possibly they will speak to each other. it is a jobs week this morning. disinflation report. and life after john boehner in ohio. we will speak to douglas holsey aiken.to douglas holtz i'm tom keene. francine lacqua from london. i thought that the interview was phenomenal. what is john corbin doing in the united kingdom this morning jack? : jeremy corbyn. he wants the labor candidacy, and he wants to speak to the common person. he doesn't have a chance of becoming elected until 2020. the narrative of what he is trying to play at -- equality, the lack of equality,

inequality, and giving more voice to the people. tom: and mr. stiglitz and mr. p jeremy corbynthe campaign this morning. it is going to be a busy week for francine lacqua and myself. let's get the top headlines. there is vonnie quinn. vonnie: a busy week in new york as well. vladimir putin trying to figure out a way out of diplomatic isolation. the russian president speaks to the u.n. general assembly, where he is likely to call on the u.s. and its allies to make, and calls over moscow over syria. he criticized the u.s. for supporting rebels opposed to syria president, bashir al-assad. >> more than 2000 fighters for russia and the ex soviet republic are in the territory of syria. there is a threat of their return to us. so instead of waiting for the return, we are better off helping bashar al-assad fight

them on syrian territory. this is the most important thing, which encourages us and pushes us to provide assistance to assad. in general, we want the region to stabilize. vonnie: putin has assisted that aside be part of any settlement. russia has reached an agreement with syria, iraq, and iran to share intelligence about islamic state. a move that will allow russian to get more support for assad. it came as a surprise to u.s. officials. outgoing house speaker john boehner is taking aim at hardliners in his own party. he calls them false prophets who promise more than they can deliver on issues such as cutting off federal funding for planned parenthood. he said he quit rather than being in the position of forcing republicans on voting on a measure as speaker. i would have gotten 400 votes, probably.

but why do i want to make my members, republican members, walk supply jacket we are going to get criticized at home by some who think we should be more aggressive. vonnie: california congressman kenny mccarthy is likely to become speaker. he will be number two in the republican leadership. golfn spieth has become first 22t -- golf's million dollars man. it was enough for him to win the fedexcup and its $10 million bonus. he won five times this year, including two majors. it was a nice year for the team. tom: absolutely. more than anything about it, it is beyond tiger. how do we psychologically get beyond tiger? they are really doing it. they are getting a new set of heroes. with the british open, and the last year, -- in the last year,

there is a new cast. let's do a jobs week data check. vix near that 20 average. putin is in, as mr. new york. i believe he is at the waldorf with more security than the pope. 65.68 on a stronger dollar-ruble from last week. euro, 1.1185. let's go to the bloomberg terminal and wake up dr. schilling -- dr. shilling. core, pce, inflation, and, vonnie, this is the trajectory everybody is talking about. we will get to gary shilling in minute. in a

we begin a week of international relations and the jobs report. we begin with francine lacqua in london, and the quiet of the markets. i look at indonesian rupee, and i rip up the script with your glencore announcement in the polls in the last hour. it is still about commodities itloding, is that? francine: is still about commodities imploding, about these markets being risk-averse. ofwere promised by a lot market participants that we will not be in the binary risk-on, risk-off mood. today it really feels like a risk-off mood. monthpee has gained a albeit -- has gained amongst all the other peers. s want a haven. within your reading of the city's research, is there a

presumption that mark carney will wait until 2016? francine: the markets are waiting for a rate hike somewhere in september of 2016. i would ask two questions. first of all, when the fed goes, what it means for sterling. mark carney and janet yellen have the same sort of problem, and although it is not a mandate, they will not be looking at the currency strength. call it a war, a currency war, whatever you want to call it, a pound that is higher has an impact. tom: thank you so much. continuing with us through this entire hour from london. the single great economic markets call of the decade -- gary shilling has persistently called for low interest rates and subpar topline gdp. he has silenced his many critics, and he joins us for an update this morning. can the 10-year yield drive below 2% and stay there?

gary: i think so. i think it will go below 1%. 1.00, or in the vicinity echo gary: we are in a position of low inflation is not deflation." whether it spreads beyond that, that is another question. we also have the world really lusting for the dollar and for treasuries as a safe haven. have veryition, you interesting spreads where treasuries, 10 year yields are above those of comparable yields, sovereigns, in most developed countries, and with a rising dollar, what am i missing? tom: this is a really important point, which is relative analysis. i look at the indonesian rupee, an outlier. i understand that, but it is

under exceptional weakness -- we saw from janet yellen a hugely international press conference. will that become more dominant in the coming months and quarters? gary: i think it has to. the fed -- their charter is strictly domestic. it is price stability and full employment. tom: we did not hear that. months, the last six they mentioned explicitly the rest of the world including china, in their releases after the policy meetings. they always had a look at the rest of the world, but now they are explicitly looking at it because it is a global world and what is happening outside the u.s. affects everything. tom: i would suggest mark carney without in front of janet yellen with his international view of these two major economies. vonnie: the other point that brings mark carney and janet yellen close is they are both saying inflation will go up. week, expectslast

inflation to gradually rise. who is right? gary: they have been saying that for years. where is it going? tom, you showed that chart is going the other way. the fed is like most forecasters. they have looked for faster growth that has happened. they had looked for higher inflation than has happened. they say they are going to raise interest rates before they finally get around to it. we are in the age of offveraging, joe of working excesses built up in the 1980's and 1990's. i think wimbley -- i think we will be muddling along. we are the valedictorians in summer remedial school. vonnie: when you say that the commodities deflation and disinflation is there, will it be persistent, or will the fed continue to look at it as something transitory? gary: the fed looks at it as

trend is story -- the fed looks at it as transitory. the saudis pulled the plug last december, and flooded the market. they want to get after cheaters. oil went to $10 a barrel. that brought the cpi down to $10 -- down but it did not stay there. energy prices collapse, and with it you have the big cci negative. vonnie: how many months? in a bear in mind we are period of excess supply. you look at glencore -- you look at the money investments that were made in the middle of the last decade -- and these are five- to 10 year projects. a number of the things, they are so deeply into those, that even though they are going to make money, it is cheaper -- tom: this goes to the heart of your analysis.

gary, that we, have to clear markets. do you have an optimism -- is it your call for oil -- remind us what it is -- that markets will actually clear? gary: i think so. we could go to $10 to $20 a barrel, and that is because we are in a price war. that oil willith clear. can copper clear? can sink clear yakima -- can zinc clear? gary: if you do not have demand picking up substantially, you have to chase out supply. you have to get somebody to chicken out. tom: which has not happened. gary shilling with us. research combine as well. vonnie quinn and francine lacqua are with me this morning.

today at 10:00 eastern, president obama will speak to the united nations general assembly. bloomberg television and radio. we will bring you that speech live in a most busy david united nations. this is "bloomberg surveillance ." good morning. ♪

tom: good morning, everyone. a modest deterioration of the tape. s&p futures -- in new york and london, "bloomberg surveillance." there is francine lacqua with headlines. francine: there are a number of elements in the false admission tents scandal. germany plus regulators have given the company until october 7 or when it's cars will meet in mission standards.

voters in spain's region have narrowly rejected a proposal for an independent state. that reduces the chance of head on collision between the catalans and the spanish government. president obama and russia's president, vladimir putin, meet today in new york. vladimir putin is expected on the -- to call on the u.s. and its allies in a common cause with rusher in its fight against the islamic state. he wants to be seen as an indispensable ally against terrorism. >> i think that is fair. president putin wants to be heard specifically with regards to syria. at the same time he wants to distract or deflect all the attention that has been on

russia for ukraine. that is ultimately what he wants. he wants the sanctions to be dropped, and for russia to no longer be a pariah state. francine: mr. couldn't possibly is to restore a relationship that will seek to reassure the u.s. will barack obama bite into that? >> obviously he is going to be very reluctant. he feels, like other european leaders, burned by president putin. but the reality is the preamble to this meeting suggests he is going to listen to him. a lot of people are saying he has limited options. he will give president put in a hearing and i think he will be challenged to walk away from the meeting without embracing any of the ideas, at least privately, because at the end of the day, putin has troops on the ground that can do something in syria, and president obama has no options. tom: the story in the u.s. the

is play over the weekend "the washington post." i'm fascinated how esther assad -- how mr. assad will take it in. >> during the morning session, i am listening to the president of iran and the president of russia because those of the two countries that will go to bat effectively. they are the two countries that have forces on the ground with the ability to support me and change the situation. what he is going to be hoping for is that they will be effective in convincing everybody that aside -- that supporting assad is going to be the way to deal with the islamic state. tom: do the iranians change their dialogue or their stance gekko while they are worried about damascus and syria, they're worried about their deal with the united states on nuclear armed.

>> i think the iranians will be very careful and leave the heavy lifting when it comes to damascus and syria to the russians. at the end of the day, what the iranians want is to see the sanctions removed, to get the oil companies in, and get the economy back on track. they will be mindful of that in their conversations and speeches in new york. will president obama avoids the idea that the u.s. might be piggybacking on russia? >> that is a good one. that is a big concern. if you look in the lead up to this meeting, the two sides have been saying that the other initiated it. they have been arguing about who actually called for the meeting. think we will get a press conference almost immediately after it, where the administration says we have met, we heard president putin out and we have these concerns. let's see where this goes forward. i suspect the big conclusions will be kept quiet because they

do not trust him yet. tom: ryan chilcote, thank you so much. coming up in the next hour, we will speak with former u.s. homeland security secretary tom ridge. we will speak of iran. we may get some politics into that discussion as well. i noticed glencore south and the age people at the -- and bhp billiton crushed in metals and commodities this morning. this is "bloomberg surveillance ." ♪

tom: england in somber shop this morning. there is no question the news of

the weekend was wales defeating england in rugby. i do not pretend to be an expert , other than kit juckes and i had a martini bet going. we will do that his next visit, too. time for our morning must read. here is vonnie quinn. vonnie: wait until the real teams get involved. india's prime minister met in silicon valley over the weekend. mark zuckerberg held a town hall discussion with the leader. prime minister modi -- here is what he said about the meeting. >> the strength of social media today is that i can tell governments where they are going wrong -- is that it can tell governments where they are going wrong entrance. them from moving in the wrong directions. it can make them aware and give them up opportunity -- give them

an opportunity for course correction. we still have them every five years. now we have them every five minutes. vonnie: this relationship between zuckerberg and modi is extraordinarily interesting. it came out in "wall street journal," that before mark zuckerberg was deciding whether social mediart a device, he went to india. tom: i have been taken back by the india presence within social media. francine: also the fact that you have heads of state showing up at facebook and silicon valley. it shows you the powerhouse of silicon valley. on saturday, on the sidelines of the unit -- of the human general sibley, we heard mark zuckerberg being quizzed on whether he was responding to the hate postings.

this is facebook entering geopolitics. vonnie: and it has been for a a while. facebook now with his articles washington post"rtian to post ♪ -- tom: do you remember the saturday morning of cyprus? it was extraordinary. i have never seen anything like of themedia the day cyprus collapse. that is where it was fought. about you,on't know but are the younger generations going to be as involved, and is this an effort to keep them involved? francine: to tom's point, when you look at the cyprus collapse and what is happening in greece, this is also an amazing social these pr people from brussels who had difficulty communicating. they now use social media to alert the media over news

conferences or breaking news on possible capital controls. tom: francine, thank you so much. it was really quite something this weekend to see. pope,ing on friday, the and the news from china. and then mr. john boehner there's what is his resignation mean? we have the perfect important guest for this. douglas holds aiken will join us -- doug holds aiken will join us. stay with us, worldwide. "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." it is a washington in shock. you could feel it through the weekend. what a terrific set of essays, , on mr. boehner of ohio.

right now, our top headlines. here is vonnie quinn. andie: president obama president vladimir putin meet today in new york. they have not had a one-on-one meeting in more than a year. vladimir putin is expected to call on the u.s. to join with russia in defeating islamic state. france has launched its first airstrikes against islamic state militants in syria. francois hollande says the planes destroyed in isis training camp. france has been reluctant to hit islamic state in syria. he did not want to help bashar al-assad. comcast is making its biggest overseas investment ever. paynbc universal unit will $1.5 billion for a majority stake in universal studios japan, which operates a theme park in osaka. roberts,st ceo, brian says it is the company's starting to make more global investments. donald trump is falling back in

the pack in the presidential race. a new poll shows ben carson one percentage point behind trump. that is a virtual tie for the top. marco rubio and carly fiorina are tied for third. carly fiorina is the fastest rising candidate in either party. is not about being pro-life or pro-choice. it is certainly not about birth control. it is not even about women's health. it is about the character of our nation. no one can deny this is happening because it is happening. democrats, hillary clinton still leads bernie sanders, but the margin is 15 percentage points down from 34 in july. trump has a big-name endorsement. billionaire carl icahn says he is endorsing trump because he is the only candidate speaking out about the country's albums. loopholes supports

that encourage corporations to relocate overseas. breaking news for you on alcoa. one of america upon dynamic companies, the aluminum company of america. it was split into two companies. god, i feel old right now. they are going to go upstream and downstream. their 10 year shareholder return is -7% per year. for those of you of a certain age, a certain vintage, this is something to see. when you do that, you turn to gary shilling. you go to paul o'neill's pittsburgh and you look up the lobby of carnegie mellon university. gary: is followed steel on the way out. you look at these basic commodities and the world has

plenty of them. the idea that this was an investment theme. i have seen a lot of pension funds that regard commodities as investment class. tom: one of our interns from boston university just said to me, are they going to name the companies upstream in volume? francine, it just keeps coming. alcoa.e, now all: -- now this is not over, is it? francine: it is not. this is about adding value. when -- how do you add value when there is so much pressure? well, it is really a situation of supply and demand. you look back a decade ago, all ers, theyd rock min play, and demand

was slow. they are in a position where a lot of times they have to complete these things. even though they lose money, they lose less money than if they cut and run. tom: there it is. we will have much more on this today. an historic moment. alcoa splits into two. vonnie: they have not decided on the value added company name yet. switch to the washington debate. we will have more on this through the morning. we welcome douglas holtz-eakin. we are truly thrilled to bring him to you, as someone who knows republican fiscal politics. all of us were stunned. you gave advice to senator mccain in his campaign. there is no more john boehners on the hill, are there ye? doug: there are not many. the next target will be mitch

mcconnell. can the people taking over the republican party -- and i say this with great respect -- can they do a budget process, to the point of ronald reagan, anti-washington? they are anti-this? fine. i do not want to get into that debate. can they do a budget process? doug: we have big problems. if you roll the clock forward 10 years, we are borrowing about $800 billion to $900 billion, and 85% of that is interest. so we are entering a debt spiral. so there are big budget problems that dwarf the fights we are having today. do the process and the substance of those fixes? the key is, the folks who really drove john boehner -- they are significant -- they are a significant block. what john boehner did was get into the thick of it, and he

decided i am going to go out on my terms and use a window to move legislation to stop a lot of problems. .aise the debt ceiling that gets you to february. and then the things that did not have been, we have the same votes then. and we have the same problems. vonnie: what will be easier to keep the government open down that he is gone? there are two camps on this. the floorput on something that is a clean funding bill and you pass it votes -- or the senate sends it over. they have already done this. that would have led to a fight on leadership. the house would have gone into turmoil. he decided, fine, we will take the second one off the table. now we funded and we get to december, and we are back -- now we funded it and we get to

december. gary: with a history of newt gingrich -- was there any serious doubt that they were going to close the government? tom: what is the likelihood of a shutdown. down it has gone way because of this announcement. if you roll it back to 2013, we did polling that said the american public -- even republican primary voters agree with you on the substance. they agree with you on the substance. should you shut the government to do with this? no. 70/30. they did it anyway. tom: i want to go back to basics. weaverage in history, are bringing in normal tax receipts and spending normal money? where those in amex right now -- where are those dynamics right now? doug: we are getting 10,000 baby

boomers retiring every day. tom: i want to bring up a quote from "the wall street journal." -- talkhi and barnes about two names that have added a lot of value in thinking. modelamp thought the gop should and could once again be the party of lincoln. neither lincoln nor jack camp favorite income redistribution, but they both thought government had a role in helping people klein." -- and -- in helping people climb." doug: this is not entirely new. the republican party has always included different factions. the great leaders were always able to unite them into a government coalition. his solution would be very different. , ronald classic uniter

reagan, not a divider. he believed deeply in economic opportunity and reaching out to minorities. thoughtot someone who that you succeeded by energizing your base. he was a believer in an inclusive party. yournk the key is, that to point, growth really is 2%. growth is 2%. we get all excited about nudges above and below, but it is 2%. the question is, is there a political leader who understands the problem and has the leadership capability to make the changes? gary: can you really increase, though? that is the point. i think the government way over rates themselves in terms of monetary and fiscal policy. we had all the massive fiscal stimulus. qe, where did it get you? i am going to agree to disagree with you. i think it is a terrible --

doug: i am going to disagree with you. if you look at the core, immigration reform can change the number of people and the skills that we have. that is a core supply-side growth. we are adding about $100 billion a year in regulatory costs and we never take them off the books. we know tax reform, entitlement reform, you get the debt under control -- those are essentials. we have identified education failure in america. those are in normal sleeping policy reforms, but that is the kind of thing that changes the are normal-- those sweeping policy reforms, but that is the kind of things that change the directory. when your assumption be the kevin mccarthy is the next speaker? doug: i think he will be the next speaker. my first piece of advice would

be to buy kevlar business suits. he will not change the fundamental vote dynamic. this is a house caucus that has a vast majority of people who believe in incremental progress, who understand they have a historic majority, understand they control the senate, but also understand there is a democratic presence. how do you inch along? there is a significant block that does not believe in that strategy and they should just shut the government if they do not go with a -- if they do not get what they want. john boehner leaves as speaker of the house. he will be around a little bit more to see if he can affect policy. lows onglencore to new weak commodity prices. and the aluminum company of america will split in two. a shadowalcoa that is of what it was 10 years ago and

certainly 20 years ago. on alcoa in come pittsburgh. today at 10:00 a.m., the russian president will speak to the u.n. general simply. vonnie quinn is in new york, francine lacqua in london. i'm tom keene. stay with us. "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." vonnie quinn had pistachio ice cream over the weekend, and francine lacqua went for rum raisin. the single best chart with gary shilling here. let's look at the basic chart. sometimes we get so obtuse about the three standard deviation brazilian real or it how about if we look at the unemployment rate in america? this full to your great work, gary. it is labor slack, according to janet yellen, at the that it is leader slack, according to janet yellen. gary: except for the participation rate. hadhe participation rate not declined from its piquant february of 2000, the unemployment rate would -- from

its peak in february of 2000, the unemployment rate would have been at 13%. have aes chair yellen mandate to look at the yeah but? a lousy target, unemployment, because it includes people who are working but people who say they want jobs. they abandon that, and they had to because of this decline in the participation rate. 60% of that is demographics of people retiring, but the other 40% are middle-aged people and younger who have dropped out of the labor force. younger people say they want to get more education. a lot of them came out of college with big debt and no better job prospects. but a huge army of people have the skills. another six-plus percent

in london. 45% this year, as the prosecutor in germany has opened an investigation into martin winterkorn. francine, you have more? francine: on the one side it is a positive. there is nothing that markets like better than certainty, so at least this looks like a chapter of the german prosecutor opening an investigation into martin winterkorn. there are other endowments -- there are other developments, audi saying that 2000 of its own cars may have been affected by the diesel scandal. tom: you see volkswagen really struggling on a price basis this morning. let's jump to our top photos here. can we have a slower newsweek than last week? vonnie: let's have a look at a few photos to change the subject a little bit. than 656hat -- more

feet of beachfront. thankfully, but the hole is about 10 feet deep and at least 300 people were evacuated from the popular tourist destination. a sinkhole happened out of the blue. i believe you have some breaking news, tom. tom: i want to spend three seconds on this. we have a new slow this morning. alcoa out, and the glencore news this morning. let's go to our second photo. photo, francine was looking into the night sky last night. francine: the earth witnessed a lunar eclipse alongside a super the moon in its closest orbit earth. red, and thisred

has not happened since 1982. it was visible from most of the americas, western africa, north of the equator, and parts of antarctica. saw there, as we from behind big ben. kevin piller almost made a height-defying catch. he climbed the walls to try to catch the ball. catch with the's los angeles angels this morning, he had a better fence to work with than this. trout went up, put his arm on the fence, went up another two fee, made the catch, and the trick is that he came down on the ground. they are so far off the ground, the pro magic is that you had to make the catch and all that, but then you have to climb down the mountain.

both of these athletes -- it is extraordinary. and displays to baseball, how -- and this plays to baseball, how important defense is at this stage in the season. it is called gravity. baseball gravity. , never got toaaa the majors. coming up in the next hour, what a special treat this is. tom ridge joins us. the former homeland security secretary on iran. i'm sorry, we will speak to the gentleman from pennsylvania about the exiting gentleman from ohio as well. vonnie quinn in new york, francine lacqua in london. i am a green later or something like that. it has been a busy week of "bloomberg surveillance." good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." let's do the forex report right now. i want to get through it. a stronger and more stable ruble this morning. washington, leaving

6.3 on the you want. glencore with the historic moment for the aluminum company of america. alcoa will split in two. a shadow of the dow component it used to be i do not know, where was it, 50 or 60 million years ago? it is not a penny stock. gary shilling says it is essentially downstream with upstream chaos. still with us this morning, gary shilling, celebrated economist. i want to talk about your global rates call and look at the holistic sense of your research note. we have inflation, and i look at sweetness one example of a company with a disinflation

-deflation. which way is that dynamic tilting gekko gary: i think it is still tilting toward deflation. you have excess supply of almost everything in the world. what has happened is things have not changed an awful lot recently, but perceptions have changed. people used to think that china was an independently growing company -- an independently growing country. china manufactures goods that they send to north america and europe. that has been a big revelation in the last two months. how does currency play into your synthesis toward the lower rates? currency -- the reality is almost every country in the world is devaluing against the dollar. they are doing it with commodity , or they are

deliberately junking them, like the euro and the yen. or they are catching up. that is what the chinese are doing. they are saying we have to devalue. we have these currencies declining, and it is a reflection of slow growth. low rates are a reflection of slow growth more than anything else. tom: francine, jump in here. how much will hold over after commodity crisis -- after commodity prices continue to slump? see these you commodity producers -- an oil is a prime example -- where they say we are going to keep reducing this and chase out excess supply elsewhere, we can save lower prices longer. you see the same thing with iron ore. tom: gary, congratulations on

your market call. gary shilling. francine lacqua, thank you so much good what an interesting monday morning it has been. we continue with another hour of "bloomberg surveillance." good morning. ♪

this is "bloomberg surveillance." this afternoon, president obama and vladimir putin definitely will speak to each other. it is a jobs week this morning. we receive a key disinflation report. barry eichengreen of berkeley. this is "bloomberg surveillance ." i'm tom keene. joining me, michael mckee and david gura. michael: it is like we never left. the new slow this morning is incredible. company news today is just -- alcoa, mediadia -- general. there it is. and of course the drama, the aluminum company of america splitting in two is a good way to get the top headline. here is david gura.

david: alcoa will split into two and become two public companies early next year. ,ne will keep the alcoa name and the other will focus on high technology products. vladimir putin at the u.n. today. the russian president will talk with president obama at the united nations. the white house says he anxiously asked for the meeting. the u.s. wants answers from him about ukraine and syria. backs the u.s., russia the shaky bashar al-assad regime. he spoke about it on "60 minutes" last night. other solution than rendering them help in fighting terrorism but at the same time urging them to engage in positive dialogue with the rational opposition and conduct reform. said russian troops will not join the fight in syria right now. a new deal gives russia more

influence in the syrian conflict. iraq and iran says it will share intelligence about the islamic state with russia. outgoing house speaker john boehner is taking aim at hard-liners in his own party. the house is locked in a budget that'll over funding -- in a budget battle over funding of planned parenthood. boehner: winning that vote was never an issue. i was going to get the overwhelming number. i would have gotten 400 votes, probably but why do i want to make my members walked the plank gekko we are going to get criticized at home by some who think we ought to be more aggressive. david: 22-year-old jordan spieth is the youngest golfer ever to win the fedexcup, so he has plenty of time to spend the $10 million prize.

he won five tournaments this year, including the tour championship over the weekend. tom: it is a merger frenzy this morning. we will rip up the script. michael mckee, this is a regency merger which has become a new company, energy transfer. that is not a dow component, to say the least, in a megadeal. this is the distortions we have seen in hydrocarbons. billion in this deal. they are transfer companies. they move stuff around. we have been talking with a lot of people who say that is the one thing in the energy space you should think about investing in because the stuff has got to move no matter what the price of it is. ideathis is a downstream where refineries and pipelines do well even with the chaos that we see in the upstream area. let me do a data check. futures, -13. dow futures, -102.

it is a morning of mergers, breaking news, and international relations. first, the president, then mr. putin of russia, will speak at the u.n. this afternoon. we are thrilled to have barry eichengreen with us. also with us this morning, anders corr of corr analytics. other, itst saw each was on the steps of the united nations. it is this perfectly transfigured 1960's architectural piece. what will you listen for this morning from mr. putin and mr. obama? >> mr. putin and mr. obama will be discussing syria and isis and also the ukraine. the u.s. is definitely not on common ground. the u.s. and russia will be diverting -- diverging quite

strongly on islamic state. supports looking to their strongman, bashar al-assad, in syria, because they have all kinds of assets, military assets. obama is looking to sideline bashar assad, who is a brutal dictator, responsible for 300,000 deaths in syria. i must go to barry eichengreen. when we see the merger news this morning, away from globalizing and capital fetters. you could write a new book called "the great distortion," and all that michael mckee and i do with is distortion. where does the great distortion with monetary politics and market distortion end? when the u.s. economy

finds its footing. that may be the beginning of the end, as it were. michael: as the fed is supposed to raise rates, markets expect additional stimulus. it does not seem to matter where the cash is coming from these days. i think the markets are right, that we will see another move on the ecb. we will see another move from the boj and emerging markets with room from a new for. we are going -- with room to maneuver. : so the great distortion does not end, it just has a different feeding tube. barry: if you are worried about distortions, it is not for central banks, as monetary policymakers, to address. bloomberg team is

beginning to travel to lima, peru, for the international monetary fund meetings. what will be the surprise out of those meetings? will it be a reaffirmation of madame lagarde's new mediocre, or a research -- or a reset of where the global economy is? barry: there will be more attention to global markets. that is not good. tom: you look at the indonesian rupee, that has to play over into our international relations, doesn't it? and her scope absolutely. chinesemoney -- and he money that, does that make sense? barry: it makes sense for the longer term. it probably does not make sense this year, when the renminbi is not freely useful? michael: we are in this incredible period of churn, and thecompare policy action of

1930's to policy action coming out of the great recession. how similar is this playing out after these two events to what happened then? barry: it is similar, and different as well. we had a robust recovery from earlier. as tom said, it has been mediocre. on the back of that robust a year, it grew by 10% between 1933 and 1937. the fed exited prematurely and we had a double-dip recession. history is very much on mrs. yellen's mind and accounts for why the fed has reacted quite differently. michael: why haven't we seen the 10% kind of growth we saw coming out of the depression? barry: part of it is that there

was a very deep depression, and there was not much room to bounce back with a deeper downturn this time. there were mixed signals coming out of washington. there has been no new deal. policy thingt is a on the physical side? fiscal policy is always issue number one in the united states. i remain convinced we could have done more in 2009, and we would have been growing faster as a result. tom: we have a giant of international economics with us this morning, in anders corr. framedh of your world is by a dampened animal spirit? madame lagarde nailed this with the new mediocre, which has been reaffirmed in recent reports. how much of a dampened spirit affects mr. obama and mr. putin as they speak to the world this morning? anders: i think the dampened

animal spirit absolutely describes mr. putin. hand, is the other trying to promote diplomacy over military force. he is committed to that to the extent of suffering some level of criticism within his own party, and definitely on the other side of the aisle. but i think that is what we will be seeing, is obama will be encouraging prudent -- will be encouraging mr. to pull back some of the military approaches in syria. tom ridge will join us later, the former homeland secretary. stay with us. worldwide, this is "bloomberg surveillance." ♪." ♪

tom: good morning, everyone. "bloomberg surveillance." i am looking at the bloomberg terminal. right next to me, -12. what a friday it was. what a friday, and then saturday, sunday. it has been an incredible weekend. did you watch "face the nation"? john boehner? tom: i heard it was something. michael: this is a man who does

not show a lot of emotion. the outgoing house speaker saying that outgoing -- saying that hardline republicans are nothing but false prophets. does the party beware, or does the temple come crashing down? former towas medications directed to the republican national committee. he joins us from the harvard kennedy school of government in boston. the speaker says he will do whatever it takes to keep the government open, pass the budget, leave the planned parenthood amendments out of it. it will make the conservatives very unhappy. what do they do about it? do the republicans fracture at ?his point after john boehner, is are someone who can hold this party together in the house? >> there sure is. kevin mccarthy is going to be the next speaker. i have known him since 1996. i met him in bakersfield, california, when he was a

staffer for former commerce and bill thomas. he has opened the door and gone in whenever opportunity knocks. he won the lottery in california when he was young and open to delhi, which taught him -- and i, which taught him how to run a business. it is a tough job, but understand more than half the house republicans have come into in more recent0, times. kevin mccarthy has recruited them to run. he is somebody who has campaigned for them, whether in washington or -- michael: they pass a budget, and then in december they get the debt ceiling bill. will they get through that, or do we have another showdown? doug: certainly we know there will not be a shutdown in the short term. no one wants to see a shutdown

in the longer term. that is where kevin can bring both sides together. he is trusted throughout the republican congress in the house. it is a big task, but i do not think there is better positioned than kevin mccarthy. michael: doug heye, thanks for being with us today. a.m.,his morning at 10:00 we will have further discussion of our international relations. president obama speaking to the united nations. look for that on bloomberg radio and bloomberg television. ♪

tom: good morning, everyone. ."loomberg surveillance michael mckee and tom keene helping you with international relations, and the markets as well. let's get to headlines with david gura. david: energy transfer corporation has agreed to buy williams corporation rome was $38 billion, including debt.

-- williams corporation for almost $38 billion, including debt. reuters reports vw has suspended the r&d heads of the w cars audi, and porsche. president obama and president couldn't beat today -- president obama and president putin meet today. those are the top headlines. tom: very good. it is ultimately an optimistic book on america -- "america worriers need not look -- barry eichengreen has sequentially changed the debate over international economics. , with anders corr, as we look at this soup of the international relations and visits to washington and new york that we are in. there is a fear that one day the dollar will drift away as our

linchpin, as our support, our foundation. the fear is unfounded, correct? the fear isnk unfounded. the dollar will have to share the stage with another consequential global currency, but we have been saying that for a long time. i think we will continue to say that. tom: it goes back to world war i. what about the dollar? michael: when we took over from sterling -- with exorbitant privilege comes exorbitant responsibilities. we have to put up with the stronger dollar because we are the world pod reserve currency. you have these swings in inflation and corporate profits and things like that. barry: the strong dollar is uncomfortable, but it is testimony to the fact that the u.s. economy is doing relatively well, and our financial markets look more stable than china's. review the strong

dollar of the late 1990's, i go back to a singapore g-7 meeting where you got in a fist fight with a leader in thailand. there this time around in emerging markets with a dominant dollar? markets think emerging -- their economies are not doing well and the u.s. is. i do not think so. tom: is their piggy bank big enough to withstand the currency war? barry: the piggy bank in china is big enough to smooth the adjustment of the currency. michael: is it wrong to say there are currency wars underway , or is this the normal money in thef world today? barry: i am with you. i think the currency war metaphor is mistaken. it is appropriate under these circumstances that countries with weak economies have week

currencies as a way of enhancing their competitiveness, maintaining their exports. tom: anders corr, we look at the commodities implosion. richard sharma was in your chair a week ago. does a commodity implosion mean for america's international relations? well, oil being down as much as it is and the ruble being consequently down, i think that vladimir putin is really looking to shore up his popular support at home. by doing these international ventures in syria and ukraine, that is one of the reasons he is doing what he is doing. the question for the professor is, what does russia -- does russia have enough hard currency in its treasury to defend the ruble and maintain what they were doing?

barry: wewere work -- were worried about that last year. .om: bring up the copper price this is a shock to me. 225.is copper at these commodities are continuing their decline this morning. michael: they are, and based on a lot of what people think. and asked,o to china to present the evaluation for the chinese, not a big deal, but you say it was not that they did that but how they did it that is causing so many problems in the world today. they communicated very badly, they did not explain their motives. they did not communicate when their adjustment was over. i think it was a textbook case of how not to do a devaluation. michael: the market seems to be betting that the adjustment is not over. what do you think?

barry: they will have to loosen policy and the renminbi will depreciate a little bit more. speaks of abuiter global recession and has different probabilities of that. are we heading to some point of 3% global reform? barry: i am more optimistic. consumption is almost half now of the chinese economy. even if the rest of china has not grown at all, they can still grow. tom: for those of you on bowtie todayio, my has been flown in from shanghai. michael: there you go. tom: a gift from the family. michael: industrial company profits in china almost felt -- industrial company profits in china fell. we should be looking at bowtie profits. tom: coming up next, we will

look at the interesting work of networking in the phone business. , and erickson that you do not know. coming up next. good morning. ♪

tom: good morning, everyone. let's get right to our top headlines good here is david. david: for the first time in 10 months, president obama and vladimir putin will meet face-to-face to that hit they will talk in the sidelines of the un's general a some recession. they both set to speak today.

vladimir putin is calling on russia to defeat the islamic state could comcast is making its biggest overseas investment. they will pay $1.5 billion in a majority stake for universal studios japan. the company runs a theme park in osaka. it is the company's move into global investments. donald trump is falling to the pack in the republican race. dr. ben carson is just want her sentence point behind -- one percentage point behind the top. carly fiorina and marco rubio are tied for third. she is the highest rising candidate and stuck to her widely disputed claim about abuses by planned parenthood. >> this is not even about women's health. this is about the character of our nation. no one can deny this is happening because it is happening. among democrats, hillary clinton still leads bernie

sanders, but the margin is now from 34. fo trump is getting a big-name endorsement from carl icahn, because he is the only candidate speaking about problems. trump will lay out his tax plan today. was off theion field and one baseball game yesterday. jonathan papelbon and bryce harper of the washington nationals got into a fight in the dugout. it did not last long as it was broken up by tenets. jonathan papelbon said later it was his fault. which theonder uniform people wear next season. he went from the phillies to washington. michael: he is to play for your beloved hometown. tom: we will not talk about that. i understand you go after the kid from the minors. michael: but not the national

league m.v.p.. tom: have we seen that ever, mike? michael: baseball players do this every once in a while. tom: you never see this in sweden. we will get to that in a minute. let us go to the bloomberg terminal and look at something. mike mckee, you're going to help me on this. this is something we see in the u.s. and united kingdom. we cannot get out of the way of this inflation. core deflatorhis is not the most important chart out there this one appeared michael morning. tom: it is the most important chart. pushing them a corporate profits and leading central banks to continue their stimulus programs, which as you pointed out, lead to great distortions. there is a tremendous amount of interest in where inflation is and why we cannot generate it. tom: could the jobs report this friday i just the debate? it is a most tangential to the debate. not if we get a

rise and salaries and hourly learnings. -- earnings. it is not pushing hard enough to change the direction of that era. tom: you've received international acclaim for your question to janet yellen. review what she said to you. i thought that was important. athael: the issue is that this point, the fed is looking for the unemployment rate to continue to fall. to slow. is going the two things are sort of contradictory if you believe in a phelps curve world, which in theory, they did. tom: out of the london school of youomics and million euro to go, janet yellen believes in that world. mark carney believes in that world and on and on and on. everyone is on the same theoretical page, right? michael: and everyone is waiting for something for it to work.

tom: maybe like the national strike to get to the world series. at some point. it did not work out. of us give you a framework where we are as we go to wednesday and thursday and friday. 111.73. at wasng ever higher structuring calls to a sustained euro. that is still the minority opinion. maybe the headline of an incredible news flow is that oil has done nothing. it was supposed to go down and it has really not declined. 44.81. bring up the second board. putinssian ruble for mr. gives him a little bit of wiggle room at the united nations this morning. he is not facing the difficulties like in indonesia, where earlier this morning, we had new record weakness on the indonesian rupiah.

that sets the framework of where this cross asset formulation is worldwide. dow futures are -82. it is an interesting data check in international relations week. michael: this is "bloomberg surveillance." i michael mckee with tom keene. it would begin for technology companies. ericsson agrees it would be good for long-term sustainable growth. hans is in new york for the sustainable development summit and he has been kind enough to come in this monitor obviously, you have a business interest in this, but you're making a larger point that if government support technology infrastructure, it is a bit like a transcontinental railroad. it opens up the entire world to financial growth. hans: you're absolutely right.

what we are seeing right now is the fast spread of technology is now spreading out so far in the world. , 90% of the population will have broadband coverage. that is the greatest tool that leaders of this world have to transform and accelerate achievement for this very bold target that has not been approved on friday for sustainable development goals. that is what i'm advocating for. tell how broadband universally available is going to raise growth standards. it will help all the people i know check their fantasy football teams, but how does it raise global growth? hans: broadband has been used for consumers. what you see right now is that it can be used for other things. different industries like the other industry or the software industry will start using the broadband in the cloud. we also want to see the public sector use it, everything from education to health care to sustainable sickness. all that is pending with i.t.

components in order to achieve both growth and a much more sustainable planet. many of the goals, or all the goals i would say, have a device with sustainable development goals. that is why we see the second face of this technology that was built with this technology. you and i can call each other on the smallest network service today. voice is noise in the network today. michael: here's a question for you. david: someone argue that the growth is not occurring quickly enough to really allow the average african to get broadband. the price of broadband technology will decrease quickly enough so that eventually africa will come online. hans: you're absolutely right. you can basically move from any country to another. is the same equipment here in new york like in africa. todays why you will see

70 million roughly subscribers on broadband and africa will go to 700 million in 2020. tom: i know you are here in support of the united nations effort and i'm not quick to ask you brutal questions about ericsson. i will say this -- where is the money in the club? oud? one of the great mysteries is that i cannot figure out where the probability is down and income statement in the cloud. you have a swedish answer for us? hans: we are in 180 countries. i think the clout answer is in software and new types of business models. if you look at the telecom sector, we are used to the cloud services. that is sort of in the next five years, but it is very much going to be in new business models. you can deliver in another way and be more efficient. michael: so you make money if the world embraces technology. so why do we need more government spending? what does government brings to it? hans: what government brings is

that government needs to increase technology because we are the the enabled lipid you need -- enabler. you need to develop content for education and a particular platform for health care. that's what government needs to do and they need to purchase that for the citizens. and then you can attack the global goals and achieve them earlier if you do it right. you have the enabler from the private sector. tom: you know who henrik lundqvist is of the new york rangers? is there another henrik lundqvist in sweden right now? hans: there are plenty of them. there are plenty good hockey players in sweden. tom: we need more in new york wonder movesngels on to another swedish goa lie. hans, thank you so much. rangers hockey opening in a bit.

coming up on bloomberg television, we will speak with a former prime minister of australia. there is a number of former prime minister's australia. we will talk about the commodity implosion. stay with us worldwide. "bloomberg surveillance." good morning. ♪

tom: good morning, everyone.

tom keene and michael mckee to get your week started. what a week it was for news flow -- culminating in the washington nationals chokehold. there is no other discussion ca guyrning as the low-key from philadelphia comes in as a relief pitcher and kos after the start -- goes after the start in a chuckle. michael: not a good move. tom: phil mattingly joining us right now from washington. who had the chokehold on mr. boehner?- mr. weine phil: jonathan papelbon was taking the form of 40 .epublicans

anything that john boehner would do that would hand out a compromise -- those 40 would automatically vote against him and short-circuit any effort that john boehner had to get his way as speaker. tom: the money question this morning is to frame for us the chokehold they have on the republican leadership of the senate. kevin mccarthy, who is the majority leader, has been working all weekend to ramp up support. and tellingcalled every single lawmaker in the house, pledging to take a tougher stance with the white house and pledging to take a a tougher stance of the senate. it is his race to lose for speaker. we talked about this on friday and it continues as i traded e-mails with capitol hill and lawmakers this weekend. the dynamics do not change no matter who moves into john boehner's role. if these 35 or 40 lawmakers thing for whatever reason that they can force the president to accept something they want to do or that they can force senate democrats to accept something

they want to do, they're wrong. kevin mccarthy can pledge whatever you want to come but if he is the next speaker, that dynamic has not changed and will not until january 2017. michael: john boehner was very strong and emotional and saying that these people know they are wasting our time and that will not get it done. does kevin mccarthy know he is wasting time doing that? phil: what is different between john boehner and kevin mccarthy recruited a ahy lot of these guys to help take in republicans to a majority january 2011. he knows these members of congress and knows where they're from, their families, their back story. he has great relationships with them. that is something john boehner did not have with members of congress. there's some hope among mccarthy's team and outside circle that because of those relationships, he can help move them along. just to make a point, he was hip and house majority

leader relationships do not help them in those cases. i'm not sure how that will change if elevated to the top spot. tom: phil mattingly, thank you very much. mike mckee, he looked at the news flow over the weekend. what was the single thing that caught your eye? alanael: the cattl elections. tom: over to spain, another topic. at 10:00 a.m., the president speaks. ♪

tom: good monday morning. right now, our headlines. david: royal dutch shell will quit its search for sale off the coast of alaska. so got approval to drill there just six weeks ago. the senate is expected pass a bill that would prevent the government shutdown. majority leader mitch mcconnell is pulling the device of planned parenthood issue out of the spending plan. the organization funding could still snag in the house. women withdies with early breast cancer, they could skip cancer.

beat the oddsnot of beating the disease. tom: it is the most interesting week. we focus more on the national relations. we must. michael: it is a week where new yorkers must get out of the way of the motorcades and limousines. it is un's security week and we get the world leaders. today, president obama and president putin of russia will be speaking to the general assembly. and then they will meet later to discuss what to do about syria and that is the real issue for the world right now. but will come out of that meeting? anders is with us. the question that i have and, what agreed is can they come up with a solution for syria even if they agree or as the country to broken right now to really fix? anders: i do not see putin and obama agreeing on syria. obama is strongly against the assaduing of the

regime and putin is all about keeping assad and power because he is keeping the naval base and target. syria has been russia's main ally since 1972 and putin wants to maintain a solid and that power position. michael: and the people that are ssad said they will negotiate with him. unless putin is willing to throw him under the bus, they will hold. anders: he has gassed his people and drop barrel bombs on him. the sunni rebels there will not negotiate. warns just saw "want of arabia" andf the borders are gone. the borders of syria are gone.

turkey is a little concerned about this. andrew's core, where are we five years from now with our new borders? are there any? anders: syria is definitely a failed state at this point. tom: iraq is close to. those borders do not matter that mike and i memorized. anders: even the border between turkey and these areas is insecure. people are flowing over them. foreign terrorist fighters are coming in from all of the world. 4500 terrorist fires have known -- fighters have gone into syria and iraq. michael: what does this mean for the world? stephanie there anders: this is a serious issue for the stability of europe. michael: is this afghanistan post russia on steroids where is it becomes the home of the world's terrorist groups and we get the refugee crisis on top of that? anders: yes, and i do not think

that pigeon right now has the -- vladimir putin right now has the military or economic muscle to really go and encounter the insurgency operations. michael: he has a problem because they have 28 million muslims in that country and they are a much softer target the united states, which has been targeting terrorist attacks are long time. anders: it would be a major mistake for vladimir putin to align himself with the assafd regime too closely. tom: syria has the shoreline on the mediterranean and that is with the russians are. how effective can those troops material be inland? how far inland the vision mr. putin's people can work? anders: the attack helicopters can cover most of syria, but

they cannot be effective. they contend point strikes against terrorist here and there, but they will not be effective other than defending the assad regime. he can defend what he has got now, but he cannot make any gains. michael: you have seen them the play airstrikes in syria against isis. is there some way russia and the u.s. can work together against that one faction? anders: we can do pinpoint strikes without boots on the ground. we are not going to do much even with boots on the ground. we were not effective in iraq and afghanistan. that was not a very viable strategy. there are safe havens for refugees. he has promoted potentially no flight zones. even if you do have a safe haven for refugees in iraq or syria, that could be a location where jihadi's could use as a base. tom: you have been a critic of

the president and the ministration and their foreign policy. what is john kerry getting right as he deals with these intractable issues? anders: i think they're kind to support the current premier of iraq. i think that is the right thing to do right now. the current premier of iraq is a shiite, but he is somewhat resistant to iran. he has currently been forced by pressure from iran to align with iran, assad. he has announced that there will be a communications command control center in baghdad. it shows that we are losing influence. we need to reinvest in his premiership and try to bring him back to our side. david: we have this news that iraq will now share intelligence information with folks beside the u.s.. -- how big of a deal for that to brook? anders: it should not be too

extensive to support that regime locally in that. the to put ground troops in iraq, but we need to locally support him to resist influence as much as possible from iran and russia. tom: i look at where we are and you drama before the united boilerplate these speeches or will there be real messaging? anders: vladimir putin is grandstanding at the event. tom: is that a boilerplate speech? anders: absolutely. he is trying to gain public support by supposedly tried to put a hand towards obama and ask for cooperation. in fact, he is asking for something that we will never give. tom: acai photograph of the two leaders -- i do not know when it was. the difference in body language, i do not have ever seen it this start in a diplomatic photograph. tom: they are completely

different personalities. michael: they have different levels of experience in negotiation. the news flow out of the region is so bad. it is continuously that. is this just a disaster in the making? we waiting for the two trance to crash? anders: united states has to be careful to not get involved. we spent trillions of dollars if you include interest payments and all the extra payments that go along with these wars in iraq and afghanistan. we do not want to throw a lot of good money after bad money there. tom: anders, thank you so much. you can see the president speaking at 10:00 a.m. this one. mike, i've not some doubt all the transactions this morning, i'm going to say that we are in $40 billion a transactions, including the synergistic value alcoa splitting into two

companies. a nice pop here, but you can see what was decades ago, and they split apart. michael: they have to adapt to the new world. people company is going to stay together and continue to produce aluminum and the new company is what they make out of it -- the high-tech stuff. tom: you wonder where this is going as we aim the end of free money. are they right at morgan stanley that the free money gained goes into next year? michael: tune in at 8:30 a.m.. morgan stanley has arty said that if he sounds a little bit dovish, you will see the market react a lot to it. tom: that is why we have michael mckee to know that mr. dudley will speak in a few minutes. then there is glencore as copper is decidedly challenge this one. stay tuned to us.

we have another hour of "bloomberg surveillance." we will focus on markets, economics, international relations. from new york, "bloomberg surveillance." at 10:00 a.m., the president speaks. ♪

>> this is "bloomberg

surveillance." 8:00 on walls street. we need to be boring, but we are not. an exciting morning as we approach the end of the third quarter. fromuote of the day comes investment management in london. markets have just been so volatile. i recommend investors to shut up shop. the best thing now would be a moment of dullness. that is not what we have this morning. let us get you caught up on where we are trading at this hour. corporate profits at chinese industrial companies is today's villain, dropping the most in four years. stock markets around the world are following, except in china. figure out that. hong kong closed for the day. if profits can fall in china, why not elsewhere? the only major index higher is spain where the narrowly rejected calls for independence. why not in the united states?

the s&p futures are 14 points lower. the same percentage for the dow and the nasdaq is all 34 points. that is 8/10 on the day. the 10 year yield at the moment goes for 2.43% in the five-year down at 68 basis points for your two year yield, it is a great concern. what are we watching today? liberated- shares of -- obliterated. the swiss mining giant could see all the equity value illuminated under current commodity prices. glencore down 24%. into twoarating companies. one produces aluminum and the other makes stuff from those things. shares rising up 6%. royal dutch shell spent $7 ring for oilo

and gas in the arctic and found nothing. they carry about $3 billion on the balance sheet. it is an additional contractual obligation of $1.1 billion. an energy transfer by williams company $37.7 billion. an awful lot of corporate news today. week in the news flow remains a torrent. standing in front of the faucet, diego, the coinvestment officer. good morning to you. you specialize in distress. there is a lot of distress around the world right now. there's more distress and behavior than in reality, but yes, there is concern. michael: people are more concerned about what is going on than they should be? diego: i do think so. i do not think that china shapearily is as in week

that it tends to be spoken of. i think where you see the stock market took a beating, but the economy has stabilized and likely to do well and the government is committed to expensive measures. michael: that is a good point. do we look at the wrong thing in china? the focus on industrial company profits -- tom was talking about his bowtie today. we will get a shot of that for you in a moment. is consumer spending more important these days than it used to be, but it doesn't make the headlines? diego: i think it means more reliance on domestic consumption and not investments at the to experts. from that standpoint, the government has reviewed the recent requirements and the evaluation was an expansionary measure. the sense is that in general, demand in china has bottomed

out, but is stable at this level. it is likely to start inching higher and that is good news. michael: october 18, the evening of it in the united states -- will get to the numbers on the morning of the 19th. gdp in china -- are we going to be surprised? diego: i do not think there will be much the price. will not be aere catastrophic number. people should not be looking at the stock market to engage necessarily what is going on in , particularly the shanghai stock market, which has been a roller coaster this year. michael: what about the rest of the emerging markets but seem to be reacting to china? indonesia has been falling. the government resets their value as they try to do with much lower growth. is this the chinese flu spreading around the world or are we sort of mistaking what is happening in a lot different

places for one coherent explanation? diego: four years, the biggest driver of emerging markets growth has been commodities. there is no doubt that commodities have been in a a lot of pressure so it makes sense for a lot of economies to be adjusting. obviously, the fact that most of them have flipped their ex rates do more of a adjustment without getting into a currency crisis like they did in the 1990's. i expect emerging markets to be under pressure, yes. global growth suffers as a result, but we do not see that as a typical emerging market crisis like the one we had in the 1990's. michael: we have the throw in the question about the federal reserve and the idea of differentials. are we seeing the united states drive these promises well? problems as well? diego: more expectation and reality.

it is that the same level that it started out this year. this is not being treasury driven. even though people talk about a temper tantrum, even if the fed moves, that would assume that it is not this year, but early next year, it is going to be very subtle. going to reduce dramatically, but to illuminate the zero interest rate policy. those are two different things. michael: it brings us back to where we started. you do not see as much of a crisis going on as citigroup, who is forecasting the possibility of a global recession. there's ain, i think number of cell phone prophecies in terms of the price action. the fact that ultimately produces, but the sense when we look at prices and that commodities have not disappeared in terms of growth, i think that generates a feeling of doom that is permitting on the markets. the reality of the global

economy is not nearly as we. the u.s. is not doing that bad. europe is slowly recovering. china is doing the same. the rest of the world is, but my personal thesis is that commodity prices have overreacted to this low line in growth. we will see commodity prices rebounding, and with that, so will the economy. michael: ultimately, when does it become clear to people or when did they get the idea that we have overreacted or that we may have gone too far in the markets? moments isng those very difficult, but at some point in time, people get tired of being paranoid. when you start looking at more flimsy excuses, it is not that they are not problems, but there are problems that continue to justify the price action. i do not think that is the case. michael: what about this? we hurt for a very long time that people were telling us that in thed a correction

markets. the pes were too high. do we look at all this in the context of that? people are looking for reasons to be depressed because they want to see the market go down. when the market starts to go down, you start to see bogeyman under every bed. diego: i think there is some of that. the thing is that obviously we were all taught in business the market is always right and that price action should tell you something. markets move, they go down. wow, that must be a problem out there. in some cases, there is a problem. in many cases, if if you people who are paranoid and they stole. that is kind of the element that you have to gauge. obviously maybe because we look into the stress, we look more into the facts and necessarily what people say and how they reacted it will take a while, but at the end of the day, again, would go back to

fundamentals, is the fed going to be that aggressive raising rates? no. commendationtreme is because the u.s. is not doing that bad. if it gets confirmed, china is not doing that bad. do we need to be as concerned about the market? that is why we take it from the standpoint as a moment in which you have to look for opportunity in situations which assets get completely oversold. because of this general feeling of doom. michael: giving our investment philosophy, is it easier for you to investors t these days? diego: easier now than a few months ago, so we're happy. michael: it is harder to find distressed stuff? you're getting value questions come value opportunities, but is when youe distress are loading up on greek paper? diego: it is kind of funny.

when we look at emerging market space on the corporate side, the number of assets trading at these levels without being in distress, it is hard for me to remember a time like that with things trading at $.30 or $.40 on the dollar. we know they are current and paying have no cash needs in the near term. this is all happening at a time in which people are talking conditions in that dealers are not providing much market making as they used to. is with usego ferro and we will continue our conversation with him as we watch the markets faltered dow, nasdaq, futures all lower. tune in for colombia's must-read. your success is our priority. ♪

>> this is "bloomberg surveillance" on a busy morning. let us get right to david gura with the headlines. david: there's a big deal with transport business. almost $30 billion including debt. williams rejected angie transfers first bid in june and look around for other buyers. while dutch shell will quit exploring offshore alaska. they blame high cost for

arcticing well in the waters. six weeks ago, they got government approval to drill offshore there. will split into two, with one keeping the alcoa name and the other producing products for the turbine and construction industries. donald trump has a big name and endorsement. carl icahn is backing donald trump because he is the only candidate speaking about the country's problems. he made the endorsement in a video that will be released tomorrow. roosevelt is great. he stood up to jpmorgan. where will we get a guy like that again? h, but heay be bras is wanted to say this is complete [beep]. david: trump will lay out his tax plan later today. build on itsnts to

success of its mobile app. ordersrs can pa place and customers spend $10 on an average order. that is higher than those in person. jordan spieth has become golf first $22 million man. he caps off a season for the ages winning the tour championship in atlanta. that was enough for him to win the fedexcup and its $10 million bonus. jordan spieth 15 times this year, including two majors. my with the data check. ramy: let us look at how indices are stacking up ahead of the beltl. they are all down half a percent as two thirdsmuch of a percent. similar to the last bear markets. the index has in fact fallen for the past two months. we are about one hour and 15 minutes away from the bell and

we will be getting this to you when they come up. the split creating a lot of news and glencore with stocks leading there on that news. ramy: oil has been missing the $45 barrel on bad industrials from china. david: this is "bloomberg surveillance." at 10:00, the president speaks. ♪

tom: good morning, everyone. "bloomberg surveillance" from new york city. data futures -102. some real challenges out there as well. you can see it in the foreign exchange market as well. a dear deterioration of the tape, but i do not want to make much of it. we need to go to the first word breaking news mess. he is william a longley. -- here is william alon

maloney. william: glencore shares are down 20% to a fresh all-time low. dow futures were down as much as 150 points. the 10 year yield at 2.1% has moved the average. watch the nasdaq biotech index after friday's 5% loss. the key level there is the august low at 4181. personal income and spending at 10:00. at 10:30 a.m., the dow and the fed could dudley speaks at 8:30 a.m. in dealnews, energy transfer agrees to buy williams in a deal. of cola has separated into two publicly traded companies. upgrades and downgrades this morning -- dimon offshore is a hold at deutsche bank. performanceised the at credit suisse. finally, jc penny's it raised to

a buy at stearns ag. live at the breaking news desk, i'm bill maloney. tom: to hear more breaking news over the terminal, you could do go. at squawk futures are a little bit better. ferro is watching those and we were talking before the break about how much of this has been overdone. there's too much fear in the markets amount enough reality about what is going on. , whateality kind of world we touched on just before the break was how greylock likes to look for distressed investment situations. you were heavily involved in greece and places like that. is there any place like that that we should be worried about within this entire universe we were talking about that is truly

distressed, that is an opportunity for you, but a concern for the rest the world? diego: i do not think that i can think of something like that of that magnitude. the one that i think it's an obvious area of concern is brazil. it is a large country, one of the largest economies. i think it is suffering from a mixture of politics linked to government corruption. drop in commodity prices. that is a place with the headlines are likely to get much worse than they are even now. michael: what happens to brazil going forward? do they continue to fall. ? does the economy worsen? does dilma rousseff stay in office? diego: i feel a lot of people are calling for her impeachment. that is where you have a weak

president who is better to complete the mandate. therefore, the pt is part of the ruling election. we think to the elections next year that she is likely to stay. the thing is that the finance minister is well respected. if he leaves, i think that you can see even more pressure in the currency and general assets. good days a few for reality, izilian wonder if you can define for us what these currency movements express about the overall story. of 1990ut the fears eight, but more of what we saw in ecuador ages ago or 1994. the currency markets tell us something. what are they telling us this time around? diego: i think this time, they are telling us that a lot of

countries have learned. if you have an external shock caused by commodities, it does not affect every single country. is anery emerging market exported some are benefiting from the situation. switched a lot of their financing into local currency. they have built reserves and flexible effects. if you have an external shock, the best thing that you can do naturally is to let your currency go. that is what a lot of these countries are doing. i think that is a major reaction to look at those things in the same context. 90's, but it'se different. diego: this country is in better shape and they are doing what they should be doing. tom: you see it with the philippines, which is not to ss, but again, what does that have to do with commodities? wereel: that is what you

telling us. commodities have overreacted and people are overreacting to the commodities. diego: everything is linked to flows. you see the drops in local market funds and equity funds. you see that people are redeeming out of those funds. to sell the assets and turn them back into dollars. one thing for me interesting and brazil is that if you look at where it is trading now, it is trading to where it was when doma was elected. what i'm trying to say is that brazil was in complete disarray. , yes, it's in trouble, but not at the same level. tom: diego, thank you so much. thrill to get you in with important emerging markets. michael: take a breath, everyone. tom: that is certainly the theme. that is what the pope said.

take a breath, president obama and prudent. at 10:00 a.m., president speaking to the united nations assembled in general. it is "bloomberg surveillance." stay with us. ♪

david: this is "bloomberg surveillance." here are the top headlines. president obama and vladimir putin beat new york today. they have not had a one-on-one more than what then h you. vladimir putin is calling on the

in. to join russia an defeating the islamic state. russia has reached an agreement with syria, iraq, and iran to share intelligence about defeating isis. this came as a surprise to u.s. officials. outgoing house speaker john boehner is taking aim at hard-liners in his own party. john boehner calls them false prophets, promising more than they can deliver, including cutting off funding for planned parenthood. he quit rather than forcing the publicans to vote on a measure on his future as speaker. >> winning that vote was never an issue. i was want to get the overwhelming number -- i would've gotten 400 votes probably. my tokent to make members- repelled can what the plank because they will be criticized by others who think we should be more aggressive. david: kevin mccarthy is likely

to be the successor. he is currently number two in the republican leadership. it quick check of futures and they are all down this morning. this is "bloomberg surveillance." let's go out to tom and mike in the radio studio. michael: along with tom keene, time now for our economic indicators. commonwealthin financial network. when it is time to change the conversation, talk with a broker who is ready to listen. visit, what.com to learn more. income and spending. >> income and spending and spending up 4.4%. what than forecast. the prior month revised july higher. it is up higher. july revisedy with higher to inflation data tied to the spending and income report still below the fed's target.

again, consumer spending drives the economy. august up .4%. that is the bloomberg first were desk. let us go back to new york. michael: we also get the fed speak today. phil dudley supposedly speaking at this hour. they did not give an advanced text. the markets will be glued to the bloomberg screens, waiting for headlines. morgan stanley said this morning that dudley says yes, janet yellen is right and we will raise rates this year, it will not be a big deal. if he says i'm still not convinced, it will significantly move markets. tom: i totally agree with you and its massively asymmetric. yields are right now for a set of reasons tilting toward dudley dovish. do i have that right? michael: it would appear that way. yields are down and it does it. appear the markets are dovish. tom: do you suggest the

commodity pricing of copper a code news hits as well? fede is about 47 speeches this week. michael: almost 47. there are eight fed speakers. there is also a whole bunch of people speaking from the european central banks this week, wondering if they're going to do more. tom: did you buy an iphone this weekend? michael: i did not. i know you were in line for four of them. we were apparently the only people who did not. 13 million, apple says. tom: the buzz of the camera is to die for. i go back to the engineering of the new chip, the a nine. this deserves watching. the reports that i get -- and i'm not the expert on this -- the gloom over it is possibly unfounded.

but there is apple with headlines. they sold more than 13 million new phones as well. thismberg surveillance" morning is brought to you by cohen resnick accounted. the business needs market focus titans. an industry leading experts at cohen resnick. find out how at cohen resnick.com. they're getting perspective on emerging markets with guest on that. diego ferro with us. from all with us now. geraldo is on with us run after every time you're on, the peso is weaker. , does it shall affect the dialogue?

is 18 to the dollar or around number of 20 to the dollar? >> we have seen a very major correction across the board in all currencies. , in the, it was driven past, i would say three years by the move of the major currencies against the dollar. it was the weaker yen and euro driving the whole e.m. currency spectrum until recently, until china decided to depreciate its currency. dollare saw some embility, but weaker currencies across the board. we need to understand the part of the macro rebalancing in terms of the trade short. many economies are facing lower commodity prices, but also we need to understand this in the context of a much weaker export environment that requires a

weaker currency spectrum to equilibrium the global dynamic. the mexican peso looks very attractive. mexican assets would look very attractive appeared yo. you could argue the same and other countries, especially those who specialize in manufacturing exports did it is an indication of a weak global environment that the fed recommends a couple weeks ago. michael: is this driven by the interest rates differentials or how much of what is happening with the peso is directly related to china and mexico trade? gerardo: i think that the way to the fed policy has been transmitted to financial markets is by higher shortened rates and a stronger dollar. that has been the transmission mechanism to the rest of the world.

em currencies, as i was saying, have moved accordingly. they have moved to the weakness of the yen and the euro. -- youthat, you can see look at what the fed said a couple weeks ago. they were recognizing come i guess to a much larger extent than usual, that the international environment, as much as the fed is concerned on that, the rest of the world and the em spectrum has been weaker precisely because of this slower growth environment. tom: we have so much to talk about and we are thrilled to bring you folks gerardo rodriguez. the thing that is wonderful is actual public service within the arena. it is great to talk to somebody who has sat on both sides of the fence as well. talk to him about robert finch's idea of the wonderful labor arbitrage that some of these countries will face, particularly mexico as

well, where you see later games beingbor attractiveness game changing given some of these currency devaluations. futures are -10 and dow futures argument of 81. a -81. david: time for morning must-read. mine comes from "the boston globe" by madeleine albright and she writes that refugees are not charity cases and that they can add to the health of our economy in the strength of our democracy. those displaced from syria and elsewhere are no different from generations past in terms of what they can contribute to our national life. she notes from a lot of personal history on a very important date from here that she can from czechoslovakia herself. she was able to get here easily and no trip on a raft, nothing that perilous. it speaks to how america remains

a beacon for a lot of people around the world and using statistics to really illustrate how it her estimation u.s. can do more. formerly people have left syria in united states buspar has accepted 1600 of them. she is advocating for the united states to do more. ramy: it was interesting that she was not just driven out once from czechoslovakia, but twice. czechoslovakia's loss has become the united states's game. she has become one of the united states most prominent politicians. not just her, but in the past, there have been some of the refugees have come to the united states who have contributed to our macon society. i was on the yuan high commissioner for refugees site and they have a list of more than 100 people have come to the u.s., chief among them albert einstein. in addition, there is victor mis" in wrote "limits ar

the house formulation sharing the past decade. david: it is up to congress to sign off on this. syria continues to be the topic of the yuan. we will from the president today at 10:00. this is "bloomberg surveillance" on bloomberg tv and bloomberg radio. ♪

tom: good morning, everyone.

we say good morning to you with a busy day with mr. dudley and headlines. they moved the market with yields higher. let us get to david with our morning headlines. david: bill dudley, president of the new york said, expects the rates to rise. comcast making its biggest investment overseas. they will pay $1.5 billion for a majority stake in universal studios japan on which operates if you park in osaka. the ceo says it's the start of the company making more global investments. there are a number of developments in the volkswagen emission tests and a. the w's al unit says to moving cars were involved. germany's regulators have given the until october 7 to have a plan for when it's cars will meet the mission standards. reuters reports that dw has suspended the r&d heads of dw cars, audi, and porsche. job cuts are on the way at whole foods. they will cut 1500 jobs in the next two months. that is less than 2% of its workforce.

whole foods expects a significant percentage of those tw who lost their jobs to find other jobs in the company. here is rainy with a morning must listen. ramy: india's prime minister met with the tech elite in silicon valley over the weekend. facebook ceo mark zuckerberg did hold a town hall discussion with the leader there. the prime minister is great vocal on social networks with over 50 million followers on twitter. here's what he said about the medium. social mediath of today is that it can tell governments where they going on. they can stop them from moving in the wrong directions. and giveke them aware them an opportunity to do a course correction. we used to have elections every five years, but now we have it every five minutes. ramy: it is interesting what he says they are about the election. over the past four years after a york, iback to new was in asia and hong kong and i was covering the hong kong pro-democracy protests and that

social media can galvanize and organize people so quickly. they tried to change the status quo over there, but it did not happen. it is able to pool people together and organize quickly. david: it is interesting to hear him embrace social media. not every world leader has done that unequivocally. i think about my time in washington and how much polling there is, more than your out from the presidential election. how constantly we are getting new poll results and how to come kids things for elected officials who would perhaps like to go with her gut and stick with the guns, but they cannot do that because they're getting feedback from social media. ramy: it speaks to places where there is a lack of social media. for simple, china has clamped down a lot on facebook, twitter, and chinese equivalents. there is a lack of response for anything happening in the country. the feelings are antigovernment feelings or pro-democracy feelings that might be happening china,given country like

for example, or myanmar. it is interesting that the places that are thriving the most have some really terrific adjusting voices coming out of the woodwork. david: he is not the only world leader talking about this. we had pope francis talking about social media in a negative light, saying young people need to get off social media and its of the world. coming up later today on bloomberg television, former starting premise for julia july. -- australian prime minister julia july. this is "bloomberg surveillance." ♪

tom: good morning, everyone. worldwide coast-to-coast unserious xm channel 119, bloomberg channel, the patriots are not going to lose a quarter this year. the san francisco 49ers are free morning.et we wil we will not talk about the jets either. broughtrg surveillance" to you by invesco. looking for investment thought leadership? experts are a clicker way to go to invesco.com/u.s. to subscribe to the blog and follow invesco u.s. on twitter.

michael mckee, i did not know i would be so copper focused when we walked in the door. michael: copper is off of it flows, but glencore is getting hammered. it is down more than 30% by now. saying with a commodity route under way. they may be nothing left in terms of assets for shareholders and everybody heading for the exit. chicago copper, which is different than london, is quoted --two dollars and $.30 $2.30. $2.28 tost is t rounded up. stunning and it goes again to emerging-market stocks. emerging markets getting hammered by commodity prices. di go was telling us that he

thought commodities were overdone. rodriguez is with us from black rock. of emergingtop markets. if you have a company like glencore going down, a big presence in a lot of emerging-market, as are many of these mining companies, what is the knock on effect? gerardo: i would say that what we are seeing in commodity prices is rather a manifestation activityobal economic and backed up. blinds on economic related activity, you my because there is a transmission of public finances to the credit channel in these economies for lower commodity prices, you would say, are good for the economy as a whole living in a low growth environment.

there are a small number of economies that suffer significantly. painave concentrated the and widespread game. the issue is that those countries and companies like glencore that you are mentioning are experiencing in immediate market to market affect by lower prices while the benefits would be evident over time for the rest of the economy as a whole. tom: as a public official, which he used to be, this is one example. help us walk through this. means wagey weaker or later advanced to a nation. discussed that for mexico? are we on the cusp of the mexican manufacturing boom with a become the american switzerland? gerardo: in general, weaker currencies for countries that

are relatively open like mexico and well connected to the global -- it is a very good thing for the prospects of future growth. we are actually seeing a world in which export growth has been relatively low. mexico already stands out because of its strong performance. now, this all happens not just through the more competitiveness of the labor market, but the product market as a whole. all this is happening at the same time in which we are seeing a structural shift off of manufacturing production towards a market that is less labor-intensive. tom: what is your investment on mexico right now? gerardo: mexico, it's an interesting case. it has one of the nicest

microeconomic stories of all emerging markets. it is one of the few countries that has structural reform agenda momentum going on with the energy sector being opened up for private sector investment for the first time in 80 years. labor competition, telecom reform. that makes mexico a really interesting investment opportunity, but when you want to express that positive view of the country through equity markets, you get some difficulties there. a clear example is the energy sector. if you want to play the energy sector because of the reform, actually you do not get many ways to play that did the equity markets because that sect or is not represented. o to earliero g stages of development of new products and most of that is outside of public markets. there are interesting

opportunities in the infrastructure space in mexico. over time, we will see those companies listed in the stock exchange and become an investment opportunity for public markets. michael: mexico is a story waiting to happen at this point. it is only just beginning? gerardo: the landscape of mexico is looking very attractive, but in a 10-15 your type of horizon. it is being referenced by cyclical type of dynamics. affecting countries like china and brazil, but beyond that, the prospects of growth for the mexican economy are actually one of the most attractive that one can find in the em spectrum out there. michael: does mexico pull up other countries in the region? gerardo: not necessarily. when you look at the region, you can see that there are two basic groups in latin america. you have those countries that

are heavily influenced and heavily exposed to the commodity dynamics and to china dynamics. southernost of the america. and then you have mexico and some of central america countries that have been leading more towards the manufacturing space. mexico is an interesting case. being an important oil producer and exporter, oil is not really good for the economy as a whole. oil is not that relevant for the export sector as a whole. oil is only relevant for public finances at this stage. being aas migrated to very important manufacturing exporter. tom: is there an opportunity in emerging equity markets now? they are way outside of their trading range second 2009. is the black rock framework that there is a gloom out to 2008 ws or do you really frame

this as an opportunity? which can it be? gerardo: it is actually two things that the same time. you have to be careful. em equity markets have underperformed for more than four years now. it is mainly driven by all the things that have been causing this commodity. tom: what do you do right now? gerardo: what you do with this is you want to find your spots where there is value. i would say that from a beta perspective, all of the em equities look attractive right now. there are some interesting places that we have been looking at. certainly, the case of india which has reform momentum and from a valuation perspective, interestingly enough, a country like turkey is one we are looking at. tom: it is a greek letter moment, mike mckee. beta going to crush my

alpha potential? michael: well done. the beta will continue to be the dominant factor of the asset class. to the extent that we seek commodity prices stabilizing, with a major move that the currencies have experienced so far, one can think that going forward the beta may reverse. need to think that em equity investment historically has been a value investment. the most successful investment opportunities in em and you can find where there is value there. ian toas a contrary that. it has not worked in the past years, but at one point, it will. oom: thank you, gerard rodriguez from blackrock it is the movement.

the thing is that the bulldozer as you pick up the alpha dime is called gamma. the bulldozer is called gamma and we see gamma. we have alpha, beta, and gamma. it is a greek "bloomberg surveillance." good morning. ♪

>> this is "bloomberg

surveillance." tom: good morning, everyone. it is a cloudy new york city that greets the united nations. the carriages and the horses and the tourists and the many assembled for the united nations meeting. the comments of the president of the united states to the assembled at 10:00 a.m. at the united nations. they will be looking at commodities. that gives you some of the real gyration. our forex report. the best retail trading platform. 1.2025. showing a little bit of yen strength. the euro turning, dollar -- the

euro churning, the dollar churning. what a great discussion this morning on mexican peso. dollar-you want, 6.3 -- dollar-yuan, 6.37. mike, we'll must have international relations -- we almost have international relations exhaustion. michael: the lady from seven investment in management. markets have been so volatile i'd recommend investors to shut up shop. the best thing now would be a moment of dullness. he is like senior vice president dullness, founding

member. [laughter] michael: could you use a little dullness out there? >> yes, but i don't think we are going to get it. tom is the one with the bow tie. sorry, tom. michael: that's all right. you have analysts shoving each other aside outside your door, everybody saying, we've got to do something right now. >> fortunately, we've missed most of the carnage. we got fairly defensive back in july. we sold our china exposure and basically started de-risking because it was plain to me that we were getting set up for a garden-variety correction. i think we are getting to a point now where prices are getting low enough so we can he opportunities. michael: you agree about

shutting up shop, your timing is just different. scott: exactly. if you can manage to not puke in your waste can too much. [laughter] tom: can we say that on television? michael: we just did. scott: we are getting to a point of capitulation that occurs historically at the first game of the world series. we are starting to look for opportunities, but i don't think it is over. bring -- what you bring is a wonderful sense of history. you have a shocking single sentence in your note. the gyrations and instabilities of today remind you of another time and place of one george soros, which is back in little bit. those of us of a certain vintage set up a little straight when

you say something like that. scott: all of these currencies in the world are pegged. you can buy put options for the premium. for a 1%-2% if you think about the nature of the bet, if you consider the fact that the chinese economy is aowing, you sort of have whole -- pulse on the situation. you can make outsized gains for little cost or risk of losing money. michael: can i back up a little bit? you mentioned china. do you invest in china? yes, you could make an argument that they should do something or the currency needs to do something, but when you are talking about china, just because it should happen does not mean it will. scott: i think that is true in the short run, but in the long run, it is impossible for market

to remain in positions that are just not sustainable economically. that is which george soros writes. tom: scott, i'm going to put this out on bloomberg television and i will get it out on social for all of bloomberg radio. this is the one-way bet on chinese out one year. this red is the massive devaluation by the market. for those of you on radio, it looks like a table tilted and the upside of the tilt is a volatility expectation of what it will do. you predict we will cd evaluation and further devaluation- see and further depression. scott: i think if the chinese were to devalue the currency in a meaningful way, that would be

the other shoe that would need to drop for the emerging markets and that would probably signaling pretty strong buy signal. how will they do it? that is a great question. we have the chinese communists getting together for their five-year plan coming up. at that time, they have an opportunity to make a decision to devalue. path wouldble glide be a seven level by the end of the year and maybe an eight -level by next year. michael: that much? scott: i think the currency needs to come down by 25% or 30%. their largest trading partner, japan, is devalued by 40% or more. it is hard to remain competitive with your neighbors when you're trading partners of all devalued. michael: let's talk about getting stronger.

two-year note yield is already moving upward in the curve. bill dudley suggested the fed will raise rates this year. he also said today, we are making way too much of this. how does it affect your investment strategy? scott: i think we all need to go to a recovery group because we are spending way too much time ofthe addictive -- addiction when this rate rise will happen. it does not matter when it will happen. we are all too focused on it. we know it is coming at some point. we know it is going to be a shallow increase in rates. i come up personally, don't think we are going to get meaningful wage inflation -- i personally, don't think we

will get meaningful wage and flechette for a while. -- inflation for a while. tom: we are back to where we were in 2001-2003 in copper and gold. value, except i feel trapped. michael: i think this is the kind of situation, where, if you buy these stocks now and you were to wake up in five years, you would find out you are buying things that will perform fairly well, though it could be painful for the next six months. michael: what do you think of inflation these days in terms of what you look to buy? that is the great debate. when do we get some? , just theide the fed

idea of prices going up to help corporate profits. anything on the horizon? scott: i don't really see any relief until we get into the middle of next year. i don't see the commodity cycle really ending until the second quarter of next year. our projections on oil show that we are going to continue to be under pressure going into the first or second quarter of next year. mb gets to valued, i don't see any stop on the deflationary effects. tom: thank you so much for the terrific overview. the one-way bet on the chinese renminbi really says it all. what do we stumble long next in our fed fixation? michael: we had some comments from dan tarullo of the board of

governors. john williams has already spoken . he will be talking this afternoon. of them thiseight weekend. mario draghi in washington later this week. tom: interesting. i want to clarify something for our american audience. they quote stocks differently in england. 67. you see glencore at that is cents. over.cimal is moved ♪

tom: good morning, everyone. "bloomberg surveillance." from our world headquarters in our radio studios. david gora. david: thank you, tom. major futures indexes are down. we are looking at individual movers in a few minutes. >> i want to talk to you about an acquisition attempt in the broadcast media industry. broadcasting --

nexstar broadcasting is up in the premarket by 3.2%. media general popping by 22%. nexstar is hoping to break up a deal between media general and meredith. star owns about 130 tv stations. another consolidation to talk about. this one is a done deal. natural gas and midstream assets. i.e. control of pipelines. energy transfer will take over williams company. by 0.6%.ansfer is down this deal is a premium of 4.6%

from friday's closing price. the combined company would become one of the top six biggest u.s. energy companies. they had a combined market value of more than $60 billion. one final stock a want to show you is alcoa. this is a split. it will split itself into two publicly traded companies. investors seem to be up for that. the stock is up by nearly 6% in the premarket. the mining side will retain the name alcoa. one of the possible reasons for this is due to falling aluminum prices. there is competition from china. alcoa does get a large share from sales to the airline industry.

merely a 50% drop there. not doing solid profit. >> commodities continues to be the story. the instability, the tamil in china -- tumult in china driving a lot of that. today at 10:00 eastern, president obama will speak to the u.n. general assembly. this is "bloomberg surveillance." streaming on your tablet, your phone, and bloomberg.com. ♪

tom: good morning, everyone. "bloomberg surveillance." a most interesting morning. it is a really, really interesting morning. futures, -12. they are back-and-forth with a little bit of deterioration in the last number of minutes. the giants have been so challenged he decided to go to puerto rico. joining us is our board member arthur levitt and the former

chairman of the securities exchange commission, as well. he joins us on the t-mobile phone line. arthur, i look at puerto rico and you have written me an intelligent paragraph that they play by a different rulebook. they are not under the same body of security laws that we are in the united states. is that a good or bad thing? arthur: it is incredible. it is absolutely unbelievable. they neglect to follow, they have an exemption from the investment company act of 1940, which regulates the conduct of mutual fund companies. the limited reach of the law allows a firm to steal puerto rican bonds that it underwrote intuit's mutual funds -- into

its mutual funds because of the island's fiscal crisis. ubs did that in 2008 when they underwrote $3 billion of bonds to the cash-strapped retirement system. it is a joke. this is a community that really needs this protection and now, because of a variety of issues, they are having problems. to go over to the island, to see the need for basic infrastructure repairs, it is really sad. this was once a great, wonderful island that has been allowed to deteriorate. all of the taxis are on strike for instance. it is just like a third world country. michael: there are two different issues there.one is the ubs

question and one is, what does puerto rico do to move forward? have you found any answer to the second question? arthur: they're clearly has to be legislation which gives them a short-term fix in terms of bankruptcy. aside from, the usual remedies are important. the government is talking about setting up some kind of control board which would include many people from puerto rico. that is dicey. the inclination of people out here is to kind of deal with a community with a soft touch. i think there has to be monitoring and oversight coming out of washington to help them restore basic services and come about a budget which is rational and could get them out of the

fix they are in today because it is really dreadful. you have to be here to see it. tom: you were formerly an advisor to goldman sachs. you have an immense perspective on their management structure. with mr. blank fine i -- with lloyd blankfein ill with cancer and many are saying it is a wonderfully curable cancer, mr. is someone who has operational excellence of goldman sachs, but is it your presumption that there will be a debate about who is after lloyd blankfein? or is it a more rigid firm? debate there is always a around a transition such as this. i think that gary cohen has such great support from within the company that i think it would be a very easy transition and a very logical one.

that is the one i would place heavy yards under. -- heavy odds under. hopefully, lloyd will be tcu red and his management has steered the company through difficult times, but i think gary would be the odds on favorite to succeed him. tom: we have headlines quickly right now from mr. dimon over at j.p. morgan. he is a macro economist. jamie dimon talking about the economic prospects are extraordinary in the u.s. have aank executive feeling for the american economy? arthur: yes. yes. a bank executive certainly can have a feeling for the american economy. enoughs brought-gauged -- broad-engaged enough to talk about the economy more than many economists.

tom: they have so many regional reporting abilities, almost like beige book reporting. ,amie dimon, among others almost as his own beige book. michael: absolutely. he said the u.s. private sector is broadly strong and the u.s. consumer is in good shape. august was the month when everything went pear-shaped. china and all the concerns about the u.s. economy, the global economy, and yet americans ramped up their spending. july numbers were revised higher. consumers are hanging in there. tom: mike and i have a respect for data. gdp clocked an animal spirit of 6.1%. that is not doom and gloom. michael: you have been asking for the number for a while. tom: there it was.

i really wonder about the ebbs and flows we see. we have some houses with week to week and day-to-day recalibration of the third quarter ending september 30. where did the third quarter? it is "bloomberg surveillance." ♪

>> this is "bloomberg surveillance." the u.n. general assembly will hear from president obama and vladimir putin this morning. then they will hold their first formal meeting in nearly two

years. the president will confront putin about russia's role in ukraine and its military buildup in syria. time, french warplanes are attacking islamic state targets in syria. francois hollande said they destroyed an islamic state training camp. those are the top headlines. it is time for a quick data check. futures are all down before the market opens. dow jones futures down about 0.5%. 0.5%. futures also down this is "bloomberg surveillance." mike in theand

radio studio. [applause] tom: good morning, everyone. "bloomberg surveillance" for my world headquarters in new york city. bells are ringing. the president is speaking in 30 minutes. the opening bell is brought to you by sei. today's competitive marketplace requires asset managers to become more operationally adept. imagine transforming your business with sei's global .com/imagine.eic when i saw the news this morning , i said, i can't wait to talk to david wilson. .o me, this is a big deal alcoa down in flames. two.hey split in if it isn't un-american, it is

at least un-pittsburgh that they would do this. david: if i'm not mistaken, they have based in new york the last couple years. tom: they will always be pittsburgh, but you are right. david: shares up 3.8% in early trading. the largest u.s. aluminum maker will separate into two companies. one for smelting and refining, the other to supply airlines. they are struggling to overcome a production boom in china. apple is down 1%. the company sold a record 13 million smartphones and the debut -- in the debut weekend for the iphone 6s. gene munster figuring 12 million to 13 million. comcast is down. they are making their biggest overseas investment.

the nbc universal unit agreed to buy a 57% stake in the universals japan themepark. group iss vodafone down 3% in u.s. trading. they ended talks with john .alone about an asset swap liberty global shares are down 3.5%. williams, the pipeline company, down 6.5%. williams accepted a takeover bid from energy transfer equitie s. the dollar amount is 29% lower than a deal williams rejected in june. the company scrapped a $14 billion purchase of the 42% williams partners it does not already own. williams partners is down 2.3%. sigma-aldrich is down.

the companies originally estimated the takeover by merck would be done. media general up 20%. it was targeted in an unsolicited takeover offer from nexstar. nexstar wants to break up media deal for $2.4 billion meredith corporation. tom: thanks so much. an important note this morning, mike. shifting the optimistic call for 2015 out into 2016. he is looking for a retest down there. volatileit has been a time period. since options-struggle september is almost over, we welcome tracy alloway in.

she has been looking at the options market and the options market is telling you that we should fasten our safety belts. tracy: it is, indeed. the wood is not telling us which market -- which direction it might go. the market might move in either direction by a certain amount. it looks like traders are pricing in a 2.4% move just this week on the s&p 500. that would be a big move. we don't know which direction it will go. we don't know if the traders are right. [laughter] tom: she had a lot of conviction. [laughter] michael: we are going to get sick. we just don't know why. [laughter] tom: tracy had a lot of conviction in her comment. [laughter] tracy: if we are going to be seeing a big move, this would be the week to see it.

flow.e a huge, huge news it just does not seem to stop. a pickup in volatility does not seem like an outrageous note. called.y dwyer he gets a lot of grief for being bullish. he ships out. is everyone shifting now? tracy: i don't know if you saw say that it moved $70 billion out of asset managers. bloomberg has a story, as well. we talk about the decline of petrodollars. those petrodollars are out of circulation in the markets and that is going to have a feedthrough on asset prices. we have had some major shifts, sure. michael: do we have any idea what the saudis were buying that they got out of? tracy: equities. more than that, just trying to

shore up their coffers. because of the oil price and the movement in fx. you asked me what i was reading over the weekend and it was not equity market stuff, it was mostly and credit, where we have seen big moves in high-yield. tom: this is a cardinal thing. i go back to holly guthrie and her amazing call on amazon and their implosion years ago. my cardinal rule is credit markets are always out front. do you agree? tracy: i agree. as a person who trends toward credit, i will always argue that credit is smarter than equities. tom: on a different equation basis, they are a little bit sooner because of the institutional freedoms to say what they think. tracy: sure. you saw it going into august. now, we are seeing credit deteriorate once again.

we have spreads on u.s. junk bonds above 8%. that is the premium people ask for to hold junk. we are starting to see weakening. we are seeing weakness in the materials and mining sector. it is turning pretty ugly. tom: commodity ugliness and spread market versus everything out. that is what makes the debate so interesting. michael: is this an economic is this ae markets or volatility call, in terms of what the credit markets are telling us? tracy: it is difficult to say because they are both interlinked. if volatility picks up and companies cannot get access to funding, that becomes a very big economic problem. we have seen all of these energy companies just totally dependent

on capital markets for their existence for the past 10-15 years. of those capital markets shut down to them, we will be seeing a pickup in defaults. tom: tracy, great work. tracy alloway with bloomberg markets. the color is yellow on the screen, sort of an amber orange yellow. michael: like my tie today for those of you on radio. orange is what we would call that. we are down 113 points. michael: it is not a good start to the day. 2.4%e going to look at decline. tom: ok. let me do a gated check. -- data check. west texas. brent crude. goal down a good $15. i'm going to call that midrange.

yen masks what we are seeing in some of the emerging markets with very weak copper prices. let me see if i have a copper print. i'm not going to get that up. ♪

tom: good morning, everyone. we are 18 minutes away from a

speech by the president of the united states before the un's general assembly. of course, he will meet later today with russia's vladimir putin. >> it has been 10 years since vladimir putin has traveled to new york for the u.n.'s general assembly. here is ryan chilcote now from london. ryan, good to speak with you. the focus is going to be on syria. there is a discussion to be had about the refugee crisis and about russia moving military support to bashar al-assad's government. what will be the biggest issue for mr. putin? >> the most important issue for mr. putin is syria. it is an opportunity for him to be a player and that is as objective. if you listen to the obama administration, they are going to talk about the ukraine. ever since they agreed to meet,

they have been disagreeing what they would talk about. the russians said the entire focus would be on syria and the obama administration said the top of the agenda is ukraine. for president putin, this is an opportunity to push his agenda and deflect all of the attention on russia, where russia has gotten on the defensive over the ukraine. >> we heard president putin speaking with charlie rose on "60 minutes" last night. do you expect the sanctions to be the focus when it comes to ukraine? that what president putin wants to accomplish is to get president obama on board. in time, he believes that will lead to the removal of the sanctions. later this week, on friday, president putin, president poroshenko, the french, and the german leaders will get together in paris and they will talk

about the peace process in ukraine. late in january, the eu sanctions that had been imposed in january are up for renewal. what president putin is hoping is that he can win over some europeans. many are desperate for a solution in syria. he can at least get the eu sanctions dropped or some of them as early as january, which ,ould force the u.s. leader president obama and that whoever --cceeds sam, to ease him, to ease u.s. sanctions so aey are not at disadvantage. >> i was surprised to see the president putin had not been here in a decade. what explains that? >> russian-american relations have been all over the place. at that time, the first time he came, president putin was very

much a good guy back in 2005. after that, things got rather ugly and he did not see much value in coming back, but he has something to offer, he thinks, this time and that is why he is back in new york. >> we are waiting on president obama to address the united nations general assembly. we will take his speech live on bloomberg tv and bloomberg radio. ♪

tom: good morning, everyone. a monday morning. an interesting morning in the data market. commodities front and center. the president's speech shifted thismaybe to 10:30-ish morning. the brazilian real is weaker right now. "bloomberg surveillance." brought to you by the good people of devon shire street in boston. learn how innovations in business can create future market trends. all happening at fidelity's traders summit. delly.com/--

fidelity.com/traderssummit. mike, this is made the interview of the day for you and me. isn't it great to have a foreigner look at new york city? [laughter] michael: i suppose that is true. somebody all the way from middle barry college. andrew bevan. we get pending home sales coming out today. we have been looking at real estate to drive us, to drive the economy forward. a seniorbin works as analyst. apartments, manufactured in student housing -- and student housing, it has been a strength, is it still the same? are we still seeing investment

going into that area? are we starting to build out what we needed? andrew: good morning. thank you for having me on. we are still seeing strength on the apartment stocks. fundamentals still indicate increases in occupancy. new leases being executed today are locking and a good bit of growth for next year. stocks the apartment more than the student housing and manufactured housing, that are a little bit more defensive at the time. we view the multifamily deliveries over the next two years, those around me expected to be 1% of the inventory nationwide. notesou write brilliant on the human condition of real estate. level ofd out the hip new york city.

important iis hipness to apartment demand? hudson yards is not hip as they build it out. how does hipness play into your spreadsheets? andrew: it is a key factor. brooklyn has won out. growtht amount of supply is coming. millennials have a higher propensity to rent than the typical american. a lot of the employment growth that has happened in the u.s. has been within this demographic. we are seeing a surge of this demographic coming to urban areas, where it has been most san francisco and new york. backstop makesl it possible. tom: excuse me, excuse me.

meantrevious time, that trust fund in a previous time. jargon alert. equate withs hip expensive? are these apartments going to be priced for young millennials or are they looking for the wall street guy? andrew: i would say hudson yards is more geared toward the wall street family type. there are more amenities moving to the city from the suburbs. trying to make it better pitch to families. brooklyn has a grittier historical neighborhood feel and slightly lower price points, which definitely attract the people working in tech,

media, advertising. the people employed in those industries are seeking out those neighborhoods. the hudson yards, given that it is creating its own neighborhood , it is going to become something over the next decade or two and we don't know what that is yet, but we know the price point are going to be relatively high. areas will remain in brooklyn-type areas. there is a lot of new construction there catering to that. i don't expect the man to slow down in brooklyn at all. another term for the apartments are really small but we are close to the bars? andrew: we are seeing that. there were one apartments where they are putting in glass dividers to allow double occupancy and charging a wrench premium for that. -- rent premium for that. tom: i love how you do this with a look at real estate investment

. i think of john miller looking at it from the appraisal side. let me cut to the chase. in 5-10 years, are we going to look like the real estate in tokyo? for thathe question point in time is whether you start to see amenities that have typically been located in the suburbs, specifically schools, kind of pop up in the city and kind of start to bring themselves to the millennials, so they don't need to move out. that is an area that you can see densification. a continued massive migration into the city. order the existing homes in the suburbs that baby boomers are selling become affordable enough and accessible enough that the millennial crowd currently living in the city decides to make the jump to the suburbs? it is a more financial decision. tom: what do you think?

is it cyclical? postrecession? post crisis? or is there a structural change in what my kids want? there is no tone in my voice. you missed that. [laughter] tom: i think -- andrew: i think like the amenities of the city. i think millennials like to spend money on experiences, not on things. if you have two kids, maybe you need to look at school districts outside of the city. [laughter] michael: they are building all of these apartments, but they are not building more schools. that in the public schools. in the number of kids per classroom. you notice it in the private schools in the inaccessibility and the ever higher prices for private schools. have you track whether we are going to have enough school seats for the millennials and

their children to stay here? andrew: i think the charter school phenomenon is going to be a driver. the private market mentality, a way to penetrate and get into neighborhoods. there are more schools opening up downtown. tom: yes, yes. andrew: i know from talking to some clients on the upper west and upper east sides, the waiting lists have gotten extremely long at schools. definitely some fatigue and people looking to hudson yards and looking to downtown. tom: is new york translatable to other cities like sanford is go, boston, washington -- san francisco, boston, washington, chicago? andrew: when there are restrictions to supply growth, it is translatable. san francisco, san jose. los angeles is joining the party. they have an affordability

crisis, but the legislature will not let the landlords build new assets and scale. tom: we've got to leave it there. please stay in touch with us when you are in new york again, so we can show you how small the kitchen is. folks, it is painful what drew has just described. michael: some people called in kitchens. other people call them third bedrooms. tom: that is true. the hallway becomes an extension. michael: that is interesting that they are tracking schools. tom: we trying to get people on the show who are smart, smart, smart on real estate. john miller, drew babin. what an interesting first day for "surveillance" for the week. bill gross scheduled to be with us. the president is on in three

minutes, but he is not. he will be delayed until 10:30. michael: we are shocked. tom: we say good morning. we are produced by richard sherman -- truman, as well. this is "bloomberg surveillance." ♪

♪ >> good morning.

i'm scarlet fu. welcome to the "bloomberg market day." president obama is scheduled to address the u.n. general assembly. fortunes have gone from bad to worse. can anything stop the freefall? transfer creates a national -- a natural gas powerhouse. we want to get a market update. it looks like a fifth straight day of losses for the s&p 500. the s&p 500 is headed for its first back-to-back quarterly declines. since 2011. we just got economic data out, as well. pending home sales crossing the tape.