The expiration of futures and options contracts causing an increase in volume, although thus far not an increase in volatility. Financials biggest drag today. The second biggest drag is energy. Exxon mobil today down 1. 5 today down 1. 5 . Following with oil prices as well. Schlumberger, however, some of the oil services companies, we are also seeing declines they are, and this being friday, we have the count. Oil rig we has been seeing it rise, or at least be unchanged, for 12 straight weeks, so this uptick that you see in the past couple of months again, 12 straight weeks of either a zero reading or a build. Finally, gasoline as well bears mentioning. , uphowever, is going higher 2 , and thats after a leak in an alabama pipeline that shut that pipeline. Thats really the main when that brings gasoline from gulf coast refineries to the southern United States, so with that supply constraint, that is what is driving gasoline prices higher. David thank you very much. Mark crumpton has a check of the news at this hour. Mark after years of questioning president obama us citizenship, republican president ial nominee donald trump today reverse course after years of questioning president obamas citizenship. Mr. Trump Hillary Clinton and her campaign of 2008 started the birther controversy. I finished it. I finished it. You know what i mean. Was born barack obama in the United States, period. Mark the Clinton Campaign rejected mr. Trumps assertion. Mrs. Clinton speaking today to a group of africanamerican women said donald trump should be regarded for originally starting the birther controversy. In other news on this friday, the u. S. House Intelligence Committee says Edward Snowden caused tremendous damage to National Security. A report says the u. S. Government will eventually spend billions to repair the damage he caused in leaking National SecurityAgency Documents about spying operations. Snowden is now a fugitive in russia. A movie sympathetic to him opens tonight. The Associated Press and other organizations are suing the fbi. They want to learn who it paid and how much it spent to hack into a locked iphone as part of the investigation into the San Bernardino shootings. More than 1 3 of saudiled air based on aivilians comprehensive survey published today in the guardian newspaper. The findings contradict claims by the saudi government they are seeking to minimize civilian casualties. News 24 hours a day powered by more than 2600. Ournalists and analysts this is bloomberg. David next week is another longanticipated fomc meeting in washington and this week, a flurry of conjunction on what the fed will do. On Interest Rate hikes seemed to dominate dovish tones. No compelling case of any kind for a rate increase in september. The olympic sport has become will they raise it, will they not raise it . This has been a topic of almost numbing boredom to me. The fed has gotten themselves into a hole of zero Interest Rates and do not know how to get out. What . Ease in three years . I think what they have done is a terrible error by dithering so much over 25 basis points. We have the lowest rates in the United States and around the inld that we have ever had the past thousands of years. I promise you the economy is not the worst it has been in those years. 25 basis points, 50 basis points is going to affect markets, but it will not affect the u. S. Economy. David i want to break a little news here crossing the bloomberg terminal, donald tusk of the eu saying theresa may, Prime Minister of the u. K. , to be article 50 likely triggered in january or february. Back to the fed. We had the cacophony of voices. Help us make sense of them. Not in the september cap. David you are not. I see here 22 chance of a hike. It just inched up slightly after the report this morning. Before the report, it was about 18 . Todays cpi report was positive news. Help alleviate concerns of policymakers that inflation 2 not getting back to their target, but it will not create any risks that inflation will flare up any time soon because it is just not fair. It is a lagging indicator, and growth is not anywhere near the level where it should create any inflation flareups. David cpi energy was pretty flat. It had been a drag. Are we seeing a change on the energy side . It is ok but flat, as you mentioned. The declines in good commodities were upset by a pickup in services commodities. , its ok. It is getting back but will not become a contributor any time soon. David you mentioned this is something fed policymakers will next week. Weigh if we could bring that up and look at the table, give us a sense of the economic setting these policymakers will be sitting at next week. Obviously, they have a dual mandate. They look at the Employment Situation and inflation situation. On the employment front, we are beforemuch where we were december. You can see the table, the payrolls actually slightly better than they were before the december rate hike, but in terms of growth, we are nowhere near where we were at the end of last year. Growth has decelerated, and the indicators the most recent indicators on retail sales and Industrial Production are telling us that the second half of the year rebound will not be as strong as we previously thought. David one last function i want to bring up on the terminal before we go, there has been a lot of of conversation about the effectiveness of this kind of forecasting. There has been a lot of onferent views, not Just Television from these experts but from actual policymakers and bankers as well. What do you make of the dynamic of conversation we have heard . Fed policymakers definitely still think that they will be able to raise rates, so we probably will not see much of a change going forward. 19the way, we are getting this time around, so it will be interesting to see how it evolves going forward, but we will probably see that much change in the years ahead. David great to speak with you. Coming up, a special conversation with the u. S. Secretary of agriculture, tom vilsack. Andill talk megamergers, the state of the farm economy. This is bloomberg. David it is time now for the bloombergs nest flash, a look at some of the biggest business stories in the news. Britain may have to give up membership in the European Union single market. That would mean the loss of the u. K. Banks crucial access to clients on the continent to achieve immigration restrictions that voters have demanded. Instead, treasury staff are drawing up their own blueprint, which they hope will allow Britain FinancialServices Firms similar access to europe. Robert bosch provided software, the Justice Department is asking it automakers in addition to vw used the software to skirt environmental standards. Scotch whiskey has pulled out of ends in the first increase since 2013, driven by demand in asia. The fall of the pound after the increase demand for scotch and even more and that is your business flash update. The takeover of st. Louisbased fire by german german bayer is getting the attention of regulators around the world. The merger caps a way of consolidation across agriculture. Monsanto past ceo month santos ceo monsantos ceo spoke with bloomberg. Grant the combination of the two companies unlocks the potential going forward. I think this is a great deal. David he shares insight on consolidation in the industry. Secretary vilsack is the longestserving cabinet member in the Obama Administration and joins us now. Let me ask you about some of the concerns that have come up as a result of this merger and others, that this space, the seed space, the fertilizer space , is getting too small. Secretary vilsack if you look at what happens when commodities get tight and margins get deuce, used consolidation at the farm and in terms of his mrs. Serving the farm. Underlying this is a series of small Seed Companies providing innovation that farmers are looking for. There are appropriate questions to be asking in connection with any merger this side, but im confident with Seed Technology coming off patent that we will continue to see Smaller Companies that will be successful and push the big guys to provide farmers choice. I think it is appropriate for regulators to ask questions, but at the end of the day, i am more encouraged by what i think will be a spurt of innovation. David how much cause does it give you that a lot of these mergers are taking place with Companies Based overseas . Secretary vilsack thats part of the world we live in and we just got finished having a conversation with several hundred folks about open data, the sharing of information in governments and the private sector and agriculture and nutrition. Thats the world we live in today. There is a sharing of information because we aced a huge challenge, which is to ease an everincreasing population. It will require as much innovation in the next 35 years in agriculture as we have experienced in the past 10,000 years. I think what we are looking for our ways in which we can provide assistance to the government. Open data is one way. David you think of innovation on the tech side. It is often happening with small companies. Bayer was stressing big names could lead to innovation. How will creating a Bigger Company be a more Innovative Company . Secretary vilsack a coven nation their Core Competencies is what they have been talking about. A my lifetime, there has been tremendous amount of innovation and agriculture. That has been a result of technology obviously. The Agriculture Sector has been one of the most innovative sectors of our economy over the course of the last 20, 30 years. David you travel and talked to a lot of farmers. What do they say . Secretary vilsack they are obviously concerned about their bottom line. They want choice. They want competition. They want quality. They want new innovation. They want it for the least amount of money possible, which is certainly understandable, but at the end of the day, what were seeing in america is a diversification of agriculture. We are beginning to see a lot of goller, midsized operators into food systems, and that will create opportunities for Seed Companies and for farms to be more diversified and what they grow. We are dealing with climate change. Some of the challenges that will create. It is important for us to have the best and latest research so toare in a position to adapt a changing climate. David when you talk to younger people getting involved in arming, how concerned are they about the economics right now . We are not at the greatest part of the cycle. Are they worried about making this a living longterm . Secretary vilsack in the shortterm, everyone is always concerned about that. But i think you have to look at fiveyear increments like we do in arm farm bills. Debt to equity ratios are still very strong, almost near record lows. The fact is that farm families and Farm Household income is above the average American Household income, so there is some additional opportunities, i think, and young people are very interested in this space. I think they are cautious. Thats why we are looking or consent two ins to incent small and midsized operators. David when it comes to agriculture being a global world, the u. S. Tendered a complaint against china, how they have incentivized farming. How big a concern is that to you, and how do we navigate competition with china going or were gekko secretary vilsack china is our number one agricultural customer, so we have to respect that, but at the same time, they could be doing a lot more and we could be telling more if they had not been subsidizing the commodities as much as they had we could selling more. They were going to be allowed a certain to minimus level a level. De minimus we filed 20 of these cases. Or two them have an against china. Several of them have been in the agricultural space. Against them have been china. It is a signal that we are going to focus on enforcement and make sure these trade agreements are lived up to. This is a reassuring step we have taken for american agriculture. David exports are way up. If you listen to the rhetoric on the campaign trail, half of it is kind of inward looking, talking about trade in a way we have been for the last 4, 8 years. How difficult or concerning is that to you and could it be for your successor . Secretary vilsack to the extent we think we can only do business with ourselves and still prosper, that is a missed taken view, i think. N the Transpacific Partnership the market, so it is something deeply concerning to the president , deeply concerning to anybody who understands the world in which we live. Trade agreements need to be fair and need to be enforced and i think we are reflecting that, but at the same time, we have to be open to the rest of the world because 95 of the World Consumers live outside the u. S. And emerging middle class is in asia offer a tremendous opportunity emerging middle class is emerging middle classes in asia. David when you go to iowa and talk to farmers, and they wonder who to vote for because of issues like trade, what do you tell them . Secretary vilsack i have to be careful about answering a political question in what is primarily an official capacity. I think president obama has the right approach. He understands americas place in the world and understand the necessity from a National Security perspective. We do not necessarily want to see the asian market to china. We do not want asia to set the rules of the road. The Transpacific Partnership and things like and allow the united and toto have a voice lead, which is what the world expects us to do. Hopefully, Congress Gives it a chance. They have a decision to make. We will see what happens after that. David thank you very much. U. S. Secretary of agriculture tom vilsack joining us in new york. More coming up. This is bloomberg. Week bloomberg is this bloombergs nestweek businessweek is out with a special election addition. We wanted to go back and explain what is making this election so unusual some would say even weird and how we got here. We took it from that perspective. David we hear the stroke that , thisare two americas binary system. You take that apart and show that there are many more. We started with two and ended up with 242. Our goal was to show how we got here by looking at how interests compete and overlap, so we look at all kinds of people all over the country. David you are always so effectively using data and visuals. There i say this issue took that to a new level dare i say this issue took that to a new level. Ellen we did turn to the data. We started with census data but moved on from there. We divided people into groups and matched those groups because many people are many different kinds of things. Throughout the issue, we are doing statistical breakdowns, looking at Additional Data to show what people care about and why. David the writer of the opening and Closing Remarks of the issue is a bright eyed optimist saying the device may not be as deep the divides may not be as deep as we think and there are ways to bridge them going forward. Ellen peter is our resident optimist. He is our economic columnist, so i pose the question where is the hope . He basically said that what americans have in common is a desire to create an america that can go forward and allow them to prosper. Go,d quickly, before we what are some of the issues you explore . Childcare, you do well, but these are some of the issues the candidates do not talk about every day. Spreads ofid two people connected by their needs in childcare. You have people whose children are being taken care of by caregivers, and it shows the complexity of an issue that has come up in this campaign. David thank you very much. The election issue is on newsstands and you can hear more every saturday and sunday on bloomberg television. This is bloomberg. From bloomberg World Headquarters in new york, this is bloomberg markets. Lets take a look at some of the days biggest movers. Sugar surging to a fouryear. Igh bad weather in brazil being blamed for that. The midwest of the u. S. Is forecast to into rage rise spell after getting soaked with rain thet few weeks midwest of the u. S. Is forecast. O enter a dry spell crude oil tumbling again today and having its worst week since early august. Rices down 1. 9 taking a deeper look at oil, the chart to my right shows opecs surge in output and the subsequent fall in prices. Check the headlines and the bloomberg first word news at this hour. Mark president obama is ramping up his campaign to persuade congress to pass his struggling trade deal with asia. President obama after a lot of negotiations, weve got what is the most progressive, effective trade deal that we have ever seen. Byk the pact is opposed both president ial candidates and many rankandfile lawmakers from each party. Congressional leaders say it is unlikely to get a vote this year. And this disclaimer mike bloomberg, founder and majority owner of bloomberg lp, the parent of bloomberg television, has publicly stated his support for the Transpacific Partnership. A rash of hacking attacks has u. S. Officials concerned. Nine states have asked federal authorities to look for vulnerabilities in voting systems tied to the internet. Saidity Company Symantec its workers were easily able to hack into an electronic voting machine. A british judge says a man accused of hacking into American GovernmentComputer Systems and stealing confidential information should be extradited to the u. S. To face trial. American prosecutors say he stole names, Social Security numbers, and credit card information. Love has 14 days to appeal todays ruling. U. S. Secretary of state john kerry spoke with his russian counterpart, sergei lavrov, by phone today and urged him to allowsyria to humanitarian convoys into aleppo and other areas in need. Said unless the aid is allowed, future military cooperation was not guaranteed. He called the delays and assistance to a aleppo unacceptable. News 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Back to you. David north korea surprised the world last week when it conducted its most powerful nuclear test to date, flying supersonic bombers over u. S. Ally, south korea. Of ake with the cochairs task force on independent policy toward north korea. Here is our interview. Well, there is a grave threat to the allies we have in the region south korea and japan, a grave threat to china, and the threat is growing and growing to be a threat to the United States because the Nuclear Developments indicate the next president could very well have his advisers or her advisers come in and say that the North Koreans can now strike the United States with a nuclear weapon, so it is a grave and growing threat. David was this most recent test somehow different from what weve seen in the past . Admiral mullen he continues to advance his capabilities. We have seen in the last year launches from a submarine, as an example. The size of this test at least was to believe to this point so far we call them tests, from my perspective. They really are operational shots where he is testing his system, and he continues to advance. He has actually tested more missiles in the five years he has been head of his country. Han his father did all of that is pretty alarming. David your task force makes several recommendations, one of which is more sanctions. When you have a country like north korea that is no so heavily sanctioned at this point, what more can be done . the United Nations resolution passed with Chinese Support that basically puts the responsibility on all human countries to search planes going in and out of north korea for any kind of military equipment just puts the responsibility on all United Nations countries. Its not being rigorously enforced, but it is a very powerful tool, and that can be stepped up. To put to be willing both rewards and cost on the the North Koreans continued to be defiant on the resolutions. Finally and most important, we have to have a partnership with china if we are going to end up with a Korean Peninsula that does not have Nuclear Weapons that is stable and do it without a war. That is essential. David how do you make the case to beijing . China has been such a longtime ally with north korea. How do you make the case that they should be siding with the rest of the International North korea . Nst admiral moll and in our engagements with china, the chinese leadership says they are interested in keeping the region stable. They overlap with our interests. To remind everybody, this is a part of the world that has four of the five biggest economies in the world, and that will continue into the future, so stability is absolutely key. What we try to do in the report is create some level of incentive possibilities for all the stakeholders, and that includes china. Part of the recommendation one of the recommendations is inside aa and the u. S. Very complex relationship lead the effort to resolution. We have had reaffirmation from the chinese leadership that they will not stand for nuclearization of that peninsula, so our goal is the same. They have been focused and rightly so on stability of the peninsula for a long time. We think there is ample opportunity to work together. Thequestion is will leadership from both countries stepped forward and really work hard to make this happen . David the question i want to put to both of you is the socalled pigot to asia to the pivot to asia. Senator nunn, i will start with you. Does that seem like a partial pivot at this point . Is there more that could be done . Of course there is always more that could be done. It is a matter of resources, but it seems to me that it is not simply military forces that are part of the pivot. It is also much more engagement in Economic Issues and also political relationships. We are strengthening relationships with japan and south korea, with other allies in asia. We have a major trade agreement, which is being opposed now by Major Political forces in the u. S. , but that was part of the , and economic thrust. So it is not just military, and it is enormously important. That part of the world is really going to have the strongest Economic Growth over the next several decades. David since you have introduced that, i wonder, looking at the Campaign Must far, it seems there has been at least on the republican side more reluctance to engage with china on some issues. Ve proposedat you ha is getting china more involved with talks. Are you worried about how the election shakes out . Mullen maybe this is my experience, but the reality is the world right now really forces engagement with those who very significant powers in the world, and to me, that gets driven in great part between the u. S. And russia im sorry, between the u. S. And china in particular because of the importance of our economies together and how interlinked we. Re i think our leaders, whoever they may be, will almost have no choice but to engage china, and this north korea peace this north korea piece is part of it and the tpp is part of it. How we interact with the world. Ill be critical senator nunn communication between the great powers is absolutely essential. Building trust is essential and you cannot build trust without communication and we must in for size that with russia and china as well as our key allies. David still ahead, donald trump reverses course and now says president obama was born in the u. S. , period. His words. Does this matter in the president ial race . This is bloomberg. David this is bloomberg markets. Im david gura. Hillary clinton and donald trump both in the city they hope to call home for the next four years, washington, d. C. Donald trump called for rebuilding the nations military and admitted he was wrong about president obama being born overseas but not before taking another shot at his opponent. Mr. Trump Hillary Clinton and her campaign of 2008 started the birther controversy. I finished it. I finished it. You know what i mean. President barack obama was born in the United States, period. Meanwhilesident obama wasted no time taking a shot at mr. Trump. President obama im shocked that a question like that would come up at a time when weve got so many other things to do. Im not that shocked, actually. Its fairly typical. Weve got other business to attend to. I was pretty confident about where i was born. I think most people were as well. My hope would be that the president ial election reflects more serious issues than that. David what was the political motivation for bringing up the birther issue again . Steve, great to have you with us. Steve thank you. David put this into some context. Why did this issue come up today and why did donald trump reverse course now . Steve we say this a lot a weird day. The fact that we are even talking about this. We should start with what donald trump said about Hillary Clinton being the controversy that has been debunked. That is not true. This is what catapulted him into the National Spotlight and political spotlight years ago. He has been writing it for years it foras been riding years. His campaign has been advertising that they were going to do this for about a week now, a few days now. T raises a couple of questions first of all, donald trump still knows the media and still in some ways is playing the media. He announced he is going to do this. He gets out there and holds a whole event, understand words words, andtters 10 everybody is talking about it. It is dominating the news cycle. The other part of this is if donald trump is learning from past mistakes when it comes to controversy. This is a new approach we have seen from him where he comes out, says something very short, very curt, tries to move on, and i bet you we will see in the next couple of days him and his campaign saying, ive addressed this. Its over. Lets move on to other things. If that is possible remains to be seen. David our colleague was back at atlantic when this came out, and he quoted the clinton strategist who advised Hillary Clinton to play up the broader worldview of barack obama at the time. Let me ask you about the polling we are seeing. Many democrats are worried here. How much cause is therefore concern . Were seeing polls on the national and state level starting to tighten, starting to contract. The Clinton Campaign has said for a wild that this will be a tighter race than polls had been showing just after the convention the Clinton Campaign has said for a while. I think the Clinton Campaign always knew a landslide would never be the case, but i think they are a little more nervous than they want to be. Some of it is a reflection of the bad week she has had. We see polls by definition naturally swing back and forth. I think some people need to calm down and think about where the far as whichs states she needs to win and which States Donald trump needs to win. He still has an uphill battle, but he is within striking distance of all of them. If the dominoes all fall in his direction, it is possible. David she is ahead and back on the trail as well. What do the next few days look like . She is going to try to put this health thing in the rearview mirror. She is back on the trail trying to hit the ground running, show that she is excited to be there, joyful, having fun and healthy, as that is what we will see a focus from her. David it is time now for the bloombergs miss flash Bloomberg Business flash. Pt medco power indonesia is joining the bidding process. You will ever is considering company, thet household Product Company cofounded by actress jessica alba unilever is considering joining honest company. The pilots union of lufthansa , andalks over pay, pension benefits have failed. Lufthansa on watch for a possible credit downgrade. That is your business flash upgrade. Update. Julie hyman is looking at stock news. Julie a few miscellaneous movers we have not gotten to. Debbie w grainger is one of the worst performers in the s p 500 grainger. Ww today thatlyst says the long shadow of amazon business has been a growing since it grainger ever got into the business. The analyst is citing a redacted , whiche Court Testimony cited grainger as a direct competitor and direct target of amazon. We are also looking at a couple of health care movers today going in opposite directions. After reports by reuters and the New York Post that the , shareswas up for sale of depomed spiking. Another Company Testing a respiratory vaccine for the elderly for rsv, a flulike ailment was mostly affect the elderly, but it got worse results than a placebo in test, and that is causing that total. Finally, Frontier Communications might not be able to maintain its current evident current dividend. A citigroup analyst says the company will probably need to cut its dividend by 2018, so theres shares down 2. 5 shares down. They have a hefty yield, by the way, so that would be one of the reasons for people to own the stock. Devoteesming up, apple lining up to get the latest iphone. Will this rush impact the Company Stock price . This is bloomberg. David this is bloomberg markets. Im david gura. Are heree 7 and 7plus in hong kong. The new phones are creating quite a buzz but many who want them will have to wait a while as supply is tight. How big a boost will this be to apples bottom line . We spoke to an analyst with a on apple with a target of 173. Will this have enough features to make people upgrade . One of the most Amazing Things to me about apples iphone every year, it has been effectively and incremental natural evolution, across each cycle, they have systemically gained share. This speaks to the brand value it brings to the table. Then you have this really Large Installed base we will definitely get a contraction on the 7 according to our survey data. More evenve a distribution of new users coming into the iphone ecosystem. That is what our survey shows as well. As a result, we will move away from this one good year, one bad year cadence that put a limited multiple on the stock, so we will get two years of good year on year growth which i think will drive significant expansion, and one of the primary reasons behind one of the highest price targets out there on the street. David i just downloaded the new operating system. There has been this focus on services. We are looking at the hardware out today. Are you satisfied with the degree to which apple is focusing on that . Toal i think they continue do a better and better job of utilizing the cloud. I continue to hear anecdotal stories of frustration with apples level of service. When you compared to the bellwethers of purveyors of very large scale, they have a much stronger dna dealing with open Source Software to leverage to deliver Better Services at ,cale with higher reliability so i think that still is a problem for apple, but again, it is that brand value that continues to power apple share gains year after year. David a couple quarters back, there was so much concern about apples supply chain. Here we are with a new model of iphone and seeming like heavy demand. Are you confident the company has ironed out those kinks in the supply chain . Nehal supply constraint today, but i do not think that is a statement of them having not ironed out the kinks. It has continued to operate quite well overall, and i really dont see that being an issue. You always have a supply constraint at the beginning of the iphone cycle. Taking awayheyre the number of phones they sold on the first weekend. David i wanted to ask how big a deal it is that they are taking that away. Nehal it is a big deal in investors minds. We have known for the past 10 years that the iphone has always been in supply constraint. It is just hiding something that is not as good at his good as it is supposed to be. Then monday, tuesday, wednesday, we saw the carriers in the United States announcing they had 4x yearoveryear increase in sales or at least flat. Thank you very much. This is bloomberg. David welcome to bloomberg markets. We are life from bloomberg World Headquarters in new york for the next hours and covering stories in chicago, berlin, tokyo, and beyond. A volatile week for the markets. Oil trade at a onemonth low. How this will play into next Months Central Bank meeting. Deutsche bank sells as shares a selloff. Questioning,f president obamas citizenship, donald trump this morning said the president was born in the u. S. But couldnt leave it at that. He used it as an opportunity to ate a job at a jab Hillary Clinton. Lets head to julie hyman for the latest on the markets. Julie things have been remarkably