october, an early jobs report. 0,000 jobs per20 month. russian airstrikes in syria caused damage and distressed. this is bloomberg "surveillance. live from a gorgeous new york. it is the first day of october. i'm with is. good morning. us from ferro joins london. what have you learned about glencore? lot.han: not a i've heard enough about glencore. it embodies the problem we see globally, commodity rout, weaker china and companies loaded up on that debt. commoditiesus is on , your gallon of gas in america. our top headlines.

vonnie: russia's president vladimir putin says he is trying to prevent the spread of terrorism. u.s. officials say russian airstrikes in syria are not aimed at islamic state, they are targeting opposition groups fighting serious president bashar al-assad. asidehas vowed to keep and power. attacks hit one group of rebels trained by the cia. secretary of state john kerry called for a political solution. he appeared with his russian counterpart. >> even as we do not have yet a resolution with respect to some critical choices in the political solution, we think we have some specific steps that may be able to help lead in the right direction. u.s. is concerned there could be incidents between russian planes and u.s. warplanes in the same area. that government

stimulus may be having an impact on manufacturing. china's measure of factory activity stabilized around a three-year low. the report signals government spending on infrastructure gaining traction. governmentrom forecasters, they cannot rule out the possibility that hurricane joaquin will hit the east coast this weekend. uin become a major hurricane with winds of 120 miles per hour. is east of the bahamas. some say it will hit the eastern seaboard, others say it will veer away into the atlantic. auto workers have rejected a contract for the first time in 20 years. uaw members have turned down a proposed contract with fiat chrysler. some union members were unhappy the deal did not bring an end to a two tier wage structure.

teams celebrated after clinching division titles. st. louis beat pittsburgh 11-1 to win its third straight national league central crown. champagne after toronto won its first american league east title in 22 years. the blue jays were in fourth place two months ago. tom: what a great contrast. the blue jays, it is really special and new. the cardinals are a true sports franchise. vonnie: seems like every october we talk about the cardinals. tom: i don't know if you had this in ireland, in my youth you could turn on the radio and kmox in st. louis was bouncing off the ionosphere. vonnie: definitely watched some cardinals games. the surprises of bloomberg "surveillance." vonnie quinn, a cardinals fan.

equities, bonds, currencies and commodities. a little red. futures up 16. within equities, bonds, currencies and commodities. vix, 24.50. gold, south, brent near $50. still negative interest rates in germany. some optimism. this is auto sales. i'm proud of this chart. this is 30 years on american autos. here's the recession of 2001 that did not happen. they give us a lot of free cars. here's the ugliness of 1991. vonnie: that is insane. that's the interesting thing.

as much as economists are not spending savings or the oil is not coming through, we are seeing car sales above 17 million. tom: this gap above the blue line is the uber effect. i' m kidding. we will have michael with attention to that later on bloomberg "surveillance." of quiet markets, we don't know what to do with ourselves. nevertheless, i hear this from , the idea of still negative interest rates. what does that mean for mario draghi? jonathan: it is difficult, bring up the two year with a negative yield of -.26%, the ecb cannot buy that. you have not seen and unwind in the bond market. disinflation is still the same. you see it in the data as european factories cut prices. you see it in the market.

what's the policy response? we look to monetary and fiscal policy and shrugged, what are they going to do? tom: a fascinating moment. with lagarde's comments, what do you learn in her important speech? jonathan: she's nervous. come out andimf specifically recommend what they should do for policy. when that dropped across the terminal two months ago, i'm .till surprised jonathan ferro with us from london. the debate is less the price of oil and far more the terminal value of oil. is it $40, $50, or $70 per barrel. exxon cares about this. so too, harold york, principal

analyst. wonderful to have you back here. i want to go to the future value of oil. how is the terminal value determined? we look at current demand and go out 10 years. we ask ourselves how does the market balance the demand. we look at existing non-opec production. how much of that goes into the decline. eventually you come into a breakeven cost. that's what it is going to take to get people to invest. history of the bright guys like you or daniel yeargin or name a sell side oil analyst of gaiming the price. is it a dartboard? skip: it is a dartboard but we

are better at it than the forward curve is. the market has to come back to the physical fundamentals. anathan: i want to ask question, when oil prices were on the way down we used to talk about a floor. we would go through 50 or 60. do we need to switch the conversation and start discussing a ceiling. resilient.as been is there a ceiling in the crude market? skip: i think we have always thought that $90 a barrel was in some sense the operating ceiling. that is what we needed to bring the last project in. you get political events and anything can happen once you get above $90 a barrel. 2011-2014, that was kind of driven more by the market fundamentals and then the nonmarket effects like middle east uncertainty. great -- it is

banks, energy servicing companies and oil companies cutting. how much more that do we see before the end of the year? skip: we think we are going to see another wave in the fourth quarter. we've done cuts in the field. costshave to compress further, we are coming into the headquarters. that is what the chesapeake move is. you are starting to see that the cost compression that has to be sustained to get us through 16 and 217 has gone from the field to the corporate centers. is: it is october 1, what your october shaping up as? what are you looking at that affects the price of a gallon of gas? skip: what we are looking at is how does the supply-demand balance correct itself in 2015 and when does that start to

happen. oil prices are flat until the second half of next year. that is when the market starts to see the rebalancing. it is similar to our long-term view, we are going to out to when does that de-stocking occur and trace back. tom: we will talk about the balance sheet adjustment later in the hour but the flow dynamics, no pun intended, is interesting. jonathan: it is more interesting when you account for what is happening in the u.s. when we judge whether it is a net positive for the u.s. economy with of uti at $46 a barrel, we are using the economic models of the previous decade. the u.s. is a major producer, do we need to look at the models adjust? skip: i think the models of the last 30 yearsskip:, not just for gdp but the way we estimate how

oil markets, there is of a shift that has to go on. in terms of how it impacts the net economy, it is two things. we'll is expected that low oil prices would first be a negative impact as you cut back the capital spending and jobs. confidentrs got more and start to see the benefits of the low gasoline prices you would see an upswing and that is what we have seen. it is very much a regional story. texas and north dakota are hammered much harder. california and new york are better off. skip york to give us perspective on your next gallon of gas. getting him onks the show, he will be with us for the hour. lagarde's new mediocre. ls about a global

savings glut. stay with us. ♪

tom: good morning, everyone. john farrell and francine lacqua joining a perfect day. the bridgehames, looking over st. paul's cathedral. a beautiful day in london. we need world headlines. here's vonnie. but time inress has the fight over spending. lawmakers averted a shutdown by passing a temporary budget bill that keeps agencies in business until december 11. conservatives will have another opportunity to try to defund planned parenthood. report may new increase concerning the country

is slipping into recession. the index for large manufacturers sell from june to september and will shrink further in the next few months at large companies that have benefited from the week yen are still not expanding domestic investments. russia and the u.s. at odds over airstrikes in syria. russia says the attacks were aimed at islamic state targets. the u.s. says what rush that really did was attack rebels opposed to bashar al-assad, who russia supports. let's bring this, in henry meyer from moscow. .ou are literally in russia is there any clarity on what russia is doing in syria? the russians claimed they struck islamic state targets yesterday in syria. says the areas which were hit were not areas in which islamic state has a presence.

this morning, the spokesman for tosident putin seemed confound those concerns when he said it russia's goal is to support the advancing forces of president assad and the russian campaign is aimed at countering, as he expressed it, "extremist groups." state.ng islamic that would seem to feed into suspicions that russia has a brighter goal -- a broader goal. vonnie: this is going to be a problem, knowing what russia is going to do. in the "financial times," wr when russianif and military personnel starts dying in syria, the applause might fade." is there any good outcome? even if president assad is supported by russia, the u.s. is

working in the opposite direction so we're going to have chaos, are we not? henry: the risk is certainly that you could get a worse conflict. the saudi foreign minister two days ago said if russia continues to support assad, saudi arabia may have to increase support for the rebels. there are lines of communication between the militaries of the u.s. and russia. the russian hope is that actually they will construct some kind of informal coalition on the ground. we will see whether that happens. tom: there is a stereotype in the united states of a russian military, effort that is clumsy rusted, and not all that good. what is the quality of the military and aircraft that russia has in syria? are these cracked forces? henry: the pilots are very good.

the planes they have deployed are a mixture. some are advanced and some are older models. that will impact the efficiency of the operation. russia will have to deploy some aircraft at relatively low altitudes, which could mean the risk of being shot down and pilots being captured. this could have an adverse affect on russian public opinion. in general, these are crack forces. tom: we spoke to the latvian .oreign minister yesterday focus off ofe the ukraine? henry: that is the goal. will meet with his counterparts. one of the main objectives in syria is to get out of the isolation it has been under itce it and next crimea --

and asked -- it and ask -- it annexed crimea. vonnie: if we start to see civilian casualties at the hands of russia, what is the response? henry: there have been civilian casualties in syria. the concern is that the russian as carefulay not be and you will see more so-called collateral damage that has been the case so far. theould also increase insurgency against president bashar al-assad. you could end up with retaliation against russia. there is a risk of jihadist attacks in russia. tom: henry meyer, greatly appreciated. we will speakur to general richard myers, former chairman of the joint chiefs of staff.

over 4000 flying hours of duty in our military aircraft. in the myers, with us 8:00 hour. stay with us, bloomberg "surveillance." ♪

tom: good morning, everyone. thank you for being with us. vonnie quinn and tom keene, michael mckee and a bit. with us fromo was london. time for a morning must-read. robin wigglesworth in "the ft," tamed?"y really be unsystematic -- on systematic

risk. an emphasis on "more safely." pageis a fabulous one for all of wall street. skip york with us on commodities . part of this is the burgeoning etf's and matching your world of commodities with derivative hedging. are you -- are we too smart for our own good? vonnie: it is -- is increasingly complex. the forward curve for oil does not reflect the oil markets anymore. sometimes it is a head against a currency, commodity or a stock. integration is going to do it but you've got to think your way through it. tom: robin talks about some players, cliff of aqr, ray

friend,re these guys a of oury or a frenemy viewers? think they are a frenemy. there is unintended consequences. quite often, we understand what the consequence is after it has happened and then we adapt. vonnie: that is what they are talking about, the cobra affect. there was a bounty put on a dead cobra, more dead cobras will come about because people buried them in order for the bounty. orderple breed them in for the bounty. when oil is going up and down, is it good for investors? this is where you have to

trust your advisor. i was doinghings i do not look at my financial statements now. tom: why? fretting on than what my funds are doing on a month-to-month basis, i'm going to live my life. tom: ok. i am looking at the double every threesh fund, minutes. robin wigglesworth, just wonderful. good morning, everyone. ♪

tom: a washington, d.c. where dreams can be made. he came out of reserve officer training corps at kansas state university.

richard myers became the chairman of our joint chiefs of of our military general myers will join us in the 8:00 hour. a success story in the military. with us later on on bloomberg "surveillance." top headlines. vonnie: thank you. russia is rejecting u.s. criticism of airstrikes in syria. russia says it's planes attack u.s.,me targets as the the islamic state. american officials say the russians bond -- bombed rebels opposed to bashar al-assad. u.s. warplanes are flying in the same aa. russia's foreign minister appeared at du and with john kerry. response was to

engage at the request of the syrian government. establish channels of communication to avoid unintended incidents. vonnie: u.s. officials say the russians gave them one hour of warning before the attack. china, interest rate cuts and government spending programs may be showing up in manufacturing. china's measure of factory activity stabilized last month. they are still at a three year. manufacturers hurt by deflation and excess capacity. in afghanistan the government forces have recaptured the city from the taliban are the taliban denies the claims. u.s. warplanes attacked after the afghans asked for help. bernie sanders catching up to hillary clinton when it comes to fundraising. as much in collected the third quarter as mrs. clinton and brought in about $26 million, most from small

donations. clinton took in 28 million, most from big fundraisers. hurricane joaquin picking up speed as it heads for the bahamas. where does it go after that? hurricane joaquin is a category three hurricane with maximum sustained winds of 120 miles an hour. forecasters say they cannot rule out that a hurricane will strike the east coast as early as sunday. some models say hurricane joaquin could head into the atlantic. we don't know. tom: come on. vonnie: it is like a bowl of spaghetti, they call it the spaghetti model. tom: the cartographers at "the new york post" say here we go again. the arrow points directly at the ritz-carlton. shaking.nder is vonnie: it has become a hurricane to be taken seriously but we do not know -- tom: hype free on bloomberg "surveillance." it's coming!

vonnie: we will be speaking to meteorologists. tom: speaking of hype, a jobs report tomorrow. -- joshht of bloomberg of bloomberg intelligence. what will you look for tomorrow? job: they are all.net growth. this month more so than ever. you got to look at what happened to revisions to the august number. 00, thatame in at 173,0 is much lower than the year to date average of 212,000. policy makers are going to look to see if that gets revised upward. the moment,stion of aren't these quality jobs? there's a perception that they are not end there is push back on that perception. a lot of the nature of what work is has changed. there is a little c-span.

jobs for the sharing economy. it is interesting stuff. what makes a quality job, is it about benefits, autonomy? this is a conversation that is going to grow in this country. neede: what will traders to see before they start to believe that there will be a 2015 left off? trendthey've got to see a like number. the fomc has said they expect they are going to be lifting off as long as they see sustained progress. a 73,000 is not going to cut it. you've got to have something that will make up the progress. rk, have you been surprised by the layoffs? what is the level of ugly right now? skip: we are directionally down about 90,000 jobs. tom: how many more?

skip: we might double that. push that against your aggregate sense of 200,000. that means we are sort of normal at 250 or 260? skip: our average last year was 260. josh: if we can get to 15 or 220 -- tom: if you consider skip's world, that is a great number. fedie: put into context the speak we've heard. there was confusion and now we have had all sorts of fed speakers coming out. where would you say the committee is at? josh: i think they want to hundred 15000 and expect if the u.s. data can hold. management.t risk janet yellen overplayed her hand a little bit. she did not say anything, she just said we are expecting more progress. she said if we see more progress, we expect later this

year. placingwhy our traders a 43% probability on a december move? josh: traders have to price in the full range of possible outcomes, you have to get into catastrophic outcomes. the fomc is not talking about catastrophic outcomes, they have to focus on the most likely outcome. they do not have such fat tails. vonnie: our survey shows we are going to see 200,000 after 173,000, does that cut it? josh: that should cut it. the question is what do the revisions look like. 173,000 could go lower, there is two-sided risk. tom: what is the other side of the risk? i thought we did 6.1% nominal gdp in the second quarter. we had a great nominal gdp. josh: if we do not get job growth, we do not get further

improvement, the fed is going to have cold feet. tom: you are the guru. how do you define slack? what is slack? josh: slack is the things that are not measured by the unemployment rate, underemployment, involuntary part-time workers, lack of wage growth. is that more important tomorrow than the body count? josh: it is the body count, wages are a lagging indicator. tom: i am going to tweet. vonnie: more fed speak. does it really matter what the speeches?ay in are we really only listening to janet yellen and stanley fischer? josh: the biggest thing is a fischer tomorrow. we have patrick parker who will speak, the head of the philadelphia fed. no one has heard him talk about monetary policy. he's not an economist by training. , youis he plosserian

cannot have a job unless you consider charles plosser's -- josh: that remains to be seen. tom: what are you going to read about over the weekend? josh: we want to know what everyone else had to say about the jobs report and trying to pick three what patrick parker had to say. we don't know anything about this guy from a monetary policy perspective. weinberg morning, carl with a brilliant note about growth of inventories in japan, through the roof. josh: we have an inventory issue in the u.s. it was the largest two quarter growth in inventory over the last 15 years. gdp?are we a sub 2% macro economic advisers has it at 1.8% export weakness. josh: that might be for this quarter but for this year we should beat the target for gdp. thank you soght,

much. we will enjoy the perspective of alan krueger, former chairman of the president's council on economic advisers and one of america's great labor economists. of ourr that with all coverage. michael mckee and i will have that for you, we go beneath the headline data. ♪

tom: good morning. first data out with pricing, $18-$20 per share. this will be used to retire billions and billions of 11%-12% preferred debt. everybody in an uproar, citigroup running the books on this. just like a moment from another time and place. vonnie: do you remember the other day one analyst brought in a red herring. we can't expect a roadshow. tom: can we go? vonnie: not sure you would want to. i would be more interested in going to the square launch of the ipo. thing.e hipster first data is not a hipster. first data is a big service provider and this is a huge transaction to look forward to.

right now it is time for our single best chart. skip york with us. not oil, not copper, natural gas. is really big on natural gas. if he was big on it at four or 5 million gazillion btus, he's got to love it at 2. always been a big push, one of the ways we get our way off the foreign oil addiction is through using more domestic natural gas, if you go you encourage that substitution. it is helping move his industry in the right direction. tom: is there a fracking revolution in oil in natural gas? the same technology. one of the things we see is when you deploy some sort of new technique in oil and it transfers to gas, you get better

results in gas because gas flows easier through the same porous rock. you get more gas flowing through it. york on engineering. vonnie: i want to know where we are on federal regulations on fracking. we've lost the idea that maybe we do not want as much fracking. judge inre was a wyoming who issued an injunction fracking rules on federal lands. it is probably more of a bellwether. there is not a lot of fracking going on on federal lands. there is regulations would not have an impact on the actual drilling but it may be signals we ought to pause and rethink the risk of using the regulation environment strangling the economic boom that fracking has created. vonnie: it would be regulatory

as opposed to supply and demand that would strangle the bill? -- strangle the boom? skip: i think that is what the industry has worried about. the regulatory death knell has never showed up. now we are back to economics. the cloud of the regulatory environment, the uncertainty is what really has the industry watching. vonnie: from one cloud to another, some photos. tom: we are not doing hurricane watch. vonnie: we are doing volcano watch. western mexico erupted tuesday and wednesday. look at the time lapse video, capturing lava, ash and smoke released more than a mile into the sky. three consecutive explosions, the largest eruption since may 24, 2005. the volcano did erupt in july, one of the most active in north america. stunning. tom: wow. nothing else to say.

photo, we havet a three-year-old leopard who got a pot stuck on his head in india village. he was trying to get some water. he spent about 4.5 hours with a pot on his head. he was freed after being tranquilized by the forestry department. he was checked by veterinarians before being released into the wild. he will not put his head into a pot again. i would be nervous. can you imagine? tom: wow. vonnie: he is learning how to get water. in a couple years he will just kill something. photo, you could be the new owner of donald trump's -- selling one of his campaign coaches with the

"trump" slogan. tom: would you put a second story on top and make it a tour bus of new york? vonnie: could you issue bonds on it? i don't know. bus?did he ever go on the that is the real question. vonnie: the name david, like everything else. tom: in our next hour, an important with joachim fels of pimco. joachim fels on germany, europe, deflation and disinflation of a global savings glut. this is bloomberg "surveillance," good morning. ♪

non-report. yen churning at 1.20. euro-dollar weaker. euro-yen big dea., through 134.

strong yen weak euro. that is a valid watch. 143, i can almost afford harrod's. vonnie: barclays out with a call on japan. microsoft and google have agreed their long-running battle over smartphone and video game patents, dropping about 20 lawsuits in the u.s. and germany. executives had been demanding royalties and microsoft had been trying to block motorola phones from using certain features. a rough month and a rough year for investor david einhorn and his green my capital. green lines main hedge funds fell almost 4%. einhorn said the market environment has become ofavorable to his style value investing.

donald trump says syrian refugees could be a terrorist army in disguise. the front runner told an audience what would happen to syrian refugees under a trump presidency. as part of the mass win, they arei going back. a lot of people say that is not nice. we cannot afford to be nice. we are taking care of the world. we are losing our shirts on everything we do. vonnie: trump says he wants to know why the refugees are not fighting to save syria. tom: i just finished david donald's one volume on abraham lincoln. what we just heard there was the same energy we heard between northern illinois and southern illinois in the vicinity of 1857. nothing changes. it is never going to go away. vonnie: tweet the link to the book. great idea.

it is a classic one volume from one of our great historians on the 16th president. we need to look at the accounting of hyper carbons -- hydrocarbons. no one better to do that then skip york. he does not live in new york city. he lives where they do things with nuts and bolts. vonnie: do not forget the washer. tom: vonn it was talking about a lock washer. about balance sheet adjustment. we've heard from the sophisticates that october is the month where you recalibrate every energy balance sheet. what will happen? in octoberig issue is that some banks that have reserved back to lending, they will get those terms reset. what we are hearing so far is it is not the doomsday a lot of people have been saying it was going to be. and a lot of the larger producers do not see the

rebasing until march of 2016. even if we look at rbl loans, the ones that are not using the reserves are 40% of production. the ones that are going to go through the stress today, it is going to be a tragedy for them. but they are the smaller companies. tom: we saw the merger and , what does week ago it mean for someone who everyone agrees -- this is not buy-hold -sell, anadarko petroleum, everybody loves them. they have a balance sheet of $52 billion. what will be there hit? ducks in, one billion here, one billion there, what is it going to be? skip: we think there's going to cut that youpital could see -- tom: you mean a capex cut.

skip: a cut of 50%-20%. somewhere in the neighborhood of $5 billion. tom: is this good enough accounting? vonnie: cut that you could the banks do not want to make calls on the line spirit the banks went into roll over. is this a case where the banks are going to rid themselves of the weaklings and only stronger once will survive? they are going to try to force the week into the strong. there needs to be consolidation. you had a year to straighten this out and you did not straighten out, now we're going to expose you. the ones that have the balance sheet are going to absorb those. tom: does everybody gauge the amount of petroleum on their balance sheet in the same method or process or measurement? skip: they do/ tom: it is codified? skip: it is driven by sec regulations. vonnie: will it be a fire sale, will we see service providers selling assets or combining in a

quick attempt? skip: you are asking the question one week to early. next week we will have the client forum and bring in people from capital markets is likely to get that view. that is what the client base is asking. is this going to be quick or is this going to be slow. vonnie: what is your got instinct? skip: it is going to be a tsunami. a couple trades done early. we are going to set the price point as where transactions ought to occur and we will see the wave after it. gross loves mexico. what did you learn on your trip to mexico city? combined with the conference i attended on tuesday and then the bidding and leasing's network -- that were think there's a longer-term confidence in the industry.

it was expensive to get into the bid room and they bid on deep water projects. on: skip york hydrocarbons. in the next hour, joachim fels on germany. ♪

announcer: this is bloomberg "surveillance."

tom: out of the crisis, a global savings glut. for the entire hour, joachim fels of pimco. it is october. an early jobs report. america mints 200,000 jobs a month. jack dorsey must decide if 140 characters is too few. good morning. this is bloomberg "surveillance," live from new york. it is thursday, october 1. i am tom keene. joining me is vonnie clan and michael mckee. what does october 1 mean? michael: things start to happen in the fourth quarter. we will see what happens to the jobs report and everybody is watching the hurricane. we are -- tom: we are doing hurricane sandy hysteria. keepel: the models

changing, where it is going we do not know. there is some thought it might come to new york so everybody can start panicking. it know what the problem is, might affect the nfl games on sunday. if you start messing with the national football league, you are messing with america. tom: it cannot get in the way of tom brady after deflategate. top headlines with vonnie quinn. vonnie: russia' as president vladimir putin trying to prevent terrorism.of u.s. officials say russian airstrikes in syria are not aimed at islamic state, they are targeting groups fighting serious president bashar al-assad. to keep assadd and power. according to the u.s., the attacks had a group of rebels trained by the cia. john kerry called for a political solution. he appeared with his russian counterpart. secretary kerry: even as we do a resolution with

respect to some critical choices in that political solution, we think we have some very specific steps that may be able to help lead in the right direction. the vonnie: getting some headlines that russia carried out 4 airstrikes overnight according to a russian news agency, citing the defense ministry. the u.s. is concerned that could andncidents between russian u.s. planes in the same area. and china, a sign that government stimulus may be having an impact on manufacturing. china's measure of factory activity stabilized last month around a three year. the report signals interest rate cuts and government spending on infrastructure are gaining traction. a warning from government forecasters, they cannot rule out the possibility that hurricane joaquin will hit the east coast this weekend. hurricane joaquin has become a major hurricane with top winds of 120 miles an hour. east of the located

bahamas. computer models show several possibilities. some say it will hit the eastern seaboard. others say it will head into the atlantic. payments processing company first date at once to raise three point two billion dollars in an ipo, that is according to regulatory filings today. private equity firm kkr took first data private eight years ago for almost $30 billion. there's a our top headlines. tom: a lot going on. let's do a data check. churn in the markets, gold wea k. it has been quiet for a few days but yields grind lower. no other way to look at it. days of quiet markets. jonathan ferro is in london. ,ive us an update on lagarde disinflation, and low rates. what does it signal? jonathan: they are worried about a fragile economic recovery and

what happens when we go forward. an -- the/ -- the boj theme is the theme of disinflation, low prices get priced on as a factory gain. the bond market once again, yields are low. that theme has not changed for has gotten worse. tom: where does sterling settle. i noticed the grind in sterling does a51 handle. what 1.49 signal? jonathan: the rhetoric has not been matched by a pickup in the data. for those guys to pick about hiking, they need inflation to pick up. that is there one mandate, if they do not have inflation, what can they do. if the data does not match it, it does not count for much. sterling has pulled back in the last month.

from london. ferro we are pleased and thrilled to have joachim fels, global economic advisor for pimco, after a tour of duty at morgan stanley, mr. fels has brought to pimco. i want to talk about the savings glut. i think your work is brilliant. i want to congratulate you on berra, the economist y. "i never said most of the things i said." he sadly passed away last week. he has many great quotes. there was a lot of focus on what janet yellen did say in the press conference when she mentioned china 17 times. in her speech a week later she did not mention china, only once. outer could see villa and -- i could see willem bouter

saying this. "ihael: alan greenspan said understand you think you understand what i said." based on the data on which they are dependent, what is pimco's call for the rest of the year? do you think it gets pushed into 2016 joachim:? i think they want to go. 14 of the 17 fomc members have signaled they want to raise rates. the assumptions should be they go in december. several things need to fall in place before that happens. like an easing of financial conditions. tom: it sounds like a hope. vonnie: yogi berra said there is in theory no difference between theory and practice but in practice there is. traders are saying the fed is not going to move. joachim: the market sees it as a

less than 50% chance. if you look at the markets at the moment with financial conditions having tightened, at the moment it looks like they do not go. if markets calmed down, if we get further progress on the labor market and there are signs that inflation expectations star to stabilize, i think they will go. michael: will you be watching at 8:31 eastern time tomorrow, a change in market expectations. are likely to get some pickup and wages. i think the hourly earnings will be important. wage growth has been stuck around 2%. there is a chance that tomorrow we will see a pickup. i think that will increase the fed's confidence. get a goodt if we body count, does the revision lower to the previous number? there is more likely to be a revision upwards in the

august numbers. typically there is a pattern that the artist numbers initially recorded are relatively weak and then they get revised up. michael talked doesn't really matter? the fed says we spend too much time worrying about when they start raising rates. i agree. we are spending so much time in the markets to figure out when the first step is. what is more important is what is the path going to be. at pimco we have a theory that we are in the new neutral environment. the neutral rate of interest is much lower. we would say it is maybe 2% to 2.5% nominal from the fed funds rate. tom: this goes back to see bodie bodie that austin university, said 2%. you are good at synthesizing the new lower terminal rate into our

politics and political economy. how are our politicians adapting to the new view? for the politicians it is a great thing. the government can borrow at extremely low rates. in some cases at negative real rates. i think that is a great thing to have. michael talk -- michael: they do not do it. the people have to live at the new nominal gdp rate. are we prepared? joachim: we are getting prepared. we've been in the new normal since 2009. tom: you did not come up with that phrase. vonnie: be pervasive thought in the market is that the first rays does not matter. but 25 basis points is different from 0-25 basis points. what will be the real effect on the economy? joachim: the impact of a 25 basis points great hike is likely to be small. this will be the best signaled rate hike in history.

if they hike, they will make sure the markets are prepared. i find it hard to believe that a 25 basis point rate hike can derail a $17 trillion economy. tom: we will speak about a global savings glut later. in our next hour, michael mckee and i will speak with general richard myers. former chairman of the joint barelyof staff, that describes this gentleman. richard myers is a flyer on combat and air attacks in syria. to that in our next hour. stay with us worldwide on television and radio. the storm is coming, get ready. bloomberg "surveillance. hurricane tom keene. ♪

tom: good morning. joachim fels with pimco. looking for to our discussion with mr. fels. here's michael mckee with a morning must read. this is brilliant. michael: he is the cohead of atan economics research hsbc. commodity prices falling. he notes usually a tumble and commodity prices after a short delay would be self-correcting, prodding importers to spend.

this time it is not. the debt overhang is delaying the adjustment. we have too many commodities out there and we do not have any demand is basically what it comes down to. joachim: i think that is right. china on the demand side. china is in a protracted slowdown and that is not going to change. we've had plenty of supply over the last few years so this is weighing down on prices. with supply so great and credit having been so liberal to finance the growth of the last few years, central banks are at the limit of being able to create demand. joachim: i'm not sure. i still believe in the power of central banks to create demand if they want. there are diminishing returns because asset prices are higher and interest rates are lower. that means they have to do more to stimulate demand. michael: where is the helicopter pad? the language of helicopters

. how do you effect that? it is a great image but when guys like you say helicopters of money, what do you mean? joachim: it means central banks have the ability to print money, to create money electronically. which hastional qe, become a traditional policy, they are buying bonds. there is some talk and there is the possibility that sent -- central banks print the money and handed over to the government and the government spends it. tom: what does that do to currencies. create more money and your currency goes down. if all the major players do it, you may not see a lot of moves. michael: are there fiscal authorities who would go along with that?

i guarantee you it is not going to happen in washington, d.c.. joachim: it is not going to happen in europe will -- or washington. this is a theoretical possibility. if the fed does not escape from the zero bound, we fall into a recession and then we have to do something else. tom: looking at the fed, a series of speakers. lockhart and john williams with important comments. stay with us. ♪

tom: good morning. let's get to our top headlines. congress has got itself -- and bought itself sometime in the fight of her spending. lawmakers averted a bill that keeps agencies in business until december 11. conservatives will have another opportunity to try to defund planned parenthood. report maynew increase concerns the country is

slipping into a recession. the index for large manufacturers fell from june to september and will shrink further in the next few months. large companies that have benefited from the week yen are not expanding domestic investment. russia launched airstrikes in syria overnight. russia says it destroyed a command center and car bomb factory. officials are targeting islamic state. the u.s. says what russia it really did was attacked opposed to syrian president bashar al-assad, who russia supports. we need to look at twitter. i don't think this should go above 140 characters. michael: jack dorsey was the man who came up with 140 characters. twitter shares down a little. it rallied yesterday on a report that mr. dorsey will drop the interim from his interim ceo title. remain as ceo of the

mobile payments company square at the same time. paul sweeneyw is of bloomberg intelligence. still with us, joachim fels, pimco's global economic advisor. from thisy was fired job in 2008. early daysbout the of twitter, he was described as a bad manager who handled criticism poorly. why is this a good idea to bring him back? >> i think investors are looking for somebody to step in. type had the interim ceo for a while. let's bring jack back. what jack does bring to the table's product knowledge and a focus on innovating their product. that is where twitter has lagged facebook.

that in a form of slower user growth and slower user engagement. a lot of people believe the fix is a product fix. , a lot of believe, might be the best candidate. vonnie: some product fixes were already underway under dick costolo, including project lightning. will dorsey be getting credit something dick costolo did not have time to roll out? what investors have been concerned about is the slow rate of innovation at twitter when you compare it to google or facebook where it seems like they are innovating, iterating the product every day. every time you go on linkedin there is some new bell or whistle. tom: you are not talking about revenue, you are talking about the machinery. saying thetors are product is kind of stale. you need to iterate the product. you need to drive to things if

you are any business, the size of your audience and the engagement of their audience. how much time do they spend on your platform? that is what you sell to advertisers. jobs's model, get fired, come back and be the savior of the company. what evidence do we have that he can do that other than the vision thing? paul: we do not. that is one of the issues for the stock. is this something that can be fixed or have they already lost the momentum in silicon valley. if you have lost that, it is almost impossible to get back, product or not. -- apparentlys there is a plan b. we will have to wait and see what becomes official. square looks to be going forward with its ipo in the fourth quarter whether this happens or not. mobile payments. but not a partner with twitter.

for twitterncern with dorsey coming back is is he going to be full-time ceo at twitter? does not sound my get. sounds like he's going to keep his job at square. when dukestagram loses at football i can do a video. on fine i can do a video. am i right that divide is a failure? paul: it has not driven -- tom: why has the management not fixed that? vonnie: that is what project lightning is. paul: you have a product that has not taken off in the marketplace, do you let it flounder or the you try to iterate it and turn it around? we see that at facebook and linkedin all the time. they move onto the next thing. the challenge at twitter, they have not moved as quickly as some investors are users would like to see. michael: when they began twitter

in 2000 six, jack dorsey said 140 characters is our signature. now they are talking about expanding that to possibly unlimited. good or bad idea? i think users are split. it is kind of what makes twitter unique. do you want to get away from what makes you unique? tom: i will rip up the script. company profiles, what is your team going to bring to the terminal for joachim fels. company specific analysis. we are rolling out 1000 companies under research coverage where we will provide a deep dive into companies' fundamentals, key themes driving the companies. covering 100 40 industries, we are rolling out coverage of 4000 companies. plug?s that a shameless we will have more in the coming weeks with paul sweeney and his team.

they have spearheaded smart analysis away from the pressures of buy-hold-sell. a will enjoy tomorrow conversation with alan krueger as we look at the american labor economy. bloomberg "surveillance." ♪

the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. tom: would color was the storm? a little joke from my grandfather. we await a storm four days away. we don't know where it is heading. maybe the citigroup tower in new

york city. this is bloomberg surveillance. the bahamas is where the hurricane is. russia carried out more airstrikes in syria overnight. defeatedit's planes and air factory. moscow says it is attacking islamic state targets. -- the united states says the russian foreign minister says moscow is trying to avoid any mistakes involving u.s. warplanes. he aboard -- he appeared at the u.n.. the first instruction to us was to make sure that the coalition of the united states some -- within syria at the request of syrian government.

communications to avoid any incidents. u.s. officials say the russians gave them one hour of the morning before the attacks. ofna's official measure factor -- stabilized last month. it is being heard by deflation. haveghanistan, forces recaptured a city from the tally ban. the tally ban it denies the claim. the hurricane is picking up speed as it heads towards the bahamas. where does it go after that? it is now a category three hurricane with sustained wind of 120 miles per hour. they can't rule out that the hurricane will strike the east coast of the united states.

however, it could figure off into the atlantic. we are in an uncertainty. disco baseball teams celebrated. -- two baseball teams celebrated. toronto won the first american east title in 22 years. the blue jays were in fourth place months ago. tom has storm colors. have you picked a team yet? vonnie: the mets. tom: you have to pick the mets. vonnie: it is a binary outcome. think theyue fans are going to lose because that is what they do. tom: let's go to the terminal right now. this is the greek yield minus the german yields. normal, 10ingly

years ago, then there is the crisis, second crisis, and then we rollover to the glory recently. you have been mustering worldwide on this crisis. is it all clear? >> i don't think it is all clear, but i think there is a political will to hold the euro together. we have a third program in place for greece. they need to implement the new government. i think there is a good chance that they get through the first review in november or december. ecb could begin re-buying government bonds. tom: in newport beach, california -- vonnie, help me? mohammed? vonnie: i believe so? michael: he is a mets fan. tom: he is.

he makes an assumption that can they doe a -- this with the euro? could, in theory, they could introduce a parallel currency. this would be them leaving the euro. i don't think they really want us. if they do that, they get a major drop in real wages increase. the greek people would be even more impoverished. a isis why i think option to stay in the euro to do what it takes to fulfill the program. then, any help forthcoming will be may be in the form of debt relief. michael: if they do what they say they are going to do, how long does it take them? this is the question -- it takes a decade or more.

but what is important, if they come through the first review, europe will agree to lengthen the maturities of the debt. so you get a reduction in the net value of these bonds. it is not a haircut. tom: we will come back. this is bloomberg surveillance. i'm with vonnie quinn and tom keene. it is car sales day. .he consensus is a slight drop 17.7 units in september. the most interesting is how volkswagen will use -- will move. jamie butters joins me. split on this, whether they will take a real hair, whether the publicity would help car sales or hurt car sales.

they are really split. it will be interesting to see who is right and who is wrong. as well,looking at it saying they will miss out on the diesel sales because they stopped sales on the two liter diesels. others are saying that they could go all the way negative. we have a range of 6.6 positive-6.2 negative. they are all over the map. there were some pretty hefty incentives, a real effort to close sales. so it will be interesting to see how it turns out today. michael: free floor mats. this aoes down, is substitution effect, would people just go buy another car? or would people put a leg?

jaime: when there have been these scandals before, they don't affect sales. as strange as it seems, the customers get around it and they get over it. the one time it made a difference was when the toyotas made a stop sale on the corolla prius. previous -- the diesel buyers are peculiar animals. [laughter] heard think, what i've some of the reporting has been, they are more likely to wait if they possibly can. vw is going to find a way to make the emissions clean. if you want a diesel, you want a diesel. view -- the the quiet about diesels.

help me with the responsibility or the but mess of the industry. with all of this recovery, is there a glut of units of cars? jaime: not too much. it has been a really disciplined industry so far. we check out a lot of that during the recession, and we have added that back. the incentives are picking up but so are the prices. things haven't got out of control yet. if things get out of control and demand slacks, we will see. when it is going to break down, some people will tell you it could be any day now, they could start flooding the market with incentives. others see more of a plateau. they keep adding capacity incrementally, they can run this sufficiently.

it is surprising. michael: the other interesting story is the expectations for ford is a 19% increase, i guess because they finally have enough pickup trucks to sell? jaime: they have gone for so many months with an undersupply of pickup trucks, now they have both factories running full and they are pushing hard. the estimates, some of the ranges went up to 22%. pretty steep. vonnie: quickly, what is the impact of the rejection with fiat chrysler? jaime: we presume that will be pronounced today. all indications have been that they are rejecting the contract. they will gather the chrysler leaders together and decide how to move forward. we expect that they would go back to sergio marchionne and

try to get a better deal. tom: jamie butters, thank you so much. from detroit, this morning. talk about the fed, this morning. ♪

tom: bloomberg surveillance, called in the markets. green on the screen. we are not bad. we need to look at the movers this morning. vonnie: let's take a look at a few movers. s&p 500 is above its worst closing level. we are looking at shares of some of the biggest underground mining manufacturers, they are falling today. is beingn today, it replaced by verisk analytics. joy global is down because of the commodities, -- it is also about the rebalancing on a day like this. vonnie: joy global is going into the mid-cast. tom, we can talk about copper

because it is climbing for a third day. data from china signatures growth in the world possibly is -- world possible biggest metal. a lot of people didn't pay attention to china industrial data. -- we paye pay a tape attention to anything china now. chinese restaurant people are going to react in the market. the chinese numbers still signal contraction, but they didn't get worse. that has people celebrating. we have a few things to go on, glencore is another one we are looking out for. they are down in the premarket by 2.6%. bring up the glencore pricing. this is wildly misleading.

89, that is not $89. pence. hence -- that is like a penny stock. vonnie: yes. idea, i like the way some people do it. michael: the system just puts the direct quote in. when they open at 9:30 -- tom: where is this going? vonnie: it is the first day of the new quarter. if you want to know what companies are going to be accounted for, really it is apple, microsoft and exxon. we won't draw any conclusions yet. tom: jobs day tomorrow. what is the single thing you will look for?

michael: it is wages. we know that we will have a decent headcount. the unemployment rate is low enough that if it doesn't go down, it doesn't matter. but the fed wants to see wages. tom: that would be a good thing to look at. i want to point out the 10 year yield. hour, the most important conversation of the day, the former chairman of the joint chiefs of staff. ♪

tom: good morning, bloomberg surveillance. important conversation coming up, but first, the top headlines. vonnie: japan's central bank sees little need to add stimulus right away. bloomberg news is reporting that the bank of japan policyholders will hold off and get a clearer view of where the economy is heading. out with the outlook for economic growth. it was a rough month for david einhorn. greenlight's main hedge fund fell in september, it is down

17% for the year. he has said that the market has become unfavorable. agreedft and google have to end their long-running battle gaming.nes and they are dropping about 20 lawsuits. google had been demanding royalties from the xbox gaming system. no financial terms were disclosed. know --t you need to pimco. his recent analysis is a core theory, which we all forget, including me, which is ask equals i. savings must equal investment. without that, it is out of wok.

what is a savings glut? >> that describes the situation we are in. to save more,s for old age or other reasons, but hardly any company wants to invest. so desired savings exceeds desired investment. why is the key reason interest rates are so low. it is not the federal bank. what is so important about , it is the yield compression back 30 years has a part of it being savings glut and part of it being inequality. but nobody talks about the massive glut. the money is just sitting there. the reasoning behind that

suggests that -- can we get nerdy? negative time preference. can you explain that to our audience? it is something that i promised -- that economists thought was done. >> it is what the textbooks tell you. ever since austrian capital theory, the idea was that people had negative time preference, they prefer today's consumption over tomorrow hoskinson and. so you have to offer them a positive interest rate. michael: and we are not. joachim: my theory is, time preference may have become positive. people may prefer future consumption over current consumption. you fall this into the comments of lawrence summers. how does summers fold into the

popeye theory? how does he play into that? his thesis is part of the global savings glut. what happens here is that demographics has an impact on the glut. we live longer but we don't work longer. we are working at a very long time period. baby boomers want to save a lot, this is flooding global markets. there is also a money glut out there and an oil glut. the big secular force is the savings glut. this is why we are in a neutral environment where interest rates are much lower. so savings on part of the consumer and corporation, will we see this come to

fruition for the economy at some point? it is beneficial in the sense that the oil glut helps consumers. the money glut provides some sale wind -- some tailwind. but if everyone wants to save and no one wants to invest, there is a global demand inefficiency. that is why this is mediocre. michael: it is a chicken and egg situation. how do we break out of that? joachim: there are two ways. one is what the central banks have been trying with all kinds of different policies, pushing interest rates below the equilibrium interest rate. a better way to do it would be fiscal policy. real interest rates are very low. we can borrow as negative real rates.

i think it governments can do a lot to stimulate long-term growth by investing in infrastructure and education. think of the immigration issue in europe, this is the time to invest in education for the young immigrants. tom: one of the themes here is that, where is the investment? if savings is up, investment can come up. where is the spirit to make more investment? from lowit has to come interest rates, but that is not enough. it needs stronger demand. this is where governments could play a role. again, with intelligent spending. not consumption but investment. vonnie: can diminishment in avings in china make up for

savings glut in the united states? joachim: in theory, yes. but the chinese people are still saving a lot and they want to export their capital. chinese investors and other emerging market investors now look for the safe haven. so this is one reason why the u.s. interest rates have remained so low. tom: how does janet yellen adapt? joachim: she had to take economic forces on board. she talked about the equilibrium interest rates, then being either zero or slightly negative, and this is why the rate part will be very shallow. ?ichael: why do it at all why raise rates under these circumstances? joachim: domestic demand is strong. we have a strong domestic sector, and i think the fed is

eager to get away from zero because this would signal that we are back to a more normal situation. so i think it is more a psychological thing. i don't think they want to go into a very sharp hiking signal, they just want to signal that the time has come to move away from zero because the economy is fine. look at themco, you bond market and the equity markets. do you link equity performance right now into a greater economic field? is it enthusiasm? what is happening in equity markets is that they are scared about what is going on in the global economy. earnings have slowed in the united states. they have rolled over because the dollar has appreciated a lot and there are worries about china and china is slowing. onthis does have an impact

the real economy because financial conditions affect growth and the inflation outlook. low equity prices mean conditions are tighter. do you have a call of euro parity? i am old enough to remember the euro parity and being below parity. there is no reason why we can't go back there. i don't think that is particularly likely over the next six months, but over the next 1-2 years, why not? on a shallow tightening cycle, that argues for a lower euro and a stronger dollar. tom: thank you so much for being here today. he is with pimco. jamaal or -- tomorrow is the job stay. also, secretary perez will be with us, he will arrive with a

positive spin in hand. , we will have comments on the auto sales breaking right now. this is bloomberg surveillance. good morning. ♪

an ulcer: this is bloomberg surveillance. michael: it is 8:00 on a damp wall street. markets, there is some sunshine, but are there storm clouds ahead? we will give you the full report here on bloomberg surveillance. i am michael mckee. it is the 66 anniversary of the founding of the people's republic of china. asia, the chinese markets closed. in japan, a big rise on the day. manufacturing confidence falls more than forecasted down three points. but service industry source by 25 points. investors made that good news. the nikkei is up. they -- pmit is pmi

day. markets are higher. stoxx 600 is up 4/10 of 1%. the german number comes in a worse than expected, about the only country in which that happened. let me point out, there are big .inners in europe, glencore we are set to open the fourth quarter with a second day of strong gains. the pmi atversion of 8:30. watching car sales because they have power the economy lately. only a small drop forecast in millionr to a 17.6

seasonally adjusted sales rate from 17.7. fiat chrysler, there auto sales were up 14%, that matches the estimate for the month. syria, buts bombs in not on isis. the world is shocked that vladimir putin might have lied. we will talk to one of the joint chiefs of staff, later on this afternoon -- this morning. joaquin.rricane it is a big one. it is a category three with a forecast track that at the moment, takes it straight towards new york city. moment" part is a thing, the other model has

it turning harmlessly out to sea. joining us now is rob. do we go to the sandbags? rob: last night caused run trended further east, and that is what allowed the hurricane center to go with the long-range track south of new york city. the interesting thing is that the -- looks an awful lot like the track of the european. so the trends now is to the east. it has nantucket on monday night. we watched each friend in the guidance. if they continue the trend towards the european, they correctly trended sandy's left turn, it could be another home joaquin neverat heads towards the united states. so we will be watching very carefully around midnight tonight.

there are dozens of models. even if the storm goes out to see, the forecast is for rain from washington, d.c. through the cape cod area. rob: that is due to a stalled frontal system that push through yesterday, it will actually be pushed back towards us as we get closer to the weekend. push throughhat we yesterday, more of that will come over the weekend. we will see rain whether or not joaquin comes of the coast. michael: i know rob will be watching that for us. we will cap -- we will keep checking back with him. we have a headline crossing the terminal, it looks like tepid is in a deal, a pharmaceutical

company is buying another one. $2.3 billion. tom: this is a red herring. 18-20, but there are lots of little deals. michael: especially in the pharmaceuticals. this is a mexican pharmaceutical company, rim said. that is where you get the combination, there are a number of books on that's that are better than good. bloomberg surveillance this morning. good morning on bloomberg television and bloomberg radio. during times of growth or economic uncertainty, your business needs cohn resnick. to move forward find out more at

cohn resnick.com. this is interesting. we are talking car sales. fiat chrysler is 14% higher during the month. straight months that they have increased sales. detroitoined now from by keith naughton. dimaggio like. what is sergio doing right? why have they been able to put together this incredible string? j theeep.a word, i jeep cherokee had its best month ever. suv's sellices low, well. the other interesting

number out there is the ford forecast, 19%. i assume that is along the same lines. people want the pickup trucks. they haven't had enough inventory and now they do? keith: fordyce sells a lot of suvs. people don't want the passenger cars. want is an suv or a truck because gas prices are so low. michael: how many volkswagens are going to sell in this month? keith: not as many as last year. volkswagen is not likely to have a great month, but keep in mind, in the overall market, volkswagen is just a lit. they are outsold by subaru. tom: what is the psychology of american carmakers when we get

near to 19 million units. we are above trend. the record is from 2000 when we sold 17.4 million vehicles. chrysler today says they expect above $18.4to be million -- 18.4 million vehicles. michael: how long can that continue? at some point we will have enough cars. keith: the fleet on the road is still 10 years old. when you have interest rates and gas prices as low as they are, people are interested in buying cars. sell your car, it will bring the age down by five years. tom: i got an e-mail from scranton.

i have a national rambler. i'm not giving it up. it is a whole new system to a car which is forcing a lot of people into a good purchase. keith: you have found the outlier there heidi nash rambler . wouldn't havet any of the modern safety conveniences. i wouldn't feel safe being in a car without airbags. the technology revolution in cars has been on a fast pace with cars. tom: it is great when you lean forward to change the radio. michael: oh, you had a radio? tom: i put that in later. workers at fiat chrysler are rejecting the contract. what does that mean? keith: that puts us into

dangerous territory. a national contract hasn't been rejected like that in three decades. so now they go back to chrysler and try to get a better deal. they go to ford or gm to try and get a better deal war they strike. all right, keith naughton, he is covering industry sales. we have a four case of -- a forecast of 17.7. futures are up four. i am watching the 10 year yields, whatever you want to say, yields are lower. 2.03% on the 10 year yield. ♪

tom: good morning everyone, bloomberg surveillance on the radio and television worldwide. vonnie quinn is the looking -- is looking at the heels. vonnie: i am looking at the two year yields. it is a big relief after one of the worst returns. julie hyman it joins me now with a recap of the carnage. is it fair to call it carnage? julie: yeah, particularly the month of august.

if you look at the major averages on the quarter, you see each, thef around 8% dow got the worst of it. all of them had the worst quarter in four years since the third quarter of 2011. this is growth concerns. if you look at the worst performing groups, a lot of commodities-based stocks are doing poorly. health care was down as well, that was kind of a late entry into the losers category because of the selloff to biotech. vonnie: it came out of nowhere. we had seen the biotech selloff about six months, and suddenly they were back in the headlines. julie: right, with hillary clinton tweeting about capping prescription drug prices. there are a lot of ifs. she would have to become

president. but nonetheless, analysts say it was an excuse to sell off the guys that had done well. looking at there underlying commodity prices. how much of a correlated with the drop in stock? the stocks have done worse than the underlying commodities themselves. but it has been no picnic. in the quarter. copper down 11%. , and the dollar in the meantime sought a bit of a pickup. about 1%. have, certainly towards the end of the quarter, federal reserve officials saying that it is likely that reads will go up by the end of the year and yet yields went down. so there is still a disconnect

between what the fed is telling the market and what the ed -- what the market is pricing. vonnie: it's funny you should mention that. coming up later today we are keeping an eye on the federal reserve officials speaking. john williams and -- are both on today. this is bloomberg surveillance on bloomberg television and also on bloomberg radio. ♪

the decision to go depends on the data until then, and we are seeing some mixed trends. the industrial side of the

economy where you think you are getting a week p.m. i, on the other hand, we just got 80,000 jobs this week. we think we will get pretty decent auto sales so in the mid-17th on auto sales. as the data continues to hold >> are repaying too much attention to manufacturing? what we have seen is the industrial side week for two reasons, exports, and what is going on in oil and gas. you have seen the collapse in drilling. of those things are continuing to be on the weak side and that is holding the industrial side back. clear that the rest of the economy is doing better. is there a history where

central bankers take why equals c, and they say, let's forget about x for a wild. where wea history forget about export dynamics, it do they do that? >> i don't think they can. it is one of the things that has driven the outlook. the biggest thing the fed has had to deal with over the last year -- tom: is that annexed? >> the dollar. it is an unusual circumstance. that has been one of the clear challenges. the fundamental question is, how well can the u.s. do in that environment? tom: if you go back to janet fisher, are they able to say, i don't care about net exports?

i don't know the answer to that question. manufacturing has changed. we have smaller contractors. those are the people who say they would get hurt the worst. the big guys are hedging. exports have become a big part of the economy. past 20 years, it has become more important. weis not just manufacturing, export a lot of services. there are other aspects to it as well. it is still the domestic economy that will drive things. in some sense, that can offset a lot of weakness elsewhere. that auto sales have remained strong is an encouraging sign. we need to strengthen the other parts of retail sales. the other thing is that domestic investment has been weak. isig thing in that is what

going on with gas, but if that holds up, that could be weakness abroad. do we see confidence and then sales fall when we lose jobs. we saw 15,000 jobs lost in the most recent one. surveys, their connection to spending is complicated. 141 --one- direct one. , whatas growth, outlook is going on with portfolios, it has all been strong. and yet, the follow-through into broader retail sales has been relatively just waiting. -- relatively disappointing. to see a stronger contribution from consumers. michael: we will find out more

about manufacturing jobs tomorrow. the consensus forecast is no jobs created. 13,000 jobs lost, overall 200,000 is the forecast for payroll. we get that at 10:00 this morning. ♪

vonnie: this is bloomberg surveillance. here are the top headlines. a warning from government forecasters. they cannot rule out the possibility that hurricane joaquin will hit the u.s. this weekend.

it is located east of the bahamas. computer models show several possibilities. some say it will hit the eastern seaboard and others say it will veer away from the u.s. hewlett-packard's board has acute approved splitting the company in two. hewlett-packard enterprise will provide i.t. services to corporate clients. shares of hewlett-packard enterprise will start trading november 2. hewlett-packard incorporated is the other company. conagra foods is talking about -- it is coping with a slowing packaged food company. first date i once to raise as much as $3.2 billion in an ipo according to a regulatory

finding. first date when private several years ago. time for a quick data check. futures just higher now, up 2/10 of one point. let's get back to tom and mike. michael: if it is thursday, it must the time for jobless claims. brought to you by commonwealth financial network. talk with a broker-dealer that is ready to listen. or visit commonwealth.com. jobless claims up by 10,000 to 277,000, or than forecast. the number of people continuing to collect unemployment and if it's down to the lowest in 15 years. initial claims up 10,000.

they have been below the critical 300,000 level since march. continuing claims, the number of people remaining on unemployment is now the lowest since the year 2000. let's go back to new york. michael: that is a historical comparison for you. tom: it is. said, the mixer of data is sobering with a yield of 2.4%. michael: the number of people collecting jobless claims are the lowers -- lowest since 2007. what do jobless claims tell us about the economy? we have been below 300,000 for months and months. when of the things that is happened over the last two years

is the rate of turn has slowed down. we think of 2000 -- 200,000 net ,ob increases is a good number and if you think about 300,000 initial claims every week as being a normal number. multiply that times for and that gives you the number of initial claims over the course of the month. that gives you a sense of how much turnover there is in the labor market relative to the net changes in employment. that turnover has trended lower for 20 years and that is a problem because a big part of what generates productivity growth are people moving from unsuccessful firms to successful firms. it is good to have fewer people losing their jobs but on another sense, the u.s. economy has become less dynamic. part of the reason those claims are so low has to do with that and that is not altogether a good thing. michael: what has caused the economy to be less dynamic?

lewis: we do not have a good take on that. argued it isave sort of the financial constraints in the wake of the great recession, but frankly the data does not support that all that well either. we do not have a good answer for it, but it is part of the productivity story. it is a good part of how to think about where the economy is right now. it is a sign the economy is less dynamic and part of why productivity growth is slower. michael: there is an argument that the fed contributes by keeping rates so low for so long that would allow companies that would otherwise go out of business to stay in business. lewis: i am not sure i buy that. tough a relatively environment for businesses to be successful. topline growth is very weak. i do not think the financial issues are that they are part of

buyso i am not sure i would the argument. are we two different american economies? do you put that on steroids, this idea that there are two america's? lewis: there is no question that if you look at the part of the economy that is very much tied to high-tech, that is doing -- that is a different world than in some sense what is going on in the rest. if you look at the labor market, there is a shortage of workers with high skills. if you go to for example, job search sites that are focused on those things, what you see is businesses are having a hard time finding workers. we obviously have got a lot of people looking for jobs that cannot get them so i think you

are seeing that two tier economy. it is part of the challenge that the fed in particular faces because the average of those two things tells you one thing, but different things on both ends. have lower we productivity, the two tear it economy, wage inequality and very wide levels, has monetary and fiscal policy evolved to understand and adapt to it, or are we still trying to fight yesterday's war? lewis: i think the authorities are very aware of the problems and are trying to figure out what to do about them. i would argue that awful lot of what you have to do is more in fiscal policy. these are not the kind of things that monetary policy can address and this is where the political constraints we face can make it very hard to have a sensible response. tom: lou alexander, thank you so

much. it is fascinating, the economy we are in. andre at 2% interest rates you look at where the two year .80%.e-yellen, michael: clearly wall street is not buying what she is selling. tom: one of the measurements that the pros use, they take the euro-yent and look at which is decisively broken down, strong yen, week euro. let me continue with a data check. 65.7, up seven. yuanote, this week is the

-- 65.71, stronger. , 15144, ah pound weaker british pound. futures are down 56. heree: i am vonnie quinn with julie hyman, our senior markets correspondent. julie, earlier today we spoke with tim co. global advisor about the impact of a fed rate hike. >> it is likely to be very small, particularly as this would be the first signaled rate hike in history. they will make sure the markets are prepared for this and i find it hard to believe that a 25 can derail rate hike a 25 trillion economy. vonnie: at the same time, markets do not seem to be

believing that. julie: that is what i love, this realism, what in fact will really happen? does it matter if it happens next month, at the end of the year, early next year, will it make that much of a difference? the markets do not seem to be reacting that way because whenever we get a whisper that the rate hike is imminent, you definitely get some shark -- sharp responses. debate on what the rate increase will mean for financial companies. at the fedyou look features, they are pricing in less than 50%. julie: when you see the yield curve widen, that is also good for the banks. once the interest rates go up they can charge more on loans, however if you look at stock performance, they have not necessarily done well after rate

increases. vonnie: julie hyman, thank you so much. she is our senior market correspondent. stay tuned to bloomberg television and radio for dennis lockhart and john williams this afternoon. ♪

tom: good morning, everyone.

the 10 year yield, 2.4%. here is vonnie quinn on the news on russia. vonnie: getting word of more airstrikes. we have some word from president vladimir putin, talking about the number of casualties appearing in the press appeared before russian planes actually hit syria. chilcoteo go to ryan on these russian airstrikes. expert, havinga lived there for many years. how much can we believe of what vladimir putin says? ryan: that is a good question. he is talking about civilian casualties, not combatants. this is his way of saying there is a western propaganda machine out there and they are just interested in us achieving success so they are lying to you.

we heard the same kind of thing from the russian foreign ministry yesterday when he was asked why they were not hitting islamic state but other groups. do not listen to the u.s. when it comes to russian airstrikes. i guess you have to listen to vladimir putin and the just as critical as you would with any other leader. vonnie: if he is attacking anti-rebel groups, rebels being al-assad'sashar regime, why does he want the u.s. to think he is targeting isis? ryan: that is an interesting one. they are all over the place on this. yesterday the russians said they were only going after the islamic state but seem to beginning confidence. the spokesman today was quite want, saying they are they are

to support the syrian army. he shifted the focus from we are hitting islamic state, to we are for the asisad regime, and that assumes we would be going after islamic state, but does not exclude going after other groups. russia conclude -- includes other groups, including those trained by the u.s. to be terrorists. vonnie: if there are more casualties as a result of these it changetions, does the policy of the u.s. or any other country? ryan: i do not see how any buddies -- anybody's policy changes. they are using a word called will doicting. russia what it wants and the allies will do what they want just as long as nobody gets in each other's way. vonnie: we are going to keep an

i on developments, and thank you to ryan chilcote joining us from our bloomberg headquarters in london. -- despite strikes by the u.s.-led coalition. we have general myers joining us in the 8:00 hour, former chairman of the joint chiefs of staff. this is bloomberg surveillance. ♪

tom: good morning. bloomberg surveillance, bloomberg radio, or television will be here tomorrow for jobs day. alan krueger is scheduled to join us, as well as many other guests. we hope you stay with us. bloomberg surveillance brought to you by invesco. experienced experts are just a click away. invesco.com/u.s. to subscribe in the invesco log. second day of russian airstrikes in syria. the russians insist they are targeting terrorists, but their

definition seems to be different from that of the u.s. questions about exactly where they are targeting their airstrikes dominating the news right now. richard myers is a retired four-star general. he had a lot of that shiny stuff on his shoulders. general of the joint chiefs -- joint chiefs of staff. . military --ere our our military knows where the bombs are landing and what the russian army is actually doing. it may take some time to do the analysis but we know where they are going. we know where the isis targets are quite well and if they are bombing somewhere else, we will know that.

michael: what are they trying to do? we have talked to a lot of people that say you cannot win their. it would be afghanistan all over again for the russians, so from a military perspective, what with their strategy be? gen. myers: to continue their strong relationship with syria, which gives them their foothold in the middle east, their only foothold. they have been supporting the assad regime for quite some time. all the air defenses in syria are russian defenses, and they have been bolstered recently. they have deployed aircraft and tanks to syria as well. the first thing is to maintain their alliance with the assad regime and to have some influence in middle east affairs. i think it is void on their list to find isis, but that is the

cover they are going to use. tom: general, you will be forever 59 years old when you took over the joint chiefs position. you came out of rotc and went on to a storied career. you have boots on the ground experience in vietnam. when you hear the phrase for syria and the shattered borders of boots on the ground, what does that mean? gen. myers: that means a commitment you have to see through to the finish, whatever the political goal would be. i think president obama laid that out earlier, that assad has to go, and the question is, what fills in behind it? rollof folks would like to the country, let's of different factions so there needs to be some sort of international process. mainly diplomacy, and some

forces to maintain order well you sort out what follows the regime. it is remarkable to me that assad is still in power. he could be held accountable as a war criminal. he has used chemical weapons on his own people and he is not the future for syria. tom: we speak with admiral struve v this who talks with his nato experience. how would you deploy u.s. forces now, given what russia is doing in the eastern mediterranean? >> it makes it so much more difficult and i think people heard secretary ash carter yesterday when he said, we will continue with our airstrikes unabated and not influenced by what russia is doing. that sets up potential conflict when you have aircraft flying and they are not the conflicted. ed exclusively.

when you are hurling bombs at the ground, that is an important concept and we are not there yet. secretary kerry talked about having talks to start this but those talks to be the first that any of our senior military have had with russians for years. we have just had very poor relations in the last 5, 6 years. beyond assad and taking the russians at their word that they want to defeat isis as well, is there a military strategy? what would be the military strategy? can we defeat isis by ourselves or in some sort of alliance? gen. myers: i think isis can be defeated, if you mean that then and women do not want to join their cause.

i think the military is only a partial solution. i think there are other instruments of national and international power that must be brought to bear. you cannot just think the military is going to be the only answer. in developing that strategy as we found out in iraq is really, really difficult for any country , and the u.s. in particular, it organized.t to get michael: your background is air force. us any goodes doing at this point against isis, or is it a waste of material? isis only seems to be getting stronger. gen. myers: from the report i get and the people i talked to, i think they are doing amazing work. is, isis is

continuing to gather recruits from around the world and it is part of their whole information campaign. that is why i say there are other things we need to do besides military actions to hurt them. i think the airstrikes have been very effective in syria. ,om: i look at where we are now and the idea of the borders of the middle east not so much with your experience in the air force at the pentagon, how does america project to a region where we are not even really sure where the borders are? gen. myers: that goes back to the end of world war i and the demise of austrian-hungarian empire. we are where we are with the borders we have so that is of course one of the issues we deal with, everybody deals with in

the middle east and it is very complicated. i cannot answer you directly. it just complicates, certainly the military strategy, which i think leads us back to diplomacy. the only way we are going to make headway is if we have diplomacy. borders and all the complexities that arise from where they are, the people there want the same thing people around the world want, and we saw that in afghanistan when they risked their lives to go vote. they want some say in their political process, they want security, education for their children, reasonable health care. wants and the needs are pretty much universal, and that is what i think we have to appeal to and find people willing to go after that. theael: post-vietnam military attitude changed.

we became a lot less enthusiastic about using the military. , are afghanistan and iraq we going to see a post-vietnam syndrome again? gen. myers: i think part of that was the controversy around the vietnam war. i think the military has always been, at least as long as i have been in the service, the military is not the first one to recommend the use of military force, but it is one of the powers the president of the united states has and it must be considered to deal with vital national interests around the globe. it should not be the only one. i do not think we are going to see any change. tom: general richard myers, thank you, the 15th former chairman of the joint chiefs of staff serving and the -- in the past decade. futures up three.

i cannot begin to convey the grinding lower yield we have served this morning. the note 2.02%. it is bloomberg surveillance. ♪

>> this is bloomberg surveillance.

tom: good morning. michael mckee and tom keene. bloomberg radio, bloomberg television worldwide. to have one of our cameras in with richard truman is a good and beautiful thing. without question, the headline is the deterioration we are seeing in yields worldwide. year, 2.02410 percent. there is that grinding lower yield as well, one of our themes this morning to say the least. let me go over to our forex brief this morning, brought to you by interactive brokers. platform, ibkr.

com/forex. an amazing amount of flow. mike, 8:30 tomorrow morning, what we you look for? i will look for that traditional structure of unemployment to see if it can get better with the rest of the economy. michael: we also want to be on top of wages, average hourly earnings because the fed has said they are looking at that as a matter of slack. we have some headlines from gm, and it is not their sales. the ceo is speaking at an investor conference and says they are on track for their 2016 target for north america adjusted margins of about 10%. europe is going to be profitable next year and so far they are sustaining strong china margins. a lot of talk about what they

are going to do with their cars going into the next couple of years. gm shares are up 3/10 of a percent. we are still waiting for their sales figures for the month of september. the yield i point out is 4.08% of common shares? michael: g.m. is unveiling an electronic icicle. -- bicycle. tom: i am all over that. an e-bike from gm. we are continuing to watch the political contest in the united states for the president of the united states. you may have heard that the former host of an nbc television show who has his name on a lot of buildings around new york city is in the lead. tom: really? michael: i keep getting asked by people, how can that be? the polls may not be correct.

scott keeter is director of research at the pewter research center. talking about how difficult it is to conduct clinical polls, people do not answer the phone, people do not answer their phones, and you do not get a lot of calls for pollsters. it must be really hard to try to figure out how accurate you are. scott: we have seen a decline in the willingness of able to talk with us. peoples manifested and refusing if you reach them, but more commonly you do not reach people. it leaves you wondering whether the people you talk to are like the people you do not talk to. fortunately, we have over the years had a final exam which is called an election, and that

gives us a chance to compare what we think is true with what actually is true. we have generally speaking past that final exam very well over the years. but the last couple of years have not been so kind. 2014 was not a good polling year. pollsters in the united states underestimated how well the republicans were going to do in a lot of places. there have been a number of polling failures around the world in 2015. michael: around the world is an interesting point. the greek collection figures were wrong, u.k. election figures were wrong. this is not just an american problem. scott: the social processes that are driving this, that people are busy or suspicious of having their identity stolen, or just have decided it is not worth their time, these are things happening everywhere. you see the same trends in what

we see there was -- in what we call the response rate going down everywhere in the world. those problems are not limited to the u.s. michael: how do pollsters try to deal with that? what kind of adjustments are people making in the numbers we see? one, you try to deal with it on the front end. you call people when you have a sample of telephone numbers, you call them several times over the course of three or four days because not everyone who is not talking to you is actively resisting, they just are busy or not able to pick up. if you call a few times at least, you have a better chance of reaching people. end, you compare the characteristics of the people that you got with known

characteristics and the population. you do not know how they are going to vote but you know if hispanic,lack, white, you know if they are younger or older. you can statistically adjust the data to look like the population. whether that fixes it in terms of the political position is less certain. tom: how do you pull anger? scott: people who feel strongly about something actually want to tell you about it. the fact is, you may get more anger in a poll then there is out there because people want to vent. i do not necessarily think that is true, but given how accurate polls have been over the past elections. 2008, 2012. predictions and

so i think people want to talk about the way they feel, if you can get them on the phone. michael: one of the things that pundits have said, whether they thatight or wrong, political candidate who leads the polls will eventually fade because the support he is getting now is from people who do not actually show up at the polls. when do we start getting polls that would be reasonably accurate, to the best of your ability, that measure the have among those who will actually vote? certainly a reasonable criticism that polling this far away from an election is just a kind of barometer of mood rather than something you could bank on and make a firm prediction on. there are things you can do, even in the polls you conduct right now.

you can ask people how engaged they are in the campaign, have they voted in the past? past behavior is very predictive of future behavior. those people are likely to show up. we are not necessarily seeing that the opinions expressed by those people are all that different from the people who are more margins connected. tom: do you see a shift from the initial caucuses and primaries over to the carolina primaries? when you pull a broader and more diverse state, do you get a lot different results than something i would suggest is more narrow like iowa or new hampshire? is anyif you're poll good, it should give you a picture of what the profile of the electorate in those places are.

the electorate in south carolina is very different from the electorate in say, new hampshire, and you can see that in the polls in terms of the candidates in both parties who are doing well. scott, thank you so much. scott peter with pew research. mike, you forwarded to me another polling, which is the price of real estate in new york. the median price of a condo is up 10%. mike, $998,000. michael: i am holding out for those extra 2000. tom: that is extraordinary. this comes from john miller. michael: if you are listening, we want you to come in soon and explain this. how do the ordinary people who

are complaining to the pollsters? a quarter of a million dollars down, and do the math on a $750,000 mortgage plus fees. it is a new america, new york city. we say good morning to all of you. television.loomberg futures up three, dow futures up 33. , 2.082%.ar yield shilling, 199. ♪

♪ tom: good morning, everyone. we need to look at movers this morning. i'm looking at the 10 year yield, 2.02%. bank of america wasting no time with their recommendations. senior markets correspondent julie hyman joins me, and they are decidedly defensive. julie: because everyone is asking what is next in this

fourth quarter after the third quarter terrible performance. in past years, you have seen a bottoming process in october. ramy: but this is a good sign. julie: these are sort of unique buys. we have heard analyst commentary on the past months. disney plunged after its earning. you can see extra space storage, eli lilly, mcdonald's, reynolds walmart. raytheon, i think that is all of the by recommendations. on underperforming they are looking at best buy and southern. on the disney front, everybody is looking forward to "star wars." that is one of the upcoming catalyst, not just the movie but all the stuff tied to the movie.

i am sure my kids will be bugging me for "star wars close quote -- star wars" stuff. that will be compelling in the eyes of bank of america. disney, oneition to of the things they are talking about is mcdonald's and one of the things i am looking forward to his all-day breakfast. ,ulie: it is coming very soon and of course the next phase of reconstruction are in -- restructuring. here there have been a couple of analysts recently that have been looking toward mcdonald's and its potential improvement. the shares are not doing a lot this morning. one of these underperforms, best buy. going into the fourth quarter which seasonably would be the strong time for best i. -- best by.

there noterica says confident. if you are going to buy your electronic product, will you buy them as best i? or if they will go online first and get them there. dennis lockhart and john williams, federal reserve presidents both speaking today. this is bloomberg surveillance. do not go away. ♪

tom: good morning, everyone. bloomberg surveillance, bloomberg radio, bloomberg television, we are worldwide. good news all around. chrysler suggesting an 18.4 million unit rate. we thought we would never see that. michael: g.m. is much better at -- then estimates at 12 and a

half percent. ford is supposed to have a big month because they now have enough f-150 pickups to sell. tom: it speaks of the resiliency of any given crisis. we have been following this every day since august 2007. as of the first week of june this year, i thought i be it was a boring summer. michael: ford is out. 23%. i am impressed. 2007,alking about august and someone who has seen cycle after cycle is arthur levitt, former chairman of the sec. a bloomberg lp board member. it is amazing when america is in andm, we get into our gloom we clear our way out of it.

we seem to do that time and time again. arthur: i think that is part of the american spirit. it is a resiliency. not ton ability and -- look back at thousand years, to look back 100 years and say we have been there, done that, we have the stuff, strength, and vision to pull us out of a particular down cycle. heavy, but we are so resilient that we do not stay there. tom: can wall street, as a concept, the resilient and recover detached from the american people, or do they have to find a way -- do that jamie dimons of the world have to find a way to reconnect with mainstream america? arthur: i think we are constantly looking for ways to reconnect. i think it is kind of cyclical,

particularly in up markets. there tends to be a disconnect because we are human beings and we tend to believe our own rhetoric. if things are going along swimmingly, the notion of reconnecting to anybody is probably the last thing in our mind. the business community drives in terms of bringing in money and it is only when things go down and people are critical and carpeting and pushing that we let's getigns of, back to mainstream, that is where fundamentals are. tom: michael? michael: arthur levitt had some entry-level jobs as chairman of the sec, finally getting qualified to be a radio host on bloomberg radio. look,"gram, "a closer airs on saturdays.

guest, speaking to the head of the minneapolis fed. guy, hishat a terrific feet firmly balanced on the ground. wasvish dove if there ever one. he is not for raising interest rates at this point. he is really a balanced guy, a football fan, a princeton alumnus. very open. he is optimistic about the economy. i asked him why people felt that it was compelling to raise interest rates. and he said it just goes along attention of things that are happening. certainly saw no compelling

reason right now to raise rates. he thought there were still elements of softness in the economy, although he was not intractable. he did not say never. he certainly is aware of the fact that the chairman predicted it is likely to have a raise for the end of the year. his growth rate expectations are ,elatively modest for this year somewhere around the 3% level, a little lower than that perhaps. itwas quite open and i think for a very interesting -- levitt, you are in san francisco and the home of bank of america. do big bank mergers work? nationsbank, this bank, that bank, and the founding bank in san francisco, do big bank combinations work? arthur: they work in financial

services generally. i do not think they work very well between big banks and brokerage firms. tom: arthur levitt, thank you so much. what are we watching here? futures up for. mike and i are focused on the 10 year yield. 2.03%, and yield at if you look at claims and continuing claims, and adp, and told me what those numbers are, ever telluld never, you that we would be under 2.20. michael: auto sales certainly suggesting the economy is strong. nissan sales up 18%. everybody crushing it. tom: oil putting up a bid. when dollar $.42.

brent crude. gold, 111.15. stay with us ♪. .

the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. >> good morning. here are your top headlines. hurricane walking taking up speeds as it moves toward the bahamas. where does it go after that gekt?

forecasters say they cannot rule out the hurricane will strike the east coast as early as this sunday. still some computer models say joaquin could head into the atlantic. the number of americans apply for first-time unemployment benefits was slightly higher than expected last week. jobless claims rose by 10,000 to 277,000. still the number is near a decade low and the total number of people receiving benefits was the smallest in 15 years. there is a major restructuring at conagra foods. the company is cutting about 1500 jobs and moving its headquarters from omaha to chicago. the negra is coping with the slowing packaged food industry. last month it wrote down the value of its private able billion by almost 2 dollars. those are your top headlines. let's look at the futures before the market opened. ,ou can see they are up capitalizing on gains from

yesterday. morning, "bloomberg surveillance." we welcome you to the opening bell at the new york stock exchange. inthe nasdaq as well as not the future, the asset manager business will be profoundly different. find out how their global operating platform can help you navigate the new operational frontier at seic seic.com/imagine. green on the screen. movers with david wilson. sort of a blur today of news. a mishmash post up >> one area that is worth focusing on is the automakers because they are out with their sales figures for

september. general motors sales increased 12.5% last month, ford motors rose 23%. ony exceeded the estimates bloomberg survey. you have gm up 1.1% in early trading. up 1.4%. 1.4% -- ford fiat chrysler is up. bristol-myers squibb, little change. the drugmaker one u.s. revelatory approval to sell a combination of the cancer which will bes used to combat a form of melanoma. celgene up 2.4%. this was a stock that set a record in july, slid 23% from that piqued her to decline in part prompting jpmorgan's call. .lumina down 4.5%

going back to autos, and auto-parts supplier of telling investors it is aiming to reach $12 million in sales by 2020 which works out to annual revenue growth of 7%. mccormick down 2.1%. the spice makers is colder quarter earnings fell more than expected -- third quarter earnings fell more than expected. down.s the clement maker -- the quitman cut in response to falling crop prices. the maker of chips used in supercomputers raised third quarter rest o -- estimates. tom: david wilson, thank you. a look at the vix.

angst in the market. tracy alloway and i are both weather geeks. tom: you're going into hurricane hysteria. mike: it is possible this whole thing will blow away. the models are undecided. they seem to be moving east, but that doesn't mean it cannot affect the markets. somebody who is as interested in this as you has found a way. >> i have been staring at my bloomberg map function all morning and watching the cone of uncertainty of joaquin as it moves across the screen. the models on where the hurricane is going are uncertain, but traders are also placing bets. interestingly, yesterday we saw companies like home depot and lowe's perform better than the overall market, ostensibly of people betting there's going to

be a need for home supplies and rebuilding equipment. we saw one power generator company up 10% yesterday, which was its best performance at about two years. certain people are certainly making bets this hurricane is going to make landfall somewhere in the u.s. we have seen the property and ensures down a little bit. we're looking for the second order effects and commodities markets, oil rigs -- we will see what happens. mike: i am a little surprised kimberly-clark down yesterday. if you have ever lived in washington, d.c., the minute it allows up, people run out and buy all the toilet paper in every store. there is no real oil -- i guess refineries? is that we look at on the east coast? we don't real oil in new york. >> i'm not sure. we will have to see. yield,e apple computer

denominated a believe in swiss francs -- seesmic, japanese yen. but the bond market, when we say spreads are backing up, give us some color, and as an example, the new hewlett-packard as well. >> my favorite topic, credit market. we're been talking about some pain and the junk bond market recently. tom: is hewlett-packard junk? >> it is not. we're starting to see a little contagion into the investment-grade market because hewlett-packard sold about $15 million worth of bonds yesterday and they had to pay up to do that. they had to pay a big premium -- tom: how much? >> 50 basis points over. this to yourttoo brain. this is always the canary in the coal mine. i'm not suggesting gloom, but tracy is absolutely dead on that

where you first see tensions is when quality companies have to change. and the guy that nails this is david goldman step for years, at bank of america. you see little quivers of 20 or 30tuff and it is basis points, 1/10 of a percent higher than it would have gone. >> we have a lot of other investment-grade companies who need to issue bonds over the course of the next two or three years. tom: why? >> they have done all the shareholder from the activity like taking over companies or promised dividend hikes and buybacks, and have to find all that to the debt market. that will be something to watch. mike: why do we see, i don't want to call it a blowout, but moving spreads given the fact, as tom has been pointing out all morning, treasuries are dropping gekko is there more concerned about companies ability to make gekko is are dropping

a more concern about copies ability to make profits? >> pricing credit as if we are in a recession. again, moving at of the general economy on that front. however, the other argument is the corporate bond market has been incredibly frothy over the past five years things to qe is not just rates. people talk about a stock market bubble, but more money has poured into the corporate bond is based than in stocks over the past six years. we've seen a lot of investors highland to that asset class without differentiating between companies -- one junk rated shell lindner is the equivalent .f a junk rated manufacturer now people are starting to differentiate between business models, starting to worry about the spreads their earning on these models, whether they been adequately compensated for the risk. so we're seeing some of the froth taken out of the market. interesting time to find out if you have compensated yourself for risk. >> right whenever thing is falling apart. tom: if i can double barrel this

, hewlett-packard needed a higher yield to get the transaction done, mike, i believe you mentioned earlier, maybe was jonathan ferro, spanish indicators rolling over for the fourth consecutive month. i believe manufacturing pmi. little whispers out there that push against what a huge optimism like u.s. auto sales. mike: that is why do so hard to figure what is going on because the spanish numbers were not bad and they have been extraordinarily elevated. what does it tell you? it does put people on watch. tom: looking at the bloomberg dow am a negative for the year. a little bit of a pullback in equities, even with all of this other up and down going on. sterling, 151.62. that is weaker over the last number. dollar having canada, 134.

it rallies. we feature that chart a few years ago -- a few days ago. brazilian a mexican peso, calmer. brazilian rial. ♪

tom: good morning, "bloomberg

surveillance." jeep sales up something like 40%. we need to look at the auto business. u.s. auto sales are crossing this morning and matt miller joins me now to go over those headlines. take it away. this is your thing. matt: these companies once again just knocked the cover off the ball. chrysler came out with double-digit sales growth, 14%. rowas their 66th month in a of car sales growth. for 66 months and a road they managed to raise the bar. ford also knocked the cover off the ball, 20 3%. we were only looking for 19%. gm came out with 12.5% growth and we were only looking for less than 10%. all of the major american, if you want to call fiat chrysler american, beat expectations, but

the real issue here isn't the car sales story. the real issue is the story that we had overnight that the uaw has rejected the contract with fiat chrysler and will have to either negotiate a better deal with them, try to get a better deal with gm or ford, or strike. >> what do you think is going to happen? matt: it is happening, but sergio is maybe not the got a go to. they went to that because dennis is friends with sergio and they work together for years and thought he can a better deal. he did agree for the uaw and voteshey tried to buy uaw i giving all of the members of $3000 bonus if they voted for the contract. that did not work and now they're going to have to try to find either a better deal to worse else or agree terms. the problem is, even though carmakers are selling a lot more vehicles, they're paying for that in high r&d costs and high

financing costs and paying for that in sweet deals. >> québec to hire auto sales, specifically with pickups, suvs, i think the big reason is cheaper gas, right? at least one of the big reasons. if you go to the bloomberg terminal, take a look. you can see the price of gas is $2.29 or so. just looking at this, this is a five year graph. what do you think? how big of a factor is this? matt: combined with the fact that big truck's are getting better gas mileage. what we call truck's are lighter, smaller suv's, basically cars that are higher off the road and hold a little more stuff in the back. they're getting 25, 30 miles per gallon. combined with the fact gas only cost $2.30 a gallon in combined with the fact, really, steve ratner was just telling me, financing is so cheap and consumers are willing to stretch

themselves out to get new vehicles, that is helping to boost sales. talks tesla just came out with -- >> tesla just came out with the model x. the impacts on the market? matt: not really any. that is the luxury market. if you have 100 $30,000 to spend on an suv, that is a different market. >> looking ahead to job state. tomorrow, alan krueger. this is "bloomberg surveillance." ♪

tom: good morning, "bloomberg surveillance." we will get to bill gross in a moment. brought to you by -- we thank ftm financial for their support. what they know it first tennessee bank, a lot of traits are what are called a color trade. bill gross puts out a collared tweet. mike: weighing in on what you should do right now. he says, how to invest in a casino-like market -- mimic the casino.

what do you do gekko by volatility inside the boundaries, so outside the boundaries. then he goes on to separate himself from the rest of us to guess he says, make sure you have the boundaries right. good luck. t that is part of the attitude of hedging or getting directional call right. in the case of mr. gross, taking advantage inside the collar. you have to know where the edges are of the collar as well. mike, there's a football game this weekend. it is not your beloved rock is. mike: we don't like it when someone misleads us. last week harvard football coach tim murphy told us -- you remember this -- told us the home opener against brown would be a tough, hard-fought contest. and he was taking nothing for granted.

final score, harvard 53, brown 27. coach, we're not buying it. your plane georgetown this bloomberg 1200 a.m. p.m.regame starts at 1200 in boston at 6:45. don't tell me you could lose this game. >> we can't lose any game, fellas, if you don't come to play and make mistakes, anybody can beat you. not make a lot of mistakes last weekend. blowout very, very early. hownteresting article about people at the stadium were watching the vendors, watching the cheerleaders, you know come a watching the players on the sideline. how do you keep your team in the game when you go out and immediately start stomping on the opponent? >> it is a nice position to bn.

it was one of those nights we played well in all phases. i think was a classic case of murphy's law for brown. it wasn't the brown team we are used to sing. i think if you play long enough in any league at a new level, you will have one of those nights. it was one of those nights and everything went our way. tom: i have been watching preseason hockey. it is ugly. people started throwing the puck around. what is the difference in a good college football game three or four? >> you work out the bugs. right now we're better football team than we were three weeks ago. our philosophy is, our next game is our best game. game, wee harvard-yale hope to be playing our best game. your book, is a simple? terriblyd say it is

simple, but it is not rocket science. mike: a lot has been made about university of oregon and maryland and their new uniforms. harvard has spiffy new uniforms. how often do you change the way you look? how important is that the players? >> that's funny. we're beautiful iconic uniforms which will remain our beautiful iconic uniforms, hopefully, for generations to come. crimson with gold fields. it you have to adapt and evolve and i hope every generation once a little bit different look. i think oregon was probably on the forefront of this and not everyone in america, including notre dame who may have the most iconic informs, has an alternative uniform. we have done that with some of our night games. and we play our biggest rivals, i guarantee we will be in our beautiful crimson and gold iconic uniforms. 90% of the people love it. obviously, 10% who feel it is not perfect.

that you do what you think is best. mike: tom has to run out and buy new alternative jersey, but we wish you luck. tom: a bowtie. murphy,rvard coach tim they are a defeated so far this year. 16 in a row, the longest among the football conference championship subdivision. even ohio state cap match what coach murphy has done. preshow 1200rg a.m. in: peter elliott is with us studio, a rare treat. he's usually calling us from some restaurant somewhere. let's talk about the boston red sox. you say there is a renaissance. i think we all know that about many cities in america. but you also talk about the club culture. have you been to the harvard club in boston? >> good morning, gentle man. i spent a number of weeks in the and few months in boston

really had, not only a terrific time, but discovered some key things. one of them is, there are terrific restaurants around fenway which is something you can't say about a lot of stadiums around this country, little in this world. some of the hottest restaurants in the country are right around fenway. that is really impressive and wonderful. the second thing is, this thing about harvard. boston is a harvard city. not only does harvard have one club, they have two clubs. the classic club in the back bay view want to pull up to a cozy leather chair and sit down and enjoy that, or go to the bank of america tower where they have a competing club at the top floor facing the harbor over boston college, obviously. the secret in boston is to know someone who has access to one of those clubs, and you will get terrific food. tom: within the culture, it goes back to my was suggest, durgin

park. this is like in the past. boston is a completely different city from the one i went to school. my family still lives outside boston. taking out that artery, taking out the elevated arterial nightmare, now you can explore the north end, walk along the rose kennedy park. mostly, the whole area over -- where we never went -- tom: is it homogenized into an american cuisine city to city? >> i go on these tours. for me, butill weep i was sometimes go 10 to 15 restaurants a day. everyone while i was in boston, i started with oysters. ,ither went to select oyster what people think of the traditional busy heart of boston, then to neptune in the

north end. no matter where you go, there's a leaning toward traditional new england-styles and then they make them better. mike: let's expand the conversation to boston and new york and ask this question -- if you want to sit quietly in a restaurant, is there a place you can actually do that and talk to the person you are eating with? i was at one of manhattan's finer, better-known restaurants last night, and it was loud. >> where were you? >> ralph lauren polo. >> i didn't realize they let people like you into ralph lauren polo. mike: they sat me in the loudest corner. >> i'm teasing. this has become the biggest issue. that restauranteurs and some clients have come to believe that there is a kind of combination between buzz and fun and was in sum, nation what makes a perfect restaurant.

a lot of us, as your reporting, are fed up with it. there is a lot of talk about how king -- how making boys pushes you out, but a lot of the newly built restaurants are working hard at finding ways to keep the buzz level still high, but the ability to speak possible. them.are a number of i'm afraid to say the ralph lauren spot is not a practitioner of that. i'm sure they want everyone out as quickly as they can. 4,: i can't say enough about 6, 8 pages, bloomberg brief reserve. it is not about snubism, just straight talk about food, what to do, just importantly, what not to do. bloomberg 6:00 p.m., prime time, bloomberg radio and television worldwide, nelson rriggs, jim roberson from adventurous, and gene munster will attend.

really looking for to that tonight. p.m. or that is 6:00 we are produced by richard truman. this is "bloomberg surveillance." good morning. ♪

>> good morning.

welcome to the bloomberg market day. let's go to the morning headlines. the fourth quarter met welcome to it. the markets keep limping along? will be your finish strong? we will get an expert forecast. u.s. on a makers report strong september sales but the road to hear good -- at could be bumpy. matt miller will give us details about the data. vacancy? you see a larry sees an opportunity. we will introduce you to the real estate billionaire who flies underneath the radar. the first up, we have some breaking economic data and julie hyman has more and also the latest market activity. julie: let's talk about the manufacturing number from the institute for supply management. 50.2 is the reading. that is lower than the 50.6 that have been anticipated by economists. also lower than the prior month. essentially, the third straight decline month over