we are live from bloomberg world headquarters in new york. we're covering stories add of brazil, washington, paris and tokyo. the countdown to the federal reserve and bank of japan decision is on and markets are in a wait and see mode. with stocks hovering around high valuations, where are the opportunities? we will tell you why health care maybe undervalued. and the new brazilian president is barring red tape as he tries to lead brazil's economy out of the worst recession in a century. less than an hour from the close of trading. let's go to julie hyman who has the latest. it is wait and see. all three major averages have a

study, with little bouncing around in a narrow range. the same goes for race as well with the 10 year yield down three basis points. inare seeing a little drop and there's broad expectation the fed is not going to be changing rates after tomorrow's decision. if you look at the bloomberg, we have those rate expectations mapped out priced into the fed funds future. now priced at around 30% with a chance of an increase at the meeting. sense onnusual in the the part of some of the primary dealers, two of them saying we will see an increase in rates. uncertainty of going into the meeting and the bank of japan is the other factor when it comes to the central bank decision. we have been watching the ceo of

wells fargo testify today, john stumpf saying he regrets what happened. he shouldwarren said leave the bank, yet shares are higher by 2%. morgan stanley upgraded shares, saying they are inexpensive right now. of the late day movers we have been watching is lamarr advertising after one analyst said outfront media could lose part of its contract with the mta in new york city. bus terminals, etc.. interestingly, out front shares are hanging on to gains. they haven't really been victims of that report. they got a contract with the massachusetts a transportation authority and that might be

helping to insulate to some extent against those declines. with thatie hyman update. let's get to the first word news with mark crumpton in the newsroom. in his final speech to the united nations general assembly as president, barack obama said the world faces a choice between more cooperation or more division. president obama: i want to suggest to you today that we must go forward and not back. imperfect ast as the principles of open markets and accountable governance of democracy and human rights and international law, that we have forged to remain the firmest foundation of this human century. mark: the president added growing contest

between liberalism and authoritarianism. brazil's president is promising to push ahead with measures to economy.struggling he told bloomberg that his lack of electoral ambition gives them and he willto act spend all his political capital to shore up public accounts. bomberpected new york came across the fbi's radar after a domestic incident in 2014. he was arrested on weapons and aggravated assault charges for allegedly stabbing a relative in the leg according to court documents. fbi tossagged in the guardian system, the general database of tips and report of suspicious of cities. if he was ever interviewed by the fbi. france has rested eight people in connection with a truck attack that left 86 people dead. areecutors say the suspects linked to the attacker who is

killed by police after driving his truck into a crowd during bastille day ceremonies. islamic state claimed responsibility for the violence. news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. david: u.s. stocks are higher ahead of tomorrow's announcement from the fed. , our guests with a controversial line -- chasing monetary policy wins is not a good investment strategy. i assume you are paying attention to what's happening tomorrow. guest: everyone has to pay attention to what the central banks are doing, but there is an overreliance on what they are doing. it's just not really working any further, so i think it is humming down to what our individual companies doing and

when you look at the individual stock correlations, it's much more about stock taking than it has been. so earning season, are we going to have to look at this on a company by company basis? you are going to have a huge differential bisect your. there are a few sectors doing well. but a bunch of others are not doing well. wayland gas has not gotten much better. the beats or expectations have not in that good. you need to drill into the sector and look at it company i company. look at walmart and target -- a huge difference on a comp of rental of a few percent. you have to do the micro worked out. david: what is your attitude toward safer high dividend stocks? guest: people are

overpaying for them in chasing yield. why don't you liquidate 2% of your portfolio rather than overpay for higher dividend stocks? i think that's a savior way to invest and you don't have to pay the multiples. where does the smart money go now? you mentioned some sectors. is it too late? guest: secular growers, the companies with a nice tailwind behind their business are still very attractive. health as a sector is very attractive. david: where in health care are you looking? it seems like there some uncertainty in the sector right now. guest: if you look at what happened with mylan in the epipen, that was not the sector's best moment. but there are several undergoing pricing mechanisms and some of those are companies to look at.

good news last week about the clinicalisease drug in trials and that could be very interesting. plus a huge pipeline behind it. their biggest drug is going almost 20%. a very interesting story and priced 17 times earnings. and it labs announced on friday that johnson & johnson is buying their ocular service business. that's interesting because now they don't have to raise equity to do the saint jude deals. the stock popped a little on friday but nothing close to what i think it should. we see plenty of consolidations. do you anticipate more on that in the coming year? where else might we see some of that? when you look at the global growth outlook, which is 30 them, we will see them and

day. i would expect a lot more in a day, particularly while rates remain as low as they are. i think alphabet is underrated right now. reallyore business is going well. it's all about the consumer coming to google and spending more time, being able to do virtually everything on the site and the cost-cutting we keep hearing about is music to my ears for sure. thank you. is apple's iphone seven a game changer? our guests has his doubts. we will find out why, coming up. this is bloomberg. ♪

david: this is bloomberg markets. i'm david bureau. john stumpf took a beating today -- many blasted his handling of an account scandal. senator elizabeth warren may have given it to him the hardest. senator warren: since this massive scam came to life, you "i amaid repeatedly accountable." have you resigned? >> know i have not. senator warren: have you returned one dime? i will take that as a no. i'm not asking about regional managers or branch managers, i'm asking if you have fired senior management, the people who actually led community banking divisions who oversaw this or the compliance division taking

sure the bank comply with the law. any of those people? your definition of accountable is to push the blame to your low-level employees who do not have the money for a fancy pr firm to defend themselves. gutless leadership. do you know how much the value of your stock went up while the scam was going on? >> it is all in the public record. senator warren. you are right it in the public record, because i look it up. share price went up by $30, than thans out to more $200 million in gains all for you, personally. you should resign. you should give back the money you took while this scam was going on and you should be criminally investigated by both the department of justice and the securities and exchange commission. you squeezed your employees to the breaking point so they would cheat customers and you could

drive up the value of your stock and put hundreds of millions of dollars in your own pocket. and when it all blew up, you kept your job, you kept your multimillion dollar bonuses, and you went on television to blame thousands of $12 and our employees who were just trying to make cross sale quotas that made you rich. clawing backort any or all of the pay for the person in charge of compliance? you are going to have no recommendation at all? if you have no opinion on the most massive fraud, how can it be you can collect a paycheck for being chairman of the board? in 2008, wall street promised change, but it looks like it is business as usual. cheats the little

guys and the executives line their own pockets. you make it clear that wall street won't change until we make it change. thank you. some of theing of questions elizabeth warren asked the ceo of wells fargo earlier today. he outlined ways they would try to make a new compliance program. vonnie: the controversy surrounding the iphone seven launch -- they say they have received almost as many as four as previous orders model. they have been vague about the launch. we have a lot to get through because you had the egg telecommunications conference and the first to have them lay out their strategy. but let's settle this discussion about demands or the iphone seven. was it there?

great conference last weekend as you say, sprint and t-mobile had some eye-popping announcements about the iphone value and that is good news. i think it raises three big questions. at&tion number one is our and verizon seeing the same kind of volume increases? they have said not really. certainly not as big as the iphone 6 cycle. is are theseestion aggressive promotions the new normal and are they driving these up great? these are the trade-ins and it sounds to me those are going to go away. sounds like two or three more weeks is about it. is there going to be a market share shift? i think that has been going on for a while.

will continue but it doesn't look like a big market share issue. guest: free is a very powerful business model. if you are a company going after the lower and of the market and you are trying to entice those people, you are going to take credit risks. as you mount them through time, it does create incremental risk. tell us about verizon's strategy. the big question is you bought aol and you bought yahoo!, now what.

there's a sense they are this indomitable force, but verizon is number three andy strategy is on pulling them together and keeping content that works, marrying it to a powerful engine and and try to monetize that more aggressively. they are talking about execution for the next two years and i think what comes next is more roll ups. david: the analogy used as a shopping mall. tell me about this. guest: what they say they are going to have is a shopping mall of internet rants. in the mall will be all of these individual stores. get more and more eyeballs of traffic and that's how they are trying to build up the business for themselves.

things theyof the were talking about is at blocking. facebook and google are going to need more of this now as a turnover revenue to the providers. how's that going to work in the next five or 10 years? five or 10 years is a long time. aol and yahoo! remain in that umbrella. we have two different privacy regimes. in terms of opting in or opting out. a lot of companies are using as far as what they can do as far as at blocking. a lot of what we are talking about for media and content on your phone is more apt-centric. david: does the verizon plan make sense to you?

guest: you have to recognize that digital is growing. there has to be a way for a guy to scale up and created damages for the little guys who are providing the content that maybe google and facebook are unable to provide. thank you for joining us. vonnie: still ahead, cleaning up with clorox -- the bleach giant is the subject of today's options in sight. this is bloomberg. ♪

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vonnie: this isvonnie: bloomberg markets. time for options and sites with julie hyman. joining me today is kevin kelly, chief investment officer at recon capital. we have been talking about the vix which has been swinging around. theaven't talked much about getting much into options territory, but it is the volatility of allah till it he -- you have noticed an interesting phenomenon. kevin: what is interesting is that it is elevated to a historic norm. it trading above 101 today and that is fascinating because the vix is trading below its average, which is around 19 or 20. that's significant given the

fact that we have a lot of overhangs in the market. earnings season is going to fedt in 30 days and if the does it raise rates, that should shock the market because everyone is anticipating the fed will not move. if they do move, it should spike up. volatility is showing people are starting to position around going into non-cyclicals and defenses. julie: do they tend to move more together? kevin: this gap is typically wider than we see during a time like this where there is a macro time and not a lot is happening. the market is anticipating a lot of in today moves but it is not seeing a giant spike in volatility.

julie: given that environment, you are thinking safety. today.is your trade a defensive, consumer staple stock. are you looking for some rocking is here? kevin: we don't know what a earnings is going to be. they are growing their earnings as well as revenue. they had the cash on their balance sheet with a can increase dividend, which is great in this market. and can do acquisitions they've been doing that to grow their earnings and you can see in the price performance today versus the overall market. clorox is up 1%. the overall market is barely flat. showing that people are transitioning into these defensive names. it is relatively flat to relatively down on the year.

market andinto the by and in the money call. ,ou want to buy the $120 call but this expires in october. if the market does move up in participation with the fed not moving, you have the defensive nature of this and it costs a one $500, so it's dollar premium you are paying for exposure to the upside. julie: thank you for coming in. david: still ahead, more of bloomberg's exclusive interview with the resilient president. will he be able to pass economic reforms in the country? this is bloomberg. ♪

scarlet: from bloomberg world headquarters in mid-town manhattan, you are watching bloomberg markets. let's get you a check of the

headlines on bloomberg first word news. mark: hillary clinton has a five-point advantage in the crucial's -- crucial swing state of florida according to a new poll. candidate,rian party gary johnson has 6%. jill stein gets 1%. florida upon its attorney general is defending her decision to accept a $25,000 donation from mr. trump while her office was fielding consumer complaints about trump university. she says she has no regrets about accepting the money in 2013 and her office did nothing wrong. she also said it would have looked like a bribe if she had chosen to return the money once questions arose. the wells fargo ceo, john stumpf told the senate banking committee he's deeply sorry it took so long to realize employees were opening millions of unauthorized accounts. some said the bank will expand

interview to include the year -- the years 2000 nine at 2010. he received little somebody from senator elizabeth warren. senator warren: you have not resigned, you have not returned a single nickel of your earnings. you have not fired a single executive. your definition of accountable theo push the blame to low-level employees who don't have the money for a fancy pr firm to defend themselves. it is gutless leadership. fargo'sme said wells board has the tools it needs to hold executives responsible and he will respect the board's decision. a volcano in costa rica corrupted four times, forcing authorities to temporarily close the capital's international airport. at least one irruption reached a reported 13,000 feet. officials say the airport will reopen after the ash is cleared from the tarmac.

global news 24 hours a day powered by more than 2600 overalists and analysts in 100 20 countries. i'm mark crumpton. this is bloomberg. matt: markets close in just under 30 minutes. look at the gains we are seeing -- the dow up a quarter of 1%. .3%.asdaq up nasdaq marketthe site with abigail doolittle who will explain what is going on. abigail: it is relatively quiet. we've had a return to volatility but the nasdaq composite index has been trading in a relatively tight range to the upside. ahead of the fed, investors are clearly treading water but don't let the calm surface lead you to believe there's not a lot happening beneath. we have some massive movers in the biotech space. seeing a stock

move up so much in one day, up 700% on the news allergan is going to diet for up to $1.7 billion. have smaller companies trading higher. biotechhave one of the giants, gilead sciences trading higher. our bloomberg intelligence analysts told us why investors are so excited -- the acquisition validates the fatty liver disease. with this acquisition, it seems like a valid space. we had huge moves in the biotech space. matt: biotech is doing well today, but i know the biotech industry index is still in a bear market form. abigail: that is true, but there's still reason to think

the biotech bear market could continue. and thishe bloomberg is a lifetime chart of gilead sciences. it shows a beautiful uptrend but also shows gilead has tended to consolidate down for the uptrend after times of congestion. it suggests we could see gilead sciences, one of the biggest in the nasdaq consolidate to near $60 a share. this chart could suggest the bearishness we have seen in biotech may not be over quite yet. as for the nasdaq, it is slightly higher. we have some apple-related weakness with apple flipping back up into the green. we have broad common t-mobile trading lower. finally, a standout loser on the day is a cnet retail group.

acena retail group. they guided the full-year down. it looks like slowing traffic. they are having their worst one-day drop on record in more than 31 years. a lot of longs and that stock not happy, but there is a high short interest there, so they are probably pretty please. job: the treasury market is staging a comeback as investors await policy decision from the fed and doj. both central banks will release policy decisions tomorrow. the u.s. 30 year yield fell the they join theas rally. joining us is the chief market strategist at cantor fitzgerald. we have an interesting 24 hours

coming up in the market. what are you looking for and what do you think the world will look like when we are back here tomorrow at this exact time? guest: i think japan is going to do what it has to do and connect itself to a negative interest rate policy. further negative interest rates. joe: you're not staying up all night? a good nightsget sleep because there will be a lot to do tomorrow. i think the fed will not move in their meeting and the reason for that is because we've already gotten a self tightening. reform had many market that goes into effect in mid-october and that has led to a run-up in libor which has affected the commercial paper market. is aommercial paper market critical source of funding in a short term and that is up about 40 basis points over six weeks

or so. that provides headwinds for corporations, so i think the fed is aware of that. thelet: does it constitute conditions the fed will fold into its decision? yellen hasink chair been clear that she is taking into account what ever data they need to take into account. that clearly includes asset markets and lending conditions. if you look at recent fed including ands, where 40% ever spawned into the last survey said they were tightening conditions. lending standards are starting to tighten. are we seeing what's happening in the u.s. naturally they are trying to force in japan? they're going to go more negative on the short and then

longer and rates are rising. i have one-month treasury bill rates here on the terminal and you can see we are down 2.1% ahead of -- down to .1%. sure if there is an analogy there, but it is interesting to note if you look at your work function which i if you lineeful, that up against the steepness of , as thesury curve probability of increase has fallen, the curve has deepened, which makes sense. most of that action happens on the short end of the curve, so at the end of the day, a steeper curve is important because that is how banks make their money. financialricate the system, so we want to see yield curve that is deeper and i think the fed does, too. usually a quarter of a percent would not be a big deal, but 1.6 oru have rates at

1.7, 25 basis points is important in that contest -- in that context. joe: what do you think it signals about the rest of the year? what would change between now and december that did not justify a hike at this meeting. they probably don't want to take december off the meeting completely. how do you if -- how you expect the fed to manage the signaling component of tomorrow's decision? guest: the complicating factor here is the u.s. elections. the next meeting is the week before and there's no press conference thereafter. the fed is becoming more political -- more political -- more politicized, whether they like it or not. neel kashkari just said politics makes no difference to their decision. guest: but i think they have been drawn into the clinical

part of it whether they like it or not. the election of 1832, that jacksonian moment we had back in the day, the fed is born of politics, whether they want to admit it or not. i think it's difficult for the fed to raise right in front of the election. i think that makes december the most logical choice, depending on what happens to financial conditions between now and then. scarlet: let's turn to brazil. president was at the united nations general assembly meeting and he's talking about reinforcing his commitment to reforms to short growth and shore up the budget deficit. give us your assessment of how he's done so far. it seems like the honeymoon time has tapered off. guest: there has been a heck of a rally in resilient assets, generally speaking. but it has been part and parcel of a broader emerging markets rally which, in our view, has more to do with capital flows and interest rate differentials between developed economies and

emerging-market economies. it has to -- it doesn't have to do with the idiosyncrasies of the brazilian market or any market so far. it is a cultural revolution we are looking for through his presidency, one that is qs -- one that issues corruption and favoritism. i think that's probably not going to happen. the chief market structures at cantor fitzgerald. thank you very much. brazil's new president says he is ready to tackle hard reforms in his country. we have more of our exclusive interview with erik schatzker. this is bloomberg. ♪

markets.s is bloomberg i matt miller. the president of brazil is confident lawmakers will approve a cap on government spending by the end of the year. took office after the impeachment of the former president. he spoke with erik schatzker about the brazilian economy and how long it will take to eliminate the budget deficit. erik: mr. president, you want to cap government spending in real terms as well as make social security, call it more restrictive. these are too ambitious report -- proposals that require constitutional change and they are not without opposition. .et's talk about a timeline realistically, when will these two important returns -- reforms be passed into law? president temer: these are too difficult reforms. i acknowledge that, but they are

essential. because they are essential, i believe we will pass this congress.tter in are feeling the government spending that may be renewed based on the previous years inflation. i am absolutely certain we will be able to pass that measure before the end of this year. the other is social security reform which will be submitted this year. is the timeline required for these bills to be passed. many brazilian say the government is not spending enough on education or health care. if you cap spending, that means unless you take it from

somewhere else, you won't be able to spend more and you will be able to spend more on schools. president temer: that's an argument often used by the opposition. if you read the contents of the bill, you will see it is an overall nature. that's an overall feeling there is a reduction in education and health care. budget, we have already applied it as though it has already been passed. these sectors will not be harmed somehow by the constitutional ceiling. erik: how long is it going to take to close the budget deficit? how many years? i think it has to be years before brazil has a primary surplus. president temer: that is true.

and we havece established measures to reduce billioncit to 130 brazilian reality. we will have to live with a that deficit, but all of is the result of a policy aimed at lowering inflation and that is aboutd 4.5% next year. we also want to create many jobs. it could be two or three years before we totally eliminate the deficit, i agree. veryot too long ago, i got telling research finding that if we set the spending ceiling four years ago, by this time, we

would have no deficit whatsoever in brazil anymore. the support you relied on , letmpeachment is fragile say. the brazilian people are not in love with the idea of austerity. boldo you maintain the reforms you have announced, the same reforms domestic business people and foreign investors are counting on to revive the economy? how do you maintain that momentum? president temer: we are totally changing the business climate in the country. furthermore, may i stayed for the record there has been a tremendous resumption of confidence and trust. we are managing to reestablish trust, which will of course trigger not only an inflow of more investment -- of course

there's a degree of resistance to innovation at times and it all depends to a certain extent on the way we are able to explain the reforms that at this thet in time, we see brazilian population beginning to understand that these reforms are key and essential to resume hope and trust in the country. schatzker ins erik exclusive interview with the brazilian president. scarlet: september is a historically bad month for u.s. stocks, but the second half is particularly painful. we have the chart that shows it. this is bloomberg. ♪

scarlet: this is bloomberg markets. i'm scarlet fu. time for our chart chat where we

look at different grass that illustrate the days trends. this week is historically weak time for stocks. september 10 two be painful for stocks, but the second half of september is particularly painful because at issue is the week that comes after a quadruple witching. week, right now. what you will see is the average return going back to 1990. the dow, s&p and nasdaq, we are looking at a loss 85% of the time. the russell 2000 falling i better than 1.6%. this is something to keep in mind and we are in that week right now. joe: speaking of ominous signs, let's look at a pattern we are seeing that preceded another market selloff. the market is generally in an uptrend, but that number of

stocks making 52 week highs is clearly diminishing. the last time we saw this with leading up to the big selloff last august, 2015. there was the chinese devaluation that roil markets. but you can see from the blue line at the bottom, the number of stocks making 52 week highs was declining. we are seeing that pattern again. it's just one indicator and you can never use one indicator to time the market, but it is something you should pay as there are concerns the market might cap out here. that 3679 is when i may be stealing. a story i've been following for a couple of weeks now -- a pipeline burst in alabama. this is a function on the bloomberg where you can sort

through all different sorts of events and activities from shipping lines to nuclear plants to pipelines. thenial owns and operates pipeline that burst in alabama. huge jump in the october price for gas. contract worth more than the following contract because they were worried about this first. i can show you that this is the difference between the october and november contract and it rose to 8.5 percent. just a couple of trading days ago. three pointown to 5% because colonial says the pipeline will be back online in the alabama portion, one day ahead of schedule. lessmakes traders a lot

nervous and october gas futures becausest so much more they know they are going to be able to get them when colonial fixes that pipeline. .carlet: what a relief time for a look at the bloomberg business flash. we begin with the state of west virginia accusing drugmaker mylan of medicaid fraud for inflating the price of its epipen by 500%. they have been under the price.ht over the this comes one week after -- one week before the ceo testifies for congress. this was what matt was showing us -- colonial pipeline will continue shipments tomorrow after they bypass a stretch deemed hazardous by authorities. it will take several days for fuel delivery to return to

normal. the university of oregon endowment is beating some other funds due to investment in private equity and real estate. the endowment earned 2.5% through june 30. it's the largest gain in colleges so far this year. that is your business flash update. matt: that's it for bloomberg markets. the market closes up next. here are the major averages with less than four minutes to go until the closing bell. gains across the board, although slight with the s&p at 2142. this is bloomberg. ♪

>> we are moments away from the closing bell. i'm scarlet fu. ♪

scarlet: u.s. stocks closing higher this afternoon, oil rising. joe: but the question is, "what'd you miss?" scarlet: account down to the decision, rates at about 23%. the rate decision in japan in just a few hours. fedex posting results in minutes. it will be front and center. we begin with market minutes, gains on major indexes before the fed decision and boj decision tonight. and bonds both rising ahead of those central-bank announcements. when you look at the different sectors, six out of 11 major groups were higher. this comes on the heels of disappointing housing