October 14th. David we want to join mike mckee in new york. We got ism numbers. They were not a surprise and a good way. Michael they were a surprise and a terrible way. Purchasing Management Index falls more than one point. It is the biggest drop in the first contraction since 2016, january of 2016. Even worse, the underlying numbers, new orders fall of 47. 2, unemployment falls to 47. 4, inventories rise to 49. 9. 50 is the abiding line between growth and contraction. When you have inventories rising faster than new orders, there is a strong correlation with recession ahead. We are not in recession yet, but manufacturing seems to be good david when you get numbers like this you wonder why. We see pmi numbers softening. Is it because of theariffs that were just increased over the weekend . Michael that is what manufacturers are saying. It has a quote saying comments from the panel trade remains the most significant issue indicated by the strong contraction. They are saying the trade wars are having an impact on manufacturing. David we do not seem to be making much progress in resolving them. Now lets go to boston. Brian, youve been following Hurricane Dorian what is the latest . Weakenede winds have 110 Miles Per Hour which brings us to a category 2 storm. It struck the bahamas with winds of 185 Miles Per Hour a few days ago. David at the same time it slow moving and that can meet a lot more rain. What we know about the rain it is likely to bring ashore and where . Will start in northern florida and go all the way up the east coast and potentially hit areas of the northeast like eastern massachusetts and new england. As the storm goes north it will widen. It has been relatively compact. It will spread out and that will spread the wind and the rain through the eastern seaboard. David we do not have many refineries along the south eastern seaboard. At the same time we have a lot of of homes and property damage. To have any sense of how much is at risk . Brian i would say billions of dollars at risk, and in addition to the real estate you have a lot of agriculture in the southeast of the u. S. Cotton crops in South Carolina and North Carolina are hyatt rest. David thank you so much. That is Brian Sullivan from washington. Now lets go back to london and Therese Rafael. We have heard from Boris Johnson. Lets listen if we can hear him to what went on earlier. We are negotiating a deal. I am confident though i am confident of getting a deal, we will need by october 31, in all circumstances. There will be no further pointless delay. David he has been pretty steadfast in his point of view. Does he have the power to get that done . Therese he is walking a fine line. To keep to continue hopes alive they can get a deal before october 31. The key date is the october 17 european summit. That is necessary to keep moderates on board, those that do not want to know deal brexit. At the same time he has one eye on the brexit party, nigel farajs party that once a clean brexit. They have been very clear they would support Boris Johnson in an election, even with holding candidates from certain constituencies, but only if johnson commits to a know deal brexit. The way he is trying to satisfy both moderates and hardline exit years, he is trying to brexit union ishe european saying they have not seen anything new and they are not optimistic that progress is being made, but they are not closing doors either. David one piece of news that came out of parliamentary proceedings is he did lose a member of parliament and lost his majority. What does that say about the possibility of an election . People are talking about the possibility that if he loses the vote we may be headed toward a snap election. Therese even with the majority of one and election was inevitable. The question is will it happen before october 31, before brexit or after . Boris johnson now once it as soon as possible. It as soon as possible. This is a lameduck government for all intents and purposes until it can hold an election. He is writing fairly high in the polls. He has an Opposition Party with a leader that is not popular. From his perspective i think people want to get to an election. He has denied that. That is what we will see him try to do. David thank you for the trip reporting from london. That is Therese Rafael from bloomberg opinion. Lets get a check on the markets. Here is Abigail Doolittle to abigial you are right about that. Take a look down the nasdaq following losses in europe. This coming on trade concerns along with the disappointing ism manufacturing number. The dow down 1. 2 . Dow transport underperforming even more. The macro uncertainty we saw broil the market continuing into the month of september. Not surprisingly, we have a rally for haven bonds. At the 10 year yield, we will see a distinct move after the ism manufacturing number came out. Bonds have been rallying overnight, and right around the time the ism manufacturing number came out, it was said bonds had been slightly in the red with yield slightly higher. A big drop off at the lows, down seven basis points. A big rally for bonds as investors seeking haven assets in the context of the uncertainty. The uncertainty you and Michael Mckee were talking about, if we go to the bloomberg and take a look at a great chart showing the manufacturing numbers, pmis around the world, there is the case for a manufacturing recession. Pmire looking at the german in yellow, the eurozone pmi and ofe, china pmi, for a couple years we were suddenly expansion for a public these areas. Today the u. S. Is white, joining these other areas, contracting. Greece is still expanding. Nonetheless it does beg the question of whether an actual question put an actual recession could be down the road. Because this is a risk off signal, we have another area of risk asset selling off. As the commodity complex, off the lows. The bloomberg Commodity Index down. 6 . Oil down 3 . China, the Worlds Largest users of natural resources. Not only do we have week pmi numbers, but the trade war weighing on commodities for the first trading day in september. Entered the democratic primary with the perfect resume. Why isnt Kamala Harris catching fire in the 2020 race . We will talk to joe crowley, next. This is bloomberg. David this is balance of power on bloomberg television. We turn out a ritika gupta for bloomberg first word news. Tika Hurricane Dorian is getting weaker, downgraded to a category 2, but it is still battering the bahamas. Dorian is moving slowly toward the northwest. Forecasters say it is likely to head up the u. S. Ease most and it could move dangerously close to the florida coastline. President trump telling china he better get a trade deal done before next years election. The president tweeted that if he wins, a deal would be much tougher for beijing. He said the u. S. Is doing very well and negotiations with china, although he gave no specifics. In hong kong, carrie lam denied she ever asked chinas permission to quit over the protest. The leak ofounced demand she made last week to business people. She said she tried to explain privately it would be an easy choice for anyone in her position to leave. Global news 24 hours a day, on air and tictoc gupta. Tika this is bloomberg. David the next democratic debate is just over a week away, and this time the stage in houston will be a lot less crowded. They may be 10 people at the debate, but people are realistically starting to think it is down to a four person race. We welcome joe crowley, former congressman from new york. He is now a senior policy advisor and he joins us from washington. It is good to have you. Mr. Crowley great to be with you. David obviously joe biden is in, Elizabeth Warren is in, Bernie Sanders is in, and Kamala Harris is usually included. Wise and she doing better . She seems to have why isnt she doing better . Mr. Crowley what she is suffering from has been the size of the field itself, having so many candidates has confused many voters. I think now, as the field is narrowing, this next debate will have fewer democrats on the state. Kids are back to school, moms and dads are back from vacation and starting to Pay Attention. I think there is still time for Kamala Harris to move forward. She is a very polished politician, a good elected official, and she will make her case. I would not discount her entirely, yet. David how important is it to the Democratic Party she remain a viable contender. If you look at those four, you have Elizabeth Warren, you have Bernie Sanders who thought to be progressive, you have joe biden who is more of a moderate. It is, harris the alternative joe biden if something happens to him . Mr. Crowley it is a great question. I think Kamala Harris has had more of a centerleft record as a progressive, i think she is a progressive. The reality is she hit joe biden hard at those debates and so whether or not she inherits any fallout from biden is yet to be seen. I think it is narrowing and i think she will be right up there with Elizabeth Warren. It is important for her to be there. For women, having lost senator gillibrand and the issue she was bringing forward unknown in the military on women in the military and equal pay and reproductive rights. Senator warren will be bringing that up, senator Vice President biden and Bernie Sanders will be talking about those issue. I think it is good she is doing the race. David polls indicate trade seems to be an increasing concern of voters. There was a poll just last week that said as trade tensions with china dominate the headlines, confidence in the economy is slipping. The people who think the economy is getting worse rose by double digit in june and four in 10 voters blame the president s policies. Does that represent an opportunity for the democrats . Mr. Crowley i think it does. I also want to be careful not to conflate the issue of trade with tariffs. It is a tool the president is using, i think wrongfully, in terms of pushing china. We need trade agreements and that is why we need to see the usmca past. Smart trade agreements. These tariffs are hurting consumers and farmers. There is an opportunity for democrats to step in and say we recognize that some of the trade policies in the past of ben hur for workers, hurtful to farmers. We have a better plan. Hurtfule past have been for workers, hurtful to farmers. We have a better plan. David as far as trade becomes an issue, is a risk for democrats . The president could turn that on a dime with a tweet or two. We talked to david wu from bank of america, and this is what he had to say with what the president could do to fix the trade issue. I am still reasonably optimistic there could be a deal. As time passes, there will be incentive to do a deal with china to minimize the risk of recession when he is seeking reelection next year. David if part of the problem is the president s hostile chance hostile stance with china, is that a vulnerability . Mr. Crowley that is true. He can. I think the American Farmers and manufacturers, workers in manufacturing and autos in other fields, they are tired of being used as pawns. I think theyre great americans and great patriots. They are willing to sacrifice if they know what the end game is. They do not know what the president s game is all about. That is part of the problem. This empathy from democrats as it pertains to policies toward china and trade has been going on for decades. The way the president has exacerbated that in a tumultuous economy to begin with and adding to the top of discussion of recession is troubling many americans. David thank you so much. Always helpful to have you on. That is former congressman from new york joe crowley from washington. Still ahead, the u. S. China trade dispute has hit American Farmers hard. Ceo,lk with the cobank who banks farmers in the midwest. That is next and this is bloomberg. David you are watching balance of power. I am david westin. The United States and china are still figuring out whether theyre meeting this month or not while tariffs on imports went into effect this weekend. One sector hit has been agriculture. We welcome cobank ceo tom halverson. Cobank provides Banking Services to American Farmers. Thank you for being with us. Farmers had good cash flow and growth when Commodity Prices were high. Net farm income, even before the trade war over the last 18 months had already come off substantially and was 50 lower than it was before. The combination of adding to that through tariffs, and we can talk about the details of how that is constraining arm income and agribusiness, but also bad weather circumstances people are familiar with this year, which is also having an effect. Are theow specifically tariffs hitting American Farmers and which farmers . It is not equal across the board. Tom we are a tremendously productive agricultural country and we make a substantial contribution to our export balance which is positive through agricultural exports. We export about 20 of agricultural commodities. Some we export substantially more than other. Years welast 20 to 25 went exporting zero soybeans to china to exporting more thans 40 of all the soybeans to china. That is an important example. The chinese, as a result of tariffs and retaliation for our tariffs have stopped buying u. S. Soybeans. We have built a large Soybean Production complex with the supporting infrastructure and so forth and now we are not selling any soybeans to the chinese, and they are changing their own tariff structure to incentivize and make cheaper and easier for people like brazil and argentina and other producers to replace u. S. Farmers in the chinese market. David we saw the brains are by far the the grains are by far the largest hit. You say income is down. Delinquencies are up. Is that your experience . Tom it is. Our customers are predominantly agricultural coops. We lend money to form associations who lend to farmers and ranchers in 23 states. Clearly the stress among and ishin the Producer Community being manifest. The Balance Sheet strength and the cash flow of farmers is significantly softer than it wouldve been three or four years ago. David lets talk about what that might mean politically. If we look at important swing states like wisconsin, they tend to be agricultural states. You see wisminnesa, iowa. Our farmers forgiving the president , are they staying with him, are they starting to say we are getting nervous . Tom farmers are like everybody else. You ask 10 people and you will get 10 different opinions. Each is nuanced. As congressman crowley said a few moments ago, rural americans in general and farmers in particular are patriotic people. They want to do the right thing for the country and they will make their own judgments as to whether the shortterm pain is worth the longterm gain, and i leave it to them to determine what they think is the right answer. David the federal government has stepped up and given some subsidies. How much of the shortfall is that making up . Tom that makes a meaningful contribution. You have to realize it is a blunt instrument. The market will determine certain outcomes for every producer and every commodity and the mechanisms that are available to you to take a pot of money and distributed distribute it across the economy is a pretty crude instrument. He will not get it to the same people in the same quantity that the market would have delivered. It is somewhat random but they try to be controlled and equitable about it. It is a blunt instrument. It will not make everybody whole, nor will it get to the right people, sometimes he gets to the wrong people in the wrong quantities. The ultimate answer is for Agricultural Producers as well as everybody else to be able to sell their products into an efficient marketplace that involves export and domestic sales at a level of prices that can sustain them in the long run. David when we started on this about 18 months ago, it was perceived as a temporary thing. Some people think it will not be resolved for the election. Does theire come a point when dumptynot put humpty together again . Point, but the later it depends on the commodity. Lets take soybeans again. The answer is they are not buying u. S. Soybeans right now. They are buying brazilian soybeans and argentinian soybeans in a market we spent 25 years building has dissipated. Even if we could region agreement that would involve them making substantial purchases for the next season, that does not correct the long term access to that marketplace, which is what farmers and ranchers in the country need, whether it is soybeans or whatever other product. David thank you so much for being here. That is tom halverson. Coming up, the United States says it has an agreement with japan, but what is in the agreement . We talk with tobias harris. If you have a bloomberg terminal, you can check out our charts online and interact with us directly. This is bloomberg. Devices are like doorways that could allow hackers into your home. 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