. -- mike mckee.l she use this speech to commit to get what she wants to do as far as rate policy? like: that's the first question. will this be an academic speech and talk about academic series which was the theme of the jackson hole conference visit, or does she is the opportunity to build on an academic team and talk about current monetary policy issues with inflation? if she does that, people want to know when does she see inflation becoming enough of a danger that the fed really needs to focus on raising interest rates? the fed forecast they put out at the press conference last week is that inflation rises at a slower rate going forward than it has been. there does not seem to be any urgency for the fed to get going, and that has the markets confused because of the same time they are telling us we have reached almost full employment. she said there is a case for raising rates, so people are confused at what the fed is looking at. matt: when we were watching the fed decision and you and tom keene

let's talk a little bit about this with mike mckee.hinks a quarter-point move will affect the u.s. economy, but neither do they know the psychological impact of a change in direction. after almost seven years with rate that effectively zero, and unemployment at 5.1%, consumer spending and business investment, the case for a rate movement is soon set. china's equity bubble collapse, volatility and another drop in oil prices convinced many investors it be better to hold off. ant would give the fed opportunity to assess the effects of those developments on the prospect for roads ahead. today, that debate moves from the trading floor to the fed conference room. no matter what they decided, the announcement will be complicated. they will release new economic forecast and a new. plot. if they hold off, what do they say? today announce a press conference? if they go, why and how? investors will want the exit strategy and a good explanation. and everybody wants the answer to the next question -- what do they do next? michael mckee, bloomberg.

i am in new york and michael mckee is in washington. mike question in the press conference this afternoon at 2:30? mike: i think it will be why? decision is, people will want to know what is behind it. tom: can a move the markets likely south mario draghi about a: 40 on that ecb morning. kelly have that same kind of energy at this press conference? mike: absolutely. there were -- nobody knows what the markets will do and they don't move uniformly after there is a big newsmaking event, so i would be prepared for volatility after 2:00. tom: michael mckee in washington york.am in new a clock check. we will be with you on bloomberg's "surveillance" until 10:00 a.m. will rejoin you at 1:55 with kathleen hays, look for that worldwide. ♪ tom: good morning, everyone. on cablevision, a site of relief that the rangers and then not involved but a little going on with that transaction. vonnie: that transaction is european cable operator alteese agreed to by cablevision guided at almost $18 billion. paul sweeney joins us. head of alteese decided to make

keene and mike mckee will speak with ray dalia. in a minute. ♪ scarlet: this is bloomberg "market day." the you saw thoughts are doing ahead of the market rate decision by the fed. force apple to delay the launch of the new watch operating system at the last minute. awful as it is taking longer to fix that expected. it is supposed to let third-party apps run more quickly on the watch. tolett-packard preparing split into. it will eliminate as many as 33,000 jobs. become tober it will stand-alone businesses. one that deals high-end technology and the other that holds personal computers. toys "r" us will hire fewer employees this year. taking on 40,000 temporary workers. will"r" us will live -- rely more on existing workers. they are in the middle of a turnaround your after three years of falling sales. much more coming up in the final hour of the trading day. u.s. stocks are holding onto gains in the final hour. a reminder that as we count you wen to the fomc decision have live coverage with a special report set for 2:00 eastern time

olivia: this is something i heard mike mckee speak with tom on "bloomberg surveillance" once. as he put it, volatility is out of the bottle and it is hard to put it back in. michael: what the three of us are talking about is an excuse for the fact that markets are overvalued and people want to sell anybody -- anyway. people have been talking about a correction for years. all of the technical analysts have been saying it will be bumpy, we will have ops, we will have downs -- we will have ups. there are a few that saw this, david kosten saw this. he had a flat estimate for the s&p 500 at 2100. he said within that you will see 2170 for the first half of the year, and then volatility will pick up before the september meeting. here we are. it is going according to the playbook. said this has been a long, calm, bull market. the process will take a long time. andre down steeply today the last week. the market peaked in may, right before memorial day. the slow roller that is gaining steam as it goes -- as a keeps going. is to be expected. as you said, this is a long, calm, bull rally.

tom keene and mike mckee were asking the question, is the old model broken? is the phillips curve no longer relevant? there is so much slack and labor force and we are at 5.1% unemployment. normally, that would push up wages sincerely. >> i think tom is right to focus on this so-called philip kerr relationship. changedrelationship has , things are different. the structure of the labor market has changed. looking back at how the relationship between wages and an implement worked in 1960, it's the longer relevant. a lot of people argue with good reason that the wage rate or the price of labor in the states is determined by the global price of labor, which is set by china. all the outsourcing that we are is meaning that you can have low levels of unemployment but no sign that wage inflation is picking up. with productivity growth on the long-term downturn, that's a worrying factor. -- it iss to the u.k. a key challenge for policymakers. matt: we appreciate your time this morning. up, the $900 million department of justice settlement closes one of the darkest cha

the longtime bond fund manager was talking with tom keene and mike mckee. when they did the wrong thing, they went below 2% in terms of the short-term. they did not have to go to zero. now, getting back up there will recap a con asset markets -- recap act on asset markets. asset prices plunge and we have a problem. tom: it is the 10th anniversary of your acclaimed article in the financial analyst journal. thatwas a classic article all of our listeners and viewers are living. when does the great distortion and? it did not end yesterday. it will not end for years. can you tell me when retirees get a fair shake? bill: i can't. such thatuld indicate seven years, if we had 25 years of expanding debt, perhaps we will have to pay the price for at least another five or 10 years. debt, thetalize financial sector and corporate sector is doing well. 0% problem being, savers at are really getting the short end of the stick. ultimately, there has to be a rebalance. tom: are we at the point where we are addicted to accommodation? we are addicted to the point of the alcoh

mike mckee, he looked at the news flow over the weekend.ng that caught your eye? alanael: the cattl elections. tom: over to spain, another topic. at 10:00 a.m., the president speaks. ♪ tom: good monday morning. right now, our headlines. david: royal dutch shell will quit its search for sale off the coast of alaska. so got approval to drill there just six weeks ago. the senate is expected pass a bill that would prevent the government shutdown. majority leader mitch mcconnell is pulling the device of planned parenthood issue out of the spending plan. the organization funding could still snag in the house. women withdies with early breast cancer, they could skip cancer. beat the oddsnot of beating the disease. tom: it is the most interesting week. we focus more on the national relations. we must. michael: it is a week where new yorkers must get out of the way of the motorcades and limousines. it is un's security week and we get the world leaders. today, president obama and president putin of russia will be speaking to the general assembly. and

tom: mike mckee explained deutsche bank's place in this analysis. peter garber's work on a greater international economics. chiefer was the international economist at the fed for a while another long background in central banking. he thinks the fed should move. they are past their sell by date. tom: tracy, expand on this. how can there be to rate increases if there is only one? would say on peter's point there is a weird dynamic happening among investors right now. i was reading an investor survey where majority of investors think the fed should raise rates in the survey, but minority think they actually will. difficultis terrible situation for the fed where they see where asset prices are right now. they are potentially divorced from reality. they see what is happening in the global economy and the trouble in emergence markets, and the ecb strong data in the u.s. that says they should maybe tighten. but they have to tighten all these things. that didn't think it through. we saw lloyd blankfein standing up saying he thinks on the basis of u.s. data

in conversation with tom keene and mike mckee. back to the "bloomberg market day," i'm olivia sterns. tulane university is a known as a sports powerhouse, but that didn't stop the university from building a multimillion dollar football stadium after 39 seasons at the mercedes-benz super bowl in -- superdome, they now play at a shiny new stadium. so far, the stadium is in translating into wins. the football team is only two and five. economists say the place could end up being a big money loser. willem marx has the story. willem: finding a college party isn't hard, and they are no strangers to tailgates. on the campus of tulane university in the heart of new fun is, the ball driven a new phenomenon. the southern iv long known as , two laneswerhouse football program is no darling of athletics. this might just three wins last year, fans happily filled the nearly 30,000 seats of the new stadium that's named for its biggest benefactor. stadium was the easiest capital project to raise money for. willem: yvette jones has raised more than

television the morning at 10:00 a.m., true paget's rate we have received with a list of events and to mike mckeeon-like i would suggest. there is a mystery to it. it will not be just another speech this morning to say the least. mike: no, it is a major event or nothington whether folks say it. it is a major event for wall street remains to be seen, but the pope has had some things to say. that inbe he will say new york city. bloomberg's "surveillance" brought to you by invesco. have you considered your investment alternatives? classes andal asset strategies may help achieve your goals. find out more at invesco.com /alternatives. with all the news flow and the markets of the, the mexican peso working out to new weakness, we are with the european commissioner for trades cecelia of sweden. i know you don't comment on foreign exchange, that is the height of rudeness, but i would suggest that what we see with the famous swedish stock in relationship between new zealand and australia, we have a global system compensating to the shocks of the last seven or eight years. world take the shocks we have see

kathleen hays, mike mckee will join me with an esteemed set of guests, all different and all dividedhe debate on what the fed will do at 2:00 p.m. washington time tomorrow. and then, the idea of where do we go from there, and it has a lot to do with china. angie: absolutely, because the volatility we have been seeing in the markets has really dampened the bets that the fed is actually going to do something in september. everybody is waiting to hear on this side of the world, whether or not fomc decision is going to really create more volatility in emerging markets. guest: that is absolutely true. ray and many others suggesting the new globalization of financial markets and the shot of the continue distortion will reverberate across europe. tomorrow, draghi in frankfurt, and in japan that wonderful rapport on the credit rating markdown in tokyo. over to china, i want to make clear that mr. dalio is adamant that china is not a basket case. he spoke highly of their continued economic growth, and centered more on the structural shift the chinese economy has to have. he thinks they will g

mike mckee is talking about italy become a positive for europe.inberg in china? carl: i viewed what was happening in china as a six -- cyclical slowdown. the piece i'm writing for readers tonight, china's economy or adwind to global growth slowing moderating tailwind. growing at 7%, china is still letting 1.2 percentage points, it will struggle to grow next year altogether. even at slower growth, the economic power is formidable. tom: it is amazing on europe, if you look at smaller economies, there was the gloom months ago. there is a lot of gloom and if you talk to anybody in the stock market these days, they are suicidal because everything is wrong in the world. economists are telling us china is not as bad as we think and europe is coming back. what is your take on the global economy? have a in the we may global recession camp? carl: i am will trade is collapsing at a pace faster than we have seen other than 2008 in 2009 downturn. nothing good has ever come from world gdp. looking for world gdp growth. if you chart out the world exports value,

mike mckee and tom keene on investment and finance.dio, this is bloomberg's "surveillance." ♪ michael: cash ramy: good morning. this is bloomberg's "surveillance pick a your your top headlines -- a people dead and seven missing from flash flooding on the arizona utah border. police say the fans were washed several hundred yards downstream. it happened in the community -- served as a base for hungary declared a state of emergency in two counties near circular migrants toward him. soldiers could be deployed along the border. austria said they could shoot -- could soon run short of housing for refugees. the bmw spokesman for the company's ceo is ok after collapsing during a news conference. kruger-old harold fainted onstage at the frankfurt motor show. he said he had not been feeling well. your top stories. here's brendan greeley with another check. brendan: a look at what is going on as we wait for the next two days for janet yellen to do something. futures are up five points, not a whole lot of movement. look at yields. yields are up, p

bill gross with tom keene and mike mckee.ght thing monetary policy is exhausted in reaching real growth. brendan: she is worried about a strong dollar. they are watching this trade weighted dollar. a lot of farmers market trading partners, which is critically stronger than the dollar we think of. vonnie: exactly. bill gross sang every asset price is artificially elevated. space -- some investors trying to sell their etf's during the august when he fourth market route. -- august 24 market route. here to discuss is eric. inc. you for joining us. where do we stand on this? eric: it was a bad day. there were some small retail investors who got burned. this is august 24. $18 trillion worth of etf shares were traded the past 12 months. that is more than the u.s. gdp . , the first 45y minutes, due to some circuit breaker issues, some people got bad prices. 40% below in retrospect. we don't want small investors to get burned. a lot of regular investors are using uts. come i give them credit, taking a leadership role. there are thousa

weinberg -- when carl gives mike mckee -- i get nothing. what was your question yesterday? fed's explanations do not hold together. janet yellen says they want to see progress in the labor market that will bring about higher inflation, but the forecast is that the unemployment rate goes down, but so does inflation. on that basis, how can you argue for any rate move at all? torsten: the fed response will probably be to say that we would do this in time for -- it is quite ironic that for the last four years, the forecast has been that inflation will go to 1.9 and move sideways. vonnie: the idea that there is going to be no wage inflation but that there will be more jobs -- michael: that is what she -- that is what she is saying. we are looking for inflation because the unemployment rate is going down. the two things do not hold together. can i ask about a december rate increase? it is not the ideal time to be increasing rates for traders in the market, is it? was clearly case that we had more in the pipeline holding inflation down. so in other words, in a month's time, will w

olivia: mike mckee said earlier this morning -- this is interesting because of the fed meeting.f the curve is that.g off, and look at the yield is 7.9%, the highest level since april 2011, up several basis points. that is a big move. alix: and unbelievable move. maybe we wills see a rate hike. olivia: i was looking at glencore because the stock had a crazy move at a record no -- record low in 2011. at one point, it hits a record low. it is going to issue more stock and will sell new shares, trying at 10 percentbt of existing shares. the rush to pay off debt before the ratings downgrade. alix: either way, the share is chopped in half. -- chart iol shark want to share with you. anthony, who runs a cool hedge fund, he says the way he likes to invest is look at initial jobless claims. every time the initial jobless claim hits a low, he sells the s&p. you can see the orange line. it hits a low. you see a decline because it is somewhat levered to the inflation rate. >> this is spontaneous. manufacturing sector is hitting a speed bump. factory production in the u.s. spell by the most a

mike mckee, washington. guy: how did u.s. markets react? juliette: u.s.were relatively unchanged until the fed came out and said there would be no increase in interest rates. we saw quite a bit of volatility. the dow jones rising as much as 193 points at one stage. then falling as much as 100 points. the s&p and the dow finishing lower, but the nasdaq finishing higher. they are try to figure out what all of this means. we are trying to parse through the janet yellen press conference. as sheseemed to climb was giving her statement and then falling as she answered questions. saying and -- saying a rate increase is still on the table for an october meeting. the 2-year note was an interesting trade. we saw it by the end of the trait -- and of the day falling the most. declineline -- it's beginning just before the statement coming out. the fed said no change in those interest rates at this meeting. we saw this movement and other assets. the dollar index falling the most since we saw the august market meltdown. with rates.ong one of the assets benefiting from a

he spoke to tom keene and mike mckee. ray: i didn't care if they -- i don't care if they raise 25 basis points. i do not see the reason for it, frankly. 2007 i was watching this incredible bubble happening. an asset bubble and it was a finance of a lot of debt. it was an obvious bubble. thefed give attention to gdp gap and missed the whole bubble and we had an economic collapse. now we have a situation in which we are in the mid-part of the cycle. they are trying to identify where the inflation is. what they are worried about -- and we have a lot of included. there are glimmers here and there. but basically, i think that they're wary too much about the short-term debt cycle and not enough about the long-term. so i don't get it, given those risks. look at the world. where -- we're in a world economy. tell me companies that should be tightening or easing monetary policy. francine: that brings up today's twitter question. do you care if the fed raise rates? i know someone who will care. let's bring in our guest. great to hav

mike mckee and i talked to raghuram rajan.him is india immune to the slowdown in china. : nobody isjan immune. we import amount of finished products, so if the chinese economy grows more slowly than anticipated, it is less of an effect for us. we benefit hugely from lower commodity prices, which would be another effect on slower chinese growth. brendan: sri-kumar is with us. and you raghuram rajan, know that country very well. is india moving according to its own dynamics right now? is-kumar: the benefit it has that largely uncorrelated with the rest of the world, exports are not a big part of gdp. as raghuram rajan said -- a great interview, by the way -- they do not depend on exports to china either. they just suffer from the overall emerging-market fallout, but it is not china related. the other development that is helping is that unlike china, with the median age of 36, india has a meeting aged -- a median age of 26. it is a much younger country. it will stay with a median age of 26, whereas china's median age is going to

tom: that's better than mike mckee does. bill: it does.he question is does the currency depreciate? you pick your poison. countries, myese favorite emerging market country , the strongest one in my opinion is mexico. has half the debt of the united states, with 2% growth. inflation is under 3%. it has the cap of emerging markets, the risk appears on the screen, mexico will do well. i think there's some emerging-market countries that can do well. and by the way, just to point out, mexico's forward yield curve going forward in the next two years as perhaps 300 basis points higher in terms of a future increase that in the united states. i think it's really overextended. we wille a minute left, ask you the money question we come back. in the meantime, all the things you mentioned -- if the fed moves, if the fed doesn't move, does it affect those things? or are we talking about this volatility in fitted him until they do? on the pressnds conference in september where the plan is supposedly laid out. they don't want to make it conditional. but t

scarlet: economics editor, mike mckee.ebuts, thatodel x story is next. ♪ mark: for all the hype around tesla's latest model, the shares have been languishing all day. it has shot up like a rocket since the model s was introduce three years ago. will this do the same? allico betty liu -- scarlet: betty liu was at the unveiling. this will be a pricey, but nice-looking, car. that he cap it is. : it is very pricey. thousands gathered to cheer the model x last night. fancy features like the doors and the panoramic windshields. i got to testdrive the car myself. it is very, very fast. $142,000 version can go zero to 60 in 3.2 seconds. it in ludicrous month, and you can sit around the suburbs of new jersey and westchester in that. why isn't the stock lower, and why is it not reacting much to this begin filling? -- why is the stock lower? some say there were key pieces of information that was not available yesterday. for instance, how much will it cost at the base? not the ludicrous motor high performance. they company did not wan

mike mckee, you have got news. actually trading russia but all russian exchanges, trading has been halted. apparently dealing with equipment problems. they will resume trading, but they do not know when. -- strongergoal after a thursday, friday, and monday. with emerginge markets. .his is neil dutta futures up 33. i just looked at the eci wages one of thes, statistics we have on our paychecks. was six orike it eight years ago. it is not back to where it was. like you say no, there is wage growth. where do i see wage growth? >> there are a variety of wage indicators as you mentioned. the media wage tracker, for apple, is above percent. if you look at compensation per hour from the bureau of labor statistics, 2.5% over the last year. because aoks fluky lot of the weakness was german by incentive compensation in the northeast. tom: which number do you use? i got this over the weekend and i was at a barbecue. there was nothing healthy for me. how do you measure wage growth? most of our listeners go, neil dutta is not.

mike: welcome back. i am michael mckee along with tom keene.ght to you by commonwealth. broker ready to listen. the latest reading on u.s. gdp is out. benny has the numbers. >> revised data showing gdp expanded at 3.9% in the second quarter, higher than the government's prior estimate of 3.7%. it is higher than the first quarter when growth was under 1%. where do we go from here? the third quarter is a most over. economists looking for third-quarter growth of 2.4%. yesterday, the federal reserve of atlantic issuing an estimate for the third quarter. it could be as low as 1.4%. thanks so much. there are the numbers. yields are higher. do you think janet yellen would like to go back one week to press conference? and change her tune? mike: i think she would. steve has a good note this morning suggesting she did not say anything differently but said it in a more academic way, maybe the markets speak academic because they seem to have gotten the message. tom: what has changed? speaking of deflation, -- pushing against the negativity. we see 3.9% gdp

here with us is mike mckee and chief economist carl cricket on riccadonna.s the fed moving because it is afraid of making a mistake or getting ahead of itself? side itu can pick what could be on because it is such a close call. carl: i'm going with the fed holds actually. we have seen over the past five years several central banks raising rates and then having to backtrack. this is a very dangerous policy mistake and there is limited ammunition to reverse course if the fed needs to. they do not want to go down the route of additional quantitative easing. the fed is want to air on the side of caution and hold off to see what extent of negative feedback into the economy from recent developments in fact are. as of late, it looks a little bit troubling. we had a big pullback in consumer sentiment last friday. in today's new york empire survey is a bit of a sentiment gauge as well. much weaker than expected. pimm: what about the retail sales report? stillthat is a reported most of the retail sales figures have mentality this is a rare occasion where the empire su

tom keene, i believe with mike mckee.tickets to go see it live and a lot of people really enjoy it. if you do not get the chance to do that, definitely tune into bloomberg radio or watch it here on bloomberg television wednesday of next week at 6:00 p.m. ♪ matt: welcome back. i am matt miller here let's get .ack to julie hyman the s&p in the dow post gains of about .5%. we have seen already this intraday volatility. earlier in the session, bouncing between gains and losses, now holding onto the gains. things have become more subdued for sure. after the past couple of weeks, big declines in big swings. today in terms of price actions and volume, things have slowed down. take a look. everything is back from school and people are back from labor day. and yet trading has fallen off from where it was in the past couple of weeks in august. , a showing of industry group by industry group, a change of volume in the past 20 days. 5%, a volume gain of about it is the only of about 10 industry groups seeing an increase of volume. fi

tom: where is probabilities right now, mike mckee?el: we are starting to get into the range of market perception, rather than being buffeted by headlines. move.: but that means a something has to happen at the end of next week when the fed press release and a press conference there, you will move one way or the other because 30% is not a typical placing for action on the part of the fed. michael: the interesting thing i have seen is that people are looking at this as the start of the fed tightening cycle, and they have hearkened back to 1994 or even 2004. the fed says over and over again it ain't like that, we are not going to go very high, we might be one and done for a while. the turnover rate will be low, but people do not seem to buy that. steven: if that means into the early part of next year, fine, but the fed has no history of -- michael: even if it is 1%. even if it is 1% for the cycle, the 2-year note has a little bit of pricing. be a remarkably shallow tightening cycle. tom: why is this happening now? -- thereapan and china

back to tom keene, mike mckee and tracy alloway. ♪ tom: from rome to havana and now on to washington,e president of the united states at the white house. marines await as to some 15,000 including john gary hring.n gear michael: back on the continent, the pope left behind news happening. mario draghi is testifying before the european parliament. a lot of people have been wondering if he would signal that there is additional qe coming. so far, no such signal although he does say it is possible. he says the macroeconomic environment has become more challenging. inflation will stay lower than the thought it would for longer. inflation is going to only rise slowly. the ecb can alter the size, composition, and duration of qe. no sign that they are going to use it yet. tom: a marine stepped forward above the door of the south lawn. up. going up -- flags going we'll go to vince p oz a -- vincent piazza and keep you updated on the peasantry -- the pageantry. his oil disconnected from other commodities? vincent: we think it is a function of deferred maintenance by the refiners. you are entering

coming up, mike and tom hold a co-authorsn with the of a new book. ♪ tom: good morning. michael mckee is always brought to you by invesco. have you considered all your alternatives, noncommittal asset classes and strategies? find out more at invesco.com/ alternatives. futures -34. mike, we have been talking about the brazilian rail this morning. point -- 4.02. isn't it great to do the first interview with someone when they take over a new duty? michael: it is the first time she has been with us as the head of strategy for td securities. i want to start with global rate strategy, which, oddly enough, is your title. i am wondering what a global rate strategy is right now in an era in which the fed says it will not raise rates, but then the next day, a whole bunch of fed officials come up and start saying that we will raise rates. no one quite knows what the fed's reaction is, no one knows whether the ecb will be doing additional qe, and everyone is wondering whether the bank of japan has it right. how do you figure out what to do? having me onfor the show. i'm excited to be back. you br

tom keene and michael mckee spoke about fundamentals with the man who manages the world must largest hedge fund, ray dalio. mikeim if quantitative easing works. >> d think qe works anymore? dalio: it's going to work a lot less than it worked last time. we cannot have a big rate rise for the term structure raised in assets. the amount of debt, what the distant -- with a deflationary pleasure exist around. we will have a downturn. the downturn should be particularly worrisome because we don't have the spreads. when you are asking whether the work, qe is the purchase of those assets to get those premiums up. when you keep pushing, am i going to buy more bonds. is there an attractive investment relative to bonds, the spread is what is going to drive that. if there's not much spread, you get less effective monetary policy. michael: are we there? dalio: we're not there yet. we are closer. europe is there. michael: they are pushing on a string? dalio: what happens is, what are you going to buy in the way of the bonds? michael: you can't buy a german two year. dalio: we are very close. that is why you need more currenc