tension seen in currencies. the dollar strengthens. and the president and 15,000 great pope francis of the white house. good morning, everyone. this is bloomberg surveillance, live from our world headquarters in new york. it is wednesday, joining me this morning, vonnie quinn. from vienna, jon ferro. jon:, good morning. jon: good morning to you. i am here in austria to break down what the ecb councilmember thinks about the world right now and how the ecb can respond. tom: it is everything with a punch bowl filled to the brim and you are seeing that in market volatility. right now, a busy morning. let's get to top headlines. here is funny. is promisingnping

to work with the u.s. to fight cybercrime. he was in seattle speaking to american business executives on the first stop of his u.s. visit. he said china was a staunch defender of the cyber security. >> the international community should, on a basis of mutual respect and trust, work together peaceful, secure, open cyberspace. china is ready to set up a high level joint dialogue mechanism with the united states on fighting cybercrime. obama administration is likely to be skeptical. the u.s. has accused china of being responsible for massive cyber attacks on government agencies. with has signed a deal boeing to build a 737 completion center in the country. it will be boeing's first facility of its kind outside the u.s. buy 300s agreed to

jets. on the first full day of history to the u.s., pope francis meets with president obama. the president and his family greeted him yesterday when he arrived from cuba. ceremonyill speak at a on the white house lawn this morning. president obama is hoping to find common ground on climate change and income inequality. the two are mild the part -- are miles apart on abortion and same-sex marriage. there is issued out in germany over the volkswagen emissions test scandal. volkswagen ceo martin winterkorn will make his case before a vw supervisory board. he will be asked what he knew about the scheme to fake emissions tests on 11 million cars with diesel engines. he has vowed to get to the bottom of the scandal but the board may force him out. the german government has demanded vw take action. baseball hall of famer yogi berra has died, and the new york

yankees catcher spent 18 years in the majors and played in more than world series -- in more world series games than anyone. decades after his last game, he was celebrated for his way with words. he coined the phrase, "it ain't over until it is over." tom: we talked earlier about this. i had the clearest memories in fenway of mickey mantle stealing second base, whitey ford pitching, and a guy named yogi berra catching the ball. there will be baseball statistics, but what we do not understand is these were the rock stars of their age. there was no other competition. first -- football was an afterthought, hockey was an afterthought. the scope and scale of the new york yankees -- i cannot really think of an equivalency. vonnie: no wonder they were rock stars. tom: it was a separate time.

yogi berra was the most basic of the basic. his parents were basically very poor st. louis immigrants. eighth grade education. he fought world war ii -- he fought in world war ii off a boat in normandy on d-day. he was a star on a team with joe dimaggio and mickey mantle. you are looking at me like what you are you talking about? vonnie: no, i'm not, i was reading about this today. tom: we remember from our youth, it is not just about little cute yogi phrases. we have a quote from --" in the next hour. let's do a data check. equities, bonds, currencies, commodities. the markets are exceptionally nuanced. euro-dollar 1.1130.

on to the next screen, if you would. , 22.44.he vix it is stronger yen, weaker euro. that there's close watching. but the number one focus right now is the agent -- the asian currencies. brazilian real making history yesterday with weakness. this is the chart of the moment. ofe is the asian crisis 1997-1998. a week asia taking out abenomics in japan. here is the strength of the asian currencies. what an elegant chart. just a beautiful, beautiful chart. this is the tension where we have new asian weakness. you wonder when the currency war cuts in. some of that as well as the 2% appreciation from china. we will see if it takes a turn upward again.

tom: some of the other smaller four daysof asia -- on from an historic fed meeting, global markets are riveted to the dynamics of foreign exchange. the litmus paper of the system, currency pairs -- they say all. whether brazil or indonesia, fx signals the tension of the moment. part of the tension is in europe. jon ferro is in vienna, austria, after an important ecb interview. first of all, on these interesting markets, four days on, what do you glean from foreign exchange right now? jon: i think the basic question is what we saw after the fed a week ago what was that the federal reserve was not going to move. a lot of people shifting perhaps into 2016. a lot of people are asking the question, a weak dollar, stronger euro, story -- does the ecb need to do more? the conversation i had today did

not take that box at all. i know you are going to talk with me about it later. today,versation i had then maybe the emphasis is shifting away from the fx channel. that will be a subject of debate for months to come. tom: jon ferro will join us in moments with this interview with mr. novotny. paper, four-your paper, negative yield. and the euro is down to 1.1134. it was at 1.14 a day or two ago. again,at i would state globally, the nuances of this market are fascinating. part of that is it is a time of cheap money. we will adjust the initial public offering market later, confidence out there right now -- i go to the weather's first oil announcement

yesterday. they were going to do this, do this, do this, and shareholders go maybe not. our shareholders in charge of the thanking, the m&a, and the ipo process right now? >> that is a really good question, because if they are, why are there no deals in the tech market? we see almost no volume on the ipo market on the public side. decidinge shareholders when to go, or the bankers? are the other market makers deciding where to go? ceo's, why go public when you can get as much money as you want? rett: public markets are for liquidity, not for fundraising. tom: is this harmful to the american system? on the broader theme of american capitalism, if this environment

has changed because of central banks, do you deem it harmful to america? the last quarter, we saw $7 million go -- $7 billion go into private markets. no problem raising money in the private markets, and these companies are funded. the question is, now that these billions are coming from black where is itel going to come from? tom: have you seen more empty floors? rett: people are coming out of the systems. this is the promise of tech. it is really bad for overpaid people. vonnie: so these companies have no problem getting private money, but how much debt are they carrying? little.ry most of the capital flowing into these markets is equity.

tom: i want to show this. this is 336 pages. the kkr deal. wallace has rett done -- he reads the documents involved. today, does anybody read this stuff anymore? rett: we read these documents, and sometimes they are good and sometimes they are not. this one, you cannot model it. we score for obfuscation and for transparency, and we also score for jargon. tom: are you scoring this tv show? rett: i cannot disclose that, and we introduce a new metric for this one which is gobbledygook. different from the gobbledygook of 1999. us --it is more volume in inous than theume in u

gobbledygook of 1999. when they are done, we can here from first data. vonnie: where is that particular phrase on your gobbledygook? rett: unicorn is jargon. tom: we are going to come back, but, rett wallace, i want to come back and talk about this unicorn, and a deck accord? dekacorn? what is that? rett: at a million range, there privately traded and not talking about going public anytime soon. tom: we will talk about ipo's later in the hour, maybe after that groupon announcement yesterday.

coming up, an important interview. novotny with jon ferro, an important interview. four hours of "bloomberg surveillance." good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." london again today, a gorgeous day in london. looking on the thames to st. paul's cathedral. an important interview in vienna. vonnie: taking place a few minutes ago. we have jon ferro with ewald nowotny. jon ferro spoke to the national bank of austria governor, and he is standing by outside the central bank. nowotny reveal any

clues for ecb policy echo jon: he did not, and i think that is the news. the series of ecb officials march out, act -- late, and -- dovishly -- yes, there are downside risks. this is what he had to say on some of the downside risks. ewald: it is not about being that bad, but one has to have a realistic perspective, and weeed what we see is that had increasing risks to emerging markets. it is not just china. perhaps china is not even the number one element. about the rest, the other

emerging markets. the situation in brazil, the situation in russia and other emerging markets. that is something that is clearly a downside risk. jon, we have mario draghi speaking as well or it is ewald nowotny going against what mario draghi is telling the markets? jon: very possibly. the core of the ecb, they have talked up the need to do more. what i thought was really interesting about today, tom and i will go back and forth and talk about the fx market and how the stronger euro or the stronger yen pushes the ecb or the boj to do more. gauge ofto use it as a whether the ecb is willing to do more. and put the question to governor nowotny about whether the ecb does more. listen to what he has to say about the importance of the fx channel. ewald nowotny: we do have the feeling that the tests have

diminished, that the effects on the exports side, between movements and exports, it is not as close as it has been. we also know that a large part of the fx is because ethics changes has to be in the medium to short-term. answeroo early to get an , but there is a lowering, or a weakening of this commission. ferro, it always comes back to the real economy. give our american viewers an update on the strength of the european economy. is this a europe teetering on recession? jon: not right now, tom. the pmi toss out this morning do not show that at all. we are seeing a slowdown in china, which is important.

we are not seeing that feedthrough into the headline numbers in europe. inflation is low, just above zero, but we had not seen it show up in data in a big, big way. we are way off from falling into the next recession. jon ferro, thank you very much. look for his interview with mr. nowotny across all of bloomberg media this morning. i look at europe and the predictions made, the article out this morning on bloomberg about dollar strong, dollar weak. four days on, we still have no clue. there: and it is obvious are problems in central banks around the world in deciding what to do next, based on what the fed has done. you heard him say that an prolongation of the asset program will have an indirect effect on the market. tom: the biggest quantitative easing is in japan as a percentage of gdp.

their punch bowl is as big as you can get. coming up, we are thrilled to bring you former chrysler chief executive officer robert nardelli. he will join us to talk about vw. bob nardelli on the level and scope and level of this crisis. have we ever seen anything like the vw debacle before? stay with us. it is a perfect morning in new york to greet the pope. it is "bloomberg surveillance." ♪

tom: it is new york city. vivian ye of "the new york times " with the single most important franciswith pope

visiting. he will stay on the upper east side behind this camera view as he arrives thursday and spends thursday and friday night in new york. he will sleep directly across the street from the palatial amir of qatar.e that is what you do. nobody complains. did i just editorialize? vonnie: i would say that the people of qatar probably a little bit more worried about their investment in volkswagen at the moment. tom: it speaks volumes about new york city that we are putting the pope across the street from the emirate of qatar. that is what we do. let's get to the "morning must-read" with vonnie quinn. vonnie: this is from "the financial times," and it has to do with our guest, rett wallace.

vonnie: rett wallace, i want to bring you in here. this is precisely the point. growth,-3% revenue versus alibaba's 8% positive revenue growth. get amazon can do no wrong. what is wrong with our markets? rett: we love this. as far as alibaba is concerned, how could they not disappoint after they totally destroyed their market debut here. perfect execution. the stock is off by half, which makes sense given what chinese stocks are doing right now. but as a company, it is really unsafe to say that alibaba is going anywhere. totallyng they do is so commending. it will be difficult to see them losing their shares versus amazon or anybody else. vonnie: is it unsafe to say that

alibaba is going anywhere, but also that amazon is going anywhere? guy: now the amazon actually comes into my apartment. they are all the way down on the ground now. what started out as virtual is no very real, and they have trucks on the road and the people are in my house and in my office. tom: you are so good at roadshow analysis. institutional shareholders felt that they had to buy jack ma, that they had to buy alibaba. do they sell those shares three minutes after it goes public? using bloomberg terminal charts. rett: that's right. more sellers and buyers. the market counties off by more than half of what it was. tom: is it still 30 or 40 years ago that people felt like they had to buy shares to launch to the next deal? rett: i do not think jack ma had to seal the deal to be invited

to his roadshow because they were huge on the road. the deal is exciting, and now we are settling into a huge chinese correction that nobody was talking about when alibaba was on the road. the the question is, did game change? here is kkr first data, 336 pages. we have to go. we have to come back. i am all wound up about ipo's this morning. it is large. there it is. coming up, a conversation on pope francis. he is in washington. ♪

, beforehington, d.c. the pageantry that we will see this morning. some 15,000 scheduled to be at the white house, on the lawn, as the president and mrs. obama greet pope francis.

his first visit ever to the united states. right now to our top headlines this morning. here is vonnie quinn. vonnie: thank you so much, tom. as you said, the pope is in washington. he will have a meeting with president obama today. the president and his family met with the pope yesterday when he arrived from cuba. fending offlready conservative criticism on economic news. president, decision china signed a deal to build a 737 completion center in china, the first of its kind outside the u.s. china has ordered 300 boeing jets, all of this according to china's official news agency.

a meeting may decide the fate of vw ceo martin winterkorn. the scandal could cost vw billions in penalties and repairs. martin winterkorn will have to convince a few key players. one is the head of the porsche family that controls the w. vw.hat controls bloomberg news reports the fbi has uncovered work-related and personal e-mails that hillary clinton said was deleted from her server. the device housed her personal account while she was secretary of state. howfbi is investigating classified information was. and a baseball legend is that. you'll give era's mixed up sayings made some forget that he was one of the greatest catchers ever.

he was a three-time m.v.p. and led 10 championship teams. he was 90 years old. he died yesterday in new jersey. tom: he essentially invented the modern catching game. i want to know what johnny bench and others think of him. yogi berra, simply a catcher. tough: he said once it is to make predations, especially about the future. tom: that covers our entire week last week. thank you, you'll be berra, for that -- thank you, yogi berra, for that analysis of janet yellen. sara's and the slums, -- thellas of misery confronted social justice and inequality with his face.

our guest will attend white house ceremonies this morning, "thee is the author of francis effect," which goes over the gloss of the moment of media coverage. what upsets you about the media frenzy over the visit of the pope. what do we get wrong? >> i think some of the focus tends to be on the spectacle of the visit. pope francis is a man of substance. he brings a powerful message to this country. his critique of markets and his desire to put the human person at the center of the economy is a challenging message. to power truth wherever we go we sometimes forget that. the pope certainly has his critics. the movie last night, "francisco," the argentinian movie on pope francis, long before he was pope. and wasuches down greeted by the president, how will he be greeted by the more conservative cardinals of america?

is no doubt that this poll is shaking up the internal politics of the church. he wants a debate in the church. he welcomes that. he is getting it in spades. you are right, there is certainly -- there are certainly conservative cardinals who do not like what he is doing. i think the american people will embrace him. he is someone who wants to be out on the streets with the people. he brings energy and joy, and it makes people look at the catholic church again. vonnie: there are a significant portion of catholics in the u.s. is there a candidate running for president right now, republican party or not, that will speak to these congregations? john: i think pope francis transcends partisan divisions. his message does not fit neatly into our political or ideological boxes in this country. you see bernie sanders talking about the pope a lot. he cannot stop tweeting about pope francis. i think that is because both of them -- and they obviously have a lot of differences -- they

understand the structural causes of injustice in this country, and they want to address that. that is not always an easy thing. again, i think he transcends politics. bernie sanders finds alignment with this pope in terms of his economic critique. vonnie: so bernie sanders is the closest thing, you think. anticipate encyclicals with this pope? john: pope francis put out a very powerful and cyclical in june about the environment. -- he links the economic inequality with the environmental degradation of the planet. i think it is a wake-up call. tom: john, we all remember, those of us who were old enough period from the

1962 to 1965 when the catholic church entered the modern era. john: this pope really wants to bring back that vision of the council engagement with the world. this pope rejects sort of a fortress mentality of catholicism, where we hunkered down. i do not think there will be an official vatican iii, so to speak. this is a reform papacy, no doubt, and that agenda is very clear for this pope. i think a lot of people welcome it and embrace it, and it also causes some tension among conservative cardinals. tom: as one volume on european capitalism, define the appropriate capitalism for pope francis. speaks fromrancis the heart of the church's social tradition when he challenges markets, so this does not make pope francis anti-capitalist,

but it puts the human person at the center of the economy. going way back to 1891, the church had spoken out clearly on living wages and the need to have prudent oversight of markets. the pope wants to humanize capitalism. i do not think he wants to toss it out. i think he understands the benefit of markets, but he also understands limitations of markets from a street-level perspective. this is a pope had his most formative is. since in the barrio's of buenos aires. he will bring that message to washington. vonnie: will this message in washington be about inequality? john: i think that will be a big one. he will connect the dots and lift up the issues of the common good and hopefully elevate our political discourse in this country, which has been pretty ugly in american politics of late. us. john gehring with he has to leave us right now and get through the four-hour security line at the white house. vonnie: there will be some

elbowing on the white house lawn. the pope arrives at the white house at 9:00 a.m. eastern, beginning two days of d.c. events, including an address to congress tomorrow. tom: and then on to new york city, and then finally on to philadelphia as well. we have a wonderful single best chart for you. jon ferro is in austria. we will look at the challenges of the austrian real economy. it is a mirror of europe confronting refugees and economic migrants. stay with us. worldwide from new york city this morning, "bloomberg surveillance." ♪

"morningere is today's brief." 9:00 a.m. eastern, pope francis arrives at the white house. 12:30 p.m. eastern, fed president dennis -- atlanta fed president dennis lockhart speaks on the u.s. economy. and at 2:00 p.m., the chinese president visits boeing. tom: a little moment of silence for those of you in manhattan -- there it is, gridlock. will you be able to get home? -- will you be able to get home? surveillance single

best chart right now. it is a common chart at an uncommon time. the nation has measured predictable growth. jon ferro is in the and they are debt right now, underlying tension as austria confronts per capita gdp mediocrity and refugees from the middle east at the same time. jon ferro, things changed in all of europe, in austria, and that changes the dialogue as they confront refugees and migrants. what have you observed in vienna? jon: number one, i look at that chart, i look at the per capita gdp in austria and it is still a wealthy country. as it flattens down, that is crucial. that means people are not getting much wealthier. when you look at the eurozone in its entirety, on a plummet rates very high. capita gdp is not growing. that fuels the anti-immigration

policy for some of these parties, particularly in northern europe area that makes this issue over immigration that much more important. if you get it wrong, it fuels those kinds of parties that do want to break up the uni. vonnie shows us the polarities, really anywhere. you see it in the united states as well. do you have the same polarities in ireland as well? lingus four times a week, it seems. ireland has the same polarity as austria, doesn't ? vonnie: everybody does. ireland has exports and -- tom: their economy is still doing very well. vonnie: what i want to know from jon ferro, is that flattening to of gdp per capita -- the poorer countries benefit from this rebalancing? jon: that

is a really good point. let's look at germany. the shares of german imports coming from austria has actually dropped, and the eastern neighbors -- hungary, the czech republic -- they have taken that share away from austria. the buildup in the east has taken away a share from austria, and you wonder if that is a structural thing. years, who couple of is to say it will turn around, even if we do get a recovery in your. -- in europe. ferro, thank you. i lived this in budapest when i visited there a number of years ago. the czeching how republic has taken the thunder away from vienna. was in shadow of what it many regards. speaking of shadows, we have photos today. vonnie: still have the opec meeting, the opera. aree top photos today --

stunning shot from space from scott kelly on his 179th boarding of the international space station, taking a photo of the nile river at night. you can see it on the left there. and on the map around it is egypt. circumnavigating the globe more than one dozen times a day. tom, how many times do you certain advocated -- do you circumnavigate it a day? tom: -- vonnie: number two top photo -- a kayaker off santa barbara had a scary experience with an aggressive hammerhead shark. the man was fishing off the coast and repeatedly had to be back the shark with his paddle. the shark is aggressively ramming into the boat, circling it, and even following it. tom: he is in a kayak?

vonnie: this calls for jordan spieth. batting back a hammerhead shark. tom: that looks like rett wallace at a roadshow. getaway, get away! i did not see that. wow. vonnie: the shark just wanted to play. tom: right, a hammerhead shark. vonnie: pope francis arriving at andrews air force base at a fiat 500 l. rett wallace, with all that is going on in germany, angela merkel drives a poseidon to help -- a passat? is that like a fancy, securitized fiat?

vonnie: it is. uber x.annot get into a saying another tweet is "his holiness knows how to make an entrance." that is sergio markey only -- tom: that is fabulous. doing top photos now. they are just awesome. lexi who? elizabeth, we greatly appreciate this morning. in the next hour, seriously, on volkswagen. who do we want to speak to? an american executive with a terrific perspective. robert nardelli will join us. we look forward to that in our next hour. maybe we will even have some breaking news on vw as well. from "bloomberg surveillance new york city, this is -- from new

york city, this is "bloomberg surveillance." ♪

tom: we could do a two-hour

forex report this morning. euro-yen is with the pros are launching again. brazilian real makes true history yesterday. a much weaker real. -- this is all of at 106 point 81. breathtaking in its weakness or let's get to top headlines with vonnie quinn. of three companies pledging to zero out greenhouse gas emissions from their operations by 2050, unilever. their ceo is one of the chief executives urging governments to adopt their own net zero target. he spoke to francine lacqua in an exclusive interview. it is our goal to set an

example, ultimately driven by the needs of consumers. u.n. is holding meetings in new york this week on sustainable development. harvard has a world-class biggest endowment, but it is not beating its peers when it comes to investing. harvard's endowment posted a 5.8% investment return in a year that ended june 30. the ceo says he is overhauling the funds's and investment decision-making. most widelye the sung song in the world. a judge in los angeles ruled that anyone can use the song "happy birthday to you" without paying royalties. "happy birthday" -- is copyright holder -- right, tom? tom: this is a raging debate

with copywriting. it is a copyrighted item. i do not know the specifics, but the bottom line is if you're in a restaurant and they sing "happy birthday," i am not sure they are in breach of law. i do know that when carly fiorina sings "happy birthday," that is in breach of law. words: and if it is the and you sing a different tune -- --appy birthday to ya aren't they the same words? tom: this is a really interesting idea of how far does copyright extend guy: judges -- how far does copyright extend? thedge pushes against industry. janet yellen, central banker to the world. her policy is also the gift that keeps on giving.

rett wallace is cofounder and ceo of tri-con. they do brilliant word -- brilliant work. joins us as the roadshow derby heats up this fall. is there a roadshow derby this fall? rett: can you only have two horses? that the we see is cool companies that people are interested in are not -- be priced ating to an appropriate value? they are going to figure out the price at which kkr will be -- tom: is it still like the old days when he makes five phone calls? he gets fidelity, pimm: on the phone, and says that when he on thedelity, pimco

phone, and says that is -- they also filed with an underwriter, interestingly. tom: what does that signify, somebody does not get a big fat fee? they are doing it themselves. that is the future. what he tells me is, there is an intrusion of private equity-like money into your world that was not there years ago. tom: kkr has a growth fund. vonnie: and with groupon yesterday, 1000 people laid off. amazing that groupon has 1000 people to fire. when was the last time anybody heard about groupon? the unit economics of groupon were not made clear to investors. basically selling $20 pieces to 10 -- for -- $20 pieces -- s iscally selling $20 pizza

not sustainable. this is a local company that had a very good customer acquisition. it just happened to work only once. tom: henry paulson made his name at goldman sachs years ago, traveling middle america, looking at industrial companies, making legitimate deals where everybody won within the transaction. can that occur today ? rett: absolutely. tom: the transaction yesterday, spinning off specialty chemical. rett: certainly there is win-win all over the place. there are sometimes that the public is brought in off of -- tom: rett wallace, thank you so much, with triton research. volkswagen is really front and center. you need to stay with us on

radio and television. robert nardelli with some terrific perspectives on what is truly a ginormous crisis in vw. vonnie quinn and tom keene. this is"bloomberg surveillance." ♪ . . .

>> this is "bloomberg surveillance." the ceo of volkswagen faces

a furious family. can he survive to thursday? in this hour, former metal binder robert nardelli. dollar strengthens, and the president and 15,000 americans greet pope francis at the white house. good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarters in new york. it is wednesday, symptom or 23rd. i tom keene, joining me michael mckee. the pope, there's something about it. today, it has broken out, people are out early staking out positions, trying to see the pope as he motorcades around the capital city. he will be at the white house later today and it tomorrow, addresses a joint session of congress. tom: we will have coverage for you on television and radio. up outside the south

lawn of the white house with assembled.te chairs do you think republican candidates will be in the perfect white chairs? michael: not up in the front row, put it that way. tom: i thought it would be an accu medical meeting at the white house. here is david. spoke to jinping american business leaders last night, china is a staunch defender of cyber security. >> the international community should on a basis of mutual respect and mutual trust work together and peaceful, secure, ive --and corporate cooperative space. china's open to a dialogue with the united states on fighting cybercrime. david: the obama administration is likely to be skeptical. the u.s. blames china for

massive cyber attacks on american companies and government agencies. coinciding, china cuts a pair of deals with boeing. 737jet maker will build a completion center in china, and china is buying 300 boeing planes. plantl tour a boeing today. and the volkswagen supervisory board wants to hear what the ceo new about 11 cars that beat admissions tests. the board might force him out. 1/4 of democrats nationwide favor joe biden as a presidential nominee. he is in second place. hillary clinton leads with 33%, vermont senator bernie sanders is close with a 24%. tom: to see him greeted by the pope at andrews air force base

was something to see with mrs. biden as well. let me do a quick data check for you. euro has been weaker the last two days. it will be something to see, $1.10 printed. volkswagen moving a little higher off of two days and three days of absolute debacle as well. four days on from a story that meeting. global markets are riveted to the currency pair. signals tension of the moment. the yieldarrow knows is negative right now. as we look at the markets rolling out, what are you focused on? jon: i look at the strong dollar, but assets are so conflicted, when you look at the

strong dollar, good news for the like of europe and japan, bad news for the rest. notpick out a point, you do know if it is good or bad. you look at the federal reserve, for instance, let's call it federal confusion because for some people, no move is great, good for risk, but at the same time, no moves, we are sitting here thinking, "is that bad? do they think the global economy is too weak to sustain a rate hike?" tom: i would link it to the policy outcomes. jon ferro, thank you so much for your assistance from vienna. mike, you see the currency markets. i know you do not focus that much on it. what else are you see in? the bond market? michael: the bond market is drifting sideways. prices are a little lower, yields a little higher, but not really telling us anything at the moment. what is interesting is the euro has been falling even this point the fed is doing nothing. tom: i would agree with that.

the dollar dynamics, i would say, like, we are finally there where we have some similes of a redux of the late 1990's. we have a new leg up in trade weighted dollar strength. really gets my attention here to do you sense a tension point of the dollar drives higher? michael: there seems to be. deutsche bank have come across our desk suggesting that the dollar is going to fall back now. it has gone too far, too fast. good news fore the united states but not necessarily good news for mario draghi and the ecb. tom: the new parlor game is guess the dollar. there is no waiting for volkswagen. chief executive officers -- they must delegate to underlings, and it is the underlings that will kill you. vw and 60 years of repetition, it is flat out logan. -- broken.

executives shuddered. nba will only get you so far. robert nardelli, we are thrilled to bring you the good, the bad, what did you first think of when you heard of the scope and the scale of this debacle? robert: it is unconscionable, a company like volkswagen with the global recor reputation and brand and integrity -- it is hard to believe that they would do something like this, tom. my spirit warehouse that chrysler -- a couple of things either decided that they did not have the technology to be compliant, one, the cost to be compliant was greater than the return it would get in the united states given the epa regulations here versus europe. can we do not know if they sold those engines to any other oe manufacturer. the devastation they have created to the dealership, the value that it has lost some of

the credibility, the consumer complaint -- it is overwhelming. tom: is it fair to mr. that he exits if he did not know of these details? starts at theit top. mary went through this at gm. you have to create a culture of compliance. if there was a complicity where i think he had to know that this took place. it is hard to believe that someone in the position -- it is to thing to make an error, make mistakes. if it is true, this was a conscious decision to circumvent the regulations here in the u.s. have you seen this and any -- i will step back -- enron, obviously, criminal fraud, but would it be unique to a particular company, or is that the evo's these days in business -- to stretch the rules as far as you can? robert: what we have here not

only on the epa thing, mike, but we have another major collision in regards to the standards here in the u.s. consumers are voting with their dollars for large trucks, suv's. car companies love it. greater margins. totally against the compliance with the new gasoline standards. tom: are you suggesting that mark feels at ford motor will adapt now? robert: there has to be because they will not be able to meet haveap standards on miles -- of the cap a standards on miles per gallon. that is why you are seeing most of the cars going to electric controls, in other words the old manual hydraulics. earring,got electric everything to reduce the drag on the engine, to reduce the rpm to get better efficiency going forward.

it is a major challenge. tom: i love a nuts and bolts "surveillance" with bob nardelli. michael: it is never going to meet the emissions -- robert: it will not have to. he is grandfathered. [laughter] plugremember the spark cap? we are going to rip up the script. how could chrysler build a they recruit it with a distributor where you knew they were going to drop the screw in the distributor and ruin the rotation? why do we do that? robert: because we wanted to get you back to the dealers. [laughter] michael: car companies are going to make electric cars. are people going to buy electric cars? are they going to sell enough to bring the fuel standards up? robert: we certainly do not see we?oday, do with oil prices down, therefore gas prices are down, consumers are flocking back to the larger vehicles, and they do not see

the need to buy the electric car. the only thing that is going to aalthy cap -- to help the cap standards is if they put a quota, you can only make so many trucks must so many suv's. tom: we will continue to look across the bloomberg terminal for breaking news on vw as one boards meets today. coming up, the vice president surges in a new bloomberg poll. we will have many details on the most interesting polls, he is not a candidate, pope francis. stay with us. "bloomberg surveillance" from new york city. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." mckee, robert nardelli. time for a morning must-read, from the giant of baseball writing, roger angell writes -- there is also a matter of perfection, which baseball every as a possibility in game, but at such as that it is never mentioned. could be but the thought flies out of your head because it is so crazy.

"nothing went through my mind until the seventh inning," yogi berra said this time afterward. a closeher yogi gem, enough, and, as always, you knew what he meant. you look in his abilities away from the funny comments, but it was about the game, and he did it right from the get-go. michael: perhaps only babe ruth americanim in the people's love for a baseball figure, and he was an extraordinary talent as well as humorous baseball figure. years, three m.v.p. awards, 15 all-star game appearances, played in more world series games than anyone else. of course, he is member for some of the great, great quotes. [laughs] he said, of course, "it ain't it's over," "nobody goes there anymore, it is too crowded." tom: one of my great childhood

memories is fenway park in the early 1960's, i can barely remember it, mickey mantel, whitey ford, whitey ford was 14 years in the minors. these guys were mere mortals, weren't they? robert: yogi is the kind of legends that we need today, someone the youth of america could look up to, someone with integrity, passion -- tom: you are thinking of tom brady, right? [laughter] robert: i think i was talking about yogi, to be honest with you. [laughs] but every child growing up, you and i during that period, we all knew yogi, we all looked up to him, we all have this aspirational desire to be like him. like theit was not competition there is now for her to there is the football derby every sunday afternoon, the transracial things, hockey. really up to the -- the trans-gentle things, hockey. michael: ace ball is still, and most americans minds, --

baseball is still, in most americans' minds, america's pastime. "the future is still what it used to be." tom: yogi berra, dead at 90. for years, the catcher of the modern era.

after some sporting volatility, futures advance this s&p futures up 9, dow futures up 82 we welcome all of you worldwide on bloomberg television and bloomberg radio. here is david. david: holiday sales may have less than they did last year. christmas shopping last year was up by more than 5%. the reason -- stagnant wages.

instagram, facebook's photo sharing app, now has 400 million monthly users, more than twitter. of instagram users are outside the u.s. it is catching on fast in brazil, japan, and indonesia. faa approved the use of nflg drones for the for video. they cannot be used near airplanes. tom: i am lost. he kobe berra would not like berra when not like drones. [laughter] pollel: a new bloomberg shows a hillary clinton leading the democratic field, but her numbers are slipping. you can see who is a number 2 -- joe biden at 25%. most interesting is this new survey does confirm the catch phrase of hillary's husband campaign for president

-- is always the economy, stupid. our survey director joins us now. i was really struck by some of the numbers in here because there have been some real deterioration in people's views on the economy, not just the economy, but income inequality. people feel it is getting worse. overall financial security, people feel it is any worse. people feel the value of their homes is going down. what is happening here? ann: let me clarify -- when we ask is a getting better, worse, or staying the same, there are more people who say it is getting better than getting that proportion is so high purity tracking is going down, so it's a little bittersweet, but it is still a sense that the economy is getting better among more people saying it is getting worse, but that margin is declining, so that is the move. people are so worried. michael: using the survey every month, and you are looking at the changes in people's attitudes. is this telling us about something about the change in

the economy, that people are picking up perhaps for the economic data, or is it because the stock market let down and people like tom keene and michael mckee have been telling people the i sky is falling. this is a political poll, so the extent of the economy is politicized, then there is a right answer. if it is getting better, that would say support from economic policies in place, but if it is worth, you are unhappy about things and really, so it is a little bit about the mood of a nation a little bit better than the economic indicators. i would go to the hard data for economic indicators. michael: we are still a long way away from the election, but is it beginning to shape up as an election about the economy even though we are in -- it is not a poster session election. is about the economy? ann: i do not knows it is about the economy yet. at the end of the preseason where some candidates are deciding that they are not into this game and they are being

benched, however he wants talk about it, but i think if the sense of being ready to take a look at candidates, and what is that they are going to be doing in terms of the economy, there has been very little conversation about that. soul told me the small players could stay in longer because of the big money helping the small players. do you observe that in the polls? do you see a change? ann: scott walker would say "not so much." polls inok at the january, february, march, april, and then it looked like he lost it. why did he lose it? because he was not able to keep the cycle going of having good performances that bentley able to want to support you with their dollars. tom: what about bob nardelli? robert: even hillary is going that way to all of a sudden she is against the xl hartline -- the xl pipeline. why?

because major dollars will support her. tom: tell us about rob nardelli's eastern ohio? ann: eastern ohio. [laughs] tom: i am serious. hillary clinton has to win. ann: it is a must win. tom: what you observe there now? drill downlls cannot as finally as eastern ohio. to be a keyng battleground, as it always is a they have got a candidate on the republican side from that. if he ends up with the nomination, that puts it in play. tom: you guys have got your republican poll coming out tomorrow. ann: we do. michael: the poll has a move up for joe biden. is that because he is getting media attention because we are bored with the hillary coronation in the press and people are writing about him, or is there a genuine groundswell of support for joe biden?

or are the american people just not sold on hillary? ann: there are a couple of things going on. it is more complicated than that. if polla bit of a what because there is no national election that will pit joe biden against hillary clinton, but we wanted to see how that would be out. the fact that he comes in second over bernie sanders, that is meaningful. his national favorability has increased. it has only increased 3 points, but everybody else decreased, including the pope from the last time we measured. tom: what did you learn about pope? ann: he is very popular, including among people who are not catholic and including among people who have no religion, i called in the "nones." tom: very cute. ann: they like his issues when it colors inside the lines of the catholic church, when he steps out to other issues, that gets more risky if he gets political. michael: unfortunately, he cannot run for president in the

country. more on the 2016 presidential race. you can see it at bloomberg.com /politics. this is "bloomberg surveillance." ♪

tom: good morning, everyone. it is the white house preparing for thousands of people to greet pope francis' first visit from cuba to the united states. he will go to washington and then new york and then philadelphia. talk abouted to

this. they are getting ready at the white house, and the uproar in washington. michael: nobody brings up the crowds like the pope, whether you are catholic or not. people want to see the religious leader of the catholic church. the pope every time comes to the united states, people not just gathering around the white house by the vatican embassy in washington where the pope is staying attracting huge crowds. people jockeying for position along the motorcade route just to see him. here in central park, they have to block out and give away tickets to be in the park to line the roads to watch and just drive through when he comes through on friday. tom: and of course at madison square garden as well here in two days. notourse, the pope does wear any branding. he is not premier league in the united kingdom or formula one racing, but he can still do some branding. it will help, among others, a small car company called fiat.

this was a home run yesterday for fiat. robert hurt l.a. is with us and knows a thing or two about branding -- robert nardelli is with us and knows a thing or two about branding. is the remember, fiat brand of choice in italy, so if you are not driving a fiat, you are not patriotic. if you look at e.g. grand cherokee that he customize for the -- if you look at the jeep grand cherokee that was customize for the pope, he got a twofer. tom: is it more chrysler or more fiats that was a success? robert: look at the numbers. it was not for chrysler, fiat what have gone bankrupt. coming out of the economic recession we had in 2007, 2008, and 2009, it was chrysler and the jeep grand cherokee and all the things they did during that period was to reestablish that

brand to keep fiat alive. tom: what i'm learning about the pope pulls up to the white house this morning, you want the canvas top, the jeep safari. [laughter] david: the popemobile is riding on one of those. tom: very good. ann selzer with us now. polling with the pope. ann: what i think is interesting is this is a pope popular with people who are not catholic. veryous support for the specific things that he is changing inside the catholic church, so including more women, saying who am i to judge if a ,ay person is seeking the lord welcoming immigrants, making marriage and all miss easier -- annulmentsiage

easier. very much strong support and heading in a good direction. only 4% of people who are not currently or formerly applix say they are becoming -- catholic say they are becoming catholics. so he is not expanding his flock. david: he is only the fourth pope to visit the united states. ofs is the enormous to a lot us, catholics and non-catholics, it is a very special event. michael: there was a survey that almost as many last catholics, people who identify as such, as you have catholics. how important are catholics in the presidential race anymore? it is not like 1960. not like 1960. that has changed quite a bit. there are ways in which the catholics tend to be of more of a democratic leaning, sort of religion that we as we think about evangelicals being more republican-leaning.

i will say that even evangelicals in our national survey say they feel very good about this pope. tom: how is the evangelical polling now versus four years ago? is there a nuance in the evangelical thrust of american politics? ann: there is a lack of nuance. it is not a growing population. they are looking, and turns of their politics, at a huge field of people were coming up to court exactly them, so they have not landed on anyone just yet. tom: i look at all of this, and mike, you go back to the pageantry of it and the moment of it and it goes back to the economy, and the fact is even if it is a good american economy, it is not the economy we need. the pope comes to america with a subpar economy from where we were. michael: the thing that stood oll is thein ann's p people who think their children will do better.

the number of people who think so has declined over the last couple of months. tom: you see more homeless on the streets in new york? michael: it is hard to say, but perhaps. tom: our data check is green on the screen with futures up. michael: this is "bloomberg surveillance." i am michael mckee along with tom keene. we are here with bob nardelli. tom: as we look at some of the action in currencies, there is a backdrop, if you are speaking of brazil politically, even culturally, brazil is imploding. it is expecting a record week real.julia is our bureau chief in são paulo. julie, how did the brazilian people react overnight to the currencies, record weakness?

we have not really ever seen this, so it is on the cover of monthly newspapers, and people are just a little shocked at how fast it has fallen so far. the level of protest so far with the government? we did nuances of the object, economic data, and the anger or the tension out there -- gays that versus other moment in recent months. i think we have something good happen overnight, at 2:00 in the morning, congress upheld some of the measures. so that went very well. it will belooks like a better open this morning, so the protests are a little less enthusiastic than we have seen in recent months. michael: we presume when the legislature comes back, they will uphold the rest of the vetoes. our people convinced that this is going to be enough to put a floor under the economy and

under the markets there? julia: i think it is the first piece of good news we've had in a while, so at least that has stopped getting worse. we still need to see what will come out of that, and we still do not have dates set for those votes that are so very important votes. things are that quieter, but i do not think we can call a floor yet. tom: i think, julia, the budget is extraordinary. the budget deficit nears very much the explosive weakness we've seen in the brazilian real. thea, if we can move from fiscal policy, you take the news isvolkswagen, petrobras maybe right behind volkswagen as the corporate screw above the moment. give us the update on his giant oil company. what you look for in the rest of september and into october? from: we are waiting oakland to cut more of its investment plan given how the

oil and the currency, because her member petrobras has a huge foreign debt, euro denominated being held at 4, they have increased their debt significantly in the past few months, so we are waiting for them to cut more investments and just to see what they can do now with also oil falling. julia, thank you so much, julia leite in são paulo. robert hurt l.a. knows it is a global market. boeing selling 300 planes to china -- robert nardelli knows it is a global market. boeing telling 300 planes to china. you get distracted. robert: i tell you, tom, the ceo's today have an honest -- unbelievable challenge. inyou are selling cars brazil or importing cars from brazil, you look at the china market getting much softer for the auto industry. the fluctuation in the ability

to have it every day -- unbelievable. did you spendtime with your controller worrying about foreign-exchange dynamics? i'm going to guess you spend a little time. robert: a little bit, but mostly it was from a hedging standpoint. brazil, it is not a hedging standpoint, it is salvation. robert: even in china, if you look at what happened to the there, we used to monitor -- my was growing up in ge, japan was always the barometer on how we looked at the exchange rate. now what is a global economic market. tom: and complex. is this good for america? when you see this complexity, does it think about what better america? robert: what it shows is the dependency the u.s. market has on the global economy and the exchange, not only the exchange rate but the exchange of goods. it is a very, very challenging period because you do not have stability in the market anywhere , so the ceo today has to have a much broader view every day.

tom: and we see it, mike, when the mexican peso making about 17. weaker currencies change the labor arbitrage to say the least. we are going to come back with volkswagen's board news. ♪

tom: good morning, everyone.

we look at new york city, we look at washington, london, hong kong. ." is a global "surveillance right now , we are looking at an area where traffic will not move. traffic will not move. michael: somewhere around 5:00 on thursday. robert: rush hour on thursday. tom: if you have to go to the dry cleaners, today is the day to do it in new york. that is your "surveillance" wisdom. right now, we're moving out of gridlock to david gura. about fiat let's talk chrysler. 2.1% move, the reason being this vw scandal has grown and grown. the european auto manufacturers saying this is not an industrywide problem. that is bringing some assurance to investors and fiat chrysler. some assurance. tom: scv1. what is that, vatican one?

the nextdent, motorcade it will get here, a super hyper security built. what you think? chevy -- thinkl: you have got to -- that car is perfect for a place like washington or new york city where you cannot park. you can fit into a tiny's ace. -- tiny space. [laughter] david: they next one, citric needing to sell, about 3% in the premarket, having a lot of interest from outside. for next is the story year, i am seeing it now for the first time, will the cloud work? i have set it for years, i do not get the macroeconomics, the price theory of the cloud. in the last couple of days, you and others have had the cloud challenged. david: it is coming up, exactly. they are talking about it. if they do not get a buyer, they will have to's and off a lot of stuff. -- to spin off a lot of stuff. tom: can you make money in the

cloud? david: story of the year. xi jinping going to visit boeing this year, china is buying 300 boeing planes. robert: they will probably welcome him at boeing. tom: bogner delly, this is our expert juggernaut -- bob nardelli, this is our expert juggernaut. the export import bank, which supports boeing, out of business now, and boeing says it needs it. can american business of the without it? robert: it'll be interesting. my good friend jim mcnerney running boeing has done a excellent jobn, but that import export bank has been critical, and there are a lot of critics. there was a lot of lobbying to try to get it reinstated, but it did not go through. tom: should ge move their headquarters? robert: it is interesting, tom. it is not the corporate tax in connecticut -- it is the personal tax.

tom: they cannot get the bodies. robert: the 500 executives. again, growing up in ge, you had to live where your job was. today, many of the top executives are commuting from favorable, lower tax based on a personal basis. tom: we could do that, with "surveillance," you and i. michael: i thought you did? florida in the winter. tom: turks and take those. stay with us. this is "bloomberg surveillance." ♪

tom: good morning, everyone. futures have evaporated in the last few moments. s&p futures were up 8, they are not now. let's go to top headlines with david gura. david: hours after xi jinping arrives, china's official news agency announces a pair of deals, boeing will build a 737 completion center in china, and china is buying 300 boeing jets. democrats favored joe biden at the presidential nominee, even though he is not in the race. poll still shows hillary clinton leading a 33%, the vice president at second, from a senator bernie sanders a

close third at 24% year and "happy birthday to you" now belongs to the people. the psalm without paying royalties. the publishing company has been collecting on the two for decades might appeal. those of the top headlines. tom: let's continue a smart conversation on volkswagen. right now, we need an update. we had a beautiful briefing yesterday from our hans nichols, and he joins us now. hans, what is the nuance today versus your briefing of yesterday? hans: i have got a new paper for everyone to read, and that is -- this is the paper-based in lower saxony, which has a 20% stake in volkswagen. they have a lot of votes on the executive council and governing council. they seem to be getting a little bit of scoop on which direction this is going. the executive committee met last night, a surprise meeting we did not know about. they are meeting today. the executive committee will

make their case to the full 20-member committee on whether or not martin winterkorn should keep his job. he is meeting with him today, guys. tom: i look at the headlines coming across the bloomberg terminal, and it is as much public officials as private statements or analysis. is volkswagen perceived as a government-owned entity? hans: well, somewhat. maybe more so than the other big auto companies here, but it does flavor as a same national champion because the government is not enough early want to play favorites between daimler, bmw, and volkswagen. volkswagen is the biggest. 10 million units, 590,000 employees, 12 different brands volkswagenmborghini, -- it reminds me of these banking crises where the banks got to complicated for one ceo to know everything that is going on. this is a complicated business. i question, mr. nardelli,

guess, is how much do all auto companies game the omissions standards? you can see that could be the direction volkswagen goes -- everyone is doing it, we just got caught. tom: do we game our epa emissions? robert: we did not at chrysler. , they look at navistar did not have the technology to meet the on-highway compliance with the large engines. i worked with tim very closely who ran commons engine. we were developing our own engine, and we could not be the epa standards technology wise. we were looking at putting an additional fluids. we had to back away from it. the system byme what you own or who you buy it from, not by manipulating the technology, as the alleged item here at volkswagen? to one is vwoints

is recognized, not government owned, but it reflects on germany in total. michael: bob makes a good point. hans, you translate volkswagen, it is "people's car." how is this playing in germany? hans: well, angela merkel is embarrassed. for more calling transparency from the company. you have labor union you leaders saying they want clear transparency and explanations from dr. winterkorn, and the rest of the auto industry is a little bit nervous because one in 7 jobs in germany is related to the auto industry. it has invested so much in diesel. it is the overall sort of consequence in schedule is diesel is not only killed in the u.s. but put on the back burner in europe. there will be a lot of lost investment because companies here have all invested heavily into diesel. they have been subsidized heavily as well. quick question for everyone here on set -- of all the times we have looked at the stickers when you look at the cars on the

block and you see miles per gallon, who here has ever gotten the miles per gallon that has been advertised for both city and highway? because i have never been able to. [laughter] robert: it depends on the driver. [laughter] michael: how realistic are those numbers to begin with? there has been some findings relative to also the state epa or miles per gallon alsod. again, it is a very standard test, rigorous under certain conditions that are governed by the government relative to how you comply. and again, in everyday driving, different factors -- road wear,ions, tyeire weather -- all come into play on that. again, you have a set of standards by which he tests and comply to it i would tell you at chrysler, we did not fudge on that. david: what does this standard say that regulation?

are the standards too ambitious? the way in which this unfolded, what does that say about regulation? look, you know, it is like apple pie and mother, you want to reduce emissions, you want to get better gas mileage, but we have got to make sure that the technology is there, able to comply, and the cost thern benefit is there for manufacturer. possibly what happened with the vw case as they could not come up with the technology, they found a workaround to be determined, and it was only within the u.s. market because the epa requirements in europe are more lax than a are here in the u.s. tom: hans, you agree with that, that volkswagen was almost lulle intod this by being in europe and having more lax regulation? hans: they wanted to play in the european clean fuel area. instead of going electric light we'll do an auto companies it, they went diesel and not quite make it.

-- instead of going electric auto companies did, they went diesel and did not quite make it. they have a lot more pollutants. i mean, paris has a small problem now, in part because they have been so heavily subsidized, diesel technology has been heavily subsidize, and they admit a lot of carcinogens. michael: hans, you said it would be a big problem for the investment in diesel, particularly in europe. i am asking bob nardelli here is diesel goes away in the united states, does anybody care? robert: it is not be few and the engine of choice over here, which was one of the challenges we had. do we spend billions of dollars to be compliant on a very small market? if you look at the ability to get diesel fuel, it is not as readily available in the u.s. as it is in europe. it is the fuel of choice over there, so we thought it was a very small market when we were looking at it. i'm nichols, thank you so

much, greatly appreciate it this morning, briefing us on both sides. we can see headlines today, folks, out of vw. i get a local tweet from marco pope'sy on the licensed tour, on the fiat. i love twitter. 1, helping with the italian, italian]speaking michael: vatican city state. tom: that is just so cool. there you go. as i said before, i can just see the president and a ford or in a chrysler jeep. it is a new trend. get out of the cadillac, the mercedes, or whatever. [laughter] robert: in america, you're driving a ram truck. michael: that is true. tom: with all the gm trowel and what mari borrow -- challenges and what mary barra robert: has

done -- she raised the bar -- tom: with all the g.m. challenges and what mary barra has done -- robert: she raised the bar. and to put all the structures in place to make sure that does not happen again -- she has done a great job. tom: you see the turnaround, the good move competition between gm and ford and the rest, where do you see the american auto industry in five years when you have got vw in tennessee, carolina, and many others manufacturers? robert:robert: you have got to here.es putting plants you have got a plethora of competition. they see this as a very attractive market. have the customer centricity that they had. the aspirational interior design we were talking about, so they saw an opportunity to come in. they will be competitive. tom: bob nardelli, thank you so much. michael mckee on the pope. the pope will arrive at

the white house about an hour from now. it will be interesting to see if he pulls up in that little car and gets out. the pond and thorough money the people gathered, the pope's visit to america gets underway. ♪

>> good morning it is 8:00 on wall street. the dog that did not bark. china gets bad news on its economy. at this point, and looks like the rest of the world is not paying a lot of attention. let's take a look at what is happening in the markets. a pessimistic read on chinese manufacturing. a private report falls to its lowest since 2009. the financial crisis. you can imagine what happened. the stock market falls 2% on the day. the hang seng gets hammered, 2.3%. carmakers including volkswagen rebounding today helping push european stocks higher. the dax is up by 69 point 7/10 of a percent -- 69.7 tenths of a percent. in the united states, the era of good feeling continues although

feeling is not as strong as they were an hour or so ago. futures are up -- s&p futures are up by a point. nasdaq futures are higher by seven. today, are watching still volkswagen. martin winterkorn gets a chance to make his case before the executive committee of the automaker's supervisory board. what did he know and when did he know it? the answers to those questions may decide whether he will stay on the job. , the popeo the u.s. in washington driving around in his fiat. he will be pulling up in that car at the white house in about an hour. gather ceremony, crowds around the white house now. he will address congress before

coming to new york and shutting down the city completely. xi jinping in seattle yesterday. he is announcing china will buy 300 boeing jets. no doubt there will roll out the red carpet when he visits the plane manufacturer in the northwest today. , thetory of the day passing of lawrence peter be rra. 15 all-star game appearances, more world series games than anyone and known for his malapropisms as he once said ain't what it used to be." joining us, jeff degraaf, ceo and one of the cofounders -- he gives and i all things in the markets and like to look at charts and things that make tom keene very excited.

let be get your general view before we get into some of the charts that you follow. on the economy, on the markets there has been a lot of question about whether or not we have run the course in this bull market and whether china is signaling that there are a lot of bubbles out there. this one taking down the rest of the world and bursting. is that your view? is this just an air pocket? jeff: that is the $1 million question. it seems to be an air pocket. i would say there is a contraction in global growth that is hitting u.s. markets. as you would expect. it is hitting those areas that have a high exposure to the international markets. those that are domestic look very good. together andit all

you look at things like the credit default swaps in u.s. banks, they are actually tighter than any other sector. . think this is an adjustment i think there is a liquidity adjustment taking place. in terms of turning into a full-fledged air market, that seems premature at this point. michael: yesterday we had bob shiller on. he adjusts price earnings over a 10 year period. he suggests we are still overvalued. what do you see? jeff: valuation is tricky because the us valuation is a function of liquidity. from that standpoint, liquidity conditions are tightening, not loosening. you see that in the styles that are working so growth is outperforming value. are very things tt

consistent with a contraction in the liquidity environment and when you have a contraction, you generally have a suppression in multiples. the vicks is up 16% for the year and yet you say low vol is better. jeff: low volatility stocks that have less beta. quality is another measure we look at. in this business it is great to think i'm going to buy high quality assets. one of the best things you can do when the liquidity is expanding in the marketplace is to find the lowest quality assets and own them. i know that might seem counterintuitive against the grain. we have shown time and time again that is where you need to be. michael: jeff has been named institutional investors number one technical analyst for the last 10 years. since you are the number one

post of financial news radio, you two have a lot in common. tom: we are here with jeff degraaf and that is a good thing. i'm going to do a question that will stop traffic nationwide. michael: we don't even need the pope. i thought your coverage was really something. with so much going on in the news flow today, the white house lawn filling up very quickly. bloomberg surveillance this morning brought to you by cohnreznick, accounting text advisory during times of growth or economic uncertainty your business needs cohnreznick advisory group. find out more at cohnreznick.com . jeff degraaf is with us. you and i read john maggie cover to cover one million years ago. a textbook about support lines.

do you buy so-called head and shoulder mythology? if i have a shoulder and i have a head up and another shoulder, the world will come to an end? jeff: no. we do buy into trends. i think with the head and shoulders represents is the definition of trend, particularly when you have a neck line violation. a trend is defined by a sequence of lower lows and lower highs. the head and shoulder helps to represent that. tom: isn't and violation -- what is a neck line by laois and? -- a violation? why i can't dos technical analysis. tom: your point is well taken. analysis of technical

on head and shoulders, on onport, on resistance consolidation and distribution. his technical analysis about knowing where we have been? or is the jeff degraaf world about guessing where we are headed? jeff: it is about taking the information of today and yesterday and projecting a continuation of that behavior. if you think about it in math terms, think about a regression line. you're taking data points around the distribution and projecting where you think the next one will be. tom: do you extrapolate with a new humility after what you put up with for the last eight years? jeff: we always try to be as humble as we can. , we pride ourselves on quantifying as much of the

process as we can. instead of the guesswork of head and shoulders it is difficult to go back in time in an unbiased way and look at those formations and come up with something. -- we havento developed statistical methods to help us sort through it. michael: the great thing about the show, tom is so smart, i get to be a dumb sidekick. ,f you are projecting forward how does that square with the safe harbor statements we get in every note from every analyst about how past performance has nothing to do with the future? jeff: that is a copout. that is what they are doing, right? we are taking the information and we are looking at it as it is applied in the past and seeing if it has relevance. if it does -- michael: you are saying never mind the statements come a sometimes it does? jeff: absolutely. a company's earnings are

generally trend following. they are either up or down and they do that in some type of sequence. there is generally a trend to those and that trend is reflected in price momentum. the difference, -- that is why this business is so difficult -- price historically leads data. collective- the wisdom of the market gets it first. about on to talk technical analysis. the tone we see with futures up. now.lian real, stronger ♪

tom: what a volatile day yesterday? drama in the markets with that recovery late in the afternoon across some of the asset classes. david: commodities getting whacked yesterday. matt miller is here with me to dig deeper into the commodity losses. matt: we will see if we cannot get signs of a rebound. i will go to chris kirsch, the director of portfolio management . let me ask about china because

the pmi numbers we got overnight were so bad and yet i am seeing other commodities rise. oil is gaining back. down. copper was the fact that we saw the other commodities rise, we saw a correlation trade and it is now above the 2.30 level. it could see a bounce but we are -- buying anything consider new lows at 220 earlier this morning with the news out of china. a lot of commodities direction has been driven by dollar strength and dollar witness -- dollar weakness. we are looking for decent numbers out of china and we are just not getting them. chris: i believe china has become the driving force around the copper trade. we saw the strengthening dollar put in in p meant on a rally above 245. bad news coming at a china and potential revisions of gdp has

really caused this influx to the downside. it has taken its breath at the 230 level. matt: we see the correlation, trade helping to move copper higher this morning. can we expect correlation to play a bigger role in copper's ?rade -- chris: a lot of the industrial metals, zinc had a capitulation trade. had act that we have not larger selloff despite those numbers coming out of china makes us believe we could be setting a range here. right now everyone is holding. we are not buying until it reaches 245. matt: thanks very much. chris gersch of ultima's capital. credits wiese downgraded the entire mining sector. david you were watching

bloomberg surveillance. the pope getting ready to arrive at the white house in the next 45 minutes or so down in washington, d.c. ♪

tom: good morning. a special good morning to bloomberg 1200 boston. a perfect day in new york. we say good morning. brought to you by invesco. invesco's experts can help. find the latest thought leadership at the invesco blog.

visit invesco.com to subscribe. we are watching in about one hour the president in the pope will meet at the white house. i believe the pope will drive up in some form or manner. .ichael: in a tiny fiat you got the explanation on the license plate. tom: thank you for briefing us. one. vatican city state very cool. we will have to see what happens with the pageantry of the next hour. ,oining us live in the studio this is breaking news. here is bill maloney. bill: gains in the u k and italy. volkswagen currently trading higher. u.s. futures are off their best levels. dow futures up as much as 93 points earlier.

u.s. 10 yield at 2.14%. draghieconomic front, speaks at 9:00. doe energy numbers. upgrades and downgrades this morning. intel raised the market performed at bernstein. a price target of 180. a price target of 62. carmax cut market performed at oppenheimer. tom: to hear more on breaking news, particularly across the bloomberg terminal, go to squawk go. michael: i'm bringing back jeff degraaf, chairman and head technical analyst at renaissance macro. one of the street's most respected -- tom: can i rip up the script and

say neil dutta has john -- has done a great job with perspective? jeff: thank you. michael: you should give him a big raise. tom always says this and i am going to repeat it, we don't send out people's research notes. you'll have to talk to mr. degraff on your own to get his notes. i'm looking at notes you sent out today. we were just talking about how you extrapolate from the past. today versus 2011. you note the natives -- the latest market developments bear resemblance to 2011. what you mean by that? jeff: if you look at the structure of what happened here recently and you go back and look at other times. instead of us overlaying and saying this reminds us of 1874 or 2011, we let our programs do

that and tell us what this most looks like. if you look at the similarities, , beforelly stands out we had this explosion in volatility and this drawdown off the highs, our trend work had turned negative. instead of the head and shoulder formation we used other methods and our trend work turned bearish neutral two weeks prior to that swoon we had on that monday back in august. telling because it said that the internal structure of the market was weaker. that was similar to what happened in 2011. over 90% oversold come of the s&p constituents made a 20 day low simultaneously. that does not happen often. 1997,pened in 2011, 2008,

and prior to that it happened in 1978. what it does historically is it gives you a sense of the severity of the oversold condition which is extreme here. i think what is most interesting or telling is that in every one of those instances the market went on to make another undercut low. from our standpoint, it was the beginning of something, not the end. itselfppens to associate from a quantitative standpoint very well with the most recent price action. our real messages, that was a warning shot. at a minimum, we have got a retest that will take place and likely and undercut low four to six weeks past that point. tom: the retest will go below the previous low. does it signal a bear market? jeff: not necessarily. 2011 was the best -- tom: look at the gold chart.

on bloombergt radio plus. how can you be a bull on gold now? jeff: you have to be able philosophical a -- you have to be a bull philosophically. if you look at the relative talstionship, precious me are working better than industrial which is usually an early indication of some type of global unrest. tom: zinc, which i featured two days ago, and copper, moving like they are moving is out front of what we can see. is that what you are saying? jeff: yes. tom: jeff degraaf, think you so much. we will continue with more technical allowance -- technical analysis. upures up five, dow futures

eight. west texas, not for -- not part of the news flow this morning. stay with us on television, on radio, "bloomberg surveillance." ♪

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he arrived from cuba. francis will speak this morning. president obama is hoping to .ind common ground the two are miles apart on issues such as abortion and same-sex marriage. a poll shows the race for the democratic presidential nomination may turn out to be more competitive. whethern has not said he is running. according to a new poll, 25% of registered democrats say biden is their choice. hillary clinton leads with 33%. a 24%.sanders is xi jinping is promising to work with the u.s. on cyberattacks. she was speaking to american business executives. he says china was a staunch defender of cyber security. the u.s. has accused china of being responsible for massive cyber attacks on american companies and government agencies.

indexes,t the major futures are up this morning. the dow up 52, the s&p up 5.3 points. thirds of about two percent. michael: welcome back. i michael mckee along with tom keene. visit commonwealth.com. not a lot of economic numbers out today. the big one to the u.s., u.s. manufacturing pmi does not get the same amount of attention as the market numbers do in europe. germany's pmi, a little lower than expected. france is a little better overall. away from all we have been

covering, we get new home sales tomorrow, don't we? that's a big deal. michael: we get durable goods orders. no, we do get to home sales. we will be watching that. stronger,my, getting at least according to the data. that is dragging the dollar up. let me put this on screen, the trade weighted dollar. that is a big issue for the united states. we are getting back to the 1990's levels. redeker is one of the most experienced forex watchers at morgan stanley. he has seen this before and was around for the 1990's. with the dollar getting this , mr.g, the fed worried

redeker and others are changing their tune. they see the dollar going too far too fast. you are looking for it to fall back? mr. redeker: it depends which currencies we are talking about. when we are talking about the g ofthe surplus environment japan, it certainly makes that statement. we could see ais fall. the euro-dollar good move higher. we want to make the point that our u.s. dollar will miss -- atlishness is not changing all. there is a shift taking place in relative returns, expectations. u.s. is currently experiencing significant flow of money

repatriation. have beenwhich invested for the past 10 to 15 years. these funds no longer provide adequate returns. this money comes back into the united states and to that extent is quite similar off what we have experienced in the 1990's. pretty much in line with our projections. about a u.s.ng dollar bull market. and think we rally still have one more like to go. michael: how much more painful is it going to get for american exporters in terms of inflation? how much further can the dollar rise? mr. redeker: you are mentioning two topics.

when you look at inflation expectations, that did decline .oward recent low you look at the u.s. manufacturing sector which to to globalt is exposed markets, you see scaling back. at isou need to look domestic funding conditions. you need to see how the housing market is doing, how the retail sector is doing, how consumption is doing. when you factoring is 8% of the u.s. gdp. it is not really as a relevant story. domestic demand seems to be doing ok. tom: i look at your colleague who was way out front on the fed delay, there is a nuance of next year or december. morgan stanley led to the major houses on the delay call months

and months ago. withave you recalibrated mrs. an inner's work as you move into next year? mr. redeker: that works very well together. when you look at what our economists are doing, they take -- the implement that in their forecast. u.s.ve been bullish on the dollar and that allows them to moderate their projections on inflation, they're in -- their exploitations -- their expectations accordingly. coordination taking place between ellen and my team. what drives the dollar. is it the relative return at petitions? -- return expectations? michael: aren't they the same basically because the fed is going to drive return expectations? mr. redeker: it is not the same.

many are investing in emerging markets giving you good returns. that is down to the fundamentals in emerging markets. when you have higher interest rates in the united states, it does influence a part of u.s. equation. it leaves the other part unattended. the u.s.ver saying is a land of milk and honey in terms of our performance. the u.s. dollar is weakening because of declining credit multiplying in emerging markets. as well, weakness in investor spending. stagnation seems -- tom: hans-guenter redeker with us. i want to look at asia when we come back. it is a little green on the screen. a nice bounce off what we saw yesterday.

.44. 111 the quiet underpinning has been a weaker euro and asian currencies, really struggling the last few days. it is time for a morning must listen. earlier today on surveillance we spoke with bob nardelli about the volkswagen emissions scandal. went through this at gm. you have to create a culture of compliance. -- iere was complicity think he had to know this took place. it is hard to believe someone in that position -- it is one thing to make a mistake. this -- if this is true, it was a conscious decision to circumvent regulations in the u.s. david: matt miller, joining us

now. what do you make of what yet to say? matt: a lot of people have been saying this about martin winterkorn not just because of the position he sits in but because of the kind of executive he has. a very hands-on engineer. one time audi dropped out of the race because of a gearbox problem. he took the gearbox apart himself to determine the problem. that is unusual but this is the kind of ceo that martin winterkorn is. arman prosecutors came out couple of minutes ago and said they are reviewing the possible charge for aggravated fraud. this is the kind of thing that was done with intent. the question is, why would any underlings do this without trying to please their higher-ups? maybe bob nardelli has the right take. david: i am struck how much wider it gets. .e will continue to follow it

mike and tom continue their conversation with hans redeker. this is bloomberg surveillance. ♪

tom: good morning. "bloomberg surveillance."

the pope and president will meet at the white house. the pope should hans with vice president biden -- the pope shook hands with vice president biden. , quarter of poll americans registered as democrats who lean that way say that joe biden is their top choice for president. joining us to talk about that is ann selzer. joe biden has not declared his candidacy. he has expressed trepidation. seltzer: -- after selzer -- >> we do not elect presidents based on national elections are you for him to end up with one out of four people saying that he is the first choice, that is meaningful. us -- to haveave

a sense of what is attractive about vice president biden? >> it could be that he is the one not running so he has not been in the spotlight and all of that. was interesting is that there is not that much difference between republicans and democrats in their wish for him to get in. between 40% and 50% saying they wish he would run. they are saying you'd be good for the race. republicans might think he could beat hillary clinton and think she is more formidable. democrats might think he is a good guy. david: a crowded field of republicans with 15. it could be a crowded field of democrats with three. when you look at the basis for these candidates, hillary clinton still polling well with women voters. dr. selzer: her base with women is actually eroding. she isequal -- ethnic

five points greater support among women than among men. what she used have in terms of a big gender gap is not there among democrats so she may be polling better on a general election basis with women. i think biden is across the drawsthe kind of guy that across the board. bernie sanders does better with people -- when asked what their religious preference is and they say none. he may be finding geographical pockets rather than having that widespread appeal. i think that is what joe biden might have going for him. lot ofsenator sanders, a people thought he was there to shake things up. is his support growing? dr. selzer: this poll does not suggest that that is the case. in iowa we have seen him close

on hillary clinton. where it matters for him to be making up ground, he is. 35% did not know enough about him to say heather feelings were nationally. he's not quite a national figure yet. david: pope francis will soon arrive at the white house. people are gathering outside on the south lawn. this is bloomberg surveillance. ♪

tom: good morning. michael mckee and tom keene from our cozy radio studio at our world headquarters. surveillance. futures up five. brought to you by invesco. have you considered all your alternatives? nontraditional asset classes and strategies may help you achieve your goals. find out more at invesco.com\ alternatives. hans redeker, with us this morning. i am putting this chart out on

bloomberg radio plus, the best way to see what is going on in mike and mine brains. hans guenter redeker, tell us japan and what it signals with new weakness. we have seen significant allocation of capital especially in the post lisman environment. environment.ehman venue, an influx of capital and you try to use your currency reserve to absorb some of the incoming capital. this is often associated with easy monetary conditions and that allowed commercial banks'

balance sheets to flow at a strong pace in the post lehman environment. you have this combination of overcapacity and debt. let's say if return of investment is falling and the funding cost for debt being stable, at one point you get to a situation where the return of investment is inadequate for the funding cost. then you are forced to do leverage. when you deleverage, you become an exporter of capital because savings have to go somewhere. been -- you have declining currency result. tom: what you just heard was textbook hans redeker. a balance sheet analysis in foreign exchange and economics today -- to die for.

it is about what will happen or must happen because of the movable economic forces. michael: that leads me to my next question about what will happen, must happen with the chinese yen. it has gotten stronger over the last few days. we can numbers of china -- week numbers of china. what is the trend for the u.n. -- for the yen? hans: i think the chinese have provided themselves with increasing a flexibility. when you look at the forecast, we think -- because we are bullish on the u.s. dollar, we think the dollar could -- the most important message is that the trade rated index was stay stable for the time being. china aiming for stability in the forex market.

a number of reasons can be brought forward. the past have seen three to four years that short-term past currency liabilities went from something like 3% of gdp to 9.5%. if you are now weakening the exchange rate, you have an impact on the asset liability ratios domestically in china. when the economy is weak, you do not want that. we have to think about the policy response to this economic weakness. under certain circle -- under current circumstances, a fiscal response would be more far-reaching compared to monetary policy response. thatn, we are expecting the train rate -- the trade rated is going to stay stable.

that means the dollar is going to work higher. michael: does that mean because the dollar is going higher that other currencies are going to have to adjust lower? hans: we think the adjustment pressure is more outside of china. that is where you have bigger flexibility in capital accounts, more openness in capital accounts. here we are going to see in the region, potentially weakness of currencies that includes korea, .hailand, taiwan, singapore this is going to be an important thing going forward. if we are right, that the region has overcapacity and has to deal with debt levels, at the same time, the region does not offer structured capital markets.

that means this increase in outflow.ust lead to an brilliant and i agree with everything you said except for one point. is part of the immature markets of asia mean that this challenge is expressed through bank balance sheets? do we need to watch the banks in asia? asianwhen you look into banks, they have been growing balance sheets disproportionally over the past five to eight years. there was an american monetary policy may for america but with substantial side effects situation. that seems to be comparable to the early period of the introduction of the euro where there was one currency and

monetary policy made for germany to loose -- too loose for spain. the monetary policy for america was too loose for korea. we know what the outcome was in europe. huge deflationary short as we ran out to adjust. -- iia, they have seen hope they will -- necessary policy and response or easing of monetary conditions. tom: hans redeker, greatly appreciated. that was absolutely brilliant. asia's dollar index without japan goes to new recent weakness. i don't know if hans redeker caused a bad. -- caused that.

-- we will keep you abreast on television. import images of the pontiff not in his fiat. michael: we can see pictures coming in of the pope. he has walked out of the vatican embassy in washington. here shaking hands with many of the thousands of people who have come to try to get a glimpse of him. they have lined the route from embassy to the white house to see him pass by. francis, shaking hands with people. many people holding vatican flags as they watch the pope. tom: on the debate of america and religion, i mentioned this earlier, you hope that he does this in new york.

he will stay on the upper east street iscross the qatarthe amir of lives. i think it would be wonderful if he came out and shook hands. michael: maybe they could sit on the stoop in new york city. pageantry -- the pope will be greeted by the president group --obama by a with a group of 15,000 people. michael: not on the south lawn but in the area. hundreds of people on the south lawn. the address of a joint session of congress is tomorrow and then he goes up to capitol hill -- from capitol hill he goes here to new york. tom: and then on to

philadelphia. bloomberg television and bloomberg radio worldwide. stay with us. ♪

tom: good morning.

we welcome all of you in new york. bloomberg 11 30. on television, worldwide. michael mckee and and tontine -- and tom keene. asia's dollar index, all of those nations without japan goes to new recent weakness moments ago. that is part of our forex brief brought to you by interactive brokers. are your returns tracked down by high transaction costs? your costs can help maximize your returns. kr.com -- visit ibkr.com. in washington, no one cares about the futures. michael: that is a fact. everybody in washington is

focused on pope francis who is just about to arrive at the white house. it is a state visit because he is technically head of state but it is not the kind of state visit we are used to. it has got to be the toughest ticket in washington to be on the south lawn of the white house right now. thereet to live is covering the president and the pope's remarks. what time did you have to get up? good morning. i am a little sleep deprived. and reporters are covering spent the night a few blocks from the white house so as not to contend with road closures. also because, we had to be there at 5:00 this morning to get through the white house gates.

tremendous interest in this event. partly because of the pope, partly because of the nature of white house coverage. enormous interest in this event. i am also 5'2". you can probably see more than i can. when i lift my iphone up to see what i can see, there is a crowd of around 15,000 people stretching all the way back ellipse.he i am told it is officially a state visit but it is different for most state arrival ceremonies. the president and the pope will not review the troops. nor will he come back for a state dinner this evening.

they will make remarks on the south lawn. you can hear the band playing in the background. they will make remarks. what do both of them want to focus on? we tend to treat the visit as a tourist occasion but this is also official business for him and the president. margaret: both men have a meeting of the minds on a couple in which theres is a role for u.s. policymakers to engage. one of them is climate change. theother is this issue of perils of capitalismincome inequality. president obama wants to take advantage of the pope's activism to try to bolster his pitch for this without overstepping the line in creating a diplomatic

curfufle. we know from the vatican reporters traveling with him, the pope would like to -- tom: margaret talev, stay with us. for those of you on radio and television, it needs description , looking like a 15 car motorcade moving out toward where margaret is. i can honestly say, i have never seen this. service secret suburbans surrounding the pope's fiat. i have never seen this. mass ofed by the

american -- michael: i cover the white house for many years. i don't think i've ever seen anyone arrive in a more humble vehicle than his holiness. tom: as you prepare within the orderliness of the south lawn, what will you listen for from the president and from the pontiff? margaret: a couple of things. one is precisely how the president strikes a balance between acknowledging the pope as a moral leader, a world figure and not a polygonal -- not a political figure. the other is the context in which the president addresses in his own faith. .t is not 2009 anymore but it is still an issue. we will see a lot more of how to decipher the politics when the

pope addresses congress. this is to some extent a preview of that and an address to the american people. it's remarks -- his remarks are imminent. to knowledge one another without making it look like a political appearance. -- would you expect to see republicans front and center among the worthies around the podium on the lawn? margaret: i think we will see republicans at the service at the basilica. there are many republicans who are calculating how close to the pope they want to get. there are a few boycotting in general, including the house speaker -- there are many coming quitting the house speaker who are thrilled to be a part of it. michael: this is an extraordinary week for the white house. there is a new social secretary

who is coming to arrange two state visits in a week. on friday, the chinese president arrives and he will get the full treatment. margaret: it is such a different kind of visit. all of the sort of stuff, tensions. .here are major events you want them both to go seamlessly. .t is a tremendous task to have these a day apart is astonishing. immediately to state dinner for xi jinping. michael: with 15,000 people lining the route of the lighthouse -- of the white house that security -- i met insecurity is tight. margaret: both in terms of security at the gates and in

.erms of around the perimeter they have snowplows out. anyone who lives in washington knows the d.c. government never gets the snowplows ready. they are here well in advance. it normally takes me about three minutes to clear the white house gates with my pass. it took an hour and 20 minutes this morning. tom: we welcome all of you on bloomberg radio and number television to the quiet majesty of the south lawn of the united states of america's white house. i remember the john adams tv show. do you imagine john adams ever visit? the pope would you have to frame the history making moments. only three other popes have visited the united states over

-- within the modern age. it is a rare event. with pope francis visiting for his first time. debates,e political who is bragging most about being in link with pope francis? is this a bragging moment for democrats or republicans? margaret: it is easier for democrats to brag about this. messagesned on these which from the pope are not political but for them are. also because democrats want to as respectful of religion.

they are in a -- republicans are in a 15 way primary fight now. many in the republican field a catholic. if you embrace the hot button issues, it could be problematic for you. how can you say i love the pope without saying you are on board? tom: thank you so much. margaret standing three feet from the door with a will come out of. michael: maybe she can get us in our graphic -- maybe she can get us an autograph. anthem will be played along with the national anthem. tom: stay with us. ♪

tom: the white house awaiting the arrival of the pope. he is in his motorcade right now. the president, waiting to greet pope francis at the white house as he formally begins a visit to the nation's capital. as we look at economics and investment, here is david gura. david: stocks are suffering their worst decline in nearly two weeks yesterday. matt miller joins me with three

stoxx keeping an eye on ahead of the market open. matt: we see futures gaining today. we could see a market bounceback like we have seen in europe with european automakers. i am taking a look at fiat chrysler. fiat issee that trading live in milan after a couple of days of drops. fiat came out with some news. it says sales in europe are a 8.6% but sales in china are down and sales in latin america are down 27%. david: maybe a bit of a papal fiat. driving around in a matt: that would be the first time i heard about that in my job here in 15 years. we see movers and semiconductors. intel is gaining as bernstein upgraded to market perform from underperform.

half set up for second inventory channel phil. it has been under shipping so it needs to get more chips out to pc makers. taiwan semiconductor forecasting a revenue drop for the first time in four years because of the weaker smart phone market. has fallen for 14 of 30%past 16 sessions down since then. it bounce back for u.s. steel in the premarket trade as well. david: commodities the big story yesterday. matt: chinese pmi, the worst since 2009. a lot of commodities took a hit overnight and bounced back this morning. you saw oil come down overnight and come back up today. david: matt miller, thank you very much. another quick look at the south lawn of the white house as we await the arrival of the pope who is making his way down massachusetts avenue.

he is in a motorcade heading down massachusetts avenue and is expected to speak shortly. later this afternoon, he will head to the basilica of the national shrine of the immaculate conception to celebrate a mass at about 4:15 this afternoon. coming up, the u.s. stock markets open. back to tom keene, mike mckee and tracy alloway. ♪

tom: from rome to havana and now on to washington, the pope on his way to be greeted by the president of the united states at the white house. marines await as to some 15,000 including john gary hring.n gear

michael: back on the continent, the pope left behind news happening. mario draghi is testifying before the european parliament. a lot of people have been wondering if he would signal that there is additional qe coming. so far, no such signal although he does say it is possible. he says the macroeconomic environment has become more challenging. inflation will stay lower than the thought it would for longer. inflation is going to only rise slowly. the ecb can alter the size, composition, and duration of qe. no sign that they are going to use it yet. tom: a marine stepped forward above the door of the south lawn. up. going up -- flags going we'll go to vince p oz a --

vincent piazza and keep you updated on the peasantry -- the pageantry. his oil disconnected from other commodities? vincent: we think it is a function of deferred maintenance by the refiners. you are entering a period where demand typically wins. you also have supply that has come off its high in the u.s. in 9.6 million barrels. tom: are you surprised we are at 46.58? vincent: you have fundamentals influx. you have a demand cadence that is coming into a seasonally weak period. you have supply that has come off since the peak of 9.6 million barrels. tom: his demand down because the pontiff is driving a fiat and

not a cadillac escalade? vincent: vehicle miles driven has been strong this year, above the five-year average. folks have responded to lower gasoline prices. tom: as we continue, the president and first lady step out of the white house onto the lawn. michael: the pope must be almost there. you were among the people who told us some months ago when oil prices started rising again that that was a feint. they did fall back. we are hearing people saying we will see another leg down. what is your forecast? vincent: within the u.s., what you have here is this supply of potential output that can be introduced into the market. you have these wells that have not been completed that can come online with any kind of price rise. when you are going to see most band around 40 and

60. the operators have said that as ,rude breaches that $60 range you could see activity come back in the form of these drilled wells coming online. that tends to mute any price rise. michael: suggests oil is sensitive at this point to price . production is. vincent: when you think about the way the technologies that have been deployed to complete these wells, the operators have become efficient. the operators have learned quickly, coming down that learning curve faster. tom: the learning curve we are having is a pope saving gasoline. the pope is leaving his -- is leaving his fiat. the president greeting the pope

and his translator as well. the first lady as well, dressed in black this morning. , moreesident conservative, dressed with some respect. michael: this pope's argentinian so he is speaking spanish probably to the president. the president and first lady escorting pope francis to the podium. the trappings, pretty much the same for any state visit except they will skip the military parts of it. the pope does not have a military. they will not review the troops but they will address the people on the south lawn. you can see the marine band in the background. tom: maybe we will get that feed for you. i noticed the cabinet secretaries are lined up as they walked to the podium. seeing secretary kerry and other senior officers of the government.

i must say for the radio audience, it sort of looks like that 18th hole. quiet.y with the same michael: it -- i did not realize this, the united states has a national anthem but so does the vatican. the vatican insists it is not an national anthem as such but they have a papal anthem. march.tifical anthem tom: the president of the united states, greeting the leader of the roman catholic church. this goes back to george washington's travels north after he became president. he stopped in newport, rhode island and he said, we are different. this off of advice from james madison, the idea of george washington stopping at a synagogue in rhode island 200 plus years ago was something.

pope and president are at the white house. this is bloomberg radio and bloomberg television. going to continue to watch the pageantry outside the white house on the south lawn. president obama standing next to the pontiff as we hear both the national anthem and the national anthem of the holy see. the pope making that drive down massachusetts avenue. there will be none of the usual military customs associated with a state visit. we will see that when the chinese president comes to the white house. here we have the president and the pope listening to national anthems outside of the white house. ♪

david: listening to the marine band on the south lawn of the white house. this is a busy trip for the pope. his first visit to the united states. he will go from here to philadelphia and new york. the afternoon, a mass at basilica of the national shrine of the immaculate conception in washington, d.c. the biggest roman catholic church in north america. beckett started at 4:15. a ceremony on the south lawn of the white house. we are expecting remarks from the president and the pope. ♪

[applause]

>> troops in review. ♪ david: you are watching the pope 's of arrival at the white house on bloomberg television. i am joined by matt miller.

there is no military component to this matter but you are seeing the two of them reviewing the military band. matt: although he does have the swiss guard. they are not in uniform. david: the pope making the drive from the vatican embassy across from the vice president's there is a crowd. about 11,000 plus people on the south lawn watching his members of the cabinet and congress, invited guests about the united states and the vatican for this arrival ceremony. matt: i imagine there is a lot of standing for this 78-year-old pope who had a long day yesterday and it is not just the long days planned ahead. he had an incredible climate change coming from very hot and humid cuba to washington dc. he has the jet lag issues.

he looks quite fit for a 78-year-old man standing and watching all of this pomp and circumstance. you have to think for this pope it must seem, i don't want to say silly, but too much. david: it is something he has shied away from. he shied away from many of the luxuries of his position in the past, preferring to more spartan life in vatican city. -- pope and the president weeks for president to welcome the pope formally to the white house. this pope's this is first visit to the united states. taking his seat there. we will take the president live to see what yet the same. say.e what he has to

president obama: good morning. [cheers] president obama: what a beautiful day the lord has made.

father, on behalf of michelle and myself, welcome to the white house. [applause] president obama: i should explain that our backyard is not typically this crowded. [laughter] president obama: the size and the spirit of today's gathering is just a small reflection of the deep devotion of some 70 million american catholics. [applause] president obama: it reflects as well the way your methods of love and hope that have inspired so many people across our nation and around the world. on behalf of the american people it is my great honor and privilege to welcome you to the

united states of america. [applause] president obama: today we mark many firsts. your holiness, you been celibate as a first pope from the americas. [applause] this is yourma: first visit to the united states. [applause] president obama: and you were also the first pontiff to share an encyclical to a twitter account. us inisit not only allows some small way to reciprocate the extraordinary hospitality you have extended to me at the vatican last year. it also reveals how much all americans, from every background

and every state, valley the role that the catholic church plays in strengthening america. pplause] president obama: for my time working in impoverished neighborhoods with the catholic church in chicago, to my travels as president i have seen firsthand how every single day catholic communities, priests, hungry,are feeding the healing the sick, sheltering the homeless, educating our children, and fortifying the faith that sustains so many. what is true in america is true around the world. from the busy streets of buenos aires to the remote villages in

, catholic organizations serve the poor, minister to prisoners, build schools, build homes, operate orphanages and hospitals. and just as the church has stood with those struggling to break the chains of poverty the church so often is given voice and hope to those seeking to break the chains of violence and oppression. excitementelieve the around your visit must be a trivet not only do your role as pope, but to your unique qualities as a person [applause] . president obama: in your humility, your embrace of

simplicity, and the gentleness of your words and the generosity of your spirit. we see a living example of jesus'teachings. eight the year whose moral authority comes not just the words but also through deeds. [applause] president obama: you call on all of us, catholic and non-catholic these to put the least of at the center of our concerns. you remind us that in the eyes of god our measure as individuals and our measure as a society is not determined by wealth or power or station or celebrity. but by how well we few to scripture call to lift of the poor and marginalized.

[applause] president obama: to stand up for justice and against inequality, and to ensure that every human being is able to live in dignity because we are all made in the image of god. [applause] president obama: you remind us that the lord's most powerful message is mercy. that means welcoming the stranger with empathy and a truly open heart. [applause] president obama: from the refugee who flees war-torn lands to the immigrant who leaves home in search of a better life. [applause] it means obama: showing compassion and love for the marginalized and the

outcast. to those who have suffered and those who have caused suffering and seek reduction. -- redemption. you remind us of the cost of war. particularly on the powerless and defenseless and urges towards the imperative of peace. [applause] president obama: holy father, we are grateful for your invaluable support of our new beginning for the cuban people which also promise -- [applause] the promise of: better relations between our two countries, greater cooperation across the hemisphere, and a better life for the cuban people. we thank you for your passionate voice against the deadly conflicts that ravaged the lives of so many men, women, and children. and your call for nations to

resist the sirens of war and resolve disputes through diplomacy. you remind us that people are only truly free when they can practice their faith freely. [applause] president obama: here in the united states we cherish religious liberty. basis for so much of what brought us together. here in the united states we cherish our religious liberty but around the world at this very moment children of god, including christians, were targeted and killed because of their faith. believers are prevented from gathering at places of worship. the faithful are imprisoned and churches are destroyed.

so we stand with you in defense of religious freedom and interfaith dialogue knowing that people everywhere must be able to live out their faith free from fear and free from intimidation. [applause] president obama: holy father, you remind us that we have a sacred obligation to protect our magnificent gift to us. [applause] president obama: we support your call to all world leaders to support the communities most vulnerable to changing climates and become together to pervert worleserve our precious for future generationsd. [applause] holiness,obama: your

your words and deeds set a profound moral example. in these gentle but firm reminders of our obligations to god and to one another you were shaking us out of our complacency. all of us may at times expressed discomfort -- contemplate the difference between how we lead our daily lives and what we know to be true. what we know to be right. i believe such discomfort is a blessing for a points to something better. you shake our conscience from slumber. newsus to rejoice in good and give us confidence we can come together in humility and service and pursue a world that is more loving, more just, and more free. here at home and around the

world may our generation he'd your call -- head your call to remain on the sidelines during this march of living hope. that great gift of hope, holy father, we thank you and welcome you with joy and gratitude to the united states of america. [applause] pope francis: good morning.

i am deeply grateful for your welcome in the name of all americans. but for some immigrant families i'm happy to be a guest in this builty which was largely by immigrants. [applause] i look forward toe francis: these days of encounter and dialogue in which i hope to listen to and share many of the hopes and dreams of the american people.

visit i will have the honor of addressing congress. where i hope as a brother of this country to offer words of encouragement for those who guide the nation's political future and fidelity to its founding. travel too to celebrate and support the institutions of at this and a family important moment in the history of our civilization. [applause] president,s: mr.

american catholics are committed which isng a society toly tolerant and inclusive securing the rights of individuals and communities and rejecting every form of injustice and discrimination. [applause] with countless other people, they are like efforts torned that build a just and orderly society respect their deepest concerns

and the right to religious liberty. [applause] it reminds one of america's most precious possessions. united states reminds us all need to be vigilant, press easily -- precisely as good fromens defend freedom everything that would threaten or compromise it. [applause] president, i mr. find it encouraging you are proposing an initiative for

reducing air pollution. [applause] bite setting the urgency, it seems clear to me also that climate change is a longer be leftno to the future generations. [applause] when it comes to home we of our common are living at a critical moment of history. make thehave time to change needed to bring about a -- for we know that things can change.

[applause] such change: seriouson our part a and responsible recognition, not only of the kind of the world would maybe leaving to our children, but also to the millions of people living under our system which is overlooked them. -- has overlooked them. has beenn home part of this which cries out to powerfullyhich today strikes our homes, our cities, our societies.

it's a telling phrase of martin . we can say we have defaulted on our promissory note to honor it.e time [applause] pope francis: we know by faith that the creator does not abandon us. his loving plan for having created us. to come has the ability together in building our common home. inspired, we wish

to commit ourselves to the conscious and responsible care of our common home. president, therefore -- which were recently made to mend a broken realization and to open new doors to cooperation within hours human family represent positive steps along the path of reconciliation, justice, and freedom. womend like all men and in this great nation to support the efforts of the international

-- and to stimulate models of development. [applause] so that our: brothers and sisters everywhere peaceow the blessings of which god, for all his children. mr. president, once again i welcome. for your and i look forward to these days in your country. god bless america.

[cheers] [applause] the popeu have delivered remarks outside of the white house. president obama welcoming him to the south lawn. we will go to margaret who covers the white house for bloomberg news. i want to get your take on what the pope had to say about climate change. making a strong statement about the fact there is still time here for change. a critical moment in history but there is time. a forceful statement from the pope. margaret: they both really went there, didn't they? we heard the president not shy activisming the pope's on these issues. we heard the pope said he is encouraged by the president activism and this cannot wait for future generations.

for those that but he would not touch it, this was not the case. he has been making it in an effort to not offend any critics while still making his call to action. that was on climate change every there were other issues as well. cuba and immigration. he said he tried to take advantage of the moment -- he certainly tried to take advantage of the moment. david: i'm joined by matt miller. your reaction? matt: i thought it was interesting that when he cities based to congress to offering kurtzman to those in congress -- offering encouragement to those in congress. referencing the first of many of our founding principles. he made a reference to religious freedom that is laid out in the constitution. it is been a subject of the news lately is a ben carson's

statements on the possibility of a muslim president. the pope does not want to get involved in politics but he does make statement after statement that is politically loaded. margaret, i was wondering about your take on that. margaret: it was hard to hear you because of the choir. margaretu mentioned that he spoke about immigration right from the get-go, saying that as the son of an immigrant family he is happy to be in a country that is so warmly embraced immigrants from its first days and built by those immigrants. largely built by people like his parents. i would to get a tim, we spoke yesterday on certain -- " we'vellance. talked about immigration and climate change. cuba is something he mentioned. this was not a welcome -- casual

welcome to the united states. this was a strongly set up local statements from both sides. trying to get tim back on the phone. i was struck -- matt: i think we haven't -- we have him. david: in these last couple of minutes i want to go through what will happen next. the president will look and the pope inside the white house. the pope will sign a guestbook. they will exchange gifts which is customary. it will be a bilateral meeting to the two of them in the white house, the pope being the head of the holy see. matt: they are running late. they should've already finished their photographs in the blue room balcony by now and then in the receiving line meeting people and shaking hands and

exchanging gifts. they will be doing that. they should've entered the oval office around 10:20. i wonder if they will have to cut short -- they may have to cut short their bilateral meeting in the old office because they only have until about 11:00 before the pope has to go outside and get in the popemobile. there are hundreds of thousands of people lighting the national mall -- aligning the national mall. david: this will lead to a massey celebrates at the national basilica in washington dc, one of the biggest churches in the world. we are seeing the pope go inside with president obama and mrs. obama. they will exchange gifts, hold the meeting, and there will be a prey to follow. -- parade to follow. matt: people watching the pope, waiting for hours, days even to get a glance of him if only for a few seconds before he gives that mass to about 25,000 ticketholders. david: this is been special

coverage to the pope's visit and arrival on the south lawn. ♪

♪ >> it is 10:00 in new york. welcome to "bloomberg market day ." the battle is on an volkswagen boardroom. what the scandal needs for vw owners here in the u.s.

it will depend on who you ask. we look at two very different calls. china's president has a busy itinerary in seattle today, including dinner with ill gates. it will have a report throughout the day. ♪ alix steel: good morning. you're looking at stocks but he was taking a bit of a breather after the s&p hit its lows level in a two-week -- this is kind of call compared what we saw yesterday. pretty amazing considering china's pmi saw seven straight month of contraction. with a continued to pay attention to volkswagen. it is trading at