adam posen joins us this morning. and german engineering in the house? yeah, right. allegations on outright fraud. this is "bloomberg surveillance ," live from our world headquarters in new york. it is monday, september 21. i'm tom keene. joining me, from london, francine lacqua. the physicist, the metal engineer who made audi and is now running vw. from your reporting, it's his job in danger? be that: his job cannot secure, but he has apologized. it always depends on the deal. this is years of cheating. trustedof the most brands in the u.k. and in europe. this is a brand that is trying also to enter the u.s. market, which they are not doing very well. he has admitted to cheating the pollution controls for years to

get the tests through. tom: francine lacqua is from london with the end -- for the entire hour, focusing on vw. let's get to top headlines with vonnie quinn. vonnie: in greece, the once and future prime minister returns to power with a stronger than expected mandate. alexis tsipras and his series of party-- and his series of won. from tomorrow we raise our sleeves to support the weakest, the working classes. equality, social progress, social justice and prosperity for our country. to be able to have a stronger greece after four years and make our people proud and stand tall again. sippers came to power --

tsipras came to power to end austerity. secretary of state john kerry made the announcement in berlin where he met with germany plus foreign minister. this year the u.s. cap to the number of refugees being allowed in at 70,000. john kerry: we are now going up to 85,000 with at least -- it is not a ceiling, a floor -- of 10,000 over the next year for specifically, even as we receive more refugees from other areas. in the next fiscal year we will target 100,000. vonnie: germany may take in as many as one million refugees this year. another republican outsider is rising in the polls. carly fiorina has risen to second-place in a new cnn poll of registered voters. -- at 15%, up from

3%. donald trump is still the leader. but he went from 32% to 24%. a milestone last night for the emmy awards. is the first african-american woman honored as best lead actress in a drama series. for her role in the series "how to get away with murder." those are your top headlines tom:. i did not -- tom: i did not watch it. claire danes. temperature is 100 degrees. i can see why. washington,, kerry with a cocktail dress. what is it about the look. to me it is -- vonnie: they have to make sure they do not wear the same dress. tom: who keeps charge of that? the emmys was successful.

, they never forget the vw did an early "madmen" about the branding of that brand in america. we look at equities, bonds, currencies, commodities. 1.1284. is, the euro, we have a smart chart coming up on oil. on to the next screen. averagegetting back to at 22.28. look at that divide. a big negative yield for the german two-year. quietly friday, brazil continue to unravel. we are on the for real per dollar watch. as we moved to the bloomberg terminal, this is what janet yellen is focused on. the inflation-adjusted two-year, the moderation over two decades.

here is normal. this is sort of like i want to get back here, but we are nowhere near that. most of this appeared here is the new lack of inflation. the two year yield is clearly showing that great distortion. risee: we are looking at a , a little bit of the bet on what is happening with other central banks. tom: it is definitely central-bank influenced. we are back appear on a lack of inflation. let's move degrees. i thought it was going to be boring. i was wrong. this monday's word is shocking as alexis tsipras stuns with a good win -- not a great win, but a good win -- amid an appallingly low turnout. exhausted by their current democracy. athens must now implement a tough set of austere packages.

what is next for mr. tsipras in a government that has two effect a plan yes -- that has to effect a plan? tom: he will be meeting with the president of the athletic republic, and he will have to -- of the atlantic republic, and he will have to reform. his -- the review is going to be at the end of october. he needs pension and labor market reform, taxes. that will be done as well as recapitalization of the banks. 50 billion euros, an additional euros.illion then the ecb is checking through the books right now, and they could open the door to qe. vonnie: the creditors would agree it is a sigh of relief, but is it certain that alexis tsipras will continue with the reforms that were set out?

tom: that is a question on the nines of many people. -- on the minds of many people. banks were closed, capital controls still imposed. but during the election campaign, he said we will soften the edges of this bailout program and make the implementation fairer. he has to give something back to the voters. he has to satisfy the demands of the creditors, whose patience has run thin. tom: is greece still in depression? is that how you would put it? mackenzie: the latest data suggests that the contractions for this year by the end of 2015 will be 1.4%. obviously credit is pretty much nonexistent because of the capital controls and the need for recapitalization of the

banks. it is in a very poor state. they have to meet these deficit reduction targets. that will be incredibly unless there is strong growth. many people think that is unlikely. those targets could very well be missed, putting pressure on the balancing act. tom: thank you so much. tom mackenzie in athens. it was a quiet week for " lastberg surveillance week. are you kidding? i slept the whole weekend. 's chief strategist in charge of courage for his company. comege will be needed december. i know you would not appear with us until the minnesota vikings won again. thank you. we secured victory. tom: did you adjust your market outlook off of what you saw on thursday? brian: not a bit.

we put out a piece on friday, midday, looking at the way the market reacted once again to the , calling itsion from an investment strategy standpoint, a fed misstep. we think the fed should have raised rates. growth is coming back. you show the chart. i think now, from an investment strategy standpoint, the fed has set itself up to be late again. that only adds to what has been an uncertain year. that uncertainty will roll over into 2016. we have an election and all these other things going on, and it adds to the volatility. tom: we had a wonderful moment with ray dalio last week. we had no idea the response we would get to our conversation with him. he is optimistic on the american experience, but he thinks a bubble is out there. is your world of equities in a bubble right now?

brian: to have a bubble, you need to have something in excess. there is no way we are in a bubble with respect to equities because mom and pop in the midwest are not buying stocks yet. they are scared about the election, about isis, interest rates, and about jobs. you cannot have a bubble in equities unless you have this type of excess with respect to feeling and sentiment, and we are nowhere near that. vonnie: you are saying the fed should have hiked even with the china wobble and the drop in equity markets? brian: yes, growth is coming back. -- stocks in the u.s. are by far the more stable -- the most stable in the world, and we have seen them come back. they are continuing to show leadership. they are underperforming versus europe, but that is more of a momentum play with investors chasing momentum and qe in europe.

we do think the fed should every's rates. vonnie: if the fed starts raising rates, do companies need to start tightening their belts? brian: no. an entireised generation of investors that believes the stocks only go up, they do not go down. theave forgotten all about time during the mid-1990's. i think we are heading back into a 1980's and 1990's environment. we are stockpicking. peter lynch, warren buffett. it is all about stocks and less about pmi and macro and china and commodities. we are looking at stocks again. what is your number one sector right now? brian: technology. people are arbitrarily selling financial because they are worried about that interest margin. the most exciting thing is wealth management. wealth management is the crown jewel. tom: so you like morgan stanley and what james gorman has done.

we will talk to brian belski on the markets coming up. over the weekend, it could be an $18 billion mistake. this on volkswagen with american diesel cars. this is extraordinary. francine lacqua has a perspective on this from london. stay with us from new york. this is "bloomberg surveillance ." good morning. ♪

tom: good morning, everyone. particularly to those in the united kingdom. what a week it was last week in america. same thing in the u.k. the political economics of the moment is absolutely extraordinary. let's get to our top headlines in london. here is francine. rentin

popeine: in havana, the met with former leader fidel castro. the vatican described the meeting as informal and familial. the pope flies the east in cuba today for the next leg of his trip. he drew huge crowds while celebrating mass in downtown havana. goldman sachs says the euro may fall another 10 u.s. cents because the european central bank is ready to increase stimulus so we can meet inflation targets. goldman protects the ecb will maintain quantitative easing through the end of next year. volkswagen stock is plunging after the company admitted to designing cars to circumvent u.s. laws. carmaker is suspending u.s. sales of some diesel powered vw's and audis.

for more on the story, let's get straight to our international correspondent, hans nichols, from berlin. this is huge because they have been cheating for years. hans: this is bigger than volkswagen. this is about the entire diesel technology. if you want to have a better fuel standard through diesel, you may have to be willing to accept that you may be polluting more. the epa thinks they caught volkswagen red-handed, from 2009 to 2015 with a defeat device. emitsolkswagen tests it less emissions. when it is out on the road, it pollutes 10 to 40 times bigger than what happened. ceo, martin the winterkorn, said. i am personally and

deeply sorry that we have broken the trust of our customers. cooperate fully with transparency to completely establish the fact that this the facts of this case." so many models -- the passat, the jetta. many vehicles have been suspended in the states, as well as certified, preowned. they are talking $18 billion in fines at the high end of it. that is like a bnp paribas number. we have never seen a figure like this when it comes to auto manufacturers. is a huge fine. this is a company trying to be number one. they sell over 10 million cars, almost as much as toyota. but crucially, they are getting the u.s. market. hans: that has always been a criticism of martin winterkorn. reverse the trend.

tom: i look at the iconic way that we look at vw, and maybe the best thing after the emmys last night is in the early seasons of "madmen," there is a vw commercial which completely changes the plot and cast of the show. i am suggesting a lot of us really do not know who vw is. define for our american audience who vw is. cons: volkswagen is a holding -- hans: volkswagen is a holding company. audi, bentley. at the core they have the volkswagen brand, which sells the passat. they have over 500,000 employees globally. winterkorn won the power struggle on the vw

side back in april, but there is supposed to be a vote on friday that will extend his contract into 2018. will that take place? hans: that is what we're trying to figure out. martin winterkorn saw he had a contract extension. when i interviewed him a week ago, he hedged on this. i do not know if it is an open question now, but it is a difficult time for volkswagen. tom: hans nichols, thank you so much. that was brilliant with francine and hans. 597,000 employees. ford motor has fewer. i had no idea how big it is. of those employees, by the way, are in germany. down 21%r stock is this morning. we have a wonderful guest this money to synthesize all we observed last week and to drive it forward. adam pozen's formerly a member of the bank of england. really looking forward to this. a lengthy conversation with dr.

economy going forward. from london and from new york, we welcome you. it is "bloomberg surveillance." ♪

morning, everyone. maybe a week a little less crowded than last week. washington, philadelphia, new york and hong kong will be focused on the events in america. hong kong will be focused on the visit of the chinese leader to washington as the pope moves from washington to new york. a beautiful view of hong kong this morning. we have a morning must listen on china. vonnie: in china, behind the

china's highest ranking officials, former ambassador to the u.s., and the top ago shooter on foreign policy. he will talk about china's currency at, among other things. >> supply and demand determine thinklue of imb, and i y is quitenerall steady. we will continue to do reform in sectors, various including the financial sector. when people look back 10 years or 15 years from now and we see that the market reform is really good not only for china but for the rest of the world. vonnie: a fascinating interview, and a reminder that it will be

aired in full tonight. i want to mention some things that he said. he said the value of the r&b is steady. he said it is also determined by supply and demand. it is a pegged currency. tom: there are any number of phrases that ken rogoff would give it. sharma is joining us in the 7:00 hour. you have to believe in managed by a law by any chinese authorities going to be affected by that supply and demand. vonnie: and this definitely was what set off the china equity plunge this summer. the 2% move that china enacted with its currency. or so,aw another 2% move would we see another route in markets? brian: i am guessing that the volatility in china is here to stay.

in had a decade-long buildup capacity. now there is overcapacity. they have almost too much. they need to take that down just like america did between 2000 and 2009 after our big buildup during the 1990's. what is going to end up happening in china is you need to see more credibility. it is statements like this with respect to -- a reminder to stay tuned for "china: behind the wall." this is bloomberg surveillance on bloomberg television, streaming on your tablet, your phone, and bloomberg. ♪

tom: without question, the block of the morning, our four hours of "numbered surveillance." richard sharma of morgan stanley -- ruchir sharma of morgan

stanley. and adam posen. let's get to top headlines. here is vonnie quinn. vonnie: in greece, alexis tsipras has been returned to power after agreeing to austerity measures. he campaigned against them originally. he received 35% of the vote. he will form a coalition government with the center-right new democracy party. now he will have to make the tax hikes and spending cuts he agreed to. investors are hammering volkswagen over that air pollution test scandal in the u.s. shares of vw have fallen as much as 22% in europe. feed elliott has admitted to cheating on the 10th -- cw has admitted to cheating on the test for years. it has halted sales of the cars that were involved. falling after two days of gains. federal reserve policymakers are

making the case for an interest rate hike later this year. san francisco fed president john williams over the weekend. >> the natural next step is to gradually start raising interest rates. it is the appropriate time to begin that process. maker jamespolicy bullard and james lacher -- two americans held in -- they ousted the good -- the rebels ousted the government early this year. they are facing airstrikes led by saudi arabia and backed by the u.s. in sunday night football, aaron rodgers through for two touchdowns -- aaron rodgers threw for two touchdowns. lost both of its

games. brian belski is shaking his head. diehard nflelski, a fan. brian: just terrible. we love people from wisconsin, but packers fans? tom: coming about the -- tell me about the ads that you see. into your family room, as i feel it is? is, too.think it but if you travel around north america like i do and you listen to sports radio, you have all of these fantasy football draft shows and all of this kind of stuff. tom: we have essentially lost -- we have essentially brought in las vegas to the -- brian: it does not add value to somebody who just wants to sit down and watch the game. vonnie: the thing about fantasy football, it has nothing to do with the team you support. it is all these team members. tom: it is betting.

what is the difference between that and las vegas? brian: we grew up not liking the packers are what if you have aaron rodgers on your team? tom: sacrilegious. i am predicting this is going to become a big deal. vonnie: it is a big deal already. tom: we have brought the show to a complete halt over this. brian belski says this is shortsighted. it does seem that janet yellen still is waiting for a better labor market in order to hike, brian. brian: still waiting, still going to be late. the labor conditions have had an improvement for a wild. why don't you have a situation with the fed where you actually lead instead of focusing on what was and focus on what is. what is is an improving economy.

it is the slowest economic recovery in history. all we see is monetary policy, no fiscal policy. regulations have remained very stringent in america, and we have not allowed businesses to do business, even though corporate america has done a great job of rebuilding balance sheets. the debt problem is where the government continues to pile on debt. the fed needs to be a little bit more aggressive and looking forward, not reacting to what is happening right now. tom: the bear market we are in is -3% on the s&p 500. it is terrible. we are all going to die. vonnie: over the weekend there was a lot of focus on to medication and the fed, how it may be confusing markets, reacting quickly to markets, and vice versa. what you said is not the fed's mandate. the fed does not have to worry about comedy performance, it has to worry about financial stability and growth. perspective.

down 3% is nothing. 3%,re so reactive to down down 4% and what about these bigger moves? we continue to think that the august hold back -- -- the august pullback, everybody wants to see this thing go down and we continue to try to guess where the top is. tom: some houses are reducing their earnings out six months, 12 months. as a general rule, is a crew like you hide the earnings growth, or will they pull down those earnings estimates? brian: the majority of estimates usually come down around this time, and then people crank out the 2016 forecast we tend to do that later in october and november when we get a later field for what is happening in the next year. at the end of the day, we are so focused on american companies needing international growth, we just do not think that is the case. what do you see in terms

of growth this year and next year? comfortablee still with a $126 estimate. tom: so you have a double-digit lift. canada,peaking about canada is your beta stock and the united states is your out for stock over the next three to five years. know that we do not talk greek letters on monday? what the hell did he just say? growththe majority of coming from america, in america the u.s. stock market is going to be her out for stock, meaning much more consistent. canada is going to be beta, and so is japan and europe. the steady performance will be u.s. stocks. montrealthe bank of we canadian oil yet? brian:

are getting close to where we think that we will see this range developing, and energy in particular will be in a position faster. china with all its capacity, they have to draw down prices lower. energy is in a better spot. tom: brian belski. this is our topic for our single best chart. how low can oil go? lower for longer? will he go completely the other way, looking for a nice rebound out any number of years, to $70 and even $80 a barrel. brian belski of bmo capital markets, vonnie quinn. tom keene. this is "bloomberg surveillance ." ♪

tom: good morning, everyone. "bloomberg surveillance." ruchir sharma will join us in the next lock. he is definitive on global market and commodities. oil,ingle best chart is on and it is on the basic idea of the bet in oil, which is to go along, young man. and the idea that we migrate back up to $80 a barrel as a terminal value. brian belski is back with us. rather than with the minutia of

how low we can go and all that, there is a new reset on five years, seven years. brian: how do we know where china will be in two years, five years? that is what people are banking on. do you really believe that china can get its game together and stop lying about their growth numbers? the answer is no. tom: because it is a human condition to try to guess that terminal value, it matters to the balance sheet of oil companies, who have to reset whether assets are. that give you caution on those stocks? brian: for the same reason we love financials and technology, energy andlove materials. 3250, or 40 to 60? probably. that is an outlier, $80.

i am seeing $60 a barrel as a general rule. stocksyou do not buy because they are cheap come you buy stocks because they are growing. we think those companies will be the winners in the next 10 years. we think we see massive consolidations in the energy area, both in canada and in an america in the next five or 10 years. vonnie: do we see exports? brian: we believe that the pipeline will be turned on. we are believers in the manufacturing renaissance. tom: something not mentioned thursday. did janet yellen get a get out of jail card or a free pass in the mergers and acquisitions game yakking with new lower rates, not only in energy but everywhere else, does m&a do well? m&a does well, but we

focus too much on what is happening right now. , with end of the day these lower rates, i think it is more of a notion that we will see continued share buybacks in dividend growth. i think that is a bigger point with respect to lower rates. vonnie: you see this and technology, then, because you said that is the sector -- lead, but inill ofms of -- the majority institutional investors are massively underweight financials, massively. that is where the big catch up can happen. look at dividend growth but free cash flow growth -- for mere mortals, how does brian belski measure free cash flow and measure its growth correctly echo brian: the key thing is what is coming with respect to earnings, the key thing with dividend growth is you want to find those companies that have free cash flow yields

greater than the dividend yields, because then you can continue to facilitate that dividend growth. that is why a lot of the dividends increased or not fit that growth. tom: let's do our hands-out thing. the idea of free cash flow yields, dividend yields, this is where you want it. the day, wee end of need to build a case for credibility with respect to buying equities again, and equities are providing income in america. especially given the fact that when you start to see principal losses and bonds, the next big phase no one is even talking about -- we will see people start to buy equities again, and a big part of it will be equities income. we also have values in our top photos. a massive fist fight this morning over which one to use. there are so many good ones. vonnie: very colorful ones. soccer fans worldwide will be enjoying this one. ronaldorid's cristiano

met the refugee boy tripped by a camera women. his father was tripped by karen -- while carrying the boy, and the video sparked outrage. is: in the backdrop of this secretary kerry announcing we will take more refugees and economic migrants. vonnie: and the idea that many of these refugees have jobs that are worthwhile in other countries. tom: they can come in on day one and add value. next photo. sbos, the greek island, has become a place for refugees.

refugeesve amount of -- migrants arrived and discarded things along the way. to theis is the sea east of greece. so this is they are traveling is not what we perceive. with they do not go that far. with some risk, to say the least. vonnie: exactly. it is known for its wonderful history and poetry. belski is on draft kings right now. vonnie: top photo -- people have begun celebrating oktoberfest. in 182nd festival has begun munich, germany. lederhosen, giant pretzels,

carousels, large glasses of year. it is a hoot. the price of beer has increased. a glass of beer, a large glasses of beer is $11.40, u.s. dollars. brian: the beer is about this big, though. tom: with this celebration of germany, and particularly bavaria, it is affected by moving new refugees and economic migrants around. there is a modest knockdown effect. exactly. but it will never top oktoberfest. that is for sure. tom: there it is. i see hans nichols in lederhosen. --are thrilled to bring you even more so now after what the fed did -- adam posen will join us. he is president of the pearson institute for international economics. that barely describes his transatlantic greece.

adam posen on greece, at imposed on germany, and on his bank of england and the federal reserve. "bloomberg surveillance." stay with us. ♪

tom: good morning, everyone. markets churn. the forex report is simple. i have to go to brazilian real. brazilian real closed ugly. 3.95. emotionally, that is a huge signal. to our top headlines. here's vonnie quinn. mayie: the u.s. reportedly be getting u.n. condemnation of its trade and margo. the obama administration might abstain in the najaf general assembly -- in the next general assembly. it asks that the embargo be lifted. there is a takeover today in the semiconductor business. dialog semiconductor has agreed to buy bank at mel corporation.

torepresents a 43% premium atmel's closing price. in northern california, authorities now say that wildfires have destroyed more than 1000 homes during the fire is about -- than 1000 homes. the fire is about 70% contained. let's go to francine lacqua in london. rinsing co-last -- the president of the peterson institute for international economics -- it was days before the fed announcement. dr. adam posen was producing a hike, saying it was better tight now -- to hike now. welcome back to bloomberg. you were hoping for the fed to do something thursday. now we're seeing tactical polls. have they missed the window? adam: it is a fair question.

i got the prediction last week wrong. i was hoping they would not. i think they have got a very tight window. december, there are technical if you reallyhike need to do it, but what is the extra information they will get over the next month? it is not clear what that will be. they have to make that call. inflation is not going up anytime soon, which is why i would not want them to move. but if they are doing old-fashioned inflation targeting, as vice-chairman fisher said at jackson hole, you have to get ahead of the fed's before the search comes. i cannot believe they are going to move in october after not september, because there is nothing to hang it on. i think they are looking at january. do you think normalization in the u.k. will start sooner than the market things, or because the fed has

delayed, we will also delay a rate hike? i do not think the bank of england and the tcc is paying that much attention to the fed. chiefhe exception of economist andrew haldane, when he come out -- when he came out and said you will need a cut. i think the bank of england is still going to be after the fed, but it will be earlier than the markets predict. the markets are predicting october of 2016, i believe. i think the bank of england moves before midyear. tom: i thought one of the cool op-ed's last week was andrew's andrew, always making headlines.

tom: what happened? "greystokethe movie tom: of tarzan. franco exactly right. the whole point of the cowardly lion is that he is only supposed to be dangerous when -- is in danger u.s. from the fed making a huge mistake right now. nobody in the u.s. is in danger from deflation or inflation. there are a few people in the workforce we would like to get back into jobs. and there is a question of how much the fed can do about that versus it being a structural issue. for many others, they try to make this a courage issue. it is not a courage issue. thati would mention here ken rogoff and william port wild

uiter said this last week. vonnie: you think there will be some kind of inflation spike at some point, though. adam: i think the fed, if they do not believe there will be an inflation spike at some point, the fed is moving to a very different regime. go back to stanley fischer's speech, which was political -- which was prototypical inflation targeting. he said we had to be in front of the wage growth. to fomc announced something 4.7%, to 4.8%. let's say we do $190,000 a month. adam posen is with us from the peterson institute. he will continue with us. brian belski has to go shape up draft cams. brian, thank you so much. , incine lacqua, thank you london.

michael mckee will pick up with us here in the next hour. "bloomberg surveillance." we are about the guests, including adam posen and ruchir sharma. stay with us, worldwide, "bloomberg surveillance." ♪

announcer: this is "bloomberg surveillance."

shocks in greece he will reform and austere coalition. in this hour, adam posen joins us. and german engineering in the house. right. tumbles amid allegations of a right fraud. subaru would never do that. this is "bloomberg surveillance ," live from new york. it is monday, september 21. joining me, vonnie quinn and michael mckee. maybe not as exhausting as last week. know, it isnever only monday. janet yellin will speak on thursday. michael: we are not talking about market volatility because of the fed. tom: will janet yellen speak on thursday? at the: she is speaking university of massachusetts. we do not know. we expect her to talk about the economy, but whether she gets into the fed decision-making or

just talks on economic theory. we are rating -- we are waiting to find out. tom: they have a financial markets division that is really strong. it will be interesting to see if she brings up a good volatility and such. headlines this weekend. here's vonnie quinn. vonnie: there was an election, and the greek prime minister is saying that his party has a clear mandate. alexis tsipras has been handed a second straight term, steering the country into a new bailout deal. he credits young voters for his went. alexis tsipras: i want to thank the young people who gave this syriza proved too hard to die. tsipras wing party took tsipras'e --

left-party took 35% of the vote. the u.s. is dramatically increasing the number of syrian refugees entering the country. country willys the accept 85,000 year and 100,000 in 2017. john kerry: we are now going up to 85,000 with at least -- and i that it isat least, not a ceiling, it is a floor -- of 10,000 over the next year from syria, even as we receive more refugees from other areas. in the next fiscal year, we will target 100,000. vonnie: the u.s. has accepted fewer than 1000 refugees in the last four years. volkswagen is feeling the aftershock of the scandal in the u.s. shares fell as much as 22% in europe today. apology.ssued an

vw could face up to the $18 billion in fines. a milestone lesson for the emmy awards. viola davis is the first african-american woman honored as best lead actress in a drama series, winning for "how to get away with murder." look at those pictures. very exciting. tom: why are the emmys a bigger deal than the oscars? why are they more fun now? vonnie: because they have become a little bit more populist. bowden says it is the golden age of tv. i think he is right. let me do a quick data check. i mentioned the brazilian real. attention, gets my but other than that, a big churn. the two-year -- the 10-year

yield, 2.15%. alexis tsipras stunned with a good win amid a historically low turnout. the greeks exhausted by their new version of democracy. tom mackenzie is in athens, and in athens it was now implement a tough set of austere policies. joining us as well, adam posen. is the president -- for mr.the to do list tsipras? tom mackenzie: it is a very long to do list he will be sworn in this evening. then the government will be sworn in tomorrow morning, and they need to hit the ground running because there are a number of deadlines. not least, the review of the country's creditors. the creditors signed out on this demo. there are a number of reforms.

there are 220 actions, approximately, that they need to take. reform,g labor market pensions, taxes. a tightrope walk for alexis as he tries to make sure that creditors remain happy with the targets they have to hit. michael: he has only a five-seat majority in parliament. how difficult will it be to implement all these reforms? he has to do pretty much all of them or the troika is not going to be happy. tom mackenzie: absolutely. tohas managed for them specifically set up their own party. basew has a stronger around him, and he has is in the creek -- he has his independent greek nationalists. if there is too much public pressure, that could start to shake and crumble. but they know that the creditors

will not give them too much room to wiggle on this. minister --inance he thinks they can make some moves to keep creditors on board. tom: tom mackenzie with us from athens this morning. i go mckee, i want you to bring in dr. posing. you visited athens a number of months -- dr. posen. you visited athens a number of months ago. are they still in depression? is that the right word to use? michael: absolutely. the economy has shrunk to a quarter. even if they implement the reforms and get debt relief, it is a long road back for the average greek to feel it is somewhat normal. adam: absolutely. there is no question that this is a devastated economy. the issue always was getting rid of the outright panic that came up in june. -- : tom: and they have succeeded,

right? adam: they have put a bottom on things. you are right. they may get a bounce this year, but keep because they are in the euro they do not get a huge exchange rate move. michael: they do not have a lot of exports. this is a relatively inward looking economy anyway. adam: it is a relatively uncompetitive economy. they would like to be exporting tourism services, something other than shipping, which does not get taxed. tom: can they only do that with the drachma? at some point they have to inject some sort of new currency, according to mohamed el-erian. do you agree with him? adam: people are willing to suffer a lot, in ireland and spain, to stay in the euro. but i think it would have been easier for them if they had been able to do some side of new drachma. tom: german exports within our

academics -- what do you and our colleague that you and your colleague, jacob kierkegaard, learn about germany? what did you learn about angela merkel in germany? great that you mentioned jacob kierkegaard. he is stressing that he was one of the few people who was not surprised by this 180 being tough on the greeks and then welcoming the migrants, which for most of us was sort of a shock. this is the germany i used to study and love, with the one opening up the migrants. -- opening up to migrants. but germany remains trapped by its demographics, by its own setbacks in energy policy. it keeps having this export oriented model. it is doing pretty well, but it's long-term growth rate is cap. even in germany and europe, it does not have a great future

without reforms. now have the possibility of further qe from the ecb, to help europe in general. how does that change the equation? adam: it makes things for better -- it makes things better for germany and ireland and spain to take advantage, but as mike was saying, it is not like greece has all these exports waiting to go. that is why it is so much longer of a slog for greece than some of the others, and that is why germany and these european officials were pushing so hard in greece. michael: how much is it a problem for greece that they have this enormous diaspora of young people who left? adam: that is a really good question. our conclusion was, as sad as it is, that is sometimes the best outcome. you do not want the young,

energetic, educated people in greece to squander their lives away. you talk about in this country, if you happen to graduate at the a job,ime and cannot get it follows you for life. some of the baltic states like estonia spent hundreds of thousands -- sent hundreds of thousands abroad to get the option. tom: adam posen with us for the entire hour. really looking forward to dr. posen with ruchir sharma with morgan stanley. we will discuss the commodity implosion, the commodity super cycle. adam posen and ruchir sharma together. stay with us. it is "bloomberg surveillance." ♪

good morning, everyone. worldwide, london. gray clouds over st. paul's cathedral. a correction -- our new offices in london are off to the left beyond the image. a little bit down the river, toward the roman ruins. vonnie: very pleasant. tom: let me do a morning must-read right now. rogoff -- did you know he is

a giant of chess as well? he writes a review of a must-see new movie, "the age of bobby fischer." the movie is "pawn sacrifice." adam posen with us on a unique economist, ken rogoff. i thought this review was great. the movie is supposed to be stunning. take us back to young ken rogoff. adam: you have to give it to ken. he devoted his teenage years to be as good as he could be in chess, and he wanted to do something more meaningful.

become theat has textbook. people talk about the right heart broke off -- the reinhardt rogoff textbook. it defines the economic understanding for graduates. tom: at the highest levels of chess, it speaks to the chess match that we are in now. we are in the game, you have an end of game, and i have no middle game. does janet yellen have a middle game? adam: we are not being sacrificed. it is ok. tom: what is the fed's middle game? adam: the fed does not have a middle game because it really does not matter very much. there is a tension with what is happening on the external side about the rising dollar and the slowing rest of the world, and

it is a pretty solid, steady growth in the u.s. economy. so what do you do? the problem is they keep talking ahead of the watchful waiting. this is something we saw worse with the bank of england a year ago. in some ways it would be better if people talked less. we could keep things steady. tom: adam posen on his colleague in crime, kenneth rogoff. conversation, the former president of mexico they fox. stay with us. ♪

tom: good morning, everyone. ."loomberg surveillance michael mckee and vonnie quinn. let's get to top headlines. tonie: pope francis heads the united states tomorrow after a whirlwind visit to cuba or he met yesterday with fidel castro and his mother, raul. the pope will celebrate mass today in eastern cuba, drawing huge crowds.

euro mayachs says the fall and another 10 u.s. sense because european central bank is ready to increase the stimulus so it can meet its inflation targets. quantitativets easing to continue through the end of next year. another republican outsider is rising in the polls. carly fiorina is now second in the latest national survey. she is at 15%, up from 3% before last week's debate. donald trump still leaves from 24%, but he has been losing percentage point since the last month. michael: we will keep an eye on it. you want to talk about a big plunge? volkswagen. in germany, shares are crashing, down almost 22%. the biggest drop in 16 years after the company admitted it rate the diesel cars -- it rigged the diesel cars it sells here in the u.s. to cheap

pollution standards. it is possible some executives could go to jail. jamie butters heads the u.s. auto team for bloomberg news and joint us from detroit. as one analyst puts it, what is so damning is that this was deliberate, not an oversight. jamie: that is right. look not like whether you at the gm ignition switch or the problems toyota had with their unintended acceleration. something did not go right. it takes time to figure it out. that is not what happened here. somebody had to decide that it was going to be better to put in this software that would cheat the testing system than to actually live up to the rules of the clean air act. are going to be repercussions. the question is how high it goes. who knew, who approved it, and who made the decision. when didwho knew and they know it become the operative question. even if he avoids criminal the ceo done?

how high do not know it went. if it goes all the way back to him -- you would think that a lot of the blame will go to martin winterkorn. it is a like he is a finance guy running a car company. he is very -- a very technical expert. .e is responsible you look at the gm case in india, the head of powertrain was punished. and a lot of people lost their jobs, but it did not come all the way back to the headquarters. if it was just a local market move to meet local requirements, maybe it does not hit anybody in germany. vonnie: here is the martin winterkorn quote -- vonnie: it is not really enough,

is it? somebody made a decision on this and implemented it throughout the network of cars. jamie: yeah, and you think about california, where so many of the clean air rules have taken hold, have set a standard, and put some weight behind it. to say that these cars that have been touted as clean diesel, you can do it with the right engineering, in fact we are spewing a whole lot of more pollutants into the air. so many otherg sacrifices to try to clean up the air in california. they are not going to be treated gently by regulators for this. michael: people do not realize volkswagen is close to the world's largest carmaker, the end that quick toyota. but they have never made huge inroads in the united states. no and neck with toyota. but they have never made huge inroads in the united states. poor: it has been a product in the u.s. market to begin with.

they have never gotten hold when america was all about economy and fuel economy. they were low quality, high price, not great fuel economy. a small group of devoted fans, but not enough for a mainstream brand, which should be one of -- topld's top rands brands, is four-door toyota. they are number one in europe, number one in china, right now and neck with gm. with volkswagen and its other brands. is a huge company. not had great quality. they made the same mistakes in the market that honda did but they did not react as quickly, and this is a quarter of their sales. jamie butters runs our auto team in detroit. tom: adam posen is with us as well, on germany. coming out of world war ii, their structure is different. adam: it is, and volkswagen is

part of -- partly government-owned. as you want to draw a parallel here on the volkswagen, some of the stuff that we have seen, like the libor scandal. i begin to wonder if some of these companies think they are too big to fail. they have been bailed out repeatedly. libor, you just pay a fine. it is part of doing business. i wondergregious, but if it is a bigger problem in the auto industry as well. it cannot just be one side of the other. adam: i think you all announced that the german government is now investigating directly in addition to the u.s., and if they go with criminal penalties or criminal prosecutions, that will be -- going back to my comparison with finance -- tougher on their own company than americans. tom: adam posen with us, with

the peterson interstate -- with the peterson institute. coming up, really looking forward to a conversation with ruchir sharma. he was dead on with the emerging commodity markets. stay with us. "bloomberg surveillance." ♪ sure, tv has evolved over the years.

it's gotten squarer. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks.

sports freaks. x1 from xfinity will change the way you experience tv. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. vonnie: -- tom: good monday morning. bloomberg "surveillance" from new york city. vonnie: greek voters gave their prime minister a second straight term. alexis tsipras whethered

political opposition while steering the country into a new bailout deal. syriza took 35% of the vote and will continue governing by renewing its coalition with a nationalist party. treasuries falling after two days of gains. federal reserve policymakers making the case for a rate increase later this year. john williams addressed the issue in a weekend. speech >> the next step is to start raising interest rates. the likely appropriate time is later this year. vonnie: the fed {unchanged last left rates fed unchanged last week. two americans held hostage in yemen are safe in oman. ousted the government early this year and are facing airstrikes led by saudi arabia and backed by the u.s. bay to agers led green 10 point win over seattle.

a rematch over last season's nfc championship game. i'm sure you are watching the emmy's. tom: not really. i knew that our staff would watch. the twitter feed is g reat. let's go to the bloomberg terminal. adam posen with the peterson institute. ,wo year yield back to volcker coming down, the nirvana of the 90's. inflation adjusted, here's the beginning here. adam posen, we are getting back because there's next to no inflation. is that getting back when inflation disappears? adam: that is a killer chart. you got to think about the real component being driven by population growth and down the inflation component. zerotill want it above

especially since the economy is growing and the financial markets need stability. that is not the way you want to get it about zero. if larry summers is right about secular stagnation that is not going to go up much. tom: did you take ec-10 at harvard a million years ago? adam: actually, i skipped it. frdstein, summers, ben eidman. vonnie: did you hear what he said? tom: he took it in eighth grade. benjamin friedman is one of the giants. adam: he was my dissertation advisor. tom: so long, so negative. at the forefront in the 1980's of getting us to focus on credit rather than money supply. which is one of the key insights. and than others picked up on it. i think ben was focused on the

idea that the normal economy has excessive credit growth. that gets you to an interest rate that is slightly -- tom: this goes back to ben friedman's moral consequences of growth. does it benefit the plutocracy? michael: i want to go to one of dalio saysacy's, ray the problem is the fed cannot create credit anymore. we are at the end of a long-term debt cycle. adam: i watched the dalio stuff you did, which was interesting. i'm one notch less pessimistic than dalio. he leaps a little too much to we cannot create credit period. now that we have worked off so much cleaning up of balance sheets and we have done some things to recapitalize the banks, i think we can create

credit. we do not have enough growth expectations. we don't have enough productivity driving and population growth -- tom: how do you jumpstart growth? very hard. the answer is you have got to reform our patent system and technology system. you got to do more public investment. you've got to liberalize. there are places that are not the labor force. tom: adam posen is in new york because of the pope. did you leave washington because of the traffic? adam: no, i love coming home! i love the pope. wtoere supposed to have the director general give a speech and we had to be shut down because of the pope mobile. tom: adam posen of the peterson institute. listed i did a check, equities,

bonds, currencies, commodities. urn after what we saw thursday with futures up 12. equities heal. nymex crude, $45.48. i'm watching the brazilian rreaeal. vonnie: this is bloomberg "surveillance. interview of the morning. janet yellen has delayed the commodities. perbrazilian real nears 4 dollar. we must consider the death of commodities and the deflation it brings. ruchir sharma is a portfolio manager at morgan stanley. collapset front on the of the australian boom. joining us as well as adam posen of the peterson institute. one more victory lap for you in your book "breakout nations." now what for india and other

emerging markets? ruchir: i think the real problem with emerging markets is that they are still suffering from the legacy issues of an over investment boom in china in the last decade and too much credit. we were discussing credit, the example has been china and the createdf debt china has over the last seven years has been unprecedented. that is difficult to work out in short order. of pessimism about emerging markets and ironically that is the only good news, and a lot of people understand this. people would speak about how this was the new world of dynamic growth and how emerging poised tore grow faster. now we are looking at a china, mosthere ex- emerging markets are growing less than the u.s. this is a defining change. i tom: -- tom: i will put up the number .ommodity index

on radio and television, this looks the same. an ugly chart. michael: everything in the short and medium term seems to turn on china. where do you see china going? are you in the jim chanos camp that they are going to blow up? the blowup not in camp, i'm not sure whether that is a good or bad thing. in the short term they will keep being able to extend and pretend over the crisis. i'm not sure that that clears the system. in 2008,at the u.s. you have the clearing of the system. in china's case it is more like cycles which delay the long cycle. the long cycle is still downward pressure on economic growth. when you pick up so much debt and we have run a lot of work on this, in each instance, regardless of what your reserves youor whatever buffers have, economic growth suffers in a major way in the subsequent 5

years after a rent up in that -- a ramp up in debt. tom: it has got to be a theme. can emerging markets clear their systems like developed economies do? adam: i actually disagree a bit with ruchir. my colleague is much more optimistic. it goes to three points. , we saw it inel korea in the 1990's and japan in the 2000 and taiwan before that, taking debt and using your way.ves and a constructive there has been a huge rebalancing in china towards services. overdrawn. data is there has been a slowdown in china but i think a lot of it is backward looking data being concentrated in the observable

manufacturing sector and less on the service sector. as theirno means government perfect, there is an intentionality here. governor zhou and president xi do have a forward-looking vision. his politics make it in the way of that. there is a constructive view. tom: i want you to touch back on this, do you have an optimism that the political system can address their economic challenges? ruchir: i think the point is even if you look at the instance he just quoted, and all those instances, you had an economic slowdown or recession before the cleanup. in 1997-1998. even the u.s. economy has had 12 recessions over the last century. i don't know why we are so afraid to encounter the fact that china is going to have -- i agree. i'm just saying we do not need

to get dramatic. tom: we will continue this coming upon on china, in about five minutes. we have a special tonight, 9:00 p.m., "china: behind the wall." betty liu in an important conversation. ♪

a most eventful washington.

the pontiff will visit. china willesident of visit. what a week for security in washington, d.c. a busy 10 days to say the least. quiet day for the president today. the week is going to round up with the pope's visit. the pope's arrival will lift finish of getting on worked on p return to phil mattingly. pontiff help president obama with? phil: there are key elements of what pope francis has been talking about that helps the white house agenda. i will talk about three, economic inequality has been a white house issue they've been trying to address through policy functions mostly blocks on capitol hill. climate change is another one. hisrought it out in

encyclical recently. the white house has tried to use that to push for it on the executive side. i want to talk about the last one. on friday he's going to be in philadelphia. he arrives on tuesday night. the president will go out of his way to visit him when he arrives. thursday, a joint session of congress and then he goes to new york city. he will seek to the u.n. and address climate change. when he goes to philadelphia he will talk about justice reform. , there is that push some bipartisan support on capitol hill. if the pope adds momentum to that, that is something the white house thinks they can move forward. vonnie: was their coordination on the pope's people and obama's people on what the pope is going to address? phil: on logistics, yes, on what he is going to address, no.

thinks very highly of pope francis and regularly talks about his one-on-one meeting at the vatican last year. there's caution. the white house is not aligned with the vatican on everything. the white house's with catholic teachings when it comes to y marriage.a there's caution. i talked to want official who made clear we look forward to what the pope has to say but we know better than to try to get involved. tom: i thought "the wall street journal did a great job. "i am a lapsed catholic but pope francis is impressive enough to make me reconsider." michael mckee of bloomberg "surveillance," that really speaks to the moment. michael: it does. i've got to ask you about the report, the u.s. abstains from the condemnation of the u.s.-cuba embargo. phil: what we are hearing is

that is a possibility. what it aligns with is what the administration has said here the president has called for congress to move for the trade embargo in place since the end of dwight eisenhower's administration. congress is not going to move on that so long as republicans are in control. this is a way to show that that is what they want. tom: thank you so much, phil mattingly in washington. coming up, our conversation without imposing and ruchir sharma on china. ♪

tom: we welcome you on a monday. we are not as fed-infected as we were last week. we welcome all of you with a more eclectic "surveillance." agency says iran is making progress in cooperating with the nuclear deal. the international atomic energy agency inspected a research building and says no equipment linked to atomic weapons was found. the agency will report next month on iran past nuclear work. the u.s. may accept u.n. consummation of its cuba trade embargo. the associated press says the

obama administration might abstain in the vote on the resolution. it asks that the embargo be lifted. the u.s. restored diplomatic ties to cuba in july but congress will not lift the embargo. semiconductor sector. more than $4.5 billion in cash and stock. not too small of a deal. tom: that is sort of a quiet monday. vonnie: it is going to ramp up. tom: the punch bowl was refilled thursday. you heard a collegial disagreement between ruchir sharma and adam posen. adam posen cited his colleague nick. ruchir sharma, what are you and the team looking for in

washington later this week. ruchir: i don't think that is going to be the main focus of the markets. they do not want any increase in hostility between these two power. president walking away thinking the u.s. is getting more hostile. tom: i read in "the new york times" every word of the china tensions in the west philippine , the south china sea. there is a military overlay to a good economic debate. important to understand how sincerely the national security group is taking what is going on in the south china sea and how seriously their allies are. the philippines is talking about navaling the subic bay

base, which they had pushed the u.s. out of. they are talking about letting japanese naval ships come to the philippines. tom: unbelievable. adam: think about how scared they must be of china. michael: we tend to think of these things as zero-sum relationships. how economically and or militarily important as china to the region and the u.s.? ruchir: in terms of a rising .ower it is always a threat in terms -- it is hard to handicap what is going to happen in the immediate future. in five-10 years' time, these tensions are going to increase. whether it happens after six months it is hard to say. a rising economic power has always posed a threat. what would you prescribe for the next administration? what is the policy that is the most beneficial economically when we speak to china? economically there are

still positive some relationships between the u.s. and china. you have to praise china for the way they stabilize their exchange rate. they did not try to write down a huge amount against the u.s. i'm worried if there's hostility the chinese could react and that will make tensions worse. i try to build on the g-20 piece on exchange rates, a u.s.-china investment treaty. an arms-control context, the chinese had proposed we will stop doing anything that threatens your critical and for structure. that is not going to satisfy congress, nor should it hear the chinese have been aggressive on cyber. with the soviet union, you can do business on this stuff with china. michael: are we going to do spheres of influence? adam: i don't think you can. this is where ruchir is right. there is a geography. the u.s. was so powerful in the pacific after world war ii, we

have a ring of allies all around china. the philippines, japan, south korea, vietnam, indonesia. to so it is very hard extract from that. the chinese want to say we should not be encircled and the americans say we are not going to forsake allies. one way is to be friendly to the chinese silk road initiative which takes them inland. tom: that goes to "breakout nations," is a silk road going to be built? ruchir: i think they will build it but the real problem is going to be how they deal with the economic problem. the rise of china from a military and economic standpoint , the next couple years the domestic challenges are going to be overwhelming as they try and come out of tough economic support. vonnie: where do you see growth in china in the next year.

did you take notice of the equity selloff? chinese economy is growing at a pace of around 5%. that might slow down over the next year or so. the average growth for the next .ive years is around 4-5% for-5% is average. within that it is possible you get a year or two where growth falls below that. is the risk i think for the global economy which we spoke about last time. we are in the seventh year of expansion.omic over the last 50 years there is been a global recession once every 8-9 years. we are almost due one. the next recession will be in china. that is the single biggest risk for the global economy. this is not to say china will disappear from the economic map. china is going to be the second largest economy in the world. we're looking at a tough transition.

people have been unprepared to accept that china can grow below what its government once it to grow. might bethat china growing well below the government target and might slip further as part of a transition, that is what the world has been unprepared for. tom: last question to dr. pozen. -- dr. posen. michael: do we get the global recession citi is talking about led by china. impacts.the adam: i don't think we get that. there's a good case to make but you look at the large economic blocs, the u.s. is being dragged from a higher exchange rate dollar but otherwise doing ok. europe and greece have stabilized. japan, goldman came out with a low forecast for japan.

i'm on a high forecast for japan. hir is right that they are in the fives but they will do stimulus to keep it above that. if we get the currency move we expect, china will get through it. i think you are not looking at global recession but you are looking at a return to global imbalances we saw in the early 2000's. tom: do you see a currency war? ofm: it has been a lot chatter until now. it is a question of how the u.s. and china get along on the yuan- dollar over the next few weeks. ru: ruchir, the indonesia piah is the new weakness. on the on pessimistic chinese currency, they need a weaker exchange rate. tom: seven or further? next 18to expect in the months the chinese currency will be lowered by 10% is reasonable.

the currency has depreciated significantly and they need a weaker exchange rate. tom: it is so important to our viewers and listeners -- what does the indonesian appeal weakness signal? ruchir: it signals a broad weakness. i'm a bit more optimistic on indonesia than brazil. all the commodity exporting countries are getting hit badly. in indonesia's case we are likely to see a better outcome than brazil or russia. i that mark -- i'm a bit more optimistic. tom: this was superb. adam posen and ruchir sharma. absolutely amazing. was it surreal not doing fed, fed, fed? michael: it has been bizarre. i'm off to memphis to take the pulse of america. tom: safe travels. we say good morning to all of you in memphis, tennessee. we continue market day.

right now, surveillance continues on radio and television worldwide. futures doing better than good. up 13. ♪

announcer: this is bloomberg

"surveillance." >> good morning fellow capitalists, 8:00 a.m. on wall street. i am pimm fox along with tom keene. news is volkswagen shares are skating in trading. the company admitting to cheating on u.s. air pollution tests for years, risking billions and potential fines and shaking investor confidence. we will take a look at other stories of the day, including where futures are trading. equity futures up 12. s&p 500. nasdaq up 24. dow futures are up 108. let's take a look at the bond market. a little bit of a rally. tenure being bid higher, 2.16 for the 10 year. 1%.ear, 296, a gain of what is going on in europe, looking at the stoxx 600, a

gain of a little more than 1%, 34 points. taking a look at europe, the ftse 100 is up about 1%. gain of 60 points in london. 10thn germany up about a of a percent. a lot of selling pressure in germany today having to do with volkswagen. volkswagen shares in frankfurt have plunged as much as 22% on the news that the company had falsified the u.s. air quality and pollution standards tests. this is the steepest interday decline in volkswagen shares in almost seven years. we got information from chinese regulators about the help of the chinese economy, the economy is performing a little bit better than many non-chinese participants. we will take a look at that.

the emmy awards were last night. time warner cable taking home a lot of little statues. mainly because of the success of "game of thrones." time warner cable won more enemies than all other networks combined for original programming. a big deal for time warner rather, time warner's hbo unit. keene, you have joined me. great to have you. i know we are going to be talking to brian of wells fargo that fixed income. i'm briefed by one of my producers. i must admit, it is stunning to see the success of a nonnetwork television show. my basic take -- pimm: i thought you were going

to tell me you turned the tv off after the giants. im: they were winning when turned it off. it just shows how all things change. there is servitude about anything -- pimm: you've got to swim faster than the current. tom: pimm fox with us this morning. welcome. bloomberg "surveillance," brought to you by cohen resnick accounting tax advisory. it can be hard to navigate, your business needs transformative advice to drive it forward. znick.com.hy at cohnre we welcome all of the on bloomberg radio and bloomberg television worldwide to our next two hours. jane foley will join us. nicholas economides. jonathan miller on why pimm fox and i cannot afford midtown

manhattan. brian rehling, fixed income strategist at wells fargo. good morning. brian: good morning. tom: i look at all going on in the fixed income world and i guess you have to adjust and recalibrate after what we saw thursday. is it lower for longer in this great distortion? brian: definitely. i think it has always been lower regardless of what the fed busted thursday. you have got to readjust your return expectations into the low single digits for fixed income. tom: pimm, you are better at this than i am. the idea that the relevant turn will stay low forever, does that mean people at wells fargo can never retire? brian:ou have got to readjust yr return expectations into the low single digits for fixed income. it is difficult.

forever is a long time. pimm: speak about what is going on in high-yield debt. the energy sector has been under pressure because of the falling price of crude oil. what about purchasing are looking out the stress -- looking at distressed debt for energy producers. brian: you got to be careful. we are going to see defaults as bank clients have to be renegotiated. you really have to be thinking about moving up in credit quality and i would avoid the energy space. that is just an area that is ripe for more paramount. -- more turmoil. pimm: what about alternative financials? tom: let me jump in, brian belsky adamant at bmo capital, the underpriced assets. so, tell us your thoughts? brian: financials are well capitalized. better than they have been perhaps ever.

you got the ability to clip coupon. those are probably good fixed in terms ofts income generation and growth. they are being hampered by low rates. if low rates are going to stay low for some time that is going to continue to be an earnings headwind. from the fixed income side, there is value. i don't see any reason not to -- tom: within this and what we saw thursday from the fed, we are going to play the parlor game and i'm looking forward to it as little as you are. ans idea of dividends as alternative to yield, all my readers say that is a bad conversation point. yet you have that every day at wells fargo. is dividend growth, cash flow growth an alternative to a yield coupon? brian: it is because it has to be.

clients that need income cannot find much in the fixed income markets at eighth and forced to find income elsewhere. you are taking on more risk. when the fed finally does start raising rates and we get a few great hikes behind us the clients are going to be able to transition back into safer assets for income and that is where those types of alternative income products could face some more significant headwinds. double line said they are starting a global bond fund that will focus on sovereign debt of major, developed an emerging market countries. what about the investment idea? brian: i do not like developed international. that is all foreign currency. we think the dollar is going to continue to slowly strengthen and the yield dispersion does not look attractive to us. emerging markets -- for the income play, a little bit longer

term timeframe if you are willing to put up with some volatility. that is ok but those areas are not overly attractive. tom: brian rehling, thank you so much, from wells fargo and fixed income. what a weekend. the most amazing article. pimm fox has the coolest -- for those of you on radio -- imagine a dining room table that is like 14 feet long. pimm fox has 85% of it covered with reading for the weekend. pimm: i thought it was my daughter's reading material. think the article on the philippines this weekend in the new york times. it essential return of the u.s. navy -- about the potential return of the u.s. navy to subic bay. the president of china coming to washington. tom: what reading, you this weekend? me but on caught

another level i saw a story about a library that had been opened in the area near calais where all the refugees have been gathering trying to traverse the tunnel to get to the u.k.. they've set up a library for themselves. i think this speaks to an issue raised last week by german officials particularly german saidobile officials who these people can be a big positive for the european union. they can become the workers they need because of the demographic issues. they are going to have to get their mind around that. tom: we are doing a backdrop as with an increase and what we will do. pimm: 100,000? the u.s. would try to take 100,000. tom: a movable story. reporting out of our european desk, "u.s. to take more syrian

refugees as leaders debate quotas." limited i did a check, a pimm fox data check with a complete equity view. pimm: of god. tom: futures up 11 on the s&p, dow futures up 98. nasdaq futures, i never quote those, up 22, .5%. good nasdaq. we never do that. the vix closing 22.28 friday. west texas, $45.83. gold down $7. 1.2046.en, real weaker, watching the brazilian real. ♪

>> this is bloomberg "surveillance." andloomberg television radio. oil prices have gained in three of the past four weeks and are on the move this morning. julie hyman joins us with more. are seeing oil move higher this morning after data showed u.s. drilling decline on friday, cutting the number of rigs in operation for three weeks. oil is down 50% from a year ago amid the global oversupply that

goldman sachs predicts may keep prices low for the next 15 years. joining me to discuss is the senior market strategist at our data futures from the cme i chicago. we are seeing some bullish sentiment on the part of hedge fund managers. the net long position is the highest we've seen in2 months. is that caused for optimism? optimism, my year on target is closer to $50. the fed's hesitancy caused concern last week. you have push and pull with regards to supply. u.s. production peak about nine .5 million barrels a day. there is a lot of concern that will boost output. i look at a key level support around the $43 level and that

will end up over $47. with opec increasing production we are going to see rent crude come down and the u.s. curbing production start gaining on that. that's where i'm looking at prices going. julie: is there a way to benefit from the closing gap between brent and the bti in terms of trading? are you see people trying to capitalize on that? think once people start grasping the story that u.s. production has peaked you will see traders position in that we are seeing money managers come into the long side of west texas. of not being optimistic as the global economy and starting to sell brent. more online, opec continues to struggle with their production efforts. you will see prices start to close in on the gap.

selling like a brent crude and buying west texas against it may be a good strategy. julie: phillip streible, thank you, talking about oil and closing the gap between wti and brent. vonnie: julie hyman, thank you. just to give you this quotes, wti at 45 dollars $.78. we've got former mexican president vincente fox coming up . we talk with 10 at 1:30 eastern. this is bloomberg "surveillance." ♪

tom: good morning. on bloomberg radio and television, we welcome you as we consider economics, finance, investment, international relations and the new york giants worldwide. 2 games in a row. we thank you for your notes. arthur levitt is being treated and resting well. on the markets to get you started on a monday, joining us live in studio from the first

word breaking news desk, bill maloney. markets in the green led by gains in france and italy. germany's dax higher despite 21% losses in volkswagen. gains in u.s. futures have accelerated over the past hour. earlier st. louis president bullard said the fed will have easy policy over the next 10 years u.s. 10 year yield bounces. crude futures above the 50 day moving average after losses friday. on, the economic front at 10:00 existing home sales estimated at five -- 1.5 million. atmel.semi agrees to buy alibaba's look up ends. lennar beat estimates, shares higher by 3.4% premarket. downgrades, atnd

deutsche bank, d.r. horton cut to hold. aircap raised to buy at bank of america in. lululemon raised. goldman sachs raised to outperform at oppenheimer. i am bill maloney. tom: greatly appreciated. to your breaking news over the bloomberg terminal, look to go for that. someone we speak to always, very ofortant, jane foley rabobank. the brazilian real, the indonesian rubiah. what is the -- rupiah. what is the significance of a real 4-1 and how fast we got here.

jane: they have politics keeping the markets going but they also have week commodity prices. iron ore is weak. there is a supply glut. all of the -- although there's massive announcements from some big miners of job cuts there is still no sign that the price of iron ore is chilling any lifting. they've got politics, commodities, dollar-denominated debt. they are worried about the fed. it is all coming together in l.rms of brazi we had the credit rating bad news as well. tom: when you look at the movement, i put this question to adam posen earlier, the idea of a currency war. have we not even seen that yet? is that something to come as nations adjust to janet yellen?

fiorina there is a two-pronged thing about the currency war. and wealked about brazil can talk about other commodity producers, indonesia, south africa. a huge amount of countries and particularly emerging markets countries. what has happened to them this year is their currencies have been dragged down because of the weakness of commodity prices. this means many of these countries are at risk of inflation. they do not want to play the currency war game. they do not want the currency -- some central banks are really tied between a rock and a hard place. do they put interest rates down to stimulate growth or hike rates to prevent currency weakness? bringing in more inflation. these commodity producers particularly in the emerging world are not engaged in currency wars. the currencies that might be, of

ecb.e, the this is a prime candidate. we saw week growth in the eurozone. the euro has been firm recently. perhaps they would want the euro weaker. that is one reason the market is entertaining this discussion, when the ecb could step up its qe program. pimm: the u.s. dollar is the world's reserve currency. have the chinese central bank and the chinese economy, have they hijacked u.s. monetary policy? think so.n't if we look at china what we have is similar to japan and the eurozone. very weak inflationary pressures and weakening growth. that is not an economy where they want to have a strengthening currency. we've seen in japan and the eurozone and we have seen there's currencies weakened over the last year or two. for china because of the de facto peg, the renminbi's defective -- de facto peg

against the dollar, it is being dragged up. that is not right necessarily for an economy that is weakening. you understand why they had to devalue and if there was a looser -- currency would slip even more. it's possible that we will see more weakening in the renminbi over the next few months and that would tie in, properly, i would argue, with a weakening economy. tom: jane foley of rival bank -- of rabobank. there was a summary of the discussion between developed nation currency dynamics and the excitement and the weakening that we are seeing in the emerging markets, including brazil and the indonesian rupiah. a dollar brazil, 3.9409, churning here.

much weaker than what we saw thursday as well. 59.ican peso, 16. the most interesting week, pimm fox and tom keene on bloomberg television and radio worldwide. ♪

>> this is bloomberg surveillance, i am vonnie quinn. almost one quarter of folks like an's value has been wiped out. punishing them today, shares are down by as

much as 20%. they admitted on friday that they had been cheating on u.s. pollution tests for years. $18 could be fined almost billion. in greece, the past and future prime minister returns to power. alexis cypress's party took the vote. .hey took 35.5% of the vote they will join the new democracy party. >> from tomorrow, we raise our sleeves and work with the working class to lift the sun up over our homeland. social justice and prosperity of our country, to be able to have a stronger and fair greece, and make us strong again. goodbye. >> he came to power to end followty and now he must through on what he agreed to.

another political outsider is rising in the polls, carly fiorina has risen to second poll of a new cnn voters. she is at 15% from 3%. >> it is cozy in our radio booth headquarters on lexington and 59th street. how are you? for an aircraft hangar, it is cozy, the amount of space. kitchens in manhattan, are you kidding me? commonwealth -- a financial network to jd power ranks highest in satisfaction among investment firms four times in a row. visit commonwealth.com.

again, visit commonwealth.com. in a pre-fed meeting, we had a meeting with steen jakobsen. he is very opinionated on what all central banks should do and also the fed. he is back with us after the actions of the fed. good morning. >> good morning. here that we saw, this is janet yellen pushing against markets. in which way are they pushing against markets? me, at least, it is surprising that they added the international side to the for the reasonms of not moving ahead with the fed hike. that is making a murky water out of the forecasting that they are

doing. certainly, we saw that he moved down. the international aspect is interesting, because as you know, the fed generally doesn't comment on international conditions except that it will dictate the dollar rate. they do have a mandate that has huge-- for me that was a thing that came in. you are attuned to the idea of currency adjustment. is that the only path for these economists? is that what will be the tool in the toolbox? >> i think so. the federal reserve is telling a weakerhey want dollar, not a strong dollar. they know the path of least resistance is that if you think about a dollar-based economy, where commodities are priced and

transacted in dollars, where 85% of all new debt issues have been issued in dollars, it is pretty clear to everyone that the one thing the world cannot take it -- take right now is a stronger dollar. they are playing bold in holding that view. that would lead to slightly better commodity prices and countries coming back online. possibilityhe remains for a weaker dollar because central banks are not going to do anything to help us. you areu writes that preparing for a recession on the first quarter of next year. >> yes. the federaln reserve hiking rates is closing very fast. they argue that it has to do with china, the dollar, the emerging markets.

if you look between now and december, i don't think any of those parameters will change. china will not change, the dollar will be plus, minus 1%. thathe emerging markets -- is a given. having said that, don't forget that the u.s. economy has been 2.25% forwo point -- every quarter. we have a negative drag from the oil sector that will come down negatively this year. has two reply to the and -- on the economy, will continue to borrow at the that they have, especially on student loans.

they are feeling the pinch on high interest loans. both in investment grade and across the board. tom: wander in here with your camera. chart up sohis radio listeners can see it. up, up we go. i don't think most of america understands that we have made it halfway back. pimm: yes. there was an anniversary recently, 1985 plaza, right? tom: help me here. with the greece election, with the social challenge of migrants, where is a good place forth the euro? do i want a euro under parity? >> no, you don't. you want the euro to go the

other side if you want global growth. you want the u.s. to regain some traction. the top line of s&p 500 companies come from earnings. so the economy is far bigger than the sheer you use for calculating gp. there is a lot of slush profit. so you don't want that, what you bank isich the central always trying to achieve, is a stable dollar and euro. giganticis running a -- despite having improved. more than $200 billion deficit. a strongerake dollar, and i think ultimately, that is what will happen. the u.s. is at the end of the cycle. tom: let's come back.

that was steen jakobsen. is 1.20. 12 -- o is vonnie: good morning. it is time for a morning must-read. meme's.about these are the pictures that overlay text, they are said to be a cultural issue, not to be docked. the article says they are a big business, this summer, you see again tracking down anyone who had posted a meme called socially awkward penguin. , readingan is with me up on this as well.

people are actually starting to go after copyright money for these. a good thing in one sense. right, it informs the cultural conversation to some degree. i'm not sure how much it brings it up. but the bigger problem is how do you people he's -- how do you police this? it comes back to music and how you monetize that. i don't know that anybody under -- how of 21 years old do you find the source of the meme? what if it is one person's photo? >> anyone can make one, it doesn't have to be produced. and it's can be shared. there was an example recently --ause of straight ooututta

there were many meme's made because of that. i would advise everyone to take a look at the financial times. ♪

morning, this is

bloomberg surveillance. let's take a quick look at the market. futures are up 4/10 of 1%. we are starting the week on a positive note. thanve s&p futures up more 25%. the u.s. to year yield is up, is a change their higher, we have crude oil 48.85s up more than 2% to a barrel. i want to bring to your attention the dollar index, that is up almost .7%. let's get some top headlines. a short time, folks like an's value has decreased.

volkswagen admitted on friday that it had been cheating on u.s. pollution tests for years. they could be fined as much as $18 billion. alex -- alexis tsipras one the second victory in eight months. , andtook 35% of the vote it will put them in a coalition with the new democracy party. >> from tomorrow, we raise our sleeves and work hard to restore the working class. for a grease of equality, social justice and prosperity in our country. to be able to have a stronger greece after the past four years. goodbye. he promised to end austerity, and instead he must continue on with it. another political outsider is

rising in the polls. carly fiorina is in second place among registered voters. she is up from 3% to 15%. samsung will begin leasing its galaxy phones in the united states. for the most part, wireless carriers in the u.s. moved away from subsidizing smartphone sales. milestone last night at the emmy awards. viola davis was the first african-american woman honored for winning lead actress in a tv series. time warner dominated the award ceremony. -- also one for being a cross-dresser in transparent.

down with onesit of china's top officials, that is tonight on bloomberg intelligence at 9:00 eastern. up. again, dow future is update atg to be an least at the start on wall street. you are listening to bloomberg surveillance. ♪

>> good morning, bloomberg surveillance, and bloomberg radio worldwide. the patriots last night, more than impressive. good morning bloomberg in new york. and all of you with our television across the nation on to worldwide. bloomberg surveillance is brought to you by invesco. have you considered all of your investment alternatives? we may help you achieve your goals, find out more at invesco.com/alternatives. and i were talking

earlier about a great new york times article on the philippines treatment. us, heoevinger is with is talking about his imf experience. we were talking to adam earlier is arguably the china -- up there now. he is optimistic on china. do you share that? >> thank you for having me. what has been saying about china makes sense. there is a lot of pessimism in the market. is due, and some of it has gone too far. his main point is that all of the data is focused on the manufacturing sector, and that is the weakest part of the chinese economy.

if you look at services, the fastest-growing part of the economy, it doesn't look that bad. tom: the picture at the end of , theovie, doctor zhivago from 40 yearsmage ago, our big infrastructure projects -- that doesn't begin to describe the new china? biggest the second economy in the world. china is going through a painful adjustment. it is painful for china, investors, and what we are seeing is the slowdown in investments in the property , but aand manufacturing pickup in services. that is what needs to happen so china can reduce the excess in their economy. pimm: i wonder if you could

speak a little bit about the dollar in this context. the fed is trying to create inflation, they haven't been very good at that so far. don't we need growth? i don't see any kind of turnaround in the kind of investments -- the investment led growth that we have been seeing in china over the last 10 years. is a slowdown in the property sector, that's will repeat demand -- will keep demand for commodities relatively weak. but it will create conditions so china can grow. tom: if the two presidents were address that china's banks are just wards of

the government, how do you respond to that? what happened in the stock market this summer braces a lot of questions about chinese leaders stated commitment to let the market play a bigger role, and it raises questions about their commitment to letting their regulators do their job and manage the market in a way that we do in the u.s.. pimm: let's turn a little bit too federal reserve policy and the context in china but also sometimesreducers who -- somehow need to turn that into money. china which is selling treasuries, so they are diversifying their holding. speak about that.

>> let's talk about treasuries. it is not surprising that china and you mention oil orders, but in asia, reserves are going down, they have been going up for many years. the important thing for investors is to think about what driving the sale of dollars by china's central bank. china still has a trade surplus. thoseas been driving sales is capital outflows. as china sells dollar assets, the rest of china is buying dollar assets. investors are not going to hold , they have a much greater risk tolerance, but the main point is that china is taking with one hand and giving

back with the other. >> with this be a moment for investors to look at what has brought the under own? i'm thinking emerging equities and market currencies. >> a great point. they are massively underweight. what china is doing is pulling back restrictions to invest overseas. can be verystors comfortable in investing in emerging markets. tom: can they do that now? >> to a limited extent. is a bigwe will see rollback in other restrictions. you may know the answer. -- dos the dumb question they have a sovereign wealth fund? they absolutely do have a

sovereign wealth fund. it is called china investment corporation. all kinds of funds. tom: is it visible? is it like the fund of abu dhabi? do they have a prospectus? corporationestment is a lot more transparent than china's central bank. they have a model but they have a long way to go. tom: help the republicans and democrats listening today, what you do so well is that you have academics, you have the imf toward duty, your treasury toward duty, you have done it all. what is the republican backsplash --

republican\democratic view? a lotna is going to take of lumps going forward. what all winners of presidential elections have found is that when they get into office, whatever they want to achieve, they have to work with china. tom: let's leave it there. david loevinger, please come back. in washington, i have an jfk, pluslanding at or minus an hour around the pope. pimm: so what does that mean? said, one day to get to your place or can we use the surveillance helicopter? swarovski, that was a deal

that happened this year. basic andrew's, he will be meeting with the president. the pope is meeting with the president tomorrow. it was something to see him sitting with fidel castro. pimm fox and tom keene getting you started. it is such a joy to do this. thank you for your many notes. i can't tell you what a joy it said, anddo fed, fed, more fed. inwill do that again december. up, we are out by four basis points. watch, a brazilian royale

, 3.98 right now, we will get a floor print on that. will be a headline across the bloomberg terminal. stay with us. ♪

tom: good morning, everyone.

tom keene with pimm fox. we welcome all of you on the brady -- on radio and television. pimm: it is cozy. how about cozy and currencies? tom: i like that. greece, thatto will be my first question for professor economy d's. don't weared why i , it is because i am so vain i need thicker lenses. we are brought to you by interactive markets -- interactive brokers. in over 100 market centers in 24 visit iv kr.com.

we thank interactive brokers for their support. the futures are now up 10. , and againowthrough , we areilian reality focused on that. we are bringing in nicholas idies. he is definitive on the complexities linking greece to the domestic greece experience. pimm: you are getting emotional there. tom: like the greek people. are the greek people born out by modern democracy? have been tired of the whole situation. it is like posttraumatic disorder for greece.

day after day, they hear that news, they had put all their alexa cyprus in january and he did a huge u-turn. i thought of mr. papandreou , where is the culture in the generation of follow-on to him? unfortunately, he was a disaster to greece. corruption.onalized aftermath in the greece of him. paradigmtely, the new of a liberal democratic economy has not yet emerged.

pimm: we have been speaking for last several weeks about the migrant crisis. refugeesotos of syrian landing on islands, greek islands. what about the migration of greeks from greece? yes, people have been leaving greece as much as they can. especially well-trained people with college education. they leave and go to europe. some of them have shown up here in the united states, some in silicon valley, but there is a significant drain of educated people. on the other hand, there are

lots of people who cannot leave. and they are getting more desperate. pimm: how does an economy faced with the challenges, the political challenges, how does theconomy do that without skilled labor that is necessary to create the economy to pay this all off? people whow, the left, they cannot find jobs. if the years from now, greek economy recovers, they can come back and things will be different. that'll be good for the economy if they have experience abroad. tom: that would be nicholas idies. we are on bloomberg radio today with pimm fox. professor, you were invented under the finance minister for greece. is it feasible that the new

ipris could -- new ts be -- like yourself? >> i think it is unlikely he would do that. that with theee prime minister, who ever appoints somebody, one has to agree that certain things need to be done. he signs the agreement with the europeans but at the same time, he said that it was a product of extortion. tom: what is the number one thing of that extortion that greece must do in september and october. a very significant increase in taxes and cuts in pensions. the defense sector of the

greek economy and the spending on the military in greece has been a subject of intense criticism. what is your thought? greece faces a significant adversary, turkey. much in company, very -- is this a real adversary? unfortunately, it is a real adversary. it is a serious problem. greece has spent almost as much in militaryd states expenditures, but this doesn't really show the full extent of the problem. when the united states spends on military, some of it is on research. greece just buys weapons from abroad. it is a very expensive thing to

do. subways from germany, missiles from russia. any possible thing you can imagine. it is a problem for greece. tom: let's bring it back to arianics, mohammed all speaks of a workout that must have a devaluation of greece currency, do you agree that it is required? to go back to the euro down the road? >> if greece went to a new a, it would be valued dramatically, prices would triple in real terms, and therefore it would be a huge crisis.

presente, in the situation, doesn't have options. the only option is to receive money from the europeans at an interest rate of 1% and do what they say. there is also the additional issue of the huge debt that has been accumulated over the years. this needs to be restructured. tom: how will it be restructured? when will that occur and what will be the motive? not completely clear, most likely this fall. the best solution would be a restructuring that would 100gate the maturities to years, far away into the future, so the present value of the 50%-60%bt would fall by , it would be manageable.

greece has a craze. , it doesn't pay interest for a number of years. that number could be extended to 20 years. that would give greece the opportunity to grow. pimm: professor, the last question. you have a website. if that was going to be a picture, what kind of picture would it be to describe greece? >> business has been hard hit because of the capital controls. imports and exports are hard to do, the retail sector is suffering because people can only take 60 euros out of the bank. and greece has significant problems. tom: thank you so much. he is truly one of the world's leading network

economists, someday we will have you been to talk about networks. >> i would be very glad to. tom: futures are up 7%. nothing matters to me like 3.97, with all of the uproar of the fed, we are looking at four, that is down 10,000. brazil is a source of emotion to say the least. ♪

tom: good morning, bloomberg surveillance on bloomberg television worldwide. the future is up 7%, i am looking at a brazilian real. pre-marketooking at movers. what are you looking at this morning? thehere is a big deal in semi industry. mel forgreed to buy at

$4.6 billion. it is larger than their own market value. you can see the shares are rallying by about 14%. premium them we have seen in some larger deals. large year for semiconductor deals. plunging, down 22%. diversify, trying to mel is thes -- at biggest customer. movement, thathe is the space they are trying to get in. julie: there is some risk in being reliant on a single customer. also this morning, we are watching gopro.

barrens wrote about gopro over are downnd, shares 4.5%. this is not a new criticism, saying it is a one-hit wonder. says it could become a takeover target eventually. is one we are watching, they are coming out with a earnings that beat estimates this morning. those shares are up by nearly 3%. most builders specialize in entry-level or luxury, lennar is more diversified. >> i would only assume that part of that is because the housing market is doing better, is that fueling this? julie: yes.

lot of builders have been doing well as a result of the housing market. overall, it has been doing pretty well. the concern is what happens when rates go up. we will see how the market withstands that. >> coming up later, china behind the wall. one of china's most highest ranking officials, tonight at 9:00. this is bloomberg surveillance on tv and radio, and on your tablet. ♪

tom: good morning, bloomberg has taken a monday pause. i slept from something in the vicinity of 8:00 friday night until 10:42 saturday morning. just trying to catch up. pimm: just catching up.

tom: the fed stuff, and all of it. longer,ecause he had a more thoughtful interview. our guests matter like arthur levitt. want to talk about brokers, it is a huge thing for all of global wall street. but first of all we have to talk about the labor department, their investigation of the new york giants. it is not going very well. >> no it isn't. i feel sorry for tom coughlin. that is where the blame must live. it was almost predictable with the flow of the game. coughlin must be hanging their heads today. louder than i

have ever heard before. tom: one more question on football, to our global audience, they don't know the culture that pimm fox grew up with as a kid. thing, of theural giants sticking by their people. new yorkarming the giants right now? >> no. they benefit from the team, culture and tradition, it outweighs these momentary blips. alongl remember these with what happened last week, but the class of the new york giants will not be hurt one single bit. can i give them a detail? falcons, 24, the giants, 20.

maybe -- will go back and read the book. the book was called earned the right to win. tom: there we go. about many oftalk the topics, the heart of the security exchange commission. the labor department has a fiduciary standard for investment advisors, and it seems common sense to bring a fiduciary standard over to revenue producers at firms. they are called investment brokers. should that occur? yes, having been a registered tens ofhaving managed thousands of registered reps, it is in frequent that a customer selltes an order to buy or

, and the broker doesn't say, that is interesting, have you thought of general motors instead of chrysler -- there is always a dialogue. it is the nature of a broker. so to say that the sweep of into silent workers order executors, it is totally fiction. they are part of the process. there is no reason in my mind way broker should live by it easier standard than an advisor. a broker touches more retail advisors -- retail investors they and an advisor. i think this rule is very necessary. the republicans will try to overturn it by attacking it on to an appropriation bill, but the president and the secretary of labor feel so strongly about there is i now think better than a 50% chance that

the bill will be enacted. pimm: is there a better than 50% chance that joe biden will run? >> i would give it about 50%. he appears to be moving in that direction. it is a question of timing rather than the weather. you've got to get everybody going. >> no, i don't think it is good. when you enter a primary at the last minute, limited resources and particularly a candidate with tarnish in his record, having run for president twice before, it is disruptive to the party, not good for the party. bad for the party's hopes to pertain the white house. tom: arthur levitt, we are looking forward to you being the new head coach of the giants. arthur levitt, the former

chairman. , am watching brazilian real maybe it is a part of 3.97.ities, pimm: you are looking for the 4.00. suggest that they are beginning a challenged week for emerging markets. they need to find a bid. interesting point, malaysia. there was a huge downdraft when there comes to foreign currencies. everything from oil to other him points. has a uniquea feature, opec or not opec. futures are up 7%.

higher, 2.18% are . pimm fox and tom keene. we have to get the markets open. good morning ♪.

david: here are your top headlines. the u.s. is dramatically increasing the number of syrian refugees who may enter the country. john kerry says the u.s. will accept 800-5000 refugees next your and 100,000 2017.

over the last four years, the u.s. has accepted less than 1000 refugees. iran is making significant progress with the nuclear deal. a key research facility and the inspectors found no equipment link to atomic weapons. a report on iran's past nuclear war. pope francis will celebrate mass in cuba today before heading to the u.s. tomorrow. he met with fidel castro and his brother, role. switch --f did not me meet with dissidents there. carly fiorina is searching for the latest cnn poll. 15% up from 3% in the last debate. donald trump's lead has slipped by eight percentage points in the last months. we now go back to tom and pim in the studio with bloomberg surveillance.

tom: good morning, everyone. good morning, worldwide on bloomberg television and bloomberg radio. markets are opening in the united states and they bring on a closing 22.28. to 15., 12, up we have come all the way back near the two decade average of 22.2 on the vix. the opening bell brought to you by sei. imagine your asset management arm's a infrastructure as competitive advantage, let us show you how. we thank them for their support. no print on the vix yet. is not worried about the traffic this week. the traffic in philadelphia or washington.

david: i will deal with it on a train a little bit. tom: what is the traffic on the equity markets this morning? david: chips. this is all chips. absolutely. products, other the internet of things, as they call it, up 13.5% at the moment. semiconductor, talking cash and stock at $14.6 billion, or $10 per share. electronics discussed about e: 50 per share according to people familiar with the matter. we will see if this is a one and done kind of situation or if there is a counter bid. fiat chrysler is down 1.6%. wages for all the automakers members will rise under a four-year contract.

this provides the first raise for employees in nine years and closes a pay gap for second-tier workers. that stock is down 3.7%. their biggest customers. in, which admitted to cheating on u.s. air pollution, vehicles affected by the issue. the german carmaker accounts for 17% of the annual revenue. tom: one of the best parts of the show, i would never have thought of bert warner, affected by volkswagen. just making the connection. up 2%, the fiscal third-quarter earnings the analyst estimates of the bloomberg survey. growing demand at the u.s. economy expands. paypal is up 2.2%. we have got a housing

numbers coming out at 10:00 a.m. i got up early. paypal holdings of 2.3%. lululemon athletic up 2.8%. thank you so much, david wilson. if you have been watching what i have been watching, there is not much news, but three and four days of euros in. i put out a chart to bloomberg radio. what is your research inside this morning on why it continues to weaken? >> you have to look at the opposite side of the coin, the u.s. dollar. if you look at the dollar index, it is higher than it was before the fed decision last week. though we got a hold in a dovish statement, the dollar is still strengthening and that means paying for markets like brazil.

what is the significance of 4.00? >> even before getting to that level, we are starting to see real market fallout from the week resulted let me direct your attention for a second. specifically to general shopping. let me direct your attention and say, you with the bow tie, shut up and listen. >> let's take a look. general shopping, a mall operator in brazil had 66% of its debt denominated in u.s. dollars. it is offering some bondholders a haircut of 40 9%. that speaks volumes. tom: where did you get the research? you kill with this stuff.

would you like to sit together? tom: this is important. the bond is at 100 p or are giving it away this morning. you know you get to 18 or $.21 on the dollar. continue. >> we had some distress on commodities related bank receipts or bank receipts political the huge scandal there. the first time we are seeing a distressed bond issue based purely off of currency risk. no commodities related to this. it is just based on the dollar, indicative of the kind of pain coming to emerging markets. we know they have been on a dollar bargaining spree. it gets like third of its revenue coming from brazil.

saying, we will rethink the whole thing because this is not working out as planned. alloway, a font of wisdom on the dow. and we do thiss, with christopher. what do you have this morning? joysknow you are a man who -- who enjoys technical analysis. policies technical analysis machine. what is different this time is it is a rare downward sloping net. this suggests a new long-term and potentially powerful bear market has started, one that should end below the 2009 low.

you celebrate the candle charts. you look at the s&p 500. you see this compression of range. it is like a wedge, a rising wedge. i'm putting the chart out the dow want tracy to come in here so i want to get through this quickly. here is the dow with a set of we bounced upd beautifully against that moving average here. full disclosure, i do not have an opinion but i would say, it is seen as a chart that is ugly. tracy: you start to get all things that are weird. we have an odd head and shoulders formation. return this version is very low. she could bring this to a complete halt.

tracy: also coinciding with a big selloff. tom: they played for in her no other than iron resolve. she was going to go in the direction of -- tom: finish up. tracy: we also have goldman sachs, out with a note today saying return dispersion is ultralow in the s&p 500 right now. this make it hard for stock pickers. a lot of good technical analysis. look for that. article, but one out of four or one out of six oh's, it usually has a killer bloomberg terminal chart, which gives you some technical analysis. we do not have an opinion on the -- buy, sat -- buu

hold, sell. we talked about 3.97 in rio. that will be well worth watching through the morning. the weakness we see this morning. ♪

tom: good morning.

way past my bedtime. david stood up for each and every enemy. a recap of a most important night for all of television. david? david: last night, the standup winner was hbo. awards.k home 43 a four-part series based on the pulitzer prize-winning novel. outstandingemmy for actress in a drama. john finally won the prize for joining us now is lucas in los angeles. good to see you. let's begin with hbo. >> the last time they won the best drama prize, which is the most important, 2007. the last hit that combines critical praise with the sheer global popularity game of

thrones does. bigger this because of how easy it is to watch everywhere around the world. samberg, giving away his hbo now login and password, i assume that was some sort of gimmick from hbo. what last night means for them. classic will give hbo the equivalent of street credit. you hear constantly about netflix and amazon. showtime and stars, that he does rivals. year in and year out, hbo finds a way to dominate the emmy awards, which lets it put out his posters and marketing. then you have creative people responsible for the shows talking about how they could not imagine the show being anywhere else. it helps them with the creative community as well.

pimm: i noted amazon won an award last night. what we're seeing here is the ground shift. what does it mean for them? >> it means they get to keep , and zhou put death previously worked with hbo. she worked on six feet under. partnerd up finding a on amazon willing to give her creative flexibility she wanted. she had been very vocal supporting amazon. jeff bezos got one shout out. for a company like amazon which has watched netflix, it got a lot more attention to more eyeballs will be brought to the service. >> one of the most moving.

what did she have to say? >> yes. she not only spoke passionately during the show but also after the show, her years of unemployment and then finally culminating in this win. >> thank you. and coming up, peter, former head of the omb. ♪

tom: good morning. a gorgeous weekend and they here in new york city. to philadelphia and washington for a visit by the pope and then a much -- much more going on and busy season. pimm fox and tom keene, we welcome all of you on bloomberg radio worldwide. thank you for the many comments about this experiment of radio and tv. experiment. i don't know lower doing. my people do not talk to their people. no clue.

bloomberg surveillance this morning. toare brought to worldwide help your business be in a position of strength. wisdom.com. we think wisdom smith, and brown, for their support. t-mobile at work, switch or business to a carrier today without question. the most important interview in new york city and i would suggest for much of overpriced real estate america. jonathan miller joins us. give me an immediate update coming out of the summer through september. is the real estate market in san francisco, boston, new york, and a few selected geographies?

>> it is the same story except a little bit worse in the sense , no inventory, we are looking at rent at record levels, very tight. example, new york, brooklyn, manhattan. an upper trajectory to credit conditions really have not changed much. tom: cash buying? where we live, you see people walking around with suitcases with $100 bills coming out of them. is the stereotype true? >> it is still that story in many markets, for example new york, 51% still at or above. that is conducive to a cash fire environment with limited inventory tom:.

those -- tom: those suitcases are either -- you. let me put it to we talking about construction and last week we had a story that had to do with high-end real estate, in particular condominiums or prices are out of sight. 2202 $2600 per square foot here. -- the big middle, what is your estimate for the big middle. classes underserved by inventory. you were talking about 2400 per foot. if new developments could come on the market at that lower price, they would be snapped up quickly.

average, new development, hiring market is closer to 3000. if you look at the super luxury market, it is 4500. that is what tom spent to do a renovation. 2.5 feet. >> way to think of new development is we are building a new development that does not match demand. there is a massive disconnect needed and what is practical to build. it is largely due to record land alsos across the u.s. and this convergence where everyone is building at the same time a similar project so we have a high cost of materials and labor. developers can only build at the top of the market and that is the disconnect now. xhb. i was going to say

if people were going to build the home sector, exactly. it is up almost 8% so far this year. whether you live in altoona or someplace in california, i rock, i are --ng i urge you to read mr. miller's great work at miller samuel, which will show you the graduate 30. that said, how much are we going to spend per month on rent and owning five years from now? >> i think right now when you look at what is driving rent price inhe average manhattan is about $4100 per

month. reasonre is no obvious for rent to taper off in a meaningful way for the next several years. what is driving it is tight credit record employment growth in the new york city metro area specifically, and a robust economy. we have all these drivers in and we do not have the housing stock matching that. it is going to be strange. san francisco, silicon valley, all of that. tell me about boston. you have got a last-place baseball club. tell me about boston. >> i am more of a yankee fan. i would rather talk about new york. pimm: he wants boston, for heaven sake. the same it is exactly situation.

credit is national. tom, i annoy him for the last five or six years, beating the same drum. it is really creating a disconnect in what the consumer needs. tom: can policy change the disconnect? >> only if it is targeted for economic fundamentals like better employment and wage growth, household formation. aside from that, we are really seeing the result of policy that has been set, a low rate policy that created the distortion in the housing market. tom: thank you so much for sending it in an e-mail peerless and you altoona, pennsylvania. pimm: there you go, i learned that in sixth grade. thank you. jonathan, we talked about policy and money.

short-term u.s. bills, maturing one year, yielding negative or two basis points. will this just be with us forever? i feel a queer in a low rate environment for a while even if the fed raises rates. it seems to me it will be at a glacial pace. theink we are in this for long run. we continue this distortion. i do not know if it helps housing. yous interesting because have the homeownership rate dropping because credit conditions are distorting, keeping first time buyers from coming into the market. haveg for the day when we rational behavior in the banking sector. you so much, john miller in real estate. really focus on the major

cities. i thought it was interesting, boston, just like the others. york, all ofnew you on television, worldwide, it is something to see some real estate dynamics in america. it has been a topic robert shiller four years. i spoke with professor shiller any number of times and he has a new book out, a redux of his terrific work with george eight perloff, who happens to be married to janet yellen. tomorrow in with us the 9:30 hour here. it is a celebration of work by the laureates. would you explain why carol massar gets an air purifier fan deluxe? because she is carol massar and she is great.

tom: i have a 442 page contract. stay with us. bloomberg television and bloomberg radio. it is monday and there is more. ♪

>> welcome to the bloomberg market day. the world passes largest automaker faces a full sized

scandal. full swag and admitted cheated on the u.s. it visions test which could be daunting to clean up. alexis tsipras should remain in power but economists say the government has a whole new set of challenges. we will sort through mixed messages. and hbo cleaned up at the emmys last night. did victories strike a blow with cable? ♪ brandon: good morning. we have julie hyman, our senior markets correspondent, who will break it down for us. julie: a larger than estimated drop in existing home sales in august, falling 4.8%. that is month over