welcome to the bloomberg market day. after apologies and the resignation of the chief executive, what is next for volkswagen? top: plus, ford's oncutives giving their view this. i have a one-on-one interview with the president of the americas. speakjanet yellen will today. we have a preview and a special report. that's 5:00 p.m. here on bloomberg. good morning. in pimm fox. am him out. p --imm fox. i am matt miller. to dow jones industrial down

55 points. getting ever closer to the august blows. the s&p down 5.5% and the nasdaq off two thirds as the market prepares for janet yellen. pimm: obviously a lot of decline in the indices, the s&p and dow jones industrial with the decline of caterpillar shares. let's look at some of those machinery stocks. manufacturers of global mining construction equipment, deere, joy global, caterpillar all falling. more than fiven dollars per share. 's look at our top headlines. president obama will meet with russian president vladimir putin. the white house says vladimir putin requested the meeting. president obama was to see if he can make progress with putin on

their differences over ukraine and syria. ad pope francis delivers historic address to congress. the pope became the first pontiff to address a joint session of congress and he religious combating extremism to make sure that fundamental freedoms are not trampled. to assure the dignity of your fellow citizens in the demanding pursuit of the common good. for this is the chief aim of all of politics. referred torancis himself as a son of this great continent. as we all know, he was born in argentina. and the shares of caterpillar down more than 6%.

after the maker of construction and mining equipment announced they cut more than 5000 jobs and potentially 10,000 jobs over the next three years, plus cut its sales forecast and said it is aiming to reduce costs by $1.5 billion per year. caterpillar is headed for its fourth year of declining sales. this is the first time it has ever happened. caterpillar has been hit by weakness in the energy and construction markets. rose to anome sales annual rate of 552,000. that was much higher than the median forecast. durable goods orders for last month. down 2%. that was less than expected. a strong dollar and china's economic slowdown affected demand. it affects products like a television or in automobile. pimm: or a refrigerator. of those allthink

day long. the santander chief says they are making tough decisions on how to handle the brazilian economy. affect of their business is in that country. she also talked about where she sees the bank in three years. >> i want it to be the best bank in many more markets. and when i say the best, i mean the best for our people, our customers. i think in some of the smaller countries like portugal, we are already there. we want to be there and many more markets. she took over santander from her late father. pimm: coming up next on the bloomberg market day, why ibm's watson engine is expected to be a huge engine for sales growth. will caterpillar says it

be cutting 10,000 jobs over the next three years. pimm: and ford unveiled is first of aluminum body super duty pickup and matt miller set down with the president of the americas to discuss the details. those details and more coming up. the investigation of cheating in the automobile industry widens. it's not volkswagen's problem anymore. matt: that is true. the company is the center of the storm. they need a new ceo and needs to pay fines that will go into the billions. is --e funds nichols, who nichols, who is at the seat of volkswagen globally, and our guest from american university. that bloomberg is reporting mitzie's mueller is matthiasy successor --

mueller is the likely successor. but he's an inside man. he is the chairman of the porsche unit. hans: he would likely have their support. the vote.ntrol 51% of also, labor has a lot of presentation that representation on the board. he is saying they will need a and oneechnical ceo, that will minimize job losses. we spent the afternoon walking around, this is just a prosperous city, so dependent on volkswagen for its prosperity. an unemployment rate of four point 9%, much lower than the national average. there have been a couple key fromtures from porsche, audi. these are people involved in the development of the cars. there are two sides of the story. volkswagen trimming their

losses, letting go executives that could've been culpable in what is going to be a criminal investigation. wolfsburg side of the story. there's their overall auto industry side of the story. we heard from the transportation minister in germany earlier and he says all vehicles in germany, not just waltz likens, are going to be tested, and they are going to be road tested. frontloadand i should that process. test these cars. i suspect investors will want to shore those stocks. pimm: i will test the porsches, audis, and lamborghinis. rest.n test the volkswagen was the ceo that can minimize job losses. is it such a great idea to keep those employees when you are facing $2 billion losses?

not if you need them. if you don't need them, volkswagen potentially faces quite an uphill battle working through all of the regulatory agencies, and not just the fines thepenalties from regulators, but the indirect reputation losses caused by the loss of consumer confidence, investor confidence as well and that could be much larger than the potential penalties. i'm wondering if you could describe the reaction in the german press. we know one in seven jobs in germany is somehow related to the automobile industry. well, there is concern. the local paper referred to it as "the volkswagen earthquake." it is notable that a week ago dr. martin winterkorn was riding

high. he expected his contract to be extended on friday. now there's a report of their version of a auto magazine, a mass publication here, they were did not meet's x3 the particulate standards they claimed to have met. they were three times what the legal limit was. we saw their stock drop 5% immediately after that was reported. not sure where it is at right now. it gives you a sense at how sensitive the entire auto industry, let alone share prices , are two reports that these vehicles may be spewing out more noxious gases than people thought they were. there's another side of the story. in germany, people say, people have always fudged on how they were going to meet their omission standards. you would maybe have a little less weight in the car, take out a few kilograms. if everything is going to be

proofed on the road as the transportation-- minister is asking, there will likely be more vehicles that do not pass the omission standards -- admission standards they are claiming. we hear that fines could be up to $18 billion. of a lot of talk about how -- a lot of talk about how many vehicles volkswagen may have to potentially buy back in a drop in sales because of the fact that nobody trusts the company anymore. how much are they potentially going to lose here? this is a company with a $55 billion market cap. it is a big company. obviously, i think the 18 billion dollar regulatory fine is a little on the high end, but it depends on the responsible sweat and does from this point going forward. are they going to truly try to ferret out what happened?

or fire thee care people responsible and try to do everything to prevent this from happening in the future? as well as cooperating with all of the investigations that go forward? this will of easily be a big cost to vw, not only in terms of direct litigation, but management time and effort as well. if they do this right, and if they put the resources in and really try to ferret out what is true, they will probably gain back a little bit of that reputation loss they have initially that people are so afraid up at this point in time. a long and difficult task and it will probably take the next five to seven years to ferret out. pimm: i want to thank you gentlemen very much, professor from american university and our very own hans

nichols, reporting from the headquarters of vw. ibm is betting on its supercomputer watson to be a huge engine for growth in the future. we give you the details. and a reminder that at 5:00 p.m. eastern, bloomberg will have live coverage of fed chair janet yellen's speech called "inflation dynamics and monetary policy." we will be looking for any sign the fed will raise rates or leave them study in december, and you can listen to that on the radio as well and follow along on the internet at bloomberg.com. ♪

matt: welcome back to the bloomberg market day. i am matt miller. am pimm fox.

let's go to ramy inocencio. market averages are tumbling? that is right. they are at the session loans as investors wait to hear from janet yellen. she will be speaking on monetary policy at 5:00 p.m. at the university of massachusetts-amherst. analysts are nervous that a rate hike could happen before the end of the year. stocks down for the third straight session. we are looking at materials, -- thecare, as well as worst performing. caterpillar is weighing down on the market. this is the company that makes mining equipment of court. -- of course. it cut its forecast for the year by $1 billion to $48 billion, forecast byfuture

about $5 billion less than analyst predictions. cellon top of that, initiation bysell axiom capital probably not helping the stock either. you can see this dynamic another machinery stocks, joy global, united rentals. moving on to tech. alibaba is at its lowest price back on september 19 of last year. it turns out we have been talking about chinese consumers pulling back on the economy lows in the stock is already fall in the past five days in a row, has lost half of its value since the peak of november last year. lululemon, shares trading lower their after the

yoga clothes chain announced it will be adjusting some prices, some basic styles would see 20% price rises and goldman analyst lindsay drucker fears customers might fight back with fewer purchases. lululemon down by 1.5%. goldman calls those prices a short-term negative though and accelerating on a stock. lululemon at its lowest since 2014. not a good day in stocks today. pimm? pimm: unless you are short the market. matt: then it is a great day. you, ramy inocencio. ibm thinks that watson will be a huge engine for sales in the future. this according to a company executive. the computer unit could reach $1 billion in sales in the near-term term and watson is the fastest-growing part of ibm fellow analytics business. they brought in $17 billion in

sales last year. for more details i want to bring in bloomberg's own cory johnson. here is our watson expert. cory: yeah. sales ofl us about watson. they are selling what the computer can do. cory: that is the point. best brand.m's they are creating a lot of initiatives called watson, but our branding a lot of the software efforts, the cloud initiatives under that brand of watson. the thing that they like to talk about because it is the thing unlikeves them good pr, the financial result or the performance of their stock. what we have seen from their stock is problematic at best. when they trot out watson, it is the thing we like to talk about because it sounds nice. they are using that name on a lot of different products from

the watson health initiative to all caps of software initiatives -- all kinds of software initiatives. matt: when i think about what's and i think about what's in winning on "jeopardy!" how cool that was. what else does watson do besides winning at "jeopardy!"? we see the resulting sales have been falling apart. consecutive quarters of declining sales where it is getting extreme -- 15 percent year-over-year. matt: that is ugly. just as bad, are maybe worse. they are making a lot less money. we have seen profit declines 06 and beyond. the problem with watson, they offer cloud services they called watson or whatever.

those services are taking away from hardware. they are knocking on the door saying, you've got to buy more ibm hardware. to push ibm is going deeply into this cloud computing services model, they've got a lot of competition. i mean, you don't need watson to deliver cloud services. amazon delivers them and makes a lot of money doing it. rub, right?is the and iv them come up with software solutions that are so much better than the very cheap ones being offered by amazon web services? and can amazon web services data up with a high order analytics tool that can fight off ibm coming in from the very high and? when i talked to big rolenies, a lot of them with the products from ibm in the cloud. the problem is, it is eating the other business at

ibm and you have competitors like amazon cutting prices every few weeks and offering more and more with amazon web services. they will be announcing all kinds of new things right now. ibm is trying to get ahead of that, talking about watson now, because they know that there competitor --of news from this competitor in los angeles. you. cory johnson, thank ibm shares are down 10% so far this year. on the bloomberg market day, caterpillar shares hitting a multiyear low after the company announces slashes its job counts. we will find out what is weighing on caterpillar and other heavy hitters in the construction industry. ♪

matt: times are tough for caterpillar. the company is feeling the pinch from weakness in the construction business and today announced they are cutting as many as 10,000 jobs over four

years. they are also cutting their business projections by as much as $1 billion. cell list them on a and joins us by phone. gordon, is this caterpillar specific or industrywide, these problems? guest: i think it is two-pronged. i think the industry problems are related to a specific problem in china that is is oneral, and that dynamic and i think cap's ability to recognize revenues -- ability to recognize revenues is also an issue. gordon, talk about issues for still makers and supply companies like caterpillar. gordon: that is a big issue. we are in a commodity bubble right now. commodity prices are declining. that has an effect on the steel etc. - steel makers,

that does have an effect on caterpillar cost. from 1994 until 2014, caterpillar revenues are 93% correlated to mining capex. since that is expected to be down 10% compounded from 2014 to 2017, i think caterpillar fell revenues have or downside from here. we do not think they cut enough. ford's spoke with president of the u.s., and he says the f1 50 or super duty sales have been negatively industry.y the oil how exposed is caterpillar to the oil industry? ,ordon: it has resources energy, and transport, and right now resources and energy, and transport are weak. but the issue is construction. durable goods came out in the u.s. today. the architectural industry came out yesterday, very negative. i think construction is rolling over and that is what people

will be seeing the negative surprise on the company. pimm: shares of caterpillar trading at $65 a share. what is your price target for the stock? is $28.our price target i know that sounds for coney and. but caterpillar's management agrees with us. -- i know that sounds draconian. there is a significant downside. futurethink there is pain and head for these guys, significant pain. very gordon, thank you much. gordon johnson from axiom capital metal. stay with us. we are back in two minutes time. ♪ ♪

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pope francis became the first pontiff ever to address a joint meeting of u.s. congress. he warned of the dangers of religious extremism. we must combat violence perpetrated in the name .f our religion well we must also safeguard religious freedom, intellectual freedom, and individual freedom. pimm: the president of -- the pope also called for the global abolition of the death penalty. as the pope leaves washington for new york, the chinese president will arrive at the capital. -- xi jinpingg will have a dinner with

president obama tonight. amazon founder jeff bezos and american and chinese business leaders will have a meeting. he says that china will open up wider to the outside world. forident obama is set another high-level meeting on monday. he is scheduled to meet with russia for president vladimir putin. it will also the in new york for the united nations meeting of the general assembly. the white house says vladimir putin asked for the meeting. president obama wants to make progress on issues like disagreements on ukraine and syria. freddie mac says the 30-year fixed rate mortgage felt alone belowthe 15 year -- fell 3.9 percent, and the 15 year also fell. those are your top stories. the markets are closing in

europe. i want to go to bloomberg's mark barton. the euro stock 600 has fallen by 6%, sticking to his six year low. we had a note from goldman sachs forecasting a slump in the price of copper to $4500 by next year as the fed starts to raise rates with demandes surge slumps in china. ford benefiting from domestic slowed shrugging off growth in emerging markets. for midtier's i is mueller. according to people for motor with the matter, he is the front

runner for the ceo of volkswagen. is spreading. look at bmw. at one stage it was down by 10%. sinking the most in four years suv report that it3 animated 11 times the eu limits for -- image at 11 times the eu limits for air pollution. third-quarter profits for h&m as the dollar strength raised garment cost. janet yellen, over to you. very much.s bloomberg's mark barton reporting from london. ford unveiled his first aluminum super dutyries pickup at the texas state fair in dallas. the redesign follows last year's rollout of the all aluminum f1 50 in december. matt miller, my colleague set

down with ford's president of the americas. matt? day, just like the other when carlos combs sucked by, he is very proud of his new vehicle. he had interesting takes on this. the first topic we took on was the new super duty truck. it will be a lighter truck. of a truck.s less that is part of the sales pitch. guest: we reinvested a lot of the weight savings the came from the aluminum into the high-strength steel frame. frame is a folding box and we have more capability for the axle. this truck is all about work and owning work and it is the most capable truck we produce.

we're not giving out numbers here for fuel economy or towing. it is the best super duty ever when it comes to this metrics. matt: you had of time getting up to speed with f-150 production. are you there now with the f- 150? do you have the capacity, the inventory to get your numbers back up. -- backup? tt, yes. we are quite there yet. we will be in the fourth quarter. we're comfortable with where we are. we always knew we would have a thein the late summer with capacity coming online with kansas city converting over, but we feel really good about our inventory. you are starting to see that in sales and you will have the dvd roughly eight again for the 49th straight year. strokehe phrase power

turbo diesel makes me salivate a little bit. i6.7 liter v8 engine is what think every boy one spirit is a clean technology? everything you hear about diesel does not sound very good lately. diesel isel -- joe: important for the customer. we developed a diesel engine several years ago. we are very proud of it. we are very comfortable that the result in the lab matches what on the road. over 60% of our sales are in fact diesel. are you worried that diesel sales will fall now that we see that the volkswagen scandal emerged? separate the to application. the car market may feel the

effect on trucks, because those who need these vehicles to do work, they will still love those big diesels. they have been in the market for quite some time and very well received. for a have the potential ramp up on the garside. but for trucks, those who need these old mean diesel. very the car market is closely correlated with the housing market. how is your view of the housing market and the economy right now? : the housing market probably has not come back as fast as any of us would have anticipated given how low it dropped in the financial crisis. still bullish. we will see growth. we think it does bode well for truck sales. we're watching the oil rig counts and oil rig production as well. counts come rig

down, the actual production is safe and study. you add those two get together, with all of the construction going on, especially the roads in the building construction -- we think the next couple years will be very strong for truck sales. if the housing market does take .n the accelerated pace matt: you have had your issues with the epa in the past. do you think it is industry wide? joe: i don't think it is industrywide. ford is proud of being named annually one of the world's most ethical companies. we went to the epa and we said, hey, we found this problem let's make sure it is right. i think there's a lot of complications when it comes to the degree we have to test all of these figures, all of the confederate -- configurations.

we are confident. we do not use defeat devices. clearly as an industry, we continue to work around the world. continue to evolve in that way and we will work together to do that. do you think the auto industry after this scandal blows over a little bit will get together in lobby for better, more real-world testing from regulators like the epa and possibly more standardized testing for different regions around the world? : we certainly have been supporting that and have been toking mostly with the epa make that happen. there is a process to make the testing match more and more what happens in the real world. there is so much technology in the world. they have to keep up with what is in the vehicles. it's very important. we look for to being part of the

solution. let me ask you about this truck. you're going to build it here. smaller cars have been outsourced to mexico. does truck production stay in the u.s., do you think, or does that go down south as well? the50's ine our u.s. and we are very proud of that. we have been the leader in the truck market for 38 straight years. we will make it 39 this year. we love america. they are american-made. that will continue. there, a ceo of ford fully willing to field a lot of questions. we gave him a barrage of questions about other carmakers scandals. it's got to be annoying, especially when you have such a gorgeous cause like that sitting behind you. but the rep in so many auto industry scandals we just can't -- carlos stone, the first time

-- pimm: nissan renault. nissan no. we asked him about gm, chrysler, i'm asking him about volkswagen. different day, same question. what is going on in the auto industry? he that joe said "we do not use defeat devices." they do not use them. you are going to get answers like that from automakers across the industry. we need to before we know any and all of them are not gaming the system. pimm: shares of volkswagen hire a little bit today, but down 20%, 25% -- matt: that is because they are happy they got rid of martin winterkorn. now who they will bring in to replace him? brought mueller may be in from porsche, but he has been there all along as well. pimm: culpability.

all right. thanks very much. i will see you later this afternoon. that was matt miller speaking with joe heinrichs, the head of ford america. still ahead on the bloomberg -- rahm emanuel trying to fix chicago for budget. but it's not going to be easy. ♪

pimm: this is the bloomberg market day. fox.pimm a new chief executive selected for volkswagen. he is the former chief executive for the porsche division. matt -- matt: this is what i love. pimm: this is according to "the

wall street journal," he is going to become the new head of volkswagen. was: matthias mueller running the most profitable brand in the world until it got swallowed up by volkswagen after porsche attempted a takeover of volkswagen. they turned it around on them. he is sort of, has been the chosen -- pimm: how long has he been there, about? matt: he has been it volkswagen for 20 years. the: he is a veteran of company. matt: he is a favorite and the volkswagen,man of the venerable most important automaker figure in the world until couple months ago, when he was trying to throw out martin winterkorn as ceo, they planned on replacing him with matthias muller. that was originally in the had sobut winterkorn

much backing, he was able to throw him out instead -- pimm: two years with the environmental protection agency. they have not just discovered this. matt: i think it is fairly says heus winterkorn needs to start an investigation. pimm: he's not going to start anything now. well what iss damn going on here. he started the investigation. already on september 3 they admitted to the epa they were using defeat devices and had been cheating on emissions. if you are the ceo of the company and you have to admit to breaking the law 21 days ago and you have not figured out three weeks later what happened, i just don't buy you as a credible ceo. maybe that is why he had to step down. particularly in that this

is a consumer facing brand. a direct cause. but also there is the indirect cost, which is the destruction of their reputation. matt: in a market that is arguably the most important in the world. volkswagen had just been getting the u.s. market right. audi had a scandal in the 1980's and had to pull out of the u.s. market. now it has come back with force. pimm: the audi fox. yes, and the audi 5000 had unintended acceleration. in 1983, 1984, they pulled out of the u.s. market. they have come back big time. porsche has been ruling the roost in the u.s. issues thatose are were not intentional, obviously. acceleration and so on. this seems to be a device and a software that was installed in order to cheat specifically. matt: in order to break the law. they were looking to break the law with this device.

at least, at very least as late as september 3, martin winterkorn knew about it. mu've got to guess matthias ll must haveer -- matthias mul ler must have known about this as well. er, the nextas mull chief executive of volkswagen, but what about the brands under the volkswagen umbrella? do they speak to each other? matt: absolutely they speak together. toureg ands porsche's cayenne are built in the same leipzig factory. they built a number of different product on the same platform. they have been trying to reduce the number of platforms they use. talk about a potential

of 11 million vehicles, which is the number bandied about and includes not only vehicles in the united states -- matt: and audi diesel. huge production line and that got to know this is something they are installing. why would they be installing? the enginett: control unit is a fairly small piece of equipment and the software on it can even be changed. the thing they left out in the production of these diesels is the liquid receptacle. most diesel engines now have this fluid that they add -- pimm: right. matt: that removes the nitrous oxides. i want tore we go on mention the bbc is reporting, as we would expect, the u.k. government is launching an investigation. matt: add them to the list.

the germans are looking into it. 28 countriess all subject to the eu regulations to lost their own investigations. matt: all of the automakers were before the eu do it as one standardized body. the eu is looking at it as well. the point is, if you are a ceo who knows anything about your product, you have to wonder when you're clean diesel, supposedly, did not pass in missions in 2008 , and all of a sudden it passed california missions in 2009, well, how did that happen? is it magical? pimm: we will have to see if indeed matthias muller is going to be ceo -- none of thet: porsche cars are made with this kind of diesel engine, so he did not have the issue. journal"e wall street

mullerng that matthias -- a reminder that bloomberg will have live coverage of janet yellen from massachusetts. the speech is titled "inflation dynamics and monetary policy." we will bring it to you live. ♪

ramy: welcome back to the bloomberg market day. in new york.encio we are at the session lows for the third straight session. investors waiting to see what fitch or janet yellen has to say during a speech at 5:00 p.m. that bloomberg will be carrying. many investors are nervous that rate hikes could happen before the end of the year so they are

in watch and wait mode. joining me for options inside, our guest from kkm financials. x, the volatility is the highest since september 9. how do you feel about that? are seeing, you basically a shift now. we are now back below the deployment when you look at the spx of 1944. closing below that 1930 level. i think you are seeing the vix elevated as we are at a critical level on the spx. ramy: we're waiting to hear from jenny yellen later today. what your thoughts and when -- on when or if we will see a rate rise? guest: if you look at the

activity, gold and tlc, you're seeing a big rally, defensive rally. given the current conditions, i think it will be very hard pressed for the fed to raise rates in 2015. even though there is hawkishness the dollar has strengthened as well, so you see the effects not necessarily attaining the effect the fed was looking for and i think they will be on hold until 2016. ramy: in your notes, you mentioned george clooney. a little confused about that. you go back to him in the movie art thou", where where he said, "damn, we are in a tight spot." what did you mean by that? ramy: thinking up -- guest: think about the fed. you are in that burning bar. the fed is in a tight spot.

the market is having a hard time digesting the message and that is what you see elevated volatility and weakness in the market. ramy: we've got about 30 seconds. what is the trade? the 200 putst: spread is rolling down. i've got the production i was looking for. the spy november, 185, the 192 put spread offers me further protection. ramy: quickly looking ahead -- do you think the s&p will move lower? in a word? guest: i do. yes, i do. leave it there. thank you very much. more bloomberg market day after this very short break. don't go away. ♪

>> good afternoon, it is 9:00 and san francisco, noon in new york at midnight in hong kong. >> welcome to bloomberg market day. will reportedly

becomes the new ceo of volkswagen, we will have the latest on this. >> then, we will yet you details on an exclusive poll that shows that most americans agree on one central seed of donald trump's campaign. we will look at how uber is battling some of its drivers -- independent freelance contractors. >> good afternoon, i am pimm fox. betty: i am betty liu. midday, you can see the dow is down 200 points. down 1.3%.

take a look at the machinery sector. it is down more than 3%. caterpillar has come out with its a restructuring outlook and slashing at 5000 jobs. s&pof these sectors in the are lower except for the defense. plays, let me bring you inside the terminal for a quick look at the s&p machinery index, taking a look at the decline. decline today, it has not been a pretty charge for anyone. this goes all the way back to may of this year, this is where the support was, but then you 630, and notne low only are the stocks in the machinery index following, but as they try to bring it up, the

u.s. steel, which is a supplier to the industry, they are down 70% for the year. we will also bring in transcanada because they have also seen a drop. -- they like they had will shed 20% of their senior management. betty: top 10%. pimm: let's take a look at the top stories. the wall street journal is reporting that volkswagen has muellerrsche's matthias to replace martin winterkorn amid the cheating scandal that they have admitted to, they admitted to installing rage software in order to pass omissions tests.

meanwhile, -- says it might cut its rating on vw. ahead, a historical day on capitol hill. the firstis became pope to address u.s. congress. the pope warned about the difficulty of fighting religious extremists. the- is required to combat violence perpetrating in the name of our religion or an economic system. also safeguarding religious and individual freedom. pope francis called forth the global abolition of the death penalty. killed717 pilgrims were near mecca in a stampede.

this is the deadliest since 1990 when more than 1400 people were killed. pimm: new-home sales rose last month to the highest level in seven years. they rose to an annual rate of 552,000 units. that exceeded analyst estimates. downll last month, this is 2%. the stronger u.s. dollar and the slowdown in china's economy have hurt durable goods demand. how many episodes says it take to become a binge watcher? the answer is three episodes. it took three episodes to get hooked on orange is the new , however mad men people were addicted to breaking bad after just two episodes.

those are your top stories at noon. do you watch any of those? pimm: know, i know, i know. the value of my time. the country is set up and that is one -- good news for one presidential candidate. donald trump. pimm: a new national poll today, and clearly there is a lot of frustration in the politics. phil mattingly joins us, what is the mood of the voters? >> angry. it is not just donald trump who benefits. carson,orina and ben neither have any political experience and they are surging in the polls. according to the politics poll released today, 72% of those polled think the u.s. is falling

behind or failing entirely. another 72% are fed up with politics. 59% think the political system is broken. why we haveondering been dominated by donald trump, that is why. numbers,ide from those you have the candidates ranked, and no surprise, donald trump still dominates all the gop candidates. >> the clear leader, but this comes after the second debate. ben carson's surge is very real. he is up double digits from last month. he is a legit number two candidate. fiorina sincearly her stellar debate performance. she is up from 1% to 11%.

real, now the question becomes, can she stepped together a pathway forward to compete, or is this just a blip? polls show that americans are frustrated with the political system, the polls are changeable. we all know that this time next year, we may have different candidates and different results. do we run the risk of being premature in drawing conclusions from these polls? i think when you talk to a lot of people who are in the system, who are familiar with politics, they will tell you that the polls right now are very fluid. it is difficult to land anything on this one. but one thing that i pick out that is important is favorability. what is resonating with people?

people don't understand ben 68% of peopleat like him, only 10% doesn't. also, look at marco rubio. he is at 60%. if you want to know who is going to resonate in the months ahead, look at those numbers. those are real numbers, and numbers, if they say hi, you recognize that they are a legitimate candidacy member. 60% --that is amazing, 68% favorability for an carson. we will bring in a harvard fellow and a former house senator and campaign spokesperson. doug, let's pick up on the point

making aboute just the polls. how fluid they are. how much do you put at stake right now in these numbers that show ben carson's surge and donald trump's dominance. we have seen such consistency. republicans have to take it for real. the same thing with carly fiorina, the one challenge that the three of them may face is that donald trump has received a lot of attention but not much scrutiny until this past debate. ben carson and carly fiorina haven't faced any scrutiny at. how they respond to that and thatanswers they give, will show a good way of what their fortunes may be, moving forward. people start to focus now on specifics and issues. pimm: i wonder if you could speak to the issue of likability

versus the economy? now it is about a popularity contest? that is a bit of the yen and yang of politics. people want to vote for people that they like. do you want to have a beer with that person? but we also know there is a disconnect from washington, people are seeing a government that doesn't work. you previewed this a few minutes ago, whenever we see good economic news, we also see that economic news. that is why so many americans are uncertain right now. the polls suggest that americans feel the american dream isn't attainable to them. tothe candidates who appeal

those voters who are trying to move ahead, but are just trying to make it worthwhile. -- 66% ofricans think americans think that the country is moving in the wrong direction. i thought what was interesting , low down in rubio the polls, he is the second most favorable candidate. he is sooing on if well-liked, why is he so low-down? people haven't gotten to know marco rubio yet. the debates have been his biggest exposure to the voters. you are starting to see him advertise a little bit more. of advertisements from new hampshire, we are starting to see him on the airwaves. that is the other thing, focusing on different states.

my home state of north carolina, you are not seeing those advertisements all the time. so they show up in the national favorable -- marco is one to watch. can you fast-forward in your mind, 6-8 months from now, tell us who is in the race and who is not. marco rubio? >> absolutely. pimm: ted cruz? >> yeah. pimm: carly fiorina? >> we don't know yet, she has had a good rise. it is hard to tell if she has longevity, but we saw in that debate and in the predebate, she did a great job. betty: i like that, ok. doug, before we go, we are

showing carly fiorina, can you imagine if carly is for real, you could have a woman republican nominee and possibly a woman democratic nominee? >> nobody is talking about that yet, i think it would be great for the public and party, and i think it would be great for the american people. and i do think carly fiorina is for real. we have to keep in mind that the primary doesn't start until february, there is a long way to go until that point in iowa and new hampshire. and what the candidates do and what funding they have -- look at scott walker, leading the polls in january, he is now out of the race. anything can happen in politics, and that is the case when it comes to the presidential primaries. betty: great to see you. he is now a harvard fellow. spock'sp, much more on

-- on stocks. the markets have been in a tailspin. we will look at what janet yellen might say later on today. pimm: and folks like and has selected matthias mueller as its new chief executive according to the wall street journal. how the emissions scandal could affect the company overall. ♪

pimm: this is the bloomberg market day, i am pimm fox. betty: i am betty liu. we are coming off a little bit of a slow section. is here with the markets. ramy: investors are waiting to

hear what janet yellen has to say. raise rates at this month, analysts are worried it could happen by the end of the year. stocks are down for a third straight session. nasdaq is down the most by about 1.3%. let's take a look at the caterpillar, it is one of the world's biggest mining equipment companies. china seen a slowdown in and in the emerging markets, it is down by 6%. by $1 its forecast million and cut the 2016 forecast by $2 million. -- by $1 billion and cut the

.016 forecast by $2 billion volatility is at its highest in 10 days, folks are waiting for any indication of a fed rate raise. we may haver know, to wait through december or through the next year. back to you. much, noank you so matter what, everyone will be hanging on every word of yellen's speech. pimm: for the last six years -- the policy has helped support the bullish market. betty: central-bank announced a week ago that it would keep rates unchanged. has been covering this story for us and joins us now. so you have been tracking the volatility index? it is getting even worse? >> there is a lot of stuff going

on with volatility. we have a few things, we have ix, the index is high, it has been above 24 a wild now. on the terminal, we had something that said the india vix saying it had been low. at,other thing that we look is that after the fed meeting last week, you saw implied volatility at the options prices. if you look at the poets, taking at the downside of benchmarks, it moved up pretty quickly relative to bonds. betty: 15% or something? >> yeah, about 12%. that is interesting because

after so many years of having back,terest -- the market why is the market now taking out more protection on the downside? fed, webeyond just the talk about the fed uncertainty, but is it really about what the fed's decision represents? the decision represents growth, which bleeds into commodities and stocks. also in the industrial stocks. there is another idea that with those concerns elsewhere, but here, if is going on --are shrinking in earnings, fundamentals in the united states. pimm: there is a perception that

volume has dried up, but when i look on the bloomberg terminal, that is not the case. when i look at the five-year chart, this is consolidated volume going back five years. you go back and you want to say, i want to take a look, we have seen a drop yesterday, but it has been a consistent level of trading activity. >> you are absolutely right. we were joking before that there are not enough why are's out there. do see volume at solid levels compared to when it was very low in 2014. it is higher, and it has been higher on the down days. in some cases on the down days, it is almost three times higher than it is on the flip side. we are seeing a shift here that is knows -- noticeable after the fed.

i think this is now a distinct shift in sentiment, more so than we have seen in the last 1.5 years. -- the noticed people volatility speaks to it. selling, theye are selling. working forly it is us. all of her, thank you so much. our bloomberg stocks market reporter. we will have live coverage of janet yellen's speech today, it entitled inflation dynamics and monetary policy, it begins at 5:00 eastern. it will also be available on bloomberg radio. ♪

pimm: this is the bloomberg market day, i am pimm fox. if you do not live, or are from boston, you may not have heard of the automobile dealer herb

chambers. mr. is your mistake because chambers has 55 dealerships and he is no ordinary car salesman. he is a billionaire. he can thank the increase in u.s. auto sales over the past decade as well as the falling numbers of automotive -- automobile dealers. -- purchased in $1 million in cash. mr. chambers has had a nice boost in value for his 55 dealerships. they: right, they look at value, and then they look at -- other pimm: it could be worth a lot of money. story, they talk about how some bidders may come

to buy his dealership. in seven people bought a car from a chambers dealership. right, -- have been rumored to put a bid in for this company. he has worked so hard, he was waiting, and he was like, about time. i am a billionaire. pimm: the dealer count in the united states is down i about 50%. i will leave it to you. betty: much more ahead, including on the volkswagen story, coming up. ♪

back to bloomberg market day, let's get a look at the top stories making the headlines. president obama will meet with vladimir putin on monday. they will talk in new york at

the opening of the general assembly. president obama wants to see if he can make rubber us with prudent in their differences over ukraine and syria. chairman says brazil is making tough decisions about how to reform the economy. santander makes a fit of its economy there. they predict brazil will return to growth by next year. i want us to be the best bank in many more markets. when i see the best, i mean the best for our people and customers. i think in some of the smaller countries, like portugal, we are already there. year, she took over from her late father. shares of caterpillar are dropping today as you can see. the maker of construction equipment is cutting back 5000

jobs over four years in a restructuring plan. the company is heading for its first sales to klein ever. -- sales decline ever. thatberg news has learned boosts biggest -- to sales. rexall is a spanish gas contributor -- gasp distributor. aboutis a growing buzz stealing. bees -- 5 among million have been taken in the last month. australians are trying to grow more almonds. that is a look at the top story at this hour.

matthias mueller is going to become volkswagen's next ceo according to airport in the wall street journal. learned that a number of other volkswagen executives will be departing over the cheating scam. miles west of berlin, what is next? well, he has not been named. who camegue in berlin out the strongest and was the first to report that matthias mueller is likely to be the next ceo. know that there have been a couple of key departures. these are executives who were involved with the volkswagen development leading up to this.

what we are expecting tomorrow is the full supervisor board, the 20 member board, they will meet and ratify the choice of matthias mueller. hehas grown up at porsche, started there as a tool of prentice, he has turned that into a profit factory. in berlin there is a different conversation. the transport minister is talking about testing all vehicles across all brands, not just volkswagen. shares fly earlier today that they may have been 11 times over the limit. we also heard that elon musk is isberlin today, we heard it -- diesel is as bad as co2 emissions. he is making the case that his vehicles are more environmentally friendly. betty: we have a quote from its

beach where he said it is very important that we take action today to recognize that we are making a significant change to the chemical constituency of the atmosphere and the oceans. aboutsinging his shoe and electric vehicles, as well as making the point that diesel is still cleaner then the carbon monoxide that is being put out by regular gas cars. so matthias mueller, if he is in fact confirmed, what does he face here? in the face of all of the investigations, how many investigations are we talking about now? the fines, what that number is now? give me be state of it. we have heard now from a couple of other jurisdictions, the bbc is reporting that the u.k. is reporting having their on diesel fleets.

we heard something similar out of spain. here, they are talking about criminal proceedings. the company has pledged to work with prosecutors to accelerate this process to get to the bottom of it. also heard from the key labor leader here on the volkswagen board saying that they want to minimize job losses. of,000 employees at the end 2013 -- 2014. nearly half are here in germany, it is an orton part of the economy. that leaders are concerned this may lead to job losses. betty: thank you so much, hans nichols in germany. miller,o bring in matt who spoke to the former president of -- matt: the reason he came on with

me this morning was to talk about forward pass new super duty truck. the 150 inp above toughness, in hauling capacity and longevity. it also has a possible diesel has its ownit also lumen of construction which less.it way much this is kind of a sales pitch. listen to him introducing his product. last couple of months, sales have been very strong. we are getting the inventory in f 150, we are not quite there yet but we will be in the fourth quarter. we always knew that we were going to have a dip in the late spring-early summer time because now we feelity, but really good about the inventory. you are starting to see that in the sales, and we will see them

be a leader for the 39th straight here. phrase, power stroke, turbo diesel, it makes me salivate a little bit. this point, this engine is what every boy wants. all that we are hearing about diesel does not seem good lately? >> clearly we have been known for diesel in this truck since 1999, we need the torque. we developed the power stroke diesel engine years ago, we build it ourselves, we are confident in it. the results we get in the lab match what you get on the road. we are excited to get great feedback. are you worried about diesel sales falling now that we see the volkswagen scandal emerge? >> i think you have to separate

the applications. the car market maimed -- market may feel the effect, but people need these trucks to do work. they have been in the market for quite some time and are very well received. so you do have the potential of some ramifications on the car side, but for those who need diesel, they want diesel. directly.me ask you you have had your issues with past, do youe think this is industrywide? this idea of cheating the system when the epa is testing for emissions? >> i don't think it is industrywide. ford is proud of being one of the most ethical companies. error,tify a calculation we went to the epa, and we went to them to make sure it was

right and then took care of the customers. convocationsot of when it comes to the degree that we have to test all of these vehicles. that ournfident vehicles perform the way they do on the road, but clearly as an industry, we have to work with the epa and the government around the world to make sure our tests match what happens in the real world. we are going to do that, that is something that is very much in our interest. matt: do you think the auto industry, after the scandal blows over, will get together and to lobby for more real-world testing from regulators like the epa and more standardized testing for different regions around the world? >> we certainly have been supporting that. we have been working very closely with the epa to make that happen. there is a lot of work in process to help it match better what happens in the real world.

there is so much advanced technology, it has to keep up with the vehicles. it is interest -- it is important for the industry and the consumers. betty: they are looking for to being part of the solution. well, what is interesting about this situation for the auto industry is now the scrutiny emissiont are these tests? matt: a lot of the epa testing looked like they are made to be gamed. take mirrors will off a car, take up a gap in the hood, turn off the ac at the furtherovie breaks out from the wheels to reduce friction, they do anything they can to get higher numbers on these test. thatne of the big problems the scandal brings to light is that there are so many different standards in different regions.

only have tot they deal with individual countries, but within the country, they have to deal with different states. california has its own emissions standards. you couldn't buy previous 2009 volkswagen cars in california that you could buy in the other 49 states. the only way to get it in california would be to wait itil it has 7500 miles on outside of the state. betty: why wouldn't that matter? wouldn't you want to make sure you would build a car that could pass the strictest out of all of the standards? standard is inne strict on all of the measures. could make it passing california that wouldn't pass european standards. it is hi and headache for the car manufacturers. the best thing to be would be to have standardized measures.

it is easy enough for us to agree on something here in new why a lot ofs is them game the system and some of them, like folks like him, cheat and break the law. betty: ok, matt miller who has been all over the story, and -- matt: did you notice that my name is kind of like matthias mueller? matt: i did, and you have been correcting everyone's german. coming up next on market day, we will tell you how google plans to keep complaints out of the courtroom. we will be right back. ♪

betty: welcome back to bloomberg market day, i am betty liu. let's get straight to ramy inocencio. all of the smp sectors are in the red except for utilities. down for as are third straight session, but they are pulling their session lows at this point. best of500, it is the the bunch, but they are still down by about .93%. you can bet investors will be reading the tea leaves this afternoon when janet yellen gives a speech, bloomberg will be carrying that. and --ial's, materials are all down.

smp materials index is down the most by 1.6%. emerging markets are slowing down. let's take a look at commodities, oil is rebounding higher today. investors are looking at -- the stockpiles have fallen to -- that is more than a median estimate. .62%.s up by about look at the pop right there, just before 10:00, this is because durable goods orders fell 2% in august. that theueling bets fed may raise rates sooner rather than later. treasuries, the 10 year

employment gains are now off their session lows by about five basis points. the stocks are selling off today. that is a look at the markets and commodities, back to you. betty: ramy inocencio on the market. let's talk about uber. still battling it out about drivers rights. drivers want to be treated as employees with benefits, they cannot go to court. instead, they have to go through private arbitration. edward chen granted class action status to a lawsuit over two uber drivers who were looking to be cast as full-time employees. could join thers suit. what is at stake here?

the drivers are supposed to go to what is called the judicial arbitration mediation systems. that is where the disputes are supposed to be resolved. saying werivers are are employees. uber says no you're not, you are contractors. because you set your hours, and there is a little thing about a salary. [laughter] betty: right. >> this is the dispute, it is at the crux of uber drivers. right, and are you then obligated to give drivers benefits, salaries and all of the other perks? it reminds me of the battle that we were hearing here in new york, where the custodians and the housekeepers are now

picketing and demanding that they be full-time employees because they work full-time. this is where companies that are in this whole sharing economy are getting into trouble. >> if you want to know more about this story, joel rosenblatt wrote a great thecle, he quotes shannon, lawyer who represents the drivers, she says forcing drivers into arbitration is a sneaking tactic to shield uber from the class action liability, owe people a whole lot of money. so this will go on for a while. i'm fascinated to see how this turns out in court, we could have repercussions way beyond uber. betty: what do we have coming up in the next hour? yellen -- t

betty: nice of her to drop by. be speaking in massachusetts, in a lot of investors will be watching for her comments, because it was a week ago today that the fed said it was going to stay put on interest rates. the markets have not been kind since the in action by the fed. yellen, the said chair on inflation dynamics and monetary policy, i will be talking about that and other things, coming up. betty: all right, we will be back on the bloomberg market day. ♪

betty: welcome back to the bloomberg market day, i am betty liu. -- it hasn't quite worked out that way, digital ad viewers,

they are not human beings. advertisers are set to lose billions of dollars. here is mike riley. mike, we have heard about this, that it is a growing problem. bots are looking at ads and that is skewing the numbers, to the detriment of the advertiser. how bad is it? >> it is bad. the goal that we undertook was trying to figure out how massive volumes of fake traffic gets into the real internet economy, and it turns out to be a much larger problem than people realize. a major study was done last year by the national society of advertisers found that 25% of video ads are seen not by humans, about 11% of display advertisements.

complex mass of , it turns out to be a huge problem. betty: is it criminal? on one end, it is bot masters who control huge numbers of computers, so on that extreme, it is criminal. there are also different levels of low-quality traffic. those pop-ups that you never see , they can still be counted as driving an individual to a website. seeing thosevidual ads, even if those ads are never seen. about what dismayed they have seen in the digital --

new digital ad economy, one person from kellogg's said that they thought they were selling the ads in legitimate spots, but it turns out i'm buying ad spots from a guy on the coast. betty: unseemly, of course. what are their attitudes overall? do they feel like, hey it is the cost of doing business on the web? >> no one can ignore the web. you cannot put the genie back in the bottle. what they are trying to do is get a scale of the fraud. are promisingies lots of great things in terms of technology. that a lot of it may be fake. the challenge for advertisers now is, what do we do about it?

they run their own system back, get in control of where the ads are shown, and i think there is a quietly ruing revolution where he will see advertisers begin to fight back and change things. thank you so much, a fascinating story. mike riley with bloomberg news. still ahead, we will hear from rendon, the cofounder of the virtual reality company opulent, now owned by facebook. emily chang will be interviewing him. ♪

a.m. int is 10:00 france and cisco and 1:00 in new york.

mark: this is the bloomberg market day. betty: porsche ceo matthias muller emerging as the front runner for volkswagen ceo in the wake of the crisis. a preview ofhave what fed chair janet yellen might say in her speech today as the markets fall after news that interest rates would remain unchanged. good afternoon. i'm betty liu. i'm mark crumpton. let's go to bloomberg's ramy inocencio with a look at the markets. a lot of red on the screen this thursday. ramy: that's right. we are seeing stocks pull back from their session lows. have beenof course looking for guidance after the fed earlier this month declined

to raise rates. you can bet they will be parsing the words of fed chair janet yellen when she speaks on monetary policy at 5:00 p.m. two individual stocks -- i want to show you one of the big lacquers, and that would -- the laggers, and-- that would be alibaba. it is down by 1.8% or so. consumers pulling back from spending. the economy has fallen for the last five days in a row and has lost half of its value since the market peak. shares headed for their worst day in a month, twitter, citigroup saying the shares are "high risk" and the company monetization goals may prove difficult to realize, at least

until user growth accelerates. the twitter stock has been down for six straight months, taking its year-to-date fall to 29%. also, we cannot forget caterpillar in today's selloff. it is being slammed because of a slowdown in china and other emerging markets. yeard cut its cast for the and cut its to the 16 forecast by 5%. lower.about $2 billion it plans to cut 10,000 people over the next four years to try to save $1.5 billion. cell initiation by axiom capital probably is not helping that stuck either. lower, after it lost its exclusive conference with cosco. jeffries is losing its price arget by 18% to 70 bucks

share. amex shares are the lowest since september 4. that's a look at the movers and shakers, mostly on the downward trend. mark. mark: ramy inocencio, thank you. betty: pope francis delivered the historic address to congress this morning. mark: he became the first pontiff to address a joint session of congress and called for a delicate balance in battling religious extremism to ensure fundamental freedoms are not trampled. he also reminded lawmakers what their role is. you are going to assure the dignity of your fellow citizens in the tireless pursuit of common good, for this is the chief aim of all politics. of course i did us alive

of from washington. margaret, give us a sense of how this was received. reporter: it was received with resounding interest to tens of thousands of americans gathered outside of the capital and inside the chamber, the house of a dry eyesives, not from house speaker john boehner, as we saw, but also quite a lot of interest and what he had to say. he seemed to spread it around a little bit both in terms of talking about his criticism of coming you know, advocacy for the sanctity of life. touching on issues where he disagrees with both republicans and democrats. margaret, you mentioned not a dry eye in the house. we have video of john boehner several times wiping his eyes

with his handkerchief because it was such an emotional moment. i think the pope made a little joke about his green tie being the color of hope. i'm sure that set another round of tears for boehner. this is been an ordeal for him, right? is it true, he has been wanting the pope to address congress for quite some time? betty: absolutely. the pope had not started speaking at any already have the handkerchief out. it was all the way through the pope's address to the masses. you saw some of the instant reaction from republicans saying he, paul ryan could not agree more when the pope said the politics must serve the good of the human person. and speaker boehner saying the holy father's visit is surely a blessing for us all. reaction from democratic lawmakers as well including jewish democrats praising the message of the pope. the real question going forward

is this going to have any impact on american policy, foreign policy, domestic policy? there is much less evidence of that, but in terms of a brief unification right on the potential shutdown over issues of abortion, this was a moment when people could come together in a town that is very much divided. about thatalk division. was it along political lines, or was there unanimous consensus that maybe that should be put down, if only for a day? reporter: if only for a few hours in a day. i think that's absolutely right. the pope took great pains to make a speech to americans, whether it was american politicians are the american public. he spoke about abraham lincoln. he spoke about martin luther king jr. he spoke about catholic leaders who have been prominent in the united states and that was a real effort to make his message a political and that partisan gap. don't mean to make a

joke of pain or tears, but he could hardly hold it together on the balcony -- of boehner's tears, but he could hardly hold it together on the balcony either. standing with the pope on capitol hill. the pope made history by addressing congress. what happens after this? this is certainly a huge historic moment here in congress, but does it, as mark is saying, have any longer-term impact here? let's lookeporter: ahead at the immediate future. there is still the chance of an immediate shutdown. there are u.s. domestic facts on the ground that this is absolutely a long artisan lines. he pope spoke on issues considers to be moral and apolitical. but in time for the 2016

elections, it may have little implications at all. the pope makes a big point about being selfless and not aggrandizing the self, but he is no stranger to modern technology. he seems very much to be embracing it. i think there is question about how the american public will thed the -- will remember pope's visit and his propensity for selfies. he very much wants some long-term staying power. mark: margaret, we have a few seconds left. i have to ask though, because it seemed the pope was treading a very fine line. he was not condemning capitalism, but he was condemning greed. he was condemning the system of income inequality, which he says

is prevalent around the world. how is that topic received by lawmakers? reporter: this has been no surprise with this pope for the last year and a half or so and with wall street. he sought to not completely broad brush it, but talk about the pitfalls of modern capitalism and how the poor shakeout in the system, and in terms of u.s. foreign-policy, the connection between money and weapons. in terms of party orthodoxy, it disproportionately has -- draws a different reaction from democrats than republicans. democrats want to use this, to demagogue this and use it as a political issue. the pope wants to avoid becoming a pond in u.s. politics, but at is same time, thinking, this along the lines with u.s. democrats, whether it is social issues, abortion, gay marriage, gay rights -- his views as the

pope, as the head of the church are still aligned much more with the u.s. republicans. margaret joining us from washington with more on pope francis's historic address. it's interesting, she talk about that next is between money and maybe weaponry. the white house made that point clear yesterday, because when whites arrived at the house, there was not a 21-gun salute. right.that's they usually do that for state leaders. ,hey did that for president xi but not appropriate for the pope. very good point. margaret, thank you. let's get a look at the top stories we are following. president obama will meet with before the u.n. meeting of the general a simile. the white house says putin requested the meeting. the president was to see if they

can make progress over there differences on ukraine in syria. tragic stampede in the mecca city during the hajj. deadliestde was the since 1990 14 hundred were killed. and eu countries still divided over the refugee crisis. at a summit, brussels agreed on wereitarian aid, but they not able to agree on how to police the borders. >> recently i visited refugee camps and i have only one message. get todetermined to europe. it is clear the greatest tide of refugees and migrants is yet to come. it is predicted a million refugees will reach europe this year. mark: bloomberg news has learned that spain's biggest oil company is considering a number of

options including selling all or part of its stake to boost its balance sheet amid falling oil prices. bear markets sees a in copper for years to come. the bank says prices will slump as interest rates rise and consumption levels off in china. goldman says 2015 could see the largest drop in copper's and the financial crisis. through could lasted 2015. next on the bloomberg market day, we have an exclusive interview with the chair of ban co santander. betty: and according to "the wall street journal" volkswagen has chosen its new chief executive, matthias muller. we will have more analogous affect the german economy. ♪

to thewelcome back bloomberg market day. i'm betty liu. i'm here with mark crumpton. mark: boy, they would be fascinated with what goes on during the commercial break. betty: the things that we say to each other. are: more tech companies flocking to the midwest for high wages, low operating costs, and low -- costs. he is predicting the rise of innovation. this is fascinating. we got some notes on this. silicon prairie, one of the top

in tech jobs.wth look at some of these places. i check workers -- high-tech workers in lincoln, nebraska, the average salary $66,000 a year. you know why all of these young kids are getting into tech. betty: they are getting into tech, but they are not moving. mark: they don't have to move, yeah. betty: you and i were talking about the average salary in seattle something like $99,000. but the living costs are so much higher, right? what do you get for that? you get more banged for your buck in places like nebraska. companies are increasingly moving operations where the talent is cheaper, and where it is easy to retain. a, even if you're not making

$99,000 salary as you are in seattle, you might be making a $65,000 salary elsewhere where the cost of living is cheaper, so it balances out. betty: here is the problem, and there are all of these tech hubs just newe country, not york and san francisco. the problem -- the investors though are in these cities. they are in new york. they are in san fran and seattle p review kind of have to be in the cities if you want to get your company funded, make connections. that is the one problem is, if you are someplace like st. louis, missouri or elsewhere, you're not at the epicenter of where the money is. and the question is is this real or is this artificial because of government support? i imagine that if one of these companies wants to go somewhere,

the town might give them tax abatements. people pay more money, property taxes, that money can be used for road in ridge repair, -- road and bridge repair, score pair, whatever the township might need. betty: let's look at other top stories we are following as well. speaking of startups, uber is seeking to expand in the bay area. they are undertaking a renovation of the sears building through their also planning a to building campus on san francisco's mission bay. what's in unithas will be a big revenue driver. it is adding user tools for users for its push into analytics and cloud technology. citibank is getting out of

retail business. 1% marketess than a share. services tol offer clients in the boston area. that's a look at the top stories at this hour. at coming up on bloomberg television, live coverage of fed chair janet yellen fell speech on inflation dynamics and monetary policy. at 5:00 p.m.rts eastern time right here on bloomberg television.

♪ mark: welcome back to the bloomberg market day. i am mark here with betty liu. the markets have been down since last week's decision to leave interest rates unchanged. will be the markets listening when janet yellen delivers a speech on inflation dynamics and monetary policy.

michael mckee joins us. ok, what does this mean? michael: it is interesting. this is the speech she would've given if she had gone to jackson hole. , academicese are dry presentations. maybe that is what we get. was there and he did not give a dry, academic presentation. we may get clarity about what the fed thinks about interest rates and when they might make a policy move. they left the meeting last week rather confused. did.: they do you think that jenny yellen and her cohort are surprised by the market reaction? i don't know if surprised. i'm sure they did a postmortem.

but the market is telling them they did not sell their program well. that inflation will go down even when the in employment -- on implement rate goes down. going to raisell rates, that did not make sense to a lot of people. historichael, is there context to be fed saying something and the markets many back and saying we are so confused we will be in the red for a week? michael: it has not been, because the fed has made it what they were going to do. at least sense alan greenspan. it happened once before when bembenek he gave a speech in jackson hole. he quickly rectify that with another address, and the markets may be looking to janet yellen tonight to try to give a little , taken fusionty of the markets. they don't have to raise rates, she does not have to when, but

ketseast give mar guidance. mark: is at the message that is confusing or the interpretation of the message confusing? michael: it's the old, i don't understand what you think i said message. the rate of inflation is going to fall. that's not what they have been telling us for a long time. as unemployment falls we're supposed to see inflation build bike up -- backup. they put interest rate on hold, but still said something they would do some thing by the end of the year and you had fed bank president say, we are going to raise rates by the end of the year. a mixed message. betty: i know what is hard to predict, but the fed is data dependent. we are looking at december as a likely time to move. is much right to change in the next couple months, mike? we probably will get

continued job growth that is reasonable. it may not be as strong as it was simply because it has been going on for so long and there's much -- not much room for on a plummet to fall. oil prices will be going down. that will push inflation lower. betty: even lower. michael: maybe they will watch chinese data including gdp on october 19. maybe that will leave them somewhere. gdp, speaking of asia and shinzo i have a, they are calling it abenomics 2.0. the gdp target he said is $5 trillion. is that unrealistic? has been.o far it in three briefings he was to do could get there, specifically stimulus, butmic it has not worked. this was the day he was sworn in for his second term as prime minister. he says we are going to continue with what we are doing, but we

are also going to add to it. they're going to raise the amount of fiscal stimulus and its and just think -- they want to do more childcare for working women. one of the problems japan has is its fertility rate is going down. the number of workers is falling and that lowers your growth rate. if they can bring more women into the workforce because they takingeir children are care of, maybe they will have more children. that's an interesting aspect of his new program. mark: michael mckee, thanks. you are out. i am, but a program reminder -- we will have live coverage of janet yellen's speech at 5:00 p.m.. mark? mark: right here on bloomberg television. bloomberg market day continues in just a moment. ♪

mark: welcome back to bloomberg market day. i am mark of did in new york. let's get your top headlines.

pope francis became the first pontiff to address the u.s. congress. welcome lawmakers to immigrants as fellow human beings. he also warned of the difficulty of fighting religious extremism. delicate balance is necessary to combat violence -- whileme of religion also safeguarding religious om, intellectual freedom, and individual freedom. francis also called for the global abolition of the death penalty. chuck grassley of iowa says an independent authority should determine whether mrs. clinton deleted any official messages. the computer server she turned over to the fbi is being checked

afford the lead at messages. the server ran the private e-mail mrs. clinton used as secretary of state. a new survey shows that americans agree with the central theme of donald trump's campaign. 72% think the u.s. is not as great as it once was and americans are fed up with politics and think the nation is headed the wrong direction. there was a decline in the long-term mortgage rates. freddie mac says the 30 year ised year mortgage rate 3.86%, down from 3.91% a week earlier. the 15 year rate also fell. rates have stayed under 4% for nine straight weeks. netflix knows how long it will take you to become a binge watcher of some of it top shows. the answer is usually about three episodes. netflix crunched the numbers for

more than two dozen shows and viewers needed three episodes of house of cards to get hooked on the political thriller. but a breaking bad addiction kicked in after just two episodes. those are your top stories at this hour. thanks anton der withstood -- santander their withstood brazil's currency default. in an exclusive interview, santander's chairman said that reforms will ultimately put brazil on a better path. our brazilian business it for quite a while, actually, was not performing as well as we would like. that was quite as clear. i knowledge we did not do as well have for a number of years. year,d say over the last 18 months we have done much better. we have made a lot of progress

in terms of integration and cost-cutting. bank.e rerisked the we have strengthened the management also. brazil has 2 possibilities. they're up in a number of these situations in the past. they have made these reforms, taken tough decisions, which are not easy for the people, not easy for the economy. that is what is up now. we believe that will continue to be the case. there is another scenario, which is more negative, which would orn years of low growth succession. we think that brazil is taken the right measures so far, and we are confident that after 15, 16, we will see growth again. botin, thewas ana chair of santander, speaking with bloomberg's francine lacqua

. and we got this take on "surveillance" this morning. guest: when we think about the impact of the weakness in china and emerging nations, you have to think about the stronger dollar, but also commodity prices. when i add it all up, it's imports, weaker u.s. but strengthened a mistake demand because lower oil prices and the dollar improve or increase consumer purchasing power. that ships out aggregate demand. and let me add -- ok, you mentioned earlier, the sharp capitulation depreciation in the and the mexican peso. brazil has got to get its act together. it has terrible leadership, bad

policies, lacked of credibility. suffering from weaker energy prices and everybody is very reticent to invest in emerging economies here, but the general framework is the u.s. economy is doing just fine. it is growing comfortably. we have moderate inflation. it is slightly below the fed would like it -- i'm sorry, mickey levy has aged since we last saw him. it is shocking. does it have anything to do with september 17? michael: brazil is its own strange creature. mexico does reflect what is going on in the u.s. economy, but also china. the do have problems ahead for their economy. the that suggest that maybe fed is justified to take a few

weeks to wait and the what happens, see whether it has the kind of impact on the united states, either directly or ,hrough third country affects that maybe it hasn't in other countries like mexico? guest: absolutely not. the fed is always dealing amid uncertainty. we have uncertainty now emanating out of china and emerging nations. is seet you have to do the economy is growing comfortably. it is within sight of 2% in the long run. certainly these weak emerging nations will have a modest negative impact on u.s. exports. readmike, we have a headline now -- a red headline now. caterpillar is cutting is forecast.

they say 2016 sales will be about 5% low 2015. they are going to cut about 4000, 5000 jobs, try to save $1.5 billion. expect theld trend down 5%. and walmart is going to reuters and saying you have to cut -- guest: the inflationary pressures are there. they are there and they are exportrom the global and new mediocre of christine lagarde, and you were saying ignore that because there will be domestic strength from lower commodity prices? shouldi'm not saying we ignore that. i'm saying we should expect weaker exports. a multinational that relies on experts, you could expect weak product demand and the combating that. look at consumption. it is healthy. you will have another quarter into three with real consumption above 3%.

you will see strength in housing, domestic demand is strong. which is exactly what you would expect. the fed has to deal with this uncertainty. mickey leavy on "bloomberg surveillance" this morning. coming up next, porsche ceo matthias muller emerging as the front runner to become the new see all of volkswagen in the wake of the omission cycle. and we will get more insight on what janet yellen may say in a speech today as markets fall after the fed decision to leave interest rates unchanged. ♪

mark: welcome back to the bloomberg market day. i'm mark crumpton. let's get you a check of the markets. julie hyman is standing by. we're watching a selloff on wall street today. indeed. investors waiting to hear from janet yellen, giving a speech in amherst, massachusetts. normally before we hear from the fed, whether it is a statement or commentary, the market is not much changed. that is not the case today. big declines across the board on ongoing uncertainty about when rates will be going higher. also a lot of concern about global growth, caterpillar cutting its forecast. it if you take a look at our bloomberg terminal, industrials, interestingly -- a group of which caterpillar is a part, already overtaken by materials and health care in terms of steepness of the decline.

no new catalyst, just the continuing decline be of seen in the wake of hillary clinton introducing a new plan pharmaceutical prices. by see that, being led pharmaceuticals. they areou can see, not trading sideways. they are trading lower. mark: what are you watching for us this afternoon? shares are lower. that may have to do with the intereston the 10-year rate is. it's going down and down and getting closer to that 2% level. one of the broader things, the idea we haven't -- have had interest rates cut in more ways than taiwan. and safe haven currencies are outperforming the dollar in today's session. julie hyman, thank you.

all signs are pointing to porsche ceo matthias muller to become the next ceo of volkswagen. he will replace martin winterkorn who resigned earlier this week. they're all letting other chief executives go in the wake of that emissions scandal. s hans nichols is in wolfsburg, germany. wons: the story today is to stories. burg story.e wolfs who is going to replace martin winterkorn? "the wall street journal" is certain that matthias muller will be the candidate. that is according to one source milley with the matter. tomorrow there will be a

20-member board meeting where they are likely to finalize matthias muller, the porsche ceo, as the new ceo. in berlin, we heard from the transport minister saying they will do spot checks across all not just volkswagen. bmw, mercedes as well. the eu is urging all countries to do independent verification on who may be fudging numbers on diesel exhaust in missions. something similar will take place in the united kingdom. they will be testing diesels as well. a little bit about those two the partners. the development head at audi and the development head, the counterpart of porsche. both of those people, according to people familiar with the matter, will be leaving their companies. it looks like it has are starting to roll as the management board, the executive board, and the supervisory board try to clean this up.

mark? chols joining us from the flag and headquarters in germany. chrysler chairman john elkin spoke with reporters. there was a statement by the union of manufacturers in europe, saying that what has happened to volkswagen is not related to the industry, and that the industry is not concerned about repercussions to the industry. bloomberg'sbring in resident auto expert matt miller. mr. elkann saying it is not related to the industry, but the industry seems in damage control, saying that is endemic to volkswagen, not us. matt: that's right.

they are going to great effort saying it is not the entire industry. that it could apply to other carmakers. bmw had 11 times the legal limit of him. other carmakers will have to ach individually, and say whether or not they use defeat devices. told me thisent morning they do not. they will also have to talk about omissions results for the epa and the eu and other countries in the region. one of the interesting things -- what i think is the most interesting -- it may allow fiat to go forward with their plan of combining their company with another great it was widely talked about that volkswagen was butsired merger partner,

the volkswagen leaders were against it. now they are out of the way. listen to what they had to say about merging companies. collins --g about consolidation with and very clear about, it is rational and it remains rational. are alsono doubt, we building cars and increasing and for an industry that has difficulty and being able to have adequate returns for the investment that is required, consolidation is definitely a very effective solution to address the problem. he has been saying publicly and that is the reasoning and the rationality of the argument. covered a few of these auto scandals. you were all over the gm scandal. i remember you ask questions of

maryborough when she was testifying capitol hill. does volkswagen get past this, and if so, how? matt: i think it will be very difficult to get past this. the problem is they may make the mistake of accusing executives who are still too close to the individual martin winterkorn. i can't see how they do not go with an outside candidate. right, bloomberg's matt miller following the bw story. shareshead, caterpillar tanking today. we have details. our simulcast with bloomberg radio when we return. ♪

mark: welcome to the bloomberg market day. i'm mark crumpton. a spectacular fall day here in

new york city. commodities slumped is hitting caterpillar hard. they are eliminating 10,000 jobs. let's join bloomberg radio's carol massar and cory johnson. carol: thank you, charlie and thank you very much, mark. caterpillar is the number one ladder in the s&p 500 today. let's bring in our correspondent who covers the machinery area for bloomberg intelligence. of course, you're on bloomberg advantage on bloomberg radio. we have had a number of the supporting -- disappointing reports from caterpillar. what is the significance that it continues to be a tough time for caterpillar? there are seeing the next leg down. the incremental bad news is the energy markets are rolling. energy prices have been down for had a backlogt

they could work out of. that is starting to roll and mining is not turning. incrementally, construction, which had been down, but down a lot less, is not happening at all as north america is rolling in the construction equipment area. so everything is down. we knew this about caterpillar. they told us last quarter this was going on. what has changed so rapidly now? mining peaked three years ago. guest: i think it is an order of magnitude problem. they did not take the big bites. i've been wondering where the goodwill write-off is for peace iris -- p cyrus. carol: their biggest acquisition, right? threw in thek they child. they have been cutting, cutting, cutting slightly. but these are permanent changes.

they are basically signaling this is going on a lot longer. forl: what does this mean doug oberhelman, their ceo, who has been with the country for a -- with the company for a long time? cat has a long-term view. these are long-term cycles. it does not look good for him in the timing of the number of acquisitions he has done. i would not blame the downturn on him. the slow response time could work against him, as well as the timing of some of these deals. them for don't blame the downturn, but he got credit for the upturn. referencing that goodwill write-down, that's really throwing in the towel, right? they concede that they overpaid for this and that is goodwill that is never likely to be realized. michael: that's true -- guest: that is true and i have been waiting to see when that would happen for some time.

global signaled they would have to take a write-down and they did not pay for their acquisitions as much and they did not buy them at the right time. carol: this company does a lot of r&d. they have a lot of macro global trends they're looking at, and was this just a case of really, really bad timing on their part? people respect when they come out with a forecaster say something about the global come out with a forecast or say some thing about the global economy because they do so much in-house research. up and myhing is china. china was the commodity boom and the commodity bust. the length of the of cycle and now the length of the downturn is surprising them. cat, i actually believe it will

make sense over a long time that they bought into the underground mining business. mining is a very consolidated market. caterpillar is a market leader. they may 20 5% margins, 23% margins in that business when it is good. going to be good again. but they are suffering longer than they thought, and i would have thought, actually. because this is coming out and dribs and drabs, we might continue to see more and more with this company with everyone word as well. 5% does not seem enough to me. the capital spent in mining will still be 20% next year and down slightly in 17, and the oil and gas guys have just started to cut. cory: it's not getting better. the capital spending guidance is up and oil and gas is down only 6% in 2016. that sounds not enough for me. so, yes, i do think earnings

will be cut again. karen ubelhart. ger in the one lag s&p. back over you. mark: thank you also much. a programming reminder -- we will have live coverage of fed yellen's speech on inflation dynamics and monetary policy. it starts at 5 p.m. new york time right here on bloomberg television. it's a down day on the markets today. as we had to break, the dow industrials down 170, s&p down 18 points, nasdaq down 75. stay with us. the bloomberg market day continues in just a few minutes. ♪

mark: it is levitt :00 in san francisco, 2:00 a.m. in hong in hong kong. we will hear from the researcher who uncovered it all. first superd it

pickup. i sat down with the president of the americas on the bold new look. mark: could hollywood be headed off a financial cliff? we will hear from the analyst to says there are too many secrets. manyo says there are too secrets. somebody got caught between a rock and a hard place. matt: i don't want to destroy television viewers have. like a rock. bob seger did that song. we are talking about ford, not chevy. i am not sure that is a play on the competition.