welcome to "bloomberg daybreak." i am jonathan ferro alongside david westin and alix steel. equities stable, futures go nowhere. here is what you need to know at this hour. .erger trouble syngenta says its tie up with to 2000 17s pushed as the e.u. digs further into an eli lilly missing profit estimates in the third quarter. ceo john lechleiter will be joining us. carney testifies, political pressure intensifies. he answers questions in the house of lords today. will he finished out his term? earnings trickling in this morning. proctor and gamble is up next,

earnings per share at $1.03, above estimates and reaffirming its 2017 forecast. earnings she goes, slightly higher, revenue and outlook as expected. david: let's focus on the syngenta deal. we are joined by jason miner in senior analyst with bloomberg, and tara patel. you., let's start with what is going on with syngenta and the e.u. competition authorities? jason: we are at a remarkable time. we have almost $200 billion worth of deals happening and syngenta-cam china is second down the line, dupont is first. third is bayer and monsanto.

what will be the impact on competition? we are looking at a world where the farmers feared these companies are looking for a bigger share of their wallet and the companies say they are looking to boost innovation. david: they say it will least be into the next quarter -- the first quarter of next year. i think you are looking at a difference between a big, china, versus the mindset we face when we look at a publicly traded company that is doing a deal like bayer. trying to get china to feed china over the long run sois not as significant making profit concessions is a little more risky. alix: you can take a look at the syngenta deal spread. the blue line is that per-share value and the white line is the actual stock price.

the yellow circle is where the u.s. regulators approved it and right here is where the e.u. regulators put the kebab shop at. -- cabosh on it. jonathan: how much of this is about regulators looking at things more strictly and how much is normal process for a lot of consolidation in a small period of time? mark: -- tara: i think that regulators are probably now looking at the whole package. they are looking at all the deals being done, not just something very narrow that would be chem china taking over syngenta. the news was out yesterday when the european union confirmed that what looked like they would go into a much deeper probe and

pushed any kind of approval into next year. david: in general it is perceived on the side of the e.u.tic that the authorities are tougher than the u.s. antitrust authorities. are they taking the same approach to these deals or getting tougher, in part because of populist sentiment? tara: i think they are, and especially when we look at what is happening perhaps on a more political level in germany with the bayer deal, there is a lot of public worry about that deal because of monsanto, because of some regional views in the european union among consumers about how they feel about gm owes. all of that is being wrapped up. from a market standpoint i think investors probably consider the deal wouldsyngenta probably have a tougher time in the u.s. alix: another deal that is not

working out as planned is dow chemical and dupont. >> in this game of the value creation, just to remind you of the numbers, as is a $130 billion deal that will create another $30 billion of value for the shareholder at zero premium, tax-free. it is worth a few months of delay. alix: is this a case of the you actually being tougher or is this a case of these mergers and that companies not delivering? jason: i think is a little bit of both but i think the complexity baffles both parties involved. there is so many circles in this algorithm that you run. going toines are surprise everybody a little bit as we go along, but as andrew said, it is probably worth waiting. these are huge deals with huge benefits. we have a lot of

potential deals that are waiting to come through. what is going to be the biggest hurdle if they actually deliver the right data to the e.u.? hurdle meaningst i think there is also going to be perhaps some political hurdles. bayer-monsanto, otherwise in terms of switzerland the value has already been obtained and the vast majority of approvals have been obtained for syngenta and chem china. i think the e.u. is the one to look at. david: thanks to tara patel and jason miner. now we are going to turn it over to emma. be one of the biggest asset seizures in u.s. history. federal prosecutors preparing to charge several individuals and

confiscate their property. according to familiar touch people familiar with the case, $11 billion could have been stolen from this country and the u.s. macy's homes in west palm beach and the houston sub arps. least 59 people were killed in pakistan and more than 100 others wounded. most of those killed were police trainees and the attackers were part of an islamic militant group linked with al qaeda. the british government has ended delays on one of the most controversial projects. expand heathrow airport. last year a government commission said it was the best candidate. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg.

alix: s&p futures relatively flat this morning. let's dig a little deeper. overseas it has been a wild ride for monte paschi. at one point it was down 23% and up as much as 27%, then dropping 10%. shares were halted multiple times today. it is cutting 2600 jobs. a big part of that is capital rates up to 5 billion euros. morgan stanley says there are still execution risks. in the u.s., keeping our eye on twitter. reportedly they are planning to cut 300 jobs as soon as this week potentially. this is ahead of earnings trickling out later in the week. the big story was who will buy twitter and now potentially it could be no one if disney, alphabet, and salesforce all pullback. you have got to look at apple.

the key is going to be the iphone sales. likely to report their first annual revenue drop since 2001 but if they can deliver on iphone sales that will be something for the stock. the stock coming in at its closing high for 2016. jonathan: governor carney testified to lawmakers in the united kingdom in just a few hours as the future of the bank of england remains uncertain with carney at the helm. from new york, this is bloomberg. ♪

jonathan: this is bloomberg daybreak, i am jonathan ferro. equity stable across much of

europe, the ftse up for tents, the dax up 20 points. in the united states futures go nowhere. a two-year high for german business confidence. of $1.09ar still south and a euro on a six-day losing streak. pound-dollar. governor carney will address the house of lords at 10:38 with the focus of explaining the brexit impacts on the u.k. economy. joining me is dan hanson. what is really this testifying going to be about? dan: i think carney is going to get grilled on a few things. you are definitely going to get questions on long-term implications of brexit. hard brexit is looking like a likely possibility, how that will change the outlook. sterling has moved so much since

the bank of england last foot -- put out at forecast that they want to ask carney about the outlook. it is going to spur inflation and inflation is going to go high next year. i think people want to understand how that impacts bank of england policy reaction functions. jonathan: a lot of people want to figure out how politics affects garney does carney himself. -- carney himself. his term for himself is expected to end in 2018. a full eight-year term is not something he signed up for. when will we hear about his future? dan: i wish i could give you the answer to that. he is going to give an answer by the end of the year. when you think about it really, it is important that he does on. on the u.k. -- stay the u.k. is facing so much

uncertainty that carney leaving at the end of 2018 would be a , a huge rise in uncertainty, a huge hit to confidence. i think it is important that he does stay on. something by the end of the year would be welcome, especially by markets. jonathan: central banks have come in by so much criticism but monetary activism has been halted by the government. were we see anything by chancellor hammond that will make governor carney's life easier? dan: hopefully it will make it easier for him, easier for mark carney. chancellor hammond will stand up on the 23rd of november and deliver the autumn statement in the u.k.. in all likelihood there is not going to be a massive giveaway that he will focus -- massive giveaway, but he will focus on

the heathrow expansion and --trospection or -- intra- infrastructure spending. i do not think you will see a large fiscal stimulus and that really keeps the onus on the bank of england to stabilize demand and the economy. jonathan: dan hanson joining us from bloomberg intelligence as we await mark carney's testimony in a couple of hours. the markets have had to deal with a couple of things, a rate cut and a big asset purchase for the bank of england. this is what has happened since. this is sterling denominated debt issued by vodafone in the u.k., and since it was issued in the middle of august it has dropped 10%. the sterling route has affected other asset classes, credit and gilt as well. to talk about fx list -- fx risk, ken veksler.

great to have you with us. the market has become one big fat fx trade and it has become bearish. how overextended is that trade currently? ken: honestly, very extended and probably too much so, but the beauty of fx is the ability to discount mpv almost immediately. trading at 1.22 ago and the dollar paint a fairly negative picture of what the world and the market thinks of sterling, and the broader u.k. economy. whether we are overdone or not depends on how matters politically and otherwise pan out over the course of the next three to six months. realistically if article 50 is invoked come march, it is likely that 1.22 for now is an entirely plausible level and we could go lower. it is more now a political

economy than a financial one. jonathan: it betrays structural all caps -- issues and not -- ken: there would not be a one-off catalyst. given the backdrop of the brexit scenario, we would need at least datarters worth of decent to actually stabilize and point to a turn overall in the broader economy. unfortunately, even pre-the brexit vote we saw data turn lower on a broader theme. i not entirely sure we will see anything stabilize locally too soon. david: is pound actually doing its job in terms of current account? do we have any read on that that it is addressing the problem the u.k. has? ken: for all the benefit of mpv almostiscount

immediately, the inflationary pressure will probably only flow-through after about a quarters worth of data. any sort of positive impact, even though it is fairly negligible, the market will only start to see that no earlier than january or february next year. and even then, i would not be too inclined to say it has done its job because it is the wrong type of inflation. alix: the other part of this is the dollar and the dollar index right around the highs we have seen since february. charles evans comes out yesterday and says if the economic data stays steady we could see three rate hikes in 2017. markets nowhere near that. what is the dollar upside that you see? the dollar upside is probably another couple of percent higher and the catalyst will be twofold. one will be the election and frankly it does not matter who wins, clinton or trump.

it will simply be relief that that is behind us. the market will begin gearing into an overwhelming certainty of being a december rate hike, and the risk beyond that become similar to what we saw at the tail end and beginning of last year, but the market starts overpricing as evans pointed out, further hikes next year. i think three hikes next year is a little too optimistic so we run the risk of overdoing things the way we did earlier this year. jonathan: what do you make of the over excitement around a dollar trade? any people have collective amnesia. euro-dollar, one month implied volatility has a seven month -- a seven handle. it is not like the excitement to return to markets, is it? ken: it is not, but it is all

relative in the scheme of things . if we look at what the dollar index has done july through september, it has been trading in an incredibly narrow range and that has been further narrowing so movement either side of that is cause for conversation. that is ultimately what we are seeing now. whether it is unbridled enthusiasm, i would say that yes , this move is only relative to what it has done in the preceding few months. alix: what currency is going to be most at risk if we do get the dollar grinding higher? every manave got wanting to be in trying to be short again. if you see the dollar move higher legitimately, obviously dollar-yen will be the first recipient. even if you overlap a dollar-yen chart with a dollar index since july or august, they have been moving in almost lockstep.

things in the scheme of that is probably the one that is going to move quickest and have the highest beta. veksler,at is ken acumen management direct ller -- director. president obama keeps up the pressure on donald trump, this time with humor appearing on jimmy kimmel live to talk about tweet. this is bloomberg. ♪

david: this is bloomberg. fiat chrysler has beat on revenue and their profit margins are going up because they are selling more jeeps. the have taken up their guidance for the rest of the year, so that appears to be good news. trends, the other big stories we care about on the terminal.

you find those on read go. take a look at another sort of restructuring plan that has to do with monte paschi, covering about 2600 jobs by 2019, closing about a quarter branches and selling bad debt. this tells monte paschi's story. these are italian nonperforming .oans, those blue bars the white bars or monte paschi's nonperforming loans. they want to sell 28 billion euros of these to the asked -- atlas fund. that is the nail in the coffin for monte paschi. david: they have got to raise more capital and they are hoping to go to their existing shareholders but there is some dilution. jonathan: the real need for in italytion, anyone

who goes down a street, it goes bank, bank, bank. they need to consolidate. they are going to close 500 and a lot more need to be closed. david: it goes beyond monte paschi. it is a broader issue throughout the italian banking system. president obama was on jimmy kimmel live commenting on the u.s. election, reading mean tweets including one from donald trump. obamaent obama: president will go down as perhaps the worst president in the history of the united states! realdonaldtrump. at least i will go down as a president. david: this is humor and it is good for jimmy kimmel. the thing that strikes me is how personally president obama has gotten as well as his wife. it is important to him that they

really have a legacy. alix: didn't we hear this a lot from hillary clinton saying, you heard -- kurt president obama hurt president obama when you question his birth certificate. how does a republican governor succeed in a traditionally blue state? we will speak to governor charlie baker of massachusetts. later, eli lilly's ceo will be joining us. we will discuss. this is bloomberg. ♪ ♪

alix: this is bloomberg daybreak, i am alix steel. 7:30 a.m. on wall street, and here is what you need to know.

syngentahem was pushed to 2017. earnings of bonanza -- earnings bonanza, s&p companies are reporting this week including eli lilly, dissing estimates. the ceo will be joining us later on this hour. testifying, he answers questions in the house of lords starting at 10:35 eastern. will he finish out his term? jonathan: let's get to the markets. future stable, of 25 points. 4/10, the dax up a third. german business confidence a two-year high. the fx market, euro pretty much flat around $1.09, yields up two basis points. breaking news, earnings

are trickling out this morning. gm earnings, when dollars $.72 a share. revenue came in stronger than estimated at almost $43 billion. operating cash flow nearing $6 billion. it did report a loss in south america as well as europe, but nonetheless it is a beat. sprint coming out as well, purporting a loss of four cents a share. that is also better than estimated. net operating revenue at about eight and a quarter billion dollars. they sort of preannounced on october 18 and that coming in line with estimates, up 3% in the premarket. syngenta is facing regulatory concerns from the e.u.. merger with's

dupont, the ceo spoke about the deal with john mickelthwait. >> what we are doing as two companies i think is quite herculean. we are managing its company separate and managing for the combined future that once approved, will move quickly through to the next phase, 18 months, to split into three. if you do not think complexity going 21, going to three, from a cultural point of view and entity creation point whyiew, my friends at ian know what i'm -- e&y know what i'm talking about, the regulators are trying to understand the piece that is their greatest concern which is agriculture. all of you understand that one of the strongest lobbies in the

world is the farm lobby, and in europe, the agricultural sector is very, very critical to them, somewhat protected. >> does that mean you will have to do divestitures? >> we are into the remedy negotiation. i have ducked to answer your question. in this game of the value creation, just to remind you of the numbers, this is a $130 billion deal that will create another $30 billion of value for the shareholder at zero premium, tax-free. it is worth a few months of delay. really what we are doing with our investors is walking them through the clarity of each of the steps. we are going to get noise at of these jurisdictions, the e.u. in particular, that i would not listen to the noise. >> it sounds like you are settling for february. >> he is pushy.

early next year. alix: that was the ceo of dow chemical on his merger with dupont. earnings trickling out. we are getting lower forecasts for this year, caterpillar front and center, lowering its forecast. back out some restructuring it is going to make $3.25 a share, and sees 2017 sales and revenue will not be that different than 2016. they say the balance of risk for next year is likely on the negative side. he have been waiting for negative earnings revisions for 2017 and we are starting to get it. the back half, construction equipment will be lower than they had seen previously. story, cutting their top end of the year earnings forecasts even though they did beat on the top line as well as the bottom line.

they are cutting their top end of their full-year earnings. we are getting those revisions now. david: we're going to talk about massachusetts. it may be a blue state that has elected some moderate republican governors, most recently charlie baker. joining us now is governor charlie baker of massachusetts. good to have you here. i want to talk about tech and health care, but we have to talk just a moment about politics. gov. baker: for at least another two weeks. david: you distance yourself from donald trump. what is going to happen? gov. baker: our legislature was still in session and we have a lot of work before the convention, and the lieutenant governor and i stayed home to qualify -- concentrate on our day jobs. i made a decision in march i was not going to vote for donald

trump but i also said i will not vote for hillary clinton. she has believability issues and trump has temperament issues. i have voted in every presidential election since 1980 and i'm disappointed by it, but i could not bring myself to pull the lever for either one. david: as a successful politician and businessman, do you have any predictions? gov. baker: the voters get to make the call and having run only polltwice, the that really matters is the one on election day and things have a tendency to move. i think it will be interesting to see if the move toward early voting in a lot of places has some impact on how that plays out. i am not going to vote until election day because frankly i want a full view of all of the there are a lot of down ballot candidates in massachusetts that are important

, and we also have some ballot questions around legalizing recreational marijuana and charter schools. david: bill well. gov. baker: good man, i voted for him in the 1990's. he is a terrific guy. as one of those governors who has been battling the opioid epidemic i have a little trouble with the libertarian position .hat all drugs should be legal i have seen the consequences in terms of the impact of the epidemic, a lot of which has to do with prescription drug addiction. david: are we going to see a civil war in the republican party after the election? gov. baker: i do not think so. there are a lot of points of view inside the republican and democrat parties. they had a very interesting primary the screen senator sanders and secretary clinton. i think campaigns and elections

are very hot, they are contests. i think most people can get around to the process of governing. david: massachusetts has a reputation in the technology area. going back to route 128. now you have general election which you might not think of as a tech company but it is turning into the internet of things. what can you do to maintain massachusetts' position in innovation? gov. baker: ge's decision we think was a great statement, to move into boston. it was a statement about our ecosystem, our colleges and universities, our startup environment, and our airport. toy nonstop flights international destinations and it is five minutes from downtown . it was also a statement about collaborative politics.

from ge make clear to us when they made this decision that there were a lot of reasons they did it, but one was because it was clear that democrat mayor from boston and republican governor were pretty much hand in hand with supporting their participation in our economy. i would also say that we have developed over the course of the past 20 to 30 years, a terrific collection of research and development and innovation centers. mass challenge, probably one of generators,cessful was started in massachusetts and brown institute and the m.i.t. collaborative, everything that pours out of m.i.t., it is a rich environment. david: let's talk jobs. with the move to digital it is eliminating huge amounts of jobs. tech would be good for investors

and innovators but maybe not so good for people who need jobs. gov. baker: we have a 3.6% unemployment rate in massachusetts, the highest number of people working we have ever had. people are finding opportunities . i do think it is important that we focus on what i call skills. we put a lot of effort and resources into skill building. my view on this is your best path to success, whatever the state of technology is, is to have skills you can market and sell and get paid for. from my point of view, whether those are vocational or technical skills, or skills involved in informatics and data , or skills tied to a particular vertical, you need skills. a big part of our effort in education and workforce development and in public-private partnerships between colleges and businesses,

it is about skill building. david: let's talk about health care because massachusetts has been a pioneer. yesterday we learned there are real problems with obamacare premiums. can we afford it? hope after the election there will be an opportunity for governors to have an honest conversation with whoever the next administration and congress are, about some of the things that need to be done to make adjustments. my view is that there has been so much tension in washington around this issue, even some of democratsal reforms and republicans have been proposing were not able to get anywhere. david: are for amending the affordable care act? gov. baker: i think there will be changes. the arrival of the affordable disruptioneated more

in massachusetts than i think it did in a lot of other places. there are a lot of things we said to the feds, we would like to do this, and the feds have been collaborative and corporate of to the extent that they can be but part of their message is, we are limited to what we can do. having aat ends up conversation in terms of the practical and pragmatic, what is the best for the people. david: you know a lot about it from your private sector health care space. that is governor charlie baker of massachusetts. jonathan: coming up on this program, shares of eli lilly are lower after reporting earnings, a downside surprise against wall street estimates. the upside potential according to the analysts could be over 26%. the conversation went the ceo is next, john lechleiter joins us. ♪

emma: mrs. bloomberg daybreak. i am emma chandra. goldman sachs head of commodities research jeff currie coming up. jonathan: from new york, this is bloomberg daybreak. lilly,rsation about eli shares down almost 1% after they missed estimates. a disappointing sale from its blockbuster insulin drug. we are joined by john lechleiter, the president and

ceo. let's begin with the marginal downside surprise, what you delivered versus the expectations. are you disappointed even the market is on the margin? john: we are not disappointed. $.88 a share, we have kept our epi guidance for the year. we marginally increased our revenue guidance for the year. we stopped guiding for the quarter years ago and we do not manage our business to meet a consensus estimate. we are pleased with our performance that includes 7% growth, in volume growth, is to bet attributable to our new product launches -- most of that attributable to our new product launches. our pipeline keeps flowing. weekd a drug approved last for some forms of soft tissue

sarcoma, our seventh new drug approval since 2014. we think we could have as many to20 in the period from 2014 2020. jonathan: analysts are bullish on the stock and you do have to manage expectations. what you can see on the chart is where the stock price is an on the top line is the median analyst forecast, talking about 26.5% upside potential. with is the communication wall street right now? are you trying to rein back in expectations word you think you can deliver what the analysts are expecting? john: we have had over the last eight years or so a tough period where we lost patents due to expirations. i think we have kept a steady hand throughout. we have never overpromised and i

hope we have not under delivered. clearly that gap you talk about represents expectations. i believe the investment community has for products like products.ly launched we have a drug for rheumatoid arthritis under fda's review and we have a big weed out later this year for our -- read out for our big alzheimer's drug. i think investors are looking out and seeing not one potential positive that many potential opportunities down the road. our job is to help meet those expectations by guiding those drugs through the regulatory process and on to success for launches. jonathan: this is the blockbuster diabetes treatment, you have been taking market share over the last couple of quarters. is this sustainable given the competition? john: we are very pleased with

the performance. while the drug was still in development we communicated isarly that our expectation that it would fuel the growth of the class, and we are certainly seeing that. we are getting more than our fair share of that today. jonathan: you stepped down at the turn of the year. this is the final earnings report you will talk about. the animal health unit has gone through various acquisitions, i believe 10 since 2007. as you hand this company off, do you expect to say that unit spun off from the company? john: i do not have that expectation because i have been very clear, we like having that animal health business. not so long ago it was about 5% to 6% of our revenue but now it is about 15%. i think that is a meaningful form of diversification that

comes with a business that we know a lot about. there are synergies and parallels between human and animal health. it is a cash pay market. we are not subject to the kind of government payment regulations you see in human health care. we like that business and intend to stick with it. race, one isthe wall street and the other is health care. what is your advice to get prices under control? john: i think our ability to innovate and come up with new medicines is a priceless treasure that where this country leads the world. never before in history have we had so many opportunities to exploit the science and scientific knowledge that is accumulating to make a difference for patients. we have a big investment in

alzheimer's. today there is no drug available for treatment that modifies the disease. we look at the things we're ultimately most concerned about. i am proud to be part of an industry, retiring from a company in an industry that does this remarkable work. first and foremost we want to make sure that policymakers in washington understand what that innovation ecosystem has to look like, the importance of rewarding the risks taken to come up with these new innovative drugs and put policies in place that enable that rather than cripple that. jonathan: john, thank you so much, and congratulations for your tenure. i hope you find more time to play golf. john lechleiter, eli lilly's ceo and president. apple due to report earnings after three quarters of decline. will iphone sales make a comeback? from new york, this is

bloomberg. ♪

alix: this is bloomberg daybreak, i am alix steel. apple reports earnings after the closing bell. this is apple shipments and revenue for the last five quarters. we take a look at the last quarter that it reported, you ,phone shipment sales down 15% the blue bar, and revenue down 10%, the white bar. be 45 million to but that would be the third straight quarter of decline. is that the trough, will it get better? side,ms of the revenue what has made it so hard for apple to deliver on revenue growth is its average selling price, key for the earnings report after the bell. those have been coming down about $595 per phone. part of that was their launch

into those made phone ranges. for this quarter that they will be reporting, the average price estimate is $625 and some analysts say that is too conservative. do we see a move higher in terms of that data point? doolittlefrom abigail , she takes a look at revenue versus the share price. the orange line is the trend line for revenue and she is making the case that perhaps apple's revenue is in a longer-term support line. you could see a meaningful bounce higher, and will that propel the share price even more? , the is at a 2016 high highest level since december last year. jonathan: there seems to be a core listen between the pessimism around apple and the pessimism around china. are a little less

concerned about china. david: china has its own rival to the iphone, and it is cheaper and it is widely disseminated. i will be heading across town to interview samantha powers, our ambassador to the united nations. jonathan: we are about one hour, 34 minutes away from the market open. positive two points on the s&p 500. a decent bid for european equities and a surprise to the upside on german confidence. after several days of euro weakness, we trade south of $1.09. ♪

jonathan: good morning, and

welcome to bloomberg daybreak on this tuesday, october 25. i am jonathan ferro alongside alix steel. futures just up about nine points on the dow. .he fx market story as follows business confidence a two-year high but a euro weaker for sixth straight days. alix: more than one third of s&p 500 companies reporting earnings this week, including general motors. they posted a record third-quarter net income. the world's most valuable company, apple, reporting earnings today. carney testifies, political pressure intensifies. the bank of england governor answers questions in the house of lords today. will he finished out his term?

jonathan: breaking earnings coming from freeport. at $3.88 billion, beating the estimate and a bloomberg survey. a downside surprise. on etf's, adjusted earnings per share coming in at $.13, the estimate $.18. costs, the pound, $1.20. this is a company that is struggling over the last couple of years, oil, copper. for $1.06estimate was so clearly there is a little more cash pressure that we are seeing, and that could also pose new hurdles for the oil and commodity guys. jonathan: carney and focus, the rangeremains in a tight

as they wait for him to testify in front of the house of lords. brexit and the impact on the u.k. economy. is dan us with more hanson. i am sure governor carney would abouts -- love this to be economics, but he has to talk about politics as well. how difficult will his appearance in front of the house of lords be? what you have now is the discussions of theresa may and thegovernment, and possibility of a hard brexit is e. they arehe for going to be really interested in carney's term. we thought originally he would be in the job for five years. is a lot of speculation that he will not stay on the full eight-year term and i think

lawmakers would be interested to hear more, because that will impact the level of confidence in the u.k., the level of uncertainty. in,fact that he will stay you have the bank of england being steered through very choppy waters at the moment. jonathan: the choppy waters is what happens with the pound. we had a scare a few weeks ago in the flash crash. the bank of england set their stance to focus on spain or capacity that they think will result in a brexit fallout. do you think they have been shaken by what has happened with sterling or do they welcome it? it: i think on the face of sterling has fallen by more, inflation is going to go higher and faster so probably above 3% in 2017. the key thing for the bank is that inflation expectations remain anchored. i still think they will have an

easing bias and will be focused on spare capacity in growth, but they will be worried about the inflation edging up. we think the bank will stay on hold in november and will not go for a third cut. they are likely to keep the powder dry and potentially cut further in the first quarter next year as the data rate deteriorates. jonathan: dan hanson, bloomberg economist.e we have had so much pressure in the u.k. from some well-known politicians putting the pressure on governor carney and the bank of england. alix: it raises the question of central bank independence, and for that, michael mckee joins us . it is not just in the u.k., we hear from trump coming down on janet yellen. michael: it has risen along with the populism that has taken hold

because the central banks have been the only people making any kind of policy. mark carney went out on a limb and said things would be terrible after brexit, so the people in the leave camp have been shooting back saying, you were wrong so far and perhaps you should not stay long. theresa may raised questions when she went to the party conference and said that monetary policy may not be helping anymore. people started asking the question, where does carney go from here? jonathan: the question i would be asking is, isn't it ironic that these politicians who were so reluctant to do anything on the fiscal side, fueled monetary activism, or the same politicians that now complain about it. there is an easy way to get out of this. the autumn statement, do something on the fiscal side and i will pull back. michael: which is what all the

central bankers have been saying , urging the fiscal authorities to do something. they are not just being shot at by the right and the people who want the central bank to raise .ates, the left is also upset elizabeth warren has not been happy with the fed so they are in the middle of a tug-of-war over which way the country goes, and there is almost nothing they can do to satisfy everyone. alix: we see that within the fed itself. yesterday we heard from charles evans and he sounded a little more constructive and hawkish than he sounded in the past. charles: i think the most important part of our communications is really around not, when is the next increase, but what is the terms of the subsequent increases going to be? i personally think we would be well served by being a little more explicit. alix: if the data holds we could

see three rate hikes in 2017. the market is nowhere near it. threel: he is saying between now and 2017 so he is probably talking about december. we go through this every meeting . how do we know what the fed is going to do? we think they might do this or that but they do not do anything. have as saying we should more explicit explanation of what will lead us to raise rates so the market and public in price that in. that has been a communications challenge for quite some time. jonathan: let's talk about markets pricing it in, a marginally stronger dollar and a weaker euro at one dollar eight cents. it is almost as if we have collective amnesia. the fed is going to go its own

way, the dollar will strengthen and everyone will watch it happen, the fed will not just sit there and watch it happen, will it? michael: it depends how high it goes and how fast. they are not seeing any reason, because the dollar has moved up, but nothing like in 2014. right now we are only talking about very small moves and as long as that is the case, they can move in very small increments. they are talking about what amounts to be about a 16 point move when you figure out where the fed funds rate will change -- trade, and they can get away with that. it does not look like carney will be lowering rates anytime again soon. the ecb is on hold and the bank of japan, we do not know what they will do. jonathan: michael mckee. you the headlines outside the business world with emma chandra. emma: this may be one of the

biggest asset seizures in u.s. history. they are preparing to charge several individuals and confiscate property. $11 billion may have been stolen from a venezuelan company and among the assets, 20 homes in west palm beach and houston suburbs. premiums for obamacare will see their biggest jump yet next year . the cost of the benchmark civil level -- silver level lands will be up more than 25%. several big insurers have pulled out some of the markets. the british government has ended years of delays over one of the most contentious issues and politics. it has approved a $20 billion expansion of heathrow airport, allowing it to handle 135 million passengers. last year a government

commission said heathrow and not its rival was the best candidate for growth. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. chandra. this is bloomberg. alix: u.s. equity futures clawing on to gains but on the downside you have caterpillar off 2%. they are cutting their 2016 revenue forecast amid the demand slump. it does not want to seem to move. it is a similar story when you take a look at 3m, cutting its top and of its 2016 profit forecast. its consumer electronics market is what they blame, having persistent weakness and they see local organic currency sales flat. the earnings bonanza continues. , a totallyamble different story on a six-day losing streak. about oneome in

dollar three cents and it did reaffirm its 2017 forecasts. jonathan: i can tell you that stock is up about 2.60%. coming up, rebalancing the oil market. can the agreement to cut production succeed in stabilizing global crude prices? jeff currie ways and next. ♪

jonathan: from new york city, this is bloomberg daybreak. i am jonathan ferro. future stable, up 18%. the story in europe, decent german business confidence, a two-year high. .he euro still struggling

it is a dollar strength story with euro down for a sixth straight day. $50.66 as the opec general heads to baghdad to speak to the iraqis and settle output disputes. hughes reported a loss of $429 million in the third quarter but they have seen activity modestly increasing in a tough environment. david wethe joins us. our things bottoming out, has opec written out the story or are we getting too excited? david: it is tough to say overall but we are seeing bottom in some parts of the world. all the service company seem to be talking about it. in north america we are seeing a bottom. baker hughes is saying for north america to look for a slight activity increase. jonathan: how does the costs

were you involved with these players? david: it is going to continue to involve -- evolve slower rather than faster. by can use technology better drilling less wells and get the same amount of oil? that is going to be a factor. the explorers want that to come faster. service companies do the best they can. alix: that means they have to increase prices at some point, right? if you look at drilling prices they are down as much as 50%. when will they raise their costs? david: unfortunately you do not have the utilization of the service equipment at a high enough percentage to where they have control over pricing so there is a glut of fracking equipment and drilling rigs. service companies are saying, we will give up market share, we

will not bring in new equipment until you bring in higher prices. alix: they want that money. good to see you, david wethe. with us is jeff currie. drilling cost to me, has it been front and center for the shale downside. jeff: i think you have to separate the u.s. between the permian basin and the others. the costs are still relatively high so the increase in activity is primarily in the permian. when we think about it relative to the rest of the world, it still remains competitive which is why we see the increase in activity. the ability to raise cost, raise price from the oil service sector is going to be limited. we have seen too much investment over the last decade that is

going to put pressure across the oil sector as well as cost structure of the industry. basin,his is the midland where the hot spot is for crude, and this is the rig count. we are at record highs. jonathan: i remember a couple of years ago when this first ask,ed and we would always when are the bankruptcies coming and when is the oil supply going to roll over? the bankruptcies came but the oil supply did not go over. they file and carry on pumping. jeff: we actually saw it in coal as well. is thatthe key reasons the shutdown costs are substantial and the creditors still want to get some type of residual value out of these companies. only think about getting to the point where they actually shut production, you have got to get into a solvency issue but even then, someone is likely to step

in and buy the assets and you will continue to see production. you have bigger issues in what is going on in the commodity space with coal. coal prices are up. copperust today we see on a monster rally, zinc at a five-year high. iron ore moved to hide had to stop trading it. what is the distinction between oil versus metals? jeff: what we are witnessing in metals and mining is the result of a successful cartel action, or a successful production cut. china has 50% of the worlds coal production and they mandated a reduction in supply. we are starting to see that filter through the metals mining sector. if you look at what happened to the minors in china, the coal industry was losing $15 billion a quarter, has now swung to a

$15 billion credit. that puts the blood back into the system. poors and mining was the stepchild of the entire sector in terms of a potential default. by putting the blood back into the system you have actually got the industry back to moving .gain i think it is critical because it not only increases the value of these companies within that sector, it also raises the costs of producing other metals. alix: you get the rally and more production. producers are hedging. you get the rally, producers are in the market, they are selling it forward. jonathan: the swing producer in crude is obviously shall. look at what is happening and coal. rio,u were a player like how predictable our price is going to be when you know that it is kind of out of your hands,

you are literally at the mercy of a decision made in china? jeff: i think when we look at the long run problems facing, let's call it the old economy, whether it is oil, coal, metals, or mining, it is overcapacity. if you look at the strategy and policies that china has , this coal reduction in capacity is by far the most significant and stable. how do you deal with this overcapacity problem? stimulating through credit does not solve it so cutting is a successful way. the problem is you have to keep cutting until demand eats through and that could be years off, which opens the market up to substantial downside risks. jonathan: next up we talk about the politics of opec. will we get the agreement of the agreement? $50.50.ing at

from new york, this is bloomberg. ♪

alix: this is bloomberg daybreak . i am alix steel. the opec secretary-general trying to get a deal done despite the fact that iraq says it should be exempt from any production cuts. jeff currie is still with us. we talked a week ago, where are we now versus then? the probability of lowering is less than last week. iraq said there production is higher, and they want to be exempt because they are fighting a war. that brings the number of exempt countries, $11 billion --

barrels 11 billion barrels per day. it puts the burden on the remaining players to be far larger than what it was a week ago, which continues to put pressure on the potential deal to unravel. jonathan: around opec we always talk about economics. really it is the politics. what happened in doha and what happened in algiers? it feels like two completely separate countries getting together and coming to an agreement. why should we believe the individuals who got together in algiers can do something when the very same people got together in delhi and could not? jeff: i think the big difference between april and late october is the financial conditions within these countries. ityou look at saudi arabia,

indicates a much more dire situation than april. that is what i would argue is motivating the rhetoric with trying to come up with a deal. thinking about the economics today versus april, nothing has changed. the strategy of pursuing market shares still would be the dominant strategy rather than try to run a cartel, because it does not change the fact that the shale producer in the u.s. will respond to higher prices. you are seeing it in the drilling activity in the permian basin so why would argue that economic motivations have not changed. alix: something that has changed is russia, at first coming out and saying they are into a freeze and then coming out and saying, they can increase production over the next 10 years. this is their production now, that orangey pink line. can russia kill this deal? jeff: in terms of the incentives

for them to agree to a deal, if you follow the production most of it will happen between january and february next year. if you look at the investment pattern and whether production comes on, it does not stepped coming on again -- start coming on again until the beginning of next year. january, february would make sense but i do not think it means anything in terms of the long run potential increases. goldman sachsrie, global head of commodities research. managesto a cio who ultra high net worth clients for ubs, what his expectations and strategies are. ♪

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alix: this is "bloomberg daybreak," i'm alix steel. here's what you need to know this hour. more than one third of s&p 500 companies reporting earnings

this week, including general motors. they beat profit estimates, posting a record third-quarter net income. the world's most valuable company, apple reporting earnings after the bell today. analysts forcing -- forecasting a boost helping to slow the pace of a sales slump. and political pressure intensifies. the bank of england governor answers questions in the house of lords today at 10:35 a.m. eastern. will the finish out his term? that's what you need to know. jonathan: this is how the market is capturing some of those stories. equities of .4 on the ftse. the banking index has come off the back of five c -- five straight days of gains. if you switch of the board, out of germany, german business confidence at a two-week high. the on the euro, .1% on dollar. that scene continues on the margin.

yields high at about a basis point, $1.70 cents is how we trade. get to the stock mover and gets alix steel. ,lix: talk about monte paschi we had a rally is much as 23%, that fell by 27% and then rallied a little. now it's off by about 10%. it was a wild ride, shares were halted multiple times today. the ceo unveiling the strategy, going to cut jobs and shutdown banks. bywants to raise capital about 5 billion euros, which is going to be diluted. morgan stanley says a lot of execution risks remain, including how they sell those nonperforming loans. marks foruestion monte paschi. out of miller's front and center, off by a most 2%, cutting the 2016 revenue .orecast they cannot recover from the demand slump. companies are different

purchases, despite the fact commodity prices as stabilized. we are paying attention to apple and to twitter. reportedly, the company is planning hundreds more job cuts as soon as this week. could be roughly 300 people. earnings trickling out later on in the week. everyone seems to drop by the wayside, salesforce, apple, google as well. these of the stocks we are watching into the open. on equities, friday we get q3 u.s. gdp numbers. it could be a telling sign of when the fed will move on interest rates. i'm very pleased to welcome simon smiles, he joins us from zürich. in your most remote -- recent notes, you expect s&p ps to rise your on your for the first time since q2 2015. can you walk into the basis decks and how important they are? mr. smiles: very important.

there was a recovery in earnings and returned earnings growth. underlying that was improvement in tech earnings and also the fighting of the pressures caused by much lower oil prices and much drug or u.s. dollar -- much stronger u.s. dollar. consensus in this quarter was , we've already had tony 5% and did more than 25% in the s&p 500. earnings are 5% to 6% up. that's ahead of our relatively optimistic forecast. there's not a valuation driven case, it's a case that i would think that was underestimating growth. we are happy we are seeing that coming through. jonathan: it's coming through in the short-term. let's take this further out. the base effect is favorable, but is the revenue environments going to be favorable for these guys to actually find real

growth, not just fueled by base effects? mr. smiles: i think we do have to keep in mind how incredible the headwinds were from oil and the dollar. i wouldn't undermine the base effects. as a move into next year, continued improvements in the u.s. economy and growth we think will actually drive earnings growth in 2017 in the order of 6% to 7%. alix: earnings growth has a stronger dollar as well. if you have better growth, and maybe a fed rate hike, does that make a stronger dollar? mr. smiles: yes and no. in the short-term, i would theinue just rife in dollar, but with the likely rate rise in december, we think there's going to be dovish language with respect to the right path into 2017. we are estimating to hikes -- two hikes, very modest.

the very dovish outlook for rate policy in 2017 we think will actually lead to some weakness in the u.s. dollar as we are into next year. jonathan: away from the will they won't they rate hike debate, in the position you have, it offers a unique perspective on conversations or wouldn't simply get exposure to. highit down with ultra clients. i'm wondering the trend in allocations opposite to the markets right now, what are they from your clients? in terms of the client conversations am having, there's a debate around the implications of the u.s. election, but with recent polling, that concern is starting to dissipate. lyrically, there's more concern with respect to europe, and concerns over how many political events are coming up, let alone the hard brexit, etc. move is with respect to

private allocations, particularly private equity. office report,ly which would put out around two months ago showed a dramatic increase, a 2% increase in the allocations that they are making to private markets. that is consistent with the conversation i'm having. that this point in the cycle, seven or eight years in, with equity markets globally hardly offering compelling value, many of the clients are looking for these markets is a key opportunity. jonathan: i'm wondering how your the brexiterpret referendum. i had a very different rough -- conversation than i would have with friends. are your clients fully aware of the political movement that's happening outside of their world? mr. smiles: i think with respect to british clients, they are

very aware. it was a shock with respect to the outcome for the vote. that being said, from a pure acid perspective, -- asset perspective, we have done well. when one looks at the foreign assets they owned and translate these back into pounds, we've seen significant appreciation. the ftse 100 a closed all-time highs and real estate crisis action maintaining. from an asset perspective an investment perspective, u.k. clients have done ironically reasonably well. however, they are very aware of the political ramifications. there is a lot of concern broadly about what brexit and the style of brexit which we seem to be going along the path to means for the future places of britain. that being said, and non-british clients outside of britain are a lot less concerned in terms of conversations am having. alix: how concerned are your clients about rising inflation? mr. smiles: i think a modest increase in inflation is expected. in terms of the clients, we are private entrepreneurs as part of the industry leaders network. we are seeing widespread science

of a pickup in wage pressures. that isn't new. we've been hearing that from the network from the best part of 12 to 18 months. average earnings in the states have gone up at least 2.3% every month for the last 12 months. there is an expectation that inflation will pick up. that we willation see huge increase in inflation, a dramatic increase, but there is an expectation that inflation, particularly u.s., will be allowed to go through the 2% target that the fed has. in effect from the federal reserve has told us it's comfortable with that as long as it encourages further employment. modest increases in inflation is definitely an expectation that inflation will exceed what's currently being priced in, but not a huge concern that we will have rampant inflation. jonathan: simon, good to see you. simon smiles, some unique perspective and insight. coming up, fiat chrysler and general motors earnings about an

hour ago with gm reporting a record third-quarter income. details next from new york. this is bloomberg. ♪

emma: this is "bloomberg daybreak." i'm in the chandra. numbersschiller's break, we speak with robert shiller. from new york, this is "bloomberg daybreak." i am jonathan ferro. fiat chrysler and gm released numbers a little earlier on. they beat estimates after record third-quarter for gm. keith, great to

have you on the program. we keep saying things are going to roll over and then the numbers come. what is the story yet cap -- what is the story? quarter,ey had a great in north america, where sales are going to plateau. gm boosted earnings by focusing on retail sales to individual customers. chrysler, iat thought fiat was safe and chrysler, but it seems like jeep is saving fiat. keith: the really has been a role reversal, because fiat chrysler gets most of the earnings from north america. most of those come from jeep, with china quarter. now they are saying for the year, fiat chrysler make $6.3 billion. is increasing his estimate for how the year will turn out waste on the strength of mostly jeep.

alix: how much did fiat and gm have to discount to sell their cars? discounting is than as the u.s. market slows down. it seems as if automakers are focusing more on profits as you see in the results today over market share. in the thirdll quarter in united states, but their profits increased because they are going after the richer mix of sales and not just going after market share at any cost. jonathan: typically, when i say company just delivered a record net income for the third quarter , i wouldn't follow it by saying the stock is down 3% on the year. it's a conversation we keep having with the autos in detroit area. why is the company performing, get the stock is not? keith: this is true across the board, ford stock is down and they have had record earnings. investors feel like the party is over, that auto sales have

peaked. we are heading for a trough, now's a good time to sell. there's also some uncertainty over the coming autonomous future. how much are automakers investing in it, how much should they invest? are they making too big a bet, will they be outflanked by silicon valley? these dual threats and investors minds put pressure on the stock. alix: let's talk about the outlook in europe. getting some headlines from the cfo saying brexit topped $130 million, it's going to cut costs in europe to try and keep the breakeven goal. what is the outlook? keith: gm said in the second half of the year, brexit will cost them about $400 million. $100 million in the third quarter, that means we will have another $300 million in the fourth quarter. if the pressure on gm and the u.k., that's where they are really hurting the most as a result of brexit. jonathan: keith, great to have you with us. keith naughton joining us from

michigan. gm is up about 131% as we can you down to the open in new york. features marginally positive across the board. time now for the other top stories make headlines. in the chandra -- emma chandra has your next. emma: twitter mail limited three under jobs as soon as this week, 8% of the workforce. they are trying to control spending while sales slowdown. google bought a startup company to expand the efforts in virtual reality. they've been acquired by alphabet, and no terms were disclosed. control working to digital screens with eye movements. there is no evidence that volkswagen's top management approved the diesel cheating program. a spokesman says investors and the fairly good picture of how the scandal involved in so there were no clear links between top executives and the decision to

implement the schema. bloomberg business flash, i never chandra. -- i am emma chandra. alix: we sit down with samantha power, to discuss politics in the year ahead. that is next, this is bloomberg. ♪

alix: apples. added 2016 hi, earnings out after the bill. cory johnson joins us with a preview. it's all about iphone sales. cory: we had the iphone 7 hitting the end of the quarter, the guidance is going to be importance. 7's the exploding note mystery factor. the competition at the very high end of the smartphone business completely changed during the quarter that their reporting. the effect of the change is

going to be in the quarter we are living, the fourth quarter. quarter guidance has been importance for apple. is a mystery of how much the note 7 affected that. jonathan: can the demand spill over to next quarter? cory: it's an open question of how much do they try to make? apple is the master of supply chains, the one thing that tim cook made an apple to let him become the ceo, it's the thing he's done the best, handle supply chain and not get stuck with inventory. been iny management has the history of hardware has gone up one company after next. alix: revenue measurements were down double-digit in the last quarter. the other question becomes how do they get their revenue up? how is there average selling price? cory: it's likely the iphone 7 is going to help with that. the variant of the market is most of the profit, so the asp

number creeping up could be very -- it came down with the successful introduction of the lower version of the phone. the iphone 7 plus and china had weak numbers it year ago. that's a great question and this whole thing. , thehan: cory johnson proxy for china at the start of this year was apple. the pessimism was there to be seen around the pessimism around china. how much is that stories still real and how much of that concern is still there? a short seller, i would've never gone there. i look for fakes and frauds and phony companies. i think the impact of the worldwide growth of smartphones has slowed down. the chinese growth of smartphones went away. and that was the biggest driver in the last five years, the biggest detriment in the last year. it's an open question as to how

well the iphone 7 plus is going to play in china. one,ipped in china on day which the last iphone did as well. the sales cycle was lengthened in older iphones. this one hit china on day one. alix: you brought up samsung stealing market share from the note 7, but that's a question, the pie is not expanding. how much market share is able to grow? it's not even the top line, it's the bottom line. the iphone may generate 20% of worldwide smartphone sales, probably south of that, but it's what generate about 90% of smartphone profits. that's the important thing here. jonathan: where does tim cook stand currently? i had conversations about tim cook cook's future, they were sears the questioning it. i haven't heard that from them lately. mainly off the back of what's happened with the stock price. but are those conversations still happening? cory: i hear the griping, but the company -- it's the biggest

company in the world and they are making so much money. they are managing their cash well. they don't have a second hit like the iphone, i don't think that should be held against tim cook. alix: cory johnson, thanks for the preview. to david westin with samantha power, u.s. ambassador to the u.n. for exquisite interview. david: it won't all be domestic. he or she will have to address. talk about the biggest issues that you see on the geopoliticaldress he, and we should start with syria. where are we today and where we headed>? ambassador power: i wish we could say that, but we can't, with 11 million people displaced from the conflict so far. one of the jewels of the country is under vicious siege by the regime and by russia. russia every day is layering

more and more military investments into the region, backed by iran, hezbollah, and fundamentally, trying to preserve a minority government that has lost legitimacy with a population, partially because of its tactics and its governance before. we continue to invest in the political track. there is no stone we won't look under to try and see whether or not there can be a political solution from which one can build. for possibilities around aleppo specifically, because all that happens when you use bunker buster bombs and incendiary bombs and cluster munitions and in addition to the heart ache you are just trapped in a city, or part of the city, it also radicalize is further the population. terrorist equities and those of russia and the syrian regime, which claims it cares about terrorism are imperiled the longer this brutality goes on.

david: it's very difficult to talk about syria right now without referring to russia. just recently at the security council, used the word barbarism, saying what's going on in aleppo is not counterterrorism, it's actually an act of barbarism. can russia be a partner for reduction of hostilities? can we work with them? ambassador power: what has to happen is they fundamentally have to decide that their interests are not served by the approach they are taking. right now, they appear to be pursuing a military solution, try to take more territory on behalf of the regime. should they succeed, which we are doing a missing in our power to ensure they don't, then they rebel, aleppo that is they've alienated people across the world. is the terrorism problem already pronounced, but which we

are making significant strides against both in iraq and syria become more pronounced and more directed in ways that are not good for russian interests. unfortunately, we have in making this argument for several years. we know we are right, and so far as russia's interests are not going to be served in the approach they are taking, but latimer couldn't is glamour isin -- vladimir putin latimer couldn't. -- vladimir putin. he is not attentive to the war and subjecting civilians to some of the worst slaughter we've seen the century, but even in the last many decades. david: i want to talk more broadly about refugees, but let's stay with mr. putin. he is looming larger in the agenda, eight years ago, president obama came into power and we had ukraine and the baltic states, we have allegations about cyber activity going on. are they really on the front foot, and is there anything we

can do is the united states or the western world to push them on the back foot? ambassador power: it wouldn't conflate military adventurism and slaughter in syria with things going well for president clinton -- president putin. the underpinnings of his economy are very weak and fragile. the ukraine sanctions which were re-upped in july compounding deep structural problems that have never been dealt with in russia. one theory of why he draws everybody to syria to focus on russian bombers is to divert attention from some of what's happening in russia. i don't think in time that this is an approach that is sustainable. i think we see some evidence also the people around him recognize that. how they pull back, having as well so much faith as resources in this militarism is another question.

i think we made clear that we want a strong and successful russia. we don't want one that is put in the corner, that is isolated. i work with them every day on the u.s. security council, and aggressionkraine with syria, we managed to cooperate on a whole host of africa related issues that are less polarizing between us. we won't have a functional international order if they can't come again a constructive player within the security council. i think the next administration is going to be the top-tier issue, not just syria or ukraine , or thessue does your structural underpinnings, whether russia can be turned away from these incredible destructive acts. destructive for the personality of the international system, but also not at all inefficient for the russian people. david: let's broaden the discussion beyond syria. roughly half the population of

syria, but there's a much larger problem around the world. give us a sense of how big the problem is. ambassador power: lately, it feels like people are alert to what we're doing to address it. 65 million displaced the greatest number of displaced internally and refugees since the second world war. during the general assembly, president obama used his last meeting with all the heads of state to convene world leaders to say each of us have to provide more money -- the u.s. is the largest donor in terms of refugee support -- but we chatted take more people. -- we each have to take more people. the vast majority of people who somalia, ord from burma, you name it, most of them go to their immediate neighbors. they have fragile political structures or for certain, very difficult economic situations. if you look at lebanon, a country that is fragile and every respect, one in four residents of the country of

lebanon is now a syrian refugee. stable or good for anyone in lebanon, and fundamentally, as we have seen with the flow to europe, the challenge is bursting at the seams, and people are moving in unrelated ways. we've increased substantially are refugee numbers and called on other countries to do the same. our numbers this coming year will be 110,000, which is still a fraction of the 65 million. but a significant chunk that want to resettle. most people who flee across the border want to get back home. thisodest right spot in sea of weakness which is syria is that the successes that we and the syrian opposition and turkish forces have had in northern syria had actually already begun to allow syrians who have been living in turkey

-- in southern turkey, to go back to northern syria. it shows you that people -- the last thing they want to do is take to the roads and go through the balkans and turn up in germany. got they most want to do is back home, which underscores the importance of political solutions. jonathan: that was u.s. ambassador to the u.n. samantha power with david westin in an exquisite interview. -- an exclusive interview. you can watch the conference on live go under bloomberg terminal. this is "bloomberg daybreak," on this tuesday, october 25. i'm jon ferro alongside alix steel. as we count down to the cash open, futures of higher 11 points on the dow, two points on the s&p 500. a decent session involving in europe -- evolving in euro. on the fx market, more dollar strengthen euro weakness for sixth straight session. on a single currency, and yield a little higher by a basis point of 10 year two $1.77.

alix: more than one third of companies reporting this week, including caterpillar. that company lowering its sales forecast for 2016, citing sluggish demand and low commodity price excitations. the world's most valuable company, apple reports earnings after the bell today. analysts are forecasting a boost from early demand for the iphone 7, helping slow the pace of a sales slump. ,olitical pressure intensifies the bank of england governor answers questions in the house of lords today at 10:35 a.m. eastern. will finish out his term? that's what you need to know. jonathan: breaking news, home prices in 20 major cities continuing to rise for a city case in the month of august. indexity property values increasing 5.1% from august 2015 to forecast 5%, after climbing 5% through july.

a marginal upswing in price. if you look at national home prices, that gauge up 5.3%. on a monthly basis, the seasonally adjusted measure rising 0.2% from july. for more on these numbers, cofounder of the home price indexes is robert shiller, joining us now to break down these figures. elsewhere, outside the united states, people are very concerned about bubbles and hot property markets. these are steady gains. is that we are seeing in the united states? steady as she goes? mr. shiller: if it keeps going up at 5% a year, that will accumulate to a substantial increase. we are not there yet. seasonally adjusted, is not going up very fast. there are some hints of slowdown in the latest numbers. notably, the cities that are going up really dramatically month over month have fallen back -- like portland, denver,

were chicago. -- or chicago. it's not super strong, but it is still going up. jonathan: help me understand what's driving the rollover in some of those cities. have we seen a boom in construction? is demand waning? mr. shiller: the rapidly growing price cities have seen more housing starts. that is what happens, that is how capitalist system functions well. employment flows into some cities, like portland, for example, which has been drawing labor. they come and bring up home prices, it becomes more attractive for builders to start building more. that is what we're seeing. of course, if people want to move to portland, there should be more houses for them. that is what will happen eventually. alix: what do you think of housing starts for september down 9%? is that a shift to something more serious?

mr. shiller: that's the big question. as i said, we see some signs of weakness. there is no city that is going up in double-digit annual rates. , used to of our cities be there with these highfliers. --on't mean to make too much one month data was different last month. it does look like a hint of possible weakness. jonathan: looking at the data coming from the construction industry and home prices for stocks, the dashboard of the federal reserve -- how brightly will that light shine on their dashboard in the coming months? should they be aware of it? construction has always been a very cyclical industry. i guess that's a good sign. there's always a bright side to everything. economy -- the fed has had to keep industry to near zero. they would like to see more construction activity.

-- interest rates to near zero. they would like to see more construction activity. it's a good thing to have more homes. economic data is front and center friday, the first rate of third-quarter gdp. estimates are for 2.5%. what is robert shiller think? -- what does robert shiller think? mr. shiller: we gone through a slow period, it wouldn't surprise me if we had a burst of growth. we will get past the election and maybe we will be more focused on economics. robert, thank you. robert shiller, american economic association president and yale economic professor joining us. moving onto company stories, shares of caterpillar falling, as they cut 2016 sales forecasts amid sluggish growth and expectations for low commodity prices. joins us now with details on what happened. without this industry was

stabilizing. i think commodity prices are looking better, oil is looking a little better. there are two problems on equip inside. there is excess inventory -- on the equipment side. there is excess inventory, the equipment side is not going to turn break quickly. you usually what see first is parts move. we did get a first good sign on that front this quarter. ceo, i look i'm the at efficiencies. you look at the trucks and big tires that cost an absolute fortune. those guys are talking about using fewer trucks, because the one the cost so much to run, they want to take off-line. the just want to use the vy efficient ones. the mining industry has adapted off of the back of the commodity route. if we do get a cyclical upturn, whether caterpillar can roll it -- can leverage that the way to have before. karen: i don't think we see a return to former levels. a lot of that is driven by

china's demand for commodities. mining trucks are down about 70% from the peak. taken said that, they've $2 billion in cost out. they have adapted. i don't expect they see that return. alix: have they adapted enough? karen: i have to say, given what they are dealing with, they are actually doing pretty well with a permit to leverage. given the magnitude of the sales decline, they actually did very well on the income side. it doesn't look good, relative to what they had to face on the top line, they did a good job. jonathan: what does caterpillar become? just a smaller caterpillar? karen: i think the court will stay there core. i don't think they're going to redirect to new and markets. they are just going to be smaller. i don't think they go back to the prior peak. they can still be profitable once they get volume leverage, but that is not happening, maybe

not even through 17. they are hoping. to see you going turn at the top. is he going to leave the company? karen: i don't really blame him for the end markets. he had an expansionary strategy, doing a lot of acquisitions, which created some problems for them. i think he has managed ok during the downturn. down years, four the company wanted to change at the head. i would've not expected him to retire early. ubelhart, great to have you. caterpillar trading a little softer. we go now to emma chandra with your first word news. emma: this may be one of the biggest asset seizures in u.s. history. federal prosecutors prepare to charge several individuals and confiscate their property for allegedly using venezuelan state owned oil companies.

$11 billion may have been stolen from the company. among the assets, the u.s. macy's 20 homes in west palm beach and the houston suburbs. if hillary clinton is elected, she is excited to push for a $275 billion plan to rebuild america's and the structure. the proposal will be paid for by changes in the corporate tax code. supporters have said the money would come from a lower tax rate on properties. overseas.ies that would produce a one time bonanza if companies bring properties home. belgium is currently withholding consent to a proposed trade agreement between the eu and canada, because the belgian toernment has failed persuade all of its regional parliaments to sign up for the deal. the canadian government has given the eu till thursday to agree. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.

i am emma chandra, this is bloomberg. alix: thank you. i futures in the u.s. go nowhere fast, and as -- equity futures in the u.s. go nowhere fast. the real store in a -- the real story is earnings. andeporting beat on profits 71 beat on sales. more coming out after the closing bell today. take a look at procter & gamble, up over 3% in premarket profit, topping estimates. revenue bank in line with estimates. the company has been trying to implement a $10 billion cost-cutting program since last year. that is coming to fruition, in part. taking a look at united technologies. here's hoping you don't hear every day. that's your is something you don't hear every day. they are raising the low end of the 2016 profit forecast for the second consecutive quarter. industrial peers have been cutting the annual productions -- projections in the previous

days. cut the top end of the 2016 forecast amid weakness in consumer electronics markets. also, stronger dollar generates about two thirds of its revenue from overseas. the stronger dollar is starting to feed through in some earnings estimates. jonathan: coming up, apple sales declined. the iphone 7 will help prop sales. more when the company reports earnings after the bell today. later, we take you to bloomberg's year-end summit for conversation with former michigan governor john engler on the effects of free trade. in the markets, we count down to the cash open in new york. we are about 18 minutes and 35 seconds away, and futures go nowhere. up, and thequities story in the fx market is the euro the drop down to a january 29, 2016 low. down for the sixth straight

session, the longest streak since may of this year. counting down to the open from new york, this is bloomberg. ♪

alix: this isalix: "bloomberg daybreak," i'm alix steel. apple said to report earnings after the bell today. they debuted the iphone 7, hoping the new features will reduce trends for its most important product. let's take a look at apple in today's the numbers don't lie. we see the issue with the iphone. this is revenue growth of the orange line, and iphone shipment for the blue column as well. in the third quarter, revenue was down 23%, iphone 7's down 15%. if we see them fall again, it's the third consecutive fall for iphone shipments. one of the drivers of that revenue mix really had to do with asp -- average selling

price. they launch the midrange iphone se are they able to boost that back up with. higher-margin product, the iphone 7? to understand why so much attention is on the iphone, take a look at how the revenue breaks down. 66% of 2015 revenues came from the iphone. the next up was the mac about 11%. they tried to launch new products and services to offset the iphone revenue demand for this quarter. i've taken a look at smart watches. -- they have taken a look at smart watches. you see the second quarter of 2015 and 2016, it is slowing. apple is really eating everyone else's lunch when it comes to the apple watch. you also want to take a look at apple pay. the service turned two years old this month, facing stiff competition as the industry's

expect to reach $110 billion -- $210 billion in u.s. mobile in-store transactions by 2019. apple wants to be front and center with that. the big issue this year for apple was taxes. in a record crackdown, the company was ordered to pay as mu as $14.5 billion after the european commission said ireland illegally slashed apple's tax bill. this huge jump compared to its peers. that has the potential to affect earnings. however, there won't be a lot of shortage of cash for the company, because apple has over $200 billion in cash on its balance sheet, and most of that is held overseas. cook,llows apple ceo, tim to focus on diversifying the business. we are washing apple's results -- watching apple's results today. jonathan: dan, we're going to

iphone sales, the typical conversation that no one has around apple in just a moment. the charter want to look at is not the stock price, it's the multiple. i'm looking at right now it 13, 14 times earnings. this is where we were earlier this year. we were 10 times earnings. this company went from a growth story to a value story. i'm wondering whether we ever get back to where we were many years ago, when we were talking about 20 times earnings. going to get back to that? mr. ives: the smartphone industry has been under pressure. there was some shared pressure with samsung and apple. it's whether the industry believes in the super cycle going to next year. do you believe there is going to be a renaissance in growth? it comes up to demand on the smartphone. that's why they focus on what iphone 7 growth numbers look

like. it in next quarter, how they were going to guide. it's a good indicator for the rest of the industry. jonathan: are we ever going to get back to that super cycle? mr. ives: if you look at the 10 year anniversary of the iphone, there's a lot of the industry focused on that 10 year anniversary and what could be in store. you look at the samsung situation. unprecedented 7 fiasco, you've seen a major change in terms of the shift. now you start to see a do the numbers reflect that? this is really about is the smartphone industry in mature growth, or is there a renaissance going into a potential super cycle? alix: the iphone 7 could not have come at a better time with the note 7 fiasco happening after that. how much market sale will be -- how much market share will he be able to steal? course of the next

six to nine months, and also how samsung does with handholding customers. this is unprecedented. before this, samsung have a tailwind. now they have the perceived headwind. i think that's why there's a lot of focus on the next six to nine months to see what this two horse race looks like. and also google with the new phone. point, cupertino continues to be the gold standard. jonathan: for anyone getting excited about their potential to take away market share from samsung, you have samsung -- android versus ios. how stickier the zeal systems and the potential that some -- how sticky are these systems, and the potential that someone will switch? mr. ives: it surprise a lot of people how successful you seen on the android side. it comes down to the software services. on the hardware perspective, you are starting to get to the inflection point, where you see more growth in the software and services.

differentiation, whether it's android or ios, ios often speaks for itself in terms of the ecosystem. now it's does that next hardware cycle differentiate, and do you start to see those shares hit? alix: you think apple wants to be a software company and not a hardware one? theives: they talk about next evolution of that. that's acrosshendustr jonathan: daniel lives -- dan ives, glad have you with us. alix: why twitter moved up the earnings release to a time when nearly all of silicon valley is asleep. could it be about the hundreds of job cuts on the horizon? more about jack dorsey's strategy to turn around the company, next. this is bloomberg. ♪

alix: job cuts on the way a twitter. company may limit eight 300

jobs, 8% of its workforce. eliminate 300 jobs, 8% of its workforce. the heels of that we are also hearing twitter is going to report 8:00 a.m. thursday rather than after the bell. what can we learn from this? >> you could call it a strange incidents, but at the time they are announcing job cuts, that's not a good sign. investors want to see a topline growth story. here we are cutting headcount, which is the primary cost. not a good sign for the future outlook for the company, preferably. at the same time, they changed the earnings announcement time at the last minute. the company says it's to avoid going up against amazon, alphabet is also reporting after the close. let's do it thursday, when we have more time to tell our

story. unfortunately, that's 5:00 a.m. in silicon valley. alix: can we imply that this bad news is already begin? -- baked in? paul: the stock is down 40% year-to-date, and the growth story is really out of the stock. we haven't had subscriber growth for a couple of years now. ratesfrankly, the growth in the topline have been coming down from 2014 down, even through the 2017 forecast. the growth rate has been slowing for this company. , since he has come back, has been unable to reignite the user growth and will ultimately drive topline revenue growth. investors are losing patience. when we see a company like twitter, which was recently a serious growth story, start to cut headcounts -- that really gives the bears more emanation. jonathan: jack dorsey was meant to come in as the savior of this

company. he cuts the headcount, you can imagine there's a ton of exodus under way, because why would you want to stay when the company is pursuing a sale? that hasn't been going very well. it looks like jack dorsey has thrown the tao lin. in.he towel paul: they went through a sales process with no strong bidders. there were some technology and media companies looking, maybe some private equities looking, but no one came up with the formidable bid. that does not bode well for the future of the company. the question is, when jack dorsey came back, what could he do to reignite the top line user growth? is there a product fix to make it easier for consumers to get on to twitter, to make it more engaging for a bigger universe? we didn't see that. is there a technology fix for the company? we have not seen that. he promised to really accelerate the development in the adoration

of the technology of the company. we have not seen that. it, user growth is still flat, revenue estimates coming down, and now we have cost cuts. the question remains, what do you do with this company? is launching to a technology come in a foothold into the social media game. whether that is google, we will have to see. jonathan: paul sweeney, from bloomberg intelligence, on the latest round of twitter job cuts on the table. up next on "bloomberg daybreak," we have three minutes and 45 seconds away. futures lower going into the open, the dollar stronger in the fx market. it's a euro weaker for the sixth session, from new york, this is bloomberg. ♪

jonathan: this is "bloomberg daybreak," i'm jonathan ferro, county down to the cash open. we are about 22 seconds away from the opening bell. futures rolling over into the

open, but they've been dead flat through much of the morning. if you get to the other board, i will tell you what's happening in the fx market. it's been a stronger dollar story throughout the session. the pound getting slammed and a really fascinating move happening in the euro-dollar down for a sixth straight session. euro weakness and dollar strength is the theme over the last week or so. crew down by .6%, the opec secretary-general trying to solve some of those potential output supply issues with iraq. that's the story for the commodity market. the equity market, let's get to alix steel. happening, all indices slightly lower. the nasdaq 100 digital record high yesterday, with softness across the board. part of that has to do with earnings. we have negatives and positives. let's start on the positive. procter & gamble up over 4%. profits topping estimates, the company has also completed divesting more than 40 beauty y this month.

general motors off by .7%, it did have record profit in the third quarter. huge demand to hear in the u.s., huge luxury vehicle demand over in china. the revenue jumping 10%. we did get some color about brexit from the cfo, saying is going to cost them about $400 million in the fourth quarter. clawing its way higher, up .3%, despite the fact the company cut 2016 revenue forecast. saying next year is not going to be that much different than this year. but the big loser of the day is under armour, off by 14%. at one point in premarket, he was off by 18%. the long term forecast is renewing fears that the growth finally the company has blowing. it now expects revenue to increase in the low 20% range during 2017 and 2018. that will be the slowest pace

since 2009. which brings us to the big earnings story of this quarter, which is how much will revenue forecast it and earnings forecasts become for 2017. this chart from ubs categorizes annual eps growtfor s&p. the expectations for next year are extraordinarily high, over 13.2%. everyone agrees that number has to come down. but by how much and what is priced into the market? jonathan: our next guest believes a sluggish earning growth is the biggest problem market is facing. ,he next guest is jim bianco joining us from chicago. we have these favorable base effects for these industries, but the story going forward is upside surprises won't do it. the earnings growth has to, a fundamental way. are you slightly more constructive than you were going into this earnings season? mr. bianco: i'm still kind of where i was in the beginning.

let's put some historical numbers on this. about 70% of the companies will beat, that's what happens over quarter. the expectations are right now on about 01 earnings growth a year-over-year basis. if you strip out energy because the problems they had with falling crude oil prices and which are now rebounding, it's about 3%. inflation rate is around 2%. that's not going to cut it if we have the stock market go higher in environment where the fed is inspected to be raising rates. the big thing that's holding the market back right now is lackluster earnings, the benefited had was the fed can't find a reason to raise rates. if the fed is going to find a reason to raise rates, we need 8%, 9% rangehe 7%, at least to get the market moving three 3% at energy, zero with energy is not going to do it. let's separate the individual components. you'll market trading at 16 times forward earnings, next year's earnings. you have the federal reserve with record low interest rates are about 25 basis points off it. you're still pretty much there. the idea that they will hike by

25 basis points, does that really remove the flaw from the s&p 500? and what protected the multiples, evaluations the last 6, 7 years? mr. bianco: it can remove the floor, because the hike is in just another way five basis point hike as charlie evans of the chicago fed was talking about yesterday. this is the next hike of a series of many. we are expecting two or three hikes next year, if they were hike in december, that removes the floor. not just one more hike and wait a year, i don't think the market believes that. go, that'saluations on 13% earnings growth year-over-year next year. those numbers are always too high. that will probably come in at somewhere between 3% and 5%, if not lower. a year ago, we expected earnings growth around 10%. were getting zero right now. that means that the real forward p/e ratio may be closer to 18%

than 15%. aboutan: i want to talk the money market. let's bring in other asset classes into the equity conversation. a couple of quarters ago, it was about record low yields on treasuries and elsewhere in major bond market as well. that story has evolved in the last couple of months on the margin at least. you have people building a term premium on the long end and pricing in inflation of citations, or reignited expectation for inflation. what does that mean from your perspective? struggleo: a beautiful -- a bit of a struggle. it doesn't matter who does it come as long as it gets done. in 2015, the fed was doing nothing but the bank of japan and the european central bank, the ecb, were easing and printing money like crazy. they are starting to show signs that they might be ending. that's what i think is causing rates to go up. it's that easy money train driven by the boj and the ecb is coming to a stop, risk markets around the world in u.s.

equities are going to struggle unless as we talked about moments ago, we get this big burst of earnings that comes through to overwhelm that. alix: part of the rhetoric for the third quarter was at the dollar is going to be helping earnings. going forward, we've seen a pretty powerful rally in the last few weeks, the dollar index up by almost 4%. what is the downside potential for earnings? mr. bianco: everybody hopes that a strong dollar or a weak dollar will definitely help the market area of the fact of the matter is, the correlations between earnings and movements in the dollar is zero. maybe over a three to five-year timeframe, that might be a little higher, so if the dollar would do something now, you could be talking about 2020 earnings. is not what you do anything for this year's earnings or next year's earnings. maybe even the early 18th. for those hoping get bailed out by the dollar, think they're going to wind up being disappointed that earnings are going to come through because of some movements in the dollar. jonathan: earlier this year, the

conviction call was downright pessimist. what is your conviction call going into year-end now? it is somewhat more optimistic. this of perception there's going to be a clinton victory, which means stability or status quo. maybe the fed will raise one time in december and then hold for several more months. there was a perception that the central banks of the boj at ecb were not going to stop with their qualitative easing trade so there was optimism coming into the market, brings it wasn't as bad as we thought. i would question a lot of those that think maybe as we move into 2017 that those are going to become headwinds for the market, not tailwind. and: jim bianco, president founder of beyond go research. andng up, key issues challenges every executive will face in 2017. we take you to a conversation with john engler, former michigan governor and current president of the business roundtable. this is bloomberg.

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alix: --emma: this is "bloomberg daybreak," i am emma chandra. more with david westin talking john engler. jonathan: this is "bloomberg daybreak," i'm jonathan ferro. by .1%s down slightly,

on the dow in the s&p 500, lower by almost three points on the nasdaq. abigail doolittle is standing by. good morning. abigail: good morning. despite this modestly lower open for the nasdaq, we do have one big earnings winner, this chip company shares are nicely higher on facebook best day since the end of january after they put a very nice third-quarter earnings , by 23%. they also raise the outlook for the fourth quarter, suggesting this company is likely to sign on new customers. on all of this, we are talking back above the 200 day moving average, suggesting shares may climb higher from here. is ang less well, the this true small cap now microcap while tech. -- biotech. it's now a little bit above two dollars, plunging more than 80% on the day after the company antibiotic for treatment failed

a primary endpoint in a phase three study. the stock is clearly lower on this, and we show you how these binary events can truly go either way for the biotech. early investors in the stock today are not too pleased. alix: thank you, abigail doolittle joining us from the nasdaq. bloomberg's ear ahead summit, and deliver us -- andrew liver us spoke about their merger. >> what we are doing is to companies i think is quite peculiar. we are managing each company separate, we are also managing for the combined future. that once approved, will then move quickly through to the next phase, 18 months notional it, to split into three. if you don't think complexity is ,y friend, welcome to our life too, going to one, going to three, from a cultural point of view and from an entity creation point of view, our good friends

know what we're talking about. i'm employing a lot of accountants and bankers and lawyers. we are. the regulator is looking at that and trying to understand the piece that is their greatest concern, which is agriculture. that oneu understand of the strongest lobbies in the world out there is the farm lobby. and in europe, their agricultural sector is very critical to them. somewhat protected. >> is that mean you don't have to do divestitures? >> revenues, we are into phase two, which means we are into remedy negotiation. i'm ducking answering your question so far. look, in the scheme of the value creation, just remind you of the numbers, this is a $130 billion deal that will create another $30 billion of value for the shareholder as zero premium. tax-free. it's worth a few months of delay.

and what we are doing with our investors is walking them through the clarity of each of these steps. get noise ofto these jurisdictions, eu in particular. i wouldn't listen to the noise. >> that sounds as if you are settling for february. february would be ok. year, early next year, if that includes february, i will give you that. alix: that was dow chemical ceo. this is syngenta and cam china. many expected to happen by the end of this year. it will take longer. the other message coming out of the market is it may not happen. trading below now the offer price. there is a deal risk spread in these right now, and the market says we don't think it's going to happen. alix: we see that was syngenta

trading below the offer price. jonathan: let's continue the conversation's at the par quiet, where david westin is speaking to the good and great. he joins us now. david: i am enjoying myself. we're joined by john engler, head of the business roundtable. to me, he was a three term governor from my home state of michigan. welcome to bloomberg tv. mr. engler: great to be with you. david: looking at the year ahead, we are about to get a new president. whether it is a man or a woman, we're going to have some changes. the business roundtable is progrowth in its approach. progrowth policies. what a take us through a couple of those, starting with trade. it's gotten a bad name these days and both sides of the aisle are really taking issue with trade. talk to us about why that is so important to growth for market business and american economics. mr. engler: the american people represent something less than 5% of the worlds population. andenormous productivity

capacity to make things and grow things on farms, to provide services, far exceeds our opacity to consumers. we need customers. when you to sell those someone in the world. it's a give-and-take, we have to have relationships. we want good trade deals and we have to recognize that if we're going to create wealth in this country, so that is created by having customers around the world. the data is real good. where we have come and is engaged in global trade, wages are higher, incomes are greater, and that is good for the country. we want to see workers do well. we recognize the trade can be disruptive. i think there is a need to do more when there is disruption. but probably four out of five jobs are put a risk today are result of technology in the digital economy, not trade. economists agree with you, policymakers agree with you that overall it is good. i come from flint, if you go back to flint now, it looks at a war zone.

they can't even have water they can drink. what could the government do to try make it easier for those people who do lose their jobs? with trade, there will be some job loss. mr. engler: i can see that. and there is lots of job loss for lots of reasons. they first lost jobs when plants went to the south. didn't leave the country, that is one from places like south carolina, georgia, tennessee. david: right to work states. mr. engler: there's always competitive pressure, like mills leaving the southeast, and some of those mills in the furniture making or in clothing went offshore. i do think there's got to be a much more effective strategy to help workers regain skills. in some cases, regain those skills before they lose their job. and help the oppressed a competitor. we don't do training well in this country. that's one of the priorities we have had at the roundtable. a system, ifp have

trade is as beneficial as i know to be, we ought to take more of that reward from trade and global engagement and reinvest that in workers. that is something that the roundtable member companies inc. is really important. governor, arermer they the jobs? it's not just digital. jobs, souminating structurally we going to have an employment matter what the skills are? that does: a company a lot of business in china has one million workers in china. they announced they are going to replace most of those workers with robots. i went online in the first thing i found was a site where they had 110,000 workers in a china factory, today, there are only 50,000 workers and 60,000 robots. technology infusion into our economy means we're going to have to be smarter. that means that for a young person rising up, you would better get skilled and stay in school.

we have a shortage of technically skilled people today. to go toone needs college, but everybody has to have competencies and skills. for those who do go to college, it's a recognition that even that is going to get you may be prepared for that first job. but the second, the third, and the fifth? it's a consecutive process. as a country, we have to do a better job in this area. i do think the other factor that we've got is in the last decade, we've had a real decline in the formation of new businesses. small businesses aren't being created. with that rate, we would have 3 million jobs. -- 3 million more jobs. david: most of the jobs come from small business startups. many of them do. and many of the small business is become part of the supply chain of global companies. they often bring the innovation. i think there are couple of things going on. had anink that we have excessive amount of tax and

wriggle tory burden that has sapped some of the willingness of people to take risks. i also think that probably there is, because of the great recession that we went through bust008, 2009, with a boom/ we had a decade before that, some of the zeal for risk-taking has calm down a little bit. ishink if we look at who forming new businesses, historically, a lot of those have been formed by new arrivals in this country. the immigrant populations have been very, very successful at starting businesses and taking risks. it seems to me that there could be a factor there. i think it's a combination. in the process of doing tax reform, let's get the burden off for the after for newer is trying to make some thing in their garage or basement. they want to get started, and for goodness sakes, let's not have the irs showing up the first minute there's a dollar

revenue. let's let them get started and reinvest. and also, let's protect their electoral property. one of the things i have also noted is that we have had a tremendous number of american bought byanies foreign owners, they are able to do that under a tax code today which excellent benefits the foreign owner versus the u.s. owners. david: we will have to have you back to talk about inversions, next. engler, head of the business roundtable. alix: thank you, david. coming up at the top of the next hour, it is "bloomberg markets." mark barton joins us. we would consultation process underway, parliament will vote on it next year. what a day to have michael o'leary, he says they should have expanded. we are speaking to the heathrow chief executive, john holland k as well. looking forward to those

interviews. at the us, andrea illy year-end conference, the famous italian coffee brand. he drinks for cups of coffee a day, or verbally espresso. -- preferably, espresso. advisere house senior joins us. we will see you in about 10 minutes. jonathan: of course he drinks for coffee today. and michael o'leary, of course he wants stansted to be brought up. that's where he is. four espresso today, i would be bouncing around this desk. let's talk about what happens when you have a bad day. you had a bad hair day, what do you do? she took matters into her own hands at the women's tennis association tournament. she pulled out a pair of scissors and hacked off her ponytail. that's really frightening.

the haircut seems to pay off. 1-2came back after trailing , and when on to win. that's aggressive. jonathan: i don't need to do that. wear a wig. use to he was so concerned about falling out that he actually lost a tennis match. as a famous story of andre agassi in the early 90's, and exactly that happening. alix: i couldn't even do that with the scissors. we will be right back, this is bloomberg. ♪



alix: key events coming today. avalanche of holy reporting after the bell, -- you have reportingits chipotle after the bill. mark carney testifies in front of the house of lords today. it could be exciting. we are seeing a broader, stronger dollar. cabled is falling out of bed in the last half-hour.

down by over one full percentage point in the session. how much of what happens with the pound over the last couple of months is an insulator, and how much of it is a concern? alix: how much will factor into whether mark carney will complete his entire turn -- entire term? jonathan: i'm reminded by comments that the pound and brexit are like you are really and you are in your house, and it starts burning down, and you're happy, because the heating has come on. people happy with the pound falling out of bed. that's it for "bloomberg daybreak." bloomberg markets up next with vonnie quinn in mark barton. ♪

vonnie: 10:00 in new york and 1:00 in hong kong. i am vonnie quinn. mark: i am mark barton.

welcome to bloomberg "markets." vonnie: from san francisco to milan and cover stories from washington and wall street in the next hour. first, breaking economic data. julie hyman is with us. julie: consumer confidence coming out much weaker than had been anticipated. the richmond fed manufacturing index coming out with a reading of negative for in line with estimates. the consumer confidence read fro milan and cover is surprising bursting what analysts had been anticipating. 98.6 versus 103.5 last quarter. i will keep looking at the numbers to see what is going on.