[bell] scarlet: stocks closing lower. the question is, "what'd you miss?" global stocks falling. we break down all of it. european leaders meet today in bratislava to speak about the future. and the cost of living was projected in august. scarlet: we begin with our market minutes. u.s. stocks closing with eight

out of 10 industry groups falling. energy was the latter here. the s&p 500 had its worst week stocks closing with eight out of 10 industry groups falling. since july. matt: it actually wasn't too bad. we came in after a really bad day on friday. had some good days mixed in as well. we look at the trajectory over the past five days. first, we had a nice little rebound on monday. then a couple of days there. you sort of assess what happened on friday. even though we didn't recoup all of those losses, a big part of that was the tech group. this was an massive move for apple with a 7.5% gain. when of the lacquer groups was the energy group.

that has been hurting as well. it thed things off for daily move. whoever was trading on this friday decided that interest rates were going to determine the moves on those two groups. >> i want to take a look at bonds here. we saw an interesting take on yields. -- reversal of the steepening curve. now let's look at the longer view. it is still up about 20 basis points in the past two weeks. look at the 30 year. the yield has come up so much that people were getting away from that long-term debt that they had been drawn to, the maturity risk.

they wanted to get any yield that they could. it is over a little bit. you do see a reversal happening. i'm looking at the dollar, it is the highest in six weeks. that is of course after it rose faster than expected. rose betterliving than 2% in august. the pound is also falling today. it around out its worst week since july. bloomberg reporting that the secretary is ready to accept that the u.k. may have to give up membership of the eu market it may get full control of its borders. what you are seeing is the british pound, off of it. stuck in a pound is

range. it is interesting to see sometimes how it is priced in the market. he still kind of have that move down. and thatked about oil drop was pretty amazing today. 1.5% again. .rews had traded down , unbelievable move in sugar. >> a sweet move. i pay closer attention to gnma. was a two standard deviation move. scarlet: those are today's market minutes. let's take a deep look into bloomberg. i am looking at european look

straight companies. they are struggling with profit growth. of course, they are not going out to spend money either. these companies are doing what they can to reserve their dividends. tracks pay out of luxury goods that it pays out relatively low to their earnings. it is the highest since february 2010. it has helped attract some short-sellers as well. this is a great chart. trend and a prominent your dividend ratio will go higher. all these companies still add to it. they can't get rid of that. scarlet: if they do, investors

will flee in mass. for those the standard deviations? scarlet: that was just a trend. >> i go with my sugar chart. i found that the sweet stuff is actually up to more than eight or year high. we do this for a year high line and it rocked on straight through. this year by the way it is the biggest rallying commodity that we have. it has been on fire since the .iddle of 2015 it has been rocking for a wild. it's a very tangible sort of reasoning behind it.

there is a plethora of stories about it especially in brazil and it always gets into weather. issues.eopolitical i am looking at valuations as well and what is happening with expectations of reality. if you look at the top handle here, you're seeing this index and that is the current ep level. the blue line right below it is and that gap is going back to 2010. there are two elements here. the expectation for growth and earnings is massive. $107 and analysts 123 by theet us to

end of the year. is reason why this matters you get the same amount of e-mails and what they are doing is spacing their decision on cheap ford pe. it is very ambitious and it is important that we see some of it come down to reality. when i was looking through the chart library, i saw your chart. they sent me a similar chart that is slightly related. >> wow. stocks us to talk about and the rest of today's market action is mike.

let's talk about this chart. i'm going to keep the focus on that. what do you make of this? >> no. [laughter] next question. if you look at earnings estimates, they call them fishhook charts. obviously, i think the tendency ando keep pushing it back you may get disappointed but you keep pushing it out. anything.t you the stock market is like wiley coyote.

it has run off the cliff here. it is been climbing year after outside of a recession. we probably will have some itnings that i don't think will be on the 25% level that you are talking about. i think the oil chart and price is the big variable. bute profits should rebound there is a valuation picture. scarlet: you've been seeing how fund managers have been doing or not doing. do you just go with past investments? you're getting a much better return. it has been in more passive

index based on. if you look at the performance, there you can see it doesn't matter if it's large-cap or not. fundsnine and 10 of the have been trailing their benchmarks. i think the big question is why hasn't it been more aggressive? for me the answer is, if you .ver go to a party you ask what are they invested in? the longer this goes on and the more the story get out there and inple start poking into it their riaa's.

maybe if they are wells fargo they don't even know about it. [laughter] yesterday, and she shredded wells fargo management. the stock has gotten punished. for the year, they were the worst-performing stock. this was a big shock. wells fargo has a good reputation and seemed to sidestep a lot. but theirhink fines reputation was so good. more of a main street nuts and bolts banking. to me, the reason this story has so much is it is easy to

understand. it's just regular accounts. >> thanks a lot for joining, mike. you can read all of his articles on wells fargo. coming up, eu leaders gathering ins lamacchia to discuss life without the u.k.. that is next. this is bloomberg. ♪

get to therk: let's news.

president obama continues to push for approval of the tpp trade agreement. he spoke to reporters in the oval office following a meeting with business leaders who support the measure. it is frustrating that there is so much misinformation floating around on this. people whose is business it is to make sure that america has a strong position and the world and that our economy, this needs to get done. say: congressional leaders that the tbp is unlikely to get a vote this year. he has publicly stated his support for the transpacific partnership. bernie sanders is urging his supporters not to vote for a third-party candidate in november. that might deny hillary clinton the support she needs to defeat

donald trump. anyone casting of protest vote should imagine four years with donald trump as president. -- four people were killed and dozens injured in the october crash. she has pleaded not guilty to four counts of second-degree murder. promising to do anything she can to hold the european union together. the leaders met today in bratislava, slovakia. she says the eu is in critical condition and she wants leaders to take on issues such as defense and rejecting the eu's borders. day,l news 24 hours a powered by over 2600 journalists and analysts in over 20 countries, i'm mark crumpton. this is bloomberg.

matt: would you miss? ready.hammond is ins comes after they met bratislava. security, andbeen the economy. isning us from washington senior fellow jacob. thank you so much for joining us. let me first ask you about days breaking news. a very interesting story. keep access.ry and it has to be done politically.

>> i think this reflects philip reality andng up to a majority want control over borders. the eu has been very general on that. that has been clarifying and unavoidable. were talking earlier about access and membership. norway is not a member but does have access. they have set free movement is a redline. eu -- youwhat, the the u.k. is not going to get access if they restrict movement.

that is what they are saying. even if they are not saying it, there are a lot of you members that are saying it. if angela merkel is serious i don't think this is an area where she can give much. restricted or unrestricted access. scarlet: we also know the eu position was for austerity. they seem to have made a change here. they are proposed tax cuts. >> this is a continuation of what we have seen over the last 18 months where the fiscal policy has become more accommodating and less austerity driven.

thatwe have seen now is italy, france, there is a big election season coming in europe. you have a lot of populist parties and the germans have recognized first and foremost that something has got to give and that something is fiscal policy. in mye going to see opinion treasuries of spending more because they recognize that monetary policy is close to its maximum. they have got to shoot the policy mix. in a recent know, you wrote about how the potential for more stimulus could invoke political dissension. is that what you are talking about here? >> yes, absolutely. there is a number of big test coming up. the first is the italian referendum at the end of the year.

they would like the prime minister to pass and in order to full survey area even right now. it would be convenient for them to promise higher pensions or other kinds. up, a little audio participation plays. this is bloomberg. ♪

scarlet: i'm scarlet fu. what you miss? we're looking at european trade balance. the list of european trade. it has averaged out during that time. german has been steadily increasing. the eurozone has picked up. that is mainly because of the strength of germany. italyeen line there is which has been economically kind of brutal. it is one small success story. mike and he says

when you look at it, the currency is one important reason why. the euro is very good for germany and italy but has not held all of the eurozone countries. very interesting stuff. that chart on in that it is defined. i have a chart from sam from oregon. we've been sharing charts for about a year now and he sends one where in the top panel it has the s&p 500 trailing earnings. you have the best eps for the next fiscal year in light blue. interesting that the blue and red panels going up and down . the first blue is clinton been

read. then the red. can see a huge drop in earnings right after any election. the rule over that we have seen at the end of the obama administration. i am going to hold it out with one very quickly. this is looking at as what he behindare the main moves the bond and u.s. stock market over the past couple of weeks. is the epb decision. treasury the 10 year and once you get a higher yields, people do not have to come back and search for it. scarlet: can see it mirrored down there. pulling at the lowest

since april. we have three charts that you might have missed. this is bloomberg. ♪

mark: let's get to first word news. first lady michelle obama campaign today for hillary clinton. it was her first appearance on the trail on behalf of the former secretary of state and first lady. mrs. obama said it was "excruciatingly clear" that mrs. obama is the only candidate prepared to be president. mrs. obama: when you are making life or death, war or peace decisions, a president can't just pop off. weekend, the clinton campaign rolls out senators

bernie sanders and elizabeth were in at separate events in ohio. a majority of voters disagree with donald trump's plan for a wall on the border with mexico. a new survey found 53% oppose the wall, but 42% support it. there was broad general support for immigrants among democrats and republicans. the number of zika cases keeps climbing in puerto rico. health officials say more than 2000 cases were reported in the past week. that total includes more than 1700 pregnant women. that is a growing concern because zika can cause severe birth defects. prosecutors have charged eight people with recruiting for organizations before the olympic games. people were arrested in august, accused of pledging allegiance to islamic state on social

media, and allegedly discussing an attack during the rio games. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. scarlet, back to you. ofrlet: let's get a recap today's action. down, down, down for stocks. the s&p 500 down .4%. we have tracked oil the whole week. that was certainly a drag on energy shares. >> let's not lose track of the week. at the wholea look week. did not get 1% swings. >> that's true. matt: are things calming down? scarlet: we have been digging through today's cpi numbers.

with let's start inflation. you have been looking at that. been talkingtt has about how honest cpi core basis, we are at 2% or better, but that at.ot what the feds look >> exactly, the thing that has been holding down the fed's preferred measure is medical care prices. it has been really low this cycle compared to last years cycle. is fairlye got today strong like you said, above 2%. the interesting thing about the cpi data is we are seeing a big surge in medical care inflation. health caree is inflation. matt: they measure it obviously very differently. >> right. cpi includes out-of-pocket costs

whereas the other includes employee health care payments. that's a big difference. matt: shifting the cost onto employees. >> right. you are seeing the diversion spare. it is not clear if that will result in something soon, but hopefully, this will put and wee on cost as well will see the fed inflation gauge moving up. this is usually a leading indicator, isn't it? >> i am not sure. it's a good question. scarlet: i remember reading that somewhere. >> it's a big component. when it goes up, it obviously boosts the overall index. seems to increase backlash. there is no indication joe q public is out there spending more money.

it seems rough. consumer uncertainty also looks rough. you brought a chart showing it surging to a record high above -- ahead of the election. is it election related? >> it does seem to be. are people uncertain about? >> the question is what you think his notice conditions will be over the next 12 months? good times, -- business conditions will be over the next 12 months? at times, bad times, not certain. people are not sure how it will work out. this is pretty stunning. the other spikes have been around in elections. the previous one was in 2012. in 2004. one they tend to spike before elections. >> it's interesting, because the sort of sentiment gauge reflects

a wealth effect when there are selloffs and markets involved. but if you look at the charts, there is not a huge take up in 2008 or 2000 and that you would expect if it were heavily influenced by what people were feeling in terms of their investments. in 2000 and 2008, when we were going into recession, you had people saying things are going to be bad over the next few months. >> this chart feels like it should be one of my charts because it is stocks. we are looking at the return on equity of u.s. companies. it is very low. what does this mean through the lens of the u.s. economy or what the fed is going to be doing. >> this is from the quarterly funds report. it shows that profitability is a issue at the moment.

we are in a low investment environment because we are not getting a lot of return on investment. that is why we are not seeing a big pickup in investment. it parlays with the idea that inflation is still low, interest rates are low. returns are generally low right now. this is heavily affected by what is going on in oil at -- and gas. gdp, we see a big drag over all. if you were to include financials, which this doesn't, what would that chart look like? >> it's interesting that it peeks out around 2012. i was just talking about earnings expectations. earnings growth up until this year has been there, but not to the same degree as the massive

bounce back in 2008 and 2009. to get this number up, what do companies need to do? it's a good question in terms of productivity trends. i don't think it's a matter of being able to flip a switch. it's the trillion dollar question in all of economics right now. comes up from utilizing capacity and companies stepping up and taking risks in the market. the perception, at least. >> thank you for being with us. coming up, why the birther movement has been such a big part of donald trump's rise. can he put it behind him in this election cycle? this is bloomberg. ♪

scarlet: i am scarlet fu. a look at the biggest business stories in the news right now. wells fargo undergoing a scandal activity by employees to meet aggressive sales roles. california and u.s. regulators fined the bank a combined 185 million dollars last week. wells fargo says it has refunded $2.1 million in fees for products sold without authorization. person familiar with the unit plan, it brought in 1.1 billion dollars in sales

in 2015. the deal is expected to close in the first quarter of 2017. unilever has expressed interest in purchasing the company cofounded by jessica alba. talks are still in an early stage. your bloomberg business flash. >> after years of questioning president obama's citizenship, donald trump this morning said the president was born in the united states, but not before taking another shot at his opponent, hillary clinton. mr. trump: hillary clinton and her campaign of two thousand eight started the birther controversy. i finished it. you know what i mean. borndent barack obama was in the united states.

joe: so, can the republican nominee put this behind him before the election? what a claim by trump. is there any grounding to it or any truth? >> there is no truth. there never has been. there is no legitimacy to the claim that obama was not born in the united states. form11, he put out a long birth certificate under pressure by donald trump that proved he was born in hawaii. joe: what about the claim that this originated in the clinton camp? there is some truth that with hillaryine

clinton were putting forth a theory. but by that logic, you could accuse any candidate of anything. the clinton campaign, there is no evidence tying them to any of this stuff. there was a strategy memo within the campaign about whether they should make this an issue. decided not to make this an issue. matt: as far as we know. not all strategies are in the open. sometimes there is a dog whistle strategy that we are not aware of. wrote in december 2012 that the idea of going -ness thata's other you are talking about dates back to secretary clinton's campaign memo that said we need to attack the -- scarlet: outsider status --

matt: and outsider philosophy -- different philosophy of president obama. >> but there is no evidence the campaign ever acted on that. we would have known it. it would be in the public record. it is not. have been supporters of hillary clinton outside the campaign doing it, but not within the campaign. that is the distinction. scarlet: why is donald trump doing this now? >> he was asked by the washington post in an interview yesterday and he refused to say. he has refused to say for a year and a half. i think he decided this would be the moment to put the issue behind him. at aent obama is currently

58% approval rating nationally, which is kind of amazing in this environment. donald trump does not benefit from continuing this. talkingweek, we were about some of the shifting polls. opportunityse this to cast himself as a more reasonable person who can bring people together? >> i don't know that that is his brand. his brand is not i am a nice person. his brand is i am going to blow up the establishment. but this is his opportunity to continue putting hillary clinton hashe defensive, as she been, and to take advantage of her stumbles over the weekend. right now, he leads -- he is

by two points nationally, and he is gaining on her within swing states. he could get within four or five votes of winning the presidency. he is not there yet. he has to close the deal. trending in that direction, and hillary clinton will have to deal with that. wrong?hat is she doing what is a seasoned professional, politician through and through, doing to lose to a reality tv star? not good at branding. she has allowed to -- allowed herself to be perceived as trustworthy, on which has hurt her in the polls, including among millennials.

we saw that over the weekend. it wasn't that she had pneumonia. people understand that people get pneumonia. it's that the campaign was not forthcoming about it. a video that showed her stumbling did not match with the campaign's version of things. matt: thank you. scarlet: coming up, driverless cause and the robots behind them. how fast will people be replaced by robot employees and what should that mean to workers and their wages? this is bloomberg. ♪

you miss?hat did technology has disrupted

industries throughout history. with the next driving revolution likely centered around robots, what does that mean for human workers? earlier today, the shift was addressed. isthe productivity of robots not as strong yet as the computerity of reorganization in the 1990's, but we must forget that the spending has been almost five times as high as what companies have so far spent on robots, so thatthere is some hope this trend will boost productivity in the future. >> people have written about this extensively with a more pessimistic outlook as to how this turns out for the humans in the equation. how do you see this turning out?

will this replace human jobs? will innovation spring out and create new jobs? >> overall, the pace is getting bigger, but there is no doubt to me that this increases inequality because the jobs being replaced are low skilled jobs, and the ones who then if it are the ones who add value beyond what robots -- the ones who addfit are the ones value beyond what robots can do. butrising productivity, rising inequality at the same time. scarlet: what is different now? big -- in the first wasstrial revolution, there

a big increase in the number of unskilled workers. that is already different and has been different since the 90's. robots can do a lot of routine .obs, if you want what they cannot do is replace cognitive skills. that is why people with better -- better education benefit and people who lack that suffer. they cannot trade stocks. they cannot report the news. i am not sure if they have mastered the art of economics yet. what is the expectation of things like that? would it take a quantum leap? >> robots have been used in the

car industry. we saw a lot of news about apple. and they self driving car is not even in the study, but 10% of workers in the u.s. drive vehicles as their job. -- as part of their job. policy: what is the best description you have read out there, and has anyone started to implement it? >> there are two things government has to do. you have to adjust the education system. can be brought to a level where he or she benefits. ownership change rules and maybe pass on the ownership of these robots to workers so that lower income workers not only get labor

income, if you want, but they also get a little bit from capital of the robots. get ado that, we will little bit more equality in the capital structure. we have seen that in this election campaign, how many unhappy people we have. conditions will only get worse. i think people need to wake up ownership is part of the solution. youlet: coming up, what need to know to prepare for next week. this is bloomberg. ♪

scarlet: u.s. stocks fell with global stocks. that becomes -- that comes before next week's highly anticipated meetings. a number of things you will need to watch out for. china property prices coming out next week. also, the bank of japan decision on wednesday that you won't want to miss. also, the much awaited rate decision.

normally, that would overshadow everything else. but didn't you say the boj decision was happening? scarlet: that's one to watch. have a great weekend.

mark: with all due respect to president obama and hillary clinton, you are not the only once donald trump annoyed today. >> i don't know what to make of that other than we got played again, by the trump campaign, which is what they do. >> he shrewdly used to the media today. >> in a sense, you could say he was using five years of birth or experience to promote himself. >> it's hard to imagine this is