at volkswagen. we will bring you the latest. matt: china's president arrives in the u.s. for a state visit, stopping first in seattle, where he will meet with technology and business leaders. we will discuss the hot topic on the table. mark: a big victory for brian moynihan. we will look at why most shareholders decided to ignore critics and let moynahan remain ceo. ♪ mark: good day from bloomberg world headquarters in new york. i'm mark crumpton, here with matt miller. matt: let's take a look quickly at the markets. just two hours to go until the close of trading. we are witnessing a selloff a littleay, after

recovery and a brief respite from the red arrows yesterday. down 255. the nasdaq off more than 2% right now, 4726. take a look at treasuries. we can see people seeking safe haven, investors seeking safe haven there. or at least they are buying treasuries across the curve. the two year yield is down to 6.7 -- .67%. mark: oil crude declining to dell, iran advancing in a deal today with nymex crude down, trading at 45.57 per barrel. scandal isgen spreading worldwide. the company said today that as many as 11 million of its diesel cars around the globe were programmed to cheat on engine emissions tests.

the ceo offered a public apology. end thatorry without we have disappointed this trust. i apologize in always to our customers, the authorities, and everyone associated with our business. joining us now with more, jamie butters, and ed niedermayer. jamie, let me just ask you first, how close are we to understanding how long that ceo is going to stay in office? mary barra went through of all of -- went through all of these troubles, but she had just gotten there. we're hearing reports that he's going to be out friday. friday is the big meeting, but they could be meeting tonight according to reports. it could be a short remainder for his tenure.

those are the reports coming out now. not confirmed yet, but he could be replaced or removed as soon as this evening. as someone was saying, on the one hand he has this great relationship with the families that control volkswagen. on the other hand they have lost $20 billion in market cap for the last two days and is not usually the kind of performance that gets rewarded with a contract continuation. matt: not a great relationship with [indiscernible] obviously, who was pushed out after he tried to throw him out as ceo. let me ask you, ed, we have seen a lot of auto industry scandal recently with the conduct, general motors, toyota. none of those executives were thrown out. none were brought under criminal charges. do you expect to see any of that here with the volkswagen case? ed: i'm not sure about criminal charges yet, but i do think that

winterkorn is in far more danger than any of the other executives have been. he is known as the detail engineer guy. all of a sudden it seems like with these regulatory issues it's dangerous, a ceo who is a hands-on detail oriented kind of guy is at more legal risk than a hands-off manager. jamie, the public trust has been breached. obviously volkswagen is in damage control mode right now. if you were a fly on the wall, what are the conversations like there? what is first on their list of things to do? jamie: unfortunately, even as a fly on the wall my german is not good enough to crack the code, mark. but they've got to try to come clean. what they have announced so far, we just don't know if the ceo is going to make it through this week or even tonight.

starting with the gm playbook, they hire an outside investigator to try to determine what happened, who knew what, define the problem, deal with it as you have defined it. as you have discovered it. hope that nobody else finds anything worse. my german is pretty proficient and from what i can see so far it looks to me like winterkorn is really trying to go after this hands-off approach that you were talking about. he is trying to shirk passnsibility, to try and the buck. he has not obviously resigned. is that going to work out for him? ed, ed. it's tough to tell at this point. one of the things that points to real danger for him is the fact that this all came up right before this critical shareholder meeting, supervisory board meeting, and after this kind of conference with the

longtime chairman of volkswagen, i think that indicates that there are some political forces inside volkswagen stacks up making itnterkorn, more likely that he will be ousted as the result of this. why hire an outside investigator? you cannot tell me that a guy like winterkorn does not know who to ask you was in charge of this, if he did not know it himself. it seems to me to be a typical toporate climate playbook hire an outside investigator, as if you did not know what was going on in your own company. ed: but look, it worked for general motors. it could not have worked better for them. they hired an outside investigator to do an independent report and got out of a lot of tough questions as a result of that report and then got credit from prosecutors for cooperating as a result of that supposedly but not actually independent report. you have to look at what happened with gm and you have to

conclude that it worked. as long as it's working you have to expect other companies to take the same opportunity. mark: is this going to have any impact on the auto industry as a whole, jamie? seeing a really aggressive play by the regulators. you see everyone jumping on volkswagen. we heard mark rose kind, the national traffic highway safety administrator, saying that it casts a bat -- a bad light on the whole industry. everyone is feeling very distrustful and they are going to look at everything. there has been a lot of self monitoring over the years the industry that is going to come under a lot more scrutiny. yes, every automaker is going to suffer in some way for this, atough much more scrutiny state, local, national, international levels all around. matt: bmw makes a lot of diesels. verse 80's makes a lot of

diesels. are all other companies cheating the epa as much as they can as well? of the reasons this issue is so complicated is there is this really undefined line between active cheating and gaming the system. you saw hyundai did in trouble for gaming the system last year. every automaker games the system. there is this real question because the epa so dependent on cell certification. we don't know how many automakers are walking over this line. here in the u.s. and looks like regulators will be looking towards bigger fines to create a deterrent. in europe you are going to see more looking at more testing, adding extra tests to confirm the difference between the standard test results and the real-world performance. i think that that's actually going to prove to be the better approach because it gets rid of this uncertainty rather than relying on big signs. jamie, gentlemen,

thank you so much. matt: taking a look now at the other top stories we are following for you. britainonce used -- wants to strengthen financial ties with china. chancellor of the exchequer george osborne announced a series of deals with china at the shanghai stock exchange. osborne: today we can announce a package of agreements that will firmly established london as china's bridge into western markets. matt: he said the u.k. was vulnerable to the turmoil caused by the chinese stock market collapse, but says that the u.k. should not run away from china. mark: lloyd blankfein, goldman sachs ceo, says he has lymphoma, a type of cancer. he writes that his form is highly curable. he says he will keep working, though he will cut back on

travel. he has been the ceo of goldman sachs's 2006. shares are down on the news today. matt: a decision that could have a huge impact for the energy industry. the obama industry says that the sage grouse does not need to have its endangered identity lifted. buffer zones will be established where the grouse rather for breeding. assigned at the u.s. housing market still has momentum, home prices rose more than expected in july. buyers have been finding fewer homes to pick from. gains were highest in the mountain region. new england was the slowest growing market. matt: more than 2 million muslims are beginning the first rights of the annual hajj today in saudi arabia. it draws people from around the world to the holy city of mac a -- mecca.

islam requires all able-bodied -- able-bodied muslims to perform hajj at least once in their lifetime. mark: still ahead, the bank of america ceo brian moynahan the vote. winning we will go live to north carolina for the latest. ♪

mark: welcome back to "the bloomberg market day." matt: let's get over to julie hyman -- julie hyman for look at the markets right now. we are currently off 260, jules.

julie: we stayed there. interesting that we have seen stocks from this trajectory. the s&p 500 spider etf, look at the times we have gapped down 1% after the opening bell. happenede that has stocks have continued to fall throughout the day and that is happening once again today. taking a look at the groups doing the worst, take a look at the transports. the dow jones transportation average is down by 3% today. looking at the dow transports as opposed to the dow jones industrial average, that is what they called out here he. take a look at my bloomberg terminal. theory.dow take a look at my bloomberg terminal. these are the lows from october. each of these indices, the industrials are in yellow. the dow transports are in orange. take a look at the end of

august. folks over at raymond james are saying that that is not a very good sign for where we are going forward. yes, we have rebounded off of those levels, but there are still a lot of concerns about ande making new loans whether this is a false cell signal or a true cell signal. ell signal or a true se4lll signal. u.s. antitrust officials are investigating whether the largest airlines colluded on pricing not only with each other but also their biggest shareholders. and interesting twist to there. homebuilders today declining, even after yesterday with par ought -- positive earnings, they sawthe earnings that we were overshadowed by talk of growth constraints. in that case there was not

enough land for it. we also had a report from zillow that more than one quarter of u.s. homes have lost value over the past year, despite the overall housing recovery of a lot of homes have still been losing value. of course, the housing market is of course market by market. it of course depends on where you are talking about. thankthank you -- matt: you very much, giving us a report there on all the red we see on the screen. is a report that espn will cut several hundred jobs according to the sports website, the big lead. they will cut 200 jobs to 300 jobs in the coming months. they are said to be reducing costs to make up for the huge increase in rights fees they will pay to show prohaska ball. carnivale -- sorry, carnival, the cruise, not

--nivale, the celebration they came in ahead of analysts estimates. , but stillslightly eclipsed the street estimate. they are trying to battle back from a weak economy and too much capacity in the caribbean. aetna says that they will raise the pay of 10,000 humana workers. they are in a deal to acquire the rival health insurer. compensation will increase to $16 per hour, similar to what aetna workers received this spring. those are your top stories at this hour. bankamerica shareholders have spoken. brian moynahan will keep his dual role after a special vote this morning. mark: the decision to split his place between other executives , erik schatzker

is at the shareholder meeting with more on this story. what did the numbers look like in this vote? erik schatzker: the numbers were 63% in favor of the resolution, a resolution that allowed moynahan to keep his dual role, with 37% against. it sounds like a win for brian moynahan, but the man did not come out of the affair unscathed . the board, let me put it to you this way -- it could have been a simple procedural change of the company's bylaws at the annual meeting in may or the annual meeting last year. instead the board decided to hold this vote after giving brian moynahan the chairman's job, which is why it effectively became a referendum on his performance as ceo and leadership, which it did not lead -- did not need to be. why it unnecessarily caused the disservice by raising

these questions that did not necessarily need to be asked. thatll that i know and shareholders know, they might have enthusiastically supported the idea of moynahan getting the title if it had been handled differently by the board and, for that matter, the lead independent director told me and several other reporters today that it was a mistake and that he is sorry. the other point i would make is that this raises some questions about the quality of governance on the bank of america board and what happens when we get to the annual meeting next may. i spoke to the outspoken analyst from seo essay earlier today. here is what he had to say looking forward. -- >> we would be shocked if they don't make changes before next may. i think it is likely that shareholders give an even higher percentage of their vote, possibly even kicking out some of those directors. erik: as i say, 37% no leaves

some unresolved questions about governance, leadership, and bank of america. in all likelihood if you believe that he is not going to be able to walk away before may. matt: warren buffett apparently came out in support of moynahan, saying that he did a fantastic job. i think first-rate ceo was the direct vote. am i misreading the stock chart? or have the shares of fallen 30% since moynahan took over? misreading.u're not but let's be fair to the guy. he inherited a bank in terrible shape. he's had to get out of businesses, cutting approximately 70,000 jobs since he became the ceo. the question now is whether the timing is right. should the board be making moynahan the chairman now? it's not as if bank of america has industry-leading performance. it doesn't. many shareholders say that they

wish they had waited until bank of america had recovered further and accelerated the pace they are currently on. erik schatzker there, reporting on bank of america, fyi, the same time that the s&p index was up 15%. coming up, lloyd blankfein announced this morning that he has a higher -- highly curable form of lymphoma. that story is next. ♪

mark: goldman sachs ceo lloyd blankfein says that he has lymphoma, a type of cancer. matt: in a letter to shareholders he writes -- mark: blankfein is 61 and has been the ceo since 2006. shares are down in afternoon trading.

michelle, talk to me about this. what has been the impact so far? michelle: it is the very early days for blankfein, he is still probably trying to figure out a kind of treatment he will be getting. he told us chemotherapy. the good news is that for most people with this kind of blood cancer, they survived. he should be able to get through it. -- there iss hodgkin's and non-hodgkin's, and i assume it's the former, because that's the curable form. what is the prognosis as far as treatment and time? how does this get cured? michelle: it is very interesting how this plays out. we are all parsing the tea leaves to see what exactly he has. as you point out, the more curable form is hodgkin's lymphoma and is much less common. only 9000 people are diagnosed with that each year. the one he is more likely to have is non-hodgkin's lymphoma.

it does affect many more people, about 70,000 every year, but if you get it right and treat it right and quickly, you do have very high survival rates. seem like it might be non-hodgkin's because of his age. matt: the reason i said that is because he says that it's highly curable. exactly. i was talking to the chief medical officer of the american cancer society, saying that it is code among doctors saying that they think that they can get in and give him six months to one year of chemotherapy, get a clean scan and he will be done , follow-up for the next several years to make sure it does not come back. we get about 70% or 80% of a remission rate, even with people who have non-hodgkin's. mark: is this one of those moments where you have a high profile person, a ceo of one of

the most storied institutions on the planet, where he now because of his condition then goes about saying -- you know what? early treatment is the key. maybe he can help other people. would think he would. i think it's interesting that he's not being even more forthcoming. anyone at this particular agent should have a ceo succession plan in place. i wish we were hearing more on this sort of thing. it seems that people are less forthcoming when they have this kind of cancer. all right,rk: michelle cortez, appreciate it. what is next? matt: we will obviously continue to cover the volkswagen story and talk about everything else going on in the market, which has fallen over 200 points. ♪ ♪

(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. welcome back to "bloomberg market day." i'm matt miller. let's get straight to the stories making news at this hour

from the bloomberg terminal. ben carson, republican lyricale, says that correctness is the reason he's taking heat for saying that a muslim should not be elected president. he says it is his view that anyone wanting to be president must embrace the constitution and american principles and that anyone who does can be president. scott walker says that he is not the only republican who should be quitting the race for the white house. the wisconsin governor ended his campaign yesterday after falling in the polls and struggling for donations. walker: i encourage other candidates to do the same so that the voters can focus on a limited number of candidates who can offer a positive, conservative alternative to the current front runner. tot: a positive alternative the front runner, obviously referencing donald trump. walker never mentioned trumped by name. at one time he talked to the polls in iowa, but recently he felt to 10th place.

the obama administration says it's getting harder to sign up americans who are still not enrolled in the affordable care act. among the reasons the most eager customers have already signed up, many adults don't see the value of coverage and many others are managing tight household budgets. 10.5 million people remain uninsured. open enrollment starts november 1. new jersey governor, chris christie christie, who knows a thing or two about struggling with weight, has ordered the leader of the national guard to slim down. he has given the brigadier three months to shape up. the governor was unaware that the general has been reprimanded by the pentagon for his weight and for dodging physical fitness tests as well. those are some of the top stories we are following for you. isnese president xi jinping kicking off his first u.s. visit in seattle, washington, where he plans to ms. -- plans to visit with the ceos of amazon, apple,

disney, and microsoft, as well as starbucks. rainy joins us now with more. >> in the past our president xi check in right behind me. there were a few hundred supporters, as well as protesters here to greet him. a lot of people waving u.s. and chinese flags, some people holding up banners saying that following is good. over the next three days he will be here, as you said, speaking with business leaders and tech leaders. today, tonight, in fact, he will his only policy speech will he's here. former secretary of state, henry kissinger, will be in attendance. tomorrow the biggest event will be happening, it will be hosted by the paulson institute.

major executives from the u.s. and china will be coming together to talk about greater market access. we are talking about the likes of apple. tim cook will be there. microsoft will be joining howard schultz, jeff bezos, bob eiger -- the list goes on and on on the u.s. side. as well as the china side. he has brought over 15 executives who run companies with a market cap of about one dollar trillion. and that involves alibaba, baidu , the icbc -- the largest bank in the world by market cap. as well as the bank of china ceo. i huge number of business meetings and banquets tonight, with tumors coming up over -- tours coming up in the next

several days. he will be going to the redmond microsofto look at and to check out the high school. the west coast, very important to the chinese economy. thank you very much. for more, let's turn to brendan ,reeley, joined by kevin rudd president of the asia policy institute and former prime minister of australia. brendan, i will hand it over to you. learned that the former prime minister was also a rodeo rider. but we're not here to talk about that, we are here to talk about the visit of xi jinping to seattle. let's talk about this visit. what is the definition of success for xi jinping? >> he has a strategic interest in making sure that the strategic interests of america and china stay on track and are

by fundamentally torpedoed unrest. they want peace and stability in the region. why? they have a huge economic growth task ahead of them. know xi jinping well, our impression is that he has solidified control of the communist party. what kind of person is he? is rudd: xi jinping incredibly intelligent, his grasp on political power as candid as a candy. he reads history, reads his own country's history and has a sense of mission about where he wants to take china. a dream that he describes as the china dream. wealth and power, a nation strong enough not to be pushed around by anyone else anymore. for 100 years what they describe as foreign humiliation. what he says about the chinese dream, i have always

wondered this, does he defined it in opposition to what people say the american dream is? mr. rudd: it is a great question. it is an unusual term to use in chinese. if you ask political leaders to describe their vision as being a dream for something, it does not fall off the tongue. i think there is a subtle twist there. if you look at how the dream is explained in china, it is about your personal dreams and the country's dreams as well. that is a qualitative difference from america. is meeting right now, today, with tech leaders in seattle. what is the best that he can hope to get out of that specific meeting? this is a huge economic relationship. from china's growth perspective it is critical for the future as well. frankly, there are big american interest involved as well.

key growth is what happens in i.t. we all know about their success. we know about jack marr. the others as well. this is a huge potential growth driver for the chinese economy in the future, if they can get innovation right and adapt it to the financial services industry and adapt it to the way that consumer processes operate. he wants mutual investment to occur. at present it is a product leader in china as their is no state owned enterprises competing against it. the technology is too new. the definition of success for him is that chinese i.t. companies have not had to compete at home. can they thrive abroad the way that u.s. companies have thrived abroad? mr. rudd: "in. as you rightly say, the competitive market in china varies enormously depending on the product and service.

in some places it is lows. in others it is extreme the open . they are discovering that to operate as global firms, many partnerships, meaning they have to work with american firms and away way they have not done before. it is a step beyond traditional comfort zones. but they know that this is the next step in that it is no longer just an insulated chinese market that they have to grow in. brendan: what is the chinese growth rate right now? mr. rudd: the official number is seven. my own take is that it is somewhere in the vicinity of six. six is important from the chinese perspective. it is the internal definition of that switch necessary to sustain sustain a bit -- sustain social stability. brendan: is the communist party in danger of losing control of the party, looking at the growth rate right now? mr. rudd: absolutely not.

people should think through what happens if the chinese communist party falls and china falls into chaos. the consequences globally for refugees and the stability of the global economy would be huge . i think of that's not the case. is case is the legitimacy partly an expression of their role in history and partly as expression of the continuing role in the economy. when i talk about social stability i'm talking about continued living standards bringing people out of poverty and critically still generating enough jobs for the 20 million or so each year. one part of that development has been to get consumers into the equity market. that has not worked out well at all over the course of the summer. how do you link the volatility in the equity markets to the actual underlying economy? i don't.

i think that the first client on the equities market itself, massive instability with state intervention and ongoing uncertainty -- there is a great degree of soul-searching at the moment as to what went wrong and how to improve it. on the real economy, let's bear in mind that as a source of corporate finance is about 2% in china. as a reflection of other sentiment in the chinese economy i don't think it actually holds a lot in terms of being a real barometer. the growth challenges are of a different nature. net export contributes less to the economy because of the softness of global demand. traditionally exports have driven chinese growth, but now it is a lag factor. private domestic consumption has not gone up rapidly enough to offset the difference. hence the growth difficulty. rudd, thank you

very current president of the australiany, former prime minister, and let's not forget rodeo rider. back to you, matt. [laughter] matt: gather with -- glad that we had kevin on their. i shouldister rudd, say. we will talk more about commodities. keep it here on "bloomberg market day." ♪

matt: all right, welcome back. you are looking at live pictures of andrews air force base here. we are expecting not president obama to land any moment now, but the pope, the leader of catholicism. pope francis at any moment will arrive at andrews air force

base. we will get you the pictures of the papal landing as soon as we get them. he is going to address congress as soon as he arrives in washington, d.c. we know that he is supposedly unhappy, considering the guest list. we know that he will be visiting new york and philadelphia. basically the northeast american tour for port francis -- pope francis. now, will there be blood in the oil markets again? the next few weeks are critical for oil companies. banks are deciding how much to lend companies based on their reserves and the level of prices. banks line-up credit and could shrink by 10% to 15%, wiping up $15 billion in credit oil companies according to some analysts. why are the companies in so much trouble? why may they be? if it is not clear enough, alec steele is here to explain it. alix: you bet.

-- gy 21, there boring base matt: the boring base? alix: borrowing base. they're borrowing base has also been cut and they are using 100%. the idea is that if the borrowing base is cut again, these guys will be really squeezed. the other part of the picture is about hedges. these companies were hedged significantly in 2015 and as it rolls off, they are losing. it means i am going to sell you oil for a future price that we determine and it does not matter what the market is doing. so, the companies getting squeezed make easy buying targets? am i wrong? the: it really depends on possibility of the bid ask

price. if you take a look at the hedges , which tells you how much trouble these companies might be and also, this year 37%. next year they are hedging $51. petroleum, hedging 90% this year , 70% next year. vanguard national resources also seeing hedges decline. have dropped to 11% next year. those small, midsize companies are the ones in trouble, making less for the hedges that they do have. not the $90 per barrel that we have seen. oil hedging drops 11% by 2016. what about the m&a issues? it has not been around. $8 billion in deals this year,

down from 24 billion dollars per quarter over the last four years . part of the issue is twofold. yes, we had an issue with the bid ask spread. iris do not want to buy at the price is where the sellers want to sell at the end of the day. but there is also this unknown bound upat citi talking about. unsecured bonds are now trading wound up talking about. unsecured bonds are now trading below par. there are these outstanding issues preventing m&a going forward. matt: all right, thank you for a much for that, alix. explaining the m&a and commodities landscape for us. alix is going to take a quick break and then come back and join me here, but on the bloomberg terminal there is a new twist in the government's investigation into whether airlines colluded on pricing. bloomberg news reports that

antitrust officials want to know about airline communications with large shareholders. studies have argued that consumers pay more when the same large investors hold shares in the biggest airlines. amazon is celebrating it's a me awards with a one-day discount for prime membership. on friday they are cutting the price of the $99 membership fee to $67. their groundbreaking series 15 outstandingding lead actor, outstanding director, and comedy series for "transparent." oftwitter to the list companies rolling out him oh for the pope's u.s. visit. each city is a stop on the pontiff on historical u.s. trip. as you mentioned earlier, the

pope will land any minute at andrews air force base. do we see the plane coming in yet? we don't. but it's pretty cloudy. in one hour and 20 minutes, those guys will be sore. those guys should sit down and rest until the pope plans. coming up on "the bloomberg market day," as property prices continue to push higher we will talk to one activist real estate investor about where he sees opportunities. stay with us. ♪

we turn our focus now to investing in real estate. -- founder of the chief and the founder of a real estate firm joins us now. here to talk about where

he is investing and what he is doing. one of the things, one of the hot issues surrounding your fund is the sell and lease back deals that you try to convince more companies to take advantage of. correct me if i am wrong, but mgm is one of those companies and is now considering that possibility. estate value real can get locked up in traditional corporations and some companies are very well suited for being a standalone operating company. the situation at mgm is where we think a lot of value can be created by separating the two businesses. matt: one of the arguments against that is that it takes a shorter-term view, but i assume you don't agree, that you think it's healthiest in the long term as well? mr. litt: we started doing this in the 1990's. one of the first ones that we spun out as marriott, one of the

largest owners of hotels in the world. it has been a tremendous success. that was the right move for marriott at the time. they are very real estate light and a terrific growth story. post marriott has also been a fort grower, great way people to own terrific hotel assets. mgm is terrific for that. there are some situations where i don't think that that is the case, but here i think it's obvious and straightforward. think thathat do you mgm is going to decide? an activistalks as investor. are you going to be able to convince them? they were very clear on their conference call in august that they would announce a strategic plan to unlock value, including how it would work in that structure. ,ne of our principal concerns and the reason that we like this right now is las vegas is

strong. strong for the first time since the financial crisis. people want to invest and there is no way to do it. value, thethis loggia, other assets, it will be highly sought after. bellagio, city center, other assets, it will be highly sought after. matt: so, other companies own a lot of real estate, obviously, and this opportunity exists for them. macy's is one of them that people talk about a lot. they could even sell their sort of landmark robbery at herald square. do you advise other companies as to whether or not they could do this? we don't own macy's.

we think there is a lot of value in the real estate. we think that the activists in there will be capable. the management team seems to be receptive -- receptive to unlocking value. hopefully those two groups will work together. wonderingonly because there seems to be a lot of opportunity there. as an investor i would want to know about the companies that have the opportunity to do this in the future. all the: we do that time. try to find public companies with a lot of real estate where we think that our skills that -- skill set will apply. the underlying financials in las to us thevery strong, best opportunity for the splitting of the company, at mgm. we look at macy's, but we like the mgm story better. you talked about how well

las vegas is doing right now. from the real estate perspective it has had serious problems since the financial crisis. the do you think about general state of u.s. real estate? i know it is a difficult question, as it such a regional picture. mr. litt: someone asked me this in august. as i reflected on the earnings season, it occurred to me that it was probably the best earnings season i had recalled listening to across all companies and property types since the beginning of 2006. so, right now supply is modest, demand is solid. capital markets are generally wide open. the underlying fundamentals on the ground are quite attractive. matt: all right, have to go. appreciate your time. mr. litt: absolutely. -- : jonathan litt ♪

mark: it is noon in san francisco, 3:00 in new york and 3:00 a.m. in hong kong. reading the overall market low work, energy stocks.

markets are falling on renewed concern about china's economy. >> china's president starting the first official visit to the u.s. today, starting in seattle. we will discuss what is on the agenda with ian bremmer. mark: several u.s. states begin investigations into the mission that a cheated on air dilution test. we will see what the ceo of nissan thinks about that. ♪ mark: good afternoon. i am matt miller here with alex deal. steel. alix: the s&p around support levels many traders are watching. they've did not seem to be the headline catalyst that lets stocks to gold glover. seems like a low grind through the morning.

i have been focused, even though yesterday was my day off, focused on folks like an since saturday night. -- volkswagen. the markets down as well. the other corporate is oil prices. i have charted oil rises versus energy stocks in the s&p versus the s&p. the redlined the oil price. the blue line the energy stocks. the s&p the green line. seems like when you have a oil rolling over stocks are drowned down -- drive down with it. energy aspects had a note out talking about the recent strength in wti versus brent. it is the commodity pull that seems to be dominating docs. matt: bottom line, when a market moves in any direction, use the oil as a catalyst.

i am just messing around on my bloomberg terminal trying to put together a screen of carmakers. there are many to look at. if you throw all of them in at one, you can see the same. down, down. volkswagen in white. are you going to miss getting rid of -- the point is, it does not matter what the lines are. a story about the fact that everybody is falling in tandem. carlos phoneend -- said everyone is being treated with the same brush regardless. he is bullish. i want to point out one more thing. this comes from me from joe slavin. you are looking at margin debt. you can see how much it has fallen since june.

basically margin is falling. that is also being an issue in the market. that is a look right now in the markets. staying there with her nest -- next guest. investors should focus to her for earnings announcement. joe quinlan, chief market strategist joins us now. i was just talking with the hedge fund manager a moment ago. he works in the real estate area. he said earnings were at the best level since the financial crisis. ?rowth has to slow, right >> i think earnings season, we will get some upside surprises. your rough, i've been talking to a lot of u.s. companies and are it acting better news. china is a drive, we know that. i think fundamentally the economy being as strong as it is, we will see earnings

surprises. a what do you see that the fed does not see? >> the fed sees a little bit saltier than most people expect. i think the pullback reflects the feeling the world economy is not growing. the u.s. is growing by close to 3%. china growth i-5 percent. that is not great, but it is ok. isn't the volatility we are seen, the market try to and whatt the fed either the fed is going to do or do ort is going to do wife? why? like their hands are tied by the global economy. >> there has been a lot of talk by the said officials.

it is not clearing of. did throw the curveball here. waiting in the global risks. g-20 meeting ahe couple weeks ago, they said everything is fine. they must know something we don't. it sounds like a mini chinese floundering. the chinese did not handle the market very well at all. bolster them and then talk them down. janet yellen, i don't know if you felt this, but i felt like she was nervous because she did not want to say the economy is so bad i don't want to raise rates. she had to say you were shaky enough i could not raise rates. this was like lockhart who had artie been saying that. we knew this was coming down the line. sending the cheerleaders out on the field regardless whether they vote or not the

still sending them on the field. it is still sending them out on the field. how can you go in october? there is no press conference. since there is not one scheduled, if they just said today before we would have a press conference -- we will have a press conference, then you would know. alix: are we in a world of persistently low rates to come? like we will never get out of the cycle. short-term interest rates are negative. globally i think we will have a hard time. the u.s. will lead the way. i thought we had a lift off a couple of days ago. i do think we will see it early 2016. the real economy, they are in good shape. they are looking for a good retail season. workers.st is the the demand out there. i think the economy will shine

through, move ahead. we are in a low yielding environment for quite some time. matt: you do see wage pressure coming? that has been the problem. even with five point 1% unemployment, there is not significant growth in wages and no significant inflation at all. >> i do think the fact cap, the wages will start to rise. not dramatically. most companies will pay to work -- bring workers and or pay up for what they had. matt: even if we raise 25 basis points? >> it will not run>> the great economy we have. >> it will not ruin the so-called great economy we have. alix: this is a theme i feel we have been hearing for years. i was still on that gekko >> global encyclical has not worked just yet, but i think that will come to the floor. so the chinese have to come

forward. say ok, here is where we're at, here is where we are going. the cyclicals make it a bit. chinaisn't that what stabilization means, more stimulus? >> china once a strong currency, not a week currency. more fiscal spending. we need more signs the eu collectively is growing. the eu is the sleeping giant that will awaken. 2% is a lot of global demand. matt: joe quinlan, chief market strategist at ubs trust. alix: coming back talking to ian bremmer about the chinese president's visit to the u.s.. stay tuned. ♪

matt: welcome back to the bloomberg "market day." i am matt miller here with alix steel . taking a look at life images. i've been waiting for the pope to land all day at andrews air force base. so have these people. members of theot press, just fans i guess of the pope are gathering there. i see a couple of nuns. i saw a number of members of the military landing at full attention. i am hearing he will land at 4:00. president obama's plane in the background. they will wait another hour for the visit to begin. the first one. height security as well. looking at the dow 235 point.

julie hyman looking at the markets, is the stocks that are green today. looking at the stock bucking the trend today for a change. the best performer in the dow. this definitely counts as outperformance. hasanalyst say it tremendous value creation options, including additional letting the and company, even though that is something that management has pushed back against. the stock has been down recently. morganing after j.p. says the shares are a reasonable price. fighting back against the notion of is a one trick pony. shares are down 47% here today. incidentally the analyst community is very bullish. does not have one single sell

rating on the stock. watching weatherford international oil services of any rebounding. pretty externa reversal. yesterday said it was raising $1 million by sharing those in shares. investors are happy about that. those are some of the increase stocks we are seeing today. jamie told me to ask you about autozone. autozone bucking the trend. they are higher. the company's earnings beating estimates. comparable sales at the nation's largest auto chain -- auto parts chain of. this is total vehicle miles driven in the united date since 1980. obviously trending higher. these are the recessions.

recovering postrecession pretty handily. what does this mean for autozone cap of more they are on the road, the more they need stuff replaced. as you well know, we had an aging fleet in the united states, so replacement rates have been going down. if your car is older, you probably need more replaced as well. producer.s julie's machine. market machine behind julie hyman. i will stick with the cars theme here. the volkswagen scandal continues at every level from automakers to auto suppliers. , theing with carlos cohen ceo of nissan and the head of european auto manufacturers association and met me here outside bloomberg headquarters , 2016he new nissan altima altima. listen to what he had to say.

>> this is the most sold car were nissan in the united states . 60,000 per year. this segment used to be the largest in the u.s.. now it is the second-largest. is taking the lead. it is a very important segment. this is the second most sold car into the segment. >> you do not sell diesels in this country. with this in out the summer. technology to difficult to make perform and still passed epa emission testing? >> i don't think so. i think it is a very specific knowledge he. hybrids.lectric cars, power engine.that it is a technology much more

widespread. we have it. not for the united states. matt: you are of the european auto max scherzer -- auto facture union. you meet monthly. is this an issue you think is pervasive? are carmakers across the globe having to treat -- cheat in --er to pass regulator regulators? >> i don't think so. we are reminding everybody about how much improvement we have made for the past years. in order to have better emissions, better fuel efficiency, etc.. that would be every single member to make their own statements about what they are and what kind of devices and technology. much more an issue for every car manufacturer. they want to reinforce this as much as possible.

what about for you? you put together nissan in 1999. you are working around the globe. regulators from so many different regions. do you have a statement on your emissions testing? >> every country and every region has its own testing. carmakers have to adapt to this. we have to adapt to this in the most truthful and transparent way. when we are problems, we usually share them. possiblethings are today that were not possible a few years ago. what is possible for the industry is give visibility. that is why what is going through the shared that will take place at the end of the year because everyone is looking that we need to reduce emission, but give us visibility about

what kind of emission we want to reach 15 down the year so we can be prepared. matt: volkswagen down 20% today. all carmakers are getting crushed in europe. do they deserve it yet though this punishment the entire industry is waiting or? >> today there is doubt existing. i am sure you will see in the next hour statements made by every carmakers. each one stating they are sufficient of their own company. i am not so worried about it. meeting, isext there a too big to fail issue yet so are you going to be telling the leaders you need to get your companies in order? >> i think most of the companies are in order. i think every company has a challenge, and we try to place it in the most transparent and truthful way possible.

at the same way looking at the moving target. cohen ceo was carlos of nissan. -- carlos chosn. ahead, we will speak to ian bremmer from the eurasia group. a great conversation. stay with us. ♪

matt: welcome back to the bloomberg "market day." the chinese president will visit with president obama in washington this week after attending a tech summit in seattle. >> the two sides hope to thoughe an agreement people familiar with the matter said negotiations have been contentious. rights i think it is a series to the chinese how serious our concerns are.

at this point i will not preview what the discussions between president obama and president she will look like. this will issue will feature quite prominently on the agenda. matt: joining us right now is ian bremmer, president and founder of the eurasia group. theme ask you how key summit is. obviously the chinese market but it was jarring, seemed alike it had calm down. i get from the white house is they want it to be amicable and want to work through this together. it is important, but not because the chinese market volatility is important but because the u.s.-china relationship is getting worse on a bunch of issues. the cyber issue you just mentioned. chinese military buildup. american companies having a hard time doing business in china,

and even taiwan. you have the president and obama that would like to show things are still fine in the relationship that is being managed. flex they feel good website data on 25 americans for the office of personnel management. the chinese perspective is you have been doing this against us for decades and you just do not like herrity. we used to have nuclear weapons all by yourself. we have a hard time with the concept of parity. certainly from a country like china that does not accept democracy or a free market. concern with us is much more structural in the fact they do not feel they are

accorded a seat at the table. we have the imf and organizations we have created and the asia infrastructure investment bank. we told all of our allies don't join, and they did it anyways. the chinese understand they will have to fight and clock to be afforded a level of risk that for americans. alix: you wrote in the reason of this week that a failed issue sets off a skillet -- estimate tori spiral. what does that mean? >> it means the likelihood -- we the chinese economically, and they need us, to. they hope treasuries and all this sort of stuff. at the same time you have heard many in the united states that we should be sanctioning the chinese for all of the things they are ripping off of american firms. if this breaks down, you will see tit-for-tat tensioning.

when we said we were thinking about sanctioning the chinese for their talk -- attacks on american firms their immediate response was we will organize a technology summit in washington, state. we will organize all of the american tech companies. they will come and say how important china is. the problem is we do not do industrial policy. when we tell companies to do stuff, the company sake we would like to make a lot of money in china. we have shareholders. if you are the chinese president and you tell chinese companies to do something, they listen. you have ge saying if you persist with this, we will take workers on turbines and move them abroad. members of congress saying what do we need this for? it is a free market. it is only a free market if they

appear to the rules, not just americans. the bottom line, it could start a trade war is in scope poorly? >> the bottom line we have been in on a mark -- in a market where the chinese and u.s. are not friends, they are frenemies. the real question is are we going to start shipping one where we are more antagonistic on the economic rent gekko obama and the chinese president do not want to see that happen. the story is moving in a more confrontational way. alix: a lot more to talk about. i am saying goodbye to you sadly. ♪

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. bloomberg "market day." the obama administration said it

to findng harder americans not enrolled in the affordable health care act. many young adults do not see the value of coverage. many others are managing type household budget. open enrollment starts november 1. employers are putting a bigger share of medical costs on workers who use the health insurance according to the annual kaiser family foundation for banks which sets the average deductible now top $1000, up from $303 2006. deductibles have climbed nearly seven times faster than wages since 2010. at that ceo says the company will raise the pay of 10,000 humana workers. $35 billion deal to a buyer the rival health insurer and compensation will increase to six teen per hour. the pay hike will reduce turnover. the chemical company plans to split into.

it will focus on specialty chemicals. the other company will be called valvoline and focus on auto maintenance. and than 1200 oil location service centers. brian moynihan came out on top today in the power struggle at bank of america. row -- stay in his dual role as chairman and ceo. some chairman said the board overstepped their powers when it made them chairman last year. opponents say the share price lacked and the rule should not have to have been changed to give them both job. the goldman sachs ceo lloyd blankfein says he has lymphoma cancer. he writes his form of lymphoma is highly curable and will still working although will cut back on travel. he is 61 years old and has been ceo since 2006. ian bremmer is still with us. i wanted to focus on brazil.

you take a look at the currency, and it is at a record low today. does he have to go? >> leave as president, 2016. -- she is not, in my view, going to get indicted. it is not appear through the investigation of the extraordinary case, it does not appear she has been directly involved in any way that would force her to leave. that means you would have to resign. i do not see the opposition vote for that right now. her popularity ratings are absolutely in the toilet, which means she will govern and effectively. there will be no reform process. no way to attract capital into the brazilian infrastructure, so people are not believing in

brazil right now, but that is very different than saying she is about to be impeached. she get people to believe in brazilians? she does not. one of the reasons is has gone on so far is that your judiciary is independent unlike russia or even met itself, and that teens the process is going on. it is like if you went to illinois and said i will get rid of everyone unclean. it is like there is no one left to govern. on the one hand, that is good. the extraordinary corruption that exists at the highest level of the party at the highest level of this eight owned enterprises desperately need to deal with that. it is taking a very long time for the mechanism of justice to play out. eventually a new president of brazil will be voted in, and they will have a legacy of a much cleaner slate to work with.

brazil is not falling apart. it is the reason it is the most advanced for the most consolidated and the best balance of powers among them, but this is an ugly process and not to yet fully unwound. you see a lot of people continuing to head for the exit. alix: so we have to wait until 2018 to get some kind of ability there you go what is the fallout in the meantime gekkme? probably 2017 is when people realize she is not going. danger is so great when you know there is only a short-term for the next resident comes in. you start looking forward to the electoral process. alwaysket is anticipating these issues. you have to wait until we are closer to the end of her

administration. this will be continued very ugly political time for brazil. alix: if you strip that out and look at oil prices, if they do end up rebounding, does that do anything to offset the scandal happening there? commodity prices taking a dump has been a problem. not the best time for china to be softening. less commodity intensive moving toward a consumption driver. i do not see oil prices looking significantly higher going forward. the iran deal and another one billion barrels on the market. isis exists in iraq but not in places where they produce oil. that is coming up. the structural factors are just not very attractive to the significant commodities rebound right now.

i am not with goldman at 20, but i think it is pretty bearish going forward. and: you brought up iran, if we see them moving it to the world, what is their strength yet so what is the political landscape? an is a larger population, a more diverse economy than any of our golf -- gulf allies. there's a lot to be done in investing, and you will see the chinese and russians do that in terms of infrastructure, in ,erms of retail, consumer goods services, you name it. over time they have one of the populationsg western and highly educated that will be traveling back and forth in over five and 10 years time economyl be open as an as a consequence of that. hasdeal we struck with iran

significant shortcomings on the nuclear side. it will be very hard to catch them cheating. it will be hard to get congress to pull back on the sanctions. you could easily see a situation where iran is doing better and everyone is investing except the american corporations. that is a frustration for the ltinational to thought they had exclusion and now they have to apply for exemption because they cannot actually get it done. looking at the global landscape, what is the biggest risk you see? over the next two years? >> over the next two years i think one of the things they most worried about is the implications of the refugee crisis in governance in europe. undermines leadership and really puts merkel herself at risk. she has been the leader. she is now taking a stand, saying we will bring in hundreds of thousands, almost one million per year. very unpopular view

domestically. if there is violence and got for bid terrorist activity in germany the way you have seen in france with the unintegrated population, she is under the gun. a europe without german leadership is a very unattractive place. alix: such a pleasure. always great to have you. good to see you. staying with the markets, i went to bring in joe weisenthal, my miss?"on "what'd you yesterday we were unclear with the markets, and now we are down. are thispy and we morning around 2:00 a.m. futures fell out of bed when the european markets opened. volkswagen continues to get slammed. does not really explain why all int the market would all die

unison. and ugly, sloppy day. one thing we talked about is how bond yields have held up. that did not happen today. we saw them go down. the dollar up. the classic risk off day. not a great explanation. when it comes to oil prices, i mentioned earlier the market is really taking it to from the oil rice. oil down. why? earlier this morning there was a forecast out from the asian development and talking about slower growth in china. is lower growth in china really that interesting at this point yeah so it was a weird day where people have been grasping for explanations of what is going on. alix: we will be talking about this very topic with dominic globaler, deutsche bank reit strategist to get an idea.

he is really into talking about inflation and how the fed has not and able to help inflation. joe: everyone was helping with the most recent bad decision. not talking we about something new, we are only talking about the fed. i would say with the non-and there is even more top. will they visit in october or december and what would make them raise? why did this grew up so bad on communication? so many topics we were not even talking about now alix: that is what we're talking about. alix:an interesting take from him on why this that would normalize and when. bloomberg markets managing editor joe weisenthal. be sure to tune in 4:00 eastern. we will speak to the global head of rate research at deutsche bank.

very strong use. -- views. stocks are in the red for pulling off of the days when does. stocks to watch in the last few minutes trading. don't go away. ♪

alix: welcome back to the bloomberg "market day." i'm alix steel. approaching the close of trading. team market correspondent julie hyman standing by in the newsroom with the highlight. like looking at the bright spots of thing. julie: we're off the lows of the session, which is true most certainly. the dow is not down more than 200 point as it was for a while today. , a messys just saying

day. a day without a lot of specific macro drivers, although there has been news on various industries. with stocks down you might expect an uptick in the vix. take a look at my bloomberg terminal. all of the various groups declining, a lot of them because it is read across the screen. material stocks doing the worst. knlee is also down. consumer discretionary being pulled down by the automakers hurt by volkswagen. automakers down. pairing the decline on the plan to cap prescription drug prices. i wanted to get a check on metals. we had the asian development bank cutting the growth prices. that seemed to be a catalyst for some of the declines. note out today

talking about proper reduction. the copper surplus will double by 2017. all -- not all but most of the commodities. yes, we have the report out, but it did not seem there was a real sexy catalyst that put them under pressure. you look at inflation expectations also going down. not surprising. you have the input costs that keep going down. on the one hand, fed officials are telling us there is a likelihood we could see it go down by the end of the year. if you look at the 10 year, we see yields go down. 2.14 percent. the dollar we have an increase. mixed sentiment. the dollar increasing, which seemed to indicate maybe we

could see the rates go up. the yield seems to indicate it would not. then there is a great even. the one year note to yield versus treasury securities, this is a way of measuring inflation expectation. the low west since 2009. a couple of different ways to look at how the market perceives inflation right now. alix: good job fed. their mandate. retired general john allen who was hand-picked why president obama to meet -- leave the coalition against islamic states will reportedly step down in november according to bloomberg "view." allen has notified superiors. in 2015 starting out on a great note for music streaming. sales topped $1 billion for the first time. a music industry trade group says sales of spotify and

pandora dropped -- jumped 23%. the release date for the heavily anticipated movie "the big short." the film based on a best-selling book and follows the story of a few bond and derivative selling -- saw theaw this recession and the economy coming when all the others refuse to. those are some of your top stories. in the first upgraded three years microsoft office 2016 makes total but important we. coming up, anchor emily chang weeks to the chief marketing officer and emily joins us now for a preview. what are some of the highlights here? emily: this is a really important upgrade. the first time in three years.

this is the biggest product. when you are talking about updates, the same thing they have tried to do is make things easier to collaborate on, make your work easier to share. the bigger -- biggest competitors is google apps. this makes document edible -- editable at the same time. you can search for aisles, e-mail, and they have been hesitant to actually update and change the user interface, because there are so many loyal fans out there. what they have done is try to make subtle changes as to not scare off the loyal users that make it compelling. alix: it seems like they're trying to design it for collaboration, to. work today is all about

collaboration. microsoft office has been this singular product where you were isolated, working there and you are all a long -- all of alone. work has really changed. the demand to increase productivity has changed. meeting the demand with the update. the interesting thing is they to trying to move customers a subscription cloud-based so the customers will pay for monthly updates, rather than fighting them on the premise one-time upfront and hesitating to buy ever again because the fine.rsion works just about a quarter of the customers are on the cloud a version. working toward getting more and more customers on the cloud base description version. alix: thank you. you can catch the full interview coming up at 4:30. news for you.

pope francis has just arrived in the u.s., his plane touching down at joint andrews air force base. he will be meeting with president obama and will address congress. president obama and the first lady are on hand to welcome the pope in his first visit to the united states. joe biden will also be there to greet the pope. he will be the first pope to meet the president in the u.s. much more and we will watch as he disembarked. moments away from the closing bell. a number of headwinds dragging down stocks. we will break them all down when we come back. ♪

alix: you are looking at a slew of cardinals waiting for president obama -- i've looking

december.pe to this is the first time he will have visited the u.s., only the third pope to visit. thereent obama will be with michelle obama and vice president joe biden that will be there to greet the pope. we will be keeping our eyes on the footage. we are moments away from the close. there are a lot of headwinds dragging down stocks. michael regan joins with more. breakdown the past couple of days and more a longer-term issue. mike: that is a great way to do it. obviously the volkswagen is having a big effect on auto stocks. one of the suppliers is down 8%. ford and general motors down 2%.

volkswagen is looking at a huge multibillion dollar fine. that is the biggest drop among the main 24 industry groups. aside from that, by your talk -- biotech week for another day after hillary clinton said she will take a look at pricing in the industry. that is another short-term issue. then we have longer-term issues plaguing out. obviously, talking a lot about commodities. the contagion of getting to be pretty acute. glencore dropping very big today. dropping below 125 pence. that's will stick people out. they raised equity. all of a sudden the new shares are losing money quickly. that makes you wonder if there are other minors in trouble that may have a tough time selling

equity to fix the balance sheet. that is a big issue. petrobras reaching a 12 year low. the brazilian real reaching a record low. obviously that is part commodities and part brazil's own problem. they have something like $130 billion in debt. that is the credit default swap that are spiking at the highest since 2008. that is a pretty acute issue. me,: what is interesting to none of these issues are necessarily new. we have known about commodities, known about china, but it seems like something happened that exacerbated it. mike: they came out last week and said no rate increase. since then as ready stream of officials saying we are still

planning on raising some time. still a lot of confusion and uncertainty. it is hard to decide what is the main issue and what is not. it has been a volatile market for the past month or so. once the swing starts getting as big as they are, it is hard for the market to settle down. alix: thank you so much. we are still watching the pope. on thes his lane landing runway in maryland. momentsd just a few ago. many people waiting to greet him. a slew of observers, cardinals, president obama, first lady, .dvice president joe biden a lot more coming up. watching the cell of. don't miss it. -- the sell off. ♪

stocks joined the global selloff. is "what didtion you miss." china's growth is slowing. beg fore market must the fed to raise rates. if so, when? moneyanks decide how much to lend. alix: the dow is off by 185 points. points down almost 300 at one point. moving triple digits for the 19th time. joe: