vonnie: we are from bloomberg world headquarters in new york. over the next few hours, stories london, india,, and hong kong. stocks had a better-than-expected expansion the fedacturing with raising interest rates before the year is out. former ceo of twitter will be offering an exclusive interview. at the bottom of the hour, the ceo of janus capital, creating a $320 billion asset manager. r joins us now.

-- ramy inocencio joins us now. is thethe s&p 500 biggest loser right now. the dow and the nasdaq not too far behind. let me talk to you about what has been happening to the sector health of the s&p. come on over here to my bloomberg terminal. you can see the real estate is down the most today in terms of sectors, down by 1.5%, led closely behind by 1.4% of utilities and staples. profit-seeking ever since it .oined the s&p sectors utility falling because of potentially warmer weather on the horizon, as well as falling natural gas prices. financials are down on the order of half of 1%. seeing a bit of a ripple in terms of deutsche bank and wells fargo.

of a hit because the city of chicago is going to divest $25 million of its holdings after that accounting scandal. wells fargo down on the order of more than 1%. deutsche bank, returning from positivity on friday when we saw gains of 15% down today 2.4%. morgan stanley on the hot seat. dow on the order of 1% here. is that one unit of morgan stanley is accused of forcing its financial advisors into high-pressure sales contest in order to sell its loans. macy's and kohl's down almost as much as 2%. warm talking about the weather. that might be the case here. unseasonably warm weather is on tap for the u.s., so that maybe

seeing less or fewer sales in terms of warmer weather and apparel. interesting, before the presidential election, consumer discretionary across the board is on hold. all of her? shift fromtainly a friday, when a lot of things were green. mark crumpton is in the newsroom with more. mark: republicans are wondering if donald trump can recover from one of the worst weeks ever for a presidential candidate. fallout that he hit may have avoided paying federal taxes for 18 years. plus he was criticized for his initial debate performance and for going after a former beauty pageant contestant. he brought up former president bill clinton's history of infidelity, while refusing to talk about his own. university survey says that secretary clinton is ahead for -- 49% to 38% among

likely voters -- likely voters. get gary johnson is at 8%. a failed military coup this summer will be extended for another free -- three months. the us-based muslim cleric is accused of masterminding the failed coup. the state of emergency has allowed the government to carry out a massive crackdown, arresting some 32,000 people. the nobel prize for physiology has gone to a japanese physiologist for his work on how cells recycle their content. his work is involved in several conditions, including cancer and neurological disease. 26 hundred journalists and analysts in over 120 countries. i mark crumpton. this is bloomberg. twitter at 4% as rumors

about the company keep churning. the latest is google, considering a bid. disney, salesforce, they are also interested. brad? costolo,e with dick the former twitter ceo and venture capitalist. he joined index ventures at the beginning of the year. what have you been working on? dick: helping out with existing portfolio companies and looking at new deals. ball.the ball, hit the doing whatever they need. brad: what is chorus? dick: my new company, we're spending most of our time there. it is a fitness platform that and socialke rituals accountability that help people change behavior in the real world and off-line, if you will.

our thought was that those capabilities don't exist in some of the online fitness platforms and that with them you will be able to get people to stay motivated and keep doing what they are supposed to be doing. there are a lot of fitness apps out there. what does chorus do differently? >> there are even social fitness platforms out there where you can go for a run. what we're trying to do every day is deliver programming that is specific and personalize for what you're -- what you need today. friends, family, and coworkers, connected to you, where you have positive reinforcement from your team to get you out there and

keep you motivated. we have an opportunity to connect and do something together. that's the kind of social accountability we're doing off-line to online in the real world. a subscription model where personal trainers cost upwards of over $100 per hour sometimes. these boutique fitness classes are sometimes 30 to $35 per hour. you will have personalize programming to keep you motivated. brad: what got you interested in this? is it a personal passion? dick: it is. it's something i have been thinking about for a long time. twitter one of the things i wondered was -- why haven't any of these platforms really reached scale? it is generally because they are focused on some niche.

bodyweight workouts without any kind of gym workout. or they have a social component, again, of the twitter instagram interest model. for whatngs work great they are built for, but we want to broaden the appeal to a wider audience and deliver value to the people who cannot keep themselves motivated. when might we see the chorus app? >> it will be in beta sometime by the end of the summer. dick: brad: i do have to ask you about twitter -- brad: i do have to ask you about twitter. is acquisition the only way to restore twitter to growth and health? dick: i have said for a while that i think the twitter can be a successful and independent company and that i think the world of the team over there. jack thinks beautifully and

elegantly about product direction and the rest of the cedar -- senior leadership team are tremendous. i don't think that's the only possible outcome, there are a lot of ways for twitter to be successful. brad: thank you. back to you, vonnie. vonnie: a quick check on the markets first, while they were not in the green yesterday, that was still the case a couple of hours before the close. the dollar index is a little bit higher. the better manufacturing data, that is helping the yen with some weakness today. cable is want to point out after theresa may commented today by the end of march, it did drop below the handle earlier today.

this is bloomberg. ♪

this is "bloomberg markets," i'm vonnie quinn. oliver: and i'm oliver renick. time to look at the business stories in the news right now. dow chemical in dupont, the european commission ruling on their proposed merger. regulators restarted after seeking missing information about the deal. isn't -- embroiled in the eu over concerns that the combination they reduce competition for the industry. offering to buy back $1.25

billion in bonds as part of the plan to reduce debt, offering to buy those due in 2018 and 2019. the cash offer expires at the end of the month. last week the rio tinto group offered to repurchase as much as $3 billion in bonds. credit may wait until after the constitutional referendum for higher global asset management according to reuters, citing three identify -- unidentified sources close to the matter. and that is your bloomberg business flash update. capital,uying janus the new combined money manager will have $320 billion in assets and money management. the ceo discussed the default -- details from london. >> when we first started

discussing the transaction will -- transaction, we shared a similar strategic position. when we look at the industry and challenges that we were facing, we were aligned on the solution that we were adopting for the firm. that was the first fundamental bedrock. the second point was the culture of the firms being so similar. we both come from the point of view of teams with collaborative approaches and a shared similar value that is so critical. making sure that we do everything we can on behalf of our clients. it gives you the best chance in this merger of equals. >> can you give me more color as to what that actually means? >> we know that there are far more significant regulatory intrusions into the industry requiring greater scale with the

global clients and distributors that we've dealt with on a global basis, looking for partners that can work in one across the board. again, trust is such an important area for financial services and they are looking for a brand that they can trust and work with through time. that's what i mean by a new breed they can service clients equally. >> can you explain what happens going forward from here? star manager had a big name to help sales go at them and boost your pr. within your combined company? -- andrew: look, every firm is going to have names and individuals who are well regarded for what they do. whether you are looking at a sporting event and taking the , there's noe like

such thing as a lone wolf working on their own. they are all part of a combination of ideas being generated by lots of people and being able to collectively grab that through the collective approach, which i think is the future of active asset management. >> when people think of janice, typically they think of bill , typically they think of bill gross. what does he think of what you're doing? andrew: he's supportive, a great investor with a phenomenal track record. very happy and supportive of what we're doing here. the 16 year view you've got for the company, why

is that? people look at it as a situation that is defined by the situation. , the u.k. of the day financial services industry will persevere and we will need to be able to access that. similar to europe they will be more inclined for us. the u.k. and europe will be important markets for us, as will be u.s., japan, and australia. we have tried looking at brexit as the defining moment. but it is just one of the geopolitical risks that will happen over 10, 15, and 20 years. later in the hour we will hear from the other future , coming up are in about 15 minutes. a testis time for

between myself and my cohost, oliver renick, today. point outjust want to that we have an anomaly in all of this from many different things, including manufacturing. if the issue of debt was negative yield, you might have thought it was a good sign back to where we were in june and in france, germany, the netherlands, all after japan, which is the largest. try toaces like japan get it to zero. oliver: there was a push to get it back to zero, we saw it inching closer, but there we are with those numbers that are still so high. i'm glad this is in the battle of the charts, because he would

be crushing the right now. that is the story of the year in one big chart. however, i do have one that's pretty interesting with the pmi numbers that we have. this is looking at a u.k. pmi manufacturing. 55, beating this year. look at the jump down the keeps getting better. at the same time the blue line shows you the pound versus the euro. here, lower and lower the currency goes, despite resilience in the u.k. because the traders are basing this move lower on the pound and the idea that we are moving closer. you have to sort of wonder what the driving factors are. if these numbers never turn around and you get better and

better economic data, there will need to strengthening concerns -- currency. vonnie: based on what the politicians are saying, saying that the cable definitely hasn't found surveillance yet. perhaps some inflation. oliver: still ahead, adidas is hitting the ground running. using fast fashion and music to get its game back.

welcome back to "bloomberg markets." two years ago, it was one of the worst-performing stocks, but

today adidas is kicking into high gear. the managing editor of "bloomberg businessweek" told us how the company is gaining ground on nike and under armour. >> the winds were not always blowing your way, but what has changed? >> well, it depends whether you are in germany or not. [laughter] a lot has changed. the biggest thing is the company has made its peace with melding the sportsng with shoe business. increasingly what's happening that instead of thinking only in terms of sports performance, they are getting really excited about melding in what's hip, what's current. right now a lot of that is retro. those retro brands were associated with the 60's and 70's. >> they really did kind of stumble a bit.

right. right. what happened was, for the businesses they were in, like the u.s. market, which is very large, nike commands the market. is inbiggest appeal soccer, which is in that they care. they have run into a number of problems and had gotten to the point wonder -- what would happen with them? they owned reebok, which continued to be not a great armor. everyone kept saying that this would be the cost of mojo. this past year the stock is up over 100% and what's happened is that a lot of things just sort of came together. particularly the retro appeal. that peoplends remembered from the 60's and 70's that were hot again. example, the sam smith line came in the late 60's and early 70's.

it sold about 40 million units, but just last year it sold about 8 million pairs. this is the classic white that has the three stripes. not even stripes, those are just perforations. that's hot again. you see people on runways wearing these with really fancy brands. a $120 pair sneakers with somebody wearing it. you got katie holmes wearing these now. all of a sudden that the business that really responds to fashion with people running out and paying full price, something that everyone in retail loves. vonnie: that was jim ellis and you can read more of his story this week online and on newsstands. and here from the magazine's reporters every saturday on bloomberg television.

coincidentally on top charts that you can access using the bloomberg. downgrading expectations for , youin the last 12 months can see they have downgraded the price targets from 70 odd to about 65, 64 in change. oliver: you can see that about almost two thirds of people are saying to buy, but nevertheless pretty bearish. withg up next, we talk janus capital ceo to it while -- dick weil. this is bloomberg. ♪

oliver: from bloomberg world headquarters in new york, this is "bloomberg markets." vonnie: let's get over to ramy

inocencio for the latest. ramy: thank you. oil is rising, but gold and other precious metals are crossing the flat line. not once, not twice, but three times. we are at 1.2%, the high of the day right now. earlier this morning that declare the u.s. crude supply and the surprise fall of 1.8 million barrels. and we saw this pop here. later on around the 9:30 hour we got reports that it had hit a seven-month high and taken another leg lower at the 10:00 a.m. hour. oil production coming out rising to 500 million. now oil is at its highest since last july. taking a look at the five day, oil is up for four straight days in a row.

you can see that it is up by just over 6%, extending the gains after opec agreed to a production cut and a surprising one at that. in terms of what's happening on friday, the count is up for five straight weeks in a row and we can see that regardless of this, oil prices are still rising. i do want to switch over to gold oil is rising, gold futures are down by one quarter of 1% here. definitely taking the shine off of gold, oil is now a bit more of an interesting alternative asset, especially as gold falls with the potential for a fed rate hike. thank you. let's check in on the first word headlines. oliver: the u.s. is suspending -- mark: the u.s. is suspending

participation in the talks to ,top the bombings in syria citing moscow's inability to end the violence. john kerry has threatened to break off contact with moscow over syria unless the recent attacks and. in a recent retaliatory move, vladimir putin has extended a deal on weapons grade plutonium, blaming the unfriendly actions and u.s. inability to fulfill its obligations under the 2000 deal. atricane matthew is posing threat to haiti, jamaica, and cuba. the storm has sustained winds of about 145 miles per hour. expected to pass to the east of jamaica, hitting the southwestern tip of haiti today or tomorrow. the supreme court has rejected the longshot appeal from the washington redskins to had appealed the government decision to cancel its trademarks over

concerns that the name disparages native americans. the justices will decide whether the trademark law violates the first amendment. received anton has m.v.p. endorsement from one of ohio's favorite hans. look on chains -- lebron james called her a champion for children and the future. clinton, campaigning today in the state, is "running on a message of hope and unity that needs to be addressed, as far as violence is concerned in african-american communities." global news, 24 hours per day, powered by 2600 journalists and analysts in 120 countries. let's get back to him of our top stories today. someone agreeing to buy janus

capital. erik schatzker is standing by with a special guest. erik: thank you. my desk would be -- my guest would be dick weil, who has agreed to merge his firm with the henderson group. this is being billed as a merger of equals, as you know. a merger of equals can be a tricky thing to pull off. in this case you are trying to really make it equal. combining the boards, giving each of your executive teams equal representation. it's hard to see how tough decisions are being made here and the merger requires tough decisions. that's a good question. there is history in the marketplace for folks to enter into transactions with that label, but perhaps beneath the surface maybe it's not quite so equal.

the boards being split with co-ceo's drawn in a balanced way and i think it is truly a merger of equals. why is it better to have two ceos sharing the responsibility when everyone knows it's difficult to pull off ? and the that is why so few companies intend it. erik: andrew and i started talking in february and have known each other for many months , traveling to tokyo together. i have a lot of personal confidence in my ability to partner with him and make this successful. but i agree that it takes a special relationship. i think we have to have that and i think that's wonderful. if you look at henderson and , you will finds

active cultures bringing these things together rather is a lot of synergy between the common culture. in general is very challenging to do a merger of equals and to be a co-ceo. in this particular case we have the right foundation with people in philosophy and culture, allowing us to be successful. digg, i have to inject some skepticism here. i have known people my whole life that i consider my best friends that i would not share ceo responsibility with. that's another matter altogether, but how over the course of 7.5 months can you build that kind of confidence? somer or later there are people -- maybe not today -- you will begin to say that one of those guys has to get out of the way. that's fair. certainly that could happen. if that does, one of those guys

will get out of the way. we made an arrangement with the board that they should start to look forward as to whether this co-ceo thing is appropriate or if there is a better way forward. or if we should get some new person to take on the responsibility. we are in it too when it. plenty of work to do. after that time i would be happy to carry on or have andrew carry on or if the board decides they like this, any of those things are great. i have that andrew and the beginnings of an unusual partnership and for us, for both of us this is not about our personal careers. this is about building the best possible company for our clients, shareholders, and employees. it's not about my ego. the two one of conference calls that you held this morning, you talked about aspiring to be a global wealth

manager. why aspire to be global? , but as ae doubling global asset manager you will be dwarfed by the likes of , and the, fidelity list goes on, as you know. .ick: sure the story has been told solely by size, as you can imagine. five years in a row of organic growth from non-us businesses. henderson has had terrific growth outside of its he market. delivering growth and excellence outside the home markets, the combination gives us more economy of scale and operating leverage to build further into markets around the world. we are not trying to be blackrock or any of the huge ones, but the additional scale

of assets under management allows us the opportunity to capture more and -- capture more earnings for our shareholders and make appropriate is yournts. erik: what strategy for adjusting to the challenges posed by the department of labor's fiduciary standard? predict -- particularly regarding the asset pressure? dick: i think that's right, the highest played -- highest-paid players will have a difficult time afterwards. but our strategy is to partner with clients into listen to them about how we can be more effective. what we need to do is stay close to them and make sure that we are parking their strategizing with them. there is a widely held clue that

your clients are going to keep pushing down fees because they need to be able to spend reasonable compensation. tos much harder for them make that case. it's a very competitive industry and folks are offering different services and products. i think that the action ratchets it up somewhat. some of the pressure is intensifying and fair enough, we need to make sure that we deliver value for the fees that we charge. we embrace that challenge. erik: i want to know what you are betting on in terms of two outcomes, from passive to active do you believe that? or that with this merger janice henderson-- janus

will have a larger slice of the smaller pie? which of those do you believe in? moore the second than the first, but you have given me that old forced choice and that's never perfect. i think it will increasingly narrow the number of active managers for those folks who can deliver them over long time. we are committed to being in that class. together we have more strength, investment talent, and opportunity to fill needs across a wire segment. there will be some pendulous and as such as passive, it's the active managers who are quite good. the field is going to narrow. we definitely believe that's

true. allowing us to be better positioned in that field to continue to succeed. nic, it has been a pleasure to talk to you today. that those investors hope that it goes as well as you do. thank you so much for talking to us. dick weil, thank you. oliver? oliver: thank you. coming up next, the worst week ever? that is what some people in the trump party are saying about the nominee. look at the challenges facing his campaign. next on bloomberg. ♪

oliver: republicans are wondering if donald trump can recover what -- from what some have called the worst week of a presidential campaign. lastly he was criticized for a series of tweets aimed at a former miss universe. the poll from a clinical battleground state shows the race still the connect. washington,rom sahil. what are republicans telling you about the week that he's had and how it's importantly -- how it's impacting poll numbers that are really changing much year? many republicans seem

very fatalistic. seems like everything that could have gone on -- gone wrong, did. he had been ticking upwards in the polls but his debate performance was widely criticized. he lost according to many polls. the 3:00 a.m. a.m. and 5 a.m. tweets about miss universe, the , and then infidelity it all caps off with that times story about the taxes that the campaign responded about. it seems that she did that successfully, getting under his thin skin. she wanted to create doubts that he had the temperament to be president. uphold it came out a couple of days after the debates, favoring hillary clinton by 20 points. that's a crucial bloc that he needs and who historically votes republican. who are moreers cautiously optimistic, cautiously hopeful given the

fact that there are something like 37 days left in the race. vonnie: and in certain cases it doesn't seem to hurt him at all. in north carolina the latest hole shows that clinton and trump arnett can. dick: north carolina -- sahil: north carolina was a state that north carolina one, though he still lost the election. it's indispensable for trump. the fact that he's down one and a latest: north carolina is not a good sign for him. he has a lot of potential there. he has been beating her in recent polls. the polls from five other battleground states came out in michigan and clinton is leading in every one of them. i think the postdebate polls have not been particularly good for donald trump and he wants to do a lot better if he wants a real shot at the race.

oliver: what is the difference between before and after the debate? is there a specific shift in tone? immediately before and immediately after, it would be comparing apples to oranges, but what we do have our swing states in places like florida and places like new hampshire, michigan, and nevada, where engine is leading. there's no point in the apples to apples pears in. but the national poll that was taken two weeks before and then after the debate showed hillary clinton gaining a few points, gaining a net of six points in a two-way race. so far it is a little bit early to know, but it doesn't look good for donald trump year. what would you suggest,

if you were his campaign manager, to try to take angst back? he doesn't need someone like me to say it. to give it away from getting into feuds and picking battles with people like the former miss universe that don't help him. it was just a disaster for him. it didn't help them at all. it just futile -- fueled the perception about his temperament. he's got to get that issue off the table and make them believe that he has the temperament and steady, even hand to sit in the oval office. oliver: we will certainly be

checking back in with you. tomorrow in virginia, tim kaine and mike pence will face off in the first and only five presidential debate. special coverage on bloomberg beginning at eight: 30 p.m. in new york. -- 8:30 p.m. in new york. vonnie: amazon, the number one retailer in india. this is bloomberg. ♪

oliver: this is "bloomberg amazon settinge: its sights on becoming the number one on line retailer in india. are joined now with more on the story from shannon pettypiece. why did it take jeff bezos so

long? shannon: well, it has obviously been this in or miss retail side between the u.s. and china. primed for e-commerce to take off with the exclusion of smartphones. amazon, indian companies, walmart is the best. between 80 and $200 billion. the potential is certainly there and it could be really huge. i saw this figure earlier, when you think it feels like a lot more it's still pretty low. what is sort of the growth of

numbers?re in terms of it's 2% ofthink purchases are made online in india. it's really tiny. they are concentrated in the big major cities and it's a huge company for them to expand into. to your point, again, to put that $200 billion number into context, it would be on the far end of the projection. biggest retail market retailer was at $250 billion last year in the u.s.. in india, that's the equivalent of the business it does in the u.s.. vonnie: you would think that these retailers would be already further down the line when it comes to e-commerce and what amazon has done in the u.s..

how much of a competitor is it? shannon: flip card is a dominant force there. there are reports by my colleagues in india that they are in talks that walmart would invest a billion dollars into it. to help to give them a boost. mentioned, the $5 billion that amazon has been sending there. flipkart is seen as the homegrown retailer that sort of understands the market a bit better than amazon. and it is a really challenging market. that is sort of why there is such huge potential and you haven't seen much growth, officialhere are 22 languages there. there are a lot of logistical challenges outside the major cities and people do consume things differently in india than they do in other countries.

things like bartering, people being able -- people wanted to be able to barter during the e-commerce system and doing just that. the potential is definitely there. and with amazon -- amazon, gotkart, to check that peace out. oliver: coming up at the top of the hour, kathleen hays will have an exclusive interview with the cleveland fed president. watch right here on bloomberg television or catch it on bloomberg radio. ♪

3:00 in new york, 12:00 in san francisco, and 8:00 in london. oliver: welcome to bloomberg markets.

oliver: we are live from bloomberg world headquarters in new york for the next hour. we will be covering stories in cleveland, washington, and the u.k. in a few moments, and exclusive interview on bloomberg with the president of the federal reserve bank of cleveland for a wide-ranging interview. we are one hour from the close of trading. ramy inocencio is here with the latest. ramy: it looks like we are headed back toward the session lows. we did pare some losses earlier. the s&p 500 down the most by nearly .5%. that had been lower. the real estate sector is the biggest laggard. on top of that, utilities because of warmer weather on tap as well as natural gas prices also falling.

let's take a look at consumer discretionary because retail spending is taking a hit. this is where we stand in terms of jcpenney, macy's, and kohls. all down 2%. warm weather on the horizon for the rest people are holding off on buying consumer discretionary stocks in the run-up to the presidential election. it is about five weeks away. not only retail is down, but banks are also down. wells fargo down by 1.3%. this continues to take a hit because chicago is divesting $25 million. seeing aanley also spotlight, the unit accused of forcing advisors into a high-stakes loan selling contest. oliver: thanks so much. i want to turn to an exclusive

interview on five policy on television and radio. kathleen hays is at a bank of cleveland with a president marotta muster, one of the three who dissented in the september decision to keep rates on hold. let's listen in now. >> i want to welcome to our special bloomberg radio televisionur audience. i live with cleveland bank president loretta mester. thanks for inviting us. it is exciting to be with you because you dissented at a federal reserve meeting, the first time since joining the fmo fomc. the outlook is the economy will continue to perform well. what is the urgency question mark is the economy overheating? >> it is not overheating. i thought there was a compelling case for taking another gradual step up on the path.

median half across participants is a gradual path up. made a lot of progress on both parts of the dual mandate goals in terms of labor markets. jobs addedn 188,000 per month this year on average. that is a good pace, especially after last year in previous years. doing well on the labor front. inflation still below 2%. but it has moved up over the past year. monetary policy has to be forward-looking. in my view, there was a compelling case for losing -- moving the rate up gradually. there are some who think you want to curtail expansion. not at all. the reason i think it was appropriate to move the rate up by 25 points as we want a sustainable expansion. i think moving rates up is consistent with that. >> last week, the numbers on

consumer spending more weak enough that the atlanta fed cut its to be tracker down to 2.4%. the first half, the gdp barely grew over 1%. its that make you think could be longer? there is a risk of hitting the economy with a rate hike when it is not strong at? >> at the first of the year, growth was around 1%. i think we will see a rebound in the second half around 2% to 3%, about 2% for the year. a view is we will be growing little over trend over the next two years. that will be strong enough to put some downward pressure on the unemployment rate. i expect it to go down from the current level. in my view, expectations are

reasonably well a current -- well anchored. we have seen inflation move up. i think economic conditions are such we will be going gradually back to our 2% goal. wehave to be preemptive so make sure we are moving interest rates up so we can keep the expansion sustained. >> when i think of the urgency officials,, many fed a few, several, a lot of economists have raised the issue that inflation has undershot for so long. what is the urgency? would it be a good idea to let inflation get up to 2% and let it overshoot? you say not until 2018 are we going to see 2% inflation rate. >> i think we have learned over history the fed should be looking ahead and not just waiting. i want to be consistent with our communications and summary of economic projections that say a

gradual path is appropriate. until we see wait inflation get back to the goal, there is a higher potential we will have to raise interest rates on a steeper path. in the past when people -- when the fed and other policymakers have done that, it does not turn out to be a good outcome. my preference would be to move freight up gradually. with theal path assessment today about what we think is appropriate does not mean moving rates up every meeting. is a gradual path. policy will remain accommodative even if we take another step on the gradual path. >> the fed has been telling us all meetings are live. there is the potential for a policy change. you argued for hiking rates in september. the fed chair said recently the case has strengthened for a rate hike. itthe data stays strong,

seems the economy is on a better footing for a november rate hike. is the outlook does not change, are you going to argue for a rate hike in november? >> i think all meetings are live. i would include november in that. in september, i said i thought the case was compelling to take another step. if the data come in as we anticipate consistent with my forecast over the medium run, i would expect the case would remain compelling. we are going to look at all the data that comes in between now and november and november and december as we do all the time. we like to look at all the incoming information. if the data comes in consistent with what we have been seeing, yes, i would think it would still remain a compelling case. >> you would vote for a rate hike? >> we will see when we get to the meeting. the case would be compelling i think. >> it is a few days before an election. the fed says it is not political. i have seen moves before

elections. i believe it. it would raise tension. the markets would notice. are the rules for a rate hike in november this year any different? does the hurdle for the rate hike get higher in november? >> you said it yourself. we are in a political institution. we have been all along. we are designed to have an independent monetary policy. i have been going to fomc meetings since i became research director at the philly fed. over the past 16 years, i have been in the fed 30 years. politicalre an a institution. we do our best to evaluate the economy and set policy based on the economic outlook. >> you will push and you think other members will vote for a rate hike if called for in six days before an election? >> politics does not come into it. >> president bill deadly said today the fed should because his

raising rates, especially when the key rate is so low, so close to zero. if there is recession, the fed does not have much room to fight it. he is not the only one making the argument. monetaryasing it on policy. we have made progress on employment and inflation part of our mandate. to me, bringing the rate up is a little bit is appropriate. we always have to think about the risks going forward. casenk it is a compelling of taking another step on our gradual path which the ridges offense continued -- the participants continue to see as the appropriate path. >> another fellow bank president, jim bullard of st. isis, said friday december the base case for a rate hike

this year because a lot of members want to raise the key rate by the end of the year. should markets be all but condensed -- convinced it will happen in december? >> i don't like to look at it in terms of calendar year. i like to look at it as the appropriate path. you are right. december or november is less important than the economic outlook being consistent with a gradual increase in the level of the interest rate. each meeting is live. >> you mentioned this is the summer projections. each member gives their idea based on their view of the economy where interest rates are going. to hikes in 2017, two in 2018. is that realistic? or does the fomc risk under delivering again? is not the same as

promising four but ending up with one. >> it is not a promise. >> i should not have used that word. >> we sit down and each participant decides what they think the appropriate path is given what they see in the economy and what the forecast is over the medium run. we are all committed to hitting our goals and moving the economy in that direction. we write down what we think the appropriate policy path will be. if the economy evolves differently than we expect, that path will be moving around. with different shocks to the economy, you would expect that to move around. is not a commitment to the path. that we want to be as transparent as we can with the public about where we see the economy going and what policy is associated with that forecast. >> i am so glad you have given me an hour on bloomberg radio to continue to conversation. i want to thank our bloomberg television listeners for joining us. we will be continuing the conversation with loretta

mester. hays with fed president loretta mester. let's check on u.s. markets with stocks down about .5% across-the-board. s&p down a little bit more. about 380 stocks on the s&p losing. the 10-year yields have jumped up to 1.4%. fed funds futures up a little bit. oliver: november is a live meeting and the election does not come into it. she will be a dissenter if the data comes in to come in as strong as it has. the dollar index continues to be .25% higher on the day. we have that helping the yen weakness. the two-year yield is at 79 basis points. crude oil is higher on the session. that is helping gold futures.

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vonnie: this is bloomberg markets. i am vonnie quinn. oliver: i am oliver renick. time for a look at the biggest business stories in the news right now. an experiment by the sec to wrap up trading in small companies is giving fits to electronic traders. they are among big-name brokers it allowsined that competitors to reverse engineer algorithms.

the complex code is a secret weapon for profiting from the market. google's october hardware event tomorrow could mark the arrival of two new flagship smartphones to go head-to-head with the iphone which also says apple is not the only big-name competitor google has in its sights. analysts expect the debut of google home, a bluetooth speaker to compete with amazon's echo. dow chemical and upon these a new deadline for the european commission to rule on the merger. regulators restarted the clock after seeking missing information about the deal. the e.u. says it has received unspecified data. dow/dupont is embroiled in an extended probe by the e.u. over concerns the combination may reduce competition for crop protection, feed, and some petrochemicals. and that is your bloomberg business flash update. vonnie: the pound fell after the british prime minister pledged

to start pulling the u.k. out of the european union by march. edwardstoday, anna asked the director general weather she was frustrated with the government efforts to outline the process. have a listen. understand the argument that there have to be some indications given about what the government's ambition is. the fundamentals are integral to our success. based onn economy skills from around the world. there do need to be arguments. market whenn in the you look at the tumble in the pound today in the trading session suggests maybe investors think the signals we are getting signal a harder brexit than the market was prepared for. she rejects the comparison.

do you think things look like they are developing into a hard brexit? >> it does look it is going that way. i think we should be very concerned the idea there might be trade barriers. i do think it is worth looking at some of the things the chancellor has said who went to great pains to stress the importance of the economy. i think you are right. the consequences of this brexit are so fundamentally economic in nature. i think what we need to be doing is continuing to be as clear as we can about the implications for jobs, growth, and investment and look for there to be a solution for brexit that protects that in the future. >> today we heard from the treasury. does it feel as if this is a government less friendly to

business than conservative governments before? >> i think there are some signals they are trying to listen to business. the point about productivity growth and infrastructure, these are strongly business friendly policies. there are some positive signs. what we want to see is more clarity around that goal of access the single market and skills to be confident the challenges can be managed. the signals are mixed. >> how much consultation are you aware of the treasury and others in government are doing as to what business cares about? i put some of your concerns to the treasury. i said they want some answers to this. they say we should be reassured they are listening to business and the financial services injury -- industry.

what are you hearing? our business is being consulted? >> this is a huge opportunity. businesses are being consulted. we are being consulted. more crucially, it is not transparent. business does not know what is going on. there is a huge opportunity. the government needs to say this is how we will be gathering evidence and listening to what business has to say. it does have the feel of being piecemeal. edwardsthat was anna with the director general. oliver: still ahead, europe's stock market struggled but is now the time to look at germany? we will explore that trade. this is bloomberg. ♪

oliver: this is bloomberg markets. i'm oliver renick. vonnie: i am vonnie quinn. it is time for options insight. ramy: joining me today is mark sebastian, managing partner, and he joins me from chicago. good to see you. let's look at what has been happening today. .4%,ts are down about turning round from the third quarter where we ended in a positive. your note sounds like more than a little bit of caution. why is that? >> i think we saw a little bit of windowdressing on friday as we headed into the corner. the pullback not unexpected. there was a rumor there would be some deutsche bank settlement over the weekend. that did not happen. we are finding they are not close to settling. it is looking more like there could be a real problem with deutsche bank. if there was a problem in the

united states with a major bank, i would be less concerned. theiroblem is the e.u., ability to turn a manageable problem into a huge financial nightmare cannot be underestimated. worried there could be a run at deutsche bank. markets,d roil especially if the e.u. does not step in and fix it. look at greece last year. a manageable situation that turned into a mess for a while. i don't think this turns into a huge 2008 crisis, but it could volatility increases over the next couple of months if deutsche bank start having problems. ramy: deutsche bank is down by about 2% on the day, turning around from the pop on the settlement news on friday. let's talk about options. think that is too low.

walk me through your reasoning. the stocks -- vstox does run higher than vix. 17-18 is normal. it is only a tick elevated. if you look at individual german etf,wg, the that volatility is only around 20% as well. i think that is a little too low. as i look at europe as a whole, i see volatility premium relative to the united states -- underpriced, excuse me. ramy: you're looking at ewg for your trade. >> that is the german etf trading around $26. i can buy three months out in the put foradd

about $1.20. that is less than 5% of the cost as a whole. for a three-month look at something bad happening, that is not a bad do. i think a betting man, it will make a run at 25 or lower sometime before the deutsche bank crisis fully gets settled. that hashat is a trade good risk/reward given how low volatility is. ramy: we will be watching. thank you very much. back to you. oliver: still ahead, we will talk to the representative about a new bipartisan caucus. this is bloomberg. ♪

when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said.

so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. from bloomberg world headquarters, you are watching bloomberg markets. i am scarlet fu.

matt miller.m at mark: clinton edges trump in the latest bloomberg politics survey. in a four-way race, clinton edges him 44-43. meantime, secretary clinton is seizing upon a report mr. trump had a net loss of more than $915 million in 1995. clinton says it means trial may trumpve paid -- donald may not have paid a dime in federal income taxes for nearly two decades. she spoke earlier in ohio. hillary clinton: well millions of them back in -- while millions of american families were working hard and paying their first year, it seems he was computing nothing to our nation. mark: clinton says he represents the same rigged system he claims

he is going to change and added, what kind of genius loses $1 billion in a single year? it was an unusual start for the supreme court's latest term. justices did not hear arguments today because of the jewish new year. three of the eight justices are jewish. they did issue one ruling. they rejected the obama's administration last-ditch bid to keep millions of unauthorized immigrants from being deported. intact thete left lower court order halting the program. a state of emergency declared after the failed military coup will be extended another three months. the government accused the u.s.-based muslim cleric of masterminding the failed coup. the state of emergency has allow the government to carry out a method crackdown arresting 32,000 people. afghanistan's leaders will head to brussels this week looking for billions in aid as the country confronts an

increasingly powerful taliban insurgency. officials hope to secure pledges totaling about $3 billion annually at a conference tomorrow and wednesday. 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. matt: thanks very much. let's look at where the major averages stand. we have been down across the board all day after the speech by theresa may saying she would look for a brexit by the end of march next year. that has weighed on the pound and stocks. the nasdaq down about .3%. a little less than earlier because there are some winners. to find out which ones, we go to abigail doolittle. >> it has been a choppy session to the downside for the nasdaq, the nasdaq had been down about

6% around 12:30. now down about .3%. consistently dragging on the nasdaq, tech and biotech. drags are apple. we do have a recovery in biotech. the index had been down more than 1% earlier. well off of those was. but very consistent. gilead sciences has been right behind apple and alphabet for much of the afternoon as the top drag on bearish, commentary -- cautious commentary from a few of the banks. michael is saying he believes the h.i.v. franchise could eat at risk. it has been a rough year for gilead sciences on those comments that have been ongoing, plus fears around the company's hepatitis c franchise.

the stock is down more than 20% this year and literally the worst drag on the nasdaq at this point. tesla shares are sharply higher, on pace for the best day in almost four months after the company did exceed estimates for third quarter vehicle deliveries. they delivered more than 24,000 vehicles in the third quarter, exceeding some estimates i nearly 20%. they also maintained the second half delivery view of 50,000 vehicles which is a bit of a redemption for this company. they missed the second quarter delivery estimates in june. they preannounced on that. it has been a rough time for the stock. this is important because it should help tesla raise much-needed capital by the end of the year. even so, it is a bright spot today. but there is a big short against thee of 25% company that they will not be able to reach their goals plus the high cash burn. matt: that is true.

you know sometimes having a short interest can act as a christian when your stock is -- christian -- cushion when your stock is dropping. tesla is a great example of a stock that has been choppy all year. there have been real ups and downs. >> there have been some huge up and downs. at one point, it was down 40% in february. then up more than 90%. it seems the volatility is likely to continue. when we take a look at all of ,he volatility the on this year this is roughly a two-year. we see this trading violently in a wide range. the most recent area of congestion could produce a big move up or down. the last touch was to the downside. there is a good shot we could see tesla trade back toward

highs. perhaps the third-quarter report in a few weeks will be to the upside and the bulls will have something to cheer about. matt: thank you very much. scarlet: lawmakers in september announced the creation of a caucus focused on launching technologies such as bitcoin. joining us is one of the founders of the caucus, congressman mick mulvaney, a republican from south carolina. thank you for joining us today. this is a bipartisan caucus. when it comes to crypto currencies, tell us what issues democrats and republicans are in agreement? >> the democrat from colorado and i started the caucus for one purpose. i think you could count on one hand the members of congress who understand what bitcoin is an fewer that understand the underlying technology.

we started the caucus as a way to reduce our colleagues and staff to this technology -- introduce our colleagues and staff to this technology so they have good information as we start to talk about things we can do in terms of government policies. matt: the currency of bitcoin has been fairly well separated by businesses on wall street from the technology of block chain. wall street seems to want to use the technology but they don't seem to have much use for the pseudonymity of bitcoin. is that how you think politicians feel? >> most don't know the difference between the two. we are trying to say we are not saying we are pro bitcoin or anti-. we are saying here is the technology and the possibilities are fabulous. the underlying technology is

real and potential exists far beyond application in financial services. that is what we are trying to introduce folks to. the underlying technology has a chance to revolutionize things as mundane as government services so we better find out about it now as opposed to later. scarlet: what do you hope to accomplish in the first year of the caucus? >> to have the government not screwed things up too badly, to take a hands-off approach, to educate our colleagues. it is not dangerous. it is not outrageous. it has good potential. let's treat it like we did the internet. let's take a light approach and see what it can turn into and make sure the government does not get in the way and impede the natural development of this technology. scarlet: do you think there is some regulation needed for black chain technology for crypto crisis? >> we go back-and-forth.

on bitcoin, there is a need so people know what it is. if you buy and sell it, is it a good, is it money? what is it? germany treats it like its own thing in its tax code. we do need guidance toward the crypto currency. block chain technology, less is more as we try to find these natural applications and allow the technology to be looked at by various industries as we try to figure out a way to implement this tremendous revolution. matt: in the u.s., different states look at bitcoin a little different. is it a currency, commodity? as far as block chain is concerned, everybody we talked to on wall street is in agreement it can be incredibly useful for efficiencies, for efficient movement of value. you mentioned something as

mundane as government services could be using the technology. where do you see it popping up first? where do you see the use in government? 's expense tells us anything, government will be last, which is fine. we know the british government is trying a test case to use it to send welfare benefits. what a tremendous possibility that is so we know the money the government is sending to recipients gets to that specific person and is used in the proper fashion. the applications within government services are tremendous. we don't need to go first. we just need to make sure we do not discourage other folks from looking at the technology and its full application. scarlet: what do you say to your constituents who are scared of the widespread adoption of this

kind of technology that may take over their jobs or businesses? >> disruption can be really good. the internet changed a lot of jobs but it created many more jobs than it destroyed. opinion hasn my that same type of disruptive capability the internet has. we need to make sure we get the efficiencies from that and allow that to happen. change is always going to be difficult to take. disruption is always difficult to accept. at the end of the day, we are all better off if it is properly applied. matt: thank you for explaining. fascinating subject. congressman mick mulvaney a south carolina. scarlet: what is the market risk for a trump presidency? we ask david woo. this is bloomberg. ♪

scarlet: this is bloomberg markets. i am scarlet fu. it is time for a look at the biggest business stories in the news. enscor is offering to buy back bonds in a cash offer that expires at the end of the month. there is an early deadline of october 17. last week, rio tinto offered to repurchase up to $3 billion of its bonds. after more than four years of negotiations, a tentative labor

agreement struck last week with some west -- by southwest with pilots is in jeopardy. the southwest airlines pilot association now wants sections of the accord reopened. demand pilots typically industry leading paint while negotiate contracts. southwest said it has succeeded in the goal before the delta agreement. unicredit may wait before after italy's constitutional referendum to select a buyer for its global asset management unit according to reuters. unicredit the client to credit. the referendum is slated for the 4.mer for -- december microsoft is lowering prices on some platforms. this comes with a push to bulk up the cloud infrastructure in europe. open data centers in france as it continues to try to win over customers from amazon and google.

that is your business flash update. matt: republicans wonder if donald trump can recover from the tough week he had, starting with the debate and ending with the "new york times" report on his taxes. we spoke with david woo earlier today about the market risk that could be posed by donald trump presidency. >> if you look at the biggest concerns in the market now, it is that we will end up with a victory for larry clinton and a split congress in washington. market isy the ofcing in a high probability gridlock. nothing will change, the fed will be on hold as a result, markets conclude gridlock means low interest rates. trades tend to

do well in a low-risk environment. all we know about elections in the last 20 years as w the race gets tighter. i have to believe the insurgency premium is underpriced. that is going to be the big story. if we see repricing, you will assets underperforming. >> we have seen volatility very well no matter what was going on between clinton and trump. why doesn't that contradict your thesis? >> if you look at the polls, they have been very volatile. if you look at the electronic market which tells you something about investor sentiment, clinton never went below 67%. last week before the first debate when trump was searching, the market never gave her less than 57%. i don't take the market thought it was possible this was going trump wouldt donald

represent a challenge for her. bear assetse higher underperform. if you gets elected, his immigration trade policies could shut down trade policy. we could have gdp the likes of which we have not seen in decades. >> everybody thinks the republicans will clamp down on china. the last time trade war was talked about in washington was the early 1990's when bill clinton came in. he was under pressure to do something terrible to japan because it was dumping cheap cars in the u.s. today, g.m. sells more cars in china than in the united states. the politics of trade war is very different today. can you imagine if stores are raising prices 20% overnight because of a tariff on chinese goods? i think it would be political

suicide for donald trump. i think the market is overplaying the trade war. i think the fiscal easing is a more important picture. >> where are the cars manufactured? they are incentivized to be manufactured in china. isn't the issue where they are made? >> most of them are made in china. it is also true the profits jim makes in profit -- the prophet g.m. -- the profits jim makes in china get brought home. it is difficult to see corporate america doing that. this is why trump is talking about reforming corporate tax law to prevent more companies from taking their business offshore. >> if donald trump were to get elected, it would be based on a platform we will take it to the chinese. if he wants to do that, nobody in congress will stand up to him. i don't care what the lobbyists

are doing. there is no sentiment in congress to say let stand up to china. don't you need to worry about trade wars? >> i think you need to worry about a more subtle currency war. i think if trump were to become president, you would see massive fiscal stimulus. the economy would grow faster. the fed would be based to normalize more quickly. the dollar would go up. trumpw the last thing wants to seize a stronger dollar -- wants to see is a stronger dollar. trump will believe have a direct say in the currency. under donald trump, the dollar would be stronger but the general market would be more volatile. one bestur number hedge bet. >> i think over the next six weeks, volatility will go up.

think high-risk assets will underperform. out.oor is small to get i like to be underweight emerging markets. one way to be positioned for the correction is to be shortly australian dollar. >> that was david woo. scarlet: coming up, today is the first trading day of october and the fourth quarter. what do october market moves typically look like? we will show you. this is bloomberg. ♪

scarlet: this is bloomberg markets. i am scarlet fu with matt miller. is a spooky october in store for markets?

history shows it will be rocky. for the s&p 500, october is the month with the biggest share of daily moves. 28% of the days in october see moves up or down. november is around 27%. it drops dramatically in december 2 only 21%. it is a steady buildup from the start of the year. october stands out. we don't show the standard deviation also reaches its high in october. why is october so volatile? a couple of reasons. historically, we have seen the most market crashes in september and october. that creates anxiety. almost a self-fulfilling prophecy. in election years, stocks usually fall in october. not to mention the fact the vix has been low and tepid. you could see a move up. as for the first trading day of october in the fourth quarter,

some muted moves. volume is anywhere from 14% to 30% low the 20-day average. there is less trading because you have a couple of global markets shut down. maybe we will have to wait for the second or third trading day of october to see the movement pick up. matt: we are not seeing today what we typically see in october. we are also not seeing today what we have been seeing in general in the markets over the past few weeks. you and joe love to talk about this trade, which is unusual, where bonds are up and markets are down. i have the all-world index in blue and the 10-year yield in white. yieldy, the 10-year should rise the same time as the markets rise. that means people are selling bonds and buying the market or vice versa. they buy equities and sell bonds.

we have not seen that because we have been seeing this correlation trade for so long. today for the first time, you can see since at least the middle of july, we actually see people selling the markets and buying bonds. that is normal. that is what you would expect to happen. but it has not happened for so long it is interesting on a day when we finally get back to normal, even though we are not exactly normal. scarlet: today is not a typical trading day. not a lot of volume. in the marketmiss?" close is next. we are looking at declines of .25% to .3%. this is bloomberg. ♪

scarlet: where a moment away from the closing bell. stocks and bonds falling after expansion bolstered bets the federal reserve will raise rates this year. i am scarlet fu. matt: and i matt miller. scarlet: the s&p 500 retreats after posting a three-week rally. matt: the question is, "what'd you miss?" scarlet: u.s. auto sales surprised in september coming in stronger than estimated. is there more room to grow after a record 2015? matt: the g.o.p. is wondering if a turnaround is possible for donald trump after a rough week. scarlet: our guest says canada is in a housing bubble with no chance of a soft landing. ofspeak with the author "surviving the canadian real estate crash." a muted start to the first day of