up 113 points, s&p 500 gaining and the nasdaq up. you are looking at a recovery from yesterday's decline, so the volatility continues. what do we have here? rally with oil, wti gaining more than 40%, the russell 3000 energy index gaining more than 4% as well. joe: let's take a look at those commodities because that really is the story of the day. if we look at oil, you can see it surging, coming off the highs a little bit. it was above $47 a barrel that one point. it had been lower in the middle of the day, and all that just tons of headlines, nobody knew that this agreement was coming until late in the day. you can see it really take off after 2:00. earlier in the day, people thought maybe they would get an

agreement later on, but nobody really knew, so this really caught able by surprise. -- this really caught people i surprise. energy stocks the really big mover on the day. this is the russell 3000 energy, closing out right at the highs of the day there, over 4.5% gain. rallying.ng, energy truly the story of today. scarlet: we have mentioned the rally off the back of oil. 500 closing up about .5% . let's look at some individual things. let's take a look at saudi arabia and stocks. we saw those were down quite significantly yesterday. they were down 3.4% yesterday. it will be interesting to see it tomorrow, as that part of the

world wakes up, if there is an improvement. mattresse a look at maker, temper seeley -- tempur sealy. that was down. finally, you guys all remember blackberry, right? joe: no. scarlet: it was up after it announced it would no longer make its infamous blackberry phone. that's the end of an era. remember when we were talking about them and calling them crackberry? i used to file stories on blackberrys. joe: i never had one, actually. quick look at government bonds. surprisingly quiet, nowhere near the level of action we saw in commodities. a little bit of a take higher in yields -- a little bit of a tick higher in yields.

it has gotten pretty quiet there. quiet,: it has gotten but when we look at currencies, it is driven by the opec news. commodities, currencies got a after opec said to of reached a deal to cut production for the first time in eight years. the dollar weakening versus commodity currencies by at least .6%. those are today's market minutes. all day, we have been featuring a-list guests from bloomberg's most influential summit, and now we will bring you the cio of triumph fund management. >> we are really influencing events and behavior. we are very much like private

equity. i really believe what we do will be considered a separate asset class five years from now. i think we will have first mover advantage, but there will be competition, and i predict it will be in the private equity firms. if you ask me to look over the horizon, i think that's where this is going. >> interesting. how it works where you usually, not always, seek and get a board seat, i'm trying to imagine what happens when you turn up after what may have been . contentious beginning mr. garden: first of all, we have great relationships with the vast majority of management teams and boards that we invest with.

from the beginning? mr. garden: we spend considerable time and energy working out of the public spotlight in the beginning, building the relationship, getting to know them, spending one finding common ground the right strategic and operating initiatives for the business. the fact that we have had, for the most part, great relationships with management teams and boards we work with, it's not an accident. developingme really those relationships, and i think america understands when trying to invest, they are not there to embarrass you. they are not there to fire you. they are there to help you build the business, and in a lot of cases, we are giving the management team cover to do things that maybe they feel they cannot do necessarily with the pressure of quarterly earnings and so forth. i think that is well understood.

my private equity analogy, the way we operate is we will send a due diligence request list. we will get a data room set up, and we are willing -- really looking to do two things. we are looking to eliminate any kind of information advantage that management may have over the board. just like the next private equity contest, we want a very informed board, and we want to be able to foster the right kind of discussion because there is no information disconnect, but more importantly, the way i would describe it as we are trying to put a spotlight on the problems and the opportunities. we are trying to put a spotlight on problems that we have to solve, need to solve, cannot avoid, and we want to attack

those. we want to put a spotlight on the opportunities and go after them, and that's what this in -- that'sanies do what best in class companies do. that's what great companies do. of ownership we are trying to foster in the board room. it's a lot of analysis that in many cases, management agrees and has felt that they cannot do intain things because of -- the short-term, earnings might go down. >> was that what happened at bank of new york mellon, one of the recent boards you joined? mr. gardner: -- mr. garden: the sequence of events was similar. i spent time with the chairman and ceo, and we spent time where i wanted to make sure he

understood who we are and what we do. we spent time finding common ground on the business issues. we brought in those discussions out to our teams, and ultimately, i was invited to join the board. as i described, we sent a due diligence request list. gerald had a great idea at this point, which was to create a finance committee, a subset of the board to help weed through all this information and navigate what we are going to do , and the results have then spectacular. the earnings at bank of new york are up 35% plus in the last margins up 600, basis points. gerald is viewed as one of the best ceo's in the banking sector. >> there was another activist who did not agree. mr. garden: that is an interesting data point, which is

along the line, and activist showing up. i hope you did not say "another activist." showed up, and my recollection was in quite dramatic fashion went on cnbc, and as far as i can tell, the .ist of that was fire the ceo i think gerald and the board would tell you that it was important to have me involved to give the cover and time to .xecute on the plan the results have been great, by the way. it is a really good example of how we try to operate. >> things went a little less smoothly at dupont. i remember that well, too. during the proxy contest last year, ultimately, you got an outcome with dupont that you are .appy with

can you explain how that unfolded? mr. garden: how much time do we have? >> not much. mr. garden: i will not rehash the whole proxy fight, but it is very important for a management team and a board to decide, given our body of work and our track record and our ability to help management teams really be .uccessful operationally when it became clear that we were going to lose the proxy fight, it also became clear to us that we were going to lose a lot of money because the stock was going to crater. never even crossed our minds to sell the stock. it is important to understand that we were going to see this through.

a few months later when the company announced they were going to miss their numbers retirement.eo took ed green called us -- i think we were his first call -- he said he would like us to come down and speak to the dupont board and let them know what we think they should do next. we went down and presented to the board a couple of weeks later, and we had a avery option. which was a merger with dow and subsequent three-way split. i will not go into all the industrial logic behind that, but here is what is fascinating -- both the board of dupont asked us to sign a confidentiality agreement and the board of dow. now it is in the public do maine.

-- now it is in the public domain. i think that underscores how we are a unique type of investor. we are proud of the fact that our investment is now a hard is the school case study, and i think we have been vindicated. >> we only have a short amount of time, so i wanted to touch on a couple of other specific have made that are a little unusual in activist land. explain how exactly you got involved and what you hoped to accomplish? mr. garden: it is an important data point, one of the most important companies on the planet, one of the most iconic companies on the planet asked us to get involved as a

shareholder. the background to that as i have no the chairman and ceo for a long time, and he has gotten to know nelson over, let's say, the last decade. it is now public knowledge he broached the idea of nelson joining the ge board pre-crisis. but over the years, we had theogue informally about business and about philosophically how to be best in class for the multi-industry business. all very cordial, the relationship of trust and confidence. moment camethe a-ha for us in 2014 when we were doing work on ge, and we started to understand that the core industrial business is amazing, right? organic revenue growth, best in class, profit growth, best in class. amazingly resilient.

and amazing business, but obfuscated by ge capital and all the other businesses. what i am describing about the core industrial business i don't think was well understood because there were a bunch of acquisitions, a bunch of divestitures. they were reclassifying things. a felt that we had proprietary point of view. when jeff made the announcement that he was separating ge capital -- if you remember, the stock traded up and then traded right back down, at which point jeff called and said he would .ove to have us involved we appreciated how he was repositioning the company. .alled it the pivot said he would love to have us involved. we started doing diligence. we wrote a white paper. we called for margins to be increased by 200 basis points. jeff has subsequently committed to that publicly. we call for very disciplined

asset allocation. we called for the balance sheet working a little bit harder. i think it is a situation where we are very aligned with management, very aligned with the board. jack brennan is lead director. we think the world of him. you have it on the chart. we bought the stock about $24. the stock is about $30. we have been there about a year. >> you want to establish yourself as cover for management? mr. garden: we are to a certain extent validation capital. >> this is you building and industrial conglomerate. have tornt, you guys apart or separated pieces of conglomerates and said they had no right to be one. why the different approach? whenever we have separated businesses, it was a means to an end.

it competes in two parts of the industrial landscape that we think are very compelling. water, and i will include flow and filtration in that, and the electrical business. both of those areas happen to be highly fragmented. thes invited to go on board. randy hogan, the ceo, has done a great job building this business over the last decade. there's a lot of opportunity to grow organically and by acquisition. we just sold our business or announced the sale, which is effectively separating a non-core business and reloading on the balance sheet to really grow the core, and i would say we have tried to be part of that family and be part of the

business. have a few seconds left, but i wanted to get your view on the election rhetoric that we are in the middle of right now, from a business perspective, given the company's you look at. i woulden: i guess what say is i hope whoever ends up in washington, not only at the president level but in congress, stops with the rhetoric and what i would describe as the false narratives. what grates on me as the false narrative that business is greedy and evil. the way i look at it is the most important thing in this country is a thriving middle class. we need job growth. we need wage growth. it seems to me that somewhere in that recipe of success is business doing well. we want our business is doing well. americans should be so proud of

their businesses. think about our portfolio -- dupont, ge, bank of new york, .endy's, cisco these are unbelievable businesses, and americans should want those businesses winning on the world stage. to vilify business -- i think it is just a false narrative that has to change, and i hope whoever is in power sees it that way. >> thank you for your time. garden. that was ed now we are going to take a little detour to oil land. what is the latest? scarlet: various oil ministers from various opec countries have confirmed the cartel will cut production. in november, they will decide how long the cuts will be in place. they have not yet steered up the production allocations yet, but iran seems to have come out of

this fairly well in that they will not have to stop their growth according to the country's oil ministers, so that looks like a pretty conference in -- comprehensive victory. joe: a soon as you saw that headline, that raised flags for you. >> i just thought that was a sticking point. divvying up production cuts seems a little harder. joe: tracy wrote a great article on the web about one of the factors driving down the price of oil nobody has talked about yet, or at least not that i have seen. talks about the supply glut, why production is still stoked -- still so stubbornly high even though prices are still so low, and it's because we have had a technological revolution away from shale. people are standardizing the engineering contracts they use,

these really low hanging fruit having a that are significant impact on the price of drilling oil, sometimes by as much as 50% or 60%. bloomberg's erik schatzker. >> about three quarters of the investors ended up agreeing to that. ofk: is that because conditions that exist in credit markets now and perhaps only for the next couple of years, or is this an evolution that your industry is undergoing? >> i think it is an industry that we are going -- and evolution we're going through.

if you think about it, think back to, like, 70 years ago. in 2009, the risk-free mates where you kept your money if you just put your money in the bank, was around 2%, 3%, right? if i did not invest, i was making 3% i could leverage. at the end of the day, it did not really cost the investors anything. today, if i am waiting for an opportunity, it is costing you money, right? if i'm charging you 1.5% or 2%, you will be negative if i do not do anything, and that starts ising a real impact on what going on. because rates are zero, we came to the conclusion, "this is ," ae the business is going majority of our capital is locked up anyway. erik: the way you described it,

it sounds like you see this as a structural change. this is going to be the case from here on in? even if the fed raises rates, i think rates will go up max -- where you can cash, you will be lucky if you get 1%. fees longer lockups, lower , charging only on invested capital. it speaks to perhaps a more collaborative approach to dealing with your lp's. would you agree? mr. lasry: at the end of the day, everybody wants to have the aligned, and as you grow and end up managing more and more money, you are able to end up charging investors on invested capital. in the beginning when you are small, you need to charge on committed capital. bigger, you can end up charging on invested capital, and i think that ends at the end

best for everybody. if you look in the rearview mirror, can you pinpoint a date at which the turning point, when to call it golden age of hedge funds ended, and the new era of hedge funds began? after the i think financial crisis. what ended up happening is returns have just come down. if somebody makes you 10% today, it is a big deal. everybody is very happy with it. prior to 2008, 10% was not viewed that positively. that's just it. in a zero-rate environment, if somebody is making you 10%, you are thrilled with that. it's a great business model if you can have it, but it is kind of tough to keep. this you mentioned that in

ship, some of your lp's did not participate, so you have less in the way of aum. this is a long-running question, and i will pose it to you -- does size matter? do you find it easier to invest with less assets to put to work? mr. lasry: it depends. you've got to be able to invest in different cycles. one of the great opportunities today is in energy. if you have a lot of capital, it will not make that much of a difference. if somebody said you have to invest quite a bit in u.s. distressed debt, you have time, so you have to have the ability to move your capital around. you have to be able to take advantage of opportunities as the market is giving that to you. having we are seeing sort of an all-encompassing fund

, which is how it used to be is much harder. you want to take advantage of some of these industries that are getting hit and go to your investors. . think there is an opportunity k: what about hedging? some credit managers say they are under pressure not to hedge as much because returns are so and hedging its into those lousy returns. no investor wants you to hedge because there is a huge cost to that, until there is sort of a big event and everybody goes, "why didn't you hedge?" it's not complicated. 2009, everybody

would call you up and ask why you were not hedged. "god, i forgot there was a financial crisis coming. great idea. i will do that next time." when we were investing in the energy sector, everybody would say after, why didn't you hedge. why invest? i should have just gone short oil, and that would have in better, right? at the end of the day, the problem with hedging is there is a cost. 500,l you are making is 600, or 700 over, that is a big portion of your return. : do you feel freer to be hedged, and are you as a consequence of the fact your money is locked up?

mr. lasry: we believe in what we're doing on the credit side, so we will hedge a little, but the cost of our hedging is going to be about 25 or 50 basis points, so it is much more insurance for something opposed toegative as what most people are trying to do, which is hedge what is going to happen the next three months or six months. erik: how about shorting? to me, it is all about credit. if you think a company is massively overpriced where it is, you can short that, but that will be 5%, 10% of your book. the problem is it is a negative spread. so i've got to be right. if nothing happens for a year, i've just lost 10%. erik: not a good place to start.

mr. lasry: it's hard. people don't like it. about long? how would you describe it? i toldry: i remember everybody i thought it was the opportunity of a lifetime. it was, and i think it still is. you are getting massively overpaid for the risk you are taking today, and the reason is because every company that is out there has a capital structure that came into being when oil was up $100. everybody was able to borrow money, and you can have these capital structures based on oil being $100. as oil has gone down, the only debt that is still viable in our the secure. you have the capital appreciation, so for us, we do not know where oil is going, do not really care. -- at end of the table

the end of the day, we are trying to invest in a really good company. the company will still be viable. that is our downside protection. erik: but that is only on senior debt. that means you are not prospecting further down the capital structure? mr. lasry: you don't need to. if you make somebody 15%, they are thrilled. if you lose somebody 15%, you get a lot of phone calls. risk/reward is not there in my opinion. said you do not really care where oil goes. mr. lasry: it would be good to go up. itk: you have just made

clear to everybody you do not make it your business to be an oil forecaster. are you surprised that an agreement -- i would not say it is an historic agreement, but it feels historic in the fact that opec was at loggerheads with saudi arabia for so long, that an agreement to cut production produces a lift of only 5%? everybody thinks they are going to cheat around the edges, that is the reason. if they gulf -- if they hold firm, i think you will start seeing prices move up, but at the end of the day, it is all supply/demand. the more supply there is an less demand, prices move up. once people started cutting, the demand side was there, supply

just kept going down, and you see it. here is what is on, and it really is -- the reason why this is a phenomenal opportunity -- you can buy debt based on where oil is trading today. the future tells you when oil will be at 55 or 60. in essence, you could actually try to hedge that out, and you could try to lock in a spread because equity markets are going to be at 60. that market does not really care. it is actually very odd. the best opportunity out there if you guys can do this, find them, i will buy them from you all day long, is you can go out and buy wells today that are producing oil where their cost is 40, so it is positive spread, and you can hedge it by going -- you just end up locking the spread for two years and you will make $10 a barrel.

you will make your 20%, and there is actually people who are doing that. the problem is it is not scalable. i would love to buy $1 billion of that or $500 million, but there's all these opportunities out there because everybody is actually really scared, so it is a great market because everybody has run away from this market. how much of the $11 billion is in energy right now? it's confidential, but it's about $3 billion. [laughter] mr. lasry: don't tell anybody. erik: no one. how frequent are you turning over those positions? you can afford to sit on some of this and see if it works over time, but i imagine you still want to be opportunistic. mr. lasry: we do. part of it is as we find more and more opportunities -- look, the energy sector is the only sector in the last kid of years

-- to of years ago, there was $100 billion in distressed debt. it is the only sector where the amount of distressed debt has gone up in the environment or you have had positive gdp growth. you keep finding opportunities, and the reason is because people are having to meet -- you have these capital structures that did not work. forive opportunities there us, and we will keep investing in that sector as long as we keep finding that we can keep buying things generating for us somewhere around 15% plus. erik: energy, most attractive opportunity for you. what's next? there have not been a lot of distress opportunities in europe. mr. lasry: no, but there are individual loans. everybody wants to see a big company that is not in trouble. you do not have that.

take a look at what the ecb is doing. the european central bank is forcing banks in europe to deleverage. why? because they are massively over levered. they force the banks to keep .elling loans, selling loans then as the loan comes do, do not end up making a new loan. do not roll it. that is how you have got it deleveraging. what that does for firms like ours is you can buy this debt at a discount, if it is a $.70 or $.80, and you are buying something that is senior, secured, and you will generate around low to mid-teen's return and the risk you are taking is pretty minimal, but it is over two years. it's companies you will not have heard of because the vast majority of companies in europe are middle-market companies.

erik: what about deutsche bank? mr. lasry: anybody here working there? you do? ok, that's good. [laughter] no, think of it this way. jpmorgan -- does anybody here know what jpmorgan's equity capital is? it's about $250 billion. do you know what their balance sheet is? $2.5 trillion, about $10 -- about 10 times. deutsche bank -- do you know what the balance sheet is? 2.5 trillion dollars. what do you think their equity capital is? $18 billion? it was. how much levered is that. times.s levered 10

the problem is it is over 100 times. just math. i mean, i did not go to is this school. it is just how the math works, so they have got to be fully hedged. they have got to be perfectly hedged, and all the stuff they are supposed to make money on has got to work. so what do you think the ecb is doing? what is going on in europe, and deutsche is the classic example. i have no idea how hedged they are, but when somebody is 100% simplify it.t's who here is more than two times levered? raise your hand. who wants to be more than two

times levered? if you think about it, we cannot even get more than two or three times leverage. thanks are not allowed to loan more on any capital structure more than six times. six times in the. -- six times ebitda. it is a bit illogical. so i think they will be problems, but who knows? do you trust them as a counterparty? mr. lasry: right now? yeah. for three days. we're not doing things to years out -- two years out. deutsche does not have any issues right now. the problem is the more people keep talking about it, the harder it becomes, and the more they will keep saying they do

not have issues. i actually do not think they do, but it is hard for somebody to be levered that much. you cannot withstand shocks. : italian banks have issues. do you buy from italian banks? the problem with italian banks is they have not taken their reserves. not like i do not want to buy it. it's just the bank has not taken the reserve, so they have not even taken it down to a price -- the real market price, and the reason is because if they do, they would be insolvent. you go around in a circle, and they cannot comply with the rules, so he keeps getting extended and nobody is forcing them to take down the reserves because of they did, they would be insolvent. erik: when will they sort that out? quarter, banksy

take more and more reserves, and that is why europe is a five to 10-year opportunity. take tohow long it will deliver the amount they want to deliver. discreet are a very opportunity credit situation investor, but i would like to know how you feel about the bond .arket broadly speaking people say we are in a bond bubble. what do you say? the reason people say that is because everybody thinks everything is priced to perfection, right? so that if there is a problem, you are going to have real issues, and everybody is sort of reaching for yields. i get that, but at the end of the day, your choice is cash, which is zero, or invest, and people have to invest. eric: in some cases, not investing would have produced a better outcome.

harvard is down 2% of 3%, so they should have stayed in cash, and yet, gail was up 2%. the pressure is great on everybody, and ultimately, you have got to produce. there's always opportunities out there. money,st people give you you have got to make the money. so you're only charging on invested capital. how much pressure do you feel to invest? clearly, the pension funds are under pressure to allocate capital. not really feel that much pressure to invest because we are trying to invest in areas that we know there is quite a bit to do, right? so on energy, we think there is a lot to do, so if you give us capitol, we will put the money to work pretty fast. i think i would be under a lot

of pressure if someone gave me money to invest in areas where i did not think there is a lot to do, and then you have got all this capital, and what are you going to do with that. erik: one last question before we finish up. returns are down, lots of lp's have an itchy trigger finger. i wonder to myself, and this harkens back to some of the comments you were making about what it is like post-crisis. what is most different about running a business like yours today relative to what you were able to do in the mid-2000. mr. lasry: it is just harder. you are in a zero rate environment. it is much, much harder because when you are wrong today, you get crushed. you werest, when wrong, you were able to buy at a much lower level. if you were right, you did very well, so the problem today is most of the time, people are buying debt around 80 or $.90.

there's just more pressure on you to be right, and i think that has been the biggest difference. to come in at a much lower basis, and you are not coming in at a lower basis today because bonds are trading at a certain level because they got that coupon. people are willing to overlook a number of things, and therefore, you've got to wait until everything goes bad because people need that yields, whereas in the past, if there was a with that accompany was in trouble, you would be able to buy that debt pretty cheaply. so it has changed a lot. nobody cares. at the end of the day, all anybody wants is did you make me money, and i get that. that is the business we are all in. good enough business to be in for now? thank you so much. was avenue capital

sry with our erik schatzker. rallies across the board today, the big news, the surprise agreement in algiers to cut production by opec leading to a surge that really started around 2:00. again in oil. s&p energy, subsector, the biggest gainer, over about four point 5% gain. all those green arrow struck the story of the day. scarlet: that is why the nasdaq is kind of lagging behind. fromso have some headlines the cleveland fed president, one of the three dissenters in that fomc decision earlier this month. she explains her dissent in the text of her cleveland speech, saying that sometimes being prudent means moving policy rates up. she sees risks from delaying a rate hike for too long and she says gradually raising interest rates will help prolong the expansion. she does see the inflation target moving gradually, and she

says in reference to overseas headwinds, those have subsided and the u.s. expansion is resilient. we will bring you any other headlines generated from cleveland shortly. tracy: thank you. alan krueger, the foreman -- former chairman of economic advisers and a professor of economics at princeton university, joins us now. it's teams there's no -- it seems there's no shortage of things week a talk about today. how do you see the u.s. economy at this moment in time? >> i think the expansion has been resilient and i think if we avoid policy mistakes, it will continue. i do not think we will take off, but the longer this recovery goes on, the more problems we are solving, and we saw that when the census report came out in showed the fastest growth real median household income since they started collecting data. poverty rate dropped by the most in over 20 years, and income growth was strongest at the

bottom, so i think that is a sign that recovery solves weblems, and hopefully, that have congress and the administration come back after theadministration and solve rest as well. joe: in the presidential debate the other night, the consensus is that hillary clinton won the debate, but if there was one section where trump was effective, it was hammering clinton on trade. given the fact that, you know, now we are seeing income growth across a deciles, and i'm not talking specifically about his points because a lot of people said it was incoherent, i'm just talking about how it resonated. why do you think this argument he is making does seem to appeal to people? >> i think he had the wrong diagnosis and the wrong prescription. joe: people want the medicine even if it is not what is appropriate. of some quacke doctors, too.

when people are selling snake oil. i think it is very important that levelheaded commenters, economists weigh in and explain that his criticism of nafta was completely inconsistent with the facts, his claims that jobs are fleeing america was just plain false. we have added 15 million jobs in the last seven years. we have the strongest economic growth after nafta was signed. i'm not saying the decline in inequality is the result of nafta, but certainly nafta did not cause problems at that time, and i think it could be improved in some ways, but on net, it has benefited the u.s. scarlet: you mentioned recovery solves problems and cited data from the census bureau indicating that. i wonder in the late stage of the recovery if we are towards the end and about to turn because that is the other issue,

just when things are getting better, the economy is headed south again. the risks wee of are facing is donald trump's election. i think his comments about trade and immigration are harmful to our economy, even if he is not elected, but i wish i had a quarter every time someone asked me if i was worried the recovery would end. people have had this fear for the last six years, we have seen that this recovery is resilient. i do not think we have seen the kinds of bubbles building up that could cause the kind of bubble to burst in the near term, and recoveries tend not to die of old age. historically, we see the chance of a recovery turning into a recession in any given year does not change as the recovery goes on, so i think this recovery could be the longest one we have ever had. when the next president comes to office, it will that month the clips the reagan recovery and be the third longest in our history at that point. i think we should be looking at recoveryoost the

rather than look for ways to criticize how the u.s. economy has been doing, since we are digging our way out of the deep problems that were caused by the financial crisis. scarlet: have you as a policy maker and academic communicate that message of resilience, of recovery in the economic cycle to a population that does not seem to want to hear it, and certainly distrusts that message coming from people in their so-called ivory towers? : it is certainly understandable people are concerned about the economy. we went through the worst financial crisis of our lifetime. far too many people lost their jobs. more importantly, for about 30 years before then, the u.s. economy was not generating enough income growth, especially for lower income families. i think there's a lot of problems you need to address, but we have to recognize we have made progress. there is more to be done, but we

should be building on the progress we have made. look at market implied pricing right now, it kind of looks like a coin flip for a fed hike at the end of the year. you talk about how we will basically be looking down one of the longest expansions in history. is there any urgency for the fed to hike in your view, and does the lead risk causing a recession before necessary if it does? mr. krueger: i would say the fed runs of risks -- moving too slowly and bubbles build up, and that could cause problems down the road, and the other is that in some point, it is forced to raise rates very quickly because it is concerned about building pressures, and that causes the recovery to and. i do think it would make sense to seriously consider a rate hike by the end of the year if the economy continues to improve. scarlet: i want to get your thoughts on the idea that globalization has created an

entire class of losers or an entire segment of the population has lost out. you seem to focus on the losers in the developed world, but there are plenty of losers in the emerging market world as well, and that does not get quite as much attention. what will be the ramifications ifthis down the road globalization becomes a lower item on the agenda, not just for the developed world but the emerging world as well? basicueger: i think the economics is right, which is that expanding trade can help all countries, all sides. it does not help everyone equally. there are people who benefit and some people who get dislocated way trade, and that is the trade works. i think we as a country and other countries as well could do more to help countries that are dislocated. but i also think it is important to recognize that trade agreements are more than just economic agreements. they also advance our relationsnal interest.

at a time when china wants to play a bigger role, at a time when we are concerned about national security threats because of terrorism, i do not think that is the time for the u.s. to withdraw from the rest of the world or to terror of agreements and say we're going to renegotiate them with parties that will not want to renegotiate with us. this is the time to think about what types of trade agreements will raise our income and advanced our security interests. scarlet: to engage rather than disengage. alan krueger, thank you very much. be sure to watch the philadelphia fed president live from dublin tomorrow morning at 6:00 a.m. eastern. michael mckee with patrick harker. this is bloomberg. ♪

8:00 a.m. in dubai, 5:00 a.m. in london. >> we are seeing people start to talk about this is the beginning of some change in the region. we seeing some analysts already scarlet: "what'd you miss?"

theico has outperformed broader market this year with the food and beverage company set to release earnings before thursday's opening bell. let's check on pepsico. sales have declined for seven straight quarters and analysts expect that slum to extend, predicting a 3% drop, but they see a recovery starting this current quarter. total revenue has been hurt by currency exchange rates. that's the blue bars. yellow bars show the standout division, the frito-lay north american unit. rails rose more than 3% last snackr, bolstering the business. the runner-up is the north american beverage business, which is showing slower growth. pepsico says that it's propel water and juice brand health bolster these results, which is part of a bigger trend. consumption of bottled water is set to overtake soda for the first time in the u.s. on a per capita basis. rise of bottled water has not hurt most soda makers because many produce both.

pepsi's water business grew by double digits in the first half of 2016. gatorade controls 70% of the sports drink market and to defend the share from new challengers like coconut water, pepsico is introducing a new version of gatorade that is certified organic. looking at the balance sheet, the company made a big change when it sold more than 750 million euros of bonds, taking advantage of europe's stimulus. we will be tracking and breaking pepsico earnings when they are released thursday before the u.s. opening bell. joe: thanks. coming up, what you need to know to gear up for tomorrow's trading day. this is bloomberg. ♪

scarlet: u.s. stocks close that their session highs led by inergy after opec unexpectedly agreed to production cuts. do not miss japan's retail sales . joe: tomorrow at 8:30 a.m. we will get another revision of u.s. gdp and initial jobless claims in a 9:00 a.m., catch bloomberg costa david gura, who will have an exclusive interview with secretary of the treasury jack lew -- bloomberg's david gura. testifying before the house financial services committee. last timeireworks the he went on capitol hill over this scandal, so i think that will be must read tv. scarlet: do you think elizabeth warren will make a guest appearance? that is all for "what'd you miss?" we will see you tomorrow.

joe: have a great evening. this is bloomberg. ♪

>> previously on "with all due -- ect" john: your basic argument is the premise is he will not win all four of those states? but florida and north carolina, i would much rather be her. mr. trump: did you see these characters with the maps? the electoral college? about a month ago, a very small path or trump. today i'm watching, they are looking at all these paths. john: with all due respect to donald trump, you can take our maps when you pry them from our cold, dead ingersoll -- fingers.