% premium. on the political front, it is all piled on the donald as republicans squared off in their second debate. trump taking shots from challengers and not clear to what effect. or the financial world, it is all about the price of money. will it rise? will tryon and alteese to buy cablevision and the fed decides at 2:00 p.m. wall street time today. danny blanch power is an economics professor at dartmouth college and at one time an economic policy maker the bank of england. he knows what it is like to be

voting when you cannot make a decision. i know you have a firm opinion on what they should do today, asking whattart by it is like when you have a and nobodymittee knows with certainty what to do. danny: i think it is probably clear coming into the meeting yesterday that the members themselves were not exactly sure where this would go. a great deal of the discussion today will be about a surprise because central bankers care about surprises and with a likely market reaction would be to a rate to rise, which actually in market terms would be surprised. they would be concerned about that and the fact that there was a decision being made at 2:00 and janet yellen has defended that 2:30 and what happens in between? the draw.e this is there are people on one side and on the other and the data has

not come down in the way they hoped it would. it is a difficult decision. it looks is probably like the committee is split, so i think it is a tough one. my view is that should not raise. i don't think they will. the worry is that if they do, what are the consequences? mike: i will ask for your reasons for holding, but let me ask you about the surprise. they asked what the markets are doing and fed funds futures say they won't move but the 10 year note yield says they are, so how do you determine what the market is thinking? andy: that is a big problem it would be a surprise and they would spend a lot of time taking about the likely response. in some sense, you would hope as you make the decision that there would not be a negative reaction and you would probably signal it early. there is a column recently by larry summers talking about the

fed never having moved with the market probabilities of moving being low. they would be mindful that would not know. if you are a policymaker, you worry about downside risk of your decision. in the last three years, every central bank that has raised rates has had to cut them later. the war he would be that if you raise rates now, the next move would perhaps be a cut and the cut the negative and it would be a number of people on the committee who would be mindful of that and think the natural rate of unemployment is mirrored to four then five and there would be opponents to arise. mike: give us your reason why you think, if you are on the committee, you would be voting against the move today? danny: the first part is it is -- it would be a surprise to the market. the second thing is data from around the world is a major issue. we may well be at a turning

point down driven by china. the evidence especially in my judgment is a large amounts of late jerry -- of labor market hidden and underemployed pushing down on wages and that has been true from several members of the fed who have talked about that. the thing i would he focused on the lot is there is absolutely no evidence of wage growth coming. more slack in the economy then you would inc. and historically raising rates too soon is much worse than holding rates low for too long because you can deal with that. fed has anne is the inflation target and inflation is nowhere. there is a worry that we go to deflation. good morning, everyone. tom keene in new york and mike mckee in washington. the beginning of our fed coverage. we are brought to you by accounting tax and advisory. they provide your business with the industry insight it needs to

succeed. sign up for insights and find out how. nchflower and eyewitnesses personally, the great inequality out there -- is this a fed that within the theory of phd's like yourself has to work with one america, one probability distribution of outcomes or by definition did they have to wait to different americas of our society? danny: they clearly have to weigh the two americas and there has been a conference in brookings thinking about what should the fed's view of inequality be. clearly, actions have an impact and they can say we don't have anything to do with that but the hasity is that the policy

had an impact. think about the wealth distribution. those who have held wealth have been hauled in equities and there has been a divide and that is a matter of concern. my mother is they should be -- my side is they should worry about that and it will be more important as time goes forward. there is a debate on that all around the world. tom: how do respond to those who disagree with you to at least get the process going to provide an animal spirit not only to animal -- to banking industries but all the american business? danny: i suppose making a small mistake is better than making a big mistake. , as they say, one have much effect but that's a good reason for not doing them. evidence in the past saying to look at the ecb where raising rates actually has harmful effects and because negatives

later. also, raising interest rates won't have any effect at all, charlie evans made this point, on financial stability and other things, so i would literally argue the biggest mistake central banks make is there is and raisingnegative rates too soon is worse than raising them later. the worry to raise them too late is there is too much inflation. there isn't any inflation. mike: are the days of proper the celebrity inflation over? has the print a paradigm change? those who are 18 months from now will worry that they will see inflation, are they getting it wrong? you, i, and i think tom have spent conversations answering that question. we have been told that inflation is about to explode and wage growth, so year upon year upon year and nothing has happened.

we have actually monetary policies set up, if you liked what happened in the 1970's when they waste inflation, maybe we have to have a rethink when there is no inflation and central banks have to think about how can we create some. weon't buy the argument that are going to see raising inflation. we have not and we will be in a world perhaps where we are stuck and we need to create some. blanchflower with us on fed day. there is a certain majesty of what we will see this afternoon. whatever the outcome is and what it does to the markets. i am in new york and michael mckee is in washington. mike, what will be the first question in the press conference this afternoon at 2:30? mike: i think it will be why? decision is, people

will want to know what is behind it. tom: can a move the markets likely south mario draghi about a: 40 on that ecb morning. kelly have that same kind of energy at this press conference? mike: absolutely. there were -- nobody knows what the markets will do and they don't move uniformly after there is a big newsmaking event, so i would be prepared for volatility after 2:00. tom: michael mckee in washington york.am in new a clock check. we will be with you on bloomberg's "surveillance" until 10:00 a.m. will rejoin you at 1:55 with kathleen hays, look for that worldwide. ♪

tom: good morning, everyone. on cablevision, a site of relief that the rangers and then not involved but a little going on with that transaction. vonnie: that transaction is european cable operator alteese agreed to by cablevision guided at almost $18 billion. paul sweeney joins us. head of alteese decided to make this transaction, a bit of a

cable cowboy and john malone. buy cablevision? paul: cablevision is one of the oldest and arguably most bible in the united states and dominates the metro new york area, so it has been an attractive asset for a long time. there has been speculation that cablevision would be sold in the wake of consolidation in the cable-tv business but they see this as a major addition to the u.s. operations. this deal makes in the fourth largest operator. brendan: john malone is really the model for buying other regulatory environments because regulations make such a huge difference. whatis the difference of goes right and what goes wrong in an acquisition in a market that you might not understand? regulated is highly so a lot of review because consolidation is going on. his ml has really been -- m.o.

is like john, john malone was his mentor. highly leveraged transaction would debt on their but it is ok because the cable television has a lot of cash flow and support direct -- that. -- supports that. vonnie: what about liberty global? paul: liberty global focuses on europe and john malone, who controlled liberty global, he had been consolidating the u.s. market through his interest in charter communications, so charter does the u.s. for and drahi seems to be everywhere. brendan: what about drahi's work in france? paul: he will cut costs here and i think consumers of cable television will be concerned they will see changes in their service. cost are a lot of synergies in this transaction to make this deal work because they are paying a full multiple and they have a history of cutting costs and making the cash flow

work. brendan: paul sweeney from bloomberg intelligence. thank you. we get a chance to spend all day talking about cable consolidation. i am import -- i am excited. we want do that, next. -- we won't do that next. we will talk to john ryding. economics.er of rdq this is bloomberg's "surveillance" on bloomberg television. good morning. ♪

morning, everyone. we welcome all of you on this fed day. i am tom keene in new york and michael mckee in washington. did you know there is other news going on? i can't believe i'm saying this. this is exciting. morning, tom. markets are mixed. small losses in the u.k., and and u.s.ns .1 port --

field remains above the 100 day moving average. on the economic front, current account balance starts with jobless claims and at 9:45 bloomberg consumer and at 2:00, your fomc rate. tom: good to know it is on the calendar. altice agrees to buy cable television and early talks to acquire. sharesrevenue missed and are lower by 2.8% premarket and they are buying back 4 billion in stock. premarket andn 6% finally, the key wall street upgrades and downgrades -- goldman sachs agreed to by hasbro, touching neutral and deutsche bank raised to buy and ubs cut to neutral and bank of america raised to buy.

i am bill malone. tom: thank you so much. greatly appreciate that. live breaking news over your bloomberg terminal, your bloomberg terminal in the car, on your cell phone calling down the street, you can type, and go. michael? mike: i can't remember the fed meeting which was so much of a narrow call that nobody really knows how they are going to go. is stillnchflower with us, a monetary policy maker at the bank of england. you talk about that they will go in and discuss stuff and all the they wantents tell me to hear the discussion but given the complexity of the statement, don't they really have to get this ready in advance? isn't there a lean already into the meeting on which way they will go? danny: there probably is. the likelihood is that there was

a proposal on the table that was discussed. eventually it will come down to a vote and deals, if you like, will be done and their movements in the data over the last few days. a close call. i don't think they should go. i'm not sure what the decision will be and i think the chances are they will not go. summers oecd, larry have been chipping in and saying they should not go, so there will be lots of pressures on them. people may change their minds. the last thing you want in this decision, mike, is a split vote. it is better to wait. you helped a lot of people voting against in either direction, so the sensible thing to do is we will hunt and -- punt and try again. it is important that people go along and do not vote against. in a way, it is like a draw. if you are the roman emperor and

he had to make a decision, does the person survived or not, i think it is a draw, close call, but better to wait. let's wait another month, follow the data and perhaps make a hawkish statement saying that assuming the data rolls around fine, we will go and we would like to go but the data is not good enough. tom: i think so many viewers and listeners don't understand where david blanchflower fits into economics. he does work on the wage curve, seminal, andl and professor, your wage curve was a follow on the 1958 phillips is a real analysis right now. are the people making the decision at 2:00 p.m. today, are they waited to models like blanchflower's ancient wave curve or the medieval phillips curve that do not work in 2016? danny: there was clearly a

battle going on within the fed and you can read it from the minute those people who want to focus on the old way doing all tailored goals, but the world has changed since 2008. i was listening to your previous guest saying that things are fine. actually, i looked at the data after he said that and the employment rate today is 59%, it was 63% before the start of the recession. dissipation rate is 62.6 percent and it was 66.4 before the start. these are figures you have never there areork, so complexities and my view is the wage curve has moved on. it used to be a relationship between wages and unemployment and now it is between more things. it is about much more slack coming from these non-pockets from people who can't get underemployment and their wedged into 1958 or 2006 and they

probably got it wrong because the world has changed and there was a new set of relationships. i think the big story people have to get to is that if those old stories work, i is the not wage pressure? -- why is there not wage pressure? if we were close to employment, wages would be blooming. tom: an honor to have you with us today. mike mckee, how much does phillips curve discussion go into the press conference that you will be at at 2:30? is it part of the back-and-forth of q and a? up, it may notme be specifically described as the phillips curve question, but people will want to know when do we start to see wage increases if that is what the fed focuses on. it depends on what janet yellen says. tom: there are 28 flavors of the phillips curve and this is a very lifelong relationship, if you will, going back across the

good part of the 20th century on unemployment and inflation. we got michael mckee in washington. i am in new york. it is fed they would terrific guests. coming up, john ryding of rdq. stay with us. ♪

bloomberg's "surveillance." i am brendan greeley and you top headlines. the problem that has locked down gm ceo. the criminale

investigation into faulty ignition switches and bill pay the justice department $900 million. the report said that lawyers and engineers knew about the defect for years. they are blamed for more than 100 deaths. in chile, a strong earthquake forced one million people to leave their homes. it measured 8.3 on the richter scale and cost 50 foot waves into the northern and central coasts and at least eight people were killed. tsunami advisories have been issued for kawai in parts of california. opec is bullish on oil. they expect prices to rise and will hit $80 a barrel in 2020. goldman sachs says a collect of crude may keep prices low for the next 15 years. here is vonnie quinn with the data check. vonnie: as we await the 2:00 position, let's have a look at s&p 500 index many features on and dow jones% down about 25 of 1% and nasdaq the same. let's look at the two year yield

oil,0% and for crude rising up 46.78 a barrel. 49.11 a barrel. few hours before that decision. let's get back to tom and michael. mike: welcome back. i am in washington and tom keene in new york. economic indicators wrought to you by commonwealth financial network, the broker dealer that ranked highest in independent advisor satisfaction among financial investment firms four times in a row. visit commonwealth.com. that they will be more affected than housing by the fed. we have breaking ego data. 3% tosing starts down 1.12 6 million and an annual rate. that is a bit lower than a gauge ofowever,

future housing. housing permits, building permits up 3.5%, more than forecasted to 1.7 million. the current number down and the future number up with jobless claims down as well. more signs of strength in the labor market and job claims down to 264,000. let's turn to trade, the broadest measure of trade narrowing in the second quarter. $109.7 billion. housing starts down, building permits up and jobless claims down. i am been a dell two days -- i am vinny del guidice. appreciated. we welcome all of you on bloomberg television to our coverage. it is throughout the day and afternoon,.m. this one: 55 to be exact. michael mckee will make us smarter on what we will see at 2:00 p.m. and going into the press conference. this is a great honor.

he has been incredibly valuable to bloomberg "surveillance" and bloomberg economy. , thirtysomething years ago, the great i took the path from the excel -- vixel through keynes, to the ambridge, you, and this is theory that really matters today. why do we care about john ryding theory today when we talk about the phillips and game theory and other mumbo-jumbo janet yellen? think i'm not sure anybody outside of this room listening will be familiar with the term, but i think the idea is there is a lot of information in market prices and interest rates and the question is where are the neutral rates of interest? driver of the

economy and the key driver of markets. my fascination in neutral rates of interest is now higher than the zero rate that we have been active since december 2008. that tends to generate distortion. vixel decides that distortion comes in commodity prices. a lot of people talk about commodity super cycle. i think a lot of that was driven by the fed and now the markets are anticipating a renormalization of monetary policy and commodity prices are coming down and that pass had an impact around the world, especially in brazil. i think it is an important area to think about where is that neutral rate and what is in the morenow is conventional way of looking at the world, they would also probably say that if the economist have full employment, the neutral rates are higher than current rates.

tom: michael mckee, this goes but it to the arts debate, which you covered better than me which is interest rates matter. that is the heart of the analysis. mike: interest rates matter, but how do separate a managed interest rate, john, a situation where it affects prices now to actual demand? when you talk about commodities, there may be an inflated price because of added the quiddity but there is also lower demand than in the past. john: that is why you have to look at commodities that are monetary commodities and see what they have done. gold has been very important in commodity and it has been anticipating for two years the beginning of the return to more normal dietary policy. i still data around $1100 and gold is a beautiful commodity because gold, unlike oil or corn, is not used up. it is transformed. a puremand is more o

monetary demand than the demand for oil or bacon prices. tom: they would push against a lot of this analysis and paul would say, doing need a stimulus to pick up that global demand? as bill and, we have a main scenario of the global recession. john: the u.s. unemployment rate is at 5.1% and we can debate whether that full employment ore might be slightly lower might be around where it is. the fed has already moved the gold coast once this year in terms of lowering that rate, but theeconomy -- momentum in labor market -- is still running way ahead of new people coming to the labor force, so the u.s., in a sense, does not have room for that demand. the demand stimulus would either displace other demands or it would leak out to the trade

deficit and into the global economy. i don't think the u.s. with current account deficits for almost as long as we can remember really wants to be stimulating demand further. i think focus, as last night, should be more the supply-side reforms to boost supply. john, very quickly, should not is different from did, what will they do today? what do you think they actually do? john: i think they will raise rates. i think it is fascinating that ethan harris and i are on the same side of an interest rate call. ethan is more dovish than i am that his conventional analysis is aligned with the fed and very speech ofed with a janet yellen where she argues the fed should be raising interest rates. tom: let's come back with john ryding of ourdq. what we want --

conversation. john, let's get with this tomorrow. you just heard from blanchflower with a different view, harris with a different view and i made point out that ray dalio with a different view and we will hear in a bit. vonnie: this is bloomberg "surveillance. at a fewnkfein spoke points conversation today with "wall street journal" editor-in-chief gerard baker on why he would not invest in china. let's have a listen. bypeople in china can only the shares -- eight shares, so the price was up 100%, so that was done to let that happen. and the way they dealt with the collapse, i pointed out that there was no institutional investors in china, it is all retail. vonnie: that was all about

china, but he has also been saying that he would not do the hike. brendan: when he talked about china, he talked about something we heard a lot which is that the market is not ready for prime time there. there, itisms are not is not the currency that should be in the special drawing and the institutions are not ready. it is interesting to hear him as an institutional investor say it is not in institutional investor market. and it is not a market the federal reserve can completely ignore or anybody can't ignore. it is in the infancy, if you like, and it may not impact janet yellen and the committee one way or another to brace or no risk, but you can't ignore it. brendan: that's a good point. the low-cost -- the slow process of the summer was us coming in saying we could ignore that and then actually, no, other things seem to move in tandem with the shanghai composite. vonnie: and devaluation, as huge as it was, quite small this

evening, so we will break to see if it will be more. brendan: coming up, we go back to politics. we will say what you need to know about the gop debate. this is bloomberg "surveillance," and the ronald reagan library report. stay with us. ♪

tom: good morning, everyone.

bloomberg's "surveillance" on this historic day. here is vonnie quinn. vonnie: donald trump was attempting to be ronald reagan. that's right. history weighs heavily on the republican party but we have peter court from bloomberg "business week" to talk about the present or like a policy. he would that have been talking about tax reform and the possibility in washington for as long as i know you, for years. did you hear anything last night? you are scolded they, did anything tell you that might happen? peter: i thought there was little discussion of taxes at the debate. a lot of talk about the middle east, for example, and abortion. very important topics, but the economy, to me, got short stripped. we heard ben carson talk about ties in and interest but nothing

really aired out. i was disappointed. brendan: there was a mention of carried interest in the undercard from george pataki. pataki: normal american person is paying higher taxes than they should because of loopholes and one of them is that carried interest loophole. sameld ask that income the as ordinary income and lower the rate to 24% for all americans but i would not give a special break to the wall street. brendan: the weird sleight-of-hand where everybody, strangely the republicans, are willing to talk about carried interest but not willing to talk about capital gains overall. will that move from carried interest to the capital gains rate? peter: whether they can capital gains should be lowered -- i , the thing we always care andt is overall tax rate

you numbers like 10% with a flat tax with rand paul and you hear about the fair tax with mike huckabee. ofre are different ways touching the elephant from different sides, but capital gains rates which are vitally important to corporate america and people watching the tv show, they do not get talked about a whole lot. vonnie: there was discussion on military matters and i'm sure you were listening to a carly fiorina was saying but very little discussion on the economy in general. peter: exactly. i'm not sure why that is. there is a to talk about. the economy -- you did not hear them talk about the federal reserve. they were speaking in the middle of an epilepsy meeting that wall street is glued to and it did

not come up in the topic. vonnie: to a certain extent, i guess that was a moderator question but it was up to the moderator to bring that up, but also, you have to wonder if it is something that will be saved for later. i think youer coy, are sticking with this. whole lot of substance on economics in that debate yesterday. coming up, lots of substance with the fed decision. ♪

tom: good morning, everyone. good day again and coverage at 1:55 this afternoon. not to :00 p.m., we starting -- we got to start five minutes earlier because kathleen hays demands we hear more from michael mckee. mr. mckee is in washington this morning. bloomberg "surveillance" this morning brought to buy in best co. -- investco. he is available to answer questions on alternative investing. some of your questions to m/asktheexpert. what the wide ranging x -- discussion last met with ray

dalio. thank you for the comments. here is a bit of a conversation with mr. dalio. at this, and i promised laura chapman of bloomberg that i would not bring a probability dissolution, but [indiscernible] looking at rare events. with all the work you have done and the experience you have had, are these derivative strategies around bond equities able to withstand the shock of the next swan?e -- black ray: there are all sorted embedded risks in different ways. i would say that we are better able to withstand them then we have been before. less liquidity in the markets, there is a fair amount of essentially dynamic hedging, dynamic hedging is the way of

insurance companies when they take the projection in terms of interest rate risk, that is an issue, but by and large, i would say we are better able to withstand them in terms of not to short-term volatility liquidity, but in terms of bigger moves. we are better able to withstand them provided that we do not have that big event i am talking about which is the tightening of the monetary policy. what scares me or worries me is what the next downturn in the economy looks like with asset prices where they are and the lesser ability of central banks to ease monetary policy. brendan: some central bankers would say that if we raise rates now, we have ammunition. you saver -- you sound like you disagree. it is a restrictive policy. i don't care if they raise 25 basis point or lose along the curve, but i don't see the reason for it.

2007, i was watching this incredible level happen, and asset bubble and it was for finance on a lot of debt and it was an obvious bubble and the fed paid attention to the gdp gap and they missed the whole bubble. we had an economic collapse. now we have the situation where we are in the mid-part of the cycle and they try to identify where inflation is. what they are worried about, and we have a lot of liquidity around, there are glimmers here and there, always little glimmers of something, but basically i think they are worried too much about the shirt short term set -- that cycle cannot the long-term. i don't get it even this symmetrical risks. let's look at the world. we are in the world economy. tommy countries outside to should be tightening monetary policy. tom: no of the moment last night in a conversation with ray dalio

, get more responsive than what you just heard. michael mckee in washington, he will be at the fed press conference at 2:30 and he will be with this at 1:55 with some of the machinery of what to expect at 2:00 p.m. we are thrilled to bring your rdq economics. i learned that all the radar goes up when anybody, in says ilar ray dalio, really don't care about the short-term moment. on my radar goes up. what could be the market shock -- yes or no -- that we see at 2:00 p.m. this afternoon? john: 2:00 p.m. is not going to be one of those black swan events. pretty much split down the middle as to whether the fed -- tom: toggle switch, you and ethan harris, what happens to says,rkets or ray dalio stop, leave it where it is, what

happens to the markets? john: i think what happens to a rate move is not that significant. the question is what happens to the guidance the fed gives. the market has been projecting a more gradual path to rate hikes then the gradual path the fed is forecasting. the question is whether the fed changes their forward guidance. i don't see much that changes that pull guidance except breaking down the long-term interest rate where the short-term or long-term from i don't think guidance changes and the fed is guiding this is something like six rate hikes over the next -- from now until the end of next year. maybe that comes down to five, but i think you will be the guidance of fed is giving. the markets with uncertainties behind us, now we can focus on other things or did the markets

say, what is more aggressive pack for rates? the great thing about markets is they never sees the surprise and we will learn in the reaction. ike: let me ask you about the wasprecepts that way dalio talking about, we have another downturn possibly on the horizon and we have seen forecasts saying that we will see a global recession next year. second, central banks are pretty much powerless and they are pushing on a string at this point. john: suppose there is a sharper, slowly downturn in china and their warning about the risk of that -- what is the role of the fed in that? i would say the role of the fed is to put u.s. policy in the best position to respond to u.s. problems. starting to think

re-normalize monetary policy -- there is always recession out there. maybe in some ways people thought they had been ended in some way in the last great moderation cycle, but then we had the great recession so there will always be another recession. the question is what is the appropriate response for the fed now? i think the fed should not be inflation iscause very low. inflation over the last six month has been running around 2%. the effect is not tightening, they are we normalizing interest rates to where it is appropriate for the u.s. economy. if it keeps rates low and lower than appropriate, we get all these distortions to from liquidity. , tohe fed had followed tom's phrase, we would not have the same asset bubble that generated the great recession. tom: i am speechless. grief, folks,

about the theory and i just want to say that theory is what found these decisions we see from janet yellen or we toss around phrases like -- and people go, what is this? that those are the things the algebra and the allergy are grounded on. let me go back to a question --our old reigns theories good after what we have seen over the last seven years or is there a renewed message that janet yellen has to deal with? john: i don't think the old theories wherever good. economics is hundreds of years behind physics, so they are just goals. let me give you one more "very" and that was up to control which janet yellen wielded out in 2012. in april 2012, she said the fed should keep policy easier and she envisions looked up from

control in the fourth quarter of 2015, which we are pretty much there. she thought that would be associative and a much lower unemployment rate than the fed forecast were saying if they had moved sooner. now she should follow the advice of senator george. you are at 5.1% unemployment rate and you have achieved what you want to. tom: michael, this is the latter which is a dynamic analysis versus static analysis. which will you see today, mike? it is impossible to know. you have to figure that janet yellen will come down cautiously . whether she does that with a rate increase and dovish statement on over move it all, that will be the fascinating thing to see this afternoon. our second -- tom: our executive producer will cause the next labrador retriever coming, to buy so much

for making us smarter. david blanchflower and john ryding. two-yeares at -41, the , .80%. another hour of "surveillance." ♪

>> this is "bloomberg surveillance." tom: good morning, everyone. what a most interesting day. our forex brief. brokers.to interactive their lower costs can help you maximize your returns. non-dated check. non-data check. twoer yen over the last days. i'm looking at the brazilian real, which is that the critical

juncture. ckee, that brings in some of the international tension. wouldn't it be something to be a fed call with new weakness in the brazilian real? mike: it is very possible you are going to see that. that brings us back to our , thersation with ray dalio founder of bridgewater associates. we talked to him about how the markets are going to react. he is concerned the markets may not like what the fed is thinking if they decide to raise interest rates. the next big move is going to be lower. we posed the question, then what does the fed do? he said, qe. >> do you think qe works anymore? >> it is going to work a lot less than it did last time.

we cannot have a big rate rise. the amount of debt, what it adds to the dollar, what the around.nary's exist we will have a downturn. it should be particularly worrisome because we don't have the spreads. qe is the purchase of assets to get premiums up. if there is not an attractive investment relative to bonds, if the spread is what is going to drive that, if there is not much bread and every thing else, you get less spread. we are not there yet. we are closer to being there. europe is there. >> they are pushing on a string?

>> yes. buy ine you going to negative interest rates? we are very, very close. that is why you need more currency depreciation. the effectiveness in japan is there. the effectiveness comes through the currency. different between cash -- in different between cash and the other asset. we have high rates in the world by comparison to europe and japan, so it comes through the currency. that is the environment we are in. -- dalio atlliano doral country club.

on bloombergeplay tv on saturday. he put all of this in the context of his view of how the economy works. a fascinating discussion about the way thes economic machine works. he has a whole philosophy he has built up over the years that comes down to productivity, short-term debt, long-term debt. tom: i think it is a great theory. not movingant he is at things from a math foundation. but much more a world experience and historical analysis foundation. is exceptionally able and writing on economics as it attaches to the americans is tidy and on the theory and the

mass, as well. peter, wonderful to have you with us. i want to get away from a simple definition of qe and more to the idea that ray galliano takes us back to an economic analysis before post-world war ii math. can we have dalio analysis and also have the analysis of emily fisher? peter: big question. when hisof years ago video came out, ray dalio is a rock star on this kind of stuff. in addition to the video, he also have a 210-page x lehner. i raced an issue about one point t made, which is money printing. it is out there. peter: it is a good shorthand.

the problem is that it is not a literal description the way the fed conducts monetary policy. tom: i know that. analysisd that, his resonates with a lot of people. how do you dovetail that with optimal control theory and differential equations of all the different guests we speak to? peter: that is amazing. a lot of the people who come on the show are practitioners. they have an intuitive sense of markets, when they hear the phd s or the models telling them the economy works one way when they feel it working another, there is a huge disconnect. ray dalio is definitely worth looking at.

tom: hold onto the lens on the camera. it may crack. dynamic stochastic general equilibrium theory. that is what the red sox used in april. [laughter] what we used to try to figure out our football pools. we are at the end of a long-term credit cycle. the fed and other central banks cannot create more credit. how does that fit in with the series -- series -- theories? has been thet first to admit that its tools are limited. with steeringar as loose as the fed has, you

would take it into the shop. that is why the fed is concerned. it is equally concerned about whether it will be able to move in the other direction. the i've got to rip up script. we have a wonderful summary of the tension of this meeting. just announces that he sees no change in the rate, fed must drive to the the unemployment rate is going to go below 4%. peter, do you suggest we are at full employment? peter: i want to make sure, did he say under 4% or under 5%? tom: he said under 4%. peter: that is amazing.

if we got that low, then i could see why the fed would ready urgently need to start raising rates. that is down into wage inflationary territory. we are already within the target range. tom: michael, very quickly to you. john herman was kind enough to grace our studios on television and radio. it is remarkable how he jumps to december. why not october? is only about 30 days from now, really six weeks, not very long, and maybe we don't have enough data to make an assessment of how things have changed. what does peter coy think the fed will do today? peter: i'm guessing they hold

off until at least october or maybe december. tom: stephen stanley published moments ago. you so much. i love the cover article you did on apple computer last week. there it is. peter coy. stephen stanley with bob finch. wages are being bumped up by 10%-20% in many areas to attract american workers. chair yellen, are you listening? labor markets are tight. is this great or what? dalio, no,. herman, no. writing, yes. ♪

tom: good morning, everyone. "bloomberg surveillance" from a gorgeous new york city. here is brendan greeley. brendan: futures are pointing to a light red open. we are sitting around waiting for the fed. we have some movers. julie hyman is here to tell us about them. cableis a big deal in the business. patrick drahi has prevailed in

growing his empire. , which iss altice listed in amsterdam, a french-based company. fors buying cablevision $17.7 billion. this will make the fourth largest cable provider in the united states. just the cablevision part of this. there are a couple of other partners. they have an option to buy as much as 30% of cablevision. there are a few different moving parts. hi is a: patrick drawd disciple of malone. we have had all of this consolidation in the telecom business and it speaks to the

idea that it is not a fantastic growth business right now. it is a cash business. do these low to tax, tax free deals. we will see how this deal will be structured. we have had a lot of consolidation in the industry. rite aid is another mover. the company is cutting full-year forecast. it says it is reflecting more recent sales trends. it has to do with the expense from an acquisition of a company. >> another disappointment. is trying to latch onto the cloud. the problem is they are a very small part of oracle, which is an enormous company, overall.

the rest of the company did not see such growth. >> julie hyman, senior markets correspondent. coming up, we are counting down to the fed decision. this is "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." our coverage at 1:55 p.m. on fed day. we will give you perspective from our esteemed guests. we will join you to make you smarter on this important day. gerard cassidy joins us. that is a surprise.

why would we have gerard cassidy joining us, as he does now, with rbc capital? decades of experience with so much to do with banking. he joins us with t-mobile phone line. gerard, what kind of fed decision does jamie dimon and brian moynihan want? >> they want a decision where the fed raises. rising short-term rates in this environment for those companies, as well as other banks, would be very positive for their profitability. tom: let me set up the spread. bring that up on bloomberg television. it shows what you and i have heard. we are nowhere near a recession. we are way away from those ugly dips we have seen twice in the ast 20 years.

mike: if the rates go higher, they can make more money when they make loans, but how does that affect them on the deposit side? will they have to raise rates on their loans. they make it into a war for deposits. is a little early for that, but you are correct. if we are going to see a steady , there will be deposit challenges 12 months from now. banks isdity for the so high that we don't expect them to pass anything onto the deposits with the first that -- fed increases. mike: they have problems with bond inventories. are we going to see any problems with these banks pulling back from the markets because they do not want to get in trouble under

new regulatory regimes? areais is an uncharted because of the new focal rule part of the dodd-frank legislation. we have not seen a really bad bond market take effect with these new rules. there is a feeling that the broker-dealers will pull away so .hey are not violating new laws it could really hurt the owners of the bond and the bonds more than the broker-dealers. tom: you have been doing this for a few years, like back when lobster was then -- was an expensive commodity. you come to us from portland, maine. give us perspective on this meeting. this one attracted the most attention because it is a lot of uncertainty, the story is really mixed on whether they should raise rates.

investors are starting to worry that if they wait too long, will the fed be caught behind the curve and have to move more quickly than they would like to? the intensity of this is very important. tom, you will remember back in the 1980's, we used to look at thursday afternoons. this is a similar importance to the bond market. tom: that is brilliant. mike is too young to remember that. mike: i wish. tom: gerard cassidy with us on the t-mobile phone line. t-mobile at work, switch your business to the un-carrier today. michael drop in here with a question. you cover a lot of banks, particularly smaller banks. they going to be more or less

affect it than the behemoths who make money on the trading volatility? cuteu want to throw in a little bank for tom, because he always loves that area -- that. >> there are a group of banks whose assets reprice immediately once the fed fund rates go up. these of large commercial loan portfolios rather than mortgage portfolios or commercial real estate portfolios. affect those banks and those are as large as bank of america. there are smaller banks, like silicon valley in california. those are the banks that will be affect of the most and very favorably. tom: 50 seconds. give us an update on the travails of brian moynihan. are his job or future

threatened? >> i don't believe so. i think he also will win the chairman and ceo titles and he will be able to move forward on an offense of plan -- offensive plan. he has been forced to play defense because of the problems at bank of america. isbelieve the best decision the consumer coming back. consumer lending has not taken off yet. bank of america costs best position to capture that. thank you for the banking perspective. we have some headlines from general motors. they have reached a legal settlement with about 1380 individual claimants for the faulty ignition switches that their cars had. million -- $575 million.

you were listening to bloomberg surveillance. it is fed day. i michael mckee in washington. tom keene in new york. we have all the news for you. ♪

brendan: this is "bloomberg surveillance." unemployment claims fell to the lowest level in two months. since july.evel

employers have been holding back on layoffs since early in the year. the latest reading on housing market indicates that it might be leveling off. housing has been gaining most of this year. a 2.4% increase in holiday sales is predicted by one company that study consumers. that would be little more than half of last year plus increase. we have the futures section -- session now closed. down 2.1%. as we wait the opening bell, let's look at the two year yield. the dollar index is about -- down about 0.2%. let's take a look at crude

futures. tom: good morning, everyone. "bloomberg surveillance" worldwide. we welcome all of you on this historic day. marketsd check, the look like a friday after thanksgiving. it is clearly an historic day with what we have seen with the federal reserve. our opening bell is brought to you by sci in the future. find out how to sdi's global operating platform can help you navigate the new operational frontier. /imagine.t seci.com i imagine that the only one who can find any news inequities today -- in equities today is david should near wilson. >> there is plenty of news.

tom: was oracle a surprise? >> an unpleasant surprise. the business software maker's fiscal first-quarter revenue fell short of s demand -- estimates. the cloud is killing them. >> no question. cablevision systems another story. eight -- accepted a takeover offer at altice. the deal will bring an end to the dolan family's control of cablevision after more than four decades. the owner of natural gas pipelines is in advance talks to be bought. williams turned down an unsolicited offer. tom: can we go back to

cablevision for a minute? i put this out on social media. here is scarlet fu with henrik lundqvist of the new york rangers. how cool is that? and the rangers are involved. teams are not involved. it is just the cable systems. air products & chemicals are down 0.8%. advantages spin of materials technology unit. hanes is up 2.2%. you have right aid down 5%. the drugstore lowered earnings forecast after cutting sales

growth projections. one more for you. carex down 6%. agreed to merge last month. tom: it is good that you do this today. sir martin sorrell reminding us that business matters. reminding usson that the equity markets matter. it is still about the fed, isn't it? mike: it is all about the fed. tracy is joining us now. stock marketsre a and bond markets and commodity markets and markets of market and markets versus markets. nobody knows how we start trading at 2:00. you there?

>> i can't hear anything. tom, translate. there is a technical difficulty. that happens when you talk to ray dalio until 4:00 a.m. in a bar. [laughter] brought up we have such a diverse market. which market will you look at at 2:00. >> i suppose we will be looking at the one moving the most. i cannot stress what a day this at how much uncertainty there is going into this major decision. earlier this week, i thought we had a solid narrative that you could make a strong argument that it is time to hike. you could also make a strong argument a some what is happening in global markets and financial conditions that the fed should wait.

three days later, that narrative is being torn to pieces. saying thateah is he is pulling back from october, from october. he said the data shows the strength in the economy is not there. i have no idea. tom: the difference of opinion. stephen engle under puts out a grid on what different foreign exchange paris will do. ,ou and i will follow dx why the blended dollar index for the dollar strength or weakness we could see. how much are you steal for the theatrical big move either way? it all depends. we have no idea what is going to happen today.

the actual treasuries market is pricing in a 32% chance of a fed rate hike, but that is uncertain because a lot of people are talking about structural changes in the market meaning that the indicator is lower than it actually is. tom: i'm going to put this over right now. vic are, wander over here. i want to show this. this is something we missed in the last 20 minutes. this is a five day chart of the brazilian real spiking up. janet yellen goes to this meeting. she cannot ignore those outside international shocks. the market speaks this morning. >> but that is debatable. a lot of people would they her mandate is not the global economy. but then again a lot of people would say she cannot ignore external realities. -- it was a great

fate of thet the world economy lying in the hands of a few individuals. i will put out a big fancy, weekly chart showing the challenges. let's frame the research body. everyone publishing this morning. ray dalia clearly leading the way. who has the upper hand? >> i wish i knew. i see strong arguments on both. give you an idea of how evenly split, we have bank of america merrill lynch economist still working with a 25 basis point hike today, but we have saying that he thinks

hiking now would be a mistake and that they are going to hold. even internally, there is a you just a vague and split amongst people. morgan stanley has an embedded, almost constitutional requirement within the bank. we heard that from ray dalia. very quickly. >> if their aunt to hold, i think there will be strong dissent. they will communicate to the market that the rate rise is coming. the fed needs to communicate. this type of uncertainty is not good for anyone. tom: tracy alloway helping us out. we want to make you smarter and

always see across the bloomberg world so we can look at that coming up. the dow, -28. nobody has caught that. the fix is almost back to average. ♪

tom: good morning, everyone. "bloomberg surveillance." a beautiful view of the capital today. they are debating about the debate brendan greeley has been debating about since 10:30. brendan: last night, 10 republicans and donald trump all attempted to be ronald reagan. history weighs heavily on that party. sam, i'm going to read you something that you tweeted last night. jeb bush asked the $64,000 question. what is the answer to your question? >> let's add one other thing. the question was first raised in the happy hour debate by bobby jindal.

he said, let's get rid of the republican party and have a new one that is at least conservative. he said it very directly. that jebthe thread bush is picking up on. this is a party that has got an identity crisis. they look back to barry goldwater and ronald reagan. ronald reagan signed a huge amnesty it -- immigration act. 3 million mexicans became citizens when he signed that bill. stronglyes were immigration. karl rove thought that was the way they could become a majority republican party. if it is being turned against that, it's future is in the balance. brendan: do they go with the goldwater purist or do they go compromisern happy

who can win? this donald trump blowing the republican party apart or was this happening before the debate? >> it was happening before. much inat politics so the moment. look at all the little details. add donald trump to the tea party. nobody mentions the tea party anymore. if you look at the tea party issue early on, it was immigration. carson said people are afraid of the social services immigration will take, not jobs. this means conservatives are also looking for a big government that looks after them and not other people. is a real chance

to the other thing we noticed was that the debate on taxes really ship did. you have everybody talking about carried interest as if it is a thing the republican party is ok with. coming up later today at paul will join bloomberg tv to discuss the fed decision. this is "bloomberg surveillance. ♪

tom: good morning, everyone. "bloomberg surveillance." good morning worldwide on bloomberg television and radio. today, "surveillance" brought to you by fidelity. learn how innovations in business can create future market trends. that is fidelity.com/traderssumm

mit. thank you for your support of "bloomberg surveillance." michael, it is football time. mike: did you know there was only one division i football program last year that finished undefeated? tom: i did not know that. mike: the folks from the noted football factory harvard. the harvard crimson were 10-0 last year. 12:45 on saturday, you will listen to the pregame show as they open their season against rhode island. we welcome back coach tim murphy. coach murphy, you have the enviable or unenviable job of trying to prove -- improve on perfection. >> i think there were going to make a solid case that everybody will be a lot better than they were a year ago.

we are going to have a good football team. we have a lot of work to do. we having played a game yet, are still searching for an identity. we are excited about the season. tom: one of our guests, mohamed $47rian, who ran like $47,000 for harvard a number of years ago, he is a new york jets fan and they have a quarterback, ryan fitzpatrick, who was an economics major and played a little football for you. when did you know that fitzpatrick was nfl material? >> i will tell you. after his junior year, i encouraged him to go to the manning cap, where they have a lot of the top quarterbacks work. he said, white you want me to go? i said, i think you are as good as any of those guys and you need to see some of the best quarterbacks in the country to realize how good you can be.

i think that was a little bit of a turning point for him. obviously, the rest is history. i'm trying to figure out this trivia, but i do believe having thrown a touchdown pass for the chat -- jets, he may be the first quarterback in nfl history to throw touchdown passes for six different teams. is: the manning camp where you go how do learn how to give up a football game in the last 13 seconds? mike: we don't want to go there, tom, do we? [laughter] coach, interesting story developing at rutgers. they have suspended their coach for three games for speaking to a faculty member about changing a player great. how do you maintain enough of a ce from the academic side

and yet make sure your players are doing what they are supposed to do? >> you have two student-athletes who are representative of the student body. kids who belong at whatever school they are at. we have very bright kids. line is that it would be very improper for me to talk to a professor in any way that would be deemed at all trying to help a student athlete in a way that would be improper. are here to get an education first, athlete second. it is a fine line that some schools. , it becomesschools a lower level of professional football and that is where you are going to run into some trouble. mike: definitely not the program you are running at harvard. we wish you the best. on every week with tom and i. we will try to keep the undefeated string going.

listen to bloomberg 1200 boston, 12:45 on saturday head of the harvard open or against rhode island. tom: michael mckee, thank you so much. we had gerard cassidy on on banking. let's link in today's historic moment with a lot of history of wall street. levitt, i will be blunt. we get mail that says thank you so much for the historical have -- perspective that you give us. 1950's, it was said, we've got to be independent. then you go on to the rest of the fed ballet. have you ever seen a moment like this as you go back through your countless fed chairman? >> yes, i think there have been

a number of moment like this. during the volcker years. the pressure came, but in different directions. i think political pressure waxes and wanes. right now, the fed is under greater attack than probably any other time since paul volcker had interest rates north of 17%. it will pass. janet yellen is doing the best job she possibly can. my own guess is that the fed thisnot raise rates afternoon, but that is as good as my football and baseball predictions. mike: the people in the markets say we should worry about bond market reaction. are not carrying a lot of inventory, there may be a lot of volatility than their use to be. is that something that was envisioned when dodd-frank was put into place or is this one of

those collateral damage, unintended consequences that we always need to worry about? was reallydodd-frank more a tactical move and a strategic move in the minds of the creators of the bond work it was pretty far from their thinking. frankly, this is been discounted so many times. whatever dramatic result occurs i think it will be very short-lived. to turn to the politics. there seemed to be a bit more .ivility last night levitt loves the donnybrook of the primary process. when do you suggest it will get

to five candidates talking about serious injuries -- serious issues? >> i think trump finished himself last night area and i think we are getting toward serious issues. i think the ones that distinguished themselves were bush and john kasich and marco rubio. i think a lot of talk will go to carly fiorina. i think that she is too hard edged. i don't think she is going to go very much further. i think it is going come down to k-6, bush, rubio. tom: is ryan fitzpatrick the number one quarterback of the new york jets? >> i think what is important is that columbia hired university of pennsylvania's longtime coach. tom: i like that.

some new york inside baseball with dr. levitt for a global audience. tom: i'm trying to get columbia to have a division i ice hockey team. lee bollinger, if you're listening. michael, this is exciting. how will you get prepared for this afternoon? mike: i'm going to talk to the new football coach at columbia and then i'm going to read up on what happened the last time the fed started raising rates. we also want to look at how they raise rates. it is not just a matter of raising the fed funds rate. they are going to have to put in a floor, reverse repos. the will be a lot of complexity to the decision. tom: we will see you shortly. michael mckee in washington. he will be involved in the press conference at 2:30. the most important press conference chair yellen has had. we will continue our coverage

with josh wright and others moving forward on bloomberg radio. on bloomberg television, we continue, as well, as we go to 1:55 p.m. is afternoon. good morning. ♪

welcome to the bloomberg market day. day is's decision finally here. we have expert analysis of what

the fed could decide and should decide on interest rates. stay tuned for a major global cable tv with a huge deal with very big implications. republicant 15 presidential candidates think of the administration's iran deal. we will talk about this very hot topic. ♪ matt: good morning, i'm matt miller. there is not a lot of action ahead of the fed decision at 2:00 p.m. you see equities unchanged across the board. take a look at treasuries. here is where you would expect to see more action. the two year