francine: penultimate jobs report. while the data keep december alive for janet yellen. manus: the new guidance from governor carney. in an interview he tells the u.k. to prepare for a rate hike in 2016. francine: europe faces the reality of a slowdown. manus: standard chartered slumps. the stock takes a hit in hong kong as fitch downgrades the bank. francine: happy friday, everyone

to "the pulse" live from london. i am francine lacqua. us.s: it is a big day for it could be a monumental day in terms of the jobs report. analysis as the case of whether or not janet yellen will pull the trigger in december could be made after today's jobs report. francine: bank of england governor mark carney weighed in on the debate. he spoke to us exclusively yesterday and expressed confidence in the fed. governor carney: the u.s. economy is performing quite well in a new normal sense. this is not the u.s. economy of precrisis years. what matters most to our timing is the reasons why u.s. monetary policy adjusts. so we would expect u.s. monetary policy to adjust because that economy is continuing to grow. there is reflation. >> this recovery in the u.k. started after the recovery in the u.s. we are catching up.

we are now at a point where we have more or less leveled -- in terms of too much of growth. we will take our decisions. we are informed by what happens in the u.s. it matters for our economy, but we will take our decisions based on what is right for achieving our target. francine: let's welcome the european head of global markets research at bank of tokyo mitsubishi. great to have you on the program. as we await the u.s. jobs report, a little bit on easy by the fact that it is one piece of data. it seems the markets are hanging onto its everywhere. -- on to its every word. this will decide whether the fed hikes in december. >> i think they made a mistake and probably should have gone in september but we are down to the reality of it being judged on today's report. and of course the december report. i think in fairness to the fed, they have been pretty clear. ar has been pursed

pretty low. so yesterday was an important report. i would say more from the angle of if it was considerably weaker. i think you have to get something perhaps as weak as we've had over the last two months or even weaker for the markers to really start to consider the way to have been going. anything 1.40 and higher it would appear to be enough. all they have asked for in the statement is further improvement. what has gone before is good enough. manus: we prepared a couple of charts. your model actually is slightly above consensus. 30,000. you could have revisions. that is what the market has been focused on. at the same time, it is about for employment, this nirvana which is sub 5%. most of the two issues they will be focused on along with average hourly earnings. derek: fixed rate as well. manus: tell our viewers what u6

is. includes those are working part time but want a full-time job. and janet yellen has on numerous occasions spoken about the access capacity in the labor market that needs to be removed. sherestingly this week, said that excess capacity had diminished significantly. manus: that's big. derek: that is an upgrade. i think it is come what is happening in the u6 unemployment rate which is falling more sharply. it dropped .3 last months. and it is expected to drop into single digits today. 9.9%. on average, the u6 rate from when the data series began in 1994 up to the beginning of the last recession, 2008, and the average over the entire period is 9%. the u6, unemployment rate. the average over that period is 9% "

and today we could be at 9.9%. huge amountt this of excess labor is becoming less and less credible. francine: labor participation points to the strength of the economy. certainly if it is not structural the people go back into the workforce. derek: i think the participation story as more of a structural-demographic issue. there is a cyclical element, of course, but i think the fed is standing back and going, look, we cannot be judging what we need to do with the federal funds rate because of the participation rate heard we have got to look at the measures of excess capacity in the market. and clearly that is diminishing. manus: let's get to what the market perceives -- the dollar. the dollar is on a tear. positioning is building up. if we look at the longer-term chart, we really are a reinvented -- reinvigorated,

strong dollar. the major currencies are all beginning, the market is beginning to short itself, beginning to believe again. there is a decade of the dollar. because of an obstacle, it looks as if the fed is more domestically focused. we're globally focused. but the fed seems to have stepped back. derek: of course, the parlor is explained by the fact that the structure of the u.s. economy is different to the u.k.'s. less open. 50% of gdp is the export figure. u.s. is issue for the the consumer, which is nearly 70% of gdp. from that perspective, the strong dollar has good news. it increases the spending power of u.s. consumers. and of course because of the drop in prices, real incomes are now growing -- they are here as well -- but certainly in the united states. if you have 70% of the u.s. economy doing well, and the average personal consumption over the last five

quarters has been the strongest since 2005. so there is clear evidence that the domestic side of the economy, certainly the consumer side, is doing well. the problem is that there has been, the data has been mixed because of what is happening in the oil. this is new for the u.s. the fact that we had this collapse in investment in the mining sector. that has muddied the manufacturing data, along with a strong dollar which has impacted the data as well. but if you strip out the 15% that is manufacturing, the economy is looking pretty good. francine: where do you see euro -dollar? driven by q.e. or by the fed? derek: i think it is more driven by the fed. if you look at a chart over the last month, the big drop was on the 22nd draghi when we had the announcement from. -- when we had the announcement from draghi.

if you look at the rates market, i would argue that the short-term yields in europe is more position for another cut in the deposit rate on the 3rd of december. the short-term yields in germany dropped to 10 basis points very quickly. it seems to have adjusted quite quickly. the process and the u.s. is that the longer because it is the first step from the fed. the markets believe more that draghi will do what he is saying. draghi spreadllen - moves wider than the yellen-carney spread. derek: jim to degree. the spread is telling you there is more upside for the dollar. manus: you're going to stay with us. let's hear what else is on our radar this morning. it german -- no unexpectedly dropped in september. output fell 1.1%.

the drop comes as germany sealed hit a slowdown in china and other emerging markets. owner cartier richmond -- the stock is down 8% as we speak. francine: a brazilian iron ore project of dams have burst. 15 people have been killed and many more are set to be missing. the dams are owned by a joint venture. manus: coming up, prudent. that is the new word. that was the message from governor markell as he -- governor mark carney, as he says get ready for a hike in 2016. francine: when i was listen to the interview, it was interesting because prudent, i weather whether he meant it for the markets. lve into the

deeper. his bank outperformed other competitors this year. ♪

manus: welcome back to "the bloomberg tv, streaming on bloomberg.com, your tablet and your phone. mark carney says britain should

ready for a rate increase in 2016. in an exclusive interview with bloomberg, the central bank governor says that's prudent behavior. given the progress of the u.k. economy. governor carney: forward guidance initially was very much about early stages of the recovery and what are the minimum conditions required before we would even begin to think of raising interest rates. it is interesting. if you look at the historic reaction of the bank of england, given the strength of the initial recovery 2013-2014, the strength of purchasing managers indices and the growth, historically, the bank of england would have raise rates three times. it would have revealed outcomes that would not have been the right thing. but it was partly binding the hands of the committee to say let's see what the attraction is in this recovery. let's see what the underlying inflation dinette -- dynamics were. i think it did give people confidence to continue to invest.

subsequent to that, we have given guidance about the likely path of interest rates -- limited and gradual. we have repeated it so many times. it is so boring. it is part of the furniture now. at that is a good thing because that was a call we made in december of 2013. two years ago we made that call. now it is accepted. and, of course, it has been consistent. recently what we have been, the challenge we have been facing is what is the right timing of starting the process of limited, gradual rate increases. and this economy has been making judgment ofs in the the committee, including myself, it has not made yet enough progress to start the process. at some point, that will be there. majorityather have the of the british people thinking that rates are likely to go up in the next year? yes, i would.

because that is prudent behavior given the progress this economy is making, given the likely path of rights. do i also want them and businesses to think that when rates go up, it is not going to be the old rate cycle -- very sharp increases? yes, i would like them to think that because they can plan accordingly. at some point, rates are going to move. it is not today, unfortunately. so this is not going to top your news. bank of england governor mark carney speaking exclusively with bloomberg. let's bring back derek help in. when you listen to mark carney, and he was great in our exclusive interview. he had a little bit more into is thinking about next year. he is saying markets but also citizens of the u.k. get ready for a rate hike next year. derek: absolutely. this idea that the bank of italy has endorsed the rights that were in the markets, adjusting the first rate would not happen

until 2017, is wrong. and i think it was pretty clear that they want to go next year. of course, if you look at the inflation projections, the one year, sorry, the two year and the three-year point inflation forecasts are actually higher than yesterday's report that in august's. that comes on the back of a downgrade to their medium-term assumptions in regard to growth for china and emerging markets more generally. so, what i would say is that there is less wiggle room for the bank going forward. and it might not be too long before they are becoming a little bit more explicit in terms of the timing of when they may have to raise rates. of course, he reiterated we are not at the turn of the year when he said it would come into sharper relief when to raise rates. manus: you would call then a hike, they make it more boxed in having to say something more

aggressive, would that be before the halfway point next year? derek: yeah. our conclusion from yesterday is february is off. there were lots of murmurings before yesterday -- manus: the market is going for the autumn. francine: derek: if the fed go december, then we are in a situation that if things are going according to plan, they should then be signaling the potential. francine: if you look at the strength of the economy and strength of later markets -- labor markets, should we not ask ourselves why we are at these record low rates still? and why we are not considering february? derek: yes, to a degree. inflationfrom the perspective, i would argue there is a lot more focus on the uncertainty in regard to what the pounds impact on prices going forward will be. the latter -- the chancellor yesterday, the word sterling was mentioned 10 times in what is a

relatively small text in a letter. quite clearly, the move of the pound's had a big impact. the core rate is at 1%. re's better scope for them to be more patient or personally i think he wants to see what happens after december. ecb goes thend the other way, they want to see what happens in the fx markets and then they are in a better position. manus: this is where i would say before we started out -- if you look at the fashion on bloomberg, we weigh currencies against 10 big currencies. if you look at sterling, he has moved the sterling waiting. year to date, we were of 7.2 dollar and yen and new zealand dollar. that shifted right away. i would say -- and i'm curious to get your opinion -- i would say he's absolutely lock step walk straight into currency wars in terms of moving stirling. it helps his whole situation.

draghi did it last week. he says he wants lower stirling and that is what he got. derek: certainly the press conference from draghi on the 22 tight financial market conditions for the u.k.. because the move we had an eurostat and since then has been notable. -- in euro -sterling since then has been notable. i do not like using the word currency wars. francine: it seems like a a very rich situation. derek: fx does filter through. francine: thank you so much. european head of global markets research at tank of tokyo mr. bg. -- mitsubishi. manus: german industrial risk drops as the slowdown takes a toll. we are live in front for. -- in frankfurt. ♪

francine: china slowdown is heading europe's biggest economy. the dust of production dropped in germany from 1.1% in september. -- industrial production dropped. hans nichols is in frankfurt with the latest. what do the numbers tell us and how worried are we about china? herbert hainer confirm a slowdown. this is the second negative reading we have had on

industrial production. it is more crucial than factory orders. they like the industrial production read better. factory orders give us a better sense of where the geographical slowdown is taking place, outside of the eurozone to you look at the last three months, three negative readings on factory orders. that is concerning. you add that up and put it next to the industrial production and later in a couple days we will end up getting exports. that will give you a sense of how much slow down or has been on the export side of the equation. in general, it is the trend that is concerning. one quick note on the negative numbers we are seeing. no one -- and we talked about this yesterday speaking to economists in frank for -- no one factored in this dimwitted affect you would have from all the fresh spending on the refugee crisis -- no one has of alld in the effect the fresh spending on the refugee crisis. 's suggest because we are going to have a lot of fiscal stimulus on the government

spending side. manus: good day. it's manus. of course, this is going to add fuel to the speculation that the ecb will have to take more substantial measures in december. more pressure on draghi as we go towards his ecb meeting. watching inflation numbers. if inflation does not budge, it was clear that mario draghi wants to expand the size and scope of his asset purchases. manus: thank you very much. hans nichols in frankfurt. china bites. shares slumping. the challenges the whole industry faces in asia. stocks down a percent. caroline: the worst day for richemont for their stock since january. their fiscal first half of the year not looking pretty.

missing analysts estimates in terms of sales, profit. what is looking really ugly is fiscalt six months, the second half because they gave us a breakdown of what october is looking like. and surprisingly the situation is getting worse. october sales fell 6%. growthnaged to eke out of 3%, but their fiscal first half, october already showing that it is not getting easier and china. we know for three state years, there has been the issue of the clampdown on gift giving. but now you have hong kong and him. seeing a real pulled that seems to be not only the stock selloff we saw in august and the concerns about the global slowdown in china, slowdown, but it seems like the wholesalers, the department stores have no clarity, no certainty, and therefore, that are not willing to buy more products. look how important this is on a geographical basis.

almost half their sales come from asia. francine: these worries, they seem to be affecting shares across the sector this morning. cartier actchemont, as a bellwether for the rest of the sector. that is why you are seeing alltch down today and lvmh share price is loving this morning on the back of concern that luxury is not getting any easier when you're looking at asia-pacific. bells think really alarm should not just be ringing today. the data has been called for a while. cast your mind back to where exports of swiss watches have been going. weree third quarter there down 7%. september there were down across the board. asia-pacific is where it hit worse. this is a concern. back to you guys. withine: caroline hyde the latest on luxury companies. manus: coming up, what with the fed rate hike me -- who is it?

francine: it will be about european banks and what the interest rate environment helps them or hinders them. we will ask the ceo of banca intesa sanpaolo. carlo messina next. ♪

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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. welcome back to "the pulse" live from london. i'm manus cranny. our top headlines. inamed exclusive interview with bloomberg, the governor of the bank of it what has said the u.k. needs record low interest rates for a while longer. because of the slowdown in china. but mark carney has also said a hike is on the cards next year. ratherr carney: would i have the majority of the british people thinking that rates are likely to go up in the next year?

yes, i would, because that is reasonably prudent behavior given the progress is economy is making, given the likely path of rates. can watch that exclusive interview with the bank of england governor tonight at 7:00 p.m. london time. will's u.s. payroll data be watched around the world for its influence on the fed's decision in december. america's job engine sputtered in august and september amid financial market turmoil and concerns about a heartland in china. economists surveyed by bloomberg project u.s. employers added 185,000 jobs in october. brazilian iron or project owned by two of the world's biggest miners have burst, burying dozens of homes. 15 people have been reportedly killed. and many more are said to be missing. gota little bit

of breaking news in the u.k. industrial production came in lower than the market anticipated. the year in your figure -- year on year figure also missing estimates and we saw the manufacturing side do better. industrial production down. manufacturing better. let's talk about banks. standard chartered slumped in hong kong. downgraded the bank. stephan morse joins me now. talk me through the rationale for this downgrade. the brady's cup he has looked at a new strategic plan presented by bill winters -- they said, we are not sure if they can execute this. 1000 of the top 4000 senior managers of the bank are going. loan impairments are doubled. reported an unexpected loss.

this is a caution for anyone looking at investing -- manus: the stock is down 5%. they talk about this execution risk in terms of the number of turnover of staff within the bank. that is a message to all the other ceo's that are trying to invoke change. talk to me about what they need to impress the shareholder and the ratings agencies. because a lot of this is tied up in bad loans, isn't it? >> they need to show that they can essentially do a better and more profitable job with far fewer people. and that is what will only what will come out in the wash. why the rating agency has left the bank on negative review. it is a huge challenge for bill winters. this is just his latest headache after reporting two sets of poor results. francine: thank you so much. now, let's continue our focus on banks. we have been talking about central banks all day is we await the jobs report out of the u.s. banks have the most to lose when

interest rates go down. one man that is focused on improving asset quality is carlo messina, the ceo of banca intesa sanpaolo. joining us in the studio. thank you as always. always a pleasure to have you in thie studio. your share price is one of the best-performing banking stocks and european you have to do with interest rates. you have come on the shore telling me -- on the show telling me you want to buy something. the economicrd on situation is no more significant today if you can pair to august now, we are in a must -- much better situation because china is improving. all of the negative positions are no more on the table. so i think that there could be only at the point of the negative deposit -- interest rate. but at the end, my view is that draghi will increase --

[indiscernible] devaluation of the euro is a better opportunity. francine: if he does move on the deeper right, does it have an immediate impact? carlo: this could be something on the mark downside. on the other side, you will have positive on the medium-term. for us, it is ok. the zero rate environment will lead to an increase in wealth management. in the end, we will have opportunities in this environment. francine: are you still looking for targets? carlo: we are not working on, on possible -- so, if you look at the bank, we are over delivering. and we maintain a significant overdeliver in any scenario. then looking at the possible opportunity -- today, we are not looking at something that dilute our very strong capability in making execution in the bank. so, making some acquisition you can dilute your focus on

executing today. francine: you are saying you are over delivering. this is the 2017 target. thanks to what? carlo: commissions and provisions. these are the two drivers. margin is something that you can manage looking at the situation but also the concentration of risk. the government bond portfolio. we had 90% government bond. now we are at 50%. if you look at the stress tests, it is in poor reduce concentration. on the other side, you lose margin. on the other side, we are becoming probably one of the best wealth management companies in the world. so commissions can increase. and the situation needs an increase in gdp can also bring strong reduction and provisions, especially for the -- intesa sanpaolo. francine: the wealth management business, you said you do not want to ipo. why not? carlo: the point is that today i

need that income. -- net income. strongest bank in europe by capital. but today i'm a growing option. i'm growing net income. as no other in your. if you need net income, it is not so smart to make an ipo. ipo is typical want to increase capital and dilute earnings. today is not the type yet. francine: and capital is good. of capital that is probably much higher in europe. thatt hink th -- think also in the next stress tests 2016 we will be the clear winner. francine: if the fed hikes, will it be a game changer for the world? you are saying that china is doing much better. but we still don't know the shock if the fed hikes in december. carlo: the point in fed, i think they will hike.

in december. i think they will increase interest rates. this can bring a gain to the devaluation of the euro. so, you will have a positive impact. but you have to consider the real driver for growth today is the internal demand because people are coming back to consumption. so this is a driver that you can consider also not have a look to the interest rates and the central government actions. so there is now really a growth coming from return to confidence of businesses especially in italy. because italy is not a place to be because we are in a situation of finally coming back to consumption of italian families. francine: but you must be worried about deflationary pressure. carlo: deflation is something that is probably more, the game of the central governor. sorry -- but it it is not something. at the end, they will find a way

to reach 2% next year. but the point is that for the italian and european families, what is important is confidence because only if you have confidence you can come back to consumption. the situation in italy is that you decided not to make consumption for two or three years. now you're coming back to consumption. this can lead to a possibility of gpd. higher than 1% in 2015. so, it is really a driver for growth. francine: is there something that worries you with the italian economy? a lot of economists are very positive on europe. but then you have a pretty trouble figure like we had today from germany. of germany isnt related to the volkswagen situation, deutsche bank. germany is in a situation probably also looking at thisation not so strong at

moment. but italy could be the other part of the story. and this could become really the engine for growth for the european situation. in italy, i'm not worried at all. the only point is the unemployment and a young people unemployment. this is a social point. in italy, it is recovery. i think next year we can have significant improvement. francine: the italian trajectory will be increased consumption? carlo: absolutely. when we had the conversation one year ago i told you that there was a clear sign of recovery. there was the beginnings of -04. now we are in a clear situation of increased, coming from internal demand. the strength of the italian situation because the savings of young people is something like 6 trillion compared to 1.5 trillion. so, if they move some portion of this consumption, you can have an increase. that is the strategy of mr. renzi.

that is the way which is moving. the italian family, they can come to consumption. francine: when i look around european banking landscape, a lot of the banking ceo's are changing and they are becoming more the model you have been following. a little bit more retail, wealth management maybe even going after the asian consumer. do you feel like it is going to be more crowded? carlo: that is why i am remaining the ceo with intesa sanpaolo. i will not leave the position. and so, the strategy is absolutely focusing on retail and wealth management. environment,e there is no other way to make money. but if you need to have an execution machine in order to deal with clients. so our finance is to have the information -- retail bonds. all you need to make conversion

from assets under administration and deposits into assets under management. so we are in a unique position because if you compare our growth and wealth management with the best in class, deutsche bank, credit suisse and blackrock, we are really delivery. francine: but it is less known. that is a fair point. carlo: we are working with italian families. and the conversion can be massive. it can allow us to continue to grow much more than the other one. then the point is we need to have -- if you want to go outside italy, an international brand because it is clear if i wanted tap an international client, i cannot say come to intesa sanpaolo, because we are italian. in italy, we are opening for the italian people we are opening a range of private banking in the first of december of this year. working with italians. but if you want to work -- you have to have a brand. but it is not a priority today because my expectation one year

ago was to work for an acquisition. we had the conversation. intesa sanpaolo wanted to buy something big. to it was really in my plan have such a possible acquisition. today, it is not absolutely a priority because my banking division is delivering, over performance compared to all the other european peers. you cannot destroy the machine entering into a merger just for the sake of have an international brand. right strategy today is to maintain this very strong focus on my proper banking division. for the future, we will see. francine: you will come back. carlo: i will announce the possible acquisition. francine: great to have you in the studio. a great conversation. the ceo of intesa sanpaolo. up next, we talked to one of the top chefs in the world about the

business of fine dining. ♪

manus: now the business of fine dining. it's become one of the world top restaurants. and the star chef is ranked as number 16 in the world 50 best restaurants. for more, we are joined us was away by the chef -- we are

joined exclusively by chef. he is in london for his new book, " mexico from the inside out." francine: i'm hungry. manus: looks like a beautiful book. talk to us about your status. this is mexican food. i love the line that vogue wrote food is there is mexican before you and there is mexican food after you. >> thank you for having us. we are happy to present the book. the restaurant has been open for years now. 44 seats. we serve contemporary mexican food. what we have done this we have played with our good. what mommy told us what to do -- not to do. so, we basically tried to makes that are fun to eat.

plates that are beautiful. and well-crafted. francine: how much do you think of the business of the restaurant? we have a lot of viewers that have dined in your restaurant or were want to dine. on much do you focus making the numbers work or do you only focus on creativity? that i: i am fortunate work with my brother and he is really good with money. i take care of the food and he takes care of the business aspects. theously, in order for restaurant to be sustainable we need to be making money. oras not born as a prince anything like that, so we have definitely looked to have a very healthy business. when you talk about fine dining, your main focus is that the food is great and everything else will follow. francine: there is quite a revival with mexican food. an exploration in your. manus: it is discovery. we're very familiar with french

and japanese. but the city of london and europe is a real diversity. talk to me about -- you have got to look at the bottom line. we have seen some of the plates. booze and the experience of the wine. the spirits of the be -- the experience of the beer, that plays into it. enrique: when we talk about drinks, we approach the same way as we do food. so we try to serve things that only we can do. when you are opening wine that the restaurant next you can open the same bottle of wine without a problem. if you talk about cocktails, frescas, those are recipes that we have that are hard to reply. francine: frescas are some kind of shot? enrique: it is just water. flavored water. francine: tequila. enrique: there are couple of recipes in our book.

infusions, juices. francine: stuff that we can have here on "the pulse." 9:45 a.m. we have a lot of ceo's here. i guess the question they want the most answered is how do i lead a team, how do i make should that everyone on my team is behind me? that is extremely important in the kitchen. a lot of this is men look at great chefs to understand how to rally the troops. enrique: i try to treat them as i would like to be treated. that is my main idea when i am running the kitchen. my staffy cooks and the same way as i would like to be treated. manus: you have a new york restaurant. that is the first international expansion. more to open, the proposition of new york. has it worked? can you roll the program out

globally? enrique: i love new york and i love mexico city. we will focus on those two. manus: london? enrique: not in the near future. i think we should focus on new york and mexico. that way i can have a nice family life. francine: less jetlag. thank you for joining us. " mexico from the inside out." now, we have been talking, thank you. we have been talking about central banks. we had a banking coe we had one of the most famous, chefs. we are also talking about mark carney. the boe and the interview he gave john nichols yesterday was outstanding. manus: they covered broad subjects. think about prudence. yellen is live. carney is prudent.a and mario draghi is vigilant. today is jobs day. between the food and jobs, i do not know which one excites me

more. francine: estimates are for 185,000 jobs to be added for october. the on implement rate is forecast to drop to 5%. manus: u.s. equities are where we indicated. let's have a look at the day ahead. &p, of course. 97. nasdaq trading 4,6 francine: two are other top stories. dams at a brazilian iron ore project have burstordly killed as mudslides buried dozens of homes. the project is a joint venture. we've been trying to find out more about this, because, these disasters, it is a tragic loss of life but it is one of the disasters we do not know yet what impact it could have. we do not know the scale of it. we do not know how big it is. and we do not know if this will impact bhp negatively for years to come.

manus: it is all about reputation. and all about the safety in question. let's bring in will kennedy, bloomberg's managing editor for energy and commodities. give us an update. where are we in this tragedy, and what does it mean for these two companies and for the people on the ground? don't know that much about the loss of life, unfortunately. we will know more as the day starts in brazil. press reports say that as many as 45-50 people are still unaccounted for. francine: so, it is very difficult i guess to have the scale of this. but you have been covering commodity stories and tragic ones like this. how, does this feel big? do we know the scale? does it have a huge impact on bhp? will: it could be a significant event for bhp. bhp would always tell you that

it put safety first. for them to be involved in an incident like this. you could see how this -- for the local people. it is an appalling incident for the villagers. so, what does the mean? sharplyes are down which suggested investors are concerned there will be significant costs. no doubt they will have to spend a lot of money compensating the victims and cleaning this up. francine: we have never seen anything like this before, have we? will: this is a little known thing about mining is that it does produce huge quantities of waste water which go into these dams. they have occasionally burst before this is probably the worst example we have seen in recent years on its impact. manus: initial devastation. we can see on our screens at the moment. it is about the human side. in terms of munication from bhmp anp and vale.

it is about how they communicate. the process they go through. i'm reflecting back on those miscreant kitchen -- those missed medication moments from other companies -- those missed communication moments from other companies. bhp has been of talking already today in melbourne and reassuring people they will do whatever it takes to first of all just make sure the people get the help they need. then to clean up. i think in in brazil it will mean much closer scrutiny of the mining industry which is a huge part of the economy. globally, people will have to look at dams like this and how wastewater is dealt with. francine: they do so much. kennedy, bloomberg managing editor for energy and commodities. we will keep a close eye on this, the situation in brazil. in the next couple hours we will find out more when brazil wakes up. there will be rescue teams on

the ground. manus: we will bring all headlines to you across the business day. let's get you up to speed with the other headlines. in an exclusive interview with bloomberg, the governor of the bank of england has said the u.k. needs to record, needs record low interest rates for a while longer. because of the slowdown in china. but mark carney also said a hike is on the cards next year. ratherr carney: would i have the majority of the british pinky think -- people thinking that rates are going up next year? yes, i would, because that is prudent behavior given the progress this economy is making, given the likely path of rates. francine: and you can watch that exquisite interview with mark carney tonight at 7:00 p.m. london time. manus: today it is job day. u.s. payroll data will be watched around the world for its influence on the fed's decision. that is probably the understatement of 2015, because as we have spoken to derek

halperin, he's bullish. they only need to see a small improvement. francine: we look at job improvement, wage growth. "surveillance" is up next with tom keene and myself. of course, it is all about jobs. ♪

♪ francine: highly anticipated. will the u.s. jobs data be strong enough for janet yellen to hike interest rates this year? mark carney says be ready for 2016. china's contagion spreads. europe faces the reality of the slowdown. good morning. this is "bloomberg surveillance." tom, this is exciting. it is my first job stay with you. tom: my deepest sympathies.

we will bore everyone to death on the two american surveys. it will be great. it has a lot to do with changing the world for janet yellen. some say this is too much focus for janet yellen. tweedy enough? i wore this for you, francine. francine: it is very 1930's. i like it. i hope the data is better than that. brendan: a crucial reading --vonnie: a crucial reading on the u.s. economy. the unemployment rate is expected to inch downward to 5%.

janet said improving economic data would be a live possibility. u.s. is expected to announce tighter security steps for international flights in reaction to the russian airliner that went down in the egyptian desert. tourists of british were stranded in egypt after flights were suspended in the area. awarentelligence has been for some time about the security issues in the region. was issuedce 2 earlier this year that raised the floor on u.s. aircraft that are operating over the sinai peninsula. u.s. security officials have and have beenare

taking steps all along to address it. francine: the russian airbus crashed after taking off, killing all 224 people on board. at least 15 people are dead and many more missing in southeastern brazil after ray burst.a dam it happened yesterday at an iron ore project owned by two of the world's biggest mining companies. rescue crews are searching for survivors and recovering bodies. did exxon mobil lie to the public and investors about the effects of climate change? the question is the focus of a wide-ranging investigation of the company by the new york state's attorney general's office. the company must respond to a subpoena seeking documents going back nearly 40 years. the investigation wants to know what the experts new about the effects of climate change. $1 billions to spend

at the forefront of the auto -- artificial intelligence field. they will open a facility in silicon valley and one knew the massachusetts institute of technology. the company says the california site will open in january with 200 employees. those are the opening headlines. tom: very good. let me do a data check. sterling weaker this morning. futures negative. the euro-dollar showing dollar strength, euro weakness. on to the second screen, if you would. the vix. -0.32.rman yield is at right over to the terminal.

the terminal is real simple, folks. here is the good news. up we go in an amazing persistent trend. things change in 2000. francine: we are really not absolutely sure what is going to happen. tom: i agree. it is a huge debate. are we in a cyclical or structural job making recovery in the united states? of course, francine lacqua, it goes on worldwide. mediocrevetail the new with the united kingdom charging forward. francine: it does, tom. you were talking about whether this is structural and whether monetary policy had a lot to do with the jobs report, there is a great piece by mohamed el-erian that it is regrettable that there is one set of readings that could have such a big influence on the fed.

in on theally start u.s. jobs and what -- whether you are a little bit uneasy about the one jobs report or two that will make or break janet yellen's decision to hike rates in december. focusing a fed is bit too much on monetary jobs data. that is absolutely correct. it would be better if they were communicated a little bit better on the monthly data. .e don't really know it typically takes three months until we have a better idea what the underlying trend is. yes, there is too much focus on it. the fed decision is coming up in december. they need to decide on the basis of something. this will be an important report. this report and the next one

will be just good enough for the fed to go ahead. they don't need a strong report, they just need the absence of a week report. otherwise, they are poised to go. good enough would be 140,000 or 150,000? holger:. a revision holger:goody -- it is not a revision. holger: good enough is probably 175,000-plus. i would say roughly there. very early in the year, we had pretty strong labor market data. companies hired a bit more workers than they probably needed and now we have had a temporary slowdown, a bit of an offset. ,n some of the next few months

we will get to some more normal data. i read amonths ago, paper out of austria on part-time-full-time employment counting in europe. i was fascinated by the elevated unemployment rates. let me ask you a basic question. are we creating quality jobs? is creating as. bit more quality jobs than europe is. u.s. is in ase the more mature stage of its economic recovery. all in all, if we look at the last 15 years since the start of the euro, actually 16 years, what we see is that average job creation in the eurozone is exactly on par with that in the u.s. the difference in the u.s. is that a lot of people have ,etired from the labor force whereas, in europe, we have open unemployment weather has been a drop in the participation rate. tom: please explain to me the

dynamics of men and women. we had the surge in women's employment over 30-40 years and that has ebbed away. in what way does the percentage of women -- has the percentage of women coming into the workforce ebbed away? europe, we are seeing female employment continued to rise. europe has been a bit behind the u.s. female employment is rising. has seen trends that are a bit disconcerting. some people, including women, are giving up looking for a job. which may be a reflection of the kind of jobs on offer, which may have also the reason that they are at the top of the income scale that some people know want to work that actively. we do not have a firm handle on it yet. it is too new for that. tom: giving us perspective to get used to the american labor

economy. we follow on later. alan krueger will join us from princeton. of course, the former chairman of the president's council of economic advisers. we will talk to bill gross at 8:30. he will interpret not only the economy of washington, but the market reports. stay with us through the morning. good morning. ♪

stop athington will 8:30 this morning. we hope all of you stop by to watch bloomberg television and radio. our coverage of the jobs report. with me, francine lacqua in london. let's get to our friday job stay

business flash. here is vonnie quinn. vonnie: thanks. industrial production unexpectedly dropped in september in germany. fell 1.1% in august. economists were looking for a gain of 0.5%. a deal to report in the pharmaceutical space. astrazeneca is going to buy zs pharma. zsres of california-based pharma will get $19 per share. toyota is the latest automaker to distance itself from takata after similar announcements by honda and mazda.

shares have nosedived 39% over the last three days. that is the bloomberg business flash. francine: thank you so much. at the bank of england, there is inflation and there is inflation. bloombergusive television interview, that is something mark carney is watching. said one of the things we is that we have adjusted our horizon for which we would return inflation to target because we recognize that there is some persistence. we might not be about to get inflation back to target as quickly as we would have thought if it was just a one-time drop. core inflation is what central banks around the world watch. give us a sense of what you made

of the mark carney interview. it seems that february is off the table for a rate hike. it is not as far out as the autumn. is that it fair assessment? >> yeah, i think so. it was more dovish than i expected. the fact is, the thing that matters is that the inflation forecast at the end of the forecast period. it was the biggest overshoot for a decade. that is the diagnostic for rates. when he says these rates are going up in 2016, i think he means that. francine: if you look at the jobs market in the u.s., we are talking to tom keene in new york , the jobs here are fairly similar. they are just about three-four months behind that full recovery. jamie: we are in very similar places.

if you look at slack in the u.k., you look at slack in the u.s. across a range of measures and you find they are very similar. wayu.k. is leading in a because we have seen some pickup and wage growth come aware the u.s. has not. there are different ways to look at it. tom: jamie, i look at the fed probability and the shell game we've got of gaming what jalan , if you yellen will do look at the probabilities of where we are going, we have really walked away from true deflation. the distribution has shifted upward. are deflation fears over? jamie: i think we have been hit by theories of shock over the past few years, which have pushed deflation down. really, the fundamental outlook on deflation is not that different on what it used to be.

francine: tom? tom: excuse me, i'm sorry. i was looking at charts. when i look at the job quality that is being created, i think there is real doubt about that. people are saying, there is not the same jobs --they are not the same jobs that there used to be. jamie: for the u.k., there has been quite a big effect on the job statistics. in time, we would expect that to reverse. we are starting to see just a bit of that now. we are expecting some pickup and wage growth and part of that will be structural improvements. , is that right? in the u.k., we are very

similar, but we do have that weight of in the private sector. it is absolutely right. the u.k. is leading the u.s. in the labor markets. of wage has had a lot moderation after the great financial crisis. in response, the u.k. has had a significantly better employment performance and all other major industrial economies, except germany, perhaps. the u.k. is now at the stage where the quality of jobs is getting better. initially in the upswing, the low-quality jobs are being created first. the quality of the jobs is getting better. the wages are getting better. it all actually means the bank of england should raise rates at roughly the time of the u.s. fed. francine: that is another conversation. we will get to that. jamie, thank you so much. holger stays with us.

coming up in the next hour, we will speak with willem butler. one of the big thinkers when it comes to the fed and jobs and the economy in the u.k. ♪

i cannot convey even to eosityne lacqua the gorg of the end of october in new york city. we'll must hit 70-something in

new york yesterday. 70-something in new york yesterday. we need to go to francine lacqua with the morning must-read. francine: it means nothing to me. you have to speak celsius. tom: vonnie, help me. vonnie: i'm going to have to get out my iphone. tom: vonnie is useless, as well. the commitment has uma's sales as p have barely grown. factall has to do with the that they own these very high-end luxury bags.

a lot of people are saying, what it you get rid of puma and focus on luxury? tom: what is the difference adidas? puma and francine: if you look at adidas, we had figures earlier on this week and they are not doing too badly at all. they are considered running or fasting -- running shoes that are considered more street friendly. holger, to the point of what we from kering, china remains a concern. mainland china is rebounding a little bit, but the overall impact china has will not only affect companies in luxury, but will affect the rest of the world. are you worried about it? holger: i'm not worried very

much. in china, we got used to extraordinary rates of growth in the luxury business and the economy as a whole. we now have to get used to more modest rates of growth. china, whatever the real figures , as if they are close to 5% there are some reasonable guesses, that is still a lot of growth and china is not showing any sign of a hard landing, falling off a cliff. it seems to be kind of stabilizing. the most recent data was getting a little better. i would say the outlook for china is not bad. is a littleit wobbly right now, but not bad. francine: i'm looking at the german output report unexpectedly dropping. they are blaming china. is this just an excuse? holger: no, the emerging-market effects were in general recession and the slowdown in china is having an impact.

where in europe do you see it? export-oriented sector. manufacturing is down 0.6%. construction is up nicely. retail sales are up nicely. francine: thank you so much for now. breaking news? a brokerage have business. these are london shops. maybe one of the year-end window dressings. synergy in the future. onncine lacqua and tom keene this job state. stay with us. "bloomberg surveillance." ♪

francine: this is "bloomberg surveillance." here are some of your great stories you can check out right now on bloomberg.com. the u.k.'s central --

second-largest drugmaker, astra zseca, has bid to purchase pharma. toyota will ditch airbags made by takata. german industrial production unexpectedly dropped in september. they blame china. are the right to? read about it on bloomberg.com. vonnie: this morning, we have a crucial reading on the u.s. economy. the unemployment rate is expected to inch downward. a positive report says chair janet yellen's comments will see a rate increase a possibility. the report is released this morning at 8:30 eastern. the u.s. homeland security department will announce tighter restrictions on international flights.

egypt, planes are ready to take thousands of british tourists home. there were stranded when britain suspended flights in and out of the area. suspensions were prompted by the suspicion that a bomb took down a russian airliner in egypt. a dam broke in southeastern brazil. it happened yesterday at an iron theproject open by two of world's biggest mining companies. rescuers are searching for minors and recovering -- miners and recovering bodies. a probe is focusing on whether exxon mobil lied to investors and the public about climate change. investigators want to know if exxon revealed what its researchers knew about the environmental and financial effects of global warming. britain should be ready for an interest rate increase next

year. that is the outlook from mark carney. in an exclusive interview with bloomberg news, mark carney said he had confidence in the fed. it is material for demand for the u.k. and it is going to be one of the reasons why we see our economy continue to progress. i'm quite confident they will make the right decision at the right time. much more ofan see that interview tonight at 8:00 eastern on bloomberg tv. you can get more on these breaking stories at the new bloomberg.com. tom: francine, help me out. this is confusing, folks. one of the stocks went down and that it reversed and went up. that is because this is a reverse takeover.

doneeverything is said and , i cap is buying to let -- tullett. in the headlines, you don't know who is buying who. francine: it is interesting because we had that story released in one of the u.k. press. the way that they had written it it was clearly saying that icap was planning to buy a majority stake in to let me bond -- tullett prebon. interdealer brokers have been hurt. tom: how do you say it? tullett? francine: don't ask the italian. tom: they are reducing

front-office staff. a little confusion there, folks. francine: alta do with tax. european airlines have suspended flights to the sinai peninsula after the plane crash last week. is in thean president midst of his first state visit to the u.k.. , we haves all of this christopher on the program. is this a game changer? changer if it does turn out to be a bomb, which it is pointing to? is it a game changer for putin? christopher: if it were demonstrated beyond all doubt, it would be a very serious development. game changer is a big word. this is already a complex and tragic game which has lasted for years. nevertheless, it would have serious impacts for russian

domestic policy and domestic opinion, but i would like to say , for the broader international effort to deal with the tragedy of syria and the threat of fanatical jihadi terrorism coming out of it. francine: meaning that we would have to be more forceful or we would be more united? this is the optimistic part. more united. there is nothing like the reality of the common cause to help the various external parties overcome their different angles on how the domestic work.cal series should people don't come off historic positions at all easily. main arabia and iran will -- remain at odds for the foreseeable future. the united states and russia are perhaps already beginning to collaborate more effectively.

very active diplomacy from russia, including with the .yrian opposition in exile this is not being widely reported. the momentum of that would be strengthened if this tragedy were confirmed to have been caused by a jihadi terrorist bomb. putin, if youimir look at him, this will have an impact on domestic perception in russia about the involvement of russia -- that means that vladimir putin may scale it back? or it may just unify the approach with the u.s.? which is very minimal at the moment. christopher: going to the impact on russia domestically and an influence on russian policy, as i said at the beginning, this will have a negative impact on russian public opinion were it proved beyond doubt.

room andthere is no public opinion -- in public opinion for military adventures in the middle east in russia at all. it has beenout that to create extreme danger and loss of life for ordinary people always in public opinion and politics, there will be mixed reaction. some people will be moved by the argument that this proves that you have to attack terrorism preemptively in syria and that in the long run we would be at even greater risk, we, the russian people, if we did not do this. this is an argument even in the u.k. that the foreign secretary was making. it will be a net negative for the kremlin as regards to russian domestic public opinion. tom: chris, i don't know if you are a next front on the sinai peninsula, but if you are going to have boots on the ground, are

they egyptian boots, russian boots, or both? tom, you have touched on the other big angle. were this to be proved, would russian policy react by stepping up its military intervention in syria and the wider region, including boots on the ground? my own judgment is that russia would not take that step. it would continue to work with its allies, who are iran, that is well known, and also, less well-known, egypt, as well. and work with them just as the u.s. is using air support in troops on the ground, particularly the kurdish militia in syria. no russian boots on the ground, but more active military intervention. i do not subscribe to the view that putin will go into some

vendetta and it will become very unpredictable and the responsible. not his style. tom: chris granville, thank you so much. with trusted resources. after the debris falls, jason furman, will he take a victory lap? jason furman at 9:00 a.m. this morning discussing jobs with the appropriate white house spin. stay with us as francine and i spin "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." new york city, a bit of a fog, but warm, warm temperatures here. there will be a fog get 8:30, but we will try to provide clarity. inncine, this is no fun brazil this morning, is it? francine: no, it is not. there is loss of life areas it also has huge implications. a dam has burst, triggering .udslides for more, let's speak to will kennedy, bloomberg's managing editor for energy and commodities. how much do we know and how much are we waiting to know to understand the full scale of this disaster? : brazil is just waking up, so we can expect more details in the next hours. burst andburst -- dam spilled millions and millions of

gallons of water. at least 15 people are dead. it goes to the fact that we need to make sure the fact -- it goes to the fact that we to make sure we can trust companies. will: the hp would tell you that safety is their first priority. is hugely embarrassing for the company. but in little like bp, that one, you had to stop what was happening. that is not the case here. francine: i'm not an bird, but .- an expert when there is a huge mine, there is also water. will: you crush of the rock, you turn it into a slurry, you mix .t int

no more details yet? cause is precise unknown at this point. francine: thank you so much. coming up in the next hour, we will speak to the chief economist at citigroup. it is job stay. holger cannot wait to talk about labor participation. willem buiter is in a 6:00 a.m. in new york, 11:00 a.m. london. ♪

welcome back. this is "bloomberg surveillance." and ice picture of the london picture of thee london bridge. there you go. st. paul's cathedral. mark carney told us to be ready for rate rises in 20 16. here is vonnie quinn. vonnie: thank you so much. lift onset is facing its -- lufthansa is facing its longest ever strike. cabin crews are preparing to walk off the job this week.

the carrier is trying to weather competition from low-cost competitors like ryanair. possible implications of spoofing in singapore. the practice of spoofing, making orders and then canceling them before they can be executed, has recently gained prominence in a series of high-profile cases in the u.s. futures market. planning tortedly buy a controlling stake in tullett prebon. the deal could take place as soon as next week. low interest rates have curbed volatility and banks around the world have scaled back operations. this will not be the first time we will see this. we will see more and more of this consolidation. tom: reverse merger of a type.

i've got it right here. subsidiary, including some digital businesses. confusing. is icap buying tullett prebon or is tullett prebon buying icap? i think icap is buying tullett is whatbut tullett remains. i have no idea what i just said. it is job stay in america. the backdrop is the drama with mark carney and what he said yesterday. an important interview with governor carney that will air tonight at 8:00 p.m. surprisedaks and everyone, even francine lacqua. surprised.not

it really speaks to the immovable force of european disinflation and lack of nominal gdp. when and how does that and? -- end> ? holger: we have inflation running around 1%. u.k.n't have outside the serious labor cost pressures. even in the u.k., they are only edging up modestly. we are not going to have an inflation problem for the foreseeable future. had a deflation problem. we had a benefit of falling oil prices. benefit of at the falling oil prices and all the gurus that will roll away, that will roll on to the normal rate of change in oil. i don't buy that. when does the benefit click in of low hydrocarbon prices. is it there and we just can't see it? holger: if they look at the data

in the u.s., they find consumer spending among the stronger parts of the economy. if i look at europe, we are having consumption growth in the eurozone at about 1.8% year-over-year. we have significant growth in the u.k. helped by, this is the low carbon prices. what we see across both sides of the pond is that consumers are reacting a bit less enthusiastically to the low , but they saved a bit more of the windfall from low carbon prices, which is good. it actually means that they are building up a little cushion for potential coming fluctuations, which could come in the future. overall, it is not too bad. francine: when you heard that mark carney interview come over you surprised that he was a little bit dovish because this

country, why do we still have record low interest rates? we are not doing that badly. it is just currency that is keeping it down and inflation expectations? holger: i would take a little broader view and not really focus at the precise message in the press conference. francine: why? that is their job, to communicate. seenr: yes, but as we have from the boe of the fed over fednt months -- and the over recent months is that it is not so reliable that you can take one particular sentence and say, this is what is going to happen. they don't fully know what they are going to do. they are watching the data. the tendency of both of the central banks is that they are slowly edging toward the first rate hike. the fed, probably in december. for the bank of england, i still think february as possible if the u.k. data holds up nicely.

we may get a slightly stronger report on fourth-quarter gdp in the u.k. ,f the market takes a fed hike a february rate hike of the bank of england, i would not rule that out. francine: we talk about policy mistakes. is it more of a concern that if we wait too long to normalize, to start normalizing, that the hike, the interest rate hike, will have to be much more rapid than gradual? if we delay and then we realize the economy is much stronger than we thought, we are going to go to 0.5% to 2% very quickly and that may stifle the recovery? thatr: yes, there is risk we may have to do more in a rush . i don't think inflation would be such a problem that the central bank would be forced to do as much, but actually, after such a low rates, you

want to start gradual. tom: are there bubbles out there? within all of this mumbo-jumbo we are talking about, this economics back-and-forth, what the audience wants to know is how inflated as the bubble? do you transfer -- translate our central-bank theory into clear and present asset bubbles? don't really see clear and present asset bubbles to the extent that they are macroeconomic lee relevant, i have to say. we have elevated house prices in some areas, but if we look at we have hadrends, this over the last five years. i don't say that current valuations looked very stressed. across the western world, we do not see asset prices being inflated by people taking a credit. credit growth is normal or

comparatively slow. there is probably not much of a bubble. whatever is being credit fueled is not very dangerous. if there is that tentativeness, that lack of confidence, does that signal to you that there will be tepid investment next year that will not create the kind of jobs america needs? holger: i think it will create the kind of jobs america needs. it will not create as many jobs as in previous cyclical upswings in which investment was stronger and ended in exuberance early on. the bad thing about the current case and profile of the upswing is that it is not as strong as in the past. it does not create as many of the good drops as fast. the good thing about this recovery is that nobody has to stop it because it is nowhere

near as exuberance, so it can go on for a comparatively long time. tom: holger, thank you so much. in london this morning. francine lacqua and i agree on nothing. i say 70 degrees fahrenheit, she says 21 degrees fair and -- centigrade. other than that, we have great guests for you on this jobs day. we will speak with willen buiter of citigroup. then alan krueger on the two americas. finally, bill gross on the financial repression that we have seen. stay with us. another hour of "bloomberg surveillance." ♪

tom: is it possible we will see ?.9% unemployment this morning

on this job's day, we look at the american job making machine amid no inflation. the central bankers of the world will not they'll a stagnant global economy. in this hour we speak to the will not bail out a stagnant global economy. in this hour we speak to the other central banker. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. it is friday, jobs day, november 6. francine lacqua, we go from mark carney's shock over what could be a shock at 8:30. jon: the jobs report, everyone is looking at it. about labor talking participation, wage growth, and labor participation. the world wants to be an expert because it gives vindication on whether we get the fed hike or not.