tom: the teeter buildings are next to each other, and you have gone back-and-forth between the buildings to panels on economics , investments. what have you learned? talk about inflation, conductivity, but behind closed doors, a lot of people focused on deutsche bank, and there are so many questions about the past. tom: i would agree with deutsche bank front and center, and the

last few days, the pound is front and center. thisch more coming up on special edition of "bloomberg surveillance," including the italian finance minister. we will be talking about the level of the euro, and we go to .he commission we will talk about fiscal austerity and cover politics. tom: right now, we need to go to a market check in new york. come: we are seeing stocks off the lows of the session. they have been kind of bouncing around today. the initial read was that it still gave room for the fed to raise rates once more, but we have seen stocks vacillate as people are trying to suss out what it means.

if you look at the intraday action, stocks dropping to the lows of the session. one of the groups that has been doing well today has been retailers. gap was out with comparable sales for last month last night, and the company said old navy in particular performed well with a gain of 4%, better than estimated, even though namesake and banana republic sales fell. rise 15% and ralph lauren being added to the conviction list. analysts say the company prospects for a turnaround look good. a utility that operates in florida, up 3.5% today, and , exposed tosurance insurance coverage in florida, bouncing back 16% today, after

plunging yesterday. natural gas trading at a 20-month high. you can see it is up by 4% today, and finally, a quick check on the british pound. we've been talking about the flash crash that occurred in the early hours of asian trading. the bank of england governor asked for an investigation into that. right now, the pound holding pretty steady with a decline of nearly 1.5%. tom: thanks so much. mr. hildebrand has worked with the swiss national bank and now with lackrock and is someone who can really blend together all of economy.ts of our when i look at this, what i notice more than anything is the distortion, negative interest rates, something that goes across economics, certainly

finance and the ability to make a return and even the instabilities of investment. give us an update on your assessment of the value of negative interest rates. >> monetary policy has made a heroic effort to get us where we are today. in many ways it has worked. we have better conditions in europe, much better conditions in the u.s. really is where we go going forward. the negative interest rate tool is one of the many tools that was deployed. it is important to put context on it. if you look at total excess reserves in the eurozone, it is about one trillion euros. one should not overestimate and dramatize. it is there. it is a 4 billion charge for the

entire euro zone and we should do that in context. european banks are complaining and saying it is hurting them. is it just an excuse because they need to change their business model? >> there are many things impacting you if you own a bank today. negative interest rates is one of them, but in the context of things, it is relatively small, so we should look at the whole story. >> something of been hearing ceond closed doors, certain pus of european banks want a review, they want an independent panel. >> i don't think we need that because it is pretty clear what it does. it has some negative effects and the overall tool has had some positive effects. the tool has seen a lot of the monetarye of

issues. you have negative effects and positive effects. the negative interest rate is just one piece of it. i don't see the need for review. the question is what happens going forward, and i think monetary policy has reached boundaries and needs support from other policy levers. tom: within the time we have, i think it is so important to talk about a broader public in financial repression. we talked to bill gross this .orning an update on how blackrock since his financial society,n across particularly european society. >> i do think it is particularly useful to talk about financial repression. we have heightened uncertainty, not least around politics, and excess savings and high

debt levels. what you have creates an environment where investment is not happening the way it should. tom: this is critical. you lived this. are you worried about capital flows in the coming years forabilizing europe and, that matter, the g7 system? >> the normalization process will be difficult, but it is a high-class problem. we all want to see normalization. will there be some volatility when that happens? undoubtedly, but the most important thing is how we get confidence back in a system where you have an enormous amount of political uncertainty, and adding to it every a in some cases, and where you have high debt levels. that is not a conducive environment for investing. we have to tackle these things

at the source. >> but if you feel like we are reaching the limits of monetary policy, how can you also the sure we're not sowing the seeds for the next crisis? it has been seven years. i'm not sure what has changed or where the next currencies are .oming from >> as i said, monetary policy has contributed a great deal, but going forward, we need something else. this tool has been stretched and exhausted. we need to move to the political side. we need to reduce political uncertainty, and in some cases, where you have room, you probably need long-term infrastructure spending, investment spending to make sure that the confidence can be reinstated. >> what have we learned about brexit. what have we learned from prime minister theresa may? finallyme to me, we're

getting a realistic picture that people are catching on to maybe irreconcilable issues embedded in this policy. same accessrve the you have today, particularly in financial services, and two, sovereignty on immigration. those things are irreconcilable, and i think the market is beginning to realize that they are irreconcilable, and therefore, they have to make a choice. it seems pretty clear where the government has sort of staged the grounds, and therefore, the market is reacting. tom: the day talk about the norway model or, for that matter, a swiss model? how do you first need the united five and 10 years out? >> at the end of the day, it is simply simple. it is not about copying another model. the political decision is to go for what i would call hard brexit, to retake. plenty 20 over immigration, you will have to accept that means

you no longer have full access to the european market. that is the key. tom: this has been one of full. thank you so very much. look forward to seeing you. we have much more to talk about today. francine: we have another great interview coming up with the italian finance minister. we will really be trying to drill and on italian banks. all that coming up. this is bloomberg.

welcome all of you to the offices of the international monetary fund. their acclaimed aetrium there.

what do you think? eight stories high? for their annual meeting. lots to talk about. we welcome tv and radio as well worldwide. the market is quite quiet. i'm looking at the bloomberg on my iphone, and i guess sterling is front and center. francine: we are lucky that the markets are little bit quiet. let's get to and for. insight talk about how we deal with brexit and the situation on the ground, i'm pleased to financethe italian minister. as always, thank you for giving so much of your time to bloomberg. there is a referendum coming up in december. we still don't -- need to deal with the low growth environment. what is your biggest concern? there is no single

concern. there was concern the system would slowly pick up speed -- there's expectation the system would slowly pick up speed, which it is doing. there's a referendum on which attention from markets is widespread, but let me bring it back to earth. first of all, if the referendum is passed, which i hope and am convinced will, this will accelerate the whole process in the country, which has been the marker of the rent the government. if, unfortunately, there is a no vote, the country would have lost an opportunity, and things will continue a little bit like in the past. after all, we have launched important reforms with a previous legislation system, with the previous parliamentary system and will continue to do so is needed. i do not think there is a

specific connection between monta passkey in the referendum. if he has a strong plan to be implemented, he will. >> there is concern on the market. if they cause a storm referendum is voted against because political turmoil will rain exactly at a time where where are also possibly talking about the ecb tapering qe. >> of course, in europe, every day is a day where you can have a perfect storm, but as i said, i am confident in the referendum . even if it is not the case, we will continue, the government will continue to press for the reform agenda. tom: we have a chart on "surveillance" that we do of italian growth. within any definition has been stagnant for a decade or even longer. what are you going to do to move capitalism forward within italy? so five years, 10 years from now there is a better italy.

oan: you're right to the fact. even before that, italy was struggling with important impediments to growth and investment, so we have to fight to the battles at the same time, and we are already winning some parts of those battles. we have to choose important major reforms, like job market reform, which is generating growth in employment, which is not justified simply by growth in gdp. we are changing the structure of the labor market. we have introduced major reforms in the banking system. we have passed public administration reform. tom: right. where will the will, the courage come from to address the mpl issue? mr. padoan: let me remind our viewers that with the new regime, the instruments that

were available in the past to other countries and have been used effectively are not available. in spite of that, the government in introduced major reforms the controversy to facilitate and accelerate controversy, introducing guaranteed systems, and of course, also encouraging the private sector to continue, so i am confident that as we mpl toss will come to more normal levels. francine: if something were to happen on deutsche bank, would the same rules apply back : rules apply uniformly. francine: no flexibility from the commission? >> you should ask the commission that question. new regimes are important to complete the banking union. however, we have introduced a new regime without perhaps fully

considering the transition phase, the phasing in. francine: minister, is europe over-bank, and do we need banks? ation amongst >> the short answer is yes. the banking industry all over europe has to consolidate, change the business model, incorporate new technologies. tom: what would be the catalyst for that? n: we are looking now at the instruments that would facilitate a restructuring of the business model of banks, so the two things together would among other things, make qe more effective, by the way. francine: in 20 seconds, have you met with chancellor hammond? have you talked brexit? what did he say? yes, i have.

yes, we have. you would have to ask him. tom: that was very good for 20 seconds. that was wonderful. don't get up yet. sit down. we're going to come back with other special guests on our "bloombergtion of surveillance" from washington, the meeting of the international monetary and -- monetary fund. ♪

special this is a edition of "bloomberg surveillance," and we are live at the imf meeting for 2016. we have had so many interviews. there was no bright spot in the world economy so far.

tom: it is always a different meeting. mix with the pound, the flash crash, where we are in sterling. francine: brexit friday. i am pleased to welcome the cp for the european commissioner. thank you so much. toxit, people say we need theresa may and her for awere looking difficult way in. it was a hard brexit we think she wants. european commissions and european institutions in general , it is for them to come up with and alsonotification to determine their ambition, what kind of relations they want

o build with the eu to it is clear that access the eu internal market comes with conditions. first and foremost, respect of core freedoms. respectful will they be with the u.k.? >> it is important to understand involves free movement of goods, services, and capital, and there cannot be cherry picking. we do not like free movement of labor but we like free movement of capital. : you studied engineering, so you know dynamics. i watched sterling yesterday be dynamic. it has a huge momentum to it. what does it mean not only for the united kingdom, but critically for the continent of europe?

the european commission is not really commenting on currency movements. indeed, as an outcome of this , as an outcomelt of brexit, british sterling has been weaker. tom cole other seems to be a discussion of the individual states of europe versus some form of federalism. mr. juncker talked about stop talking about the united states and europe. what is federalism in your view? >> heads of states and government of other 27 eu states have stated clearly that they see the eu as indispensable and are ready to work together and

build on our successes which the .u so far has helped achieve eu has agreed to work on security to promote investment, our capital markets, digital single markets, so it is really important to concentrate on those projects and to show that there is real european value added. our peopleow much worrying about european banks behind closed doors? how much are they talking about donald trump? >> once again, the european commission cannot comment on politics. baltics outside european unions, so that is something for the voters to decide. francine: where do you see the next crisis coming from? our markets and politicians aware of the risk? -- are

markets and politicians aware of the risk? at an economicng recovery. it is a modest recovery, so we are working on strengthening it. francine: thank you so much. the rhetoric we have talked about. it's very clear that at the same time, a lot of european countries lack commonality. tom: absolutely. at the just on a panel imf meeting. we will talk to dr. brenner appreciation of sterling. good afternoon.

back to theome you imf meeting. francine lacqua, tom keene. busy few days here. really, this is the center of activity here in washington. right now to first word news in new york. mark: thank you. south carolina governor nikki haley says the forecast for the state appears to have gotten worse. there are now hurricane warnings for the entire coast, and the latest projections for the entire hurricane center show the center of matthew very close to the coast near charleston early saturday morning. at a news conference, governor residents south carolina is looking at meijer wind, major storm surges, and flooding that could compare to the historic floods of last october. how are outages are also expected. u.s. marines have arrived on rescueo assist in efforts.

a southern command the specter -- directed response team deployed to assist with operations in the caribbean. secretary kerry says syrian forces struck another hospital overnight, killing 20 people and wounding 100 others. >> this is a targeted strategy to terrorize civilians and to kill anybody and everybody who is in the way of their military objectives. mark coleman secretary kerry says russia and syria all the world more than an explanation about why they keep hitting hospitals and killing women and children. hillary clinton leads donald trump in the latest national election poll. clinton's lead comes two weeks after an earlier poll found she wozniacki and the with trump among likely voters.

libertarian party candidate gary is a 6%. green party candidate jill stein has 3%. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. tom: thank you so much. greatly appreciate it. here in washington, another story today was the surprise over the nobel peace prize. true surprise. francine: i love being here because everyone is here. no matter what the subject is, we have the best person to speak to you, and this morning, we were alive when we heard about the nobel peace prize going to for hismbian president work on that peace deal. we now welcome the colombian

finance minister. first reaction to the peace prize. bittersweet because now everything is up in the air? >> of resident has worked so for this peace process. he has been patient. he has had perseverance. he has had many obstacles over the last five years to make sure this happens. this peace process is going to help ensure that we conclude this successfully. that we domake sure not lose momentum. francine: but how? do you have to go back to the drawing board and be a lot tougher on the gorilla's -- the guerillas? basically, the goal is to reach an agreement on what needs to be done, what needs to be adjusted to make sure that the process is not derailed. tom: the coverage we had in new

york was of secure coverage of the divide within the colombian people. is it a generational divide that led to the no vote? a regional divide? >> it is not so much a regional divide. it is more the politics of fear. the opposition was basically that thereombians was not enough justice, that this is going to cost too much, that their pensions were not safe, things that are not true. we have to go back and explain and make sure people understand that this is ultimately for the benefit of every single colombian and, of course, listen to whatever needs to be adjusted. francine: how much will it impact the economy if you do have a new peace deal? >> the economy has always been managed on a very independent

track. francine: right, but a peace deal must help. >> of course. it will bring more investment, more tourism, more jobs to columbia. this is good for the country, no matter how you look at it. on tuesday, we went to the senate and enacted a bill which was controversial about raising alcohol taxation, and that shows that we have a working majority in congress, which, by the way, that bill was very important for steps coming in the next few months. tom: i spoke a week ago, 10 days the and we talked about misconceptions people have about the prosperity of latin america . >> by the way, i saw that interview. it was a fantastic interview.

a great interview. the basic misconception about ia in the-- colomb united states is the association with drugs and the ongoing love affair between hollywood and publish the bar. pablo escobar was killed two decades ago by the colombian police. i think today people see a vibrant economy, growing well-managed economy. lots of foreign investment. the peace process will just be the cherry on the pipe. : do you worry when the fed starts normalizing, when the fed finally raises rates? fun managersts of from the united states

investing. whatever happens in the united states matters a lot. i just hope it will be managed in a way that is not disruptive, communications are done in a manner that of course there is stability. i do not think every country in the world is going to have the same type of reaction. preserving our triple b rating is our north star in terms of economic policies, but also making sure we keep inflation low, low public debt. those elements i think i the ones that will protect us when interest rates begin to increase. is your take on rating agencies? we were on a panel yesterday. >> we pay a lot of attention to what they say because we know their raging is important. we are not the type of country that says one thing is the rating and another thing is the

market. no, we are very serious about doing the things that will preserve our triple b rating because we know that is beneficial not just for investors but for homeowners. whatever they pay their mortgages depends on the rating .f colombia tom cole and minister, thank you very much. wonderful surprise on the nobel peace prize. we will continue our coverage here at the international monetary fund meeting. francine lacqua will meet with you again on monday. ♪

tom: a special edition of "bloomberg surveillance." guessed after guest. madame lagarde with us yesterday. francine: we've had quite a couple of days. tom: there is a competition phd's the putf together the blue book, the green book, and the red book, and without question, the trophy this year goes to the redbook, the people on deck. that was the front and center topic. of 152e: the imf figure trillion. ourre delighted to welcome next guest dealing with exactly those issues. mr. gaspard, thank you. we are delighted to have you here. i'm not sure what worried you the most. i know you say you are busy and you do not worry, but markets

and politicians should worry a little bit more, should they not? >> no, they should be aware of the risks, and they should realize they have the tools to manage the risks, so there is a and strong call for action, mainly to get rid of this idea that we are in a week and very fragile recovery. we need to make our way too strong, sustainable, inclusive growth. we need policy actions. do you do with policy action if you get a global list -- lift in interest rates? last week how everybody has been wrong except the imf on .igher interest rates what does that do to the calculation you have on 150

trillion debt? >> if you look at market market-basedor expectations, which is something i know you do every a, several times a day, you actually see that the revision of market expectations has been to increasesnterest rate . we have put out collaboration with our colleagues from the research department and capital markets department where we actually made exactly the point you are making. in order for us to be successful in this environment, we need a consistent approach. a need policies to have clearly assigned task so that indicators for which it is relevant, one actually knows onceis going to happen monetary policy exit --

francine: you are fiscal policy, but we've been talking about fiscal policy for years. why will we get it now? gaspar: at the fund, we have been talking about fiscal policies since the beginning. my department was funded as the years ago. isetimes people say the imf fiscal, so it is nothing new. what is new now is with monetary economies many keeping rates historically low, there is this issue that monetary, fiscal, structural, and financial must work together in a comprehensive way. yorkplease visit us in new and london. we would love to continue this discussion when you are at our studios.

you so much.nk also coming up, we will delve a little deeper into politics. we have brexit to talk about, the european commission and the relationship between states. we will also talk donald trump and what is happening in south america. this is "bloomberg surveillance ," a special edition. ♪

tom: it is gorgeous, all eyes across the bridge. what are they looking at? the stadium of the washington nationals baseball team. most of the people here at the imf probably do not know about the baseball playoffs. are you up to speed on that? was the high point of the imf meetings? francine: the fact that we worry

about brexit, that we are indebted. had an economist show up gear.ton red sox that was the highlight. francine: what is wrong with the world -- that is where we want to start. the unique perspective of the founder of eurasia -- great to have you here because you just came out of a panel. imf needs to now focus on politics. ownoliticians and their countries cannot focus on politics and keep their people happy, what is the imf going to do? >> this is their problem. at the same time all their member countries that are paying them to exist are saying they want to focus locally and have to deal with their own populism, the imf is trying to figure out how they can possibly navigate an environment where the economics are slow in large part

areuse the politics challenging the mission of the imf. francine: we have theresa may saying she will not try to safeguard the city of london at the expense of immigration. did we forget that 13 months ago, people voted for the tory party without such a hard-line? these even support ukip days? win labor and the deficit is falling apart, the biggest challenge she has politically is within her own party. takingnsequence, she is that territory, but the fact is this is going to be an ugly negotiating process, just with brussels, with the europeans. the fact that she is making it more challenging herself is really going to cause damage. daysin the last couple of

at johns hopkins university, henry kissinger is setting up a new program. toyou go from diplomacy world order and go to where we are now, do we really know our international relations? particularly, do we know what federalism is to europe? i cannot get a straight answer. >> kissinger toss world is one where states are principal actors. increasingly, the principal threats to states in the world actorsome from non-state and come from inside their run country, and that is occupying them completely. it is a very different world and the europeans are responding and fragmenting. tom: you just mentioned brussels. will brussels be part of the federalism of europe in five or 10 years? >> of course it will. they do not just legislate themselves out of existed -- out

of existence. where they have gone too far. it will be fine if countries will be becoming more like europe over time. tom: the idea they went too far. francine: but i not sure they can survive by becoming smaller. the smaller you become, the more fragile you look and the more people want to leave. >> i'm not suggesting a lot of exits. i'm suggesting power within europe is going to decentralize, not move up to brussels. because a lotions of their local municipalities represent them well. tom: i'm asking this of you, francine, as well -- who does prime minister may speak to 24 months from now? francine: i don't know. willoughby dr. shaba -- sure to indr. showed -- dr. schauble

germany? >> i only know who she is speaking for, and unfortunately, she is speaking for a divided and unhappy, populist u.k. citizenry. those issues will not help them economically. >> i remember being a young 18-year-old at university, and the first thing i learned was you never know what people vote in a referendum. it may be because they want a better car, better girlfriend, better makeup, whatever. how do we know what the u.k. people actually want? >> we know in the u.k. and in columbia and they're about to find out in italy that it's not just about the issue but about the political sides that lineup, so you will vote for or against them. in the case of the u.k., this was clearly a vote against the entire establishment. we know that. picking up that

signal. your great initiatives was to bring anderson into eurasia pass group . he was turned upside down yesterday. how do you factor in foreign exchange dynamics and what they signal into your international relations? >> right now, international markets are saying they thought brexit was ok but they thought it would get uglier. i do not think that will last very long because you do not have that time horizon. brexit is not a problem yet in the same way climate change is not a problem yet. two years is sort of millennia in the context of what we are focusing on here. francine: i am a foreign national, so i do not agree. there are a number of people like me. >> the number of people saying brexit is ok with the reality is

they have not done anything yet. tom coleman in the time we have left, we wanted to talk to you about u.s. politics. it is off your radar a little bit. >> thank god. it is so far away. month.l have a we still have what is going to be the most interesting debate this sunday because it is going to be a town hall. frankly, i think that is a better format for trump. he is physically imposing. it will be challenging for him to stand up that way. it is obvious that this is not a brexit scenario because the demographics in the u.s. are more favorable to trump and because the left in the united states is more aligned with hillary. i still feel fairly confident that hillary probably wins and wins big, but trump's likelihood oneot 2%, which is what would expect it to be in a normal election. it is, like, 20%.

francine: do we still believe the polls after brexit? >> we believe a lot of structure, which is that the average american feels differently about identity politics. young americans are more secular, more multicultural. they have a harder time identifying with the identity byitics being thrown at them trump. it is an uphill struggle, but hillary is really unpopular, and the establishment is, too. everyone talks about nixon, jfk, he especially how badly appeared on television. i thought when hillary stumbled into the van during her pneumonia case she did not admit to, that was a very powerful moment that could have really hurt her. if she had a health stumble on the debate stage, we have a

different ball game and we do know that the russians are still very interested in delegitimizing the u.s. election, showing americans are not all that. much.hank you so great to have you. congratulations on your panel today. this was one of the most interesting imf meetings. francine: and we're just getting started. tom: we are. francine: we will talk foreign exchange and talk to the greek finance minister later on. tom: thank you so much for our special edition of bloomberg surveillance." good afternoon. ♪

>> it's 3:00 p.m. in new york, 12:00 p.m. in san francisco, and it :00 p.m. in london. i'm david gura. welcome to "bloomberg markets."

we are live from bloomberg world headquarters in new york for the next hour. what we are watching -- payrolls in the u.s. jumping by 156,000 in september while wages rise less than estimated. manufacturing declines. we will break down the numbers and what it could mean for the federal reserve. meanwhile, stocks paring earlier drops off the jobs report. the dollar and bonds also flat as investors turned their attention to the start of the quarterly earnings season. as we head into the weekend, it is from versus clinton round two -- trump versus clinton round two. with an hour to go until the end of trading, julie has a report on what we've seen today. you said, things have really improved in terms of

stock market action. the initial read was that numbers were not as bad as as perhaps the headline number would have in theed in the increase rate was the result of more people coming back to the workforce. all of that evaporated midday us stocks reach their lows of the session, and now they are coming back to some extent. breakdown of the groups within the s&p 500 here, we have utilities and financials higher at the moment, but materials and industrials have been the big counterweight to that today. materialsen that /industrials intersection. movingll and pbg downward. both coming out with the limitary earnings that missed estimates, both talking about slowing growth. that has pushed down not only these individual stocks, but other companies that compete with them. we have also been watching

deutsche bank after bloomberg news reported that qatar was considering raising its stake in the company to as much as 25%, the spike you for saw at noon in the shares. they have since come back down to some extent with reuters saying it is unlikely qatar will do this, so there are conflicting reports. we have also been watching other asset classes in the wake of what we saw from the jobs report. among them, we have been looking at the dollar, which is little changed at the moment, so not necessarily reflecting the view that the jobs report left the fed room to raise rates. it little bit of a bounce for gold prices. also, one final check on the irp, which looks at the probability of future rate increases. the number you want to pay attention to is december. right now, we priced in a 66% chance of an increase at that 63%, 64% chance

yesterday, so we are seeing that fed reflected, although it is not necessarily being reflected in rates and the dollar today. david: thank you very much. slungl talk with diane about the jobs report in just a few minutes. first, let's go to bloomberg news. mark: south florida has escaped the worst of hurricane matthew and the storm is pushing north. it has been downgraded to a category three and remains offshore while following the state's atlantic coast, but it still packs wind up 120 miles an hour. hundreds of miles of coastline from florida to south carolina are at risk of a deadly storm surge. more than 800,000 homes and businesses are without power. in geneva, the international red cross is making an emergency appeal for $6.9 million needed for medical aid, shelter, water, and sanitation assistance to

50,000 people in southwestern haiti hard hit by hurricane matthew. unicef says it needs $5 million to meet the immediate needs of children in the region. russia will veto a french drafted yuan resolution calling for a cease-fire in aleppo and the grounding of all aircraft according to moscow's ambassador to the united nations. a vote on the resolution is scheduled for tomorrow. brokered collapsed last month. hillary clinton is entering the final weeks of the white house with an edge in paid campaign staff. analysis finds clinton's paid staff outnumbers donald trump's 5-1. more than 4000 people are working to elect the democratic nominee compared with nearly 900 for trump. global news 24 hours a day powered by 2600 journalists and analysts in over 120 countries. back to you.

david: thanks so much. back to the jobs report and its affect on when the fed will make its next move. the u.s. added 156,000 jobs in september. earlier today, princeton's alan krueger, blackrock rick rieder, to another guest joined us talk the numbers. >> this is a no drama report. i think that is what we would like right now. we are continuing to expand. of the progress is wage growth is the strongest it has been in seven years. >> i thought it was a strong number. markets were expecting save some of the recent growth data was pretty good for to be a bit higher, but you take out the seasonal growth data input it back to normal, we are back at 175,000, 180 thousand jobs. >> there is nothing to keep the fed from raising interest rates. some point, they have to. central banks tend to be a

little weak kneed at the moment. the doj and ecb may be running out of bonds to buy, so their policy may shift to a little less dovish and a little more price bullish. the founder and ceo of ds economics joins us from chicago. let me take through the modifiers i saw today. steady and unexciting, modestly positive. you chose solid but not spectacular. >> the best part of today's report was the composition of gains. we saw a nice comeback and strong gains in professional services. this is people with college graduates, and that helped boost wage gains a bit with more competition than we saw last month. we also saw health care hiring of strong. the biggest disappointment continues to be the manufacturing sector where the strong dollar has really held

things back. there could be a turning point in mining, which i think is a .ilver lining investment is beginning to pick up. mining losses flatlined instead of going further into the red during the month and in that sector, we know now that productivity has picked up, that they can produce effectively between $40 and $50 per barrel. they just have to get some inventory. we're starting to see employment gains and more importantly, more investment as we move into 2017. we need to have an economy that continues to grind its way toward full employment. david: on that point, we have seen the dollar we can about 3% on the year thus far. we have seen oil prices hover around $50 a barrel. to what degree will that improve the employment picture do you think? >> a think it will help a little bit. the gains in mining were really about 8000 to 10,000. then they were down. if we moved back up to 5000 or

6000, that will get this number back in the range. the economy has gotten mature enough that 170 or so will continue to allow us to pull more people into the labor force as we saw with this month's report without allowing it to collapse. i think the fact we have seen continued strong gains but not a lot of movement in the unemployment rate is sort of validating to chair yellen that there is indeed some slack in the market. it will be really hard. anything short of a collapse of employment would be needed to stop the fed from raising in december. i think november is off the table, although there are some pushing for a november rate hike. david: we have heard a number of from fed policymakers. what have they said about employment? tom keene was talking to vice about employment. any hints?

>> i think there is still a little bit of a split within the fed. there is a majority that now believes we're not necessarily areull employment, but we close enough, and as long as monetary policy is still easing when you raise rates, that this is the way to go. today's data suggest we're not really behind the curve that much and it is ok to go in december. we are splitting hairs on the timing, but i think what you are hearing is all fed speakers with the exception of one want to move gradually, and part of the reason they want to move in december as opposed to later is that they do not want to have to move more rapidly later on. they want this to be a more orderly move in rates. i think that is going to be something we will see delayed very much. if we get to eat hikes next year, i think we will be lucky. three would be spectacular because we would see an economy really warming and almost heating up instead of just moving from tepid to a little bit warm. david: are you worried about unemployment right now?

is that something that concerns you? concern me still. we have seen a stabilization in the unemployment rate and that unemployment rate. above what we were in precrisis levels and well above what we were 1999, 2000. we really have to keep that in mind, and in less you believe people left on the sidelines are completely unemployable, that is up. you give i just do not believe that. i think we still have workers that can be employed. i think there are some skills gaps, but it is an overplayed card. david: what did we learn about the american consumer? consumer iscan still solid. they are spending more on services, and the secular shift is wreaking havoc on old scale industries like trucking. we have not fully made that move. we hit a tipping point, but it will be interesting to see how employment is affected.

we have yet to see the imprint on employment, and this holiday season may be the time when we see less retail, more warehousing, and that will be interesting once it occurs. >> all right, pleasure. thank you very much. coming up, according to the polls and pundits, hillary clinton outperformed donald trump in the first presidential debate. can republicans reverse that trend in debate number two which takes place on sunday evening? a preview of that coming next. this is bloomberg. ♪

david: it is time now for the bloomberg business flash, a look at some of the biggest business stories in the news right now. we start with employees suing

american international group, claiming they were denied $100 million in bonuses. details from the 2014 suit emerged in a london court hearing today. aig says even if the claim is valid, it takes a backseat to other debts a currently owes. a trial date is scheduled for january 2013. the shakes are exploring upping their stake another 10%. deutsche bank declined to comment and representatives of the royal family did not immediately respond for comment. the federal reserve is sending a warning to goldman sachs over a debt deal it arranged over a buyout of the ultimate franchise.p representatives for goldman sachs in the fed declined to comment. and that is your business flash update.

clintonetween hillary and donald trump is sunday night and the stakes are high for trump. last night, the republican nominee held a town hall in new hampshire. trump: they were saying this is practice for sunday. has nothing to do with sunday. we are just here because we just wanted to be here. hillary, frankly -- they talk about debate prep. that's not debate prep. she's resting. i want to be with the american people. i want to be with the people from new hampshire. she wants to do debate prep. david: democrats are letting .eople pour into the country trump -- poll showing clinton leads trump.

>> polls are a snapshot of where we are at the current juncture in the debate, and let's be honest us heading into the first presidential debate, everyone inside the trump political orbit was incredibly optimistic about just how far the journey he had taken from the convention to that juncture, but then we saw the week after the debate in which he had a series of political missteps and was unable to get back the political narrative and put hillary clinton on defense. as a result, we have seen the self-inflicted wounds of donald trump impacting national and state polls. david: we have heard so much about how hillary clinton is especially gifted at the town hall. the candidate particularly good at that, and is it something donald trump can learn before sunday night? >> i have covered trump plus campaign for more than a year and are seen him interact with voters, and i think you get a tale of two trumps.

sometimes you get someone who is engaged, listening more than speaking, and other times, you get someone who is more brash. i will say i do not think hillary clinton is particularly gifted. we all remember the nbc commander-in-chief forum where she did struggle. but she will be in debate prep but really trying to prepare more according to sources i'm speaking with or this debate than the last one. david: i wonder how well that is working. i heard an interview with governor scott walker who was talking about how he had been working with mike pence ahead of the debate and was sort of telegraphing to people listening to the interview that he wanted trump to take a lesson of how the vice presidential debate went. any since that is filtering into trump's psyche? haver donald trump, stakes never been higher. this is a huge opportunity to

reset. hillary clinton does not have nearly as much riding on this particular race, but this comes at a juncture, the first debate since tax returns were released, also the first since the vice presidential debate. firing off that rhetoric that is sure to get a rise out of the left as well as president obama, but that is according to the sources that i'm speaking with. perhaps it is the type of engagement he wants heading into sunday's debate. david: this week and ahead of that town hall, the house will be out for donald trump. >> a lot of the pundits i speak to say two things -- first and foremost, this was not their top choice, to have donald trump republican nominee for president, but then they say something else -- they say if

they had a choice between hillary clinton and donald trump, they suggest donald trump would surround himself or at least be open to surrounding himself with more of the people on national security as well as economically than the hillary clinton lyrical apparatus that candidly they have seen for decades. david: just over 30 days until election day. what do these candidates do? >> donald trump is going to hit the campaign hard. hillary clinton does not have as stops, but they are focusing on a ground game. theclinton campaign feels game is over with everything. david: we will be hosting a debate special event on sunday. biggins 8:30 eastern time. coming up, we'll explore one

strategy for optimizing the stock volatility. this is bloomberg. ♪

david: this is "bloomberg markets." i'm david gura. it's time now for options inside with julie hyman. julie: the chief investment officer at recon capital joins me. we have to start with the jobs report today. it has been an unusual reaction, kind of swinging oliver the place in the stock market, the bond market, the dollar. what exactly is going on? mr. kelly: it's hard to extrapolate what happened in the jobs number because a lot of optimism was coming into the report, especially when we look at the non-manufacturing pmi number.

belowhis number came consensus expectations, people were really put on pause because we are getting really choppy data. you need a market to really continue to grow because we have seen margin expansion and cost-cutting in companies, but we have not seen topline growth, and that is the holy grail that can take this market to the next leg, higher obviously. i think there is an issue because we have seen subpar gdp growth. people are really worried. when you get a disappointing number like this when it should be optimistic, it gives them cause. that's what you are seeing it all over the place. economists'ugh the reaction in the wake of the report was not that concern, particularly because we saw the labor participation rate ticked up to some degree. mr. kelly: right, but the problem is a lot of times, people are going back looking for jobs and starting to

participate more. you have about 5 million openings but people do not have the skills. you have kind of this breakdown. we are probably at full employment right now. julie: let's talk briefly about the next thing people will be looking at, which is earnings season. warnings,warning, ppg so some early indications that all is not well, perhaps. mr. kelly: yes, and you have seen that trickled through on some of the consumer names we have seen. there have been a lot of warnings and you have seen a lot in thatements guide direction, so you want to be in a lot of names that have stable cash flows. people have gone into these defensive sectors because of the stability of cash flows. julie: let's talk about your trade today, one of those classic defenses, which is verizon. verizon has not been doing so hot as of late. there has been concern about

yahoo! as well, so what prompted you to look at this one? mr. kelly: it is a defensive name, and i think it is trying to be sexy and is a little bit misunderstood. i have a lot of artificial intelligence, they are trying to move into a lot of growth spaces, and it is a great defensive name. any are not trading at absurd multiple. people complain about valuations, but they are trading at 12.5 times earnings and i looking to grow those earnings organically and through acquisitions, so it is a great name to be in and the options market is the perfect place to position yourself and buy a stock cheaper. when we look at it, there's a great way you can go into the options market. there is a $48 january put. 105-day trade. what you do is just sell be put for about $1.18, collect those proceeds no matter what so you get to keep that. if the stock goes up, it is all yours and you can keep it.

if the stock does go down, you would own it at about $46 and $.80, which is not that especially on a name with a 4.6% dividend yield, and they have already managed their guidance down. they already came out to the , so they have already guided expectation. leave it there. thank you for joining us. david: thank you very much. still ahead, the ceo of petrobras will sit down with my colleague, bloomberg cost alix steel -- bloomberg's alix steel, in just a few minutes. this is bloomberg. ♪

♪ headquartersberg i'm scarlet fu. >> you're watching bloomberg markets. >> we go to mark crumpton for

the headlines. mark: eager to get on the air. haitis have arrived in for humanitarian efforts. they are part of a joint task force, a southern command response team that will help with disaster relief operations in the caribbean. despite a mandatory evacuation order for 3000 people that live on an island in georgia, about 100 decided to ride out the storm. as they were ordered to evacuate on thursday. most left, many of them at the last moment this morning. russia says they will veto a united nations resolution calling for a cease-fire in aleppo and the grounding of all aircraft, including moscow's. they said, it is unprecedented askthe security council to a member to limit activities. >> i cannot see how we can let

this pass. it to me, the most of midi -- the most upsetting thing is that there are other ways of doing it. mark: the secret counsel, he says -- security council, says they should support an al qaeda aleppo.roup to leave hillary clinton leads in the latest election polls. the new survey shows clinton with 45% and donald trump with 40%. and jillson is at 6% stein at 3%. ♪ mark: global news, 24 hours a day, powered by 2600 journalists in over 120 countries. this is bloomberg. close in 30s minutes. so much from the flash crash of

the pound and the job numbers this money, now a turnaround in the dow that has been down for most of the day. it is unchanged. the s&p 500 is still down. and looking at the nasdaq, abigail doolittle standing by with the action. abigail: a bumpy day after starting out with small losses, opening a little bit higher with downdraft. and it has led down ever so slightly. this is going to be a bumpy week , that has left the nasdaq down, about 3/10 of 1%. that is the first down week in four weeks. this standout laggard, stock is down 50% after the biotech company says it is discontinuing the development of geneticug for a rare disease. apparently, the data suggested that the risk and reward did not

make sense, considering that more patients are taking the drug -- patients taking the drug are dying, compared to the placebo. most analysts say the overall platform for the pharmaceutical company is ok very and a winner -- ok. and a winner, netflix. a top mover for the nasdaq. and a tailwind of speculation that the company could be taken out, but we did have a buy rating. steve miller says that the second quarter miss was a hiccup and he says the company should return to a trend upward. you could call this a call on the fourth quarter of a insidering they will report two weeks. it will be interesting to see what that quarterly report brings. right now, it seems investors believe that miller is right and

it will be an ok report. matt: netflix was good this week and one we think of as an momentum stock, along with amazon and google. is netflix the only one of those that is still negative for the year? abigail: it is. pairedh, frankly it has losses considerably, down less than 10%. year. was a yes -- rough we see that netflix was trading in a very wide range, up and down and a lot of uncertainty from investors. it extends beyond 2016, this has been something the stock has dealt with for a wild. but on its strength, stocks rising above the 208 moving average. the 200 day moving average has gone to the downside and many consider it bearish. but with those stocks above a, you wonder whether it could go a

lake higher. -- leg higher. that would require them to go above 112, 114. it will be interesting to see how netflix trades, especially after the quarterly report, october 17. matt: thank you. joe: in washington, the imf meeting has just wrapped up. our bloomberg anchor caught up with the ceo of ups. -- ubs. >> the financial markets are more stable in respect of the banking system and of course, we still need to go through the challenges we are facing on the micro fronts and a geopolitical. >> how much do they hurt you? >> they hurt us in respect to

our ability to generate, you know, revenues. ofhave a very long -- proposals and our clients are divorced -- diverse. and we're looking at in terms of margins and capital consumption. so that is a real challenge. it is overwhelming. youow many times a day do talk about how ubs is different from deutsche bank? they are in at different situation. but it is still a situation much better than people probably assume it is at this point. i think the system is very strong. at the same kind of discussion that matters 5-6 years ago. and so, the reason i am

confident that, i see how the system reacts and i get a comfort out of this. >> how do you think the doj is handling negotiations? >> i do not know. look, in those matters every situation is different. it is difficult to judge from the outside. i prefer not to comment. >> how do you quantify the market? andalk about algorithms lack of liquidity, have we learned anything in the last 24 hours? >> it is difficult to make a comment without knowing the code, but there is indication that there is lack of liquidity ,nd maybe that is not the most the most liquid time of the day

in terms of the pound and a dollar. it is true, there is less liquidity in the market and people are concerned about developments out of the u.k. exiting and consequences, so you start to see that there is a readjustment of the pound. watch thesely did you tory party conference? you have a number of staff in london. are you convinced that we are looking at a hard brexit? >> iamb am not convinced that we are. when you look at those topics ics, from aop domestic, political standpoint i cannot imagine that the financial system and industry is not important for the u.k.

it is a big contributor for the well-being of the u.k., of course. it may not be the same as we have it today, but i still believe that as long as we continue to play an important role in the future. >> do you still see it as financial capital in europe? >> most likely yes. globally, for sure. the reality is that the assumption is always that -- is going to place else in your. it may be true. but some of it could go back to the u.s., or to asia. >> deutsche bank, going back ipre, they are i be owing -- o'ing their asset management. is that something you are looking at? with an ipo there is

no room for -- >> you could change their minds. when you look at asset management -- would you look at asset management? >> it is true we are going through a redefinition of strategy and we are doing well in terms of having achieved targets. the industry is one that is becoming very competitive and it is likely to see more consolidation, so we are looking at making our business more efficient and effective. eventually, we can't rule out anything, but that is just one option. i think. was bloomberg speaking with sergio ermonni.

scarlet: coming up, the outlook of oil and politics in brazil. this is bloomberg. ♪

♪ scarlet: this is "bloomberg markets." talking it over to alix steel. is no stranger to controversy, they were involved in a scandal that begin with a money-laundering investigation in 2014, but then transitioned into an exploration of corruption. up 20% and theis company now has a new ceo. nte had served on the

board and has laid out a new strategic plan for the struggling covenant, including reducing debt and raising production. and he is taking that plan on the road to equity and bond investors right now in hopes of attracting more investment. he joins us now. good to see you. businessto model your on a certain oil price. what is oil in 2017? pedro: we are looking for a $50-50 fiven dollars, that would be the range. around $70 by the end of 2017. this is a best case scenario, based on the forecast of the statisticians around the world. alix: you are the world leader in deepwater drilling, it is quite expensive. two incentivize new drilling,

what is it now compared to years ago? pedro: below $40. alix: how? pedro: we have a lot of experience working on this. to give you an example, the productivity of our wells are bigger than what we expected. we expected around 20,000 barrels a day coming out it is at 26,000. some even as much as 40,000 barrels a day. what we see is to break even it would be below $40. alix: and it is cheaper to do business because there is less to go around. the rates are extraordinarily low, but the weaker real has helped, making the dollar equivalents come down. how much of the lower costs are sticky for you? , weo: what we are doing is

are negotiations -- negotiating with the rate of equipment. with somethis equivalent, more than others. it depends on the market. and there is equipment that is specific. for example, platforms. they are very specific, there is no room. so what we are doing is trying to reduce the cost by negotiating this and also, due to the productivity difference we have seen, there are lifting costs. alix: if you are looking at $40 break even, can that increase if the real increases from here? pedro: it is important for us in defining domestic price, but when we are looking for investments we need to make and explore what we look for, the

price, the oil price. betweenexchange rate the u.s. dollar. alix: but the weaker real has reduced the cost. here $40 here tuesday? - to stay? pedro: it is. and we are working to improve it. alix: how? pedro: we are working on a 35 initiative. in order to be good. alix: moving on to the production plan, something that has come up for you on this road trip, is that the new business plan says capital spending will fall to its lowest level in a decade. but you will also see production growth triple over the next five years. how will it work?

pedro: we have three factors that are adding into this, the -- and keep ine our target as before. is increasing, so if you can see, we have more production in one well, and we will need less wells to top the platform. less we need less wells, for the same production. well withe are doing the postponement of investment fund because -- investments, because we do not need all wells to produce. we can postpone and spend that money later. and we have some platforms that were delayed in the past, we had to lease them and replace them.

and now they are becoming red. have anticipated -- and have more productivity. these are allowing us to reduce context and key production as forecast. declines should average about 9%, so as those wells get older, the rates pickup. what kind of deepwater growth do you need to say to me that kind of production goal? some analysts say 20%. that seems extreme. ofro: it is the normal life a -- andyou have reduce it. -- and you reduce it. we are now around 9%. what we want to do is work to

reduce the rate, what way to say it, you increase the recovery rate of fossil feels -- fuels. reduce the rate of decline. what you are looking at is the have are sose we good, we are able to replace this loss of production and still increase total production. it is a matter of replacing fuels with those that are more productive and having more oil on them. alix: incredible. the other area that is front and center is fuel prices. in the previous regime, petrobras sold to international markets below that rate to control inflation and had a loss of around $40 billion. you said he would sell

internationally, so what kind of frequency of change do you expect the fuel policy to be? pedro: it is important to have a pricing policy. we will announce the pricing policy. setas you said, it will that we are going to practice a policy that we will have, i mean , this international price, which is the normal way to work. it is a competitive price according to the market, taking into account the market share. upimplies that prices can go and down, according to the market. and we will change the frequency in which we change prices muppet we are defining -- prices, but we are defining the frequency. alix: will you ever go below again? pedro: we will never go below again the international prices. alix: what kind of assurance

have you gotten that he will not be arm to control inflation in brazil? pedro: we had a very good discussion. haveof the process is to freedom to practice prices according to the company interest, that is the way that it works. that was no problem for the president to assess. and it was good for me. alix: i bring of the government because the government and petrobras has been intertwined in part of your job was to separate that. when you are in the international community, you are going to investors and trying to get equity investors interested. what is the number one reassurance you can give them that this is a different petrobras then it was? pedro: there are a number of initiatives. alix: the biggest one.

pedro: it was really to improve the company. in our institute, the members of the board, they need to have the right background. they need to have knowledge in the industry, experience, and they need to pass background checks in order to ensure that we have the right people. but not only that. many other initiatives we are taking to improve petrobras and our system. alix: the carwash scandal does not go away yet. you have a potential doj investigation and a class-action lawsuit in the u.s. you have set aside money in liabilities, but no provisions for any kind of settlement. some put the number at $3 billion. our investors worried about that? pedro: they ask us about this issue, but, there is an

important difference. is completelyhis different from the process you have seen with the same kind of discussions. other companies benefited from what happened. but your breath was the victim -- petrobras was the victim and has had a huge loss in terms of reputation. alix: do you feel like investors here will take the think that of outlook as that? pedro: we are doing our best to show them that we were the victim. , theyazilian prosecutors have a very good outlook on american authority, and we are joining the prosecutors in suits of those who made the wrongdoings in order to get our money back. alix: part of your plan is selling assets to raise money to pay off debt.

there are concerns you will not be able to meet the target sales, because you do not have enough assets to sell to get $20 billion in the next two years. what can you say about that? pedro: we have a target of $15.1 billion in two years. for 2017,r target 2018. and one that amounts to $40 billion. alix: will you look for partners? and what kind are you looking for? hedge fund, private equity? pedro: we are looking at partnerships the we have a very good experience with partners. we have more than 39 partners and we have exchanged experience to develop a new way of doing things. drill a well in

less than one month, so it was a very good results of a partnership. so partnerships are very good. we are favoring partners. and of course, price will be in important consideration, but we would favor partners that can provide more the and money. alix: thank you so much. it was a pleasure. thank you for spending time with us. the ceo of petrobras. 23 days to drill a well in brazil. scarlet: thank you. that does it for "bloomberg markets." "what'd you miss?" is next. ♪

♪ scarlet: we are moments away

from the closing bell. the dollar bonds changing after the long-awaited jobs report. ♪ [bell ringing] matt: i am matt miller. joe: i am joe weisenthal. scarlet: and i am scarlet fu. the dollar holding steady and looking at a possible rate hike for december. joe: the question is, "what'd you miss?" scarlet: a goldilocks report for the jobs report, but we are breaking down what you need to know in three charts. matt: brexit is turning ugly again. the british pound is tumbling and tensed -- against the dollar in early trading yesterday in asia, a sharp move triggering concerns. joe: and i sat down the governor of norway's central bank for his take on central bank ammunition. he