of the american labor economy. we are creating jobs for it and i trot out my single best chart for 2015. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. it is wednesday, september 30. joining me, vonnie quinn. .n london, francine lacqua we see more disinflation and deflation today with the european e.u. inflation numbers. francine: we do, and that brings up questions about how much power central banks really have to fight this. also, it is the end of the quarter. that means $11 trillion were wiped off global equity markets. what that brought home is how big the markets are, and that is possibly why janet yellen had to pause from hiking rates with deflation. tom: right now let's get the top

headlines. here is vonnie quinn. vonnie: as francine was mentioning, it is the last day of the quarter and stocks are on an $11 trillion loss for the quarter. stocks are rebounding around the world. finished with their fifth straight monthly decline. 2008is a streak since the financial crisis. there is concern that japan may be falling into another recession. retail sales showed no improvement. that is likely to intensify the debate on whether prime minister government should increase spending. in afghanistan, government forces have been unable to retake a city captured by the taliban. the pentagon has called the capture of kunduz a setback. the senate plans to pass a spending bill this morning that

would avert a government shutdown. mitch mcconnell says he is confident the measure will pass in the house. mcconnell, john boehner, and president obama will meet soon to discuss spending limits for the next two years. john boehner is stepping down a month from now. there are number of things he wants to a college before leaving. john boehner: if there are ways to get things done so i do not burden my successor, i want to get it finished. and google has come out with a high-end tablet aimed at competing with apple and microsoft are it -- with apple and microsoft. it is also updating a set that -- a set-top tv device. tom: the only one who does the

event thing with people on stage is apple. i went to the samsung one at radio city is a call and it was like pretend. and warren buffett with berkshire hathaway, all that. let's do a data check. as we go through this through three days of labor market coverage. futures are up, down. yield, 2.09. the second screen -- i had to make this up. i had to struggle with it. at 26.83. the brazilian real, a little bit of strength. brent crude somewhat in the acidity of 50. you will see a lot of this chart in the next -- somewhere in the vicinity of 50. you will see a lot of this chart. what i did here was inflation adjust commodities back to 1956.

this is a long-term commodity deflation. here is that china uproar that we had, the lehman low, then we are back down here. you wonder if this is a trend we have seen over a gazillion years because of technology improvement. vonnie: exactly. becomespersistent it with the inflation figures. tom: and it falls into disinflation and deflation at lower price changes. we took three days of jobs coverage. we consider a lowered rate regime worldwide and we saw it reinforced this morning. francine lacqua is in london. i look at substantial negative yields in germany and switzerland. francine: and when you look at what mario draghi is facing, you are mentioning that inflation. for the first time in six months, the euro area inflation rate unexpectedly turning negative.

if you are saying inflation being imported by commodity prices, this is oil. i do not have much of a fact, but i can do something to try to spur this. if you look at our bloomberg survey, about two thirds of economists we spoke to expect the ecb to signal he has expanded qe. what effect that has on the bottom line growth, we are not sure yet. -- it may prop up or prop down euro, which will help him. one analyst from nomura -- the bayer's, the gloom, and the handwringing over commodities is flat out wrong. once oil stopped falling, an american consumer renaissance will occur. chiefrosenberg is a economic strategists in toronto.

he believes the canadians will win the stanley cup. fabulous to have you with us today. people perceive you as a gloomy guy, always cautious. it has been a two-your shift, and now you're ever more optimistic. state your case. david: i am optimistic on the u.s. because it has such tremendous autonomous domestic demand that it can actually decouple from the rest of the world. i never believe the rest of the world can decouple from the u.s. we talk about china so much. more thanmports 50% it exports. it is still the buyer of last resort for the world's economy. and of course you see that in the deteriorating trade performance that is only negative for the u.s. right now. you put it completely accurately, that you have to differentiate between what is good deflation and bad deflation. in the united states, being a

net raw material importer, for commodity producers it is not good news but this is margin expansion for companies that use raw materials in their business input. for consumers it is a huge boon for their purchasing power. tom: alan greenspan would use the phrase "conundrum." janet yellen has the rosenberg conundrum. she wants to be an adult and look beyond the commodity implosion and say we do not care commodity, we are x deflation. how does that change her dialogue and analysis of december or into next year? david: i think that janet yellen, in the opening months she took over at the helm of the fed, when she is talking about that time lag between the end of qe and the first rate hike, i think she did not mention it for roughly six months. the veryadline news

next day, but it made perfect sense. in the spring they should have moved off zero. but they got freaked out over the negative, what turned out to be an negative first quarter gdp with a seasonal maladjustment. gdp, we hadminal that in the second quarter of this year. david: i am going back to janet yellen. the thing that she said in her press conference was that the financial conditions had tightened, so why are we going to jump onto that tightening by raising rates at this particular meeting? here is the problem. -- i think they boxed themselves in. why, then, are we looking at third-quarter earnings to decline 4.6%? companies are not feeling it yet.

the consumer is not feeling it yet. david: i think it is almost a bifurcation. , the s&p,earnings that is not gdp. the u.s. may be 10% of the local economy, that affects a percentage of the gdp. derived in sales are the global economy. when you are looking at europe, asia, things are across the pond -- things across the pond are pretty soft. then on top of that you have a strong u.s. dollar that has -- the domestic side of the economy is doing fine. homebuilders are doing quite well. retailers are doing quite well. we just saw nike report good numbers as well. not in the u.s., but in china. i guess china bought running

shoes to run away from the stock market there. ,t is an idiosyncratic selective stock market right now. francine: you are talking about the softness across upon. that is where i am sitting, in london. when would you make the case for interest rates to rise for the fed and the rest of the world? david: the only reason i would make the case for the rates to rise is you can live in the here and now or actually operate monetary policy with a view for its impact down the road. policyknow that monetary operates with long and variable time lags. central bankers do not operate their policy based on the view of what is coming down 12 months. they are operating it because they lived in the moment like everybody else does. the question is, can you perennially keep the funds rate close to zero where nominal gdp

without creating major imbalances down the road? tom: david rosenberg is with us today. we have much to talk about. coming up later today on bloomberg television, a busy day for federal reserve comments, from the new york federal reserve. one william dudley will speak. we will hang on every word as he voices a certain tone. then a more important tone at 3:00 p.m., when janet yellen will speak. and the man in the middle, james bullard, he of the st. louis cardinals, will speak at 3:00 p.m. as well. we speak economics, finance, investment, and international relations. this is "bloomberg surveillance." good morning. ♪

everyone.morning, we begin four hours of "bloomberg surveillance." some important economic data out. first, we need our world headlines. here is francine in london. warning signsomic crop up in japan, raising the prospect of recession for the second time in as many years. analysts expected an increase in retail sales, that they did not improve during the month. the trends might push the government and the central bank in japan to prop up the economy. russian troops are one step closer to joining the fighting in syria. lawmakers have approved president vladimir putin's request to use military force. he is supporting syria's president, bashar al-assad, in

the country's civil war. key economic data came out today . the british economy regains the losses it suffered during the recession. the second quarter was higher than any level since 2008, but this eurozone, the inflation, unexpectedly turned negative in september. unemployment in germany rose this month, although the jobless rates stay the same. in's bring in hans nichols berlin. how much should we worry about -0.1?ion being at how much should we worry about the german unemployment figure going up? hans: the latter one is almost more. or story of the last three four months, leave aside the funky data we got out of greece where we saw greece gdp go back up. the story is germany is going along steady as she goes, and

this is the first indication that germany might be affected by all the global financial turmoil. this number, the unemployment number, i doubt it has any volkswagen effect. it is too immediate. longer-term, your flu -- your view on inflation -- is it driven by energy costs or is there something else putting pressure on wages? we need more data. it makes it all more important, the meeting of the ecb governing council in malta. francine? are we expecting more qe from mario draghi? we think it is driven by the energy component. but if you are mario draghi, how do you interpret this? draghi's main signal -- is it the inflation number or the gdp? deflation puts a little more pressure on him.

if it is gdp, he may have a little more room. he has hinted that he will increase quantitative easing if he needs to. he has pushed it down just with his hints. we sayme of that and mx -- some of the dynamics, days of rosenberg -- some of the dynamics, david rosenberg is with us this morning. are we going to have a 1990's dollar? david: there are probably about six questions right there. tom: i am fired up, david. can look at the dollar as a crimp on u.s. exports. but i look at the dollar as a low price. tom: it shows the strength of the american economy. david: the u.s. economy is the one i'd man. one-eyed man.

in 1998 the u.s. dollar went screaming higher. exports were going down in the second half of 1998. isn was below 50 each month in the second half of 1998. we finished the year with 5% in real terms. you had 10% that was negative and you had an economy growing at a 4% annual rate. tom: p a trudeau, wanted to make quebec in canada a european province. the dollar was terrible. the oil renaissance came, and you are back to 134. are we going to see another anothercanada as we see implosion? david: canada is one of the underlying countries that have -- a lot of that is because of the weaker dollar has a huge antidote to inflation.

we are talking about deflation here, talking about commodities. we are not living in the davy crockett/paul bunyan era anymore. is runninge cpi close to a 3% annual rate. -- so anything you can see, touch, or feel, that is deflating. but you cannot see services. whether it is education services, entertainment services. service sector inflation is being masked by deflation. you were talking about strength and dollar and how that is linked to strength in the economy. you have central banks that are clearly diverging. if you were to set interest rates for the global world, it would be going down, not up. how much is dollar strength linked to gdp and growth in the u.s., and how much is it links to weakness everywhere else?

david: i would say that we have a template for this. why we walk around not looking at what history books tell us. we have a third of the world go bankrupt in 1997-1998. those regions go down 70%, 80%. some of the economies contracted down to 20%. take a look at what interest rates did globally during that punto. they melted. u.s. economy -- did it ultimately go into some sort of destabilizing recession? havehe u.s. economy prosperity? actually they did. tom: let's come back with david rosenberg. hans nichols, thank you so much, from berlin. we will continue with francine

lacqua in london. coming up in the next hour, we need to look at digital media. we have not done that in a bit. --ebook attempts to realize attempts to revolutionize their newsfeed. and linking advertising revenue to all these gizmos the kids needs to buy. brian wieser, "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." francine lacqua in london. i am in new york. here's vonnie quinn with the "morning must-read." vonnie: speaking of the benefits of migration.

this as european countries migrants from in other countries. vonnie: i would argue that it is a little bit of a contentious op-ed from martin wolf, but he is the parents of refugees himself, so it is normal and desirable to move somewhere else when you are under political or economic pressure at home. tom: i thought exactly as you said, it was a very contentious article. francine, give us an update on refugees and migrants in europe. what should we look for as we get to the end of the week? francine: this is probably the most important political decisions that the e.u. has to take, not because it is a human story, but it also has the potential to bring up extremist

parties. watch out for this one. angela merkel is paying -- is playing a very key role in this. vonnie: and hungary and a couple of other countries have said they will not take in anymore. tom: the count is the issue, the scale of it, rather. thousands here, thousands here. it is a scale issue. as we move on from the ballet of the u.n. and all that, there is "now what" feeling that martin wolf gets in his column as well. we are with david rosenberg. stay with us on inflation. good morning. ♪

tom: they are asking in the commodity patch, where is the next glencore? a real mystery about the fragility along trading analysis in commodities. a beautiful shot. looking over with a ferris wheel in the near and present area. right now let's get to top headlines. there is vonnie quinn. for thejust settling in night or you cannot blame traders if they breathe a sigh of relief because it is the most volatile quarter for market since 2011. stocks rebounded around the world today. there are a number of reasons the commodities slumped. the slowdown in china and in exodus from emerging-market assets. japan may face it second recession in two years. output unexpectedly fell for the second straight month. retail sales were flat. that is likely to put pressure andrime minister shinzo abe the central bank to prop up the economy. costco posted quarterly earnings that beat estimates. sales rose, helped by a 2% gain

in measured fees. costco sells large volumes of at lowo consumers prices. it is the second largest retailer in the u.s. eliminating 740 jobs, 15% of its workforce. the company has been hurt by falling natural gas prices. they are down almost 60% since early 2014. and the nhl visits the scene of hockey's most famous comedy. bay played an exhibition in johnstown, pennsylvania. hockey is big in the small town of 20,000. the aging arena where the film was set, "slap shot." tom: this was a huge deal a million years ago. the syracuse old dogs looked awfully good. -- the syracuse bulldogs looked

awfully good. this is a great thing. i am going to do a massive shout out to jeremy roenick, who did pretty well in the nhl. this hockeyaft, put bill together. we had skates with metal on the bottom. hasbottom line is, as kraft gone out and said we are going to bring the stars out to a little town -- they are doing that with hockey. it is great. you twothe next time are on together, i need some kind every creation. of re-createe kind and. tom: it was a way different game back then. much, much tougher. vonnie: it is already brutal looking to me.

"bloomberg surveillance" sports right now. --r toronto maple leafs going to help the best player of the game, the pittsburgh penguins. will it work? david: it will definitely work. it will take pressure off crosby and add offensive power to the best offensive team in the league. there is a little thing called the economy that we should talk about. let's keep it up beat and look at a housing market that is decidedly upbeat. david rosenberg, optimistic even with present economic data. you like what is pending in housing? david: i did not like the pending home sale numbers yesterday, but what i did like

were the home buying plans index , which went up to its highest level in three months. household formation is starting to pick up. building permits are on a rising trend. my sense is that housing starts the next couple of years will be up 40%, 50% from where they are right now. vonnie: who will be buying? not millennials. david: we are creating job 25 to in that critical 30-year category. a lot of these boomerangs that were living with ma and pa are starting to come out. a lot of them will move into rental units first. you could argue the single family has the single biggest impact on the economy. tom: but you will take

multifamily right now? david: you are starting to find household rates starting to rise in the single-family area and a switch from what was a pronounced bull market. i think that will be the next leg up for the housing sector. vonnie: the story yesterday, a lot of the luxury -- a majority of the luxury sales in manhattan were going to canadian buyers. how are they doing it with the loony? david: that is a big surprise? -- that is a big surprise. that is a big surprise to hear that. do not have an expiration because the bottom line is that it does not make much sense. you want to start buying the currency or the assets of the currency. tom: let's pin you down for the canadian viewers. loonie?ut the

buy into the , if there isenario a relapse in the global economy that affect commodities, the same dollar will go down. but this is a president you will find in -- this is a precedent in the canadian dollar. balance, relative to the labor cost differentials, the same dollar rate note is undervalued. the currency markets have issued more than their asset class. -- more than any other asset class. we have not even undershot on the downside, seemingly overshot on the upside. have beyond if you an investment horizon beyond , you would want

to be buying the canadian dollar. tom: francine, jump in here. francine: i am going to make a tenuous link. andging it back to housing looking at the data we had from china, we had some pretty big breaking news 40 years ago, china easing the mortgage requirements. i have always thought that china was in a housing bubble, so for me this goes back to economic -- the economic outlook and the economic slowdown in china is getting much worse, and the pboc things it needs to intervene once again. everybody is talking today about the manufacturing contraction in china. two years ago, it was about the property bubble and the property market in china already corrected and it is one of the bright spots in the economy right now. people seem to think they know what is going on in china, maybe because people tell them what they read. most people who are bearish in

china have never even stepped the foot inside china, but they have somehow this educated opinion of what is happening there. the manufacturing sector is declining as a share of the chinese economy as the rebalance away from dust realization toward -- from industrialization toward consumer services. there was an article in "the economist" this week and in "the financial times," saying how service data is undercounted. you have an economy with a 4% employment rate. -- a 4% unemployment rate. people base their decisions on what is happening in the economy and what is happening in the purchasing managers index. i think people draw their conclusions based on hearsay and what people tell them. tom: i never do this, but i am going to break the rules. we have an offspring back from china visiting, who said exactly

what mr. rosenberg just said. vonnie: i think he reads "the economist" as well. tom: and he said there is a massive miscount. vonnie: surely that leads to demand for metals, so what is the bearish outlook on commodities? david: manufacturing activity in china is contracting. i would say five years ago, 10 years ago, that would be a really big deal because back then that was china's bread-and-butter, industrialization infrastructure. part of their five-year plan, which will be part of their 10, 15, 20-year plan, is to be an economic superpower like the u.s. you will not do that with the personal savings rate of 40%. they are where the u.s. was 150 years ago. this is part of their emergence from being an emerging economy.

services, theumer next super cycle for china in terms of how you play china will not be commodities, it will be how you play consumer services there. tom: let's come back with david rosenberg. a lot to talk about this morning. my chart of the year -- i usually figure it out by december 1, december 10. we already have a chart of the year. it has to do with commodities as well. this as we end the third quarter. stay with us. "bloomberg surveillance." good morning. ♪

barely slept less night. i gave her a pre-look at my single best chart, which is a rollout of my chart of the year, to remind our viewers glued to as each and every day -- i trotted out the bloomberg commodity index and then inflation adjusted it and took it back to 1956, which is when david rosenberg first began looking at commodity dynamics. here is what you need to know. inflation-adjusted, the old cr the chartold crd, is boom on the right. before that, the technological progress of the commodity miracle. david, you wrote about this in

my book and you wrote about it decades before. the gloom over commodities -- it is normal to see dampened commodity prices throughout long cycles. chart you can take that back 200 or 300 years, and it was the same chart. there will be some new story, the china story that causes an uptick or some sort of boom for a few years, and then the trend reasserts itself. the bottom line is technology. frackingy this time is . it will be u.s. technology that goes global. so the bottom line is that i take a look at that chart, as an theomist, and i look at late 1970's to the late 1990's, and it is basically going down. that was a period of unbridled prosperity in the united states. people associate economy -- people associate commodity

deflation, if you are a commodity exporter -- you do not go to walmart and buy a pound of copper. the raw material does is go into the production process. tom: it is the idea of bringing economies and securities analysis into economics. do you agree that with a commodity implosion and the reset that all we need to see is commodity balance sheets clear, like glencore, and once it is clear, we move on? am i right? david: you are right. ,e are talking about glencore and it almost looks like what happened with worldcom and enron . then we had the washout. that happened in 2002. if you looked at that and said this washout -- vonnie: you mean from a financial market's point of view.

be caught could just in fear saying we are going to have another leg down. wash that out, and then have another four or five years of expansion. a worldcom and enron, we had double dip that was temporary, then we washed out and moved on. is this idea, it of reset, which is the core of what mr. rosenberg is saying. francine: you are also saying that basically falling commodities is something that emerging markets should be looking forward to. my question to you is, inflation is going down, driven by these commodity prices. does that impact consumption directly so that people spend more because they feel richer, or does it help companies keep production costs down? david: i am making a differentiation that it is not good news for emerging markets that are commodity producers. the firstnada -- in half of gdp -- in the first half u.s.e year, gdp was -- the

is a net raw materials importer. it is basically a user of commodities. it is not like some final good. it is not like a house that you live in, which is a principal asset. basically, the reality is the reason why u.s. consumer spending in volume terms is running 2.3% right now, because they're practically is no inflation. there is deflation every growth that you see in the u.s.. plow through photos right now. i hear we have some good ones. vonnie: farmers in china are forming the chinese flag. look at this -- thousands of persimmons. it is beautiful. it is pretty controversial it ise apparently intended to boost retail sales. tom: next. vonnie: i think you have another

one for us? francine: i have the eiffel tower for you. it is for breast cancer awareness. campaign toong breastwareness and fund cancer research. vonnie: it is like the empire state. number one top photo, what would we do without him? capturing greenery from the international space station, a photo of new zealand. my favorite color is blue, but it is green i miss the most. tom: there is everything in that view. there is -- there are four golf courses that scott kelly plays on. that is new zealand. a good photo from space. ,oming up later on bloomberg tv we will look at three important speeches. michael mckee has not slept all night, worried about bill dudley

this morning. back to back, janet yellen and james bullard. they will have a different treatment of the american economy. those are three important speeches. we will have interpretation across all bloomberg media and print. stay with us through the day. good morning. ♪

tom: good morning, everyone. a forex report -- we do that when david rosenberg of canada is with us. for hisu to shinzo abe appearance at our bloomberg headquarters yesterday with those comments heard worldwide. the renminbi, importantly stronger. the chinese yuan not depreciating off of that evaluation. the brazilian real, we have gained some ground. real, elevated at 4.06, showing commodity angst or here's vonnie quinn with top headlines. are onerussian troops step closer to joining the fighting in syria. lawmakers have approved president putin's request to use military force abroad. russia has sent troops and more than two dozen fighter jets to an airbase in syria. bashar al-assad

in the country's civil war. a tropical storm is expected to become a hurricane today, and forecasters say it will move up the east coast in the next few days. its wind is nine miles per hour off hurricane force. facebook introduced features that let advertisers buyonline ads the way they tv commercials. >> i think the big message is that marketers have to understand that the days of you can do a campaign with a 32nd video ad that plays on tv are over. that is an important format and people will do it, but you cannot only do that. if you do that, you're missing a unique opportunity. that tv andsaid facebook really go together.

rich greenfield did a demo of this yesterday and said it will -- tom: that carries a lot of weight on wall street. brian wieser joins us in the next hour to continue this discussion on facebook and the revolution known as their newsfeed. yesterday there was further digital revolution. withd bershidsky "bloomberg review" said axel springer -- we would love to get from you a european take. tell us who axel springer is, and after they could not buy the ft, they decided to bank henry blodgett. buy henry blodgett. who is axel springer? leonid: axel's is the biggest publisher in germany. it owns the biggest temple in has country and it is -- it

readers online and in the paper version. it has companies set up in berlin during the cold war to counter it, the communist propaganda. it has quite a colorful history here. it is not really well-known outside germany. it is trying to be an international publisher, and it has a presence throughout eastern europe, for example. ofh the acquisition "business insider," it has acquired its first truly known international asset. ifnie: i was going to ask "business insider" can make money for axel springer. : "business insider" is not making money now. it has not been profitable throughout its history. but axel springer thinks it will

breakeven in 2018. it is saying that "business insider" is overburdened with expansion costs because now it is launching all these different editions in countries other than the u.s., and it is launching companion sites on tech and general news. so the idea that axel springer is going to start making money after the expansion is done -- withleonid bershidsky "bloomberg view" on digital acquisitions. there is a lot of free money out there to make things go. david: that is what today's central banking is all about. free money. it has not done much to create consumer inflation. tom: bill gross talks about a great distortion lasting 10 years. does it go on and on? goid: i am not sure it will

on and on in the states, but it has gone global. tom: david rosenberg, thank you so much. a terrific optimistic perspective on the future of the american economy. coming up, we look at the digital economics of america. this is "bloomberg surveillance." ♪ .

tom: it is a great distortion

continues as the real yield is unreal. in this hour, daniel fox. your cell phone is glued to your hand, the digital world is a mobile world and john boehner falls on a sword, there will be no shutdown, we think. this is "bloomberg surveillance." where did the third quarter go? keene.m onto the fourth quarter we go. >> it is when everybody is talking about, this was the worst quarter in four years to the equity markets. for the commodity markets, the worst quarter since 2008. let's move on. quarter.1.8% for the >> that is more complicated. we can talk with brian weiser about this, we had a bad month

for exports and imports in august but people are saying maybe that is because we brought in so many iphones and they will show up in inventories. tom: the iphone adjustment as we try to fold it in every conversation. let's have an iphone headlines. on the thirdloses quarters's and many investors are not sorry to see it go. worldwide buted asian stocks finished lower for a fifth straight month. it is the longest losing streak since the 2008 financial crisis. new numbers out of japan raising fears of another recession, industrial production fell in august for the second straight month and retail sales showed no improvement likely to intensify the debate about whether the government should increase spending. afghanistan troops cannot dislodge the taliban from the northern city they captured early this week and u.s. jets attack militants for a second straight date but it did not

help. u.s. military leaders want to keep some u.s. troops in afghanistan beyond 2016. a spending bill that would prevent a government shutdown expected to reach president obama's desk with type despair and votes are scheduled in the senate and the house and that will keep federal agencies open past tonight's midnight deadline but is good for just 10 weeks. republicans say they will talk to the president about a long-term plan and john boehner says there is much to do. >> if there is a way to get things done, i do not want to burden my successor. >> what the budget fight is over for now it is only a truce in the battle over planned parenthood as conservatives say they will try to strip money out of the next spending plan. new coupleffering a of gadgets. they are upgrading its tv set-top device as a challenger to apple. tom: maybe colette is the word

-- maybe glut is the word for all these new gadgets. futures up 23, dow futures up 190 two a little bit of -- yields higher. michael, you look at the markets and the fed, three fed speakers today, what will we see from them as they observe the international markets? >> not a whole lot, janet yellen doing an introductory speech and bill dudley may be talking about the markets. we know what they think. we know what they think about this so it will not add a whole lot but the adp report this morning, kicking off jobs week, everybody will be watching that. we will cap down to job stay on friday. -- we will count down to job stay -- jobs day on friday. a delay jobset

report with a shutdown. mr. mattingly will join us in a bit. it has been a wild, if you look at the media and digital wars, axel springer of germany acquired "business insider." facebook tinkers with its news feed. brian weiser is a senior analyst and that barely describes the linkage between advertising and madison avenue into how we are glued to our cell phones. this.nd more i am like everybody is doing this. brian: you are still looking at your desktop which is right in front of you almost as much as you used to. tom: we are leaving tv. sheryl sandberg was talking failure, is it

gone? brian: not as much as people think. it is not dead. the measurement is challenged because of different ways we are consuming media, not necessarily incorporating measurement. there are, -- they are kabul entry. the notion that third-party measurement will be more important than ever before. the googles of the world want to be able to say to the market, we will provide the measurement, trust us. >> that gets to sheryl sandberg, trust me, tv is dead, i run facebook. brian: when you look at tv -- there are segments of the population where there is significant declines. the scale force everything. fs everything.

>> the internet advertising model has a lot of things people do not recognize, it may work, but maybe how great and glorious it is is not exactly true. itan: all media is flawed, is a question of what the least bad medium is, digital has flaws. for many marketers, digital is efficient, but a lot of problems. is, what i want to know there is very few people minting itey, approximate in what happened 10 years ago or 30 years ago, where will we be in 10 years? as viewers, listeners, and consumers and those of us in the racket. brian: my favorite word is hegemonic, google and facebook at that position in digital.

tom: not in bc or bloomberg. nbc or bloomberg. brian: google will be playing in tv. tom: you have not mentioned apple? brian: they do not care about advertising. you want to think about amazon, they are a sleeping giant. they have $1 billion of revenue and can be as big as they want to be. tom: mr. bezos taking a minority interest. >> he was an early investor and business insider. humongousowe is so that he will not talk to me. >> he was probably on the phone with his real estate agent. brian, this new world is going to be one where there are more equals then there are -- then there are huge internet

companies. it is not just google and facebook but that is what the narrative has been. brian: the narrative is that tv is dying. tom: and you do not agree. -- in my narrative is other words, every country, axel springer, legacy in the united states and different countries, they are dominant publishers imprint, and the dominant players in the future are digital players. tom: full this back to amazon, mr. zuckerberg, i have seen the internationalization of it, can amazon be a player with google and facebook? brian: if they want to be an amazon is incredibly focused on the consumers and they think of advertisers as a vendor, not as customers in their own right. >> can i go back to the business insider deal and fulton ace

books news page and ask the question i put to joe weisenthal , if you have a news company that relies on rewriting other people's copy, can you survive or do you have to become your own news company? brian: the medium is the message. the technology is the medium. for theianna huffington first time a few weeks ago and i said to her, i am impressed with your content management system. she said thank you, but it is the content management system -- tom: not the journalism, but where does the content and substance come from for digital players working at margins that are not there? brian: nothing that was said through medium is as important as the medium itself. the tech -- tom: i remember the fistfights

at dinner parties in western new york and toronto 40 and 50 years ago, we would sit at the top of the stairs like in "madmen." we are there now? how does the new york times survive? brian: that is the challenge am you have to be differentiated. if you invest in technology that makes your content different to a consumer, that is important. tom: here is what i learned from brian. you and i have to write code. brian: -- >> we are in a lot of trouble. .om: moore with brian weiser build ugly of the new york fed. ♪

tom: good morning. tom keene and michael mckee. is it a morning must-read? michael: we will talk about the donald. donald trump released his tax plan and analysts note it makes no financial sense. joe wonders if all of the dumb things he says are a giant topless the stunt.

publicity stunt. all his life he is at a deep need to be perceived as a winner . he always has to be perceived coming up on top. that is why i do not think he will be at the mercy of actual isers in a primary, to do so losing and everyone will know it, he will be out before iowa, you read it here first. he said they will not even vote. tom: the emotion of this, i will , the shift in the winds, like a mary poppins or weathervane. that ship happened four days ago. -- shift happened four days ago. michael: a number of people have noted in the last couple of days he is not felt, the pundits -- the pundits who say he is done have been wrong. do they continue to be wrong? tom: you have covered politics

for decades, is it anger politics? .ichael: sure of the people who say they are voting for him, do they actual vote? many people say they are supporting him are from the groups, the demographic groups that vote the least. and are perhaps the most disadvantaged in society, they are mad and are not going to take it anymore, but will they go to the polls. tom: do you partition the early primaries and votes from the next block, we get to the early ones and all the headlines, and then we get to the carolinas, is that a new season? michael: yes, because the pretenders fall away, a lot of people have the money to stay through iowa and new hampshire and i were not representative of the country as a whole. if you are a frontrunner, you can survive past those two states but you have to get serious because it goes national. tom: a goes national and to the carolinas and he gets

fascinating. mr. trump, if you are watching, we would love to have you come on and talk to us about your tax plan and about some of the policies. dan in this to hour, bill gross adores him. you do not need to know anything more. ♪

tom: good morning. walked in theuss building and futures are up. let's get your top headlines. facing ais race -- recession, industrial output fell in august for the second straight month and analysts expected an increase, retail sales did not improve. china's slowdown is going to japan, it might put the central

bank to probably coming. russian forces a step closer to joining the war in syria, president's did plan to use troops abroad. the syrian president -- china's government is giving how shoppers a helping hand, the central bank cut the minimum down payment down for first-time homebuyers aim to boost the property market. michael: the fed is raising rates or not, the ecb increasing not.t or not -- qe were -- or not.\ it sounds like a dickens novel. we turn to someone who has seen the best of times and the worst of times. dan fuss used to manage charles

dickens's ical. -- accounts. is this the end of the credit cycle? if so, not much need for you guys. dan: charles was a difficult client. i have a lot of respect for ray and his opinions. i do not define it that way. i do not think it is the end of the credit cycle. it is the end of this very cheap money. that has been delayed and delayed and delayed. where i agree with ray, is when it is the end of very cheap money, you are going to have credits that need to refinance. the cost to refinance goes up before the money polls back. -- pulls back.

you do not want to own them at that first leg the cause it becomes too obvious. the plus side for a few of the ok,its is they say, well, we cannot do this on our own anymore. depending on the industry and the growth. these are normally in growing areas. then we -- then big brother has been wanting to buy us, not the best price but we will sell and they will get away with that. most of the companies in that situation will tend to go quietly. a lesson of the past. this time, i do not think so. tom: the ballast -- balance sheet adjustment -- spreads have widened. it has been a challenge. some of it is pricey, but every newspaper shows wider industrial

spreads. what does that signal to you? dan: corporate's have gotten a whole lot cheaper in the last two months, particularly in the investment-grade area, it has been once in a while in the intermediate area. the long and is still pricey because there is unusual demand of long investment-grade corporate area, every time you hit 5%, pending on what stocks are doing, you unleashed a wave of buying. tom: one of the things are global audience wants to know is, big institutional money, will he be able to make their bogey, there actuarial assumptions getting 20 year and 30 year obligations? we will be here 30 years with dan fuss, are they going to make that hurdle? dan: yes.

the interesting thing is this, i can give you a time frame comparison, let's say you are metlife or northwestern mutual and it is 1964 or 1965, and you say, ok, we are selling these policies long-term, whole life, ordinary life, and we have an interest rate assumption when we price them. i made i have picked the right -- i may not have take that the right companies, the bogey for the liability matching, or the corporate bonds are being bought, is a fixed one for a time frame based the dynamics -- tom: can you do that in 2015 out to 2045? yes, the reason is, you go into this thing

assuming 3.5 or four and you want a margin about that, the light companies used to march with a margin of 25 basin points -- basis points. if you are buying a five and have an assumption at four, you say, that is a margin, but what happens if rates go down, that is bad news. what if rates go up -- that means your bonds go down. you are reinvesting. in the 1960's, light companies lifeame growth stocks -- companies became growth stocks. tom: we will continue this discussion. i know michael mckee as a whole series of questions on fixed income, the great distortion, and the financial repression we talked about. michael: and the russian revolution and mr. dickens. tom: great expectations and you

know the rest of us. coming up, the costa rica president will be on this afternoon. conversation. stay with us worldwide. ♪

♪ tom: we say good morning. let's get to our top headlines. >> investors are betting a not so fond farewell to the third quarter. the black race on track for a loss of $11 trillion and stocks

-- on track for a loss of $11 trillion. japan's economy could be sliding back into recession come industrial production fell unexpectedly in august or the second straight month and retail sales showed no improvement, likely to intensify the debate on whether the government should increase spending. -- membersuarterly of these up 2%, the company is the second largest retailer in the u.s.\ are coming at chesapeake energy, the natural gas producer limiting 740 jobs, 15 present of its workforce. it is severing as natural gas prices fall, dropping almost 60% in less than two years. the nhl visits the scene of the most famous comedy, touches from slap shot were everywhere as pittsburgh and tampa bay played a next debate -- played an exhibition in pennsylvania. the arena where the 1977 film was set got an upgrade for the

game last night. tom: this is great. jeremy roenick was on talking about this with kraft foods and the sponsorship of hockey. this is a home run charity event. michael: one of the great sports movies of all time. you would not have thought. tom: george roy hill, did butch -- did thisit this as an afterthought. a reinvigorated pittsburgh team, they will go to johnstone, pennsylvania, and do it again kraft foods. >> and invite tom and i. tom: there we are. [laughter] us dan fuss. mike wants to talk to you about

emerging markets. it has been an ugly six months for your fund dealing with currencies and emerging markets, has it been the worst ever? dan: i have seen worse. 2008 was much worse. the worst ever predates the fund , was 1974. this feels a great deal like that. different set of circumstances, but that was awful. it may 2000 eight look like a slowdown -- 2008 look like a slowdown. these things happen. >> you have to wonder with all the heartburn of emerging markets, whether or not we will see the problems in the u.s., are u.s. fixed income step with -- if companies blow up, does it hurt us? dan: if you have an embark --

emerging-market debt mandate then you have a problem. if you have a mix of them, assuming they are paying in the local currency, it depends on how big is that mix. and depends on the credits. i am not aware of any of them that are happy about the cost of incremental capital going up. this is not a good thing for them. you have a lot of leverage in that area and some currencies, mexican peso, the best example, that serve as a proxy because a lot of these currencies do not trade well. if somebody wants to short, they will go to something -- their holdings in these funds. that is the tough side, the good side is, in a number of these situations, not all, what you have is same a bonds, new prices

in their currency. if there very attractive country has access to capital. michael: are we desperate for treasury bills, we are paying negative rates, the bid to cover ratio is blown out. the government is selling fewer bills, is this a problem for the market? dan: for anyone that has a short-term investment portfolio, it is a huge headache. how can you run the savings bank these days with rates at the level they are at, these folks are pleading with the debt -- the fed to get the short end of the about. it is making their business model very difficult. it is hard for any permanent short data portfolio, property, cash companies. we will leave it there,

thank you so much for joining us. dan fuss. his comments will be out on bloomberg digital media shortly. outdated check is risk on with futures of 25, oil 45 -- 35.05. unless congress acts, as of midnight your federal government will shut down. congress says it will act but when it comes to our legislature, nothing is certain, phil mattingly is in the center ring of the circus. if you were in las vegas, what would you set the odds at that we do have a government tomorrow morning? phil: we will have a government and it should be functioning. there are some legitimate that have to go on, a senate vote on a clean funding extension this morning, the house would then take it up, likely this afternoon.

on the off chance something goes the senate'sin effort to transfer the bill, i am told by obama administration officials they can keep the government open as long as they know the house will eventually vote on that, the question is whether house republicans can muster enough votes to shut the government down, that question is off the table. decisionohn boehner's to announce his retirement clear the way for him to get democrats and to help them pass the bill and the biggest roadblocks for now are gone. it is the future that everybody is worrying about. michael: the future is maybe november december when we get to the debt ceiling limit, there is talk that john boehner may try to move that vote up to take the heat while he is still in office? phil: it would be difficult but among the things people are looking at. the reason comes from straight -- come straight from john boehner. john boehner: if there is a way

to get things done so i do not earn a successor, i will get them finished. phil: his likely successor is kevin mccarthy from california, you look ahead to what he would have to deal with when he takes the position, transportation funding that runs out at the end of october. the debt ceiling which is estimated by congressional budget officials to be reached by late november, early-december and, assuming the government funding bill passes today, december 11 will be the time of the next shutdown debate debacle. some are some sense -- is sense that john boehner and his team can move a few things forward to clear kevin mccarthy's dekes but on something like the debt ceiling, where republicans are dead certain they want to make a fight of it and challenge the obama administration for more spending cuts, the idea that they would be able to move that out of the way in a short term, quite vote, over the next month what john boehner is still in town, i think the options are limited and very unlikely.

they will try and figure out how much they can get off kevin mccarthy's plate before he takes the new role. michael: they want to use the debt ceiling thing is a political issue rather than dealing with it as something that must be done for the government? phil: that is right and a problem they run into, it was an effective mechanism in the majority starting in 2011. starting in 2013, the obama administration decided in a closed-door meeting, they would no longer negotiate on the debt ceiling, they would no longer allow republicans to use that as a mechanism to secure spending cuts. that position has not changed. i talked to officials in the last 24 hours and they said absolutely not, no negotiating and that sets up a fight. and i do not care, we just want to know are we going to get the jobs data on friday?

phil: you can sleep well. you can sleep well to know the labor department will be open and running on friday at 8:30 a.m., you will get everything you wanted. tom: thank you so much, in washington. , was theirew up panic in your house about the debt ceiling? was george washington talking about the debt ceiling? michael: no, they did not put it in until 1911. tom: what is it? michael: it was put in during world war i because congress had to spend so much extra money to fund the war. every time you wanted to sell treasury bonds, you had to get authorization from congress, they said, the heck with that, let's give them blanket permission. tom: are you kidding me, the

debt ceiling. tomorrow on bloomberg guestllance, an important . the global economic adviser for pimco. ♪

tom: good morning.

we heard from phil mattingly, they will stay open or something like that. then we migrate into november, the debt ceiling. radio and bloomberg television worldwide, this is "bloomberg surveillance." let's take a look at what is moving this morning. >> i see ralph lauren on your copy of the new york times, he will step down as chairman of his company and his successor will be the head of the old navy brand. who has had success turning the brand around. michael: he gets good reviews. successful, the two brands are not on the same level in my mind. gap is moving down. michael: how does this affect dylan's candy bar? make sure it keeps coming to

tom. tom: we could devote the next 18 minutes to this man who changed everything about how we think about the stuff we put on our bodies. michael: for those worried about his departure, he will stay on. tom: you cannot get into his restaurant, i have been a couple of times and it is all wealth. edible and totally unpretentious. i never would have thought. it is like another ralph home run. >> ubs upgrading ralph lauren to a by. -- buy. tesla has released an suv, 2.5% isthe premarket and $130,000. the reviews have been good. tom: priced below the bentley. >> people are still waiting for

a model three which would be an electric vehicle for less than $35,000. tom: can you drive a tesla in intland or is that -- portland? are they buying teslas? >> lower cost spending market. subarus -- $330,000 -- a model $30,000.ee under the stoxx 600 up after a two-day selloff, up 2%. on pace for the worst quarter since 2011. tom: we do not spend enough time on that. , muchis another europe like the story here, that is an optimism. michael: we have people come in and say things are getting better in europe, slowly.

ralph lauren gets an upgrade because he is leaving, that is like tom keene is off bloombergtv, now watch. tom: i think he is iconic and i like the idea that he will stay around. what i've heard is he is opinionated to say the least. today,up, a lot going on with us, dudley, yellen, and book bowlers -- bullard. ♪

♪ tom: good morning. we begin three days of coverage of the job economy. friday at 8:30. >> a storm starring in the lancet called joaquin and forecasters able move up the u.s. east coast in the next few days packing winds over 75 miles per hour. do not plan a picnic for this weekend. america things valiant pharmaceuticals is healthy even know it shares has been under the weather, reinstating these dark is a by -- reinstating the stock as a

buy. sheryl sandberg says social networks are reinventing marketing. >> i think the big message is that marketers have to understand and most do, that the days of "you can do a campaign with a 32nd video at on tv" are gone. it is an important format that you cannot only do that and if you do, you're missing a unique opportunity. facebook -- those are your top headlines. tom: we had the guy to talk to, brian weiser. improvement in price, but now facebook is more about content in the newsfeed, give us an update on the state of their newsfeed. are they beginning to defeat twitter and compete journalistically with other news media?

brian: a big thing about facebook and capturing tv dollars is dependent upon licensing more professional content. if you want a tv advertising campaign, you are trying to borrow brand equity if you are an advertiser, borrowing brand equity from the content. the newsfeed, not so much. what facebook is doing is are starting to license, or work with publishers, to license their content. out you see the economists there one news organization that is the future of december -- missed sandberg's newsfeed. b they will oldham --brian: they will ultimately need the tv networks. the challenge is licensing and content involves tv networks coming in with the realization, are we better off letting facebook monetizing our inventory, do we arm them? sports on nhl on nbc

facebook, but not much else on tv. issues will of the be for advertisers, can you trust what you are getting from facebook and google. you are noting that google was caught cheating, telling people more people were watching youtube and then actually were. >> an academic study that did not get much press in the u.s. researchers found that google tries to quantify the number of they ares and then only supposed to charge advertisers for the real views. what they did was identified the fake views and told publishers one number, who uploaded content , but they are selling advertising based on a higher number. tom: i have never looked at a gnat on facebook. >> this is youtube. tom: twitter has no as, who are they fooling? brian: twitter does have as.

-- have ads. advertising does work, you do not think about it. tom: it is the jets and broncos, and at 44 motor and it goes by your brainstem. >> they need to have the ads exposed for more than just a millisecond. you need three seconds at minimum. tom: is there proof? brian: there is very little proven advertising, advertisers proceeded to work. michael: apple is coming out with ad blockers in their browsers. brian: they are supporting ad block apps. that does not mean that everyone will block ads. it is not an apt, it is inside of a mobile browser. a lot of publishers will ship the content to apps. tom: what is facebook's momentum in the united states?

i am on facebook, look at my glorious page. it is all international. which is great, is there a u.s. growth and facebook? brand for the largest focused advertisers, facebook is the first place you look to spend your digital money. you do not know anyone in pressure works but collectively it does. has no problem capturing a growing share of advertisers and markets around the world. my quibble is the idea they can capture tv money today based on saying we have super bowl like reach. it is not enough until you get tv like content, otherwise your satisfying a different goal. michael: one of the interesting things i have seen recently, google's new customer match, they can take content from an advertiser who has your e-mail and google has her e-mail, and you will see ads for places you already shop. brian: this is an important

product launch, one of facebook's most successful project is custom audiences, they were the first to do it at scale. you can match your known customer information based on e-mail addresses you possess, you send it to facebook, they would match data -- addresses and find incredibly targeting campaigns. the fact that google had not launched a product while facebook was beating desk eating lunch -- was eating who was lunch. e's lunch. my observation was that google is saying, you want to regulate us, you, we will give you something to regulate. they are being more aggressive by launching this product. >> yesterday we reported that twitter is thinking of expanding the character limit, is that something advertisers are pushing for? brian: what is interesting is

that twitter is arguably the fourth most important advertising platform. it wiltom: i do not look at adsn twitter. do not tend to think that it impacts us, collectively it does. the reality is, if branding shows up in a way you do not think about, it is there and works. >> there are -- they are promoted tweets? brian: the character limit is not an issue for advertisers. medium that is a cold medium, or hot, i confuse the two. people have to think a lot about what -- they have to think what they see, facebook is laid out in front of you. it is a real-time media, closer to radio in a way that facebook is like tv. tom: you have a single best buy? is there an opportunity?

brian: i believe that facebook is probably -- has good upside. the tv sector has been beat up, it is a value trap because discovery had their investor day yesterday, anchor the wonderful things about the wonderful business they have and the stock fell by 5%. tom: where is cable tv in five years? brian: you've all. -- you've all -- evolved. there will be more and more people who cut the cord, but maybe 1% or 2% year and you will end up paying for an oligarch collection of channels -- tom: i am waiting for apple tv. >> there are people who still have dial-up. brian: the difference between the broadband experience and dial-up was so radically different that you did see more or less a complete turnover.

i do not know if that is true with tv. it is harder to deliver content over the web. tom: if you're an expert in advertising, can google compete with apple? brian: apple makes compelling points about integrating hardware and software. if you are google, you are not in the hardware business. they tried. i'm sure they will find places, android is a welcome alternative for a lot of mobile carriers. there will be a lot of support for that. tom: always brilliant, brian weiser. he drives a hummer in portland. daley --e mize bill you say bill dudley matters? he will be speaking in the 8:00 our. we have much more for you on

bloomberg television and bloomberg radio, stay with us on all of our platforms, futures up 21 and dow futures up 173. ♪

>> good morning. it is 8:00 on wall street on the last day of the third quarter. along withl mckee tom keene. here is how the last trading day shanghai tom the the s&p, happy to put the worst quarter in the last four years in the past. at least we struck the fourth quarter without worrying about china's ups and downs. the stoxx 600 up. the dax up. it looks like the u.s. may end the quarter on an up note futures indicating -- is any indication.

it was a lousy quarter for stocks. not necessarily so for bonds. treasury yields plunged yesterday afternoon and have recovered overnight. a 67 basis point handle for a two-year. this morning, we are data dependent. industrial production unexpectedly fell in august. the inflation rate unexpectedly in thegatively paired u.s. we get the employment , the september jobs

report on friday. if there is one pair that will depend on whether congress legislation.sses phil mattingly assures us it will happen. we shall see. if you thought the third quarter was rough on stock and bond investors, commodities set for their worst quarter since the 2000 a global financial crisis. morgan stanley warning more losses may be ahead. raw materials tracked by bloomberg. the index by about 15%. if the fed raises rate, if the job report comes in, the fed raises rate -- currencies are all tied in with commodities. right now, we have got the yen at 120. the euro at 112.

a lot of people are concerned about where we go from here in the fourth quarter paired -- quarter. >> i'm with you. the fourth quarter, we have got a lot of events. a couple of elections, poland, portugal, spain, canada. michael: the elections pale compared to the fed? of theense is part reason spain and portugal have been showing better numbers if they has -- is they have told back from austerity little. the eu to be telling his countries they need to need to do austerity and more reforms. michael: so we see bad news ahead? >> with the ecb gave us earlier in the month when they cut their forecast and inflation, he said

today we have the negative cpi from europe. it is not all that surprising. it really was not updated after we got new information yesterday when both germany and spain reported inflation numbers well below expectations. wehink that is part of why did not get as much of a reaction from the news. look at then you confidence surveys, business and consumer confidence service in will do not seem to be reflecting concerns about. >> i am not so sure to look what happened in the u.s. we had the confidence board among the worst numbers recently.

i think when people see the stock markets imploded like they did in q4, it does not boost consumer confidence. michael: the stock market did not reflect consumer economy, but people think they do? think you are right. especially in the united states. on what theyork call financial depth. the size of financial markets go to the gdp. the u.s. has deep capital markets measured like that and europe much less so. i think it is more the employment figures are more telling. all right. employment figures we get this week. what little it mean for the fed? track if there is no real change or do they have

to be better? >> my understanding is current conditions in the u.s. would allow them to raise interest if the global environment stabilizes. the fed is more focused on the employment market. i think you will find nearly all of the fed officials will even some sort of form and the folks curve which basically says if you want to get inflation higher, more people to work. it causes inflation to rise, which is what really fuels headline inflation. a weak number be probably has more impact than a strong number. most i know do not expect the fed to raise rates next month. if there is an opportunity this year, it is probably in december. the not convinced government closes now, but when we get the debt ceiling and possibly taking a hand down on the spending bills to the middle

of december as well, around december 11 and 12, december meetings at the middle of the month, if the government does close, it is hard for the federal reserve to raise interest rate. that is not my most likely scenario. a correction, i said it is next week but it has been pointed out that i was an idiot. it is tonight. the united states expected to decline a little bit. board.ss the the bloomberg survey. large manufacturers, small manufacturers, large service companies and small service companies, look for a decline. that is pulling back a bit on the capital expenditure plans. this is why, coupled with the negative inflation number last week, it is why a lot of people think -- policy next month. is there any indication

the governor would actually be interested in doing that given the size of the debt the country has piled up? good question. he caught us by surprise a year ago last october when he expanded the balance sheet target $60 trillion to 80 joined dollars. i think he had advisor from the government that more stimulus was needed, and this is both monetary as well as a supplemental budget. my own guess is that they do not expand the balance sheet but they could tweak what they are buying. buying everything except my comic books. the bond market and the money markets in japan have not had an effective course on corporations as well as investors. your books would obviously add a lot to the japanese economy. if they do not do anything else, what happens to the end? story, theyng

cannot get a break with the end because everyone keeps wanting to buy into it as a haven even if the japanese economy is not good. i sigh think that is a bit of a myth. a big distinction between buying back a position you previously sold. we're not really seeing the world coming apart by yen. instead, they're saying the world is coming apart, we need to get rid of those risk assets used to finance. german orcome along u.s. stock markets or treasuries. as they unwind his actions, they have to buyback the end. but i would really point out is since june, foreigners have been very heavy sellers of japanese stocks. of septemberddle that foreigners sold a record amount of japanese stocks.

the dollar yen and we have been consolidating a whole bunch in this triangle pattern. usually, the dollar breakup to the downside. about a 75% chance. maybe, a combination of the poor japanese news, anticipation of in japan,y response u.s. jobs data, fed tightening, leads to the upside. michael: we will watch for that. , thank you for setting us up for the fourth quarter. the third quarter was ugly and wear them with that here. ♪

michael: with futures indicating, maybe it will get better. david: oil prices climbed to the most in a week. thank you very much, david. under $35trading just per barrel. in a tight stuck range between $44 and $47.

your member, because of a global cut, it is poised for his lowest quarterly average price for start of 2009 and new data could signal that we will see even cheaper oil. joining me is the chief market strategist who joins me from the cme. new important data points to talk about this money. rose.s. crude stockpile according to the american petroleum institute. explain the increased to me though we're seeing oil below 45 now. >> the markets transitioned from fundamental market and it is very much a technical market in the last month. sideways. crude trade we have see which way it will break out, but things have

relaxed and the fundamentals are not driving the market is much as i think the support and the resistance points keep focus right now. classes is opec plus second-biggest producer of oil year on year as of this month. county think that is impact in the price of oil right now? again, these are the fundamental factors the market digest. i think that is the reason we are where we are. it is important for me that we focus on -- this is the halfway point between the recent high and that low. that is important. $50 is critical not only psychologically, but that was a low point when it broke through that. it has been held down below 50 to we will see those fundamentals. you can also bring up getting out of the arctic drilling. it is not cost-effective to them. supply and demand factors will

balance out in the long run, the will discourage further investment in exploration and that should support prices in the long run. it might be months or years. >> thanks. up, williamg dudley, janet yellen, all speaking today. this is "bloomberg surveillance." ♪

michael: welcome back. the adp employment report for september, 200,000 jobs created according to the data processing company. is $10,000 better than forecast their most of the jobs come from the service industries. we was 15,000 jobs in manufacturing. pick up 35,000 jobs in the

construction industry. the chief economist is with us. give us a quick reaction to the number, to basically getting what we respect death expected. a number that tells you the economy is running at 2.5% growth. that is what the employment numbers continue to tell us and i expect we get the same thing coming out of payroll numbers friday. games going for lord, that kind of growth. michael: the forecast is for $200,000. tom: we move forward to three days of job. it is a nice way to have it as we go to the interesting view friday. good morning, everyone. "bloomberg surveillance" brought to you by invesco.

nontraditional asset classes and strategies may help you achieve your goals. more online. with the news, here is bill maloney. across thets higher floor this morning. that strength is going over the u.s. with dow futures up as much as 200 points. on the economic front, the adp data, 9:00, milwaukee. 3:00, yellen speaks in st. louis. networks revenue mr. it shares are down 25% in the premarket. stepsthe ralph lauren ceo down. in newlion dollars western digital stocks at $92.5 per share.

star board announced a 3.7% ownership stake in advance auto parts. upgrades and downgrades this parts cut thene sale of goldman sachs with a price target of 83. to buy, post holdings suntrust with a target of 75. for more breaking news particularly if you have a bloomberg terminal, you can go online. michael: steve is with us. he is chief economist. 80 p to suggest nothing much has changed in the economy. if the fed is on hold in september, then if nothing changes, lie with a raise interest rates in october or december?

>> nothing has changed with the growth inflation. if you look at the overseas growth numbers coming out in particular in japan, germany with inflation numbers that came a cpi in negative territory, there are pressures increasing and that further put them on hold. less probability they will move in october or december, 2016, before we consider what they will do. michael: a drug you would say but it is just oil. they have been saying it is temporary for quite some time to i would say the same thing if i were in their position. they do not want to come out and say they are terribly worried about it. if they were, they would have to go out and begin another process of using and that is what they are trying to stay away from. what you see janet yellen try to do is a balancing act between

allowing overseas currencies to begin to devalue relative, but not have it happened too quickly. therefore, the process of, we will raise rates but we do not raise rates, and we will ease but we do not really ease, it allows a steady erosion in currencies. precedent fora this language and this approach to communication? or is this uncharted territory? >> totally uncharted to die feel for them because it is a difficult situation for them to deal with. they have got the global aspects really weighing down, domestic aspects on the other side. we benefit because we are the reserve currency. they have to be basically the mature people in the room and sit back. as long as we have this nice service sector, an economy that can grow with 2.5%, which is arguably the envy of the world at this time.

they are allowing it to go on without causing too much discontinuity with the rest of the economy. are they creating discontinuity in the markets? she said no. >> globally, interest rates have all come down. the problem in the market is more dislocations created in the quantitive easing. aboutthere is discussion whether or not they have distorted markets more in that is treating them or negative impact going forward. a smart thing to do going forward is to basically back away from reinvestment very slowly. we have suggested to them a four-year program of taking off the balance sheet, do it every settlement across the yield curve. it, --owly out of >> put down a bond and back away. willsteve with a spirit we come back and he has a thought on chart and

the great deleveraging of america. we will talk to him about your wallet and balance sheet or lack thereof. michael mckee and tom keene in new york. ♪

david: here are your top headlines. by 200,000 last month. meanwhile, the august number was revised slightly downward.

this is the first three data points on unemployment this week. the government jobs report comes out friday. the u.s. and china are coming together. an official tells bloomberg news the u.s. agencies joining forces with its chinese counterpart. 38 facilities are banned from exporting drugs in the u.s. because of concerns over whether the drugs are safe. glencore found a way to reduce its crushing debt load. it will try to raise more than $1 billion by selling future production of gold and silver. glencore has $30 billion of debt combated by the commodities slumped. shares fell on monday before rebounding. howard marks of oaktree capital talked interest rates with matt miller in toronto. afraid to raise rates. they keep saying it is probably lead to happen, they

somehow or other through sign language, they lead the commentators to believe it will have in the month after next, whenever that will be, and than they do not do it. this has been going on for two and a quarter years. david: the hugely anticipated percentage point, he says, is clearly meaningless. back to tom and mike. michael: it never ends. talk with a broker dealer that orready to listen, call visit commonwealth.com to learn more. it is a busy data week. today and tomorrow, adp, 200,000 jobs. steve says. and we could use that.

-- a yawner. build of the is speaking at this hour on market liquidity. the fed distorting what is going on in the markets these days. are they? the headlines, it is on bond liquidity and fed qe may have affected recent measures of liquidity. it did not move the markets all that much. >> when you talk to most on traders, they will tell you it has had a secondary impact and increased low on the bond market. the question is whether this is

the right information going change worth this has to going forward. it is something that needs to change going forward. tom: you look at the behavior of america. what does that mean, first of all? >> leverage can be good and bad. if you have too much leverage, a short duration structure, yourng over the debt, credit quality is going down. the higher your credit score is, the better you are. the more liquidity comes to you. happened since the crisis is we are deleveraging the sector. we are about near the end of that story. over towhat pulls us not doing anything in 2016.

the bigger question is whether banks will let them take out credit. one thing banks have learned is that you have to be cautious in terms of the standards they provide. they will not back away from a concept you need to have 20% down on a house. that changes the dynamics. the problem into was, we allowed people to do zero down on a home. you get a home equity loan on top of it and do the renovations. you have got a home and then you are stuck. now they are being more judicious. will talk to, we about your loan and look at your credit situation and sometimes you come back and say you need 25% down. that is good and healthy and one of the reasons i think the economy is bulletproof going forward. do to olddoes it

formulas of monetary policy? to me, it is a whole new game. >> the deflation story turns modern economics upside down. it disappears when you worry about inflation. potential gdp has to be rethought. is a function of what level growth has given you inflation is capable for the economy to grow in general. we will realize in a deflationary world, it is probably a heck of a lot lower than we think that economic growth is higher than we think. the economy is a long way to run. we heard there was a clinic on asymmetric analysis. prices are up and then they're not, it is disinflation. downhe sudden, prices are in the math does not work. it is different math.

>> it is a different school of economics. exactly, 1954, there was a little bit of a deflation, a whisper. >> 1990, shifting over, it got worse in 2007 when china was disengaging from the world. they double down on exactly the same investments they had and that exacerbated the problem we are all living with now as a legacy. is excess credit in the markets gone now? >> you have got to be careful because we are starting to see incorporation in bank balance she is. high-yield space. the spread that should have gotten lower but did at, investors are looking the share buybacks and a leveraged by. things happening with glencore,

saying that these guys are changing the mix of the balance sheet. we're not hearing kings in analysis. >> we were told central banks cannot create credit anymore. we created this in the afterglow of what happened with the financial crisis we are to have the right regulations in place prior to the crisis and did not apply them. now we put h akoni and pressure on top of it all and they responded the way we wanted them to. we love to have you with us. we have got to get him back in here for another conversation. upures up 21 and dow futures 167. 2.07% as welleld,

this morning. the yen and the euro, 112 zero. 6.37 stronger. ramy and itere with is time for a morning must-read. writing in bloomberg view about carly fiorina. it's a failure does not always mean you made the wrong decision. it might just mean there are no good options or you got unlucky. the article is called, does carly fiorina'tenured matter? she says no, it does not. someone who has a different background from that when he or she becomes president, but we have been talking a lot here about carly fiorina, hewlett-packard, it has come up

time and time again in debates. >> i have to agree that you can do everything right and still fail. when we grow up, we are told to stop, look, and listen when we crossed the street. we can do that and a car can still kill you. she may havdone the best thing she cod haveone. unlikely was just that's unlucky. with that said, i would rather have had her succeed in her role as ceo than not. >> we have seen time and again, when you look at technology, hardware is often the hardest part. software,ardware with if you look at other companies that have failed time and again. the point being made in the

column, does the tenure really matter, perhaps it does not. ♪

tom: right now tesla, here is david. david: the model s, electric suv, which can go 50 miles on a single charge, chock-full of state-of-the-art features, including a pile defense mode button. leastill set you back at $132,000. betty liu was there. one andto test drive joins us now from san francisco. you were in the car, what was it like? betty: i was in the one that they called the ludicrous mode, which goes super fast. there i am. to give you background, this has gone through several delays. but it comes with really cool

features. the falcon wing doors, 17 audio speakers to deliver premium quality. you cannot really tell, but it is a panoramic windshield. says it is the largest piece of glass ever made for any vehicle ever. the best seat of the house in that car is the second row seat. you almost feel you are driving a convertible except you do not have all the wind in your hair. cool and the price tag for the one i joked is $142,000, significantly more than the model s, which is around 93 thousand dollars. and thet is a cool car third model coming out from tesla, one of the last ones

before elon musk must build in the next market. david: what does the bio defense button do? >> he was saying because the air filter nation system is so that if god-art, for bid something were to happen, and you needed to get to a safe place, you can literally go into your car and hit the bio defense button and you'd be safer in your car than any other bunker. injecting away of little humor into it. david: this vehicle would be less than $35,000. his tesla on track to get that on the market here? betty: he says he is to her this was delayed several times but they learned quite a bit from building it and fully around

with it. it was one of the last critical stumbling block. david: betty liu joining us from san francisco. .omorrow, general richard myers ♪

tom: good morning. from our world headquarters in new york city, michael mckean morning.eene good a lot to talk about a look at brazil and its impacts, its effect upon the american economy. as oh's, we are brought to you by invesco. looking for leadership, experienced experts are just a click away. describe -- subscribe to the blog. screen and risk on

the screen. mike, why don't you interview our esteemed guest who traveled north to be here. >> you have a lot to cover these days. now. doing what it can tell that down, but the economic outlook is not getting any better. i said. good morning and good to be here. talk a little bit about the we are talking about poor fiscal numbers expected. second, and the main reason for this, an economy that does not grow at all actually. it will shrink this year and next. rates this year.

9%, 9.5% this year. it is very difficult. michael: how did this all go wrong? >> i think brazil really got into very much consumption and less investment. if you take a look at consumption as a percentage of gdp, it is 6%. if you look at investments relative to gdp, we are talking about below 19 or 18%. this is something we have used a it from consumption and really came down throughout the last few years. >> i look at brazil, and with your wonderful experience there, there is a stereotype in america that argentina plays by their own rulebook. it is a belief we have going back multiple decades. does brazil play by its own rulebook?

this point in time and throughout the last two years, yes or not that much because we , foreign fundamentals reserves, almost $400 billion in foreign reserves. system is very healthy. the government has to obey some roles. mike, here is a chart. i just put this out, wander over here and look at the brazilian gdp chart. these spikes are china leg. 8%, and then off a cliff. is there any aspiration to get back to sub china like growth? something that you have to pay attention.

we now have to pick up investments. to the rate ofgo investment, both 20%. this will take time, otherwise you will not have steady growth in brazil. >> but are we getting enormous amounts of investment for falling out on the world cup? >> it has actually happened. so we do not have that much investments to get into brazil and not into the olympic games. spending,rying to cut the legislature approving vetoes. is that going to be enough, or do we need much more fundamental reform in the brazilian economy cutting spending? >> we really need reform. i think we have cut too much

already. this year, we have cut 80 billion. it is not -- in general, we cut something close to 45. and we cut a lot of expenses. i think they do not have that much to do. take a look at the -- at this package. it did not show too much of a cut. i would say they are cosmetic cuts. tom: in real, there is santa teresa and that is where the cultures clash. what is the slowdown doing to santa teresa as one in the city of rio? lot not onlynged a is santa teresa, but the geography in rio, we had a boom do not to oil and now we

have the boon anymore. we take a look at what happened, and we see the geography being assigned, a modern one, a terrorist one, it is losing track at this point in time. i think it is a symptom of what is happening in the growth in brazil. thank you so much for visiting us in our world headquarters. terrific perspective on one of the great moments in the third quarter, a weakening brazilian rio. bloomberg surveillance this , the insight your business is to move forward, find out what: resident thinks and sign up for insights cohen reznick.

that headline so for soon. it does not exactly are striking.hey one presumes it is isis, as opposed to rebels fighting the sharp assad in there. the issue has been russian support for assad. russians have been fine reconnaissance missions in the area according to the associated press. today, they actually fired weapons. we saw ian tell us yesterday that he did not think the russians would go far with this. maybe airstrike but they would not put actual troops into harm's way there. this actually means, if you ask ian, probably not a whole lot. the advantages to look at the market, oil owns 44 .99.

$48.texas intermediate, received before when we had geopolitical events, it does not move markets, which speaks volumes. there is not any oil in syria which does not affect them. markets are discounting, as in did, that the markets we get actively involved. seen is airstrikes are not moving the needle in terms of isis. at this point, it is news but not for markets. tom: there are the headlines. i would note within the day of three fed speeches, we have heard from mr. dudley. the two year yield, .6%, .6 5, 65. that is something to see the two year yield plunging lower off

the yellen comments at the press conference. and then to work lower here, a new lower on the two year yield, that'll be something. i'm not predicting that, but something worth watching. mr. they of japan, we thank him for attending at our bloomberg world headquarters yesterday. the mexican peso again under 17 and part of the risk we see this morning. , again, gold is giving away. this is the first time i said this in a week. we are on the cold watch to go down nine, 111750, dollars. it is not a big move, but it is three days of really pulling the bullish glimmer we saw on gold going back a week. the equity markets, futures up

21. dow futures of 66. -- up 66. single headline, mr. putin, russia now planning full scale involvement in syria. stay with us. ♪

>> this is "bloomberg

surveillance." in ourm: good morning, we are cozy, dry radio studio this morning. rain is porting down in new york. michael: it will be an ugly weekend at this hurricane comes our way. tom: we will follow that more as we move into jobs day friday maybe when the hurricane shows up. we have a lot to talk about this miami to get some perspective on foreign exchange right now. this is brought to you by interactive brokers. a stronger yen and the euro is $1.12.

you see the developing economies. i featured canada yesterday. that is my terminal chart of the day. loonie is $1.34. there is canadian weakness. a big move of canadian weakness over the last number of quarters. that's enough on foreign exchange this morning. equity futures are up 22. michael: everybody in the markets and around the country wants to know if peyton manning has lost it. in libby cantrell from pimco to opine on that. to ask you about politics and stuff which is what you do.

you cover public policy announcements. we will get to the broncos in a moment but let's get to john boehner. he is retiring and will not play out his contract with the people of ohio. that is a problem, you are suggesting. step back, i a don't think the ultimate outcome of him stepping down was a surprise. that johne speculated boehner was going to step down at the end of the last congress but did not because the majority leader lost in the primary last year. what was surprising is the timing. it comes in the middle of a jampacked fall with lots of fiscal deadlines and lots of room for error. is that itnk increases policy uncertainty and increases the risk of a policy mistake and that is obviously bad for markets and could

potentially be marginally bad for the economy as well. phil mattingly says don't worry about a shut down this week. that it kicksting the can down the road and races the odds we will have a problem later. exactly, the announcement last friday of his resignation improved short-term stability. there will be a government funding bill passed today. the house will present with a majority of democrats any minority of republicans with the same playbook we have seen with the fiscal cliffs. as you said, that simply kicks the can down the road. -- maccarthy more is the presumed successor to speaker john boehner. he has only been in congress for nine years. has a very unruly rank and file.

how he navigates remains to be seen. studied brown economics and there is a point and fiscal policy where you take a victory lap. inm fascinated have nobody washington -- everyone is so miserable and nobody can take a victory lap over where the deficit to gdp is. at 2.4%,ficit is historical lows compared to the 30 year average. they have brought in the whichtionary spending looks basically flat because of the sequester which was put into place a few years ago. why cannot they just move on from this issue? the spending caps and austerity issues seem to be resonating with this rank-and-file of the republican party. michael: if we leave the caps in by doing a continuing

resolution, the country gets bigger and that cap's more tightly so austerity continues. the cbo which is the consummate authority on the flatt spending projects spending and nothing is done. they think there is some hope that there could be a broader budget deal over the next month when speaker john boehner is still in place. there are only 14 legislative days in the next month so a bigger budget deal to relax these caps looks unlikely. it looks like probably flat fiscal spending and 0% contribution to gdp from the government over the next year, that's our case. what about tax receipts? we used to talk about this like a gospel. are we at record tax receipts? are well taxed.

michael: they are getting record tax receipts from eyes. >> that matters because that will inform when the country preaches the debt ceiling which of the other fiscal inflection point we had -- that congress will have to address in the fall. has said we will reach the debt ceiling probably by the end of october. that does not account for the cash balances that treasury runs which is $125 billion now. dip intos likely to the cash balance and that should push the debt ceiling deadline to around and of november. that is right when the government shutdown possibility will be occurring. this convergence of fiscal policy events we think will lead to an increase in the chances of a policy mistake. that's right when the fed is going to be contemplating raising the interest rate. michael: does a drop in the

market change the tax receipt picture significantly? >> you know, it's not necessarily that sensitive. impact.have a marginal it depends what people are selling like long-term holdings. >> it doesn't help short-term. michael: where do we see the receipts going over the next year? i guess that depends on your call on how much the economy grows. >> yes, it is dependent on economic growth. our outlook has been around the 2.5% for gdp for the next year. but not gang buster growth pretty solid growth. that is assuming government spending is pretty much flat. if we saw a relaxation of the

sequester and saw a mini budget deal coming together, then you could see marginally improved gdp. that is not what we are calling for. tom: i was talking about the importance of the afghanistan news. it's on the front pages. it's the war that never ends. u.s. forces ined some form to assist against the taliban. end ines this washington? >> that's a little bit out of my policy area. tom: from a budget standpoint, the pentagon is still fighting two wars? >> yeah, effectively, and that's why you see these budget hawks in congress really advocating for relaxation of the sequester on the defense side of the budget caps.

i think there is a concern about national security and national preparedness. with afghanistan, we have a small troop presence in iraq and what you have going on in the broader middle east. i think people worry that if we continue to cut back on defense spending that we will be in jeopardy longer-term. michael: the republicans want to increase. >> some republicans do. there is a real division within the gop. you have the deficit hawks who don't want to see any discretionary spending on defense or nondefense increased. then you have a real outspoken contingency like senator mccain who is advocating for a relaxation. that is another reason why we policy uncertainty will increase because you don't have a cohesive view when what should happen within the gop now. tom: we will come back on this.

it clearingly made from his reporting and washington that john boehner has shifted the dialogue in washington, the drama of midnight tonight is not there or thursday midnight. stay tuned. tom: when does the eastern daylight time happen? michael: it's the weekend after halloween. tom: in november? michael: they want the kids to be able to trick-or-treat when it is still light. tom: i did not know that. futures are up 20 in doubt futures are up 163. the 10 year yield is 2.08%. ♪

tom: good morning, everyone. david: the major averages are on pace to show their biggest decline but we are indicating a strong open with the s&p 500 up 1%. we have some of the notable movers. we are talking about ralph lauren and gap. tech, and farm is

what i will cover. , he himself is stepping down and in his place the gap president stephan larson has been named as his successor. looking at the premarket trading, let's see how that's performing -- ralph lauren is up by 6.8% and 7.1%.p is down id: i understand ralph lauren will keep a hand in the business. >> is probably not going to give up the company he started. he is getting up there in years. in two weeks he will be 76. it is perhaps time but it's the -- but it's his decision. moving on to technology -- barrick cutera -- barracuda security firm is reporting results down 29%.

they beat estimates for earnings per share by $.10 but they missed on revenue. that was not so much but they say that over the long term, they will be affected by the stronger dollar as well as longer sales cycle is in europe and the middle east. seeing its lowest since september 13. valley has been in the headlines over the past week and a half since hillary clinton heated. i think i say that every day. basically, some good news for valeant. buy rating of two under $90. that's indicating an 80% upside to the stock. tne reason is because valean patentt see exposure to so they can manufacture drugs

and not lose their exquisiteness. there has been the turbulence etom the hillary clinton tewe and the subpoena earlier this week. : what else do we need? thank you so much. president of costa rica will be here in the building to discuss finances at 4:00 p.m. eastern. this is "bloomberg surveillance." ♪

tom: good morning, everyone. we say good morning on bloomberg television and bloomberg radio. havelibbyrful to cantrill here from pimco.

as you look at washington, and as moderates try to figure out where they are going whether democrat or republican, is there that we that wee-party, find a new calculus of party five years out -- four years out, eight years out, 12 years out? >> we actually think about things in a cyclical time frame. it's very unlikely. there is certainly an anti-incumbent, anti-d.c. attitude. you see that in who is pulling first in the gop. tom: jeb bush is not doing very well. >> that's sort of surprising. the most interesting rumor i recently heard was that bloomberg could be an interesting candidate. tom: who?

michael bloomberg is founder and owner of bloomberg lp and also this radio station. >> you did that so beautifully. there is obviously an appetite for something that is not the status quo in washington. whether that means a third-party candidate is viable at this point even over the next four years or eight years seems quite unlikely. michael: we were excited about ross perot. but whatit's unlikely that means for whomever will be the eventual nominee with the -- that would be the more interesting nominee than the democratic side -- you are even talking a lot about the 2016 elections. if you look back historically in recent history of all of the who had a lotates of momentum in the early days,

usually, they flameout by february. you would not be surprised to see if that were the case this go around as well. tom: like the broncos. >> hey now -- michael: we will get to that but i have to ask one more question. why does the senate banking committee hate the fed? tom: good question. michael: the chairman of the banking committee suggested that yes, we have nominees for the fed seats that have been empty but we are not going to confirm them and who cares? what is it with them? not to give them a free pass but there are lots of parties that are conflicted in this. they might not be pushing for these nominees behind the scene as they should have. chairman shelby is not bringing the candidates up. there has been lots of pushing

in congress to provide more oversight to the fed. those have not been successful so a lot of this is rhetoric that resonates with the base but does not go anywhere in a legislative perspective. it does not look like these nominees are likely to get confirmed in the foreseeable future. it could potentially happen next year. who knows? we have to ask the key question -- does peyton manning still have it? know, as a fellow denverite, we saw john elway do this and adjust to a new defense. we saw him win super bowl's at 38. i'm not going to say that he does not still have it but certainly the last three games,

it has taken time to adjust to the due offense. we are 3-0 and top of the afc west. the data does not lie. michael: on sunday, they play minnesota, the vikings. >> my husband is from minnesota. fan of denverdent than he is a minnesota fan. he will give me a hard time up we don't do well. michael: they better do well. this is why they play her so much money. , to analyze the afc west. football analysis more compelling than my political analysis? i will take that. pimco need somebody who can step up and provide them with that perspective. >> we are both afc lovers. i will not say anything about the jets. tom: thank you so much.

i look at the screen and you wonder if we are into eighth b-day wait. so quiet,dp report you wonder where we will be at 8:35 a.m. friday. it seems like what is moving the market is all exiles and is, japan, china, brazil, syria, those kind of things. couple of days ago, we things wouldthat turn around and we would not recognize it when it happens. it will not say this is something that changes the whole market direction and people just start buying again. tom: go to bloomberg digital today and listen to david rosenberg. you know him as someone cautious. he is very cautious on global economy.

he is exceptionally enthusiastic about the american economic experiment. optimist aboutht the benefit of lower commodity prices to america. futures are up 21, "bloomberg surveillance." ♪

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to give you the best experience possible. because we should fit into your life. not the other way around. topd: here are your headlines -- russia launched its first airstrikes in syria today. the attack started hours after russian lawmakers authorized president vladimir putin to use military force there.

troopsdup of russian started at a base in vladimir putin is backing the shaky regime of syria. troops and plants in the u.s. led coalition helping afghan troops in a battle with the taliban trying to retake the northern city that was captured two days ago. it's the first provincial capital taken by the taliban since 2001. the storm and the atlantic is now a hurricane called watch jean. packing winds of 75 miles brower and warnings are up in the bahamas. of ae is gearing up pyramid gadgets, offering a high end tablet called the pixel c which features a 10 inch screen and detachable keyboard. its set-topng device to challenge apple and amazon and roku. the futures are up. the s&p futures are up 1.1%.

everyone,morning, "bloomberg surveillance." that is the opening bell. report will be out with yellen and bullard to come. david wilson is an cyclic needed about the music business. we have lost a giant in a jazz saxophonist, phil woods, who had a legitimate jazz career and then a guy named quincy jones changed his life and our lives. he said let's take your jazz and put it on pop records with paul

simon and billy joel. more than any other instrument or moment, it revolutionized what tone was supposed to be. it changed everything. go, we are used to seeing saxophone on records. i come at it from an r&b perspective. clarence clemons and back to with gary u.s. bonds. that is a different kind of sex. tom: this is alto sax. imagine any single bone is event that changed things than when phil woods was on " 50 ways to leave your lover." 83 and is a huge loss for the music business. >> indeed. don't stop, we are fascinated. tom: when you heard "just the and it was the

phil of billy joel, but ramon got this guy out of juilliard who was a total jazz cat and said this will work. we were nuts. let's go to david wilson. michael: do we have a saxophone to accompany dave? >> you could but yesterday i had a chance to give you an energy update but i didn't. today, you get a double. national ciquefied gas companies are up 3%. --heneer moves away from production after carl icahn tosed his stake in cheneer 2.5%. ralph lauren is up 9.5%. the 75-year-old founder stepped down as chief executive and was replaced by stephan larson who headed the gap old navy unit.

8% in the are down wake of his departure. let's talk western digital, up 14.5%. it agreed to buy a 50% stake from the disk drive maker for $92.50 per share. that prizes 33% higher than yesterday's close. in othereing gains disk drive company memory companies. seagate technology is up 6.6% at the moment. you also have a gain in sandisk which makes memory chips, up 5%. fiat/chrysler is up 5%. they may have a public offering as far as friday. the ipo price may be set the week of october 12. advance auto parts is up.

stake.ue disclose a 3.7% tom: one more. >> how about rents track? it accepted a takeover offer c fromom score valued at $800 million. the combined company will be a rival to nielsen holdings. up but nielsen is down in early trading. the decline amounts to 1.6%. can you getlse these comments on the markets and clarence clemons? michael: we have to ask tracey holloway. >> no sacks for me. michael: let's talk about something else. we can talk about copper. everybody calls it dr. copper. the dr. is out.

if you look at one commodity this week, look at copper. michael: do they use copper in saxophones? tom: they do. marcus parsley, the great trumpet player, showed me a 1930's instrument with copper in it which give it a different town. michael: now we can combine the two. >> copper on monday moved below its 200 month moving average. it's not the 20 day moving average or 20 months but 200 months which could potentially be a big deal. since then, it has gone back above that level. crisscross what some say is an important technical level and we see it feed into the wider market. we have glenn core moving because of credit rating worries but glenn core is closely pacing and tracking copper at the moment. tom: this is why we love to have

tracy hallow a with us. she did the aggregation theory and moved from where the amateurs are which is 200 days or even to what it weeks up to 200 months moving average. ada doess whatuise yam every day. michael: tell is what it means? continued weakness in copper if we see it stay below that level. it has moved up today maybe it's not a coincidence that markets feel better today. we should be looking at copper because it's an important indicator of market sentiment. it's feeding into emergency markets and feeding into glen court which is a big idiosyncratic news story. tom: what other research do you have? >> let's do credit. it has been falling out of bed. we have bank of america/merrill lynch analysts yesterday saying it looks like a train wreck in

u.s. junk bonds. their big concern is we have seen some idiosyncratic weakness in specific companies like shale companies. they worry that weakness is starting to spread. it's a big story. we have so my people talking about liquidity in the corporate bond market. bill dudley was talking about it today. the concern is that if prices in fallsonds get away, price will be more exacerbated them they would be otherwise because of lower liquidity. michael: the people of bankamerica say there is an appalling lack of liquidity in the bond market. bill dudley said there is not much evidence of treasury market liquidity declining. >> or corporate bond market liquidity but bill dudley pins that on the regulation argument. liquidity isay declining because of new rules that make it harder for banks to hold onto bonds and fit bonds and that cushion is not there anymore.

bill dudley says he does not think that is the case. we have had these years of low interest rates that have encouraged people to pile into corporate bonds and hold on to them. why trade corporate bonds if the paper is so scarce and higher-yielding? bill dudley does not address that side of the equation. he only looks at the regulation factor. tom: it's the end of a quarter and we begin our fourth quarter. tracy, thank you so much. she's got to run to her saxophone lesson. tom: billy joel -- "just the way you are go ."chael >> piano man is my karaoke favorite. i can even do the harmonica solo. michael: there is a future segment here on "surveillance."

people are already writing in. tom: where up 219 points on the vix is 207.and the ♪

david: a new report out this morning on women in the workplace. the most companies want to level the playing field but change is not easy or fast. if women and men were to participate in labor markets worldwide at the same level, gdp would grow by $28 trillion. guest is with mckinsey. that economic number is so big. there are so many motoring fat -- motivating factors to do this. why is this not as quick as people would like? >> one thing we see is that the obvious areas are not the ones we should focus on. of the 118 companies we looked at, very few of them had attention problems. what they were saying is that men and women were leaving at similar rates which led us to ask what else is going on. we found an unlevel playing field. we found ambition levels vary between men and women especially for the top. we found there are biases in the

organization that impede the ability of women to succeed. daivd: is there a point where this begins to happen more and more? absolutely, one of the main things we found is that if you can recruit women and promote them to their first promotion, help them get through the beginning, you have a greater chance of developing them through the organization. we found that women at the top were less likely to leave them early hired women. the barriers set him in the middle and upper 10 year levels. i am struck by how robust this conversation is. the sheryl sandberg book did well and people are taking this more seriously than they did before. what needs to happen for that to become more actionable? >> companies need to take action. one thing we found is that the vast majority of ceos, almost

80%, will say this is a priority. it is a priority to them but when you ask their organization and the men and women to rank them as a preorder two, less than 50% believe that is the case. in business, if you don't believe something is a priority, you'll probably not act on it. the first thing is to amp up the intensification. you can make sure that keep a practical actions that can help. are there sectors where this happens better than others? there has been a disparity in silicon valley. are others doing particularly well? >> we see improvements in health care. we see that technology lags behind. one thing worth noting as part of that is related to the education pipeline. likewe look at stem engineering computer science, not as many women graduates. we are seeing those numbers

decline in the u.s. over the last decade. the most jobs in so much opportunity is in the tech field. one thing is the early stage of making sure we bring women into the education field and line them up for these jobs. in the technology sector, we don't see that. thank you very much and the report's women at. tomorrow, general richard myers. this is "bloomberg surveillance." ♪

tom: good morning, everyone, from our world headquarters, 59th street and lexington avenue, a rainy new york and we say good morning to all of you from "bloomberg surveillance." data, give mejobs background on 80 p. michael: 10,000 more jobs forecast than what the consensus is for nonfarm payrolls friday. it's pretty much where we have been. we are brought to you by national realty with 30% returns

on rented real estate. nira.net. you can get a good cup of coffee in davos. withe have an economist the world economic forum and joins us with a terrific report on competition. good morning. >> good morning. >> i look at your work and the importance of your work is done n of columbiaarti university on competition. of theat him as one great global optimists out there. when you look at competition nation to nation, is it an optimistic report from the wef or not? it's an optimistic report in the sense it provides a number of solutions. we understand competitive

activities. see is a new normal of lower productivity growth and lower growth over all. the only way to break out of this cycle is to improve productivity going forward. we would provide a positive outlook on productivity. tom: where is your outlook on productivity? it about labor improvement, capital improvement, or total factor productivity? >> it's really all those factors that drive productivity. the factors that are the underlying drivers such as institutions, infrastructure, macro economic stability. financial, labor, and technological is important and innovation and sophisticated

businesses are key. michael: you are suggesting the global economy is adjusting to a new normal. it's lower growth but does it ,lso suggest a longer expansion may be slow, but we don't get in balance is building up? growth isivity driven balanced growth. productivity is strong and then the growth is sustainable going forward. there is no contradiction between high-growth built on solid productivity and fundamentals. if we get that, for benefits the most? do we start to see the emerging markets overcome a kind of drag ism a fed rate increase or it the developed markets that can take advantage of technology and productivity that will benefit the most? see is those

countries -- when you look back at the past seven years, those countries that have been most competitive which were the united states and switzerland, those other countries that have -- that weathered their financial crises the best. we have studied these in the countries that are competitive are more likely to withstand the next crisis. we see small improvement in terms of emerging markets. we see improvements in india and the asianca but also countries of their small improvements in a number of countries that are not the biggest emerging markets but the smaller ones. in terms of advanced european countries, many remain stable or with only small changes.

positive signal is that italy and spain are going up a little bit indicating there is some movement. thingsen i look at the that can upset the apple cart, the swiss national bank stunned the global economy, there are those shocks out there. which shocks did you see in your report that are worth focusing on? at there more looking shocks that could derail the global economy going forward. competitiveness could help countries withstand the shocks. switzerland, the country has solid fundamentals and has strong institutions and a solid macro economic situation with the labor market. it has withstood the recent shocks relatively well

especially the january franc shock. growth rates for better than expected. tom: thank you so much. she is with the world economic forum as we look at competitiveness in the world. the report reaches beyond the new normal. into three days of jobs economy, there is a new normal and a new mediocre and then to take an optimistic tack, there is a triumph of american resilience. we are different and i will tell you where i saw that. 2007 when hank paulson and the rest were trying to save the world, i read a four-page report which became a 40 page report. i sat at a bar in new york with a martini next to me and read the entire 40 page report.

then we had a 100 page report which became a 400 page report but we cleared the market. so many other societies did not do that. they are still struggling with that. the reason we are at 200,000 jobs and arguing about 2% yield versus 1% yield, we cleared the market did michael: some people would argue that we have not and that's why the fed needs to rates.nterest there is a feeling that equities in particular have gotten an artificial boost from too low interest rates from the buyer of last resort always being there and that has kept us from clearing markets and that is one reason you don't see a lot of corporate investment or demand for loans, cash is floating ripped theit we had band-aid off earlier, we would have cleared the market, that's the other side of the argument. tom: the group of esteemed

economists including kenneth rogoff say do not initiate a rate increase because that part of society cannot withstand it now. that is per their argument. michael: the question many people have -- is that really true that you cannot withstand it now because we are only talking about a very small rate increase? there is an interesting please in "the washington post go peter rbich writes about all of this and says economics is a little different from politics in the sense that politicians, for the most part except for the people on the fringes, tend to see things -- they try to combine ideas together and work together to get things past were economists tend to think of

things is absolute. that is the debate we see over the fed. my view of the economy is the only correct one, how can there possibly be any other view? raise anthe pro anti-raise groups, each convinced they have the best solution for the economy. quotecannot give us a on the jobs report friday. looking at the adp for germany. ism milwaukee. this happens every once in a while. 200,000 of the forecast for their roles on friday. the unemployment rate will remain at 51% and that is the consensus at the moment and we will see by friday.

hopefully my bloomberg terminal will be on english tomorrow as we continue jobs coverage. this is "bloomberg surveillance or co ♪

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>> a. welcome to bloomberg market day. let's go to the morning headlines. thatps the best things investors can save at the third quarter is that it is almost over. we will summon up and look ahead. investors say the worst is over. researchers are facing challenging decisions. we will head to those -- to london for the latest look. by this time tomorrow madison square garden may be trading as two separate companies. we have details of the split coming up. stocks are closing out their worst quarter in four years. at least, right now they are on a high note. let's check in with the julie hyman at a look. julie: that is correct, the s&p 500 is down by over 8%. an increase in the last day of the quarter with rallies at 1% across the boa