when we finish the year off strong? the situation in syria getting more serious. russia carrying out airstrikes. just to are they targeting? america's love of pickups and as to be's pushing auto sales to the highest level in a decade. are some automakers missing out? good afternoon. i'm scarlet fu. ami with atraight to r check on the markets. it is october 1. we have two hours to go before the close and it looks like we have given up some of our early gains. rami: given up most of the gains we saw yesterday. stocks headed downward. they are off their session lows,

reacting to worst and expected u.s. manufacturing data that came out this morning. at its weakest since may of 2013. look at theaking a numbers come s&p 500 down .5%. .75 percent.by i want to show you the sbs function which shows you trade volume against the 20 day moving average. you can see these bar charts, these volumes indicate there is a lot of trading going on, gangbusters. despite the latest u.s. employment report we are expecting tomorrow. investors usually stay on the sidelines before new data comes out. the s&p 500 today trading higher by 17.4% in terms of trade volume. energy trading the most, 25% today. higher than the 20 day average.

health care up in volume by 24%. let's also take a look at the russell 2000 index. a look at small-cap indices. this is down by 1.25%. reversing most of its gains from wednesday as well. scarlet: it is not just equities. we've seen quite a bit of moving commodities as well. >> let's take a look at oil. oil is actually surprisingly up. earlier today, it had been down but it has crossed the threshold come up just a little bit. we will call that plateau. it had been trading 3% higher this morning. looking ahead, china pmi is one of the things that is raising -- impacting -- rose for september. fell,rude production also pushing up prices. still, crude is down 25% since his june peak.

let's look at biotech. the nasdaq biotech index down by 1.2%. lower for the ninth time. back to its losing ways after hillary clinton's tweet on price gouging. today, 125 stocks lower. , expect biotech's to dry up for a while. scarlet: that does not sound good for that sector. thank you very much. a snapshot of the markets on the first day of the fourth quarter. let's get you a read of the top stories at this hour. we begin with the auto sector. chrysler reporting a 14% sales increase for the month of september. that marks the automakers 66th straight month of increased deliveries. jeep suvs playing a big role, climbing 40%. yet chrysler and gm projecting a faster sales pace than the industry has seen in a decade.

gm, ford, nissan and toyota reporting sales results that beat estimates. america's love of pickups and seb is auto sales to the highest level in more than a decade. the transportation secretary is planning ecb summit with carmakers amid multiple reports of defective vehicles. it is time for a blood conversation about integrity. the auto industry has faced the largest number of recalls in history. best time for a blood conversation. staples will be closed on thanksgiving. u.s. office-supply chain will open at six point p.m. the next day for black friday. a retreat.f last year, staples locations open for four hours on

thanksgiving evening. in terms of economic data, the number of americans applying for an up limit benefits slightly higher-than-expected last week. jobless claims rose by 10,000. when you look at the number overall, it is near a low. the lowest in a decade. as far as the total number of people receiving benefits, that was the smallest in 15 years. u.s. manufacturing stagnating in september because of stronger dollar and thinking -- sinking overseas markets. that is according to the institute for supply management factory index. it fell to 50.2 from august 51.2. the third straight decline and the weakest reading since may of 2013. it is still above 50, which means it is in expansion mode. turning to geopolitical headlights, russia's foreign minister says his country and

the west coalition see eye to eye on the targets of their fight against terrorism in syria. russia is not planning to expand a tax inside syria. -- attacks inside syria. that it wasure you a very constructive atmosphere. very friendly. things in a very openly -- they understand each other. i believe they completely understand each other. scarlet: he insists the fight against terrorism should be the global community's top priority. airstrikes alone will not solve the country's problems. for more on this developing story, ryan chilcote filed this report from london. >> russia's biggest intervention in the middle east since the fall of the soviet union could get bigger. -- the united states

and russia remain at odds over russia's bombing campaign in syria. russia is going after a range of groups fighting assad. the u.s. says it only learned of russia's military campaign when a three-star russian general appeared at the u.s. embassy in baghdad and said the bombings begin in one hour. scarlet: that was ryan chilcote reporting from london. what exactly is russia's aim? for some insight, let's bring in william courtenay. he joins us now from our washington newsroom. good afternoon. william: thank you. scarlet: let's start with the fact that come i think it's amazing when you consider the timeline. last thursday, we learned president obama would meet

vladimir putin and washington at his request. at the time, the white house was saying ukraine would be at the top of the agenda. putin did catch us offguard completely with his plan to share intelligence with iraq and syria and moved ahead with these airstrikes inside syria. discuss how quickly things have transpired. president putin implied that russia was going to conduct strikes against isis. russia's aims were limited. headed byl government and may be on the verge of collapse. so, russia is conducting airstrikes against the main opponents of that regime. army folksse are that the united states has

helped out. russia is engaged in a different and more limited fight than the u.s. and the 60 plus nation coalition going after isil. scarlet: two different fights. that explain why russia is moving with such urgency right now? william: russia is concerned that the assad regime is losing out significantly. they were giving hints that it remove assading to able to hold things together. -- if he is not able to hold things together. russia would no longer play a key role in syria. russia wants to prop up the government of syria. assad.t not be scarlet: it is about retaining its sphere of influence. would you connect the dots or

give us the linkage between these unilateral strikes in syria on russia's part with its economic instability or weakness? william: russia is having severe economic issues. it is in a recession. investment in russia is falling a lot faster than the economy as a whole. the russian ruble down 40%. structural reforms are going backwards rather than forwards. andr oil prices, sanctions intervening in places like ukraine, which are costing a lot of money. seems toin leadership be making decisions on political grounds, not economic grounds. that will involve some economic pains for russia. scarlet: that is the important backdrop. tosia is paying lip service

the idea that it shares a common goal fighting islamic state. does russia have the military might to contribute to the fight against islamic state? william: it does not. it has enough military power to help the assad government stay in power. but, as compared with the u.s. and the 60 nation coalition, they have a lot of military power. if russia were to join with our coalition, it would only have an impact at the margin. scarlet: we appreciate your perspective here. william courtney with the latest on the russia attacks in syria. we have much more coming up. come i wantt there to take you inside the bloomberg terminal to show you one of the functions available on our service. to show you the projected path for joaquin. there is this wide cone of uncertainty.

it is now a category four storm. the projected cone includes washington, d.c., the tri-state area. we will continue to keep you up-to-date on how the storm progresses. this is something people in the area are certainly talking about and keeping a close eye on. u.s. automakers reported strong september sales. why the road ahead could be a little rougher. matt miller is digging into the data. from london to new york to hong glencore be the next lehman? ♪

scarlet: welcome back to

bloomberg market day. we will head now to rami with a check on the markets. some housekeeping issues within the s&p 500. about thent to talk provider of data. jumping uprice is 5.5% after being named to replace this company, joy global. joy is now down 3.5%. verisk has tripled since its ipo in 2009. joy is down by 68% year-to-date. on a road of global commodities we've been talking about all month, a slowing chinese economic growth, that switch sk will happenri at the close of trading on october 7.

casual shoes are not for everyone. the stock is down by 12.8%. this after dropping over 7% yesterday. soft jaffray lowering to to neutral from overweight. it is trading even lower than that, $11.27. the shoemaker cut its sales guidance yesterday on the impact of a strong dollar and after shipments to chinese distributor's. 5% afters up by nearly officially splitting into two companies. the new madison square garden incorporates the arena and the sports franchises and the entertainment venues. shares were also raised to a buy from a hold. setting a price target of $185 a

share over the next 12 months. it is trading at $150 and change. msg networks will control those media properties. scarlet: like the msg channel. there's a big call this morning. the dow transport average holding better than the industrials. a strong showing from these companies right here, the railroads. they were upgraded to overweight from market weight. telling investors to aggressively buying the sector. comes as theyote call their economic outlook muted. kansas city southern ahead. canadian pacific up by 1.6%. transport, some movers and shakers in automobiles.

tesla right now down 3.1%. if you concerns just shortly after the release of the model x one is competition. the chevy volt has been announced. half theost less than price of a tesla. the retail price is $33,000 versus the tesla model s and $70,000. denmark will eliminate tax breaks for electric cars in 2016. 3.1%. down scarlet: we will stay with autos here. u.s. auto sales are booming just pickups and suvs leading the way. -- fiatcles led the way chrysler saw a 14% increase.

with the good comes the bad. the volkswagen admissions desk -- volkswagental emissions a scandal. seb sales getting a boost from cheaper gas sales. that cannot be the only thing. matt: what you and i think of as trucks or suvs, that's not what the kids are looking at today. that is a bit longer is what they consider to be a light truck. a lot of things pass for light trucks. there's a lot of reasons these pickups and bigger trucks are selling just as well as those. gas prices are cheap. that is one factor. people have jobs, that is one factor. financing is super easy. pretty much anybody can get a loan to buy an f1 50 right now.

those three things combined are the reason. the reason they are picking these vehicles, you can get 25 miles a gallon. not just the f 150. the chevy silverado come any truck out there that gets less than 25 miles per gallon is underperforming the average. scarlet: there is a headline that crossed earlier -- wasn't this a surprise? matt: that's the real story. auto sales, amazing. we expected that. labor day weekend was in september this year. 150 is at full production. even though it was awesome to see double-digit numbers for everybody, we knew that was happening. this, we did not expect. fiat chrysler, the idea was to get the deal for the unions and

go to ford and gm and try to get that from them, plus an added kiss. the union rejected that widely. do they go back and try to get better deals from gm and ford or fiat or strike? scarlet: matt miller will be keeping an eye on that one. thank you so much. matt: any time you call, i will be there. scarlet: we will be right back. ♪

scarlet: welcome back to the bloomberg market day. we are keeping our eye on the glencore storm -- the joaquin storm. the commodity maps, we pointed oilthere are a lot of infrastructure that could lie in the path of this storm.

this is the projected path, category four right now. the cone of uncertainty is fairly wide. it ranges from north carolina all the way up to southern new hampshire and vermont. encompassing washington, and philadelphia, new york. we will continue to monitor this one. this is a storm that has a lot of people concert. let's take you to the top stories. -- a lot of people concerned. a deal in the drug making industry. a number of other assets in latin america. -- price tag is $2.3 million $2.3 billion. was more breakfast competition taking a bite out of dunkin' brands. sticking with an annual profit forecast that missed analyst estimates.

it will be one dollar 87 to one dollar 91. ese ceo says franchise are worried about rising menu prices. those are your top stories right now. it was a bad summer for commodity prices. the lowest since 1999. is set forchina slowest economic growth since 1990. , wen exclusive interview asked if he sees a lehman like moment in the commodity well done. -- meltdown. the lessons as a ceo -- keep

your composure. is perception of the market just focus on the communication and addressed the market concerns. we acted quickly to reduce the balance sheet, to communicate on full perception. we work on the reduction of debt. i'm sure he has a good business in mining. he will be able to get through this crisis. ♪ 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. mark: we have some breaking news. that as many as 20 people are injured at a shooting at a local community college. it is in roseburg, oregon.

15-20 people injured in this shooting. this is from cnn. we are trying to get more confirmation on what exactly transpired there. some injuries from a shooting in oregon at a community college. let's get you covered on some other top stories at this hour. in a blistering address to the u.n., israel's premise or has slammed the iran nuclear deal. he says the deal empowers iran delegation.sted the of70 years after the murder rulerson jews, iran's promised to destroy my country, murder my people, and the theonse from this body,

response from nearly every one of the governments ed here has been absolutely nothing. utter silence. scarlet: he has been a major critic of the deal. mosaic settling into a $2 millionr -- lawsuit. the material is the result of the company's production of a commonly used fertilizer. expanding --s united states ceo is now apologizing to passengers. he declared that the merger of united and continental has failed to live up to expectations. since the merger, the airline has been plagued with chronic

delays, computer outages and workers taking their frustrations out on flyers. coca-cola changing the labeling on vitamin water to settle a lawsuit. the company was accused of making misleading health claims about its drinks. they will add the words with sweeteners in two places on the bottle. the label changes must be complete within two years. those are your top stories at this hour. that's a check on how commodities have closed today. let's begin with oil. nymex crude started the day with gains, showing u.s. crude out paste the decline. the 44-40 five dollars range. same story with brent, giving up an earlier 3% advance. to check on how the companies are doing, exploration and startingn companies

the fourth quarter with modest gains come up 1.2%. the etf has a lot of ground to make up after plunging 30% last quarter. on wells --ut today 400-5000 wells in the u.s. could become uneconomic. wells.5000 wells julie: alix: they are basically like the wells that you try to get dexter jews out of any reservoir. they encompass a huge amount of oil production. -- you try to get extra juice out of any reservoir. 80% of the total wells in the u.s.. producing more than algeria and more than all of the

u.k. basins as well. it is quite significant. for could be a good swing users. scarlet: who tends to own these? big companies or small players? i have no idea. i will have to find out. a good portion of them are in texas. also in new mexico, oklahoma, california and kansas. citigroup had a note out that said as much as 300,000 barrels a day of this type of oil could be shut in due to falling oil prices. they become extremely uneconomic. to $30,ee oil fall these guys cannot function. their maintenance costs are quite high. something that is often

overlooked. alix: it can be a key mechanism for balancing the market going forward. it could be ancillary fields that have five barrels of oil a day that could actually be instrumental in helping to balance u.s. markets. scarlet: i want to bring and kevin, the senior portfolio manager at investment powershares capital management. we've had a 15 month long commodities revolve -- free fall. kevin: it's a great contrary an opportunity right now. prices have fallen dramatically. what we are seeing in addition to the stripper well numbers coming down, most of the shale production is not economic at these levels. we are starting to see recounts the time, u.s. production rollover and decline. that will create a more healthy price and bartman in 2016. alix: it is not a done deal.

kevin: the rig count has stabilized. it bounced around a bit. demand increases to-3 million barrels per day globally. markett to balance the naturally. you will not see additional production from opec. they have cut into their spare capacity. scarlet: talk to us about the short-term perspective. a lot of things depend on what happens at the federal reserve level. disastersave natural and the prospects of that. we are monitoring joaquin. of this storm currently a category four store. how might that affect oil prices already in the $45 range? kevin: the largest commodity has been gasoline. if joaquin hits refiners among

could impact the gasoline market. we will not hit much crude oil production. we need to keep in mind the natural disasters tend to reduce supply of commodities, which is what leads to price hikes. they do have a positive skew and returns. ,lix: taking a look at the etf one that is the big guy. the futures index. it is not for hedge funds. talk about the performance. it did not really work in the last quarter. how does it play as a diversify ier? >> commodities generate returns between those stocks and bonds and they are not correlated. if you think about early 2007-2008, the market risk --

the commodity market was rolling over. we cannot count on this every quarter but they are a good .iversifier we look at past episodes of fed tightening, commodities have outperformed equities quite dramatically. dollar is the wildcard. if the dollar continues to appreciate, that would be a headwind for commodities. alix: something we have seen in ,his market, particularly oil prices in steep -- the future are so much more expensive than prices are right now, that makes the role quite expensive. as you have to roll over a contract month-to-month, you up to pay up. how do you handle that? >> look back over 25-30 years, the market has started the year this way -- the return has been similar. within one percentage point.

it does not guarantee negative returns. we use a smart beta approach. value onor the best the forward to add five percentage points a year. scarlet: we mentioned the storm. when ita big dynamic comes to commodities. what about el niño? how does that play on soft commodities? >> agriculture is a great contrary in play right now. they have been beaten up like energy prices. el niño is strong. it is expected to be stronger by the end of the year. that impacts production regions in cocoa and coffee. a number of agricultural commodities. if we are looking for a positive price outcome in 2016, the pba is a great place to look.

alix steel will be back at the top of the next hour. coming up, we turn to china where factory gauges are showing signs of stability in september. our investors celebrating? recode reporting that the twitter cofounder could be named ceo of twitter. ♪

scarlet: we want to recap some

breaking news. there are reports that active shooter at a community college in oregon. you were singing life picture u.om kat -- you are seeing live pictures from katu. the shooter is in custody. advising fire district people to stay away from the school. that city's 180 miles south of portland. let's turn to the economy of china. the gauge of manufacturing is out and the official pmi index rose in september. that number still at a three-year low. maintaining growth will be challenging. what is next for china's economy? joining us is michael mcdonough. stabilized but still below 50. is this good news or bad is? michael: that is.

it is good-banews maybe? they did not get worse. china may be gaining some control. it is hard to see that. we've started seeing credit growth, so that is a good sign. august, data in was a bit soft. the scary thing is, if you compare this august 2 last august, you will not have expected numbers to be better. we could see deceleration from china. more stimulus-- scarlet: what will that stimulus look like? we've had government stimulus measures and it doesn't seem to be doing -- michael: you saw an important one the other day when they

lifted mortgage restrictions. more rate cuts, or reserve requirement cuts in various means to stabilize growth. we don't see a scenario where you see this recovery of growth in china. we don't things that we don't think things will start searching. -- will start surging. scarlet: what affect does the decline in commodity prices have on china's economy? michael: if you are consuming metals, it is a positive. it's hard to judge how demand is going to be. one of the things i like to say about china is there is too much investment in china, but there is room for a lot more investment. badsaw a lot of investments, money going into projects that should have never gotten funded there are a lot of infrastructure projects, roads, hospitals, railways, pipes that do need to be developed.

there is still going to be some demand. i mentioned how they changed mortgage requirements. people won't buy more houses, the construction for houses will go up. there's a lot of spare capacity. after the like going symptom, not the root cause. scarlet: more targeted investment the needed. thank you so much. we want to stay on china here. there is no emerging group of andnd generation will -- emerging group of second generation wealth. they can afford two gold apple watches for their dog. chris joins us by phone from beijing. this is a great story that is available on our website.

you infiltrated a group of second generation rich chinese. how old are these guys? did they all go to boarding schools in europe? are they all in beijing and shanghai? chris: yeah. this group of kids known in chinese as an second-generation betweeney are mostly their teenage years and mid-to-late 30's. all the children of the first generation of entrepreneurs that the 1980's and early 1990's after china opened up to the world and made insane amounts of money. the children are now benefiting from many of them studying abroad, many of them come back to china and face this question of whether or not to take over the family business. they also have the option to not work at all, which is one reason the reputation in china is so

bad. every few months is a new scandal that blows up in china involving the second-generation rich kids. scarlet: are they concerned about that, doing anything to fight that stereotype? chris: yeah. there is growing concern among the chinese leadership that this group of rich kids is not only an economic problem, but potentially a political problem. economic inequality is growing. you have the children of wealth going out there and flaunting it and misbehaving, it looks bad and creates sentiment among people who don't have wealth that could turn into a political problem. we have seen reports that some parents have even created

reeducation classes for their children to try to teach them values orl confucian business aspects to reform them. you have a group of second who haven rich kids created their own organizations to promote a more positive image of this group of wealthy children. society contributing to , taking over these family incentives ushering for a more traditional economic structure into the modern economy. for will be important china's economy as it transitions to a more consumer-oriented structure in the next few years. scarlet: thank you so much for giving us a recap of your story. a great read. you can check it out in bloomberg businessweek. children of the yuan.

, we take a look at why amazon stock is beating google even though google reigns when it comes to profitability. ♪

michael: an update on the breaking news we told you about earlier. 7-10 people dead after a shooting at a community college in oregon. 20 people also injured the shooter is in custody. the local fire district advised people to stay away from umpqua community college located in roseburg, 180 miles south of portland. we will continue to keep you updated. back to business news, when it comes to profitability and valuations, google has beat.

he has coined it the amazon puzzled. he joins us from baltimore. this is a fantastic article. you said the key to the amazon e is asset turns. >> asset turns are a ratio of sales over the long-term assets that you have and are employing. it is a measure of productivity of the u have employed. -- of the capital you have employed. you have margins that are profits. and meager yet, the stock is 65% this year. , you have toy focus on the asset turns and go back to the basics.

they've been investing a huge amount of money and capital expenditures. capital expenditures over the last five years has gone up 6-7 times, almost seven times in five years. you have this huge growth in capital. what are they doing with all this? they have a platform that delivers their three basic elements of sales, things they produce. that platform to add to it, you have to add big chunks of capacity. when you add big chunks of capacity, you are not using them all right away. as a result, the asset turns go down. when the asset turns go down, the margins go down. and then, the rate of return goes down. se the market seems to be

eing is that jeff bezos knows what he is doing. he's adding up among capacity. as it becomes used, the asset turns will shoot up in the margin improvement will be very great. we've done some work on margins. their relationship between the asset turns and margins is very elastic. if you get a one percentage point improvement in asset turns, you get a 4% improvement in them margin -- in the margin. scarlet: it is a leading indicator for margins. jeff bezos owns 18% of the company. we have broken down there shareholder structure of this company. his 18% stake is more than double the next biggest shareholder capital group. why is that important when you look at amazon as compared to google?

>> he is incentivized to do the right thing. he makes money when the stock goes up. he makes money when he invests optimally incapacity. -- in capacity. he's been spending a lot over the last five years. you would think he knows what he's doing because he has his own skin in the game. andything is rigged incentivized so he is doing in eckley what the shareholders should want. stock going up. michael: thank you so much. we will be back with more bloomberg market day. ♪

betty: it is noon in san francisco and 3:00 p.m. in new york. this is the bloomberg market day. stocks are heading down, giving us gains and volatility in not

showing any signs of easing. investors and the fed will keep a close eye on the jobs report tomorrow. a rate increase this year. bernie sanders not just closing in on hillary clinton but in fundraising as well. the secret tobout bernie sanders's success. ♪ scarlet: good afternoon, everyone. alix: we want to update you on breaking news earlier. at least 15 people were killed and another 20 were wounded during a shooting in a community college in oregon. the shooter is now a custody according to local reports. the local district advised people to stay away from the community college located in roseburg, south of portland.

scarlet: let's check in with julie hyman to get a sense of how things are shaping up. julie: another confusing day for the markets. volatility is continuing to we are not seeing any breaking of the trend just because it is the first day of the fourth quarter. an enormous amount of bouncing around in the session. iswe watched, the s&p 500 turning green. global growth concerns continue to weigh on the major averages. manufacturing here in the u.s. showing the third straight monthly decline. things are sort of updating to some extent. still another hour of trading. anything goes. one chart i have been watching has been stocks versus oil. take a look because oil is reflecting those concerns about global growth. we saw a rise after we got chinese manufacturing data that

came in better than estimated. then it drifted lower and stocks tracked along with it. oil is continuing lower and stocks are diversion, heading higher. usually tend to track oil recently. the aht now, it seems guest draghi's technology. apple, declining considerably from earlier in the day, have of thelling through much session after some of its suppliers, particularly chipmaker suppliers, were seeing perhaps lower orders than anticipated. butseeing a big catalyst, on the upside, we have got health shares doing better today. biotech, but our get is one of those spare the company got fda approval for one intos drugs for injection

augmentation. over at j.p. morgan and amazon, scarlet was just toking about amazon trying edge out competitors in the streaming market by ending sales of devices by google and apple not easily compatible with amazon passes product. it is not clear if that is exactly the catalyst but the shares are among the best former student. something else that bears mentioning is the movement in the treasury market today. yields heading lower after we got economic data that missed estimates. heading toward 2%, they were at their lowest in five weeks. now unchanged, 2.05% and a bounce in yields. maybe some buyers come back in it we have had more sellers appear in the treasury market. course, another thing we are keeping an ion tear

, not necessarily for stock prices, but commodity prices, the storm in the southern part of the u.s. coast. a category four storm. you come inside and you can see the path of uncertainty. it is fairly wide and encumbrances washington dc, new york, and philadelphia. a category four storm, extremely dangerous. who knows what it will be by the time of his the u.s. board. your you can follow it on own terminal. it is surprising becau it is an el niño year. el niño's typically wind up killing any kind of hurricane. and rip tropical storms apart and we have not seen a lot of hurricanes and tropical storms so far this year. hopefully, that will happen. scarlet -- scarlet: there is still time yet.

alix: the other thing is actively chart the channing has turned 19 and it coincides with that has to have a parody running's have not done a lot of s&p kept rising part of the story is about buybacks. if question is, what happens the fed raises rates? releasing the powerback ahead wind up needing the negatives earnings growth? scarlet: exactly. a lot of people say they encouraged buybacks because company were able to borrow money cheaply and in they plow that money back into their share price to boot -- boost earnings-per-share. it cap share prices rising higher. now it happens with us on the cusp of a tightening cycle? alix: exactly. we are joined by gabriele, a global strategist for jpmorgan asset management. thank you for joining us here at

when you look at negative earnings growth in the u.s., a potential relationship with the s&p, what is your take? >> this year, two major , lowerds for earnings energy prices dragging on the energy sector as well as the higher dollar weighing on those of almostnal revenues over half of all s&p 500 companies. pushingo headwinds have earnings down. we expect more stability on both fronts, starting the fourth quarter. it will be a bit of a wash but we are expecting a pickup in 2016. as a result, more support for the market in 2016. scarlet: a big theme in terms of the global outlook. is decoupling a myth? blessed is interesting. if you look at the definition, it suggests there would not be a relationship between the two. i do not think that is what they are saying. we can expect a divergence in

growth continue. following different paths, continuing to trend downwards and developed markets sustaining a much stronger pace of growing. not a complete decoupling at all. all, andsee first of this is the easiest one to quantify, here is where we find comfort in the fact the u.s. economy is a closed economy. it is certainly not the only channel. you can have the impact via currency as well. the dollar strengthening and the impact that has. third one we are watching his confidence. >> you cannot really quantify that in certain ways. exactly. people opening of the newspaper and seeing headlines, how does that affect standing patterns? so far, we have seen a muted impact but that confidence is

what the federal reserve is watching as well. scarlet: you say you would welcome a fed interest rate increase. would that be stimulative for the u.s. economy when it is traditionally seen as a recon growth? what is the mechanism when we are in a zero interest rate scenario? >> an interesting concept. rate hikes do slow down the economy but only after they have risen to a certain point. we are starting to raise rates to 0% pretty much. these can actually be stimulative to the economy. first of all, trying to stimulate bank lending, higher rates offer an incentive for customers to borrow with more urgency. that is one way it can be impacted. second of all is the confidence channel. if the federal reserve maintains rates of 0%, what does that say about their confidence to the economy question mark not a very good one. alix: some has actually been in the credit market. corporate grade, you are also looking at more stress there are where are we in the credit

growth cycle and what happens when the fed raises rates? comes to high yields, we notice that if urgent in different sectors. it has been really focused on two main sectors relating to materials and energy. we think that is justified. the continuation of lower commodity prices. you can see default in those sectors. the spread blowout within other sectors, if we continue -- continue to see in the u.s. economy what we do n think is justified. entry opportunity for clients who have high-yield. is that is think it over emerging-market risk this time, sovereign was a big issue. is that the case now? the sovereign side, we have seen a decrease in risk. a lot of countries increased their reserves and improved the external position fair that risk has shifted to the corporate side. since the crisis that corporate took advantage of

the appetite for yields and growth and issued a lot of fixed income or bank loans. external risk has definitely shifted. sub: really quickly, we billions of dollars, $40 billion of emerging markets. where does it all go? what will it take for it to come back? >> i think it has been sitting on the sidelines in cash. people waiting to see further clarity when it comes to growth before they jump act in. jump back in it even to developed markets, we see a lot of people waiting on the sideline for further clarity on growth as well as the fed. scarlet: blue that happened in the first quarter or will people wake -- wait until the fourth quarter? it was finished positive signal of confidence and maybe we could see that in the fourth quarter. scarlet: thank you very much. alice: a quick market check, the s&p is almost flat on the day.

from where weal started the day. the dow was only off by about 51 points. at one point, off by triple digits. we are deftly seeing a rebound as oil continues to trend lower. may start further off with a gain. after two quarters of decline, who would have thought? alix: for a look at stories making headlines, including the breaking news we have been following out of oregon to we're learning about the shooting in a community college in oregon. at least 15 people were killed and at least 20 wounded in the shooting. the shooter is in custody according to local reports. the local fire district has advised people to stay away from umpqua community college. scarlet: russia's foreign minister says the coalition sees eye to eye on fight against terrorism in syria. survey also says russia is not

planning to expand the tax inside syria and that there are no misunderstandings between president vladimir putin and president obama. he insists the fight against terrorism inside syria should be the global community's top priority. but that alone will not resolve the country's problems. aboutthe u.s. aircraft in 300 u.s. troops arriving at a military base in turkey, expected to provide surveillance as well as search and rescue capabilities for the fight against syria and iraq. this is part of an agreement earlier this year between turkey and the u.s. the u.s. began flying strike missions out of turkey in august. those are some of your top stories. scarlet: coming up, hewlett-packard green lights the split of a company into two companies. other challenges lie on the horizon for hp. out scone strong numbers could raise expectations for the fed to move here at all of that in

much more coming up. ♪

alix: welcome back. scarlet: now for a look at some of the top stories crossing the terminal at this hour. microsoft and google agreed to end their long-running battle over smartphone and videogame patents. they are dropping about 20 lawsuits in the u.s. and germany. the motorola unit has been demanding royalties on the us gaming system. microsoft has been trying to block motorola phones from using these features. alix: a day after a stock merger announcement, they announce a deal of their own. cbs's video-on-demand service,

available in more than 90 local markets. data from ios and android devices along with desktop and laptop computers will also be factored in. scarlet: apologizing to passengers. declaring in a full-page ad that the emerging of united and up toental failed to live expectations. from workers who, unfortunately, develop a reputation for taking out their frustration on fires. those are the top stories at this hour. hewlett-packard not going down -- it raise 14 point $6 billion in the bond market to facilitate the split. the worst september for global sales and four years. the u.k.e founder of stocks company says he is suing hp for at least 160 million dollars, the latest exchange in a three-year dispute that will

not go away between the two parties. for more, let's bring in cory johnson. why he is suing them? what is the deal. : it is an incredible story where hewlett-packard decided the all of the things executives have been talking about, that they were not innovative enough, that they had pay $10 million to acquire an economy. a couple of old software companies sold into one. they discovered there was no emperor with close. want,er metaphor you county problems were growth projections were not reliable. the company have blown $10 billion and had to write off $8 billion of that right away. and sued mike lynch

executives were intentionally getting the money from hewlett-packard. he comes back and says, i am because the things you have said about me in my suit have -- in your suit has caused me damage. he also said the suit is wrong and it is not fair. they could've looked through the books like anyone else could have. a roll up is a rollup. it is in london where the laws are different. we will see. the investigation of the serious fraud unit in the u.k. determined they cannot charge in this case. i think it is important in the contest of yesterday's bond offering because the dollar amounts are not as similar. acquisition,n this now $15 billion to borrow. all theinteresting is

investment-grade corporate credit, they had to pay next to 50 basis points to get the deal done. i think it suggests that wall street looks of things like autonomy and looks at growth prospects for hewlett-packard incorporate, the companies that will split by year-end. it says these guys are the game and could not shoot straight here they have got so much looming debt. alix: orkut also mean we have seen a lot of corporate issuances. there's too much supply and demand. .carlet: but they are paying up >> they are more for this one than the other one. yes, if the credit markets were free and easy for everyone, maybe they would not have to pay as much. but if you look at what you look packard is, by the way, we will have to continue restructuring both companies even after they are being created. it is like building a new house and saying, do not look at the bath kitchen, we have to

remodel. scarlet: you have got a special coming up tonight on bloomberg television. you and carol massar. advantagemberg program. radio every morning from 10:00 to 2:00 on the east coast. we will have a couple of guests here and do a live primetime special on bloomberg tv and bloomberg radio. we will talk to an executive in the nasdaq about listening standards and venture capitalists. things that jean covers. he is the ax on apple. we want to know what is going on with new iphones. we want to know what is going on. alice: thank you so much. we're looking forward to it this evening. ♪

alix: front-runner hillary clinton raised $28 million during the third quarter and senator bernie sanders raised $25 million. scarlet kona grill difference is not that discrepancy. sanders only held a handful fundraiser events all quarter whereas hillary clinton traveled around the country speaking at events where tickets generally cost between $1000 and $2700. joining me now is john heilemann. hello. is the hillary clinton campaign astonished by this or were they prepared for this? >> their number is huge and off the charts and fantastic and are happy with what they have done. everyone is surprised by the is raising sanders only really small dollar donations and doing a lot of it online. a guy way behind her in the fundraising race is now at parity with her. no one in the clinton campaign will be comfortable with that, especially because by raising

the money the way sanders does, he does not spend a lot of money to raise it to his cash on hand will be greater than hers. she has to spend a lot of money going around to these events. >> is he taking donors from hillary clinton? finite poolis not a of donors are she will always dominate with established big bundlers, finance people who are traditional donors in the system. therehard to know because is no actual data, but he is certainly tapping into a lot of young voters and people who are not traditional democratic voters. probably tapping into the obama andraising network because lot of people, people on the left side of the party who are into him now. >> has he won any big and massive endorsements? >> not massive but i think the value of endorsements, she overwhelmingly has the

endorsements by far, the lion's share of elected officials. he will never compete with her on that front. they are battling a little bit over labor endorsements. in the end, energizing bernie sanders is the anti-endorsement energy. everything that endorsements signify, establishment kind of -- the status quo, all of that stuff is stuffy is running against her he is not hurting for lack of endorsements. alix: last question i want to shift to congress, particularly country for comments on benghazi, saying basically the panel help the road presidential support for hillary clinton. stupid, insanely and almost suicidal. he is in a lot of trouble and the republican party is trying to clean it up. there are senior people on the house side who have or pewter he shouldarthy and said he

apologize. some are saying he should drop out of the speaker's race there he is personally in a lot of trouble. run this whole thing in a disciplined way throughout, john bader, talking about, we just want to get the facts and the truth, you have the incoming speaker saying it is all about politics. he gives hillary clinton a powerful talking point and make the job that much harder when he actually hold a hearing area alix: thank you so much. tune in tonight at 5:00 p.m. eastern. speaking with a new film on malala. >> you're leaving me now, scarlet hurray much more ahead, we will be right back. ♪

i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. tox: we want to get straight look at top headlines this afternoon. an update on that shooting at a community college in oregon.

at least seven people were killed and another 20 were locald according to reports. 180 miles south of portland. students are being transported to fairgrounds. deal tois reached a step 62 tv stations in more than 40 markets from going dark according to variety. the deal is just one of three closely watched contract negotiations that went past their deadline. this morning said it twice for our extension for contract negotiations. dish network gave themselves an extension until 7:00 tonight. suvscans love pickups and pushing auto sales for the highest level in more than a decade. fiat chrysler reporting a 40% sales increase. fiat and general motors anticipating after pace -- a faster pace than has been seen in a decade. all reporting sales results that beat estimates.

american manufacturing stagnated in september due to a stronger dollar and sinking overseas markets. the slowest pace since november 2012 according to the incident for -- institute for supply index. the recent reading of may 2013. investors looking ahead to friday when investors release the monthly jobs report. a strong number would likely increase expectations. global economic advisor joins the surveillance team earlier and gave his take on what to expect on jobs day. >> what we are likely to get is a pickup in wages. the average hourly earnings numbers tomorrow will be incredibly important. wage has been stuck at 2%. good chance tomorrow, we see a pickup of 2.3 or 2.4 percent. that will increase the fed presses confidence. he says the market sees it as a slightly less than 50% chance of the fed moving this year. ,e said it has to be an easy

including progress in the labor market and expectations getting to stabilize. some of your top stories. we want to go straight to julie hyman with a look at the markets. we seem to be calling our way back. the dow down 64 point versus triple digits your >> yes. the s&p 500 briefly turned positive. thatted to look at charts show perhaps there is still reason for caution, at least in we head to days as the first quarter. all of these pieces on the bloomberg terminal, want to turn first of all to positive volume versus negative volume on my terminal. is ayou essentially have graphic of volume for the s&p beginning ofthe december. on red days, those were days when the s of, and read it is when it rose, anecdotally as you look here, there seemed to be more large bars on the down days than on the up days. another way to measure that is

, another way to crunch the numbers. according to this metric, the trend is turning lower. not a positive trend there. more interesting you see people involved in the market on days when it is down. alice cohen the sv is still 3% above its lows for the year. the august 24 low is still pretty ugly. it is. one of the trends we talked about, ahead of the big lunch in the markets, was the idea that the rally we had intact for the august plunge, it was really by a relatively small number and a very large stock or at what we have here is the s&p 500 index in white versus s&p 500 weighted index, which is in orange. been weight still has underperforming the s&p 500. the us of the overall is down

around 7% or so for the year, whereas the equal weight index is down more than 8% and you see the s&p 500 is still maintaining the lowest reached on august on a fourth and 25th, but the equal weight index made a new low just at the end of september a few days ago on the 28th. interesting, another technical indicator. finally, another chart i want to bring up for you. this is a seasonal chart of the s&p 500. this takes the 30 year average on the s&p over the course of a year and one of our bloomberg that youointed out tend to see a bottoming process, ofentially, in the beginning october, the first half, before you have an increase in stocks by year-end. the caution we always give is past performance does not predict future results, but you can look at the seasonal that we have seen in recent years. alice: anything to get a jump on

it here thank you. bond investors are closing the books on the worst quarter in four years there it we take a look at the former terminal and we see why. index, is a high-yield looking at the yield you can see over 8%,ike unbelievable. a five-year and you are looking at the highest level for yield 2011.since for more perspective, we are joined by glenn, the founder and ceo of fixed treat asset management and tracy ali also with us. seeing a chick -- a shakeout here? >> or member how much energy is in a high-yield bonds. 25%. not go upces will anytime soon. oil will cost some bankruptcies that we will see. a lot of requirements, the banks on their leverage winds hitting october and november her it they are going back to say hey, we have a real problem if this happens. high-yield because the energy exposure hurts and i think that is part of it. we have also seen

requirements on liquidity. three days liquidity without material change to it otherwise we cannot be illiquid loan fund. those changes are forcing selling in the high-yield market. alix: we are also seeing a spread to the investment grade as well. >> that is exactly right. there is a point to be made about jump bonds and there is a lot of energy there. but today, we saw hewlett-packard come to market selling $15 billion worth of to pay andhey had next are spread to investors to get them to take it down. it was about 50 basis points more than equivalent bonds in the market. it seems like some of the pain is spreading. the question is, where we are in the credit cycle right now. >> it is $75 million per year. that issue more due to the fact we have seen so many issues in the last year, there's

just not enough supply? >> i assume it was a fixed rate bond and not a floating rate bond. in the fixed rate with janet yellen passes rhetoric, she better raise at this time. now she has really got to do it. bonds worthed-rate less. it is part of the problem in the the raising of interest raise and that when that will happen. >> we have a lot of other companies that need to come to the market now to fund the m&a deals announced to buy buy back lance. it does not look like supply will necessary of it by that much and we will have to watch to see how the market reacts. classically to the react -- the question of how it winds up picking up. >> we have not seen that many defaults. remember the default rate went to 2.3%. i think the lack of liquidity in

the bond market, written about a bunch lately, will also impact the artist line is the actual defaults we have seen. very low. the purple lee blue line is the pessimistic forecast of what will happen. the potential is to stir it up to 16%. request there is a point to be made, that the default cycle is unusual because we have had six years of ultralow interest rates . a lot of companies have come to market and esters take their without necessarily demanding the kind of spread they should in return for the risk. we will now see how it unwinds. will it be like a normal credit cycle? that is the question. >> the fed should not have cap interest rates at zero for so long or it it created an asset system that and the has to go somewhere, and these types of problems in the market when you have that problem. >> that leads me to what got some funding from asset

management to sell midsized loans to investors. me what the digitalization is doing to help the liquidity issue? >> it will eventually create real offers in the market which do not exist today. marks on their low offers created by banks like jeffrey and others, that they do not stand behind. it is no real size to the offer. $75hedge fund tried billion. the bid was 75. does not change. there is no requirement to change it. a lot of the loan market and high-yield market are based on stale quotes from a broker that are not real. >> and you're trying to equalize that in some capacity? quite exactly. transparency will be phenomenal. real offers in the low market.

besides that, the syndication process has been the same for a hundred years. when i first met and talked to victor, he said, do not salsa meals toughest albums. solve your own. we solve one of history's key problems. it solves that problem. of the middles market you're talking about, they had risen last year. how theyn in 2013 yard do you think this could get? >> the loan market is $150 a year total. general market for bonds is 35 joint dollars. whole stock market is $30 trillion. 26 join dollars. i think this could get really big. to all illiquid assets. >> thanks. this is great. i appreciate the conversation. thank you.

also thanks to tracy ali. coming up, signs of studying in china's huge manufacturing industry. what is the impact around the globe? we are chock -- talking china with joe next. ♪

alix: a comeback. look at some of the top stories making headlines. more breakfast coffee -- cavitation could take a bite out of dunkin' donuts's bottom line. after sticking with the profit forecast that missed estimates. duncans says earnings will be a dollar $.91, repeating a forecast from april. the ceo says franchisees are worried about higher minimum

wages and rising many prices in the u.s. changing the labeling on vitamin water to settle a lawsuit, the company was accused of making this leading health claims about the at theere it they will words with sweeteners in fetus places, including by the name of the drink. the changes must be complete within two years. you when ists poised for another devaluation. a report, pimco forecast it will decrease another 7%. emerging markets sent stocks plunging. staying focused on china, a crucial piece is out today. signs of stabilization around a three-year low in the manufacturing sector. that gauge is part of a bigger global story. joe weisenthal is here to jump in with his thoughts. to look below some of the details for pmi. you can look at manufacturing. yes, you could say that.

joe: ultimately, it was not the worst report in the world but not impressive, what is happening in china. there are two pmi numbers, one is the official and one is the unofficial. and yes,hem are weak there was some improvement but the story as china and every world is not that impressive right now. alix: new orders are actually better. manufacturing is not great but domestic is good. isn't that exactly what china wants? joe: that is exactly right. look so bads not because manufacturing is shrinking, services have grown. with china, they are not nearly at the same level we are. it is also true they are trying to rebalance and that the old model that would make pmi number -- numbers potentially boom, it is not what they're going for

this point. alix: you had a great point talking about emblematic of what is going on the world. joh: i think there are two global economic stories. slowdownl commodities we talk about every day. we got south african which is in the consumption today totally falling off a cliff and russian manufacturing all going downhill. the other economic stories the bright picture. sales out ofto just about every company selling cars in the u.s.. despite the fact it is coming right from the market volatility. if the consumer were week, you would expect them to push off and that did not happen here there are two stories. the global slowdown and the strong domestic economy. the question is, which one will

win out? alix: we will talk about the job's debt and wages in the u.s. and then we will have a china debate. we will get into it. facebook, more of a poll on china, and gordon chang, we will go over some data and get different takes. good stuff. much more is coming up on the bloomberg market day. investors are anxiously waiting for the monthly jobs report. we will bring you a preview as well as what the markets are expecting. we will be right back. ♪

alix: julie hyman is standing by in the newsroom with a rundown --the action relatively calm

action. relatively calm. julie: the selling is not done at least not for today. the nasdaq will remain in the red and i want to look at the .&p we still have all of up-and-down gyrations. yesterday, we had similar action and it happened once again today and more deeply in the red around midday before coming back. initially, all that selling on the manufacturing data, showing a near contraction level and falling for the third straight month. nonetheless, things improved to some extent. look at the imap. we had a lot of volatility as well. utilities have consistently been the worst performing group. materials helping support any gains we are seeing. about oneare talking stock, what is going on there?

julie: it is a chipmaker. according to bloomberg news, the company is hiring an advisor to seek a sale of the company, to sell itself to other chipmakers rather than private equity. you can see the spike in shares now up nearly 9% on the story coming out. i want -- i want to point out where you have seen broader semiconductor spill the philadelphia semiconductor index to be specific. we have had a reversal, interesting reversal throughout the day. it has not recovered as much as the broader market has the we see a drag with -- we have seen opposite action today in the biotech index. a big recovery yesterday. if you look at how the biotech index has performed, today, there we have it, it has the opposite action. whereas semiconductors sort of plunged and started out

stronger, we have seen weakness throughout the day and then a .ate day recovery it has been another day that feel sort of directionless here. struggling to find that conviction. alix: thank you. investors in the fed all keeping a close eye on the jobs number that will come out this morning. predicting the u.s. economy added 200,000 jobs in september. in employment rate will hold steady at 5.1%. let's get down to the nitty-gritty. we have the bloomberg intelligence chief economist and mike reagan. give us your jobs index. >> this is one of the months where, i crunched the numbers and i do not see a compelling case to see the employment number fall further. a small chance that it

backs up just slightly but we are in a downtrend and we will break 5% year-end. in terms of the payroll number, most of the leading inputs in the report looked fairly solider. not dramatic changes going into this report. i think 200,000 really is the right number. note is a risk for eight -- a lower number but i do not think it happens in september. i think it is coming up in october or november. it is an impulse that hit the and early late august september. it simply did not give hiring managers enough time to change their plans to impact the september number. in october and november, we could potentially see a little bit of a pullback in the pace of hiring as a result of the market's phone you look at your stock price and it has gone down a lot in the third quarter, so maybe you have hesitation about future hiring plans. we take a look at the

s&p, and we are holding up of that love. you will see the equal weight and you will see we have touched below the august 24 low. exxon, apple, cannot save the late index. the suite do not know what the equal late index shows. the s&p 500 market cap, become his like apple and exxon have a much bigger influence on it. if you average them all out, it is a little weaker than the overall market, which suggests stock markets may be a little worse than what the s&p is showing. the s&p itself is not very attractive right now. it is fascinating. we were stuck in a trading range all year pretty much until august. then we have volatility in august. possibly a real big upside number or downside number that makes people think the fed will

jump back in. i always like to take carl's estimate and at one job to it here 2001 jobs. what is interesting, there is a loose correlation between equity prices and job. equities tell you about corporate confidence and their willingness to hire. an interesting note about the revisions we do wind up seeing and the fed has raised --ration -- putting off >> one jobs number does not change the directory of the fed. if we have a negative print, that would be a huge outlier in what -- and whatnot and we have a propensity for the august number to come in weaker than expected and get revised higher. the weakness we saw in august was much weaker than the usual forecast. we are normally to the low side by 27,000.

there may have been something a little more nefarious operating beneath the surface. look at the revisions tomorrow. a matter. i do not think we will see all of that weakness revised away in that is the troubling thing. if we look at the six month rolling average, it is at a 18 month low. the labor market is losing momentum. 200,000 is still a decent number but the direction of the trend is relevant. much, carl,you so and mike regan. will talk about jobs as well as china with the author of -- right back. ♪

>> moments away from the closing bell alix: i am alix steel.. -- we arem alix steel. moments away from the closing bell. alix: i am alix steel. i am joe weisenthal.

>> as in the bounces back, treasuries fluctuating s jobe tomorrow' report. jobs, big report tomorrow. why is it harder to fill a job. china, things may not be as bad as you think. we will have a round table to discuss the good, bad, and what it means for the market. >> we begin with stocks. interesting day, dow down triple digits, and now we are flat on the day, the s&p and positive territory. up on also picked 10-day average. interesting. it was pretui