[closing bell ringing] scarlet: u.s. stocks closing lower this afternoon, the s&p 500 falling for the second day in row. joe: the question is "what'd you miss?" scarlet: we spoke to a former imf cheap about -- chief about helicopter money. joe: and ridesharing companies are a flawed model. how theyt explained can make a profit. the philippine president cannot afford to pick a fight scarlet: h the u.s. we look at the trade links between the two countries. we begin with market minutes, looking at a down day across the indices. we're back from the summer and post labor day, but if you look at the moves in equities, the mario draghi ecb press conference did not do much in

the way of providing direction for investors. joe: people didn't expect much and he didn't deliver much. matt: except for confusion. joe: the streak of days without a move continues. look at the take a losers today, we did have a down day, although it was slight, the losers are the stocks that have been the big winners lately. apple down 2.6%, one of the biggest drops for apple on a day after it revealed a new iphone will stop ibm down 1.6%. stocks areic tech down. also, real estate -- scarlet has been showing this chart and we know financials have done well. reits have been the big winner they are among the

big losers. joe: on the government bond market, yields are higher across the board. not a ton of data, though we did get initial claims that were solid. the ecb not expending qe and perhaps adding pressure on rates. i want to look at russia because that is quite a turnaround story. this is a five-year look at russia yields and you see back in 2013 with the peak crimea stuff, much higher than now. completely erased a lot of the anxiety and turmoil of the last couple of years and real quickly, let's look at the german bonds -- yields higher on the day. you see the jump early in the morning on the draghi affect. no particular urgency in terms

of expanding government on buying there. hoping investors were for some hints that they did not get and you see higher yields will stop scarlet: i'm focused on the euro. it climbed to a two-week high after the ecb didn't do anything. no change to the qa program. adjust forecast inflation lower. matt: as he said everything was going fine. isrlet: the interpretation he's passing the baton to the politicians saying you have to do something. the path of least resistance was higher for those gains faded. the mexican peso with leading losses among currencies. at an intraday chart of crude oil -- west texas having a strong day, up over 4%. on see the news, a big surge

the news of next ordinary large inventory drawdown, suggesting supply might beginning tight again. scarlet: those are today's market minutes. you can find all of these charts using the function at the bottom of your screen will stop i'm looking at valuation versus volatility. global stocks are starting to look like victims of their. that is the all country world index p/e ratio and is at their highest 2010. that is smothering market volatility. cause andessarily effect, but you can see it moving. 30 day volatility is the blue line and it has come down. we have a lot of uncertainty and the ecb is one source of uncertainty, but the fed and what it is looking at -- exit did seem to provide a bit of a temporary.t was

the surge in volatility lasted for six or seven weeks. we got some good data with initial jobless claims will stop i want to show a chart i haven't looked at in a while. the yellow line is the s&p 500 and the white line is initial jobless claims inverted. the reason i like this chart is not to say the s&p tracks initial jobless claims perfectly, but any time someone says all the gains we have seen our fictitious and there's no real world economic improvement, look how nicely the come back in to realet does respond world economic improvement. scarlet: it is rooted in reality. joe: and that chart shows it nicely. matt: the labor picture is getting better here both here and in europe. i clicked on this story today and it apprised me. irish debt is being driven down

to incredibly low yields. action --land off auction off another billion euros and investors paid the lowest amount -- investors accepted the lowest yield ever 0.33%, which is strange because you would think since they are embroiled with tax battle over the apple bill and the way ireland taxes companies in general, that investors would be more nervous, but the greater fool theory may be at play and they might think the ecb is the greater fool. joe: ultimately, people want to park their money anywhere they think it is safe. the ecb kept its interest rate unchanged and decided against extending the duration. that was disappointing to

markets and people hoping for more stimulus. should it the about fiscal expansion or is there some other method? let's talk to the owner of stellar consulting and a former imf division chief. thank you very much for joining us. all around the world, there's a lot of talk about do policymakers need a new model for stimulating the economy? should it be more reliant on fiscal and more reliant on the standard tools of monetary policy or post crisis extraordinary tools? is it time for policymakers to pass the baton? : i would say conventional monetary policy is basically at its limit. we are really thinking if we want further stimulus to the economy, it's going to have to come from the fiscal side and that is what is important to understand when people talk

about helicopter money. joe: let's drill into that because everyone is talking about helicopter money. if you do a search, you'll see a surging number of stories about it stop but you have written about how people don't seem to understand what it is and you argue in your writing that it should we understood as a fiscal tool, not as much of a monetary policy tool. explain that further. peter: is basically a consensus of the definition of helicopter money. a permanent fiscal expansion finance with a permanent increase in central bank money better known as bank reserves. a is well accepted that it is fiscal policy. the controversial part comes from the financing aspect and the financial aspect of helicopter money is that it is

financed with bank reserves. that leads to a very important problem and that is with central bank independence. if we were to employ something like helicopter money, we would be bringing into jeopardy the independence of the monetary authority which is a big negative side effects and a big hangover from doing that. the reason i've written about helicopter money is i don't think it's necessary for a permanent expansion to be finance with money. there's nothing special about financial bank reserves. you are much better off financing a helicopter drop with long treasury bills or notes. matt: i have just run the search that joe suggested, looking over the bloomberg and hundreds of sources for stories on helicopter money and fiscal policy.

if you check it out, fiscal policy is the orange line and this goes back over a year. helicopter money is in white. people are talking a lot more about helicopter money surprisingly more than about fiscal policy. joe: by your definition of helicopter money, or the bush rebates, when they sent a check to all taxpayers, is that in line with your definition of helicopter money? peter: that is called helicopter bills or bonds. yes. viewed as a permanent expenditure, not going to be orance with future taxes expenditure cuts, then that's a helicopter drop. that is way to finance through the normal way you would finance any fiscal deficit will stop what i'm critical of is the obsession that this fiscal

stimulus would have to be financed with an increase in anchors earth. that's where i have the problem with concept. that it is really the financing side. matt: what do you think about the difference of helicopter money in japan, the u.s. and europe, or is it one and the same? peter: here's the reason i'm focusing on helicopter bonds. we are currently in a world where banks and global financial centers have more than $7 trillion in excess reserves. basically we have more than enough reserves. trillion of those reserves are in use for the financial system. at the same time, we have a strong demand for safe assets, treasury securities, and you can see that will stop we don't have

a good measure of what the excess demand is for safe assets as we do for bank reserves. you can see that with about 10 trillion in sovereign reserves. they are saying i will pay you and lock in a guaranteed return if you issue that. if you do the fiscal expansion, it really makes sense. excess out these reserves for treasury securities. thank you very much for joining us. coming up, coldwell banker ceo joins us to discuss their latest survey on regional u.s. housing. which heart of the country is dominating that list? this is bloomberg. ♪

mark: i'm mark crumpton. what get to first word news. : powell says he never tried to influence hillary clinton on e-mail use during her tenure at the state department after a newly released exchange between the two former secretaries of state democrats claim provide a detailed blueprint on how to skirt security rules. powell accused the team of trying to pin her private server use on him. she reportedly reached out to powell for advice on balancing the need for quicker coming occasions with security issues. nominee merrick garland return to capitol hill today. he met for a second time with the top democrat on the senate judiciary committee, patrick leahy. ,he senate republican leader

mitch mcconnell, has shown no signs of wavering from his position to let the next the replacement for justice antonin scalia a who died in february. california will/more greenhouse gas emissions after governor jerry brown extended the nation's most ambitious climate change law by 10 years. he signed the legislation at a park in los angeles. the law is opposed by the oil industry, business groups, and republicans. it sets a new goal to cut emissions 40% below 1990 levels by 2030. the battle to retake the iraqi town of muzzle from islamic state could begin in weeks. the new commander of american forces in iraq and syria says at least 3000 islamic state fighters remain in moz all cory: 6 -- in mosul.

global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 news countries around the world. i'm mark. this is bloomberg. scarlet: "what'd you miss?" for the third time in five years, silicon valley ranks as the most expensive waste to live in the united states. saratoga, california is the most expensive market for a four bedroom, two bathroom home. charlie young joins us. in your research, you have found california cities made up 10 out of 10 of the most expensive u.s. s in the the tech movement is part of this story, but it's not the entire story. charlie: it's location, location, location. u.s. thethe report looks at four bedm two bath homes in markets across

the united states, so we are looking at an apples to apples comparison. that's a better way for a consumer to look at housing from that perspective. you're looking at a location-based issue. lots of outdoor activities. you can be out doors. joe: are you seeing any signs of they are amongf the most expensive? there have been signs of cooling off at the high-end of certain markets. are you seeing that? charlie: what we are talking about it -- is an aspirational home for an american emily. saratoga would not be right for every american family and we can talk about that and how those tech companies are dealing with

it. in the ultrahigh end, there's a change happening. a super agent at of coldwell banker in beverly hills said foreign buyers are not there. american buyers are coming back into the market. the big agents for coldwell banker, same story -- just a different mix of buyers happening at the ultrahigh end. i have to double take when i look at these numbers. if you showed me this as a kid, i would not believe silly people are willing to pay -- charlie is a four bedroom two bath home. matt: i pulled up a chart of the case shiller indexes for san francisco, for portland, denver and new york. rollingsee we have some over in the last year.

coming off a little bit or at least not accelerating as much. there doesn't seem to be any end in sight or the gains in portland and denver. it to be in the right place? the issue isink ultrahigh end versus the average home in america. the average price for that home 130020,000 will stop markets, you can get at that price point or lower. you are seeing the very high and and how it's going to affect that pricing curve. i want to talk about other cities side of these tier one cities. i know people are talking about

wanting to move to north carolina or chattanooga. some of these cities that are not new york or san francisco. charlie: there's a term 18 hours cities. is wanting to move into the market. if you look at the most affordable lists, detroit michigan, you see that downtown detroit area is seeing a real resurgence. the younger buyer likes walk ability and the pro sports teams. that may be an extreme case but you are seeing it across the country. joe: charlie young, coldwell banker real estate ceo. scarlet: hillary clinton is

calling for republicans to put country over party. we have more of her comments. this is bloomberg.

joe: "what'd you miss?" them a credit presidential candidate hillary clinton spoke to reporters on an airport tarmac in new york and slammed her republican rival, donald trump, over his chris is u.s. military leaders. to clinton: this is a time put country over party. i would be saying that even if i were not running against him. we have never been threatened as much by a single candidate running for president as we have then in this election. matt: here to highlight the politics our bloomberg

reporter here from washington. thank you for joining us. hillary and donald have been bashing each other back and forth. have either of them said anything of substance the on campaign speak? today, hillary clinton pressed the message she has been pressing for a long time by arguing donald trump is manifestly unfit to serve for president. she went after his remarks that were all over the place, not particularly substantive and reiterated some of her policies in the stuff she has been talking about for a while. hillary clinton driving her message that republicans should consider voting for her because donald trump is unqualified to be president. joe: there has been a lot of anger and frustration about last night's nbc hosted event, particularly at the perceived lack of toughness from matt lauer. it reminded me of some of the

that the mexican president had a platform for trump to look good. seem to keep slipping away from opportunities to pin him down in public. what are people saying about the inability to get him, so to speak. criticism from a lot of people that people who have interviewed trump have not been able to pin him down on policy or asked him questions that would expose his knowledge gaps in terms of policy. what a lot of people are criticizing matt lauer for specifically is not pointing out when donald trump claimed he opposed the war in iraq from the start,. pointing out that he did an interview in 2002 where he said he unequivocally supported the war. donald trump has been playing fast and loose with this one. everyone knows hillary clinton supported the war in iraq and

now is a big stain on her presidential campaign in 2008. what was not pointed out was that he has not been consistently opposed to the war either. scarlet: what i found unusual was hillary clinton hosted a news conference at the airport. she doesn't usually do things like that. thise going to see more of in the final 10 or 12 weeks of she decided? guest: last week she would let reporters travel on her plane. she did a gaggle where she spoke to reporters on her plane. she rarely talk to travel reporters on the trail and donald trump responded by listing his -- lifting his media blacklist. people he has shut out are finally able to cover him. i think there's a healthy competition between who can be more press friendly. next, the nyu --

this is bloomberg. ♪

mark: i'm mark crumpton. let's get you first word news. a new poll shows donald trump beating hillary clinton decisively among white voters who don't have more than a high school education. trump is back i 55% of whites with no more than a high school diploma compared to 33% for clinton. whog all likely voters haven't gone past high school, clinton leads trump 47% to 42% in a two-way contest. a stunning turn on morning television for libertarian party nominee gary johnson who is trying to gain traction in the race for the white house.

aleppo was asked about and his response what is aleppo? after that interview, he told mark halperin of bloomberg politics that he needs to learn more. in only surviving suspect the terror attacks in paris is refusing to speak to a judge. he is apparently frustrated by 24 hour surveillance of his prison cell. his attorney says he is not obligated to explain his violence but that is obviously linked to constant surveillance. 130 people were killed in november possible tax. as we approach the 15th anniversary of the 9/11 attacks, the lag raise at ground zero has been found. it was lost during the cleanup of the area. it was found in everett, in 2014.n forensic analysis confirmed its authenticity. the flag is back on display at

the nationals of number 11th memorial and museum here in new york city stop -- new york city. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 news countries around the world. crumpton. this is bloomberg. scarlet: let's get a recap of today's market action. kleins across the board for the dow, s&p and nasdaq. toio draghi made no change the quantitative easing program nor to interest rates, but he did reduce the gdp and inflation forecast. matt: everything is working fine, but we are not achieving what we want to. it did not make a lot of sense but he was seemingly passing the baton to fiscal authority. the euro did rise in response. we have some headlines -- corporate bonds, he says are highly overvalued and mention the federal reserve, saying the

head is determined to show independence from the data that comes out. he goes on to say he expects the federal reserve to tighten monetary policy. tightenhe expects to and that right now this is a bad time to raise rates. we will continue to monitor these headlines as they come out. "what'd you miss?" uber may be facing another competitor this fall. google will soon launch a ridesharing service in san francisco based on its popular app. our next guest says the ridesharing business is approaching a bar mitzvah moment. what is a bar mitzvah moment for a company and why does that explain why uber may be in for a

rough sailing? and theith its users drivers and number of downloads, you are young growth company, i'm going to focus when i pray shoot at aced on the number of subscribers you have will stop at there's a point where the number of users is nice, but how are you going to start making money? some companies are ready and others are not stop -- are not. twitter and facebook came in the bar mitzvah moment and facebook was ready and twitter was not. uber's moment is approaching and it's a big question as to whether they will be ready for that moment because they are in a really tough business. scarlet: that bar mitzvah moment is coming up asked her because that is likely to be made of public investors than vcs or pes as it has been in the past. guest: when you decide to go

after the fidelity's and t. rowe price's of the world, they raise more capital and don't demand terms, so you think it's great, but the downside is they do not have the patience to hang through this. they are hoping for a quick payoff and for that ipo to come out and make money. i think impatience is pushing it that there's a recognition across the board that the business model has to change. the way they are doing business is not going to make them money. it's not a steady business model. you can grow revenue but you cannot take money. go into new cities and start out ridesharing but it is difficult to sustain rockets. -- sustain profits. uber is the only ridesharing business. they have no competition in the u.s. -- almost none. it's like saying there are other search companies than google. can they because of that

dominance in the market, can they make that visit to use a silicon valley expression to making money? the rosen things -- ridesharing will be more global than in the u.s. it's most in demand where you have most people and bad public transit. it is like asia. that is why china and asia are the future of ridesharing. if you concede that, you are conceding a big part of the market and uber cannot afford to walk away from china. tomorrowhe u.s., if you stopped growing, would you be able to make money on your existing business? i think the answer is no. this is a business where they are giving away rides. what it costs me to go from where i live to newark air artist $15 will stop it used to cost $55 in a cap. there's no way with that $15 the

drivers making enough money to cover the cost of maintaining his car. this is not a sustainable, long-term business. about long-term players like apple and google that have the deep pockets if they want to venture into the space? is not wherearing you are going to make money, but they could be trying to take the business. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 news countries around the world. + maybe this is the opening for google. it's a very different business. matt: by eliminating the driver? guest: by limiting the driver. joe: data is fairly scant, but nonetheless you say uber's valuation is below 30 alien dollars. how do you arrive at that? guest: that is pretty

optimistic. joe: recent valuations have put it over 60. it is still a significant discount from where private markets are, but how do you arrive at a market like that? guest: they are growing revenues last and growing them globally. here's what we also know -- they are losing money hand over fist. in my evaluation, i had to make two assumptions. uber does not think of it as a ridesharing company. it thinks of itself as transportation. that is what allows the pricing to get so high. they are not buying a slice of the ridesharing business and a hope you replace your second car with an new do your deliveries with uber. given in history, i would not pass them to get into these other businesses and manage the revenue. the question is how do you make

profits? concludednd uber has it cannot make money in china. it decided it would allow and cede ground to its rivals. was uber right to leave china? guest: i think it was a net positive. they were burning a billion dollars just in china. in a market where you know the game is tilted against you. i predict over time didi will win not because it is a better company but because the game is fixed. is by do a better search engine google? it is not. why throw money down the toilet going after a fixed game? is attempting to be a viable business in germany. i spend a lot of time there. there are german competitors with closer connections to volkswagen and the government

and those competitors are going to win out. china is a much more effective enforcer. couldou say $28 billion group to be optimistic. how low could ago? guest: it could go to zero. if you burn through this much cash and cannot wind way to make money, there's going to be nothing left. that's the nature of this business. that's why when someone says uber is worth 75 ilion dollars, i'm not going to say they are wrong. he pulled have to recognize uber is a boom or bust company. it could become a $100 billion company when they go public or it could go the other direction. it could become a hundred billion dollar company? guest: not without changing the way they do their business. that is partly what you are

trying to do is you want to make it difficult or drivers to switch. you want to make it difficult for your customers to switch and you can see they are experimenting with that. of tech seemsorld to be operating under the rule that winner takes all know matter what. is that true with the car sharing ride industry? guest: if you are the biggest ridesharing company in new york, when i look for a car, the uber car is always closer. there is a networking argument at the local level. become theif you most successful ridesharing company in one city, it's going to spill into other cities. i'm not quite ready to buy that. we are going to dig into gary schiller -- robert shiller's the ratio. some weak links in the data.

this is bloomberg. ♪

scarlet: time for the bloomberg business flash -- a look at the biggest business stories in the news right now. have --d is said to plans to name his successor. he confirmed he was under investigation as part of a wider judicial probe into alleged market manipulation and false accounting. wells fargo will pay $185 million to resolve claims bank employees open deposit and credit card accounts without customers approval. regulars have then investigating

whether they pushed too hard to meet sales goals and did not stop question of behavior. ends a long-standing tradition involving iphone. the company will not announce and -- the number of iphone seven that it sells because apple says sales are a reflection of supply and not demand. beforepany says it knows the first preorder that the phone will be a sellout will stop that is your bloomberg business flash stop matt: "what'd you miss?" does cash counter the case-shiller ratio? our guest is still with us and says the old adage is that it is cash flows and not earnings that drive stocks, but it's clearly being ignored by a lot of u.s. investors. thank you for sticking with us. explain what you mean. guest: let me start with the

basis of the entire thing. entireconcede -- the story is that 27 is higher than the historic average. but over what time? go all the way back to 1871 and you get an average of 16. 27 is much higher than 16. the average cable over that time is about 25. stocks are me overvalued, my question is where are you going to go instead? take the t-bond rate of 2%. you put $100 into that bond -- that's 50 times earnings. what i have is a graph where i show you the stock and you're

right, it is 27 times earnings, higher than the historic average. stocks going to leave them go into bonds and if not, what are you going to do with the cash? wait until the correction happens? that is my first argument against it. if you want to make the argument that stocks are overvalued, you cannot base it on a lazy metric. it is what you would compute if you have two minutes to look at stocks and you are at the end of the dinner and mildly drunk. let me tell you where the stocks are overvalued. people seem to like the cape because they think it's a rigorous method and is cyclically adjusted and appears to offer a durable sense of earnings flow. why do you say it is lazy?

guest: the inflation adjustment does absolutely nothing. we are not in a 10% inflation world. the averaging does make a difference. the averaging to tell us 2009 earnings were low because of the recession. that gives you the difference in the years where it is obvious to stop if you look at the correlation, it is 90%. special you are getting that you can not have gotten out of. i don't buy that. it is not that sophisticated and is not adding that much information. scarlet: you would argue it's more important to account for cash flow than earnings, which is what the cape does. for what sectors would it be more important to look at eps rather than cash flow? guest: banks.

i look at net income for banks because i wish i knew what the cash flow was. there's no excuse for not computing cash flows. you can pull them out of any financial statement and that is my source of worry for u.s. stocks. not the dpe is high, but last year, they paid out 110% of net income. is thee orange line cyclically adjusted cape and that has been trending up to stop but we have not increased that in several years will stop guest: that comes from cash flow surging with buybacks and i'm not one of those people who looks at buybacks and freaks out. but mathematically, you can't keep doing this was so there's got to be some adjustment in the cash flow. joe: fascinating stuff.

professor of finance, thank you very much. jeff gun lock has been speaking and weighed in on the head and mentioned our work function. guest: my guest is the next time the fed tightens is that when it is below fifth the, maybe 45 north worry eight and they are going to say we cannot be replaced by this work function. scarlet: a shameless log for our work function and you can see it on the bloomberg right now. joe: the idea is the fed does not want to surprise the market when it is so priced out stop that's why you see the fed trying to job on the market higher. but if they want to do september, they have to do a lot of job owning.

than you can do a lot more just the home screen. you can look at analysis and probability. coming up, the philippine can hardly afford to pick a fight with the u.s. we will tell you why few don't already know. this is bloomberg. ♪

scarlet: i'm scarlet fu. "what'd you miss?" the philippine president proved he can apologize almost as quickly as he can offend. president obama says he shook hands with him after offensive comments aimed at the president. with trade climbing between the to countries, can he afford

pick a fight with the u.s.? joining us is betty liu. get to there we numbers, want to put little context into this. it can be an amusing incident that underscores a serious case right now which is he rose to power because he promised voters who is going to crack down on gangs and drugs and he has done whatto great effect, but people perceive as great violations of human rights will stop people have been killed and bodies dumped on the streets. then turning a blind eye, so the president arrived to asia saying he was going to confront the president about human rights abuses and civil rights violations. the economic consequence is that there's a great number, millions

of filipinos who work abroad and many of them are in the u.s. and send a lot of money back to the philippines. hong kong is another huge employer of filipinos and may have about $25 billion in remittances back to the philippines. scarlet: you have to add it up to get the cumulative number. : great point. it shows you how much of the economy in the philippines is reliant on this will stop the u.s. makes the largest number in terms of the filipinos who are abroad working, so that's why there are some questions as to why he would want to shake the cage with the u.s. joe: you can see in the last few days that they are performing

after possiblyty alienating president obama. betty: the philippines compared to other economies have not been one of the rising stars. in fact, they have all in behind many others. 7:00you can catch betty at new york time and 7 a.m. hong kong time for bloomberg daybreak asia. coming up, what you need to know to gear up for tomorrow's trading day. this is bloomberg. ♪

scarlet: chinese inflation data matt:, wholesale and retail for the month of august. you have german imports and

exports coming out tomorrow joe: . and this is all part of germany plus bounce with the rest of europe. scarlet:

mark: i'm mark halperin. john: and i'm john heilemann. "with all due respect" to gary johnson, perhaps your question would be more appropriate in another setting. >> this was the end of the silk road. gary: what is aleppo? >> you are getting -- kidding. gary: no. ♪ john: we will take latebreaking staples for --swing state