already fractured republican party? >> the meetings between president obama and chinese president xi jinping. are the two world powers now seeing eye to eye? mark: a busy day for pope francis in new york city. we will bring you the very latest. good day from bloomberg world headquarters in new york. -- itas been one of those is a newsday where you think ok, the first friday of fall come everything will be fine. then, the floodgates opened. brendan: it's all non-markets news.

the pope talks, the president talks, xi jinping talks and the markets a, "ok. sure." mark: we have green across the board. the s&p 500 and nasdaq higher. the dow up 1.43%. brendan: a lot of movement in treasuries on the heels of janet yellen's speech. a little bit of green on the 10 year and 30 year note. let's take a look at oil. mark: headed for a weekly advance p of crude inventories declining. 1.75%. nymex crude, up back now to our big story today. john boehner stepping down. he addressed his decision to resign at a press conference

within the hour. >> it has become clear to me that this prolonged leadership turmoil would do irreparable harm to the institution. this morning, i informed my colleagues that i would resign from the speakership and resign from the congress at the end of october. brendan: joining us now on the phone is john heilemann. and phil mattingly. let's start with you. the speakers as he woke up this morning, preyed on it, went to a diner, decided today was the day. is there anything else going on today that would have pushed him? he hadspeaker said decided he was near resigning, ready to resign around last year. cancers defeat and

decided he needed to stick around for the sake of the party. cantor's the feet. -- defeat. there are questions looming before his chamber of congress which relate to the potential government shutdown, the debates over trying to defund planned parenthood, and ugly fight over the course of the next week. resulted inht have a leadership challenge to him, one that he could've lost. he's being honest when he says he did this to try to avoid all of that. he did this for the sake of the republican party. and his political prospects -- another government shutdown would hurt the party. is in thethat long-term interest of the party. as farhat does this mean

as the potential for a government shutdown? mean we areignation more or less likely to see that happen? lawmakers since this announcement was made and they are certain it is off the table right now. this allows john boehner to go ahead and take the bullet he knew he would have to take without having to worry about the leadership challenge. he will put up a bill to defund planned parenthood and resort to a clean funding bill that will pass and president obama will sign it into law. or threat of an overflow him losing his bigger ship no longer on the table. he is doing this for the right reasons. they will get behind him. the white house relationship with john boehner has been one that has always been contentious.

respect. one based on there's wariness about who will replace him. the president addressed the speaker. >> john boehner is a good man. he is a patriot, he cares deeply , the institution in which he served for a long time, he cares about his constituents and he cares about america. oppositeupper ideologically. both speaker boehner and president obama felt like they could talk to one another. there was always a line of communication. that is leaving now and that will cause some concern. there was cheering at the conservative the voter rally summit this morning when marco rubio announced a john boehner was resigning. what does that say to you about the possibility of a

nontraditional choice for a new speaker? john: there probably are not the votes for a far right tea party type of speaker of the house. the reaction is incredibly important and telling. the reactions has more about the state of the republican party than the resignation itself. the republican party right now is in disarray. in the congressional level, in terms of presidential nominating process -- and there is a large contingent who do not like the establishment. mark: let's get more perspective. let's bring in luke messer of indiana. he joins us now from washington. let's go back to phil mattingly. john heilemann was saying about what is going on, this

fractionalization within the republican party, the split from the far right and the split in the center. speaker boehner had problems trying to get that caucus together. will it be easier for a kevin mccarthy to bring that caucus in with the rest of the gop? phil: the crucial components of that dynamic remain the same. there is a democrat in the white house and the senate republicans who took control during the have 60 and 2014 do not votes, they cannot get through a filibuster. , kevin the speaker is mccarthy has started to move far the oddss by on favorite -- just because he is in the speaker's chair does not mean that those dynamics shift at all.

there are lawmakers who will vote against anything considered pragmatic or a compromise. whoever the next speaker is will have to compromise with the white house to move anything forward. one of the things you've heard from conservatives right now, if it is kevin mccarthy, they feel like they have a better relationship with them. the basic facts on the ground, they do not shift. things are not getting any easier. the press conference this afternoon with john boehner was as candid and emotional as we have come to expect from him. you've known him for a long time. when you look back, does it make sense -- john: it has.

his last glass of merlot in that building. thatbeen clear that he has he was carried into this office by a revolution that he did not leave. arianan establishment -- he has not enjoyed the struggle. loves the house and is always wanted to be speaker. the job has been an eternal headache for him. he has been quite successful tactician in saving some elements of their publican party from the tells -- from themselves. resignation for the job he always wanted from the institution he always loved by introducing it by singing is a beauty do the best is it zippidy doo da.

one of the strangest political resignations ever seen. it gives you a sense of how much enternal angst and turmoil h has suffered and trying to do right by his party and keep the government going. that was the first press conference i've ever seen where it literally looked like he wanted to spend more time with his family. thanks to both of you. mark: the congress and will be joining us to give us his reaction. ♪

mark: welcome back to the bloomberg market day. brendan: let's go straight to a

look at the markets right now. the dow and s&p still holding near their prize. -- near their highs. julie: the disconnect today between all the news going on in washington, here in new york with the pope's visit and the --kets are still playing war investors bring attention to janet yellen's comments yesterday. you have gains across the board but the nasdaq is the laggard as we headed towards the end of the week. nike has been the study out performer today. -- study out performer favorite reporting earnings that beat estimates. theas been benefiting from leisure trend. strong sales in china.

retailer that sells nike products did not fare so well with its earnings report. finish line listening estimates. estimates.sales the finish line had a merchandise problem. did not put out much of that fashionable stuff as it could have. it's a u.s. focused company. a chinaenefit from boost we are looking at apple today. the company is selling the latest iteration of the iphone. it is rising along with its suppliers. --ompany that is a chipmaker the company participated in a tech form yesterday that had some analyst commentary on the back of that. it gets half of its revenue from apple alone. biotech is still not working, selling up once again today. that is the primary reason the

nasdaq is the underperformer. it is more heavily weighted to these biotech companies. , theorst-performing stocks selloff in biotech began when hillary clinton first tweeted that she was going to be coming up with a prescription drug price plan and then give some details. tondan: we will be going shots of people waiting in line to buy that apple iphone. a staple of our journalism here. would hope for real numbers later on. mark: president obama and xi jinping wrapping up a news conference at the white house. an agreement on battling global warming. >> we are building on last year's climate commitments. cleanonth, issued our

power plants to reduce carbon emissions. i want to commend the china for adopting a national cap and trade system to limit emissions from its largest sectors. brendan: mike joins us now to talk about this. also is roared over because -- gerardo rodriguez. some of these climate madetments that xi jinping were made when the economic situation in china look a lot different. how has the presumption of a slowing economic growth there affected their ability to deliver these climate promises? >> not as much as a lot of people think. china is going through this transformation. --ing to go through this from this manufacturing economy to service economy. what's driving economic growth is not using as much energy. if you've been to china, there is a legitimate concern over the quality of the air.

people get sick. it is not a surprise. it's the one area where the u.s. and china both ci to i. -- see eye to eye. mark: chinese officials today talking about a cap and trade agreement. i was talking about that earlier. andhere is some sort of cap trade agreement enforced, will that not further slow the chinese economy because it will impact industry? >> there is always a trade-off with these. chinese authorities have been facing the trade-off. investmentay from and going to consumption as an important driver. the have a lot of headwinds. growthrtant source of that they cannot repeat in the next 10 years and now they need to manage the flow they have.

brendan: do you see signs of capital flight out of china? >> there have been significant capital outflows in china. it's part of the global rebalancing that we've been seeing. part of the slowdown dynamics going on in china. we will need to separate the dynamics and to those elements that have contributed to uncertainty around actions because of the erratic behavior of authorities when equity markets were going down. mark: the president spoke to dignitaries and invited guests at the white house and he said ties between washington and beijing have reached a new starting point and he said when cooperation was needed for further growth, what will that cooperation possibly look like? >> ultimately, the goal is some

sort of trade agreement. andt bilateral trade joining the tbp -- we are very far apart. also said something important. both sides meeting halfway. there might be more room to negotiate. we might move towards that type of agreement. brendan: used the word "erratic." when china was handling the swings of august. they are not that good at communicating. are there best practices they need to learn from other developed economies? >> absolutely. that is related to china's integration into broader agreement such as the tbp. tpp.

they continue to engage with the rest of the world. they need to up their game in terms of submitting themselves to the same level of scrutiny that other countries have in fors of their ability private sector participants and financial markets to determine if the price -- determine their prices. it's a strategic commitment towards moving in that direction. what we saw when and we markets were going down was somewhat of a step backwards. it is the context of transparency and taking away any volatility created by government decisions, that is the standard. mark: geraldo rodriguez and michael mcdonagh. thank you. brendan: it is a busy, busy newsday. we will be right back. ♪

brendan: welcome back to the bloomberg market day. from sydney to new york, consumers lined up outside of in a hopes to get their hands on the new iphone that went on sale today. analysts are seeing the new the new modelg may not be as successful. joining this is someone who has the new device with him. the president of parkervision associates. this is what i have. the chunky old five. you have the 6s. is there any reason for me to get the 6s? >> i've been using the regular

sized phone for many years. i switched to the plus and it makes a huge difference. it's much easier. you don't have to carry both. you can look at webpages, it makes a difference and the size is not that much bigger. mark: what is the selling point for consumers? >> are you talking about the larger phone or the new 6 version. it is a lot more than the typical 6. it's much faster, the touch recognition works much better. it has a new feature with siri. it's quite a nice -- they look identical. this is the new one. plus.s the original 6 the hardware is identical. it's much scenes,

nicer. has the 3-d touch. siri -- you can just talk to it. the fingerprint works much faster. brendan: apple always plays a quick game of expectations. what do we know about preorders? what hard data do we have? >> it is hard to say. they did not just start with a new phone. they changed the way they sell it. this is an unlocked phone. if you travel internationally, you want the unlocked. they wanted to get into the business of leasing the phone. at&t and sprint's instead of buying the phone, pay us $40 a year, we willy swap the phone.

they want to get into the leasing business. brendan: just as good of a deal as when you lease a car. >> verizon jumped on the bandwagon, t-mobile jumped on the bandwagon. brendan: you have what kind of phone? mark: the phone that is not supposed to be on my desk when i'm on the air. brendan: excuse me for doing that. much more ahead on the bloomberg market day. i will be looking at my phone. ♪

brendan: welcome back to the bloomberg market day. we will get straight to a lot of stories that have been breaking all day long. --ing a look at the stories

the u.s. and china announced an agreement today on broad anti-hacking resolution aimed at stopping that theft of corporate trade secrets. the first step towards result in one of the biggest dispute between the countries. >> today, i can announce that our two countries have reached a common understanding on the way forward. neither the u.s. nor the chinese government will conduct or support cyber enabled theft, theft of intellectual property, including trade secrets or other confidential business information for commercial advantage. we will work together with other nations to promote international rules for appropriate conduct in cyberspace. said he andjinping the president have stepped up -- creating a hotline between the two countries. stunned washington lawmakers reacting to the shocking resignation of john boehner. mitch mcconnell calls him an ally and a friend who

transformed the house gop from a dispirited group to the largest majority of the -- always happy with what john told me. he never ever misled me. he never told me something that was not true. i accepted that. i understood john boehner very well. his word was always good. brendan: nancy pelosi called his resignation seismic. andai recalling 500,000 cars to fix engine problems. parts in the two-point fire liter engines can cause them to stall. janet yellen's speech last night -- tos to have investors

have given investors the clarity they sought. nicholas was on surveillance. she admitted global markets influenced her thinking on rates. janet yellen is speaking about it more openly. >> are you stunned? >> yes. >> within the last year when she's been asked questions about whether she would consider making changes based on the perceived impact it would have on overseas markets, she said no, we need to operate with our own internal domestic mandates. clearly, she cited that as a reason for not moving. >> this is a new global speed. part of this is news flow. >> it is. , when the fed talks

about raising or lowering interest rates, everybody pays attention. the finance minister gets up and talks about how terrible the united states is. when mario draghi wants to do more qe, nobody cares. >> this has to do with global capital -- this is a problem for china. they do not want the fed to hike right now. they're concerned about implications for the strength of the dollar. -- they are showing some willingness to have some depreciation. bank the norwegian central an independent central bank? is the chinese central bank an independent central bank? >> absolutely not. sides have people on both at the table. >> in december, the fed will

raise interest rates. the ecb will turn around and do more qe. why are we so concerned about flows out of those countries? why don't they go back in berlin euros instead -- borrow in euros instead? the pboc have outside influence on the em currencies base but are still takers of monetary policy. unless they move away from that, they are accepting what the fed does. schwab knows flows, of what people do with their money. the flows of brazil and china, what are the flows you observe? ofit depends on what type account you have that swab. we've seen a tremendous amount m amongility and cal those investors with advised

relationships. where disciplined process they have people helping them versus the more trading oriented folks. that's where the activity has been greater. what we are seeing in terms of biases, u.s. versus non-us, it's not that different than what you see in the aggregate. week flowse close -- and more recently in the last month, a pickup and flows out of some em areas. >> are blue-chip american stocks nicely priced? replaced --was repriced earlier this week. >> not for your traditional deep value buyers. the market is fairly reasonably valued. if you start to see these big multinationals get down to even more reasonably valued levels, you might see that buyer stepan. -- step in.

saunders withnd nicholas. a supervisory board at wolves wagon -- full swag and has named hasnew ceo -- volkswagen named the new ceo. we've just had a remarkable day here. this meeting took place, they came out and announced that he would be the new ceo. he came from porsche. acknowledge the rough road ahead. what sort of obstacles he faces, namely regaining trust of their customers and workers and partners. -- michael

horn, the company announced he will be staying. there will be an important meeting in berlin on november 9. the group tries to chart the path forward. mark: hans nichols reporting from germany. the auto city. joining us to make sense of the changes is jamie butters. he is on the phone, calling us from detroit. the one thing i noticed about the announcement of the new ceo is that he has the one division that does not make diesel engines. >> but they do use them on their cayenne. you can get it with the three liter diesel engine. that had beend narrowly defined as sports cars, two-door sports cars. , they haveeadership

.xpanded it and moved into suvs lover, you would find that sacrilege. that's where they are getting that growth and that is the kind of expansion and growth that the volkswagen brand needs. brendan: he is a car guy just like the ceo before him. he was also an engineer. >> that's right. it will be very similar management. he will be a more charismatic version. mark: what can you tell me about managing those two families? the hardest thing to do in that empire is to have good relationships with both. how good is he at managing? mythat's a little outside of -- within any of these family-owned automakers, that's what it's about. you have a group, in this case,

two groups who have absolute control. they are very much family companies. andsee that more with ford volkswagen than with toyota. it is delicate. record.ad a great track that is well thought of by the family. slogan one read the the truth in german engineering. we think of these consumer cars -- 5 million cars were affected. are parts of the vw group unaffected by this? >> presumably, the large trucks

have all been tested. they have attempted to clean up diesel from the pumps through the tailpipe, we've had a lot of cheating on that over the years. pointelieved that this that they are clean and all being handled well. it's hard to get a full handle on where all this goes. even if volkswagen truly knows itself the depth and breadth of it at this point. maybe it's mostly the vw brand. part of the genius of the vw group has been how they have reused parts across different brands and across their portfolio without losing the brand integrity. uses so much of the common componentry that is in the wolves wagon -- volkswagens.

a little nicer leather, stiffer suspension and suddenly it's a $50,000 audi. that's why they make so much more money off those. it's a really important part of their business. brendan: do we have a sense of how brought in the industry this might be spread? some bmws in germany have already failed a road test. will this affect other companies? >> there were reports about the bmw x three failing they were later retracted. it's not clear. plenty of other companies have the capability of doing this kind of cheating. the onus will be on regulators in the u.s. because they have been the most intense about it to start with. , they, all around world have to test separately from the original tests.

the epa will revise and improve their testing. if it's too stationary and to breakable, it's too easy to cheat. brendan: jamie butters in detroit. much more ahead. blackberry second-quarter earnings fall short of expectations. we will hear from the ceo and chairman coming up next. ♪

brendan: welcome back to the bloomberg market day we will take a look at the top stories this hour. switzerland has opened a criminal investigation that has a soccer's governing body -- the fifa president. swiss and u.s. prosecutors have been investigate allegations of corruption.

baseball great pete rouse will know by the and of the year if he is back in the game. he met with mlb commissioner on thursday in new york. he has been out of baseball for more than 25 years for gambling. he plans to make a decision on his reinstatement by the end of the year. rose is now 74. he has the most career hits in major league history. the most expensive broadcast tv program for advertisers if you want to run an ad on sunday night football come it will cost you $603,000 for a 32nd spot. -- 830 second spot. 30 second spot. those are your top stories but blackberry shares down 5% after second revenue plummeted and smartphone shipments hit their lowest level since 2007. the ceo says the worst is over. he spoke to emily chang about the numbers and the release of a phone that runs the

android operating system. >> blackberry is building great phones. eric claim to fame has been security, privacy. -- our claim to fame. the thing that has always hurt us is lack of an application ecosystem support. working with google to put our blackberry n know how into the android operating system should appeal to a lot of people, especially professionals. emily: you should date hundred thousand phones this quarter. 800,000 phones this quarter. what do you think you can get? john: i did not provide any of that information. the reason why we put this out today, normally i will wait until we launch, about a month away from now.

it is leaking everywhere and i'm going to get my arms around that. because it's leaking, i thought it would be a good thing for the market to know that we are doing that. details, i have not really disclosed yet. over time, we will be -- i doubt we will tell how many phones we will sell. over time, the market will give you some knowledge. emily: i have been asking you about this for a long time now. if you are high-security customers embrace the android tempted tod you be stop selling the blackberry operating system? what would it take to do that? >> good question. 10 phone is still the most secure phone in the market. we have a lot of high-end users.

we pledge to continue supportive that. -- support of that. you have a new release coming out in march of next year. it provides another level of security. veryovernment and the regulated industry customers will be taken care of. we will continue to develop security for the android space. there will be time the customer certify --, i can there is no particular timeline on supporting the software updates on blackberry 10. emily: we have to talk about revenue. you said it would not fall below $500 million and it came up short this quarter. how much lower can it go? or is this bottom? todayi made a statement in the earnings call that i

expect q3 to uptake from the q2 volume and q4 to uptake from q3. you can call it a bottom, call it whatever. that's what we expect to do. we should see some uptake the next few quarters brendan: john chen. much more ahead on the bloomberg market day. we will be right back. ♪

brendan: welcome back to the bloomberg market day. there's been a lot of volatility today. we are trying to figure out all the non-markets news after janet yellen's speech on friday. we seen a dive in the s&p 500. we will figure out what's going on there. lots of volatility over the day. pope francis in the middle of a busy 48 hour trip. he tours central park later

tonight. he gives mass for tens of thousands at madison square garden. talking about the pope's first trip to america. see -- torised to hear how explicit the pope was in talking about finances this morning. he used the word "usery." which is a loaded word. he did say that all transactions, financial and political come have to be imbued with some sort of moral question. a lot of people confused about that. less -- let's not dive into interest rates. into isis going to dive what we can do that he talked a lot about two cultures.

he's talking about people being left behind. that is his main goal. we have to give people the dignity that comes with putting food on the table. if we wanted to, we could feed everybody. that is what he is aiming at. brendan: i will take a quote here. he had strong words about global finance. >> the painful consequences of mismanagement of the global economy guided by the ambition for wealth and power must serve as a summons to a forthright reflection on men. larger: he talked about financial institutions.

the imf, for example. is something practical that can come out of what you and i are talking about. that everyone -- let me put it this way. the pope is suspicious of wall street. does not have any problem with main street. i think he realizes there is a legitimate debate here as well. the fear is the financial a great leaving behind swath of people across the world. used was anse he examination of conscience. he's asking a lot because he's asking political leaders and the titans of the world economy, make your decisions with human dignity in mind.

the person has to be at the center of the economy. there is a clash year. how do you convince people to take a step back and say is this for the common good or just for the good of my board? brendan: one thing i've noticed about economics is that there are a lot of terms he uses that come out of academic economic literature. who is the pope's economist? >> a lot of people have been searching for that. of the more free-market people have been asking the same question. we would like to be in on the game as well. the trip to the unite states was important. -- united states was important. that is wealthy to a certain degree and educated and generous. and a society that is very generous as well. brendan: apart from the beauty of being a catholic and seeing

the pope here, what is the definition of success for the pope? what would you like for america to take away from this trip? i want to give and braced to each person. with the pope wants to do, it all reflects around god loves you and what are the consequences. the main consequence is god loves you, show that love, share that love with other people. brendan: an advisor to the vatican. thank you so much. you wanted to give all of us a hug. thank you. much more ahead on the bloomberg market day. ♪

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noon in san francisco, trick or treat them in new york, 3:00 a.m. in hong kong. >> u.s. stocks are in correction mode, falling from their highs.

they are trying to find out what is going on. scarlet: john boehner resigning from congress. how does this change the game for republicans in washington? brendan: google is again under u.s. antitrust scrutiny. why officials think the tech giant stifled competitor access with the android mobile operating system. good afternoon. -- i amdon feeley brendan greeley can she is scarlet fu appeared scarlet: reunited. we're going to get you the final check of trading or the check of trading in his final hour of trading. the dow industrials holding on to gains. .6%. cannot say that for the s&p and nasdaq. lower in both indexes in the past hour, with bio techs closer

to a bear market. at risk is whether the s&p 500 rebounds from a three-week low. we are right at that low. if you come inside the terminal, i want to pull of a chart, the msci all-country world index. it includes developed and emerging markets. since the fomc announcement last thursday, global stocks have been in a funk. they fail every day after that last thursday. aday, they have come back up little bit. janet yellen pose a speech last night was a catalyst for the rebound today could the prospect of an interest rate increase before your-end is giving the dollar a boost. the dollar is strengthening versus the euro and the yen. as for treasuries and other safe havens, like gold, little need to hide out there in treasuries. therefore, you have yields higher. the 10-year at 2.16%. all right, moving on. u.s. stocks trimming gains.

the s&p is now negative. biotech's bumbling their way towards a bear market. brendan: joining us with more is jim paulsen, chief investment strategist at wells capital management in minneapolis, minnesota. what do we make of this leg down today? is that noise or signal? jim: probably more of the struggle we have been dealing with. you can always get specifics on it, certainly the biotech being the main catalyst today. i think it continues to be the challenges and vulnerabilities of this market is facing and sort of an ongoing correction that i do not think has fully run its course yet. brendan: as you look at janet yellen's speech from friday, is there anything you are learning today that you cannot figure out immediately on friday? jim: you know, i think her comments yesterday -- i think

they kind of put us back a week "notuesday, before the announcement and glut announcement of the fed. we are kind of back to that same place. are they going to raise rates? she took it off the table, and now she put it back on the table before year-end. it gives the uncertainty a life. i am not sure at this point if there is anything the fed can or cannot do that is really going to end this market swim. -- this market swoom. it has to flash some of its own demons to find benefiting to take off. clear to me that the fed will probably wait until they are forced to raise interest rates, either by about economic report or a market move. aboutt: let's talk underlying fundamentals. earning season begins an artist -- and ernest the second week of october.

estimates exclude energy results. companies are publishing their earnings, excluding the foreign exchange of fact. what do you think is the quality of revenue and profit? i think the earnings cycle, the biggest thing to remember at this point, i think the earnings cycle is quite mature in this country. it is aging rapidly. profit margins are near all-time record highs and are coming down a little bit under some majors. for the year, i think earnings are going to grow much more slowly going forward in this recovery van they have in the past. the reason is because we have reached full employmentand the united states. if sales do not pick up and earnings remain kind of slug is -- kind of sluggish, going in line with sluggish sales, but if they do pick up, that i think we will create some cost push and pressures and margin erosion's that might also keep earnings relatively slow relative to even

better sales results. i do not think you should expect that our earnings are going to grow much faster or even as fast . scarlet: i think of an example at caterpillar, which came out with a restructuring announcement yesterday. will we see other companies follow their lead in terms of throwing in the towel on 2016? globale longer the slowdown persists, you might start to see that. i think we are very close to seeing a bounce in global growth , not only here in the u.s. but across the globe. i think we have a lot of stimulus we have dumped on the global system over the last year in the form of a huge decline in commodity prices, particularly energy costs, followed up with a big decline in sovereign bond yields across the globe. most countries outside the unitedtates have enjoyed currency weakness. you take that combination with about eight year lag, which we

are coming into, i think there will be a bounce in europe, japan, china -- you take that, nation with about year lag. that might still early announcements from ceo was a pessimistic on the global outlook. maybe by year-end, if we get a bounce going into next year, you will see a better commentary from ceo's. brendan: one of the things janet yellen emphasized on friday is that once the committee is ready to move, they will be taking a shallow, but consistent, pat. why not just do a beat up to see what happens and then readjust? jim: i think they should have a long time ago. one of the things i've look at is, why everyone is a so scared that if the fed starts, the worst thing that could happen is that they backtrack. i do not think it is such a big deal. they raise rates in the come out and say we are going to pause. or because things have changed a little bit, we're going to back off a quarter. i do not see that as a disaster.

they should get off the dime. i think they will light-year-end, which is a good thing. ultimately, it might be that the economy dictates the fed's move. if we get a bad wage number over the next couple months or oil that jumps above the dollars and sustains and surprises market participants, we can force the fed to raise rates, regardless of what they think. more importantly, i think the economy will take over control monetary policy soon. scarlet: we will see when that happens. thank you to jim paulsen, joining us from minneapolis, minnesota. stories making headlines -- the u.s. and china announce an agreement today on broad anti-hacking principles aimed at solving the theft of corporate trade secrets, the resolving oneards of the biggest disputes between the jib upcountry spirit mr. obama offered details during a joint news conference. president obama: i can announce that our two but countries

reached a common understanding on moving forward. we agree that neither the u.s. or the chinese government will conduct or knowingly support cyber-enabled theft, theft of intellectual property, including trade secrets or other confidential business information, for commercial advantage. we will work together and with other nations to promote international rules of the road for appropriate conduct in cyberspace. said he is president obama have agreed to cooperate better when investigating cybercrime spirit garlic a pope francis urging world leaders to take action on climate change during an address to the united nations, touching on several topics, praising the iran deal and calling for the elimination of nuclear weapons. image in the relationship between the u.n. and catholic church. pope francis: i can only reiterate the appreciation expressed by my predecessor's in reaffirming the importance, which the catholic church attaches to this institution and

the hope which she places in its activities. scarlet: next to stop is an east harlem school after making papal history by addressing the line -- largest array of world leaders ever at the ua a record label said they will release an album and november featuring extracts of his speeches in various languages. wow. brendan: that is amazing. are they going to do it with a backbeat, because i will listen. porsche brand chief committee of named volkswagen new had. the internal investigation found that about 5 million passenger cars were affected. mueller adjust the crisis a short time ago. >> i am taking on this responsibility at time when our company is faced with unparalleled changes. i have agreed deal of recognition, but i assume this responsibility with confidence

and will do everything to regain the trust of our customers, employers, partners, and investors, and the whole public. we stand by our responsibility. brendan: he replaces martin winterkorn, who resigned wednesday. scarlet: 5 million vehicles, one of which is yours. brendan: no, i have a 2005 passat, no 2009. that car will continue to be an unimproved lemon. scarlet: volkswagen may have that is under scrutiny. that is according to the germany transportation minister. they are under probe. brendan: the epa's taking steps to counter future emissions chief of announcing changes on how they test emissions for a diesel powered cars. on road test will be added. vw software has been tricking testing machines for seven

years. those are some of your top stories about the world, and evidently about my car. scarlet: much more coming up. we will talk about google and some issues with the u.s. antitrust authority. ♪

brendan: welcome back. i am brendan greeley with scarlet fu. in washington, lawmakers from both sides of the aisle are reacting to the shocking resignation of house speaker john boehner and for the reason he steps down. i have not had time to think about what i am going to do in the future. i have no idea. but i do know this -- i am doing

this today for the right reasons. and you know what? the right things will happen as a result. scarlet: and emotional john boehner there. the question is, who will be his successor? among those considered him a congressman handsomely, chairman of the house financial services committee. joining as is republican congressman luke messer of indiana, who sits on the house budget committee. in washington, our very own phil mattingly. want to start with the reaction to what was the response from democrats? marco rubio had an interesting take you what about the democratic establishment? phil: it was split. democrats understand on the political side of things that republicans in disarray or that storyline is good for them. it is good in the next election and in positioning on policy issues. the one thing they knew about john boehner, and this goes from the white house to nancy pelosi's office, is when they picked up the phone and had to

give him a call, there was always an open line. they knew that john boehner was somebody he -- they could work with. ideological polar opposites, but he would always come to the table and be a straight shooter. as the president said today, he would tell him what was what no matter what. there is concern among democrats that we do not know what is coming next and we do not know what that means. not necessarily for the short-term funding of the government. all the republicans i have talked to have said that is a sure thing, there will not be a government shutdown. that in december, there will be a debtghts, including ceiling fight. that is what democrats are concerned with. vertigo luke messer is joining us from the capital. congressman, how many of your colleagues called you this morning asking for support in the upcoming leadership election? congressman messer: several people are looking at it. this is something we will have to do and we will have to come together. today is a day when the american

'sople saw why so many of john colleagues love him. i believe he did the right thing for the institution by stepping aside today. way to: the best describe john boehner is he was really the leader of the " getting things accomplished" caucus within the republican party. how strong is that caucus now? think itan messer: i is still very strong. he has not given our caucus and opportunity to come together. we need to seize it. we still have president obama and the white house and a minority incratic the senate. our ability to make a difference on conservative principles depends on us to come together. we need to do that. scarlet: phil mattingly, a lot of people say the departure illustrates the extent to which moderate republicans is an endangered species in washington. for those who belong to the " hitting it done" caucus, will they be forced to move to the

extreme right to get things done? that therenot know aren't whole lot of "moderate" republicans left in the house, just as there are not a lot of moderate democrats left in the house either. i think with the congressman says is the key point. what john boehner's message was in his private meeting with lawmakers today was that now is the time to reconcile our differences, time to come together. he will stick around for a month and serve as a bridge to the next leader. he will try to get has republicans an opportunity to come together and figure out a coherent path forward. that is what he believes is his biggest lasting legacy piece will be. what is interesting is not how the factions of the republican party breakdown, but how those 35 to 40 conservatives, the far right that have given john boehner so many problems, will actually come into line with whoever the next leader is. that is the big question.

if john boehner has his way, everybody will be in line going forward. but i think there is not a lot of certainty around that, no matter who the leader is. brendan: this morning, marco rubio was speaking to the values summit when the news broke out. he got a standing ovation for the news. what does that say to you about the fractures in your party? a party,an messer: as we have to do better. bottom line, many in our party are frustrated with washington. bottom line, the reasons for that are many, including the fact that i described a moment ago, that we have a democratic president and democratic minority in the senate that can change the process. ultimately, they want to see us fight hard and deliver results. that will not be easy. john boehner had a hard job. not getting any easier now. if we have -- if we make a difference, we have to do it together. brendan:nk you --

thank you. "with all due respect" is tonight at 5:00 p.m. eastern. they had to rev up their scripts to talk about john boehner. check markets with julie hyman. so much for that relief rally on janet yellen's speech. presented -- the rally stayed as the day went on. we have seen the dow as the leader throughout the session. that continues. now it is counterpart -- now it's counterpart, the s&p 500s, and the nasdaq have turned lower, the nasdaq very solidly so. a big swing in an average today. techs --00 versus bio that is the biggest drag we are seeing today we are for the us of the 500, virtually all of its drag is from the health care groups. you have the s&p 500 in yellow versus, and white, the idb, an

i-shares biotech etf. the idb has the drifting lower throughout the day. the s&p 500 was holding up well until around 2:15, when it broke down and started gaining steam to the downside. pharmaceutical stocks are some of the worst performers in the s&p 500 today. it was biotech, but it is also big cap pharma. all of this, a cell of continuing since hillary clinton tweeted a few days ago that she was looking into capping pharmaceutical prices. it is interesting that the selling in that group has not abated. it has continued pretty much ever since then. scarlet: six straight days lower for the soccer shares. looking at the dow, the three health care-related companies are lower. what is to begin higher question mark julie: almost single-handedly nike. nike is still the best performer

in the dow at best performer in the s&p 500 after its earnings beat estimates to they had a better tax rate and raised prices. they benefited from strong demand in china. i should also mention financials. that is why the s&p 500 is not down further. the financials have been the strongest group to -- consistently throughout the day today. brendan: still ahead, google is once again under u.s. antitrust scrutiny. why officials think the tech giant stifled competitors' access to the android mobile operating system. ♪

the ftc is turning its attention to google. giant ofse the tech hurting competitors' access to the android system. a guest joins us to explain. help us think this apart at what

is the complaint? cory: the complaint itself is something that is interesting, -- there iss about an investigation over the use of they work in the android operating system, specifically those that compete with ancillary businesses that it google is running, not just their android operating system and not just their search business, but all of the other businesses, local listings and so on, that google is trying to ,et in, companies like yelp travel companies, all of those companies that create app thats run on android. do those apps compete with google or does google keep them from fairly competing? rendon co when i look at -- endon: i think of the

person who ran the division that created that market dominance. what do we know about him know about him now that he is injured at google? the real question is about the creation of android and the monopoly they have over search. the question is how they use it to grow other businesses and if they unfairly keep other companies from competing. it is interesting that this company, google, the biggest wake offormed in the the microsoft-netscape antitrust trial, and it has found itself fighting and and try that antitrust complaint -- think of their timeline, all the things that have been dealing with for so many years. this is just the latest of so many. the eu launched an investigation in late 2010. june of 2011, the ftc has their own investigation just over search results on the disc top -- on the desktop. the other investigations

continue, as does the new investigation from the eu. end of 2011, all these investigations, the staff wanted to charge, but in 2013, the commissioners decided not to charge these guys. the eu when ahead in charge to them with search engine abuse and launched a new investigation. now the ftc and justice are following on the same kind of investigation. garlic of cory johnson, thank you so much, our editor at large. this is something that is still in the early days. orndan: question is whether not the ftc wants to bring charges. ♪

scarlet: welcome back to bloomberg market day. you just saw how u.s. stocks are coming back a little bit.

to close as they look the day down unless they make an incredible comeback in the next 30 minutes. now we look at the top headlines this afternoon. selling minority stake in its agriculture business. deal could value glencore and $12 billion. shares of glencore dropped earlier to all-time low. u.s. supermarket chain albertsons plans to raise money and an ipo. moving aheadare after completing a $9 billion acquisition of safeway. albertsons will use proceeds to cut down its debt. and baker's ease water in their homemade treats are in for sticker shock, because prices are up 55% this year.

shoppers could end up paying at least two dollars more per pound. the production is shrinking in california, the nation's leading butters wire. is the latest branch of the sharing economy that is looking for a classification of workers. in separateng sued lawsuits by drivers in san francisco. they alleged the company's miss classify them as independent contractors rate the company failed to pay the overtime for minimum wage. janet yellen is confirming that the federal reserve is still on track for interest rate lift off this year. last night the fed chair laid out the rational for gradual tightening. >> left for colleagues and i anticipate that it will be appropriate to raise the target range of the federal funds rate sometime later this year and to continue boosting short-term

rates and a gradual print case thereafter as labor market improves further and inflation move back towards 2% objective. join the end of her speech she began feeling unwell because of dehydration. a spokesperson says she is now fine. janet yellen says she is ready to raise rates this year, so does that mean we get a rate rise in october? the managing director of pimco spoke with bloomberg surveillance this morning to give us his take. off think it is time to get zero. they have laid out that the liftoff is going to be very gradual now i can argue there is a difference between 25 basis point for the economy. obviously have yesterday she finally revealed that a week ago she had identified. she expects to hike this year.

interestingly enough, stocks are up. i think that was the right move. >> did they have a communications problem? they do not seem to be able to get this straight. >> they have two issues. one, they have a challenging communication and a tough message to communicate. i think last week was not a success in terms of conveying where they were. toir yellen had a chance clarify her personal views on what they should do, she showed not to do that. should a speech yesterday where she did lay that. one could argue that if she'd given yesterday's speech at her press conference, we could have avoided the week of volatility. december,ise rates in then what happens? >> they have laid out a list off path that is consistent with going four times a year. they have a meeting, and every the baseline data

would be a hike in december, and that probably every other meeting until they get that funds rate . up. that justifies any moves next year? >> values option out it. it is not going to be on autopilot. i baseline data would be four-of the fewer than that. it will not be a lot more than that, probably, but fewer. >> are we in search of a new economic model for the formula you invented along with dr. yellen and others? do they still work? >> is a grade point. first observation, a lot of the rules of thumb that i learned is a graduate student, the quantity between, the interplay

fiscal policy, we are having to rethink. when it gets to monetary rules, i am in the camp that thinks the rules anger policy. -- anchor policy. back to mike's point, the part of the problem is that when janet yellen says that the fed is data dependent, that is not a monetary policy. the feda component, but needs to spell out more when it's reaction will be. if the central banks of the world are flooding the world with dollars or their equivalent, and inflation does not rise, does friedman still hold? the long variable lag, so just hang in there and they will eventually show up very certainly the last several years of indicated that the friedman velocity relationship has broken down and become unreliable. that began they can say go.

generatedqe has enormous liquidity, and outside of a handful of emerging market economies inflation in most countries in the world is below the desired target level. that is why bernanke coming yellen, shea, draghi, kuroda or having to go to the uncharted, theyventional all a secret tried to cut rates to zero, and that is where we are today. >> are central banks powerless to generate inflation? >> i'm not in that camp area there are those who are. i think essentially what you -- whatve you the you want to view the last decade ands a financial shock central-bank measures have stabilize things much better than what have been the case without it. what we need to remember is when inflation does return and as it does return, central banks have the tools to actually get the

money supply back to more historic levels. the fed has done a lot of thought with the reverse program and deposit rates. i think they have the tools, but until they do i do think they are produced -- prudent to pursue what they are doing. scarlet: much more coming up on the bloomberg market day. we will be discussing the iphone and what differences it holds from previous iterations of the expectation for sales opening weekend. ♪

scarlet: welcome back to the bloomberg market day. let's get him some of the top stories make headlines of this hour. blackberry's was wider than expected second-quarter. the company is moving ahead with plans to release a camera device that runs on the and right system. shipments are the lowest level in eight years. because of its early time zone, australia is one of the first countries to see the new iphone. a robot helped in honor to secure her spot in line because you cannot get off from work. >> my boss said to me, you cannot get time off work because i cannot stand in line. andave a robust and there, demonstrate the future of technology. scarlet: she works in a media

marketing agency where they have six of these machines. that isre like an ipad hooked up to a segway. those are your top stories. checking a little bit more on the sale so far of the apple iphone, we do want a check of the markets now with about 20 minutes left to go before the closing bell. let's go to the markets desk and check in. ramy, it looks like we're still holding up thanks to the stock. >> the dow is only gainer right now. as you can see, our markets are ed editing for the day and a red ending for the past five days. down by 1%.s earlier today all three indexes

had been in positive territory. that was in reaction to defend janet yellen saying the slowdown will not kill u.s. growth rate she was ready to raise interest rates this year. as you can see, health care, once again is the worst performer. down by threw two and three quarters percent. this is the sixth consecutive sessions that health care has finished in the red. financials as well as utilities are in the green, jumping roughly 1.5%. let's dig a little bit deeper into help here -- health care and look at biotech stock. this is the nasdaq biotech index. it is near its session law. right after the 3:00 p.m. mark right now, down by about 5.4%.

nearly all of the stocks on this index are down today. 142 of 144. this is because of fears of price control. last weekend hillary clinton tweeted out a shutout against the industry. has plunged 13% in a week. in the broader health care section, managed health care companies and insurers are also ls./ng fal with endo health solutions, down sensenth -- most december. consumer discretionary companies rose by 1.1%. the sector was led by nike. 8.8% rightp by about

here. that is trading at a record high. this is the world's largest maker of athletic gear. it is urging the most in a year as earnings estimates. that was helped by higher prices as well as lower tax rate. orders rose 7%es . nike keeping the dow afloat today. under armour hitting an all-time high. it has come down from that, of by about 1.4%. lastly, let's close on the vix. it had been lower for most of the day, but turned positive about 250 p.m. earlier today. it is now up by 4.4% for the week. ve 25ll close abo

sessions. scarlet: thank you. he mentioned software for mars and the market, we also have apple which is defying the market decline. as we said, customers lining up around the world to get their hands on the new iphones. can the new device live up to expectations? emily chang joins us once more. you did manage to get your hands on one of the new phones. what you think so far? this is not just a new iphone, this is the rose gold iphone. is the most popular color right now. we have been hearing from 35% ofs, and apparently people in line want this color.

apparently anyone might like this rose gold full. i'm not gotten enough time to play with it yet. it is pink, but it is a nice pink. scarlet: i do read about how men like it as well. this launch for this particular phone is different from what they did with the launches of iwatch and in the past. what are they doing differently with this retail strategy this time? emily: what the want you can make an appointment i get your new watch a reservation. that is an entirely to products in a different size market. to the gone back traditional. you can line up at the store, and if you're the first one there, you of the restaurant at eating the phone. they are also try out something new where you can make an appointment to actually get your iphone. they are also turkey -- trying option readg

release lease a phone upgrade whenever you want. even though the line is short of this year, analysts are still saying that this could be another record-breaking weekend. even the lines are shorter, that may be because this is a global watch. they were holding back the phones in china, see that people standing in line to get a bunch of loans to sell on the black of market, and that has not happened this time. scarlet: all of these modifications, what does that mean in terms of stoking demand? is it going to be because incentive for people to run out and buy these new devices? for sales to continue breaking records? have been talking to experts who say it may not be a huge change in warm in terms of design, but that the updates are actually huge. but it is the software, and it

comes to the 3-d touch capability, when it comes to the new camera that can take these life photos as apple calls them. and the new color since rejoining a lot of demand. could sound isey 12 million new iphones this weekend. i've people on both sides. i have had some people say there is no way that they are going to break records. i heard completely the opposite that once again you're going to see iphone breaking records again. we will have to wait and see. the all-important holiday season quarter, that is make or break it for apple. thank you so much. she will continue talking apple because she will be seeking with ron johnson, coming up on bloomberg west at 4:30 p.m. we have more coming up on the bloomberg market day with health

-- health from etf's.

scarlet: it is only late september, and the number of new exchange rate it funds are already is an annual record and we have 200 so. that means that on average more than one etf is being created every single day. over the past they get to have etf's,wards of 1000 new more than previous two decades combine joining me now to discuss the biggest winners is our senior analyst at bloomberg television's. line, i doer double not think this is a huge shock to anybody. there are 200 etf's, and only a couple are household names attached to them. this is one of them.

she is one of the last star .ortfolio managers right now he took off where cross left. this is the rookie of the year for that. it is safe to say that his performance has been pretty good. when you consider that his others are down about 10%. it is ok. >> mostly name ideas. they lovely structure and china -- tax efficient cheaper way to get exposure. can you compare their track records in the first year versus later? they came out and over

performed everything. he had 2.8 million at this time. bill gross, he had a year that you do not think will oversee again. -- i do not think we will ever see again. scarlet: what is exponential technologies mean? isc: technology transformative. we think of it as a sector, but it can happen with a company like tesla, or netflix. it is looking for companies across sectors that are involved with transformative technology. disruptive technology. this etf.this was a $600 billion that is in argument is just one client or it hasn't been performing it is an interesting comment that concept -- an interesting concept. scarlet: one scene has been to

vigorish on china. china.ish on eric: this etf direction on --na scarlet: it is a mouthful. alix: it's not like a car. it basically gives you short exposure so it does it in a way where you just choose by and you are short. well you caning is gain assets. 252 million and an inverse etf is really rare. it is only the top 40 in terms of asset classes for etf. good performance and good timing can overcome people not knowing your product. scarlet: what about the cost of it, expensive to short asia? emily: leveraged etfs are always

famously expensive. beyond that the court -- cost of shorting could be up to 10%. when everyone wanted to shorting two months ago, it was a headwind in this fund. it is a little cheaper because it is not as red hot, convicted cross -- but they can price this based on how sharp the shares are too short. scarlet: last question, goldman sachs lost in etf this week is doing very well. has: the goldman sachs etf $57 million and he wants it on the market for $48 million. it is interesting, they hardly legendary bank. it'll be interesting to see if they can do well. they undercut on price. they pulled the vanguard in terms of coming in way cheaper.

the average smart beta etf's 30 basis points. think is a smart move to go in that way. etf investors love it. scarlet: thank you so much. of most successful etf story 2015. we have much more coming up on bloomberg television. what you miss is next. ♪

men moments away from the closing bell. i'm joe weisenthal. i am alix steel.

♪ selloff in biotech shares disrupts our rally. joe: the question is "what'd you miss?". janet yellen says policymakers expect a rate hike, but our investors convinced? we have the charts. speaker boehner's plans to quit gives the market jitters. joe: president obama will meet vladimir putin in new york on monday. why this could be vital to global markets. alix: we begin with the markets. it has been an up-and-down day. s&p 500 little change, even within the sectors. an interesting divergence