Worldwide, please make a visit to Lower Manhattan. The drama there, and the improvement in the architecture, the new architecture, in the last two years has been extraordinary. Lets go to top headlines with david gora. Thewe could see forecast for crude has been lowered once again. Goldman is trimming a 2016 estimate for a west texas crude to 45 a barrel. That is down from the may projection of 57. It is also slashing its brent crude prediction. The Iran Nuclear Deal will be formally adopted the next month now that it has survived a congressional challenge. Send the democrats and the president obama a major foreignpolicy victory. Republicans were two votes short of what they needed to pass a resolution of disapproval. Worldple around the should know that todays outcome was clear, decisive, and final. There is no doubt that the congress will allow this historic agreement to go forward. Efforts by the opponents were soundly rejected, much larger than people thought. David the plan to i read must start taking steps to comply, but opponents say they will keep fighting or human rights activists say the u. S. Should accept more migrants fleeing the syrian war, but the obama administrations say Security Issues of slow the process. President obama wants the u. S. To take in 10,000 Syrian Refugees in the next two years. Than. S. Has accepted less 1500 since the syrian war started two years ago. Saysuropean Union Official governments are green are in agreement on migrants there. They will shelter 160,000 refugees. 11 of the republican candidates will make it into prime time for president ial debate. Among them, carly fiorina, who was not among the 10 picks for the debate last month on fox. Of thepiled polls leading candidates. The debate will air wednesday night at 8 00 eastern in the Reagan Library in california. Those are the top headlines. Tom lets set a data check for you. Not much going on in the market this morning. Indonesia gets my attention, but futures are negative four are negative for. Fix, 23 point 24. 3. Gold is weaker. There is the indonesian rupee. Know you carry rupee in your wallet every day. Lets go to the bloomberg terminal. Back three dollar, and four decades with all the drama back then. Here is the strong dollar of the late 1990s. Before because we set this up, the log chart, this distance some of the strong dollar distance, we can equate over here. This is how far back we are to that 1990s dollar. Where the dollar affects the american economy. It is going to be bad for imports, right . Tom it changes import export dynamics, but i wonder about the knocked down effects for any of the other countries. We will touch on that for much of surveillance here can we begin coverage with a forecast of commodity meltdown. Jeffrey currie months ago framed 39 per barrel. His team at Goldman Sachs looks for oil to move, as low as 20. , theore importantly ramifications affect all commodity producers. Eswar prasad is professor at Cornell University and at brookings institution. He is the former head of the imf China Division and joins us this morning. Is the commodities super cycle over . Is the commodity gain done . It suddenly does not look good for a con for commodities. China actually does manage to leave out of this economy away from investment, which means less demand for economy for commodities. Either way i see much weakness. Tom we are going to talk to you en later about china. I believe one dollar 95 send gasoline is a good thing. It has got to be great. Eswar one of the reasons we are seeing weakness in oil, the supply response coming from the u. S. Barrel, a lot0 a of production has come online in the less two years is not going to be economical. This will mean a structural shift. Potentialo there is a winner for new year for u. S. Manufacturers. Eswar there has been a good net positive. David co there is a resurgence that this leads to. Eswar the question is how low oil can go before there is a negative effect. There is so much weakness around the world that it is less clear. Tom bring up the chart that we did on oil at the top of the hour, showing the 20 mark. To me, the important point of this Good Research is that we do not go back to 60, 80. Everybody is bringing down there one and twoyear fuse on oil. What does this signal . It signal structural weakness, largely because the big question that still remains, the supply on oil states at 20 a barrel because than a lot of production is not economical. Within that microeconomics, does it hearken back to the instabilities that we saw in 1994 and 1997, and then on to the drama of 1998 . Eswar oil at 30 or 40 a barrel is good for the u. S. Economy, keep some production online, but the problem if it goes below that it could be a net negative. David co and apart from the economics, there could be geopolitical issues. If you look at nigeria, venezuela, it puts a lot of pressure on them when they are getting most of their revenues out of oil. Eswar absolutely. Many of these Companies Many of these countries economies are based exclusively on oil. Some of the other countries you mentioned this will put the squeeze on them and the problem becomes social and economic instability. Tom how do you fold in global centralbank action . It seems like not a currency war but almost a centralbank war of reducing Interest Rates within deflation from the commodities. Is it a centralbank war right now . Eswar i think Central Banks are being squeezed because there is not much room. Especially if you take these economies weather is not room for any other policy, Central Banks are the only game in town. So there is this increasing imbalance with the u. S. Trying to think about raising Interest Rates, looking for when that will happen, and the rest of the world counting on Central Banks for Economic Growth. It is great to see this curious configuration of currencies in particular. As we see the divergence intensifying. Of cornellprasad university. Coming up, ken rogoff will join us in the next hour from harvard. We will pay remembrance as well to september 11. Our twitter question of the day. We are simply asking, on Goldman Sachs, how low do you think oil can go . Coming up next, can verizon succeed where others have failed in global tv. This is bloomberg surveillance. Tom somber events in Lower Manhattan today. We look at ground zero this morning. It is spectacular. If you have not attended the wonderful architecture of the new ground zero, it is extraordinary. I visited a few weeks ago. Many going up to see the Freedom Tower in new york city. David westin joins me. Cornell university, eswar prasad. Lets get to top headlines. The Financial Post says the Purchase Price is expected to be about 13 billion. The unit is the largest financier in the north american commercial truck and trailer segment. Bloomberg news is reporting droppedires merger fund 4. 2 in august as stocks tanked worldwide. Paulsons advantage hedge fund. Ellen pao will not appeal her gender determination case. Court costs are 276,000. The lawsuit claims bill colleagues preyed on her and she was not promoted because she claims mistreatment. We are joined now by paul sweeney from bloombergs intelligence unit. Verizon is making an announcement this morning, and time will tell how important it is. They will have a new mobile streaming service, free to your telephone. Example ofis another what we have been talking about for 10 or 15 years, which is the convergence of technology and media, and we are seeing it happen. We have seen so many deals where we have seen Media Companies like time warner and hbo taking their content direct to consumers, engaging technology, the internet, bringing their content to consumers. Now you have verizon trying to get to david but this is different because unlike hbo, which is subscription based, this will be free over the air like broadcast tv supported by advertising. Paul they are trying to offer this free, make it an adsupported model, and if they get enough traction in terms of subscribers, i expect they will charge. Tom can i ask a dumb question . Does anybody want this . I am texting right now, bumping into people like an idiot. How am i going to do this with tv . Paul everybody looks at one company and they look at netflix and they see over 50 million subscribers globally that are paying for streaming video, and we know that people are consuming more content via the internet primarily via their mobile devices. This is where technology and media is coming together. We have seen lots of examples where consumers are changing their behavior. David and they are not calling it verizon, they are not calling it verizon fios. They are calling it go 90. You turn your cell phone 90 degrees to watch the video. Tom that is so lame, we need to bring in david gura, the closest thing to a millennial. Would you help me here . It is like digital diary. It is insane. David is there evidence indicating people want to watch shows of any length on a smart phone, on a small tablet . Paul there absolutely is and we see it across the board. It really is a global phenomenon. You see all the content players, Hollywood Studios reconfiguring content so that it plays on mobile devices. They are upgrading technology. Brady want to watch tom beat the steelers on a mobile phone . Bei want to watch duke beaten in basketball . Know, isrts, as we really the mustsee tv left on broadcast. David espn is one of the offerings on this new device. Paul one of the challenges for verizon, the big challenges they do not own any content. At t went out and spend billions directvirectv because has relationships with the Hollywood Studios and the broadcast and Cable Networks. Verizon is trying to piece together an offering. Tom the mobile phone is treated differently in china, isnt it . Can you imagine mobile tv across the billions of people in china . Eswar i would hate to see the streets of beijing with people looking at their cell phones. China again, the mobile phone has become much more important of a part of peoples lives. You will see this demand especially in china for many more things to be done. We see this as being the way of the future, but the implications for human relationships and how things work in the streets, i fear it. David going back to pauls point of how many announcements we are seeing, a lot of Media Companies do not know where it is going and they want to try everything because something might work. The those are the experiments that make the mobile phone risk work. David you see this overall in media. There is a fairly limited audience, but they are really engaged. It was smart, well recorded, it had a certain amount of iss that one verizon that what verizon wants, a limited audience . Paul no, they want to sell advertising. David it makes the deal worth it. Paul exactly. Tom are you optimistic or paul i am very optimistic because i see the other side of the equation where the broadcast and Cable Networks are seeing real constriction on their business. Tom paul sweeney from Bloomberg Intelligence on a new experiment. Eswar prasad is with us from cornell. In the next hour, ken rogoff china, on the most interesting Foreign Exchange markets of 2015. From new york city on this september 11, it is bloomberg surveillance. Is not juster 11 about new york city. Here outside the pentagon, there is a wonderful memorial to the flight from dallas that was heading for los angeles and did a sharp turnaround and created such devastation at our department of defense. We remember september 11. Good morning, everyone. Loomberg surveillance we welcome you all to our efforts today. David westin has the morning mustread. David the thing that struck me this morning came out of usa today. We all expected another major attack and it did not happen. But it came back in a different form, in isis, in beheadings, in burning people to death. It is a much harder formed to respond to. Tom we are making that response right now p general allen will be speaking about isis. Eswar prasad is with us from Cornell University, and the search here away from the military and the terror of Economic Growth. How do we bring stability and Economic Growth to some of these geographies, particularly the middle east. To 20 a oil goes barrel, that will heighten the social and economic instability in the region. But the problem is many of these countries need governance reforms. Those are very difficult even in good times. David we saw that with the errors spring. We thought everything was with the arab spring. We thought everything was fine. ,swar countries like venezuela government problems are very hard to fix. Economic stress is going to make it much worse. Tom when we talk about the rule of law there, give us an update on the rule of law in china. Is it there gekko eswar they have a very different is it there . They have a very different definition of the rule of law. Haveudiciary is going to dominance over the communist party of china. It is a very different notion here. The government can be taken to the court. In china that is off the table. You need a functioning legal system to make property. Tom it is equivalent to the aristocracies of the middle east. Thanhey no different china in rule of law . Eswar there is no question of the functioning legal system because of the monarchies taking dominance over every aspect of life there. David i was in hong kong a while ago talking to one of those leading dissidents who campaigned in favor of chinas admission to the wto. He said the reason they did that is if they join the wto they would have to have the rule of law. Tom let me ask you quickly here , a question of rule of law, one of your expertise, david. Are we naive about what we see in the middle east and what we see in china . David realistically, we do not have rule of law. You do not have a judiciary and an independent bar. The United States is almost unique. We have always turned to the courts. You played left wing for the canadians, right . Is bloomberg surveillance good morning. Tom it is september 11. We will have coverage of the remembrances in Lower Manhattan, the pentagon, and in pennsylvania throughout the morning. Joining me on bloomberg surveillance this morning, david weston. Wonderful to have you here. Right now to our headlines with david gura. Locateo the bank has that has lowered its forecast once again a growing opec production for goldman is trimming its 2016 estimate for west texas crude to 45 a barrel. May a production of the prediction of 60. Carly fiorina will make it to prime time in the next president ial republican debate. She was not among the 10 candidates fox picks for its debate last month. Cnn added her after compiling polls from the last two months. 11 candidates will be on the stage at the Reagan Library in california. The others would take part in an event earlier in the evening. Clearden is making it that his decision about running for president is more emotional than political. The Vice President appeared on Stephen Colberts new latenight show. Biden says he is not ready to commit for a white house run. Joseph biden i do not think any man or woman should run for president unless, number one, they know exactly why they would want to be president. Two, they can look at the folks out there and say i promise you you have my whole heart, my whole soul, my energy, and my passion to do this. Co biden says he and his family are reeling from the death of his son. A big weekend ahead for netflix, its first original movies filmed screened at the toronto film festival. This is its chance at its First Academy award. It gets people accustomed to watching new theaterquality films at home. The patriots started the nfl season with the way they ended the last one, with a victory, defeating pittsburgh 2821 last night. Rew fordy th touchdowns. Tom start the game earlier. It was great to see that. He is motivated to do well. David i am a lions fan. You know where brady played college ball. Michigan. Tom lions fan . David there are not many of us. Tom we have breaking news on the Russian Central Bank. The Russian Central Bank does not raise rates. Inflation and the weakening ruble is a great challenge there. They do not do anything. To septemberrward 17 when we will have a lot more on what the u. S. Federal reserve bank will do. Dollarruble,he 67. 78. Marketthe current multiple is too optimistic despite the selloff. The market is pricing in earnings that will not materialize. According to a new study, they might just be right. Lets check in with director of Research Richard dobbs, one of the authors of the research. Tell us about this study. You think there has been a boom for 30 years, and it is about to go the other way. Had a wonderful 30 years of corporate profits, growing e times a wonderful period. As we see the picture going forward, the economic environment, Interest Rates cannot get any cheaper. Tax rates will have come down. Labor rates that have been driven down the real thing that will happen is we are seeing a change in competition. The rise of emerging markets companies that are going to be half the Largest Companies in the world are going to bring a different competitive dynamic. You look at emerging market companies, the typical return on Investment Capital is about half that of the u. S. Companies and the European Companies because they prioritize profitability, growth rather than profitability. Only one heree who is not an economist, but my recollection is when you have this reduction in essentially monopoly rents, it benefits consumers. It is bad for the companies because margins go down. But it is good for consumers. Richard one of the other disruptions we are seeing on competition is tech companies. If people were to pay traditional phone rates to skype calls, it would cost them 40 billion more. Issues with a good news for consumers. His is a great story tom richard, i hate you. It is 104 pages of reading for the weekend. This is phenomenal. Hillary clinton coined the phrase for me of fair trade. Can we have fair new competition if we do not have fair trade . Richard fair trade also includes small to Mediumsize Enterprises. See small to Mediumsize Enterprises competing, too, the cousin of platforms. Because of platforms here and we can see that the Small Companies are all going to be part of that. That is an interesting dynamic. Tom eswar prasad and Joseph Stiglitz talks about the global discontent that is out there. Is there a new discontent . Eswar American Companies around the world are going to have to adapt. Certain segments of the markets and industries, emerging markets are adding are moving up the value chain. Now it is moving up the value added chain and competing at every level with american and german companies. The landscape is going to be very strong, but this is great for consumers at large. Positiveis as a very development. But certainly workers are going to be hurt, and it will be a difficult process. Tom david weston, how can workers be hurt anymore . David there is a huge problem with income inequality in this country and around the world, which can give rise to social instability. Even within this new world, there are some new companies. Think apple, with very large margins. They are making good profits. Richard certain players are going to do well. With this widening of the googlesn the apples, are doing well, but the average company is not. , itthe last 30 years double, variability in terms of that. David how interesting. Where do we go next . U. S. Companies, European Companies need to realize the world is changing. David if you are a ceo, what do you do . Richard you need to understand where companies are. Interest Rates have gone down richard you are able to do that in a way you were not able to before. Companies need to be paranoid. Competition,he new what do you and don barton say when you go to beijing to consult people . What do you tell them . Richard the chinese are becoming global players. Tom but they just went through massive devaluation and are heading to some form of soft or modestly hard landing. It is not going well, so can they find a new Business Model . Richard everyone talks about china falling from 7 to 6 . Lets remember, 6 growth when you are that they is not that why when you are that big is not that wide. Tom coming up, brazils crisis. It escalates. That is the subject of todays single best chart. We have a semilong chart. That is the only way that eswar prasad would come on the set. Bloomberg surveillance on this september 11. Good morning. Tom good morning, everyone. Bloomberg surveillance. Tom keene and david weston joining us today. Eswar prasad from Cornell University. It is a good time to talk to professor prasad about a single best chart. We saw the rating cut earlier today. Indonesia is the emerging market du jour. Our single best chart indicates the dampened animal spirit of brazil and the immense challenge they half. Slope matters. The immense challenge they have. Slope matters. The boom through the 90s is described by the red line, and then it flat out stops. There is really a history of economic mismanagement in brazil, compounded by the political instability right now. Commodities are hurting brazil. You think about the weak demand from major export markets like china. Tom richard, i saw you on the front row of the world cup. You guys go down there how do you consult the government or private business to modernize in richard november, brazil has some pretty good winners, too. Think about anheuserbusch, one of the best run Beer Companies in the world. Brazilians now tom how do they extend that into best practices . These few companies are doing really well. How do you roll that out . David there are real problems with Economic Management under president rousseff. It will be interesting weather the downturn numbers really heits their hand, whether will have the flex ability do what he wanted to do. Richard the commodities problem everything, the slowdown in china, will be picked commodities. Out the finance ministers of the chicago school, are different been what you knew. Does austerity in brazil work the same way with the austerity with mixed results that we saw in europe . Think what mr. Joakim do, austerity to is an important part of it. I think it is crucial to show that the fiscal policies are on a sustainable part, not to squeeze it in the short run, but make it sustainable. Tom i have to rip up the script. Sad, speak tosa the brazilian people on why they should maintain confidence in their finance minister. The governmentw structure in brazil is a real problem. Macroeconomic policies are working well, and that can provide stability. Nothing else works. These two technocrats are doing their best in different circumstances, and they need support. Tom eswar prasad, thank you so much. Lets go to top photos. David number 3 Campbell Soup with keurig. Tom so you put the stuff in the cup and the broth gets pushed through . Nobody cleans the coffee machine, but you have to clean david this does not sound appetizing to me, and i like tomato soup, but this does now sound good. This does not sound good. Now we haver 2 new photos of pluto. Showing the surface of it. Whenanother photo you see pluto eclipsing the sun, you can see the atmosphere around it. David how can you not call that a planet when you look at that . You now have found an atmosphere around it. Perhaps that debate will wage again. I am told it is coming, the atmosphere. There it is. The halo effect of the atmosphere around pluto. You have pluto eclipsing the sun, and that is the halo effect around it. Tom the satellite and the sun. David we can send a satellite that far out, to take a picture, and then send it back tom i put this photo in a class thatthe ranger photo showed across the moonscape. And some of the great mans efforts as well. Yesterday we had a rainy afternoon, and somebody captured the amazing photograph of a tradew ending where the towers once stood in Lower Manhattan. Just a beautiful photograph. Tom there is a superb photograph of the brooklyn bridge, and everybody remember where they were working where they were walking on september 11. Good morning to you, worldwide, on bloomberg surveillance. Tom good morning, everyone. This is special. It is sold out. Forget about tickets. Dalia, michael mckee, and tom keene. That is not a typo. P. M. On Bloomberg Television. I am not going to ask him what the euro is going to do, etc. , etc. A broader conversation on the future of america and of our Economic System. Good morning, everyone. Bloomberg surveillance. Tom keene with david weston this morning. Petro brought billions of outstanding securities following a downgrade by s p. A scandal set some of its suppliers into bankruptcy. Rescuers in japan are in a certain in a desperate search for 22 missing people in a flooded city. The weather cleared today northeast of tokyo. Two days of heavy rains caused and drove people to rooftops. Three deaths have been reported. Government estimate ernment investigators say an engine caught fire tuesday while a British Airways jet was taking off from las vegas. It was built by General Electric or debris was found on the runway, and that has never happened since this engine was introduced 20 years ago. Tom i did an interview years ago on airlines. The pros look at them as two engines with a hunk of metal straps to them. David in ancient times i represented a titanium company, and they are desperately trying to figure out, is that one of our rotors . Tom we need to look at the engineering that is china. This friday we focus on the economic politics of china. In the next hour, ken rogoff will join us. Now, eswar prasad of Cornell University, the former head of the International Monetary fund, China Division. Richard dobbs also joins us. , what ishe moment distinctive about the september this september . Issuesthere are bigger looming in the background, like Cyber Security and geopolitical issues. On the economic front, they are trying to make progress. Move got misinterpreted, and they are trying to pull back because there has been a pushback from the u. S. To move forward on the bilateral investment treaty. Thegeopolitical issue is geopolitical issues and the cyber Security Issues will dominate the conversation. Tom let me ask you a simple question is the Economic System and the linkage of there to their private banks, to the it a normalis function . Eswar it is not a normal functioning economy. The problems they face in the financial system, they are trying to move things in the right direction. But their view of stabilization is different from you and i might have. Hey want a free market david think about the politics. It must be a different summit that xi will have in washington than three months ago. He had a lot more cards in his hand, didnt he . Eswar there is a subtle shift in the u. S. Balance of power and with china. Slowing down, the fumbling of the Exchange Rate live, and the u. S. Economy is doing very well. That makes it to the difference, both in bilateral and multilateral negotiations. David what is going on as far as you know in beijing . Has been very aggressive, one of the strongest leaders in china we have seen in some time. Does this limit his flexibility . Does it affect his power and authority within the regime . Market willtock have a direct effect on the economy, but it does have a perception that they are not managing the economy well. Rogoffu and i and ken can talk all day about Foreign Exchange. Lets talk to someone in the real world, richard dobbs. You see a moving currency from depreciation or devaluation to depreciation, to the new appreciation of the renminbi. What instability does that bring to business . Richard first of all, there are the fluctuations that are the problem. Challenge is when the economy is not good and it depreciates too much, small and Mediumsize Enterprises stop being competitive in china. Wages are going up. The good news is the government has enough money. These banks are effectively instruments of government policy. The real estate loans that they made are probably bad, but the good news is the government is behind them. The government are using them. Tom eswar prasad, what will you listen for in the dialogue as the president visits washington . The key issue is what he says about his plans to further default because they have made some progress on market reforms. They are trying to free up the Exchange Rate. Faces isproblem china there is some progress in financial markets, that nothing else is moving. State enterprises, in the form of the household registration system, that has to start moving. My fear about china is that it is a very unbalanced process going on right now. The financial market, the Institutional Support is not there for that. Tom professor, thank you so much. Richard dobbs, thank you for joining us today. We need to look at the four next change market. Theonesian repeal indonesian rupiah moving this morning. Stay with us. Announcer this is bloomberg surveillance. Tom Goldman Sachs stuns with a call for 20 oil amid global oversupply. Rogoff andr, kenneth there is great uncertainty six days from the fed meeting. We consider one and done. It is the 14th year of remembrance of september 11, 2001. Good morning, everyone. This is bloomberg surveillance , live from new york. Im tom keene. Joining me this money, david westin. Wonderful to have you here. 14 years on, we will look at Lower Manhattan today. Moments of silence on Bloomberg Radio and television. It really takes us back 14 years. You were with Charlie Gibson at the time. Charlie gibson, and then we brought in Peter Jennings after. It was shocking. Reports came in from all over, and we did not know what could be true and what could be false. Tom the News Business changed on that day and in the three or four days following. David it changed in an important sense that we may have lost. All of us remembered immediately why we were doing what we were doing. There was no question that it mattered. Tom wonderful to have you with us this morning. Top headlines this morning with david gura. David we could see a barrel of oil go for just 20. Once again, Goldman Sachs sees a global abundance. Global is trimming its projection to 45 a barrel. It is slashing its 2016 brent crude prediction from 60 a barrel from 62 a barrel to 49. 50. Senate democrats yesterday handed president obama a major foreignpolicy victory. A republican resolution phil two votes short of the 60 needed to disapprove of the iran deal. Mitch mcconnell says they might try again. We will revisit the issue next week and see if maybe any folks want to change their minds and give us a chance to remove the procedural roadblock. And give the president what he has been asking for. David the plan to keep iran from building atomic weapons starts october 19. Opponents say they will keep fighting. Human rights activists say the u. S. Should accept more of the migrants fleeing the syrian war. President obama wants to take in 10,000 refugees in the next year. Since 9 11ouse says it has taken up to two years for refugees to clear security. The european Union Official says the continent posco government the continent posco governments are close to reaching a deal there. 11 republican candidates will make it into prime time for the next weeks president ial debate. Carly fiorina will join them. She did not take place in the debate last month on fox. The debate will air on wednesday night at 8 00 eastern in the Reagan Library in california. Hbo has released the first image showing Robert De Niro and Michelle Pfeiffer as bernie and ruth madoff. Investors out of 65 billion. Those are your top headlines. Tom we all know people in new york city directly affected by that, by bernie made off. David when it is too good to be true, it is probably too good to be true. Datalets look at the check right now. Equities, bonds, currencies, commodities. 1. 1272. Advances hour, howard ward is with us, the chief Investment Officer of gamco. The bears are out in force on this friday. And ken rogoff is with us, from harvard university, on emerging markets. I believe chair yellen has a new announcement to make on september 17. Did you ever imagine oil from 100 to 40, or somewhere in the vicinity . Ken i think it is very hard to predict Commodity Prices. There are these incredible fluctuations, and it happens. It is possible. It will probably be over 100 will some day, but we probably be over 100 when it happens. Does the cheaper oil price mean for america . It has got to be a plusplusplus. I think it is a plusplusminus. It is better for europe and japan, but it is good for the United States. Tom howard, do you love the boat on exxon, or are you under the oil desk now, hiding . Oilrd if i had no exposure, i would use this weakness to accumulate some. Fortunately, Energy Stocks are correlated to the price of crude, so you are making a bet on the price of oil when that happens. With all due respect to Goldman Sachs call for 20 oil, when it was 80 or 90, i do not think they thought it was going to go to 40. Given the response to what is happening, it has been slower than expected. Over the next 12 months we will be looking at a higher price of oil. Is what is important here they have a vision out 2, 3, and five years, so they are not worried about where it will be in three weeks. David other investors like Warren Buffett are looking out 5, 10, 50 years. Howard they are looking at different prices. When prices are down, you want to buy. Unfortunately, the price of crude fell so quickly, down 50 peak. From the june 2014 tom ken rogoff, you have been upfront about saying do not look at just fiscal debt, there is private economy debt as well. Exposed to the private debt you worry about in your book . Ken it has a lot of corporate dollar debt, and when the Exchange Rate tanked by 60 or something, obviously that is problematic. That is one of the elements going on in brazil. So Government Debt is not worrisome, but there is certainly a lot of corporate debt. And private debt has grown, not at the levels we see in advanced countries, but it is one of many problems in brazil. David it seems to me brazil is one of the things many of us have not paid attention to. It is the second largest economy in the western hemisphere, 10 times the size of greece. They are looking at some pretty lean times for some time, dont you think . Ken they are. It is a combination of two things. The leadings things, global Commodity Prices have fallen, but unfortunately, a lot of counterproductive policies did not matter so much when the economy was growing anyway. Now there is nothing to fall back on. They are also having trouble with their fiscal policy, their monetary policy, because they were not now she is sort of in a jam because president rousseff will have limited resources to appeal to this and double down. The finance minister wanted to go the other way with more austerity programs, but will he be up to do that . Ken they are not sustainable. They have been downgraded to junk and something needs to happen. He was brought in and it was very brave of him to come in when he did not have the Political Support to do anything. David but he had a good job in the private sector. Ken he is a very brave man and it is very tough. The central bank at the same time, they have not really reform did enough. It is like arthur burns trying vulgar, and saying after all this change i will not inflate anymore. Tom when do you go in in overweight, large cap, International Stocks and emergingmarket stocks . Is there a trigger that you look for . Howard timing the stock market is pretty hard to do. Few people do it. Tom share prices are on sale. Howard i do not know if they are on sale or not. We have had a correction, maybe down 8 now. That was overdue. A lot of stocks are down 20 , some more. You have an economy of about 3 growth. I cannot believe that the stock market stays down for very long or goes much lower. You want to go where the fear is the greatest, and right now that is in the copies that have international exposure. Tom we are thrilled to have you with us. I had four out of seven children call in in the last 48 hours. Their iphones are broken, did you know that . It has to do with apple. For 5 00 set my alarm this morning and it did not go off. Tom ken rogoff with us as well. Our twitter question this morning goes to goldman and their call for 20 oil. How low do you think oil can go . Stay with us. Tom september 11, in pennsylvania. But first, there will be remembrances in washington this morning. In new york city, we will have this on Bloomberg Radio and Bloomberg Television for you. Moments of silence. I cannot say enough about the reconstruction and the reinvigoration of the site in Lower Manhattan. It is september 11, 2015. Time for the morning mustread. We look at the recent volatility in the market. Gary shilling, speaking of 20 oil, he says simply tom howard ward is with us, with gamco. I agree with that. The yield curve is not streaming to the economic slowdown, is it . Howard in fact, yesterday i did an economic review of the world, going to my bloomberg ecf sec, e regional Bloomberg Survey for growth. On a regional basis around the world, the expectations are for better growth next year than this year. Not worse, better. It makes sense because there is a lot of stimulus in the pipeline with lower rates. I think europe is getting better, and even the emerging markets, particularly with the commodities side, the expectation as a block is for higher. Tom ken rogoff, i have not spoken to you since lagarde coined the phrase new mediocre. How do you define new mediocre . At worldou are looking growth over the last 15 years, china is coming down from 8 , 9 to 6 . That is just a giant effect on their Global Growth workout. I am not so sure about the United States, europe, japan. That is much debated. I think the United States is at the tail end of coming out of a financial crisis, the deleveraging cycle. Someday europe will come out, someday japan will come out. I am not sure that this is evenly spread around the globe. David do you see any other people who can step up and increase the growth and take up some of the slack . Ken some of the slack. China is just historic in the size and the ambition. Chinaot necessarily think someday africa will, but it will be a while. Tom ken rogoff is with us, and howard ward from gamco. And a parlor game of the fed is fast approaching. Coming up, ken rogoff on janet yellen. Tom program note. We have had an exceptional response to a conversation with ray dally oh. With ray dalio. Michael mckee and myself, with , a broader discussion on the american economy. It is bloomberg surveillance. With me today, david westin on september 11. Wonderful to have you on september 11. Lets get to top headlines. Here is david gura. David a fired citigroup currency trader is taking a swipe at his former employer. Barry stinson prompted front running for exchange orders. The managing director at the lender was fired amid a probe into rate rigging. Bloomberg news has learned that a plan was scrapped three months ago. The reason, they could not agree on financing conditions. It was a tough august for John Paulsons hedge funds. The billionaires merger fund dropped 4. 2 in august as stocks tank worldwide. Paulsons advantage hedge fund also fell less month. Those are top headlines. An outstanding return for mr. Paulson. He has done a lot better than many others. Lets turn to what you want to know about september 17. Pay 715 deep off ogue off to rog none of us know about this except maybe the phds and the fed. They will be attuned to it on september 17. We want to know about one and done. Everybody has asked me to ask you this question. The pros talk about trajectories and the measured responses, as chairman greenspan used, so famously. What is so hard about doing the rate off the zero bound and saying we are going to sit there . What is the harm in doing that . Ken what is the logic in doing it . I have a lot of trouble with the idea of lets do it now and then we will hold our breath and leave everyone in suspense. If you do not know that you have room to raise it for a while, why are you starting now . It is very asymmetric. If you go in the wrong direction, it is harder to do something about it. I am just lost at the strategy. I would like to point out that the emphasis that they give on our models predict that inflation is coming the model has not been very good for a long time, since the financial crisis. Why you would want to rely on that and not more on seeing inflation, i do not understand. Wiser in these last seven years. Economy, andlobal certainly the american economy. Should we still do something, like what professor blanche are professor blanchard talked about . Ken he had the idea of raising inflation rates from 4 24 from 2 . That is dubious because it creates so much uncertainty. I think overshooting on inflation is the least of our concerns. David what is the real downside . If they go up 25 basis points, they can reverse it the next month. Will it really have that much of an effect on the economy . Ken you are trying to create some certainty of what your path is to have a reaction function. 2 , it is devalued just 2 . But that people are, what are you doing . What uncertainty doesnt resolve . What uncertainty does it resolve . David howard ward, how much does this affect equity markets . Howard after the first day or two, none. But i would be curious to ask, when the fed meets next week, are they going to be talking about the Global Financial market, volatility . Are they going to be talking about any concern about potentially harming emergingmarket currencies and the debt issue that many countries have, especially those that have issued debt denominated dollars, not having the commodities declining . Not it is there but anywhere near the top of the list. The main issue is will u. S. Growth continue. Tom mark carney and the bank of england come out with the headline, essentially there is no inflation, and that is the end of the discussion. What is the first order condition for chair yellen . After your think models have been so off for so long, your ship has been thrown around in the storm and you do not know where you are when you land, you want to see inflation more than usual. Tom can stan fischer provide that humility that you speak of to the fed . Ken he is a great mind and gives good counterpoints to people who say never raise the interest rate, lets not do it until 2017. If to me, it is not a 50 50 you only think you can move once and then have to wait. David westin has 14 questions. Howard ward is with us as well, from gamco. The book you need to read. Everybody owns it. Even more amazing, a lot of people read it cover to cover. A book that changed the discussion of academics. This time is different. It is september 11. At 8 50 this morning, from cantor fitzgerald, howard lutnick. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. This is a great place to work. Not because they have yoga meetings and a juice bar. 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Stagedidates will be on next wednesday night at the Reagan Library in california. Joe biden is making it clear that his decision for running for president is more emotional than political. He appeared on the new Stephen Colbert latenight show. He said he is not yet ready to commit to a white house one run. I dont think you should do know exactly why they would want to be president and two, they can look at people and say i promise you you have my whole heart and my whole soul and my energy and my passion. Here is family are still reeling from the death of his son oh in late may. He has run for president twice before. The director of National Terra changeay hackers may strategy. New cyberattacks might alter electronic data instead of just stealing it. He told a house panel that seen as a tool of war to destabilize the west. The new England Patriots started the new season at the way they finished the last one. They beat whispered in foxboro. Tom brady threw four touchdown passes. Young brady is a little motivated this year. Brazil is in a true crisis. They have a plunging real. We welcome marco. It is wonderful to have you with us. Thani want to know more anything is what will be the color of austerity in brazil . Taxt about increasing receipts or will there be cuts in spending . Marco good morning. Its good to be with you. Things have already started. Billion. Cut of 78 that is a little bit more than 1 of our gdp. When we look ahead, there is not that much to cut. Need a fiscal adjustment, you will have to remember that we have a very high tax at this point. The adjustment will be tough. David this is david westin in new york. What does this mean for the finance minister . Can he still pursue this . he can pursue that. I think he could extend his agenda. 2016 ando talk about 2017. Everything that had to be done was already done. We have to take care of the reforms. Now we are talking about huge reforms. We have to take into account efficiencies in brazil. This would increase efficiency. Am the you just assume depreciation . Is that a given . Depending on a very important variable, the fiveyear cdf. It prices in to the downgrade. This is a psychological level. Everythinghave priced. Tom thank you so much. He is in brazil. That we do a day to check on equities, bonds, and currencies. I am going to call it a constructive friday. The euro is stronger. So much for the parity in it crude oil. I noticed that gold is reverting to weakness today. That is one of the movers that we see this week. This is bloomberg surveillance here co. Apple font an yesterday. He has been of one of the most optimistic bulls. American unique use of cash, howard ward has been very right for a long time. A september gloom this sends on cupertino. His entire house is one big apple store. What did you make of the Marketing Campaign . Howard yes. Thats great. The bottom line is all these new devices are not financially material. Iphone. Y is the it has been the iphone for the next few years. 70 of the prophets, its about the iphone. Follow these other things can fill in the gap in its about the iphone. That had ae company tremendous growth as you know. They have 200 billion in cash. They are entering a mature stage. Tom you nailed the use of cash. Stock . Or bluechip is it a growth stock . Howard i think the performance of the stock is going to depend. There is going to be a little bit of growth. The dividend and the share buybacks are going to be important components. The days of tremendous Wealth Creation are probably over. I own the stock. I think its going to be a reasonably good performer over a length of years. Ken the announcement we had this week did not drive me into an apple store right away. At some point, they must feel pressure about bringing in a new product . Howard the new product issue is nothing can be big enough. They want to be like netflix. They could buy disney with their cash. About 1 5evenues are of apples. Netflix is 2. 5 of apple. Howd you move the needle . It all comes back to the iphone. That has to be successful. Tom shares are on sale. The rates are up today. Correction in a great bull market . Is this a more cautious move . Howard a lot of risk has been taken off. I think this is an ongoing correction. This is a continuing market. 2 rates, 2 growth. Thats what i would focus on. Earnings,rnies, youve got to like that stock. Tom can is with us from harvard. Should americans fear a new globalization where we manage globalization right now to keep america robust . Ken thats a complex question. Tom youve got 42 seconds. Our standard of living is rising much more than we measure it. When people say the whole class is no better off than 25 years ago, i think thats just the wrong read of the numbers. Its very disruptive. It has happened very fast on the jobs front and income distribution. Absolutely not. There are things like social networking which you can be sarcastic about, but people find great benefit. Continue this discussion. Futures are negative six. The 10 year yield is to 20 . Weve got much more view on Bloomberg Television this morning. We are thrilled to bring you necklace came in. He is nicholas came in. This september 11. tom good morning. David we have a couple of stocks moved before the trading opens. There is an independent investigation by the board into internal controls over revenue recognition. Tom is going to shave the price down. Tom that has a certain glow to it. Lets take a look at amd. This was raised to market performance. Tom its under two dollars per share. That was a big name years ago. I look at intel. You and i remember when the stocks, everybody quoted them everyday. Is there life and future in semi conductors . Howard i own some intel and texas instruments. Its surviving. Not by a lot. Its one of the situations where you can look at the Intel Research budget and its going to be tom bigger than their sales. A 3 dividend to get your attention. , its asemi conductors tough business. Declining prices every year. Most of it is a commodity oriented business. Intel is more about the pc thing. I think about one third of their revenues from data centers. Rowing at a doubledigit rate of them. David why are they not buffeted by all of this growth in a smart phones and tablets . Howard they sort of miss the boat. They have continuously missed the boat. They may be getting some traction in the arena. This is showing some status. They have not exceeded. They have tried. David we have been talking about oil all morning. We are seeing this being downgraded. Earlier the mention phillips 66 deal. Within that is all of the servicing. And it will be refining moving around a lot of petroleum. Think, its not such a moment. Tom the refiners are really holding up quite well. There was a big Energy Conference in new york this week. The consensus among the nobody thinksthat the price of crude is going to 20. Nobody thinks its going to be lower 12 months or not. They are all expected to be 70. Tom we saw Goldman Sachs lowered their views. Goldman sachs is well under 50 on their terminal view. That gets us to our question. The news from jeff kerry and his ism, goldman says 20 oil possible. How low do you think oil can go . Tom good morning everyone. They have 56 million of outstanding securities, making it the largest effort is sure following a downgraded by s p. They are facing a graft scandal. Oil supplies outside opec will decline next year for the most in two decades. That is according to the International Energy agency. U. S. Shale output. The new policy at walmart is making suppliers hopping mad. To paypany once vendors for space on its shelves and in its warehouses. Some vendors wanted better deal. Walmart says its only trying to simplify its relationships. Those are the top headlines. David we are joined by howard ward and 10 from our. You have been outspoken about the degree of leverage in china. They are going to have to sort it out. How overleveraged is it . How much leverage to the have to take out before they get back in a safe zone . I dont think its just a matter of safe zones with china. They are growing at a phenomenal rate. They are managing a very complicated economy. They have gone on for years and years, without having a big financial crisis to bring it to a halt. Its very hard to do. When that happens, there are pockets of doubt. Problem,s not such a we dont really know. Inid unlike where we were 2008, they have very large reserves. They could just write a check . Can, although they have been writing a lot of checks. Its not clear exactly how much liquid reserves they have free. There is a lot of debate about that. Broader question about their shipping. Over 50 of gdp investment, we cant go on like that forever. When you try to transform the economy, its very hard to do it gently. Are one of the worlds experts on this. I have read every word. Floating and managed floating. Do you have a confidence that china can devalue and then manage a depreciation and then reverse and appreciate as we have seen the last two weeks . Ken they have a lot of reserves. You have hit on the weakness in their system. The Exchange Rate is not as flexible as it needs to be. What i think our advice back in the day was, why dont you make it more flexible while you are strong . That is what singapore did. Idea that a guy like you saying to china, you need to freely float . Ken nothing happens quickly in china. Have class every year, we had a debate about should you move faster or slower . I think they should move faster. They have that in the plans, but it hasnt been happening. The economy is weak. David the United States has been a putting pressure on them for some time. You should bring it back up some. Ken we want them to appreciate. The specialuch is killing rights issue to them . Its a lot of credibility. That is part of why they devalued. I think you should think of it as the people inside of china who would like to liberalize the market and use that as a lever to move things along. Tom how you play this as an investor . Do you still go back to the calculus . Can you be bold enough with the emerging markets to challenge and acquire china shares or brazil shares . I would be extremely into chinesering shares or resilient shares. In the emerging markets, i would rather buy a mexican stock or a South African stock. There are other places where you can find stocks to buy. The whole chinese thing i find troubling. The data is so problematic. We dont really know whats going on. Tom do you agree with that . Ken im interested. I look at academic studies. They dont show it to be bad. I dont see how it could be so smooth. David i just dont know if i can trust the numbers. You are right about that. That have to come down to a more sustainable level. Im assuming that is south of 31. How many years will that take . Ken a lot of years. What replaces the plugin of that reduced investment . Do you just assume consumption . Howard you hope. Maybe not all. Ken it is much less on jobs. When you move away from a precedent investment to consumption. We dont say multiplier on friday. Thats too much math. Part of the issue is slowing down corporate profits. That puts pressure on the political regime. Tom all right. Lets get to the twitter answers of the day. 20 oil isman says possible. This is the first answer. Oil prices are inversely coordinated with the renewable energy. Someday. 10. One, this will balance in 2016. 40. Tom one more. Isnt boosting Economic Growth, there is a serious crisis. Tom do you think that can help . Can that pull us out of a new mediocre . David not permanently. They have been fantastic for europe. I think it is helpful here. Russia, brazil are getting hammered. Its creating a lot of volatility. Just in the United States. I thought you meant the island of manhattan. Lets look at our agenda. My agenda is to get ready for next week. I thought can was brilliant on our fed policy. It has been a parlor game. I am more not buy. I know that david westin is worn out by it. This is deadly serious and we will give you coverage through next thursday. The university of michigan. It has been coming back up from its lows. Tired of the fed a discussion in, this may be one of the best data points before they get together on the 17th. Tom this speaks of a new confidence. The American Consumer is not paying attention to headline issues in china. They just dont do that. The American Consumer is coming to life. There is rain in new york. David my agenda is the u. S. Open. The womens semi finals were postponed. Serena is closer to getting a calendar grand slam. Its a good time in new york. On this day of remembrance, i will be with michael mckee. He was at ground zero 14 years ago. He will be with you on bloomberg. On the radio. Thank you so much for being with us. Back. Ward, come it will be a while. Was this fun . David a lot of fun. Tom you got michigan four times. Right now, futures are at negative five we continue on the radio and television worldwide. Good morning. Michael good morning. Another volatile week of trading comes to a somber end as we mark the 14th anniversary of 9 11 today on surveillance. I am michael mckee, along with tom keene. Moments of silence throughout the morning as new york remembers the terrorist attacks of 2001. Markets are lower out of the world, except in china, which finished up. 1 percent today. Mimihe u. S. , the s p 500 e futures are trading lower right now. The dows off point to 5 . 4 . Q down in europe, the stoxx 600 is off. 8 2. 81 points,