second-best year for hiring since 1999. and oil rises from a 12-year low. still, crude is being battered by a perfect storm. turmoil in china, and overflowing u.s. stockpiles. welcome to "bloomberg ." i am david westin. jon: i am jonathan ferro. stephanie ruhle will be returning. , rolling overzing it seems into the open. s&p futures just up nine points this morning. inopean equities now negative territory after being in positive territory throughout the morning. to break this down through the next 60 minutes, michael

holland, of holland and company, will be what's -- will be with us through the program. vonnie quinn has first word news. the government of china controversial circuit breaker that adjust to the market yesterday. state-controlled funds were set to buy stocks. news that we are anotherg this morning, sign of rising tension after north korea's latest nuclear weapons test. south korea has reinforced its defenses along the heavily fortified border. it strengthened positions near loudspeakers broadcasting anti-north korean propaganda, and also south korean pop music. president obama has been rebuffed by congress on gun trying tod is now

convince a public that is skeptical and ambivalent. it knowledge in a town hall meeting last night there are different realities, using the realities of -- the examples of rural areas where people go hunting and urban areas that are crime fed. i am vonnie quinn. the markets now with matt. matt: i want to show people first off what the s&p looks like this week. the worst start to a year we have ever had since records began for the s&p 500 index. you can see that we are down almost 5%, and this is only the fifth trading day of the year. it has been incredibly rough why? china really kicked it off sunday night, trying to release the pressure valve and allowing the u.n. to devalue. it has been doing that all week. today chinese markets are up, but chinese markets have taken a

huge tumble on does code date -- on two days. today that his turnaround. because theyround got rid of circuit breaker rules. rules, anded those essentially it is like they stopped yelling fire in a crowded theater finally, and people are staying to watch the movie. so you can see the shanghai crop up 2%. the hang seng showing gains right now. we haveesting thing seen happen this week is wall street traders are not sleeping. they are waking up to see what happens in the chinese markets and trading u.s. futures off of that. the volume of u.s. futures -- people realize i have to come in to work in early or i cannot leave. all of a sudden they are trading a ton of futures by yesterday, and this is 9:00 to 10:00 a.m.

we will see a bigger number than that today. 600 --look at the stoxx take a look at u.s. futures first of all. it is a game but not the game we saw this morning. i saw u.s. futures up 1.5%. now we are looking at a half percent gain on the s&p. , the european broader index has turned down. up on positive momentum coming through from the asian markets. it is now turned down. however, even though the futures turned down and the stoxx 600 is turned down, it is a risk on the day. some of the places where people were storing money in safe haven assets -- gold futures are actually down today. they have been up all week. people have been running to gold. they have been parking their boats in the u.s. 10-year. now you can see the 10-year

yield is up because people are selling bonds, gold. they are selling yen. what are they going to do with that money? if they take it out of the safe haven, unless they continue getting cash, they will put it into equities. is no real sign of conviction going into the open as we await the payrolls figure. enda curran is in china and he feels no pain. he has had a busy week. great to have you with is on the program. stabilization on the fx side of things -- break it down for us. enda: good morning, jonathan. stabilization, but still government intervention. the headline might be that china's stock market rose, but only after the national team came in to buy stocks. of course the government had to toughack and give a admission of defeat, but the

circuit breaker would not work. the central bank came in today and kept the yuan steady. for the first time we had an indication that the two arms of the regulators were working together for team china rather than pulling against each other. if you remember yesterday, one of the big problems on the stock market in china and around the world was the central bank's shock decision. today a little bit of stabilization, that the chinese government agencies were all singing. not leave usuld with the impression there are no restrictions on trading. there are still a number of restrictions on who can sell in the stock market today, right? enda: this market is nowhere near open in the conventional sense like america and the rest of the west. heavily a still state-controlled market. a lot of the restrictions put in place after the crisis in the middle of last year that wiped

out value, a lot of those restrictions remain in place. the biggest one that played a larges the ban on shareholders and selling. it bots no sign of aiming out. there is a sign -- there is no sign of it bottoming out. state andd of the china will continue in shanghai and shenzhen stock markets for some time. us: thank you for joining this morning. i want to bring in michael holland. we talk about the chinese equity market and how it does not matter for the u.s. economy. but whatever happens with the chinese currency -- do we get that feedback loop at some point through the confidence channel and the equity market in the u.s.? michael: sure. the u.s. stock market, the wealth effect goes in both directions. there can be a negative.

at this point it is important to note that the market in china is not the economy. one of the things that happened last august when we had this terror visited upon the markets, with china really slowing down -- that is why they did this huge devaluation on the yuan. traders at that time did a scare article that there will be a 10% to 15% devaluation. the scares are much larger than reality. the economy is a little like the u.s. in that it is moving ahead less ungradually than the u.s. economy, but both are moving up begrudgingly. point to exactly the question i have. how much is real and how much is noise? how do you sort out what is really going out inch -- what is

really going on in china as opposed to market noise? was there last month in beijing and hong kong. you talk to people on the ground, people in government, and i have been doing this for 20 years. there are times when you lose a lot of money and over all years because we have smart people on the ground, we have been able to make a large amount of money on the original investments. there is no question that what we have been hearing the last two years, there is no new news here on the economies. they are gradually moving ahead. jon: matt miller, i know you want to jump in. matt: the chinese stock market has been volatile. that is because the lion's share , the traders in the chinese stock market are retail investors. this is a look at the csi 300 over the last 10 years, and you can see that we are looking at gains of 9% and losses of 9%.

those are incredible swings. we have not seen swings like that since back in 2009 on the chinese stock market, but they are huge. if you look at u.s. volatility, and appropriately you see a volatile response, but you do not see the swings we saw in august. here in august, the vix went up to a level of 40. we have not seen that since 2011. 20.25.are at we are not seeing the volatility yet that we are seeing in china. volatility in the u.s. market is one third the volatility of the shanghai exchange. three times more volatile, yet we had the same circuit breakers instituted by the mandarins over there. matt: but there were far more retail investors -- retail investors, when they are told they cannot do something, like u.s. teenagers,

meaning you cannot sell, what do they want to do? they want to sell. then when you see the restrictions are off, that is when the government stepped in. david: it strikes me that investors do not realize how different china is. the stock market is much heavier in retail. but also when you talk about the wealth effect, there is a different savings approach in china. whereas here there is very little margin, a lot of investors have a lot of savings to spend. michael: bingo. .2 trillion worth it is not even close. ,o do not just do something stand there when it comes to a day like yesterday. jon: we see this over the last 12 months. you get a small data point and then outside move in the market. tory investor returns

chapter 10 when you're still on chapter one. it keeps happening. we know it is not a big deal for the u.s. economy, but as the second largest economy in the world, when they are tampering with equity markets and trying to stop people from selling, when you see those kinds of moves, the point is, are we close to a mistaken policy making? michael: they have made lengthy of mistakes. the interesting thing is they are actually quite good business people. they do not make the same mistake twice. this is a startup. they have only had shortselling for two years. instituted after the crash of 1987 in the u.s. circuit breakers, we had to do what they did yesterday. we had to get rid of them because they screwed up. brady and the people putting them together said we made a mistake, so they are

making mistakes and addressing them. the pboc put out a new statement this morning, that the key to all of this is management of the currency. that is what spooked the markets. when they came out this morning going tosaid they are do predictably what they said. they own a lot of stuff and they do not want to do you value by devaluations, if you will. david: i wonder if this all means that we should expect more of this. flyave been learning on the -- the economy has been learning on the fly how to manage itself. will we see this throughout 2016? michael: yes. i do not see any reason not to. the mistakes they make will be better informed, and i thought the reaction was quite good. they said we made a mistake and we will address it. it is like a business that did something wrong. no one is making excuses.

they did the right thing. then they went into the markets and parlayed that. holland, great to have you with us this morning. david: up next, what to expect with the december payrolls report. how could that impact future rate hikes? that is next on "bloomberg ." ♪

jon: good morning and welcome back to "bloomberg ." we are 15 minutes from the opening session here in new york. -- we are two hours and 15 minutes away from the opening

session in new york. up the board -- stabilization is the keyword in china this morning. dollar-yuan, 6.59 this morning. that added optimism for the chinese equity market, a rally overnight, up by 2%. nymex crude's high this morning off the 2003 low. 33.51 per barrel. early market moves, let's go to vonnie quinn. isnie: volkswagen considering a massive buyback in the u.s. might -- they may buyback tens of thousands of cars that cannot be fixed easily. regulators in the e.u. have given fedex unconditional approval to buy its smaller rival, tnt express, more than

two years after ups was blocked from a similar take over. and u.s. law enforcement and intelligence officials meet today with tech companies about terror threats. attorney general loretta lynch and fbi director james comey are flying to northern california. they want to counter terrorists to use social media to recruit and spread propaganda. facebook, twitter, google, and apple are all among those who will take part. david: we are over one hour away from breaking news on the economy. 200,000 jobs, more or less, were expected to be added last month. our colleague brendan greeley joins us from washington, where he will be looking at those numbers so he can give them to us on the dot. we also have carl riccadonna with us. we have had a couple of jobs reports that are pretty encouraging. what do we expect this morning? brendan: i think we will have a

very relaxing friday morning. this is going to be an unremarkable jobs day. we have had some unremarkable jobs days in the fall. we are looking at a median of 200,000. 240,000. i talked to somebody on the high side, ethan harris at bank of america merrill lynch. he said look to a warm december. you have more construction, but also people tend to be looking for jobs in a warm december. that is why he is confident. the other thing he said to take a look at is if we continue on the trend we have had so far, we are going to look at a service job recovery. jobsve a mediocre gdp, the numbers, meaning companies are not getting the productivity gains we are looking for. that is what the fed is concerned about. jon: when unemployment is at 5% and we are getting close to full employment, we have to assume 200,000 day jobs numbers that come in every month are going to

be a thing of the past very soon? brendan: yes, and that is something we have been told by economists that we cannot expect forever. but there is some room for surprise on the downside. the fed is going to be hard to surprise here. it is going to have to be a low number, below 100,000, for the fed to be worried that way or the -- for the fed to be worried one way or the other. so if indeed we begin to dip back below the 200,000 number, the median for the last 11 -- it is not going to be that big of a deal if we do. 5%.d: we focus on 200,000, there are other numbers that count -- participation rate, full-time employment or not, and wages. what are we looking for there? carl: as brendan highlighted,

construction height desk -- construction, this is warm weather delaying the usual layoffs. now that cold weather has arrived, watch out in january for a potentially weak report. christmas eve was the warmest on record, so we will not see it in december. this is a head fake. the average hourly earnings figures. we will see a big spike in year on year terms because last december we saw a surprising negative print. it is an easy year-on-year comparison. we have been running at about 2.25%. people will panic that the fed is behind the curve on wage inflation. then we will see about a .2% increase, then right back down to 2.3%, 2.4%.

brendan: you can play along at home if you have a bloomberg terminal. -- ou type in h until eight: 25 you can put your number here. not far off can senses. a lot of the analysts and economists i am speaking to our higher than that. take a look at ecmi on your bloomberg terminal. it can help you forecast moves or show you what the possible moves could be after the release. this is showing s&p futures typically after a jobs number that moved down .2%. the lower bound is .4% -- .8%. 10%.pper bound is about

carl riccadonna can take one side of the debate. and say this is not a tight labor market. otherwise wage growth would be performing much better. what do you say to that? michael: i say what brendan said. there would be a little bit of a meh response unless there is 50,000 or 100,000 in either direction. i read this morning that 170,000 is the sweetest number someone could hear if they wanted the market to go up. at the end of the day, people are still looking at china. that is how we started the show. it should have been the jobs day. it is the china day still. i was surprised at that. we still have oil in the background. one wonders over the next few weeks -- david: people making some money in the real world. thanks a lot, michael holland.

brendan greeley, thank you for joining us from washington. carl riccadonna, thank you for being here. more on "bloomberg " coming up next. ♪

jon: good morning and welcome back to "bloomberg ." we are one hour and four minutes away from the report. treasury up three basis points. dollar-yen 1.18. "bloomberg " is next. ♪

david: welcome back to "bloomberg ." it is warming up in new york this morning. tom keene, we welcome you from "surveillance." tom: a quiet 48 hours.

david: probe asked. brendan greeley says they are relaxed. [laughter] up first.nie quinn is vonnie: urging china to take an aggressive stance of north korea. john kerry talked with chinese officials after north korea's nuclear test and told them "we cannot continue business as usual." china supplies most of the north's food and fuel. to impose the ago restrictions to fight the choking air pollution. vehicles will be barred from beijing's roads on alternate days. restrictions will be imposed for the rest of winter. income tax season for americans was marked by an outbreak of you may be, and this different. more security measures are designed to cut down on fraud.

among them, using stronger passwords and more questions to verify identities. you are more likely to get your refund but it will take longer. global news 24 hours a day and more than 100 [indiscernible] i am vonnie quinn. david: thank you. you have a movie review for us on the must read. tom: this is the first must read of the weekend from bloomberg view. the big shark gets it right, back in 2008, i created a list for theas to blame crisis, and it included more than 30 institutions, individuals, and legislative decisions. including michael holland, and many errors were made in the decades leading up to the credit crisis to claim anyone factor was the main cause fails to understand the basics of causation or -- the keyword -- complexity. steve roche stood up in the middle of the room of the leads and i sat next to him,

announcing that this shindig, a couple of noble laureates and steve roche said rick perry rid hold said, stop with the blame game. it was a group team effort of stupidity, including me, you, and can we move on? why can't we move on? >> we have crazy people still at the helm and in a number of places and people making mistakes. we do have some clear eyed leaders. we talked about this earlier for the crush of 87, we had adults -- the cross of 1987, we had adults in the cross. tom: we had the crisis, moved on, and you brilliantly called, you can go after jpmorgan, bank of america, but the shareholders are going to put value in those future cash flows. jpmorgan held up like rocks in this market chew up.

michael: they did have the fortress that they talked about before the crash. they had it after the crash, so they could withstand not only the fewer of the markets and the economy's declining, but also the extortion that was visited upon. tom: is it extortion? michael: absolutely. >> you said there were risky people in important places, but where are they? michael: i cannot tell you that. david: can't or won't. [laughter] there are two camps, the banks and the finances to blame all the government, and that is a way of saying do not regulate and the regulators say it is the banks and we need to regulate you more. it is not just the past of the future with more regulation. michael: that is on point. spotsrs past, we did have where people were in washington and other places who were able

to bridge that gap. they could say, this is the right way to do it for both parties and for the country and we don't have that right now. tom: what is the difference between the united states method, jon ferro, and london? they gave a speech about levels and how we screwed up and you had a lot worse banking crises so what is the difference between the blame game and the city versus the blame game across main street and wall street? john: no difference. you see the election race every time it comes up. was in which government charge and the banks as well. -- two blank which government was in charge and the banks as well. of bentley and i'm in a black cab, but that story continues and it will continue as long as we have these fantasies that continues to get pushed by politicians. yesterday, we had discussion about bernie sanders and talking about what caused the financial crisis. thanks to big to fail --banks

too big to fail. michael: i think bernie sander'' failnt about too big to are ways to run large organizations and bloomberg is a large organization, it can be run and run profitably. the fact is that the companies and financial service companies, size is not the reason. david: you point to an important point, the potential polarization. right, left, red and blue, and i think we may be seeing it between financial markets, regulators and the other. a used to be the case that they talk to each other and now they go to their respective corners. when i used extortion, that is what i was talking about. we probably hit the nader. i think the worst is behind in this part of the saga and i think over the next year or two,

things will get better. one of the reasons, jpmorgan and bank stocks have been ok and so yesterday. jon: let's tie this into the story of the financial crisis and today with the markets. the fed will continue to hold your hand, the ecb will hold your hand, the bank of england and japan will do the same, going back to thomas's point, if they don't stop doing this we will be back to [indiscernible] one way? michael: looking back, it is possible. i think what was done by starting with the 2008 paulson, bernanke, they actually did history did serve to say they did the right thing. some work in terms of keeping us from a depression. i think that is possible. i think now we are getting to a point where he can end up with the banks doing things that would be criticized for. tom: within the markets, and

michael, you have always been good about seizing opportunity, i do not sense the catharsis yet of 638, 632. we are nowhere near the kind of emotion work out -- where a guy a cashour 42% in position. michael: you are right. your instinct is met by the reality of the marketplace. the last couple of days, there has been a buyer's strike in the market. in august -- tom: i like the asymmetric's. michael: yes, we have had in absence of buyers, frenzied selling in august. we talked about mythical things that turned out not to be right. david: i wonder if the central made, ist that jon there a chance that central banks will bail us out? and fix the balance sheets?

michael: oh, yes. tom: their job is to be there. it is a safety net. once in aestion of generation or once every 15 years safety net or be there day by day. we have to get away by that and they would help if there were other institutions that would assist our monetary authorities. pain andt the peak of that is when you step back in -- tom: that was the winter classic. [laughter] jon: crude at 34 but we are not seeing the bankruptcy that people that we would see. the low $40 or $50 a ton, and it was all everybody talked about, a metric fund. we have not seen the background see and m&a. when is it the point that we get to the pain, so to speak, and those start to happen? michael: peek pain is impossible $32 adict because wti a's

year from now rather than $22, as many of the hubristic do talking about, they are saying, it is going to 18, i have heard a lot, but i would not know. i would never have the temerity to say i know where it is going, but the next is same you will get larger reserves put up and it will offset some of the federal reserve held on the money side. you are going to get that. tom: can i get something out of this conversation? should i buy apple this morning, michael? [laughter] michael: you will have to -- david: go to bloomberg view with the wonderful story this morning and she talks about the marketplace having nothing but loathing for the stock. michael: the stock right now is five times compared to facebook

at 18 times, 18 versus five, even i can figure that out. tom: david westin thinks it is an island in the caribbean. david: i have actually managed it. when did you do that? [laughter] let's go to the bloomberg, all right? [indiscernible] we are doing apple later. that was an appetizer. matt: a couple sentiment pictures. first stop for oil, this is an interesting survey, ayers versus bowles, versus neutral over that bulls versusus neutrals. neutral's about 20% there. if you look at -- let's go to and look at the momentum of the trade -- this is moving average. when you have a smaller moving averages crossing over bigger

moving averages, you get a positive momentum. and in another way, a sell signal. this is back to 2014. right at the very end here, more sell signals, but it is interesting how much sell signal you saw in and how much you did not see in august. this is an interesting terminal look at sentiment. jon: it is easy to make this complex went elastic has been simple. not a lot has changed. have you learned anything new? michael: it reinforces my observation that the markets negativeprone to the and down side view of everything. do you buy something today? you could, but the sentiment is crummy. that makes for opportunities. china today, if i were starting

a hedge fund, i would go directly there and look at the best quality companies because they are selling it five times or seven times lower and they are so depressed and they make a lower. david: there is an investing tip from michael holland. thank you. tom keene has to go back to radio. tom: i want to stay here. david: you are always welcome. more on oil, coming up. considering the potential ipo. ♪

david: good morning.

back.elcome some scientist stabilization in the future markets and china, stabilizing this morning. 6.59 and the csi 300 rallied overnight. fund said to be in the market, that is not a free market. the dollar and yen that 118, 33. -- at 118.33. let's cross over from the markets to vonnie quinn. vonnie: thank you. more sign the global smartphone market is running out of steam. samsung posted profits that bill shorts in the fourth quarter. they are headed for their second straight annual decline. samsung also excels displays and memory chips to other phone makers, such as apple. united airlines $2.8 million was find -- united airlines is

$2.8 million. the airlines was also fined for keeping passengers on board during lengthy ground delays without letting them off aircraft. campbellsville become the first major food company to disclose the presence of g.m. oh ingredients in their products. the company risks losing customers opposed to genetically modified organisms. inis expected to take it up 1.5 years. jon: thank you. i want to take you to the old market, crude slipped along and trading high this morning. saudi aramco confirms they are considering an ipo. in an e-mail statement, they said "saudi aramco confirms they have been studying various options to allow broad public participation in the equity to the listing in the capital markets to company shares and/or a bundle for subsidiaries."

aramco, the saudi huge, huge private oil company could be coming to the market and could be worth as much, even more, as the most viable company, apple. that's crossover and covered the energy markets, andrew with wti 33, $34 a barrel, this is not the ideal time to go to market, is it? andrew: no, the ideal time would've been in 2014 went revenues were at highest levels on record. if you take a look at why they are doing this right now, it could lead the way that they diversify their financing sources. there is appetite in the market for it, whether or not they actually come to petrochemical ofts or partial share soap the parent company remains to be seen, but if you look at other end ocs, they traded about 10 times enterprise by you to reserves and that would put saudi reserves at about exceed

200 billion barrels at around 2.5 trillion. unfortunate the timing, if this goes ahead, and we don't know, is this a budget crunch on their part? they need cash or is this a larger strategic plan to go back into the capital markets in the future? andrew: if you look back to the summertime, they did a bond issue with work that high. up on saudi gone arabia since then, but they have the ability from the investment community. 2008, it was five times oversubscribed and it was cut in thirds between saudi aramco, sumitomo and the rest of the shareholders and saudi arabia. domestically speaking, so if you are a shareholder and you wanted to take advantage of low oil prices in lieu of recovery at some point, maybe a share so

would not be a bad idea or a bad investment. matt: i don't think it is that horrible timing. chart shows the momentum in oil production. the top is saudi arabia's production and the bottom is the u.s. momentum in oil production. gambit to push shale producers in the u.s. out has worked, so now you can buy a piece of the winner. jon: another name for the chart this state versus private. -- is state versus private. this date is saying, keep pumping. the moment they go public, that game could change in a significant way, maybe not in the beginning that state versus active situation is important, isn't it, michael? michael: i was thinking to matt's point and how you describe the difference, jon.

if i had the difference between aramco, it and saudi is not even close. i would don't exxon mobil with the reasons you talk about because when we talk about chinese companies being state-controlled, that is released a control. in china, they talk to go in the direction of free enterprise. of: that chart is an example the point of getting to pain and when things start over. that is significant pain. is a greatthink it chart. it is working for the saudi's. i am surprised on the timing of the saudi aramco thing because why are they doing this now? referred that if this is the right move, they will be like margaret thatcher, but i don't think so. i don't understand this. david: there is a new regime in town, a new king, and the entire thing is changing and we don't know where it is going. michael: this is curious. david: thank you.

andrew cosgrove, thank you. up next, upsetting the apple cards. why the sudden crisis of confidence. stay with us. less than an hour until jobs numbers on "bloomberg ." ♪

david: welcome back. 37 minutes until we get the jobs numbers. futures are higher today. 129 to the positive. getting better. all week, the stocks have been crushed, but singled out for apple.nishment was the stock stumbles over 15%, more than twice the s&p 500 lost, erasing $52 billion in market at the start of the year. michael, you own apple and you like apple. we talked with tom earlier, but

what are your views? michael: as i referred to before, bloomberg field has a great piece on this today. have beenrever and i did these cycles before. i don't know when is the peak or trough on the stock that id no that it activates price and before the crazy price and during this time, i would have sold the stock. of cash versus 18 times forimes, facebook, there is no question in my mind that the valuation is silly, but that does not mean it cannot get sillier. it could get to three times or four times. pick up on some things, we talked about how the market is not the economy, but there is a play on apple stock. do you think that is correct?

michael: yes, of course. i think to some extent, it is that large a factor that it is overdone, as all of these things are overdone in today's market with frenetic moves in chaotic conditions. i think the chinese stock market is interestingly like apple in that they are down. the a shares had crazy populations, unicorn prices in parts of the chinese market, and are 1000 times earnings or 500 times and they have been punished. a lot of the good a share companies. toh shares --the h shares in china have great companies with the financial companies which are trading at very, very low markets, like apple and they don't make sense. matt: a lot of this negative sentiment came from checks and if you do this on the bloomberg,

you can see apple suppliers, 312, down 20% over the last month. down 10% over the last month and apple. 20%. some of the competitors, blackberry is up 10% and this goes down on the seven. customers not doing as poorly as apple or suppliers. jon: thank you. i'm afraid we have to leave it there. we could talk all day. we will in the next hour with jack and david. we get the take and how they are playing today's market. we are 34 minutes or from the opening new york city. s&p 500 index, 17 point this morning. good morning. ♪

jon: beijing loses their grip. equities in chinese stocks finally rise. the worst four-day start for america since 1928 may be over.

futures indicate shares opened higher and they are 30 minutes away in the latest job report. if they keep up hiring in the last month of 2015? he will talk to bill gross of janus capital. good morning and welcome to the second hour of "bloomberg ." i am jonathan ferro. 30 minutes away from payroll. carried am david westin stephanie ruhle is out on assignment and will be back i am david westin. stephanie ruhle this out on assignment and will be back later. meantime, we're going to first ward. vonnie: thank you. china moved to shore off markets and it appears to have worked.

the first fewnged trading days of the year and the government suspended controversial banking systems. the central bank set a higher and stronger fakes and state-controlled funds were also said to have bought stock. belgian investors think they know where the power [indiscernible] phil barry bonds. they were filed last month in the brussels department. also, a fingerprint from one of the suspects. .hey killed 130 people president obama has a message for american gun owners, they are trying -- he is trying to take the weapons away. he spoke at a town hall meeting and said he believes the way can be found to reduce violence that is consistent with the second amendment. powered by our 2400 journalists and more than years -- and our news bureaus. matt: i went to show people the s&p 500 because it has been the

worst start since record-keeping began, so ever. five trading days, four trading days down 5%. the main reason has been china. if you take a look at the currency, i have a spread with onshore versus offshore currency. you can see that the spread has three standardwn deviations from the mean. forcan buy 6.7 chinese yuan a dollar and it has been dramatic. that has caused chinese markets to get rolled. the institution of the circuit breaker and taken that ability, actually, taking it away has helped chinese markets, so they have gained a little overnight for the first day that we have , 2%.lly seen real gains we're looking at in shanghai, the csi 300, up 2%. one of the contributors to the been crude oil.

in has been falling as if there is no floor. there is a little turnaround. it is about 7:00 when we started coming back up in crude's backup per barrel, $33.76 soap a very low price but a little pickup in u.s. futures. they are up on that and up on the china news. s&p 500 index futures are point eight of 1% and dow jones up 128 points. it is a risk on day, they are selling safe haven assets, so they are selling out of gold which they bought into this week. they are selling out of bonds, driving up the yield, and they are selling the japanese yuan and maybe they would use that to buy equities in 1.5 hours when trading stocks. jon: a bullish matt miller this morning. up by 0.5% and we can debate that, but let's get to the real investors and get

their reactions. jack chris king, ceo of output advisers. he has $2.5 billion in investments and david hurro joins us now on the phone from miami. great to have you with us. david, this week, how active have you been? we have been busy trying to take it vantage of the markets and trying to exploit what was happening where you had volatile share prices and as by a investors, we do not see the underlying transit valuable companies in anywhere near as volatile or negative that's what is happening with prize. when price and fundamentals divorced themselves, it becomes an opportunity for us. to talk about these macro factors. at the end of the day over the long-term, this has little if

any to do with underlying company specific intrinsic i'll use. for people like ourselves who have this long-term investor ,ime horizon, weeks like this as this tasteful as they are, become an opportunity. david: correct me if i am wrong, david, but you are invested in a couple of companies in china. recently, you have increased. has anything you have seen in the last 24 hours to 48 hours changed your view? david herro: china has macroeconomic issues and political issues. they are trying to go from this centrally planned investment-driven to more consumption-driven and more of a market of orientation, so they say. there are changes going on. excuse me, it is impacting growth rates. volatilityting the

of the currency and everything else. all these things are true. this does not mean that the whole world is going to get sucked down the drain because of some uncertainty in china. this is the way the markets have behaved this week. we made our first direct investment in our international strategy in the chinese stock on a search engine. we have been wary of some of the h shares and others because there is a lack of transparency and a lack of alignment in shareholder interest. we are going to tread very carefully in some of these other companies. they are starting to look attractive, but we will tread carefully given those. the point i went to make about china is it does not really matter to the global economy that much if it goes from 7% to up to 5% or 6% growth. why? average gdp on the purchasing basis for china today is about

$10,000. at the turn-of-the-century, that number was $1000. just do the arithmetic. chinese ago, the , 10%,y was growing at 8% and it did not matter about the low basis. the relatively low impact it had on the global economy did not matter if it was growing 9% or 10%. now that the gdp or head is nearly $10,000, it is ok that goes from 6% or 5%. it will have a positive impact on the global economy. these fears of a slowdown in china will disrupt the world, it is overblown. jon: jack, same question. it has been pessimism, pessimism, bearishness, bearishness. did you take any opportunity or step into the market or hands-off? actually managers are

very much like david. they are active managers. they're looking at individual securities. that is on their credit side and the equity side as well. they are seeing opportunity. it is not that they are rushing in. they're going to wait and see how that this gets and maybe they will buy it on the first few upticks. this is a stock i stock, -- stock buy stock, credit by credit market. a great market for managers who do their homework. this is not the momentum market, not blitz by an etf in this let's by an etf in this sector, they are stocks. what appears to be going on in the credit market are opening up real opportunities on the high-yield side. , to come across to you and talk about individual stocks. glencore is a company and no you

hold. have you been fined glencore stock this week -- by glencore stock this week? david herro: given our philosophy, we price our business and unless there is a material change in that business, we find the business and if price continues to drop what we believe is intrinsic how you and these are reasons to at the stock, so i think one could conclude, given the weakness in glencore, what we are doing. glencore is an example. you were talking about oil and we don't have a lot of oil in the portfolio. i have to say it is looking interesting. the loss of supply and demand have not just been arrested and ceased operating. eventually, high cost supply and oil is going to come out of the market and demand, as we have the united 4% up and states and demand is picking up. the same could be said for some of the other commodities.

note to commodities are alike. commodities are alike. one of the reasons why we like owning glencore. you have a flat cost in iron ore and in copper, a steep cost. when you have steep cost curves, this means the price movements really begin to remove that high-cost supply and help the price of that commodity, whether it be oil and copper, form a base. david: one of the questions i , mightrt of the strategy that affected trading activity because don't they need access to a lot of capital levered to be effective in treating and where they are making their money? david herro: the trading operation is relatively steady and stable, and it should be about 30%-30 5%. because the rest of the business

is not burning much, that trading operation is doing more. this is one of lang course biggest competitive strength -- one of glencore's biggest competitive strengths. they're one of the biggest buyers and sellers of this commodity, whether it be lead, zinc, iron core. there are traders and they don't take a lot of risk. they fill an open order from a customer and the market maker between the supplier and the demand are of commodities. that is not really where they are going to lower debt. they need debt there to get the deals done, but what they are going to do is they have phrased money, the equity, and they are selling off some assets, income streams from precious metals which they mine, so they are taking a multi-pronged approach and there is talk of selling part of their egg trading operation, but they are making extremely good progress. they have significantly delivered already and moores coming for 2016. jon: jack, i went to give you an

opportunity to wrap things up. talking about oil getting interesting. are the interesting for you? jack: at this price, they are interesting, but you have a lot of supply. you are going to see more pumping, so i think that will stay with us a long time. it actually helps a company like glencore. if you are involved in the copper markets, energy is one third of the price of producing copper. at these low prices, it means you are going to be actually producing more copper as well. i think these commodities may stay lower and longer. you have to look around. it is individual companies. you are talking about companies, certain companies with very good management, and we are going to see a big separation this year between the good and bad managers. wet is the companies, and

are also going to seek the separation between the bad and the good managers in the investment business as well. ken, --hat is jack with herro.and david thank you. 26 minutes until the jobs report. , alan krueger will be talking about jobs, up next. ♪

jon: welcome back to "bloomberg . 16 minutes away from the futures payroll report. about one hundred 18 points, s&p 500 up by 15 points. switch out the board and i can

tell you why, concerns about china, not many this morning. the pboc, ending the cuts for fix overnight. that lifting some of the optimism for chinese and the state backed funds were in the market with line stocks that will rally in china. wti, 33.56 a barrel this morning. some of the market moves to be part of the early session. let's cross over to vonnie quinn. vonnie: it may be easier for volkswagen to buy back tens of thousands of cars than to fix them. that is according to people familiar with the matter. the cars with diesel engines have to be fixed to comply with u.s. standards. talks are still going on. european regulators have cleared the way for fedex to buy express. they say they were no antitrust issues. blocked upshe eu

from somewhere takeover. terrorism talks to date with and intelligence officials law enforcement. loretta lynch and james comey are flying to northern california. they want to do something about terrorism and using -- and the use of social media to recruit. that is your bloomberg news flash. jon: thank you. the estimated 200,000 jobs were added to the u.s. economy in the month of december. we are joined from him in new york and by alan krueger, former chairman of the white house economic advisers. great to have you. what are you looking for in 13 minutes time? obviously, you look at the top line number, 200,000 is a reasonable prediction. if you look at month to month

revisions, it could plus or minus that. revisions in the past mom, what happened to participation rates strongerexpecting waste growth in some part because one year ago, we saw wages decline in december. that should help by changing the base. 2016 that we will seek stronger wage growth. david: let's go over to mr. bricklin. what do you expect? this is the biggest release of the day so far, 200,000 jobs is probably our estimate. probably something reasonable. ist is interesting is it really strong, especially what the fed expects. they think something close to 120 thousand is enough to push down the unemployment rate, so 200,000 is a pretty solid print. the three things we looking for,

one, the weather affect, good for construction, bad for leisure and hospitality. second thing, the retail sector. we have seen a break -- a big move from online buying, so we will look at impact on hiring. lastly, oil. that will have a big impact on mining hiring so we will be looking for that to take affect. we think it will be pretty solid. matt: i went to jump in and talk about revisions because you have releases that the jobs since before the crisis and two things are striking, number one, the crisis was so long ago and it was so short, but also on number two, we were underestimating the job losses during the crisis. we have been underestimating the job addition since the crisis. if you look at revisions on the bottom part of the chart, you'd think we are getting it just about right now? it looks like it has been perfect the last few reports.

alan: that is a good point. the revisions tend to be procyclical. that was rather annoying to me when i worked at the white house because i do not think the president gets enough credit for the improvement that we have seen in the job market. the people do not pay enough attention to revisions. the reason why the revisions tended to be upward was the late responders, companies responding to the survey late with stronger job growth. i don't see any reason why that would have changed, assuming we are continuing to see expansion the job market. i do anticipate that this procyclical pattern of upward revisions on upswing and downward revisions on the downswing will continue. bricklin, on the way of the first interest rate hikes, it was about payroll and labor market reports. going through 2016 and the jan, does a significant shift from the payroll report to inflation data?

bricklin: our expectation is we do get that tick down in unemployment rate. we should be getting faster paces of inflation at any time now. we are not seen it yet. that is the linchpin right now between policy makers. as long as we make steady progress on employment, that fades into the background and that wage and inflation implication, that is what comes to focus and that is the area we have the least certainty about. david: thank you. please, stay with us. minutes away from the u.s. job report. an interview with bill gross is coming up on "bloomberg ." ♪

david: welcome back. economists are telling us to expect 200,000 jobs being created in december. we are joined by brooklyn -- by brooklyn and alan krueger -- bricklin and alan krueger. alan, what numbers would be required for the fed to change their mind about what they do this year in terms of rises? think any one report will cause them to change their mind. i think you need a very weak report and that could be followed up by a weak indicators. in particular, job growth, below 100,000, which growth flat, does it beat some of the key thresholds to cause members of the fomc to reconsider. jon: if i could give you one piece of information from the labor market report, would it just be the labor market data on

wages and nothing else? cklin: i think that is what is in focus right now. they're coming out with revisions, headline numbers, it is so difficult to figure that out. that wage number is key right now. n, tell us some of the knockout fx. let's assume they have good numbers, what will that do in your estimation to markets? and that means foreign-currency as well as -- and that means foreign-currency also. alan: i think a solid report to markets.ming that is probably what markets are hoping for and why we have seen more stability this morning in the u.s. markets. on the other hand, a very strong report would be an indication that the fed will stay on track pointg rates roughly .250

and that should help in the dollar. very much for joining us. we are a few minutes away from the payrolls report. will gross will discuss that -- bill gross will discuss that go.t on "bloomberg , -- next on "bloomberg ." ♪

>> good morning welcome back to bloomberg go. we are about 30 seconds away from the united states.

ahead of that figure, futures are higher. nasdaq futures, plus 45 points. equity futures are also higher and commodities futures are higher as well. >> 292,000 jobs at unemployment 5%. 62.5, now slightly to 62.6. unchanged.ings we are not seeing pressure on wages and we are not seeing pressure on conditions. what we're seeing is a whole lot of new jobs created as people stopped leaving the workforce and another number the fed looks

at is down. he quick weight -- quit rate is up. over the calendar year, what we're looking at is a total add that is as big as it was in the roaring 1990's. 1999 with the last time we had it that good. october revisions, up. november revisions, up. up, and services health care is also up. janet yellen wanted to run the economy half, and it is getting hotter. david: how could we be adding

this many jobs and not raising wages? inflation is so low. we are seeing real wages grow. on the other hand i would expect to see nominal wages pick up in the near term. also, unemployment wage cost is more formative the wage numbers that just came out. >> thank you for joining us this morning. stronger dollar story, and you can see that reflected in the bond market as well. i know that matt miller has been looking at that. matt: i have. u.s. 10 yeart the yield. you saw a huge spike in the 10 year yield, and it has called down just a little bit. s&p futures are gaining.

2.19%. we are back where we were essentially at 4:00 a.m. this morning when everybody was deleted about the fact that the chinese market came back -- elat ed about the fact that the chinese market came back. dell futures of 208 points. keep in mind, this looks the good. to a half hour ago. it does not look that great compared to yesterday. we are still down over the last four trading days over the s&p. , little bit of a recovery here but not a huge recovery. oil has come back up a little bit this morning, but then took a big leg lower through the last 10 minutes or so. trading at $33.85 a barrel. at the other risk

baskets, or the safe haven assets. as being sold off as investors were gathering cash to invest. well has been sold off this morning because investors had toward money there while they were spooked by the chinese and u.s. market and european markets as well. the yen comes off further. when this is green, that means it is down. ¥.7 for youruy 118 .7 yen for your dollar. it is not impressive to me when compared to the huge losses we faced over the last four days. just focus on wages. every single market analysts

says that the most important point is wages. market,a tight labor and wages pick up. it is in all the economic textbooks. they treat off the headline number, the stronger dollar, yield to the frontline curve in the treasury. have a look at what is happening right now. the yield is higher. one of the elements in the labor market that has improving rapidly, that is a good sign to me. that tells me that the family-run businesses, the smaller businesses are feeling better about the economy. >> thank you so much. we welcome all of you worldwide on bloomberg television. joining us now is bill gross at jens o.

-- janus capital. you said last month that this is a fed that has to give out in front of a better economy, even given all of the challenges you have written about. janets report confirm yellen's action, and does it say to be morell need proactive as we go into the new year? in terms of the jobs created, i think what is more important is gdp. nonetheless, the fed does believe that jobs and the unemployment rate is critical to future inflation over the medium-term. thathree or four fed steps dan fisher and janet yellen seem to confer, are probably on track in terms of their verbiage.

i do not think that it is possible to raise interest rates by 100 basis points in this limited economy. moment the fed at the will talk that talk. >> they will talk that talk, but with the humility of the first watching trading days of the year, even with the 340,000 statistics, with revisions, is this a federal reserve that must pay attention to international affairs? think so. they go in and out in terms of their statement an emphasis on global affairs in ths. thinking theyo my had to take into consideration china and global currencies, etc. i think it is number three or four on their list would the financial conditions are probably down the scale, but to

the extent that market settle, perhaps they will mention it but not react to it. i think ultimately that they should. that, how do you explain the reaction of markets after what happened the last couple of days? the u.s. go down tremendously, the dollar did not rise, it fell during that time. how is the fed supposed to think about this? bill: it is confusing, and you relative toey fall the yen and the euro. with relative market currencies, we are talking about china, and china has devalued against the dollar. we are about mexico, brazil, and other important countries that create 50% of global gdp. it pays to look both ways in developinpment.

the world's central bank or has to be cognizant of the fact that a stronger dollar on the emerging market and developing countries, because those countries have been taking on a huge amount of dollar denominated debt in the form of sovereign or corporate debt within their own countries. ultimately, a stronger dollar at some point leads to rob lives -- to problems and defaults for developing countries. that we can meet theyuation where cannot pay those steps back and we are looking at another financial crisis? some companies and some oil related companies will have problems. associated with

oil and emerging-market countries, and associated with commodities, as you know. the commodity index is at a cyclical low. copper is not a cyclical low, not ingest oil. any company that makes their money and services their debt, and that is the critical thing, is at risk. ande agreed to come back talk about the national team that assisted in china, really an understanding -- more verysten to shortly. big revisions, the unemployment rate stays at 5%. 2.5age hourly earnings, percent, slightly higher than the previous month. these are not impressive numbers, are they? think it will be

impressive until nominal wage growth gets up 23%. 3%.to time the jobnd the market was heating up. i would like to see them stronger, but i will not panic at this point. raise theould minimum wage, which would strengthen wage growth. but it is solid. partly because of a different composition of jobs? is it possible that the people who are going out of the workforce are coming back and taking lesser jobs because they want a lesser job and it is having a depressing effect? >> it could be a little bit of that. that is why the cost index is a better measure of

this. it is about the same as occupational growth. it is one way of controlling for the mix of workers and jobs. david: thank you. we will have more with no gross on bloomberg surveillance radio. alan krueger is still with us. we will be talking about jobs would come back on bloomberg go. ♪ when we come back on bloomberg go. ♪

david: welcome back to bloomberg go. as we have been watching, we just got some strong jobs numbers.

s&p futures are up almost 24. the market is strengthening some off of the strong numbers. let's go back to you and get your take on these numbers. we are seeing huge job gains without wage gains. one way to look at that is we might have put a floor on the drop in workforce participation rate. this is something that economist at been looking at for a wild. there is a lot of noise in that area it is hard to tell. tick up int december. what we may be seeing is an answer to a question that we have had. did they leave because they were frustrated at what jobs were available?

people were thinking that they might come back into the workforce as the number stopped dropping. we may see a consistent rise. another thing that economists have been wondering about is what role does the skills gap play? most of the drop in unemployment committee huge drop -- unemployment, a huge a drop in those with a college or associates degree. unchanged.egree is you have been outside of the ivory tower, you have seen the politics of this. groupsdifferent skills change, how does the policy change? normally, it is the case in a cyclical recovery that as the recovery gets going, it is the bottom half that tends to benefit more. and college graduates,

even when it spikes up for college graduates, is much lower than it is for college or high school dropouts. i think at best, it will stabilize, but we have seen signs of his stabilizing over the last couple of years, only then to see a couple of months were it drops. -- of months where it drops percentage points. inthis stage, we have seen light of the bounceback that we are going to see from people who are discouraged from the recession. for pushing so much back on brendan greeley so i did not have to. [laughter] looking at markets, stronger dollar is the story. in the bond market, treasury yields go higher. , the tenure of

three basis points -- 10 year up three basis points. futures go higher, much higher in the u.s.. the dow futures up by 200 points. s&p futures up by 25 points this morning. 1.44%.up by dax and the ftse also up this morning. with go back to bloomberg radio with janus capital cos's bill gross. am the new national te is the chinese government, and they are trying to get through the day. they got through the day friday.

i am guessing you cannot say all clear on the chinese an equities? anyone?ill: how can wrapped in addle mystery, wrapped in a conundrum. they bought stocks and manipulated to their market in another way. the market is very concerned, with the economic growth rate. has suggested 5%, 6%. other statistics, electricity consumption and generation, says 2% or 3%. >> you have been a piñata over the decades, critics have said a person who controls markets and buying flows. you are the expert on this.

is the chinese stability enough contagion to affect other markets? >bill: it can be. china certainly is important. they have better portion of the growth of the global economy over the last four years. imfworld bank, the , suggesting it has been much higher in other years. leading the growth parade to the extent that they slow down. investors have to be concerned. problem from 30,000 feet is a lack of aggregate demand relative to supply, we have oversupplied in oil, we have oversupplied in commodities trade there is a lack of demand because of slower demographics and too much debt. they take years to work out as

opposed to months and quarters. ultimately investors should expect that for the next several years, we're going to --e slow growth and markets investment markets that reflect those factors. the day seemsd of to be stabilized after the chinese markets went up today. a lot of people writing stories saying that markets have stabilized. our markets are stable at these values? exactly where it was before the jobs report came out. ifl: i think they are stable the fed only raises interest rates by one or two times in the next 12 months. it is well advertised that the fed suggested as much as four. ultimately, a destination of 2%,

or 3% in terms of the funds. i believe they have a critical element when it comes to aggregate demand and global growth. in termse a sad time of down prices, but the market only believes that the fed can grow once or twice before growth becomes affecting in a negative way. >> what is your reaction? what is it that you will be looking at to determine where yields should go? bill: what they want to look at is a lot of other things other than employment and the unemployment rate. he want to look at the gdp growth, perhaps wait 5% in the

fourth quarter. inflation as reflected by commodity prices and currency rates. our othero look at central banks in terms of what they are doing and monetary -- monitoring their interest rates. what the ecb is doing in their markets is important in oflecting the value the u.s. markets. by how boringted your life was as pimco, and how interesting your life is at janus capital. what a twisted portfolio. you have all sorts of different bonds in there. even in amazon, a piece of debt. explain to me what you are

doing. bill: amazon is reflective to some extent of our short corporate philosophy in which it pays to buy 18 months of corporate paper at 1.5% or 2%. you want to bring yield down to the bottom line. was part of the pimco philosophies since the get-go. we put an underlying portfolio, a very short, safe, protected and then weper, overlaid it with derivatives, and that is the case at janus capital. tom keene, to task michael mckee, and the light weights of america who do not realize what is coming down the road in your latest note.

are we harking back to pre-depression? 1% coupon relative to u.s. funds go up to 1.5%, and that short-term portfolio will yield 2% or 3% relative to the heyday. that is not the case. about how important it to capitalncing itself. to the extent that its straights are low, it is very hard for investors to make any money. that is one reason that the fed is trying to normalize that the banks and other spread is going to make some money. the question is how i can they go before the affect the real economy, and i don't think they can go very high.

david: that was tom keene and mike mckee on bloomberg radio. much more on how john chambers -- impacting the markets. more on how the jobs numbers are impacting the markets. oil is back up over a 13 year low. treasury yields are up because they think fed will raise the interest rate in the coming year. up, a man who is worked closely with the saudi government joins us on bloomberg go. ♪

david: welcome back. we are all around 30 minutes from the opening bell here in new york. welcome to bloomberg go. i am stephanie ruhle,

basck from las vegas. i would tell you what went on there, but you know what they say. good morning. we have a few new faces at the table. overseeing emerging market investments at newberger berman. welcome. also with us, peter. a lot to talk about. let's go to first woulrd news. >> 100,000 people dance and watch fireworks in north korea's capital to celebrate their latest nuclear bomb test.

the south is condemning the blast, by blasting loud propaganda across the border. the broadcasts include criticism and thehe economy leader. traces of explosives were found last month, and a fingerprint inm the terrorist wanted connection with the paris attacks. and a wildfire that has scorched nearly 200 square miles and is threatening other towns. officials make it was started by a lightning storm. -- think it was started by a lightning storm. we have futures that are showing gains, but coming back

from the positives after the numbers came out. you can see the s&p futures are only a 1.1%. the dow jones futures, are now of about 164 points. thingll see the same across asset classes. take a look at the 10 year yield you saw a spike, but we come back down a little bit. we were up 2.2 even, earlier. you saw gold selloff, you would think that investors are getting ready to buy, so they are taking cash out of the haven of gold, but it has come back. we were right where we were at 8:30 a.m. crude oil economy went up, and it has come back down. barrel.ain, 33.46 per

yen's safef the haven as well, selling it off, but only a little bit less. -- dollar 36 for the euro 1.36 for the euro. w.a.r. p on your terminal shows wirp shows you the probability of a rate hike at the next meeting. below 50%, so that is the only significant change in this charge. but if you want to follow along on bloomberg at home, that is what you need to do. david: big shift since yesterday. it was a day yesterday. we missed you. a lot going on, and they could not have been more excited. the kind of technology that is about disposable income. if you have all of these technologies coming, enthusiasm,

let's spend on smart teapots, but with what money? david: people are looking at this big jobs report. wages are not out. if you're working at burger king, that is not going to help david:. . david: that is what we talked to alan krueger about. how can you be adding this many people to the workforce, and not have weight pressure? -- wage pressure? to stephanie's point, she saw that anything technology, but we're not seeing that technology turning a productivity gain. light and job growth , 292 thousand, what that means is there is a lack of growth in productivity with companies. they are hiring workers, but they are not creating growth

through more efficiently working those workers. that is consistent with the kind of recovery we're seeing, which is a service jobs recovery. manufacturing was unchanged, mining was down. all of the growth came from services. food services and drinking places at a 37,000 jobs in december. experiences, not stuff. people are getting hired in the services industry, people not being more productive. stephanie: if we think the u.s. economy is growing, albeit slowly, who needs to worry about a chichina? janet yellen? they are falling out of bed again. >> i think the good news today ratifies what the fed did with raised rates, a small amount it

t. as has that the u.s. economy is relatively insulated from the rest of the world. we forget that. what happens in the u.s. is mainly because of u.s. factors. sure, trade matters, sure we care about china, but the strength comes from domestic factors. stephanie: but we have not seen the numbers out of u.s. companies. and there are a lot of foreign companies that sell stuff to america. do you agree with this point was that the u.s. is insulated? >> i agree with the insulation, but when you look at the numbers there is a different story. 50% coming from overseas, the dollar being so strong cannot help u.s. companies. and when you talk about china, china realizes they have the service currency on the planet, and that is not helping exports

when the domestic economy is slowing. erik: regardless of what you invest in, whether it is sovereign debt, emerging markets, do you have to have a view on what the fed does for the next 12 months, and then have a view on what the chinese do? >> absolutely. i think the world is a lot more correlated, especially with the market's move to a downside. the one commonality is risk. emerging markets are no means, homogenous. when the fed does raise rates, that signals the risk is off, and all risk assets have been selling off globally. stephanie: just yesterday bill gross weighed in. erik: this morning, actually. stephanie: take a look. >> the three of four steps that janet yellen seems to confirm is on track in terms of

their verbiage. i do not think it is possible to raise interest rates by 100 basis points in this global economy, which reflects a stronger dollar. i think the fed at the moment will talk that talk. erik: on the back of what bill gross just said, can you bring up wirp one more time? it shows what they are expecting for the april meeting, and shows , nohat nobody expects majority of investors that expects a fed benchmark of at least 1%, let alone 1.25% even a year from now. look at the lower right-hand quadrant of the table. we are not even close. bill gross says we are on track for another four rate hikes.

>> my view, if rates are rising, i think that has a negative drop from a currency standpoint. how much of that has already happened, where we see significant for stress on the current markets, that is the risk factor. beenipside is that we have in a selloff since 2011, and evaluations are attractive. but the -- brendan: one thing that janet yellen made clear, is this is a ach -- it is much more keeping your powder dry hike. if the drops numbers are this good -- jobs numbers are this good, if we see a recovery like this, there is an increased chance that they say we do not

need to be killing things, let's put another one in our pocket so we have it just in case you the next two months of jobs numbers are going to be imported. -- important. but mario draghi was going to stay the course for that reason, and market hated it. using theellen wrong data, containing to look at wages? indicator, twog years old. these of the people who need to set monetary policy. when they talk about being data dependent, are the using the right data? the fed is not looking at one single indicator. they are looking at the broad range. i think that the fed is steering a middle course right now. maybe this was not so crazy to

raise rates after all, after this report. we saw a herd, stampeding across the serengeti yesterday. everybody was selling. the s&p 500 does not equal the u.s. economy. the s&p 500 is very sensitive to foreign profits. , even ifcan do well the s&p 500 is not doing especially well. >> we can take that point and move it to china, where the fallacy is people confuse the shanghai composite with the chinese economy. in the shanghai composite is driven by retail investors, and there's limited amount of the investment options. based on margins, that tends to drive the market. amateur of sentiment for

the investor, and then you compound that with margins is what drives the chinese market. let's not confuse that with the economy, which is humongous, the second largest in the world. it is very hard to sustain a high percentage growth that people are expecting. stephanie: the massive volatility we are seeing this week is a positive, because market, whether they are high yield or emerging, or equities markets, they are all on the same page? now equity is selling off. is this more of a normalization? >> i would say it is, but it is also an adjustment process that you get used to the terms of chinese growth coming down. asset investment to more consumption oriented when you 's, basedhe pmi on manufacturing costs. this shows that the service

sector is doing reasonably well in china, in terms of absolute dollar gdp. if you growth 6%, york still going to add 500 billion dollars of gdp globally. stephanie: we have a lot more to cover in the next hour. thank you for joining us. when we come back we are going to get a fresh reaction to that -- breakingfor word jobs report. and later in the hour, we come back to futures. green, moving higher this morning. we have more to cover, and you are watching bloomberg go. ♪

>> welcome back to bloomberg go. here is your latest bloomberg business flash. 2014 was the best year ever in china. d sold 1.1 million vehicles. sources say vw might buy back cars that100,000 cannot be fixed easily to meet u.s. standards. regulators are still talking. and campbell will become the first major food company to gmclose jim o products -- ingredients.ts ano

a couple of stocks this morning. down after iting missed its third quarter earnings and revenue by a long shot. the same is probably true for container store. down 25%. beat slightly third-quarter estimates, but its outlook for the fourth quarter is expected to earn between 19 cents and $.22. the estimate was for $.29. a lot lower. eagle look at american outfitters. also a loser, down 12%. they said its fourth-quarter outlook is $.42 a share.

the street was on the high end of that and just that much in this market, or we have seen such drops for the past four days was enough to hit american eagle by 11.5%. jon ferro is always talking about the negative feeling back oop is much more present in europe. the world's largest oil producer is considering going public as well. revised -- who has advised the saudi government in the past, joins us next. ♪

david: welcome back. futures are moving higher, but

not as high as they were a few minutes ago. they seem to be softening a little bit. stephanie: crude is about to turn negative review have to look at the whole picture. there was some enthusiasm following the jobs number. the markets needed a positive, and they got one but it is not all unicorns and rainbows. n oil: saudi arabia company remco is considering an ipo. it would rival apple as the world's largest listed company. is tom petrie. explain to us this deal. is this a short-term response to an immediate budget crisis? tom: i do not think so. i think it is rather than that.

-- i think it is bigger than us, it is part of the bigger picture of what is going on in saudi arabia could we need more details before we can assess what they are up to. a year ago the priest -- they embraced being notion of letting the market resolve the supply and demand globally. i think they are saying let's be more connected to those global capital markets. there is a lot of detail and a lot of hurdles to address before we really can make a judgment about this. my experience with them goes back a decade or more, and it is not related to this, so i do not want to suggest that i know something particularly pertinent on it. but my assessment of the saudi part of a is this is broader liberalization that is now underway in saudi arabia, as is the generational change in the government. not know too much

about this. do we know anything about what assets would go into this company if it were to floated into an ipo? tom: i do not. but at the same time, i am presuming that it would involve some degree of exposure. for it to be meaningful, he needs to be that way, but it could be very different. they would have to show us more before they can judge that. big valuationse surrounding this. the saudi's have 10 times as much proven reserve as exxon does. surely they would not trade at a 40% discount, it would have to be bigger, no? tom: you would think that. certainly the structural issues

and sovereignty issues and so on are all part of the judgment that would be made by the markets in such an offering. assume that something of that would enter into it for sure. david: tell us what this means for the emerging markets more broadly. what is going on with saudi arabia, oil, and iran? >> printer market, emerging markets, saudi arabia does have a roadmap in my mind that they would like to be an emerging market rather than come in and dominate the index. that is opening up a process for them in terms of letting foreigners coming in -- four nort foreigners come in. when i think of emerging markets , there are a couple of , likeies that stand out russia, columbia, new mexico.

but this is a positive, especially for the population, where there is a deficit in inflation of and her start to look better with the reduction in oil prices that we have seen. they are still pursuing a policy where they are trying to aleve the marginal sh producer out of business. yet we still see equity raising to drive this. what does this say about the efficacy of the saudi policy? think the sole purpose of the saudi policy is chillve unconventional producers and the west out of business. i think it is part of a broader program. i think it involves the competitiveness that has developed between saudi and

iran. i think that is a higher priority than the other one. one can misread that you believe that it just once to undermine u.s. economics. the lesson that has occurred so far with this is that there is greater resilience and greater innovation, if you will, going in the u.s. by virtue of that. stephanie: we are out of time. thank you for joining us this morning. when we come back, we are going to get the white house reaction to the job for her. -- the jobs report. ♪

♪ >> will come back. you are watching "bloomberg ." futures are moving higher this morning on the strength of a better than expected jobs report.

created ans expectation of 200,000. if you put it in perspective as the bell rings at the nasdaq, while they are positive this morning, we are not even close to making up five days of losses. it has been an ugly week. the worst, in fact, ever. >> ever, since record-keeping began. stephanie: hold on. if you look at the charging market, and looks like a five-year. you're not seeing the price go down. is turning into jobs number, the overall number is a positive. if you dig into the quality of those jobs, what they are, it is not a big positive. i think we're going to see it. we have somewhat of a good number. the sky is not falling anymore. erik: i am not calling it a positive. stephanie: if leisure and

hospitality is an area you saw the most outgrowth, these are jobs that pay $14 an hour. these are not high-quality jobs. that is not a huge positive. we had a jobs number come in at 100,000. it was accelerated and encouraged what we saw yesterday. stephanie: if you take away today, and we look at the quality of the overall market, this is not a rosy picture. >> i'm going to take the half full. not only was it a huge beat, it had higher revisions for the past two months. yes, which is stayed stagnant, but as alan krueger pointed out, the total cost of paying employees has risen with the cost of benefits. that is taking up the room that would go into raises. that is coming down the line. i can't see this as a bad report. you can see it as not a great

report or it but there is no way you can see it as a bad report. in terms of the areas in which jobs are being created, i will point out there was a growth in manufacturing jobs would the expectation was a shrinkage. is -- first ofon all, can this pace of job growth continue? most people say "no." erik: the other question of course is, how long will it take before we see the pickup in wage inflation? and how long will it take before it translates to a meaningful increase? mark parker just recently said we are going to have a recession by the end of january. >> he was the same guy that said

ben bernanke said quantitative easing wasn't going to work. [laughter] stephanie: i am saying, yes, this is a positive. i am not calling it a false positive. but it is muted at best if you look at the underlying. opportunitye this to see where things stand right now -- now that the market is open. matt: we do see gains across the board, but they are not huge gains. ampared to a 400 point loss, 400 point game doesn't look that great. the s&p up 12 points. if you take a look at my terminal, i am going to show you stephanie's side of the argument. you will see the tenure yield. -- you'll see the team year yield. 10 year yield.he1

doesn't look like they are still in the same super risk online that they -- the for the numbers came out. i will pull up the chart for the industry groups. you have tech and consumer discretionary, financials leading the way. telecoms are down. are amongive stocks the biggest winners. to look at crude oil. it is the interesting this morning. we are still positive right now at $33.30 a barrel. illustrative on trade as it came down. it is still down, but you can see, it has moved up a little bit.

take a look at the currency board. here is another illustration of the risk entree today. people have been taking money out of the again -- out of the yen. dollar down. wanted to take a look at a couple of stops this morning. apple is a gain or once again after closing below $100 the first time since october of 2014. coming -- itple had been having problems from its supply chain that it is not going to sell as many iphones. , this company got absolutely crushed! all i can do was read about sun

edison all day because it was down 39%. they are raising capital any which way they can. not a good sign. there is a little bit of a bounce today for sun edison. >> thanks, matt. we are to answer some of the questions we had been asked. the u.s. economy added 292,000 jobs in september. joining us for reaction is dr. jason furman, the chair of obama's council of economics. you must be feeling pretty good. i want you to take your victory lap. i want to ask you about wages. that seems to be an outlier and not very encouraging. >> i am happy that the unemployment rate is falling the fastest in 30 years. creating jobs at the fastest pace in 15 years. when it comes to wages, i don't

look at a month, i look at a higher -- a longer period. nominal wages are up to .5%. that is the fastest growth we have seen -- nominal wages are up to .5%. that is the fastest growth we have seen. we have steps we can talk about to improve that. you look broadly at a variety of measures overtime. stephanie: are you concerned that the areas we are seeing a spike in job creation are leisure, hospitality, retail, which are the lowest paying jobs out there? there is a concern that the --ber goes to the quality the quantity, but the quality is not so good. >> the numbers tell you something about the quality of jobs in wage pressure, but we need to do better. this month, we saw pretty balanced wage growth.

we saw manufacturing adding jobs even though it is facing a really tough time in the global economy right now. we saw a lot of jobs in construction. we have seen a number of high pain sectors as well. -- you're seeing a number of high paying sectors as well. stephanie: when it gets cold, those construction jobs will head back inside. the highest group has been in residential construction. we are seeing more household formations as the population grows and as people move out and get jobs, they need a place to live. i think that will continue to be a bright spot in our economy. >> and even bigger conundrum than the absence of faster wage growth is the absence of inflation. if you look at the difference between inflation -- which growth and the deflator, you see this enormous gap that continues to widen. how do you explain that? it is an issue for janet yellen

and has to be an issue for you as the chairman of economic advisers. throughome pass energies into the core. the cost growth this phenomenally low, a little over 1% over the you -- over the last year due to structural changes in our economy. that is holding down core pce. you just haven't seen it in the data for the last 20 years. erik: jason, there is a lot of non-excelr what the , whatry -- the navy route would you say to that? we did some analysis and came up with an answer.

we were plus or minus four percentage points. there is so little relationship between the two, it is hard to in the number down. is there a game plan to improve that? jason: our game plan for higher majorobs, you have seen endorsements the past week from the business roundtable. expanding investments in infrastructure, raising the minimum wage, -- have touch time do you before allrough --

business is often washington? jason: i cannot give you the answer on the politics. i can get in as on the economics. it is costly to our economy to delay. you only get the benefits of the 18,000 tax cuts on american exports when we ratify the agreement. the longer we wait to do that, the longer we are going to have to wait to get the economic benefit. >> going back to today's jobs report, job creation and much longer than gdp growth, which indicator is wrong? are we miss measuring the gdp of the services base technology based economies right now? jason: i do have more confidence in the jobs numbers. they come from two completely different surveys. one of which is asking households, one asking employers. they tell similar stories in the stories are strong. gdp is tricky to measure.

measuring the intangibles. between reconciliation the 2, 1 is productivity. we have had a challenge with productivity. and there he, they could both be right because of productivity. there may be some measurement issues and that is something we are thinking hard about. erik: thank you very much jason furman. he is chair of the economic council. let's seaworld stocks are trading now. we are coming up on 12 minutes into the day. matt: we are still looking at gains, but they are not huge. the s&p putting up again of 11 points. the dow up 56. the nasdaq up 43. it is the worst start for stocks

since time started being recorded. i am looking at five days of trading in the dow jones industrial average. you can see this little blip here is the beginning of today's trading. it is nothing compared to this huge avalanche we have seen. i will zoom in. right around here, stephanie said, oh, it is the weather. it is the only reason we have had these gains and jobs. stephanie: no, that is not what i said. i said specifically in construction. dr. fuhrman gave a positive note in construction. i was reminding our viewers that we have had hot weather, and once it gets cold, the construction jobs may not be here. i jump on weather all the time. anytime a ceo tries to use the weather as an excuse, stephanie sent him packing and

takes his microphone. in any case -- stephanie: i will be happy to take yours. matt: i am going to go down to abigail doolittle while stephanie and i do with this. abigail: here's a bed bath & beyond up today. that -- shares a bed bath & beyond up today. the company has really struggled with increased promotion, fewer , and withransactions -- 80% of analysts, neutral or bearish on the stock. it seems a turnaround for bed bath & beyond is still out of sight. erik: thank you. something to look forward to. scott mather is the chief

investment officer for core u.s. strategies. with us from pimco, after we come back. ♪

♪ >> you are watching "bloomberg ." we are watching the markets. oil down now one third of 1%. we are clearly very closely watching the doubt. we are almost 20 minutes into today's trading day. we have a strong jobs report. we are debating just how strong that number is.

you have to go under the hood. first, let's give you the business flash with vonnie quinn. vonnie: more evidence of the slowdown on the smart phone market. they missed estimates and some shipment are heading for they -- they're straight annual decline. united is being fined to pointing million dollars for mistreating passengers using wheelchairs. they found the airline workers weren't helping fires in wheelchairs on and off planes probably. family dollar ceo leave his post next week. the family dollar brand will survive. dollar tree acquired family dollar's ministore/july. that is the latest business flash. >> it has been a wild week. stronger than expected jobs numbers.

volatilityse, market to match. scott nether is the chief investment officer at pimco and comanager of the total return fund. i have to cut to the chase and ask you a question about the fed. with today's jobs number, we have had average job growth of 229,000 jobs added each month. a lot of people say that can't continue. when slack is supposed to becoming out of the labor market to the job market continues be as healthy as it is, how many great hikes -- how many rate hikes every going to get this year? scott: it should be around three or four rate hikes. see it slowingl in terms of jobs being created throughout the course of the year. that is what the fate anticipates -- that is what the

fed anticipates. we have to expect the job growth is going to slow because we are getting close to full employment. that doesn't mean the u.s. economic growth is slowing substantially. our forecast is that we will 2% to 2.5%. that is still a bit above potential. of the thingsone fed is supposed to be looking at . the other one is inflation. julie scott: of 2016,er the course you will see the market shifting away from the accession of inflationary risk and move to a more bounce -- a more balanced posture. typewe won't see the same of pace drop.

you will see energy prices move up throughout the course of the year. underlying core inflation is in the neighborhood of 1.5%. that edges up close to 2%. headline goes up in that direction. you will begin to see wages going up and that is what really matters in a developing economy. fromtheme of moving deflationary obsession back to a more balanced view and romancing a successful reflation is an important driver of financial markets ahead. erik: scott, clearly, your outlook throughout the rest of the year is critical. let's talk about the here and now. how challenging hesitant to invest in the last five days to mark -- in the last five days? caused any bigot shifts or surprises. thead been talking about

very likelihood that china will depreciate its currency on the order of something around 7% to 10%. it happened more suddenly. with some policies imitation in the case of china that upset the market. we think the year ahead will be much like that. the underlying economic growth models have not really changed. it will be a continuation of what we saw last year. emerging-market wrestling with below trend growth, but ultimately, we don't think they will make significant policy mistakes. we don't think china's growth will be derailed, even though there will be surprises along the way with spikes in volatility. review those as opportunities. that,estors anticipate you don't want to hold positions out on the risk perspective. you want to be higher in quality and higher in liquidity. erik: one of the things we have seen is the devaluation of the

wan. -- will be affected your interest rates? if it happens in a slow and orderly way over the course of many quarters and not a week or two, it shouldn't have much of an impact on the real economy. it should have much impact on the fed's trajectory. the fed be very sensitive to these tight enough financial conditions. our best case will be it will look much like august and september were market settle down. that is scott mather joining us from newport beach, california. look attake one last the markets after a big jobs report. ♪

♪ will come back.

you're watching "bloomberg ." let's take a look at the markets. oil is down, just a little bit under. also, they don't take a look at the doubt. bit, but not as much as futures were predicting. stephanie said, there is not a lot of conviction. stephanie: clearly, we had a positive jobs report. we are went to get revisions and we have to date and to what that report really means. across the board, we got a lot of negative news. let's hope for some positive news. that is it for "bloomberg ." we will see you monday when bill daley joins us. see you then. ♪

♪ >> it is 10:00 in new york. 11:00 p.m. -- 11:00 p.m. in hong kong. looking to "bloomberg ." -- welcome to "bloomberg ." -- looking to "bloomberg

markets." ♪ good morning. i am betty liu. 's groundedport expectations. adding in december. does it july 1999? u.s. that's a rebounding this morning after china moves to halt their slide in shares. chinese stocks up about 2% overnight. a new twist and american apparel drama. a $200pany getting million takeover bid. ♪ we are a half an hour now into the trading session. julie hyman has the latest reaction to the jobs report. a pretty strong report.