Transcripts For BLOOMBERG Bloomberg Surveillance 20150930 :

Headlines. Here is vonnie quinn. Vonnie as francine was mentioning, it is the last day of the quarter and stocks are on an 11 trillion loss for the quarter. Stocks are rebounding around the world. Finished with their fifth straight monthly decline. 2008is a streak since the financial crisis. There is concern that japan may be falling into another recession. Retail sales showed no improvement. That is likely to intensify the debate on whether Prime Minister government should increase spending. In afghanistan, Government Forces have been unable to retake a city captured by the taliban. The pentagon has called the capture of kunduz a setback. The senate plans to pass a spending bill this morning that would avert a Government Shutdown. Mitch mcconnell says he is confident the measure will pass in the house. Mcconnell, john boehner, and president obama will meet soon to discuss spending limits for the next two years. John boehner is stepping down a month from now. There are number of things he wants to a college before leaving. John boehner if there are ways to get things done so i do not burden my successor, i want to get it finished. And google has come out with a highend tablet aimed at competing with apple and microsoft are it with apple and microsoft. It is also updating a set that a settop tv device. Tom the only one who does the event thing with people on stage is apple. I went to the samsung one at radio city is a call and it was like pretend. And Warren Buffett with berkshire hathaway, all that. Lets do a data check. As we go through this through three days of labor market coverage. Futures are up, down. Yield, 2. 09. The Second Screen i had to make this up. I had to struggle with it. At 26. 83. The brazilian real, a little bit of strength. Brent crude somewhat in the acidity of 50. You will see a lot of this chart in the next somewhere in the vicinity of 50. You will see a lot of this chart. What i did here was inflation adjust commodities back to 1956. This is a longterm commodity deflation. Here is that china uproar that we had, the lehman low, then we are back down here. You wonder if this is a trend we have seen over a gazillion years because of technology improvement. Vonnie exactly. Becomespersistent it with the inflation figures. Tom and it falls into disinflation and deflation at lower price changes. We took three days of jobs coverage. We consider a lowered rate regime worldwide and we saw it reinforced this morning. Francine lacqua is in london. I look at substantial negative yields in germany and switzerland. Francine and when you look at what mario draghi is facing, you are mentioning that inflation. For the first time in six months, the euro area inflation rate unexpectedly turning negative. If you are saying inflation being imported by Commodity Prices, this is oil. I do not have much of a fact, but i can do something to try to spur this. If you look at our bloomberg survey, about two thirds of economists we spoke to expect the ecb to signal he has expanded qe. What effect that has on the bottom line growth, we are not sure yet. It may prop up or prop down euro, which will help him. One analyst from nomura the bayers, the gloom, and the handwringing over commodities is flat out wrong. Once oil stopped falling, an American Consumer renaissance will occur. Chiefrosenberg is a economic strategists in toronto. He believes the canadians will win the stanley cup. Fabulous to have you with us today. People perceive you as a gloomy guy, always cautious. It has been a twoyour shift, and now youre ever more optimistic. State your case. David i am optimistic on the u. S. Because it has such tremendous autonomous domestic demand that it can actually decouple from the rest of the world. I never believe the rest of the world can decouple from the u. S. We talk about china so much. More thanmports 50 it exports. It is still the buyer of last resort for the worlds economy. And of course you see that in the deteriorating trade performance that is only negative for the u. S. Right now. You put it completely accurately, that you have to differentiate between what is good deflation and bad deflation. In the United States, being a net raw material importer, for commodity producers it is not good news but this is Margin Expansion for companies that use Raw Materials in their business input. For consumers it is a huge boon for their purchasing power. Tom Alan Greenspan would use the phrase conundrum. Janet yellen has the rosenberg conundrum. She wants to be an adult and look beyond the commodity implosion and say we do not care commodity, we are x deflation. How does that change her dialogue and analysis of december or into next year . David i think that janet yellen, in the opening months she took over at the helm of the fed, when she is talking about that time lag between the end of qe and the first rate hike, i think she did not mention it for roughly six months. The veryadline news next day, but it made perfect sense. In the spring they should have moved off zero. But they got freaked out over the negative, what turned out to be an negative First Quarter gdp with a seasonal maladjustment. Gdp, we hadminal that in the Second Quarter of this year. David i am going back to janet yellen. The thing that she said in her press conference was that the financial conditions had tightened, so why are we going to jump onto that tightening by raising rates at this particular meeting . Here is the problem. I think they boxed themselves in. Why, then, are we looking at thirdquarter earnings to decline 4. 6 . Companies are not feeling it yet. The consumer is not feeling it yet. David i think it is almost a bifurcation. , the s p,earnings that is not gdp. The u. S. May be 10 of the local economy, that affects a percentage of the gdp. Derived in sales are the Global Economy. When you are looking at europe, asia, things are across the pond things across the pond are pretty soft. Then on top of that you have a strong u. S. Dollar that has the domestic side of the economy is doing fine. Homebuilders are doing quite well. Retailers are doing quite well. We just saw nike report good numbers as well. Not in the u. S. , but in china. I guess china bought Running Shoes to run away from the stock market there. ,t is an idiosyncratic selective stock market right now. Francine you are talking about the softness across upon. That is where i am sitting, in london. When would you make the case for Interest Rates to rise for the fed and the rest of the world . David the only reason i would make the case for the rates to rise is you can live in the here and now or actually operate Monetary Policy with a view for its impact down the road. Policyknow that monetary operates with long and variable time lags. Central bankers do not operate their policy based on the view of what is coming down 12 months. They are operating it because they lived in the moment like everybody else does. The question is, can you perennially keep the funds rate close to zero where nominal gdp without creating major imbalances down the road . Tom David Rosenberg is with us today. We have much to talk about. Coming up later today on Bloomberg Television, a busy day for Federal Reserve comments, from the new york Federal Reserve. One William Dudley will speak. We will hang on every word as he voices a certain tone. Then a more important tone at 3 00 p. M. , when janet yellen will speak. And the man in the middle, james bullard, he of the st. Louis cardinals, will speak at 3 00 p. M. As well. We speak economics, finance, investment, and international relations. This is bloomberg surveillance. Good morning. Everyone. Morning, we begin four hours of bloomberg surveillance. Some important Economic Data out. First, we need our world headlines. Here is francine in london. Warning signsomic crop up in japan, raising the prospect of recession for the second time in as many years. Analysts expected an increase in retail sales, that they did not improve during the month. The trends might push the government and the central bank in japan to prop up the economy. Russian troops are one step closer to joining the fighting in syria. Lawmakers have approved president Vladimir Putins request to use military force. He is supporting syrias president , bashar alassad, in the countrys civil war. Key Economic Data came out today. The british economy regains the losses it suffered during the recession. The Second Quarter was higher than any level since 2008, but this eurozone, the inflation, unexpectedly turned negative in september. Unemployment in germany rose this month, although the jobless rates stay the same. Ins bring in hans nichols berlin. How much should we worry about 0. 1 . Ion being at how much should we worry about the german unemployment figure going up . Hans the latter one is almost more. Or story of the last three four months, leave aside the funky data we got out of greece where we saw greece gdp go back up. The story is germany is going along steady as she goes, and this is the first indication that germany might be affected by all the Global Financial turmoil. This number, the unemployment number, i doubt it has any volkswagen effect. It is too immediate. Longerterm, your flu your view on inflation is it driven by energy costs or is there Something Else putting pressure on wages . We need more data. It makes it all more important, the meeting of the Ecb Governing Council in malta. Francine . Are we expecting more qe from mario draghi . We think it is driven by the energy component. But if you are mario draghi, how do you interpret this . Draghis main signal is it the inflation number or the gdp . Deflation puts a little more pressure on him. If it is gdp, he may have a little more room. He has hinted that he will increase quantitative easing if he needs to. He has pushed it down just with his hints. We sayme of that and mx some of the dynamics, days of rosenberg some of the dynamics, David Rosenberg is with us this morning. Are we going to have a 1990s dollar . David there are probably about six questions right there. Tom i am fired up, david. Can look at the dollar as a crimp on u. S. Exports. But i look at the dollar as a low price. Tom it shows the strength of the american economy. David the u. S. Economy is the one id man. Oneeyed man. In 1998 the u. S. Dollar went screaming higher. Exports were going down in the second half of 1998. Isn was below 50 each month in the second half of 1998. We finished the year with 5 in real terms. You had 10 that was negative and you had an economy growing at a 4 annual rate. Tom p a trudeau, wanted to make quebec in canada a european province. The dollar was terrible. The Oil Renaissance came, and you are back to 134. Are we going to see another anothercanada as we see implosion . David canada is one of the underlying countries that have a lot of that is because of the weaker dollar has a huge antidote to inflation. We are talking about deflation here, talking about commodities. We are not living in the Davy Crockett paul bunyan era anymore. Is runninge cpi close to a 3 annual rate. So anything you can see, touch, or feel, that is deflating. But you cannot see services. Whether it is education services, entertainment services. Service sector inflation is being masked by deflation. You were talking about strength and dollar and how that is linked to strength in the economy. You have Central Banks that are clearly diverging. If you were to set Interest Rates for the global world, it would be going down, not up. How much is Dollar Strength linked to gdp and growth in the u. S. , and how much is it links to weakness everywhere else . David i would say that we have a template for this. Why we walk around not looking at what history books tell us. We have a third of the world go bankrupt in 19971998. Those regions go down 70 , 80 . Some of the economies contracted down to 20 . Take a look at what Interest Rates did globally during that punto. They melted. U. S. Economy did it ultimately go into some sort of destabilizing recession . Havehe u. S. Economy prosperity . Actually they did. Tom lets come back with David Rosenberg. Hans nichols, thank you so much, from berlin. We will continue with Francine Lacqua in london. Coming up in the next hour, we need to look at Digital Media. We have not done that in a bit. Ebook attempts to realize attempts to revolutionize their newsfeed. And linking advertising revenue to all these gizmos the kids needs to buy. Brian wieser, bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Francine lacqua in london. I am in new york. Heres vonnie quinn with the morning mustread. Vonnie speaking of the benefits of migration. This as European Countries migrants from in other countries. Vonnie i would argue that it is a little bit of a contentious oped from martin wolf, but he is the parents of refugees himself, so it is normal and desirable to move somewhere else when you are under political or economic pressure at home. Tom i thought exactly as you said, it was a very contentious article. Francine, give us an update on refugees and migrants in europe. What should we look for as we get to the end of the week . Francine this is probably the most important political decisions that the e. U. Has to take, not because it is a human story, but it also has the potential to bring up extremist parties. Watch out for this one. Angela merkel is paying is playing a very key role in this. Vonnie and hungary and a couple of other countries have said they will not take in anymore. Tom the count is the issue, the scale of it, rather. Thousands here, thousands here. It is a scale issue. As we move on from the ballet of the u. N. And all that, there is now what feeling that martin wolf gets in his column as well. We are with David Rosenberg. Stay with us on inflation. Good morning. Tom they are asking in the commodity patch, where is the next glencore . A real mystery about the fragility along trading analysis in commodities. A beautiful shot. Looking over with a ferris wheel in the near and present area. Right now lets get to top headlines. There is vonnie quinn. For thejust settling in night or you cannot blame traders if they breathe a sigh of relief because it is the most volatile quarter for market since 2011. Stocks rebounded around the world today. There are a number of reasons the commodities slumped. The slowdown in china and in exodus from emergingmarket assets. Japan may face it second recession in two years. Output unexpectedly fell for the second straight month. Retail sales were flat. That is likely to put pressure andrime minister shinzo abe the central bank to prop up the economy. Costco posted Quarterly Earnings that Beat Estimates. Sales rose, helped by a 2 gain in measured fees. Costco sells large volumes of at lowo consumers prices. It is the second largest retailer in the u. S. Eliminating 740 jobs, 15 of its workforce. The company has been hurt by falling Natural Gas Prices. They are down almost 60 since early 2014. And the nhl visits the scene of hockeys most famous comedy. Bay played an exhibition in johnstown, pennsylvania. Hockey is big in the small town of 20,000. The aging arena where the film was set, slap shot. Tom this was a huge deal a million years ago. The syracuse old dogs looked awfully good. The syracuse bulldogs looked awfully good. This is a great thing. I am going to do a massive shout out to jeremy roenick, who did pretty well in the nhl. This hockeyaft, put bill together. We had skates with metal on the bottom. Hasbottom line is, as kraft gone out and said we are going to bring the stars out to a little town they are doing that with hockey. It is great. You twothe next time are on together, i need some kind every creation. Of recreatee kind and. Tom it was a way different game back then. Much, much tougher. Vonnie it is already brutal looking to me. Bloomberg surveillance sports right now. R Toronto Maple Leafs going to help the best player of the game, the pittsburgh penguins. Will it work . David it will definitely work. It will take pressure off crosby and add offensive power to the best offensive team in the league. There is a little thing called the economy that we should talk about. Lets keep it up beat and look at a Housing Market that is decidedly upbeat. David rosenberg, optimistic even with present Economic Data. You like what is pending in housing . David i did not like the pending home sale numbers yesterday, but what i did like were the home buying plans index , which went up to its highest level in three months. Household formation is starting to pick up. Building permits are on a rising trend. My sense is that Housing Starts the next couple of years will be up 40 , 50 from where they are right now. Vonnie who will be buying . Not millennials. David we are creating job 25 to in that critical 30year category. A lot of these boomerangs that were living with ma and pa are starting to come out. A lot of them will move into rental units first. You could argue the Prime Minister<\/a> government should increase spending. In afghanistan, Government Forces<\/a> have been unable to retake a city captured by the taliban. The pentagon has called the capture of kunduz a setback. The senate plans to pass a spending bill this morning that would avert a Government Shutdown<\/a>. Mitch mcconnell says he is confident the measure will pass in the house. Mcconnell, john boehner, and president obama will meet soon to discuss spending limits for the next two years. John boehner is stepping down a month from now. There are number of things he wants to a college before leaving. John boehner if there are ways to get things done so i do not burden my successor, i want to get it finished. And google has come out with a highend tablet aimed at competing with apple and microsoft are it with apple and microsoft. It is also updating a set that a settop tv device. Tom the only one who does the event thing with people on stage is apple. I went to the samsung one at radio city is a call and it was like pretend. And Warren Buffett<\/a> with berkshire hathaway, all that. Lets do a data check. As we go through this through three days of labor market coverage. Futures are up, down. Yield, 2. 09. The Second Screen<\/a> i had to make this up. I had to struggle with it. At 26. 83. The brazilian real, a little bit of strength. Brent crude somewhat in the acidity of 50. You will see a lot of this chart in the next somewhere in the vicinity of 50. You will see a lot of this chart. What i did here was inflation adjust commodities back to 1956. This is a longterm commodity deflation. Here is that china uproar that we had, the lehman low, then we are back down here. You wonder if this is a trend we have seen over a gazillion years because of technology improvement. Vonnie exactly. Becomespersistent it with the inflation figures. Tom and it falls into disinflation and deflation at lower price changes. We took three days of jobs coverage. We consider a lowered rate regime worldwide and we saw it reinforced this morning. Francine lacqua is in london. I look at substantial negative yields in germany and switzerland. Francine and when you look at what mario draghi is facing, you are mentioning that inflation. For the first time in six months, the euro area inflation rate unexpectedly turning negative. If you are saying inflation being imported by Commodity Prices<\/a>, this is oil. I do not have much of a fact, but i can do something to try to spur this. If you look at our bloomberg survey, about two thirds of economists we spoke to expect the ecb to signal he has expanded qe. What effect that has on the bottom line growth, we are not sure yet. It may prop up or prop down euro, which will help him. One analyst from nomura the bayers, the gloom, and the handwringing over commodities is flat out wrong. Once oil stopped falling, an American Consumer<\/a> renaissance will occur. Chiefrosenberg is a economic strategists in toronto. He believes the canadians will win the stanley cup. Fabulous to have you with us today. People perceive you as a gloomy guy, always cautious. It has been a twoyour shift, and now youre ever more optimistic. State your case. David i am optimistic on the u. S. Because it has such tremendous autonomous domestic demand that it can actually decouple from the rest of the world. I never believe the rest of the world can decouple from the u. S. We talk about china so much. More thanmports 50 it exports. It is still the buyer of last resort for the worlds economy. And of course you see that in the deteriorating trade performance that is only negative for the u. S. Right now. You put it completely accurately, that you have to differentiate between what is good deflation and bad deflation. In the United States<\/a>, being a net raw material importer, for commodity producers it is not good news but this is Margin Expansion<\/a> for companies that use Raw Materials<\/a> in their business input. For consumers it is a huge boon for their purchasing power. Tom Alan Greenspan<\/a> would use the phrase conundrum. Janet yellen has the rosenberg conundrum. She wants to be an adult and look beyond the commodity implosion and say we do not care commodity, we are x deflation. How does that change her dialogue and analysis of december or into next year . David i think that janet yellen, in the opening months she took over at the helm of the fed, when she is talking about that time lag between the end of qe and the first rate hike, i think she did not mention it for roughly six months. The veryadline news next day, but it made perfect sense. In the spring they should have moved off zero. But they got freaked out over the negative, what turned out to be an negative First Quarter<\/a> gdp with a seasonal maladjustment. Gdp, we hadminal that in the Second Quarter<\/a> of this year. David i am going back to janet yellen. The thing that she said in her press conference was that the financial conditions had tightened, so why are we going to jump onto that tightening by raising rates at this particular meeting . Here is the problem. I think they boxed themselves in. Why, then, are we looking at thirdquarter earnings to decline 4. 6 . Companies are not feeling it yet. The consumer is not feeling it yet. David i think it is almost a bifurcation. , the s p,earnings that is not gdp. The u. S. May be 10 of the local economy, that affects a percentage of the gdp. Derived in sales are the Global Economy<\/a>. When you are looking at europe, asia, things are across the pond things across the pond are pretty soft. Then on top of that you have a strong u. S. Dollar that has the domestic side of the economy is doing fine. Homebuilders are doing quite well. Retailers are doing quite well. We just saw nike report good numbers as well. Not in the u. S. , but in china. I guess china bought Running Shoes<\/a> to run away from the stock market there. ,t is an idiosyncratic selective stock market right now. Francine you are talking about the softness across upon. That is where i am sitting, in london. When would you make the case for Interest Rates<\/a> to rise for the fed and the rest of the world . David the only reason i would make the case for the rates to rise is you can live in the here and now or actually operate Monetary Policy<\/a> with a view for its impact down the road. Policyknow that monetary operates with long and variable time lags. Central bankers do not operate their policy based on the view of what is coming down 12 months. They are operating it because they lived in the moment like everybody else does. The question is, can you perennially keep the funds rate close to zero where nominal gdp without creating major imbalances down the road . Tom David Rosenberg<\/a> is with us today. We have much to talk about. Coming up later today on Bloomberg Television<\/a>, a busy day for Federal Reserve<\/a> comments, from the new york Federal Reserve<\/a>. One William Dudley<\/a> will speak. We will hang on every word as he voices a certain tone. Then a more important tone at 3 00 p. M. , when janet yellen will speak. And the man in the middle, james bullard, he of the st. Louis cardinals, will speak at 3 00 p. M. As well. We speak economics, finance, investment, and international relations. This is bloomberg surveillance. Good morning. Everyone. Morning, we begin four hours of bloomberg surveillance. Some important Economic Data<\/a> out. First, we need our world headlines. Here is francine in london. Warning signsomic crop up in japan, raising the prospect of recession for the second time in as many years. Analysts expected an increase in retail sales, that they did not improve during the month. The trends might push the government and the central bank in japan to prop up the economy. Russian troops are one step closer to joining the fighting in syria. Lawmakers have approved president Vladimir Putins<\/a> request to use military force. He is supporting syrias president , bashar alassad, in the countrys civil war. Key Economic Data<\/a> came out today. The british economy regains the losses it suffered during the recession. The Second Quarter<\/a> was higher than any level since 2008, but this eurozone, the inflation, unexpectedly turned negative in september. Unemployment in germany rose this month, although the jobless rates stay the same. Ins bring in hans nichols berlin. How much should we worry about 0. 1 . Ion being at how much should we worry about the german unemployment figure going up . Hans the latter one is almost more. Or story of the last three four months, leave aside the funky data we got out of greece where we saw greece gdp go back up. The story is germany is going along steady as she goes, and this is the first indication that germany might be affected by all the Global Financial<\/a> turmoil. This number, the unemployment number, i doubt it has any volkswagen effect. It is too immediate. Longerterm, your flu your view on inflation is it driven by energy costs or is there Something Else<\/a> putting pressure on wages . We need more data. It makes it all more important, the meeting of the Ecb Governing Council<\/a> in malta. Francine . Are we expecting more qe from mario draghi . We think it is driven by the energy component. But if you are mario draghi, how do you interpret this . Draghis main signal is it the inflation number or the gdp . Deflation puts a little more pressure on him. If it is gdp, he may have a little more room. He has hinted that he will increase quantitative easing if he needs to. He has pushed it down just with his hints. We sayme of that and mx some of the dynamics, days of rosenberg some of the dynamics, David Rosenberg<\/a> is with us this morning. Are we going to have a 1990s dollar . David there are probably about six questions right there. Tom i am fired up, david. Can look at the dollar as a crimp on u. S. Exports. But i look at the dollar as a low price. Tom it shows the strength of the american economy. David the u. S. Economy is the one id man. Oneeyed man. In 1998 the u. S. Dollar went screaming higher. Exports were going down in the second half of 1998. Isn was below 50 each month in the second half of 1998. We finished the year with 5 in real terms. You had 10 that was negative and you had an economy growing at a 4 annual rate. Tom p a trudeau, wanted to make quebec in canada a european province. The dollar was terrible. The Oil Renaissance<\/a> came, and you are back to 134. Are we going to see another anothercanada as we see implosion . David canada is one of the underlying countries that have a lot of that is because of the weaker dollar has a huge antidote to inflation. We are talking about deflation here, talking about commodities. We are not living in the Davy Crockett<\/a> paul bunyan era anymore. Is runninge cpi close to a 3 annual rate. So anything you can see, touch, or feel, that is deflating. But you cannot see services. Whether it is education services, entertainment services. Service sector inflation is being masked by deflation. You were talking about strength and dollar and how that is linked to strength in the economy. You have Central Banks<\/a> that are clearly diverging. If you were to set Interest Rates<\/a> for the global world, it would be going down, not up. How much is Dollar Strength<\/a> linked to gdp and growth in the u. S. , and how much is it links to weakness everywhere else . David i would say that we have a template for this. Why we walk around not looking at what history books tell us. We have a third of the world go bankrupt in 19971998. Those regions go down 70 , 80 . Some of the economies contracted down to 20 . Take a look at what Interest Rates<\/a> did globally during that punto. They melted. U. S. Economy did it ultimately go into some sort of destabilizing recession . Havehe u. S. Economy prosperity . Actually they did. Tom lets come back with David Rosenberg<\/a>. Hans nichols, thank you so much, from berlin. We will continue with Francine Lacqua<\/a> in london. Coming up in the next hour, we need to look at Digital Media<\/a>. We have not done that in a bit. Ebook attempts to realize attempts to revolutionize their newsfeed. And linking advertising revenue to all these gizmos the kids needs to buy. Brian wieser, bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Francine lacqua in london. I am in new york. Heres vonnie quinn with the morning mustread. Vonnie speaking of the benefits of migration. This as European Countries<\/a> migrants from in other countries. Vonnie i would argue that it is a little bit of a contentious oped from martin wolf, but he is the parents of refugees himself, so it is normal and desirable to move somewhere else when you are under political or economic pressure at home. Tom i thought exactly as you said, it was a very contentious article. Francine, give us an update on refugees and migrants in europe. What should we look for as we get to the end of the week . Francine this is probably the most important political decisions that the e. U. Has to take, not because it is a human story, but it also has the potential to bring up extremist parties. Watch out for this one. Angela merkel is paying is playing a very key role in this. Vonnie and hungary and a couple of other countries have said they will not take in anymore. Tom the count is the issue, the scale of it, rather. Thousands here, thousands here. It is a scale issue. As we move on from the ballet of the u. N. And all that, there is now what feeling that martin wolf gets in his column as well. We are with David Rosenberg<\/a>. Stay with us on inflation. Good morning. Tom they are asking in the commodity patch, where is the next glencore . A real mystery about the fragility along trading analysis in commodities. A beautiful shot. Looking over with a ferris wheel in the near and present area. Right now lets get to top headlines. There is vonnie quinn. For thejust settling in night or you cannot blame traders if they breathe a sigh of relief because it is the most volatile quarter for market since 2011. Stocks rebounded around the world today. There are a number of reasons the commodities slumped. The slowdown in china and in exodus from emergingmarket assets. Japan may face it second recession in two years. Output unexpectedly fell for the second straight month. Retail sales were flat. That is likely to put pressure andrime minister shinzo abe the central bank to prop up the economy. Costco posted Quarterly Earnings<\/a> that Beat Estimates<\/a>. Sales rose, helped by a 2 gain in measured fees. Costco sells large volumes of at lowo consumers prices. It is the second largest retailer in the u. S. Eliminating 740 jobs, 15 of its workforce. The company has been hurt by falling Natural Gas Prices<\/a>. They are down almost 60 since early 2014. And the nhl visits the scene of hockeys most famous comedy. Bay played an exhibition in johnstown, pennsylvania. Hockey is big in the small town of 20,000. The aging arena where the film was set, slap shot. Tom this was a huge deal a million years ago. The syracuse old dogs looked awfully good. The syracuse bulldogs looked awfully good. This is a great thing. I am going to do a massive shout out to jeremy roenick, who did pretty well in the nhl. This hockeyaft, put bill together. We had skates with metal on the bottom. Hasbottom line is, as kraft gone out and said we are going to bring the stars out to a little town they are doing that with hockey. It is great. You twothe next time are on together, i need some kind every creation. Of recreatee kind and. Tom it was a way different game back then. Much, much tougher. Vonnie it is already brutal looking to me. Bloomberg surveillance sports right now. R Toronto Maple Leafs<\/a> going to help the best player of the game, the pittsburgh penguins. Will it work . David it will definitely work. It will take pressure off crosby and add offensive power to the best offensive team in the league. There is a little thing called the economy that we should talk about. Lets keep it up beat and look at a Housing Market<\/a> that is decidedly upbeat. David rosenberg, optimistic even with present Economic Data<\/a>. You like what is pending in housing . David i did not like the pending home sale numbers yesterday, but what i did like were the home buying plans index , which went up to its highest level in three months. Household formation is starting to pick up. Building permits are on a rising trend. My sense is that Housing Starts<\/a> the next couple of years will be up 40 , 50 from where they are right now. Vonnie who will be buying . Not millennials. David we are creating job 25 to in that critical 30year category. A lot of these boomerangs that were living with ma and pa are starting to come out. A lot of them will move into rental units first. You could argue the Single Family<\/a> has the single biggest impact on the economy. Tom but you will take multifamily right now . David you are starting to find household rates starting to rise in the singlefamily area and a switch from what was a pronounced bull market. I think that will be the next leg up for the housing sector. Vonnie the story yesterday, a lot of the luxury a majority of the luxury sales in manhattan were going to canadian buyers. How are they doing it with the loony . David that is a big surprise . That is a big surprise. That is a big surprise to hear that. Do not have an expiration because the bottom line is that it does not make much sense. You want to start buying the currency or the assets of the currency. Tom lets pin you down for the canadian viewers. Loonie . Ut the buy into the , if there isenario a relapse in the Global Economy<\/a> that affect commodities, the same dollar will go down. But this is a president you will find in this is a precedent in the canadian dollar. Balance, relative to the labor cost differentials, the same dollar rate note is undervalued. The currency markets have issued more than their asset class. More than any other asset class. We have not even undershot on the downside, seemingly overshot on the upside. Have beyond if you an investment horizon beyond , you would want to be buying the canadian dollar. Tom francine, jump in here. Francine i am going to make a tenuous link. Andging it back to housing looking at the data we had from china, we had some pretty big breaking news 40 years ago, china easing the mortgage requirements. I have always thought that china was in a housing bubble, so for me this goes back to economic the Economic Outlook<\/a> and the economic slowdown in china is getting much worse, and the pboc things it needs to intervene once again. Everybody is talking today about the manufacturing contraction in china. Two years ago, it was about the property bubble and the Property Market<\/a> in china already corrected and it is one of the bright spots in the economy right now. People seem to think they know what is going on in china, maybe because people tell them what they read. Most people who are bearish in china have never even stepped the foot inside china, but they have somehow this educated opinion of what is happening there. The Manufacturing Sector<\/a> is declining as a share of the chinese economy as the rebalance away from dust realization toward from industrialization toward Consumer Services<\/a>. There was an article in the economist this week and in the financial times, saying how service data is undercounted. You have an economy with a 4 employment rate. A 4 Unemployment Rate<\/a>. People base their decisions on what is happening in the economy and what is happening in the purchasing managers index. I think people draw their conclusions based on hearsay and what people tell them. Tom i never do this, but i am going to break the rules. We have an offspring back from china visiting, who said exactly what mr. Rosenberg just said. Vonnie i think he reads the economist as well. Tom and he said there is a massive miscount. Vonnie surely that leads to demand for metals, so what is the bearish outlook on commodities . David Manufacturing Activity<\/a> in china is contracting. I would say five years ago, 10 years ago, that would be a really big deal because back then that was chinas breadandbutter, industrialization infrastructure. Part of their fiveyear plan, which will be part of their 10, 15, 20year plan, is to be an economic superpower like the u. S. You will not do that with the personal savings rate of 40 . They are where the u. S. Was 150 years ago. This is part of their emergence from being an emerging economy. Services, theumer next super cycle for china in terms of how you play china will not be commodities, it will be how you play Consumer Services<\/a> there. Tom lets come back with David Rosenberg<\/a>. A lot to talk about this morning. My chart of the year i usually figure it out by december 1, december 10. We already have a chart of the year. It has to do with commodities as well. This as we end the Third Quarter<\/a>. Stay with us. Bloomberg surveillance. Good morning. Barely slept less night. I gave her a prelook at my single best chart, which is a rollout of my chart of the year, to remind our viewers glued to as each and every day i trotted out the bloomberg Commodity Index<\/a> and then inflation adjusted it and took it back to 1956, which is when David Rosenberg<\/a> first began looking at commodity dynamics. Here is what you need to know. Inflationadjusted, the old cr the chartold crd, is boom on the right. Before that, the Technological Progress<\/a> of the commodity miracle. David, you wrote about this in my book and you wrote about it decades before. The gloom over commodities it is normal to see dampened Commodity Prices<\/a> throughout long cycles. Chart you can take that back 200 or 300 years, and it was the same chart. There will be some new story, the china story that causes an uptick or some sort of boom for a few years, and then the trend reasserts itself. The bottom line is technology. Frackingy this time is. It will be u. S. Technology that goes global. So the bottom line is that i take a look at that chart, as an theomist, and i look at late 1970s to the late 1990s, and it is basically going down. That was a period of unbridled prosperity in the United States<\/a>. People associate economy people associate commodity deflation, if you are a commodity exporter you do not go to walmart and buy a pound of copper. The raw material does is go into the production process. Tom it is the idea of bringing economies and securities analysis into economics. Do you agree that with a commodity implosion and the reset that all we need to see is commodity Balance Sheets<\/a> clear, like glencore, and once it is clear, we move on . Am i right . David you are right. ,e are talking about glencore and it almost looks like what happened with worldcom and enron. Then we had the washout. That happened in 2002. If you looked at that and said this washout vonnie you mean from a Financial Markets<\/a> point of view. Be caught could just in fear saying we are going to have another leg down. Wash that out, and then have another four or five years of expansion. A worldcom and enron, we had double dip that was temporary, then we washed out and moved on. Is this idea, it of reset, which is the core of what mr. Rosenberg is saying. Francine you are also saying that basically falling commodities is something that emerging markets should be looking forward to. My question to you is, inflation is going down, driven by these Commodity Prices<\/a>. Does that impact consumption directly so that people spend more because they feel richer, or does it help Companies Keep<\/a> production costs down . David i am making a differentiation that it is not good news for emerging markets that are commodity producers. The firstnada in half of gdp in the first half u. S. E year, gdp was the is a net Raw Materials<\/a> importer. It is basically a user of commodities. It is not like some final good. It is not like a house that you live in, which is a principal asset. Basically, the reality is the reason why u. S. Consumer spending in volume terms is running 2. 3 right now, because theyre practically is no inflation. There is deflation every growth that you see in the u. S. Plow through photos right now. I hear we have some good ones. Vonnie farmers in china are forming the chinese flag. Look at this thousands of persimmons. It is beautiful. It is pretty controversial it ise apparently intended to boost retail sales. Tom next. Vonnie i think you have another one for us . Francine i have the eiffel tower for you. It is for Breast Cancer<\/a> awareness. Campaign toong breastwareness and fund cancer research. Vonnie it is like the empire state. Number one top photo, what would we do without him . Capturing greenery from the International Space<\/a> station, a photo of new zealand. My favorite color is blue, but it is green i miss the most. Tom there is everything in that view. There is there are four golf courses that scott kelly plays on. That is new zealand. A good photo from space. ,oming up later on bloomberg tv we will look at three important speeches. Michael mckee has not slept all night, worried about bill dudley this morning. Back to back, janet yellen and james bullard. They will have a different treatment of the american economy. Those are three important speeches. We will have interpretation across all Bloomberg Media<\/a> and print. Stay with us through the day. Good morning. Tom good morning, everyone. A forex report we do that when David Rosenberg<\/a> of canada is with us. For hisu to shinzo abe appearance at our bloomberg headquarters yesterday with those comments heard worldwide. The renminbi, importantly stronger. The chinese yuan not depreciating off of that evaluation. The brazilian real, we have gained some ground. Real, elevated at 4. 06, showing commodity angst or heres vonnie quinn with top headlines. Are onerussian troops step closer to joining the fighting in syria. Lawmakers have approved president putins request to use military force abroad. Russia has sent troops and more than two dozen fighter jets to an airbase in syria. Bashar alassad in the countrys civil war. A Tropical Storm<\/a> is expected to become a hurricane today, and forecasters say it will move up the east coast in the next few days. Its wind is nine Miles Per Hour<\/a> off hurricane force. Facebook introduced features that let advertisers buyonline ads the way they tv commercials. I think the big message is that marketers have to understand that the days of you can do a campaign with a 32nd video ad that plays on tv are over. That is an important format and people will do it, but you cannot only do that. If you do that, youre missing a unique opportunity. That tv andsaid facebook really go together. Rich greenfield did a demo of this yesterday and said it will tom that carries a lot of weight on wall street. Brian wieser joins us in the next hour to continue this discussion on facebook and the revolution known as their newsfeed. Yesterday there was further digital revolution. Withd Bershidsky Bloomberg<\/a> review said Axel Springer<\/a> we would love to get from you a european take. Tell us who Axel Springer<\/a> is, and after they could not buy the ft, they decided to bank henry blodgett. Buy henry blodgett. Who is Axel Springer<\/a> . Leonid axels is the biggest publisher in germany. It owns the biggest temple in has country and it is it Readers Online<\/a> and in the paper version. It has Companies Set<\/a> up in berlin during the cold war to counter it, the communist propaganda. It has quite a colorful history here. It is not really wellknown outside germany. It is trying to be an international publisher, and it has a presence throughout eastern europe, for example. Ofh the acquisition Business Insider<\/a>, it has acquired its first truly known international asset. Ifnie i was going to ask Business Insider<\/a> can make money for Axel Springer<\/a>. Business Insider<\/a> is not making money now. It has not been profitable throughout its history. But Axel Springer<\/a> thinks it will breakeven in 2018. It is saying that Business Insider<\/a> is overburdened with expansion costs because now it is launching all these different editions in countries other than the u. S. , and it is launching companion sites on tech and general news. So the idea that Axel Springer<\/a> is going to start making money after the expansion is done withleonid Bershidsky Bloomberg<\/a> view on digital acquisitions. There is a lot of free money out there to make things go. David that is what todays central banking is all about. Free money. It has not done much to create consumer inflation. Tom bill gross talks about a great distortion lasting 10 years. Does it go on and on . Goid i am not sure it will on and on in the states, but it has gone global. Tom David Rosenberg<\/a>, thank you so much. A terrific optimistic perspective on the future of the american economy. Coming up, we look at the digital economics of america. This is bloomberg surveillance. Tom it is a great distortion continues as the real yield is unreal. In this hour, daniel fox. Your cell phone is glued to your hand, the Digital World<\/a> is a mobile world and john boehner falls on a sword, there will be no shutdown, we think. This is bloomberg surveillance. Where did the Third Quarter<\/a> go . Keene. M onto the Fourth Quarter<\/a> we go. It is when everybody is talking about, this was the worst quarter in four years to the equity markets. For the commodity markets, the worst quarter since 2008. Lets move on. Quarter. 1. 8 for the that is more complicated. We can talk with brian weiser about this, we had a bad month for exports and imports in august but people are saying maybe that is because we brought in so many iphones and they will show up in inventories. Tom the iphone adjustment as we try to fold it in every conversation. Lets have an iphone headlines. On the thirdloses quarterss and many investors are not sorry to see it go. Worldwide buted asian stocks finished lower for a fifth straight month. It is the longest losing streak since the 2008 financial crisis. New numbers out of japan raising fears of another recession, Industrial Production<\/a> fell in august for the second straight month and retail sales showed no improvement likely to intensify the debate about whether the government should increase spending. Afghanistan troops cannot dislodge the taliban from the Northern City<\/a> they captured early this week and u. S. Jets attack militants for a second straight date but it did not help. U. S. Military leaders want to keep some u. S. Troops in afghanistan beyond 2016. A spending bill that would prevent a Government Shutdown<\/a> expected to reach president obamas desk with type despair and votes are scheduled in the senate and the house and that will keep federal agencies open past tonights midnight deadline but is good for just 10 weeks. Republicans say they will talk to the president about a longterm plan and john boehner says there is much to do. If there is a way to get things done, i do not want to burden my successor. What the budget fight is over for now it is only a truce in the battle over planned parenthood as conservatives say they will try to strip money out of the next spending plan. New coupleffering a of gadgets. They are upgrading its tv settop device as a challenger to apple. Tom maybe colette is the word maybe glut is the word for all these new gadgets. Futures up 23, dow futures up 190 two a little bit of yields higher. Michael, you look at the markets and the fed, three fed speakers today, what will we see from them as they observe the International Markets<\/a> . Not a whole lot, janet yellen doing an introductory speech and bill dudley may be talking about the markets. We know what they think. We know what they think about this so it will not add a whole lot but the adp report this morning, kicking off jobs week, everybody will be watching that. We will cap down to job stay on friday. We will count down to job stay jobs day on friday. A delay jobset report with a shutdown. Mr. Mattingly will join us in a bit. It has been a wild, if you look at the media and digital wars, Axel Springer<\/a> of germany acquired Business Insider<\/a>. Facebook tinkers with its news feed. Brian weiser is a Senior Analyst<\/a> and that barely describes the linkage between advertising and madison avenue into how we are glued to our cell phones. This. Nd more i am like everybody is doing this. Brian you are still looking at your desktop which is right in front of you almost as much as you used to. Tom we are leaving tv. Sheryl sandberg was talking failure, is it gone . Brian not as much as people think. It is not dead. The measurement is challenged because of different ways we are consuming media, not necessarily incorporating measurement. There are, they are kabul entry. The notion that thirdparty measurement will be more important than ever before. The googles of the world want to be able to say to the market, we will provide the measurement, trust us. That gets to Sheryl Sandberg<\/a>, trust me, tv is dead, i run facebook. Brian when you look at tv there are segments of the population where there is significant declines. The scale force everything. Fs everything. The internet advertising model has a lot of things people do not recognize, it may work, but maybe how great and glorious it is is not exactly true. Itan all media is flawed, is a question of what the least bad medium is, digital has flaws. For many marketers, digital is efficient, but a lot of problems. Is, what i want to know there is very few people minting itey, approximate in what happened 10 years ago or 30 years ago, where will we be in 10 years . As viewers, listeners, and consumers and those of us in the racket. Brian my favorite word is hegemonic, google and facebook at that position in digital. Tom not in bc or bloomberg. Nbc or bloomberg. Brian google will be playing in tv. Tom you have not mentioned apple . Brian they do not care about advertising. You want to think about amazon, they are a sleeping giant. They have 1 billion of revenue and can be as big as they want to be. Tom mr. Bezos taking a minority interest. He was an early investor and Business Insider<\/a>. Humongousowe is so that he will not talk to me. He was probably on the phone with his real estate agent. Brian, this new world is going to be one where there are more equals then there are then there are huge internet companies. It is not just google and facebook but that is what the narrative has been. Brian the narrative is that tv is dying. Tom and you do not agree. In my narrative is other words, every country, Axel Springer<\/a>, legacy in the United States<\/a> and different countries, they are dominant publishers imprint, and the dominant players in the future are digital players. Tom full this back to amazon, mr. Zuckerberg, i have seen the internationalization of it, can amazon be a player with google and facebook . Brian if they want to be an amazon is incredibly focused on the consumers and they think of advertisers as a vendor, not as customers in their own right. Can i go back to the Business Insider<\/a> deal and fulton ace books news page and ask the question i put to Joe Weisenthal<\/a> , if you have a news company that relies on rewriting other peoples copy, can you survive or do you have to become your own news company . Brian the medium is the message. The technology is the medium. For theianna huffington first time a few weeks ago and i said to her, i am impressed with your content Management System<\/a>. She said thank you, but it is the content Management System<\/a> tom not the journalism, but where does the content and substance come from for digital players working at margins that are not there . Brian nothing that was said through medium is as important as the medium itself. The tech tom i remember the fistfights at dinner parties in western new york and toronto 40 and 50 years ago, we would sit at the top of the stairs like in madmen. We are there now . How does the New York Times<\/a> survive . Brian that is the challenge am you have to be differentiated. If you invest in technology that makes your content different to a consumer, that is important. Tom here is what i learned from brian. You and i have to write code. Brian we are in a lot of trouble. Om moore with brian weiser build ugly of the new york fed. Tom good morning. Tom keene and Michael Mckee<\/a>. Is it a morning mustread . Michael we will talk about the donald. Donald trump released his tax plan and analysts note it makes no financial sense. Joe wonders if all of the dumb things he says are a giant topless the stunt. Publicity stunt. All his life he is at a deep need to be perceived as a winner. He always has to be perceived coming up on top. That is why i do not think he will be at the mercy of actual isers in a primary, to do so losing and everyone will know it, he will be out before iowa, you read it here first. He said they will not even vote. Tom the emotion of this, i will , the shift in the winds, like a mary poppins or weathervane. That ship happened four days ago. Shift happened four days ago. Michael a number of people have noted in the last couple of days he is not felt, the pundits the pundits who say he is done have been wrong. Do they continue to be wrong . Tom you have covered politics for decades, is it anger politics . Ichael sure of the people who say they are voting for him, do they actual vote . Many people say they are supporting him are from the groups, the demographic groups that vote the least. And are perhaps the most disadvantaged in society, they are mad and are not going to take it anymore, but will they go to the polls. Tom do you partition the early primaries and votes from the next block, we get to the early ones and all the headlines, and then we get to the carolinas, is that a new season . Michael yes, because the pretenders fall away, a lot of people have the money to stay through iowa and New Hampshire<\/a> and i were not representative of the country as a whole. If you are a frontrunner, you can survive past those two states but you have to get serious because it Goes National<\/a>. Tom a Goes National<\/a> and to the carolinas and he gets fascinating. Mr. Trump, if you are watching, we would love to have you come on and talk to us about your tax plan and about some of the policies. Dan in this to hour, bill gross adores him. You do not need to know anything more. Tom good morning. Walked in theuss building and futures are up. Lets get your top headlines. Facing ais race recession, industrial output fell in august for the second straight month and analysts expected an increase, retail sales did not improve. Chinas slowdown is going to japan, it might put the central bank to probably coming. Russian forces a step closer to joining the war in syria, president s did plan to use troops abroad. The syrian president chinas government is giving how shoppers a helping hand, the Central Bank Cut<\/a> the minimum down payment down for firsttime homebuyers aim to boost the Property Market<\/a>. Michael the fed is raising rates or not, the ecb increasing not. T or not qe were or not. \\ it sounds like a dickens novel. We turn to someone who has seen the best of times and the worst of times. Dan fuss used to manage Charles Dickenss<\/a> ical. Accounts. Is this the end of the credit cycle . If so, not much need for you guys. Dan charles was a difficult client. I have a lot of respect for ray and his opinions. I do not define it that way. I do not think it is the end of the credit cycle. It is the end of this very cheap money. That has been delayed and delayed and delayed. Where i agree with ray, is when it is the end of very cheap money, you are going to have credits that need to refinance. The cost to refinance goes up before the money polls back. Pulls back. You do not want to own them at that first leg the cause it becomes too obvious. The plus side for a few of the ok,its is they say, well, we cannot do this on our own anymore. Depending on the industry and the growth. These are normally in growing areas. Then we then big brother has been wanting to buy us, not the best price but we will sell and they will get away with that. Most of the companies in that situation will tend to go quietly. A lesson of the past. This time, i do not think so. Tom the ballast Balance Sheet<\/a> adjustment spreads have widened. It has been a challenge. Some of it is pricey, but every newspaper shows wider industrial spreads. What does that signal to you . Dan corporates have gotten a whole lot cheaper in the last two months, particularly in the investmentgrade area, it has been once in a while in the intermediate area. The long and is still pricey because there is unusual demand of long investmentgrade corporate area, every time you hit 5 , pending on what stocks are doing, you unleashed a wave of buying. Tom one of the things are global audience wants to know is, big institutional money, will he be able to make their bogey, there actuarial assumptions getting 20 year and 30 year obligations . We will be here 30 years with dan fuss, are they going to make that hurdle . Dan yes. The interesting thing is this, i can give you a time frame comparison, lets say you are metlife or Northwestern Mutual<\/a> and it is 1964 or 1965, and you say, ok, we are selling these policies longterm, whole life, ordinary life, and we have an Interest Rate<\/a> assumption when we price them. I made i have picked the right i may not have take that the right companies, the bogey for the liability matching, or the Corporate Bonds<\/a> are being bought, is a fixed one for a time frame based the dynamics tom can you do that in 2015 out to 2045 . Yes, the reason is, you go into this thing assuming 3. 5 or four and you want a margin about that, the Light Companies<\/a> used to march with a margin of 25 basin points basis points. If you are buying a five and have an assumption at four, you say, that is a margin, but what happens if rates go down, that is bad news. What if rates go up that means your bonds go down. You are reinvesting. In the 1960s, Light Companies<\/a> lifeame Growth Stocks<\/a> companies became Growth Stocks<\/a>. Tom we will continue this discussion. I know Michael Mckee<\/a> as a whole series of questions on fixed income, the great distortion, and the financial repression we talked about. Michael and the Russian Revolution<\/a> and mr. Dickens. Tom Great Expectations<\/a> and you know the rest of us. Coming up, the costa rica president will be on this afternoon. Conversation. Stay with us worldwide. Tom we say good morning. Lets get to our top headlines. Investors are betting a not so fond farewell to the Third Quarter<\/a>. The black race on track for a loss of 11 trillion and stocks on track for a loss of 11 trillion. Japans economy could be sliding back into recession come Industrial Production<\/a> fell unexpectedly in august or the second straight month and retail sales showed no improvement, likely to intensify the debate on whether the government should increase spending. Membersuarterly of these up 2 , the company is the second largest retailer in the u. S. \\ are coming at chesapeake energy, the natural gas producer limiting 740 jobs, 15 present of its workforce. It is severing as Natural Gas Prices<\/a> fall, dropping almost 60 in less than two years. The nhl visits the scene of the most famous comedy, touches from slap shot were everywhere as pittsburgh and tampa bay played a next debate played an exhibition in pennsylvania. The arena where the 1977 film was set got an upgrade for the game last night. Tom this is great. Jeremy roenick was on talking about this with kraft foods and the sponsorship of hockey. This is a Home Run Charity<\/a> event. Michael one of the great sports movies of all time. You would not have thought. Tom george roy hill, did butch did thisit this as an afterthought. A reinvigorated pittsburgh team, they will go to johnstone, pennsylvania, and do it again kraft foods. And invite tom and i. Tom there we are. [laughter] us dan fuss. Mike wants to talk to you about emerging markets. It has been an ugly six months for your fund dealing with currencies and emerging markets, has it been the worst ever . Dan i have seen worse. 2008 was much worse. The worst ever predates the fund , was 1974. This feels a great deal like that. Different set of circumstances, but that was awful. It may 2000 eight look like a slowdown 2008 look like a slowdown. These things happen. You have to wonder with all the heartburn of emerging markets, whether or not we will see the problems in the u. S. , are u. S. Fixed income step with if companies blow up, does it hurt us . Dan if you have an embark emergingmarket debt mandate then you have a problem. If you have a mix of them, assuming they are paying in the local currency, it depends on how big is that mix. And depends on the credits. I am not aware of any of them that are happy about the cost of Incremental Capital<\/a> going up. This is not a good thing for them. You have a lot of leverage in that area and some currencies, mexican peso, the best example, that serve as a proxy because a lot of these currencies do not trade well. If somebody wants to short, they will go to something their holdings in these funds. That is the tough side, the good side is, in a number of these situations, not all, what you have is same a bonds, new prices in their currency. If there very attractive country has access to capital. Michael are we desperate for treasury bills, we are paying negative rates, the bid to cover ratio is blown out. The government is selling fewer bills, is this a problem for the market . Dan for anyone that has a shortterm investment portfolio, it is a huge headache. How can you run the savings bank these days with rates at the level they are at, these folks are pleading with the debt the fed to get the short end of the about. It is making their Business Model<\/a> very difficult. It is hard for any permanent short data portfolio, property, cash companies. We will leave it there, thank you so much for joining us. Dan fuss. His comments will be out on bloomberg Digital Media<\/a> shortly. Outdated check is risk on with futures of 25, oil 45 35. 05. Unless congress acts, as of midnight your federal government will shut down. Congress says it will act but when it comes to our legislature, nothing is certain, Phil Mattingly<\/a> is in the center ring of the circus. If you were in las vegas, what would you set the odds at that we do have a government tomorrow morning . Phil we will have a government and it should be functioning. There are some legitimate that have to go on, a senate vote on a clean funding extension this morning, the house would then take it up, likely this afternoon. On the off chance something goes the senatesin effort to transfer the bill, i am told by Obama Administration<\/a> officials they can keep the government open as long as they know the house will eventually vote on that, the question is whether House Republicans<\/a> can muster enough votes to shut the government down, that question is off the table. Decisionohn boehners to announce his retirement clear the way for him to get democrats and to help them pass the bill and the biggest roadblocks for now are gone. It is the future that everybody is worrying about. Michael the future is maybe November December<\/a> when we get to the debt ceiling limit, there is talk that john boehner may try to move that vote up to take the heat while he is still in office . Phil it would be difficult but among the things people are looking at. The reason comes from straight come straight from john boehner. John boehner if there is a way to get things done so i do not earn a successor, i will get them finished. Phil his likely successor is Kevin Mccarthy<\/a> from california, you look ahead to what he would have to deal with when he takes the position, transportation funding that runs out at the end of october. The debt ceiling which is estimated by congressional budget officials to be reached by late november, earlydecember and, assuming the government funding bill passes today, december 11 will be the time of the next shutdown debate debacle. Some are some sense is sense that john boehner and his team can move a few things forward to clear Kevin Mccarthy<\/a>s dekes but on Something Like<\/a> the debt ceiling, where republicans are dead certain they want to make a fight of it and challenge the Obama Administration<\/a> for more spending cuts, the idea that they would be able to move that out of the way in a short term, quite vote, over the next month what john boehner is still in town, i think the options are limited and very unlikely. They will try and figure out how much they can get off Kevin Mccarthy<\/a>s plate before he takes the new role. Michael they want to use the debt ceiling thing is a political issue rather than dealing with it as something that must be done for the government . Phil that is right and a problem they run into, it was an effective mechanism in the majority starting in 2011. Starting in 2013, the Obama Administration<\/a> decided in a closeddoor meeting, they would no longer negotiate on the debt ceiling, they would no longer allow republicans to use that as a mechanism to secure spending cuts. That position has not changed. I talked to officials in the last 24 hours and they said absolutely not, no negotiating and that sets up a fight. And i do not care, we just want to know are we going to get the jobs data on friday . Phil you can sleep well. You can sleep well to know the Labor Department<\/a> will be open and running on friday at 8 30 a. M. , you will get everything you wanted. Tom thank you so much, in washington. , was theirew up panic in your house about the debt ceiling . Was George Washington<\/a> talking about the debt ceiling . Michael no, they did not put it in until 1911. Tom what is it . Michael it was put in during world war i because congress had to spend so much extra money to fund the war. Every time you wanted to sell treasury bonds, you had to get authorization from congress, they said, the heck with that, lets give them blanket permission. Tom are you kidding me, the debt ceiling. Tomorrow on bloomberg guestllance, an important. The Global Economic<\/a> adviser for pimco. Tom good morning. We heard from Phil Mattingly<\/a>, they will stay open or Something Like<\/a> that. Then we migrate into november, the debt ceiling. Radio and Bloomberg Television<\/a> worldwide, this is bloomberg surveillance. Lets take a look at what is moving this morning. I see ralph lauren on your copy of the New York Times<\/a>, he will step down as chairman of his company and his successor will be the head of the old navy brand. Who has had success turning the brand around. Michael he gets good reviews. Successful, the two brands are not on the same level in my mind. Gap is moving down. Michael how does this affect dylans candy bar . Make sure it keeps coming to tom. Tom we could devote the next 18 minutes to this man who changed everything about how we think about the stuff we put on our bodies. Michael for those worried about his departure, he will stay on. Tom you cannot get into his restaurant, i have been a couple of times and it is all wealth. Edible and totally unpretentious. I never would have thought. It is like another ralph home run. Ubs upgrading ralph lauren to a by. Buy. Tesla has released an suv, 2. 5 isthe premarket and 130,000. The reviews have been good. Tom priced below the bentley. People are still waiting for a model three which would be an electric vehicle for less than 35,000. Tom can you drive a tesla in intland or is that portland . Are they buying teslas . Lower cost spending market. Subarus 330,000 a model 30,000. Ee under the stoxx 600 up after a twoday selloff, up 2 . On pace for the worst quarter since 2011. Tom we do not spend enough time on that. , muchis another europe like the story here, that is an optimism. Michael we have people come in and say things are Getting Better<\/a> in europe, slowly. Ralph lauren gets an upgrade because he is leaving, that is like tom keene is off bloombergtv, now watch. Tom i think he is iconic and i like the idea that he will stay around. What ive heard is he is opinionated to say the least. Today,up, a lot going on with us, dudley, yellen, and book bowlers bullard. Tom good morning. We begin three days of coverage of the job economy. Friday at 8 30. A storm starring in the lancet called joaquin and forecasters able move up the u. S. East coast in the next few days packing winds over 75 Miles Per Hour<\/a>. Do not plan a picnic for this weekend. America things valiant pharmaceuticals is healthy even know it shares has been under the weather, reinstating these dark is a by reinstating the stock as a buy. Sheryl sandberg says social networks are reinventing marketing. I think the big message is that marketers have to understand and most do, that the days of you can do a campaign with a 32nd video at on tv are gone. It is an important format that you cannot only do that and if you do, youre missing a unique opportunity. Facebook those are your top headlines. Tom we had the guy to talk to, brian weiser. Improvement in price, but now facebook is more about content in the newsfeed, give us an update on the state of their newsfeed. Are they beginning to defeat twitter and compete journalistically with other news media . Brian a big thing about facebook and capturing tv dollars is dependent upon licensing more professional content. If you want a tv advertising campaign, you are trying to borrow brand equity if you are an advertiser, borrowing brand equity from the content. The newsfeed, not so much. What facebook is doing is are starting to license, or work with publishers, to license their content. Out you see the economists there one News Organization<\/a> that is the future of december missed sandbergs newsfeed. B they will oldham brian they will ultimately need the tv networks. The challenge is licensing and content involves tv Networks Coming<\/a> in with the realization, are we better off letting facebook monetizing our inventory, do we arm them . Sports on nhl on nbc facebook, but not much else on tv. Issues will of the be for advertisers, can you trust what you are getting from facebook and google. You are noting that google was caught cheating, telling people more people were watching youtube and then actually were. An academic study that did not get much press in the u. S. Researchers found that google tries to quantify the number of they ares and then only supposed to charge advertisers for the real views. What they did was identified the fake views and told publishers one number, who uploaded content , but they are selling advertising based on a higher number. Tom i have never looked at a gnat on facebook. This is youtube. Tom twitter has no as, who are they fooling . Brian twitter does have as. Have ads. Advertising does work, you do not think about it. Tom it is the jets and broncos, and at 44 motor and it goes by your brainstem. They need to have the ads exposed for more than just a millisecond. You need three seconds at minimum. Tom is there proof . Brian there is very little proven advertising, advertisers proceeded to work. Michael apple is coming out with ad blockers in their browsers. Brian they are supporting ad block apps. That does not mean that everyone will block ads. It is not an apt, it is inside of a mobile browser. A lot of publishers will ship the content to apps. Tom what is facebooks momentum in the United States<\/a> . I am on facebook, look at my glorious page. It is all international. Which is great, is there a u. S. Growth and facebook . Brand for the largest focused advertisers, facebook is the first place you look to spend your digital money. You do not know anyone in pressure works but collectively it does. Has no problem capturing a growing share of advertisers and markets around the world. My quibble is the idea they can capture tv money today based on saying we have super bowl like reach. It is not enough until you get tv like content, otherwise your satisfying a different goal. Michael one of the interesting things i have seen recently, googles new customer match, they can take content from an advertiser who has your email and google has her email, and you will see ads for places you already shop. Brian this is an important product launch, one of facebooks most successful project is custom audiences, they were the first to do it at scale. You can match your known customer information based on email addresses you possess, you send it to facebook, they would match data addresses and find incredibly targeting campaigns. The fact that google had not launched a product while facebook was beating desk eating lunch was eating who was lunch. Es lunch. My observation was that google is saying, you want to regulate us, you, we will give you something to regulate. They are being more aggressive by launching this product. Yesterday we reported that twitter is thinking of expanding the character limit, is that something advertisers are pushing for . Brian what is interesting is that twitter is arguably the fourth most important advertising platform. It wiltom i do not look at adsn twitter. Do not tend to think that it impacts us, collectively it does. The reality is, if branding shows up in a way you do not think about, it is there and works. There are they are promoted tweets . Brian the character limit is not an issue for advertisers. Medium that is a cold medium, or hot, i confuse the two. People have to think a lot about what they have to think what they see, facebook is laid out in front of you. It is a realtime media, closer to radio in a way that facebook is like tv. Tom you have a single best buy . Is there an opportunity . Brian i believe that facebook is probably has good upside. The tv sector has been beat up, it is a value trap because discovery had their investor day yesterday, anchor the wonderful things about the wonderful business they have and the stock fell by 5 . Tom where is cable tv in five years . Brian youve all. Youve all evolved. There will be more and more people who cut the cord, but maybe 1 or 2 year and you will end up paying for an oligarch collection of channels tom i am waiting for apple tv. There are people who still have dialup. Brian the difference between the broadband experience and dialup was so radically different that you did see more or less a complete turnover. I do not know if that is true with tv. It is harder to deliver content over the web. Tom if youre an expert in advertising, can google compete with apple . Brian apple makes compelling points about integrating hardware and software. If you are google, you are not in the hardware business. They tried. Im sure they will find places, android is a welcome alternative for a lot of mobile carriers. There will be a lot of support for that. Tom always brilliant, brian weiser. He drives a hummer in portland. Daley e mize bill you say bill dudley matters . He will be speaking in the 8 00 our. We have much more for you on Bloomberg Television<\/a> and bloomberg radio, stay with us on all of our platforms, futures up 21 and dow futures up 173. Good morning. It is 8 00 on wall street on the last day of the Third Quarter<\/a>. Along withl mckee tom keene. Here is how the last trading day shanghai tom the the s p, happy to put the worst quarter in the last four years in the past. At least we struck the Fourth Quarter<\/a> without worrying about chinas ups and downs. The stoxx 600 up. The dax up. It looks like the u. S. May end the quarter on an up note futures indicating is any indication. It was a lousy quarter for stocks. Not necessarily so for bonds. Treasury yields plunged yesterday afternoon and have recovered overnight. A 67 basis point handle for a twoyear. This morning, we are data dependent. Industrial production unexpectedly fell in august. The inflation rate unexpectedly in thegatively paired u. S. We get the employment , the september jobs report on friday. If there is one pair that will depend on whether congress legislation. Sses Phil Mattingly<\/a> assures us it will happen. We shall see. If you thought the Third Quarter<\/a> was rough on stock and bond investors, commodities set for their worst quarter since the 2000 a Global Financial<\/a> crisis. Morgan stanley warning more losses may be ahead. Raw materials tracked by bloomberg. The index by about 15 . If the fed raises rate, if the job report comes in, the fed raises rate currencies are all tied in with commodities. Right now, we have got the yen at 120. The euro at 112. A lot of people are concerned about where we go from here in the Fourth Quarter<\/a> paired quarter. Im with you. The Fourth Quarter<\/a>, we have got a lot of events. A couple of elections, poland, portugal, spain, canada. Michael the elections pale compared to the fed . Of theense is part reason spain and portugal have been showing better numbers if they has is they have told back from austerity little. The eu to be telling his countries they need to need to do austerity and more reforms. Michael so we see bad news ahead . With the ecb gave us earlier in the month when they cut their forecast and inflation, he said today we have the negative cpi from europe. It is not all that surprising. It really was not updated after we got new information yesterday when both germany and spain reported Inflation Numbers<\/a> well below expectations. Wehink that is part of why did not get as much of a reaction from the news. Look at then you confidence surveys, business and Consumer Confidence<\/a> service in will do not seem to be reflecting concerns about. I am not so sure to look what happened in the u. S. We had the confidence board among the worst numbers recently. I think when people see the stock markets imploded like they did in q4, it does not boost Consumer Confidence<\/a>. Michael the stock market did not reflect consumer economy, but people think they do . Think you are right. Especially in the United States<\/a>. On what theyork call financial depth. The size of Financial Markets<\/a> go to the gdp. The u. S. Has deep Capital Markets<\/a> measured like that and europe much less so. I think it is more the employment figures are more telling. All right. Employment figures we get this week. What little it mean for the fed . Track if there is no real change or do they have to be better . My understanding is Current Conditions<\/a> in the u. S. Would allow them to raise interest if the Global Environment<\/a> stabilizes. The fed is more focused on the employment market. I think you will find nearly all of the fed officials will even some sort of form and the folks curve which basically says if you want to get inflation higher, more people to work. It causes inflation to rise, which is what really fuels headline inflation. A weak number be probably has more impact than a strong number. Most i know do not expect the fed to raise rates next month. If there is an opportunity this year, it is probably in december. The not convinced government closes now, but when we get the debt ceiling and possibly taking a hand down on the spending bills to the middle of december as well, around december 11 and 12, december meetings at the middle of the month, if the government does close, it is hard for the Federal Reserve<\/a> to raise Interest Rate<\/a>. That is not my most likely scenario. A correction, i said it is next week but it has been pointed out that i was an idiot. It is tonight. The United States<\/a> expected to decline a little bit. Board. Ss the the bloomberg survey. Large manufacturers, small manufacturers, Large Service<\/a> companies and Small Service<\/a> companies, look for a decline. That is pulling back a bit on the Capital Expenditure<\/a> plans. This is why, coupled with the negative inflation number last week, it is why a lot of people think policy next month. Is there any indication the governor would actually be interested in doing that given the size of the debt the country has piled up . Good question. He caught us by surprise a year ago last october when he expanded the Balance Sheet<\/a> target 60 trillion to 80 joined dollars. I think he had advisor from the government that more stimulus was needed, and this is both monetary as well as a supplemental budget. My own guess is that they do not expand the Balance Sheet<\/a> but they could tweak what they are buying. Buying everything except my comic books. The bond market and the money markets in japan have not had an effective course on corporations as well as investors. Your books would obviously add a lot to the japanese economy. If they do not do anything else, what happens to the end . Story, theyng cannot get a break with the end because everyone keeps wanting to buy into it as a haven even if the japanese economy is not good. I sigh think that is a bit of a myth. A big distinction between buying back a position you previously sold. Were not really seeing the world coming apart by yen. Instead, theyre saying the world is coming apart, we need to get rid of those risk assets used to finance. German orcome along u. S. Stock markets or treasuries. As they unwind his actions, they have to buyback the end. But i would really point out is since june, foreigners have been very heavy sellers of japanese stocks. Of septemberddle that foreigners sold a record amount of japanese stocks. The dollar yen and we have been consolidating a whole bunch in this triangle pattern. Usually, the dollar breakup to the downside. About a 75 chance. Maybe, a combination of the poor japanese news, anticipation of in japan,y response u. S. Jobs data, fed tightening, leads to the upside. Michael we will watch for that. , thank you for setting us up for the Fourth Quarter<\/a>. The Third Quarter<\/a> was ugly and wear them with that here. Michael with futures indicating, maybe it will get better. David oil prices climbed to the most in a week. Thank you very much, david. Under 35trading just per barrel. In a tight stuck range between 44 and 47. Your member, because of a global cut, it is poised for his lowest quarterly average price for start of 2009 and new data could signal that we will see even cheaper oil. Joining me is the chief Market Strategist<\/a> who joins me from the cme. New important data points to talk about this money. Rose. S. Crude stockpile according to the American Petroleum<\/a> institute. Explain the increased to me though were seeing oil below 45 now. The markets transitioned from fundamental market and it is very much a technical market in the last month. Sideways. Crude trade we have see which way it will break out, but things have relaxed and the fundamentals are not driving the market is much as i think the support and the resistance points keep focus right now. Classes is opec plus secondbiggest producer of oil year on year as of this month. County think that is impact in the price of oil right now . Again, these are the fundamental factors the market digest. I think that is the reason we are where we are. It is important for me that we focus on this is the Halfway Point<\/a> between the recent high and that low. That is important. 50 is critical not only psychologically, but that was a low point when it broke through that. It has been held down below 50 to we will see those fundamentals. You can also bring up getting out of the arctic drilling. It is not costeffective to them. Supply and demand factors will balance out in the long run, the will discourage further investment in exploration and that should support prices in the long run. It might be months or years. Thanks. Up, williamg dudley, janet yellen, all speaking today. This is bloomberg surveillance. Michael welcome back. The adp employment report for september, 200,000 jobs created according to the Data Processing<\/a> company. Is 10,000 better than forecast their most of the jobs come from the service industries. We was 15,000 jobs in manufacturing. Pick up 35,000 jobs in the construction industry. The chief economist is with us. Give us a Quick Reaction<\/a> to the number, to basically getting what we respect death expected. A number that tells you the economy is running at 2. 5 growth. That is what the employment numbers continue to tell us and i expect we get the same thing coming out of payroll numbers friday. Games going for lord, that kind of growth. Michael the forecast is for 200,000. Tom we move forward to three days of job. It is a nice way to have it as we go to the interesting view friday. Good morning, everyone. Bloomberg surveillance brought to you by invesco. Nontraditional Asset Classes<\/a> and strategies may help you achieve your goals. More online. With the news, here is bill maloney. Across thets higher floor this morning. That strength is going over the u. S. With dow futures up as much as 200 points. On the economic front, the adp data, 9 00, milwaukee. 3 00, yellen speaks in st. Louis. Networks revenue mr. It shares are down 25 in the premarket. Stepsthe ralph lauren ceo down. In newlion dollars Western Digital<\/a> stocks at 92. 5 per share. Star board announced a 3. 7 ownership stake in advance auto parts. Upgrades and downgrades this parts cut thene sale of Goldman Sachs<\/a> with a price target of 83. To buy, post holdings suntrust with a target of 75. For more breaking news particularly if you have a bloomberg terminal, you can go online. Michael steve is with us. He is chief economist. 80 p to suggest nothing much has changed in the economy. If the fed is on hold in september, then if nothing changes, lie with a raise Interest Rates<\/a> in october or december . Nothing has changed with the growth inflation. If you look at the overseas Growth Numbers<\/a> coming out in particular in japan, germany with Inflation Numbers<\/a> that came a cpi in negative territory, there are pressures increasing and that further put them on hold. Less probability they will move in october or december, 2016, before we consider what they will do. Michael a drug you would say but it is just oil. They have been saying it is temporary for quite some time to i would say the same thing if i were in their position. They do not want to come out and say they are terribly worried about it. If they were, they would have to go out and begin another process of using and that is what they are trying to stay away from. What you see janet yellen try to do is a balancing act between allowing overseas currencies to begin to devalue relative, but not have it happened too quickly. Therefore, the process of, we will raise rates but we do not raise rates, and we will ease but we do not really ease, it allows a steady erosion in currencies. Precedent fora this language and this approach to communication . Or is this uncharted territory . Totally uncharted to die feel for them because it is a difficult situation for them to deal with. They have got the global aspects really weighing down, domestic aspects on the other side. We benefit because we are the reserve currency. They have to be basically the mature people in the room and sit back. As long as we have this nice service sector, an economy that can grow with 2. 5 , which is arguably the envy of the world at this time. They are allowing it to go on without causing too much discontinuity with the rest of the economy. Are they creating discontinuity in the markets . She said no. Globally, Interest Rates<\/a> have all come down. The problem in the market is more dislocations created in the quantitive easing. Aboutthere is discussion whether or not they have distorted markets more in that is treating them or negative impact Going Forward<\/a>. A smart thing to do Going Forward<\/a> is to basically back away from reinvestment very slowly. We have suggested to them a fouryear program of taking off the Balance Sheet<\/a>, do it every settlement across the yield curve. It, owly out of put down a bond and back away. Willsteve with a spirit we come back and he has a thought on chart and the great deleveraging of america. We will talk to him about your wallet and Balance Sheet<\/a> or lack thereof. Michael mckee and tom keene in new york. David here are your top headlines. By 200,000 last month. Meanwhile, the august number was revised slightly downward. This is the first three data points on unemployment this week. The government jobs report comes out friday. The u. S. And china are coming together. An official tells Bloomberg News<\/a> the u. S. Agencies joining forces with its chinese counterpart. 38 facilities are banned from exporting drugs in the u. S. Because of concerns over whether the drugs are safe. Glencore found a way to reduce its crushing debt load. It will try to raise more than 1 billion by selling future production of gold and silver. Glencore has 30 billion of debt combated by the commodities slumped. Shares fell on monday before rebounding. Howard marks of Oaktree Capital<\/a> talked Interest Rates<\/a> with matt miller in toronto. Afraid to raise rates. They keep saying it is probably lead to happen, they somehow or other through sign language, they lead the commentators to believe it will have in the month after next, whenever that will be, and than they do not do it. This has been going on for two and a quarter years. David the hugely anticipated percentage point, he says, is clearly meaningless. Back to tom and mike. Michael it never ends. Talk with a broker dealer that orready to listen, call visit commonwealth. Com to learn more. It is a busy data week. Today and tomorrow, adp, 200,000 jobs. Steve says. And we could use that. A yawner. Build of the is speaking at this hour on market liquidity. The fed distorting what is going on in the markets these days. Are they . The headlines, it is on bond liquidity and fed qe may have affected recent measures of liquidity. It did not move the markets all that much. When you talk to most on traders, they will tell you it has had a secondary impact and increased low on the bond market. The question is whether this is the right information going change worth this has to Going Forward<\/a>. It is something that needs to change Going Forward<\/a>. Tom you look at the behavior of america. What does that mean, first of all . Leverage can be good and bad. If you have too much leverage, a short duration structure, yourng over the debt, credit quality is going down. The higher your credit score is, the better you are. The more liquidity comes to you. Happened since the crisis is we are deleveraging the sector. We are about near the end of that story. Over towhat pulls us not doing anything in 2016. The bigger question is whether banks will let them take out credit. One thing banks have learned is that you have to be cautious in terms of the standards they provide. They will not back away from a concept you need to have 20 down on a house. That changes the dynamics. The problem into was, we allowed people to do zero down on a home. You get a Home Equity Loan<\/a> on top of it and do the renovations. You have got a home and then you are stuck. Now they are being more judicious. Will talk to, we about your loan and look at your credit situation and sometimes you come back and say you need 25 down. That is good and healthy and one of the reasons i think the economy is bulletproof Going Forward<\/a>. Do to olddoes it formulas of Monetary Policy<\/a> . To me, it is a whole new game. The deflation story turns modern economics upside down. It disappears when you worry about inflation. Potential gdp has to be rethought. Is a function of what level growth has given you inflation is capable for the economy to grow in general. We will realize in a deflationary world, it is probably a heck of a lot lower than we think that Economic Growth<\/a> is higher than we think. The economy is a long way to run. We heard there was a clinic on asymmetric analysis. Prices are up and then theyre not, it is disinflation. Downhe sudden, prices are in the math does not work. It is different math. It is a Different School<\/a> of economics. Exactly, 1954, there was a little bit of a deflation, a whisper. 1990, shifting over, it got worse in 2007 when china was disengaging from the world. They double down on exactly the same investments they had and that exacerbated the problem we are all living with now as a legacy. Is excess credit in the markets gone now . You have got to be careful because we are starting to see incorporation in bank balance she is. Highyield space. The spread that should have gotten lower but did at, investors are looking the share buybacks and a leveraged by. Things happening with glencore, saying that these guys are changing the mix of the Balance Sheet<\/a>. Were not hearing kings in analysis. We were told Central Banks<\/a> cannot create credit anymore. We created this in the afterglow of what happened with the financial crisis we are to have the right regulations in place prior to the crisis and did not apply them. Now we put h akoni and pressure on top of it all and they responded the way we wanted them to. We love to have you with us. We have got to get him back in here for another conversation. Upures up 21 and dow futures 167. 2. 07 as welleld, this morning. The yen and the euro, 112 zero. 6. 37 stronger. Ramy and itere with is time for a morning mustread. Writing in Bloomberg View<\/a> about carly fiorina. Its a failure does not always mean you made the wrong decision. It might just mean there are no good options or you got unlucky. The article is called, does carly fiorinatenured matter . She says no, it does not. Someone who has a different background from that when he or she becomes president , but we have been talking a lot here about carly fiorina, hewlettpackard, it has come up time and time again in debates. I have to agree that you can do everything right and still fail. When we grow up, we are told to stop, look, and listen when we crossed the street. We can do that and a car can still kill you. She may havdone the best thing she cod haveone. Unlikely was just thats unlucky. With that said, i would rather have had her succeed in her role as ceo than not. We have seen time and again, when you look at technology, hardware is often the hardest part. Software,ardware with if you look at other companies that have failed time and again. The point being made in the column, does the tenure really matter, perhaps it does not. Tom right now tesla, here is david. David the model s, electric suv, which can go 50 miles on a single charge, chockfull of stateoftheart features, including a pile defense mode button. Leastill set you back at 132,000. Betty liu was there. One andto test drive joins us now from san francisco. You were in the car, what was it like . Betty i was in the one that they called the ludicrous mode, which goes super fast. There i am. To give you background, this has gone through several delays. But it comes with really cool features. The falcon wing doors, 17 audio speakers to deliver premium quality. You cannot really tell, but it is a panoramic windshield. Says it is the largest piece of glass ever made for any vehicle ever. The best seat of the house in that car is the second row seat. You almost feel you are driving a convertible except you do not have all the wind in your hair. Cool and the price tag for the one i joked is 142,000, significantly more than the model s, which is around 93 thousand dollars. And thet is a cool car third model coming out from tesla, one of the last ones before elon musk must build in the next market. David what does the bio defense button do . He was saying because the air filter nation system is so that if godart, for bid something were to happen, and you needed to get to a safe place, you can literally go into your car and hit the bio defense button and youd be safer in your car than any other bunker. Injecting away of little humor into it. David this vehicle would be less than 35,000. His tesla on track to get that on the market here . Betty he says he is to her this was delayed several times but they learned quite a bit from building it and fully around with it. It was one of the last critical stumbling block. David betty liu joining us from san francisco. Omorrow, general Richard Myers<\/a> tom good morning. From our World Headquarters<\/a> in new york city, Michael Mckean<\/a> morning. Eene good a lot to talk about a look at brazil and its impacts, its effect upon the american economy. As ohs, we are brought to you by invesco. Looking for leadership, experienced experts are just a click away. Describe subscribe to the blog. Screen and risk on the screen. Mike, why dont you interview our esteemed guest who traveled north to be here. You have a lot to cover these days. Now. Doing what it can tell that down, but the Economic Outlook<\/a> is not getting any better. I said. Good morning and good to be here. Talk a little bit about the we are talking about poor fiscal numbers expected. Second, and the main reason for this, an economy that does not grow at all actually. It will shrink this year and next. Rates this year. 9 , 9. 5 this year. It is very difficult. Michael how did this all go wrong . I think brazil really got into very much consumption and less investment. If you take a look at consumption as a percentage of gdp, it is 6 . If you look at investments relative to gdp, we are talking about below 19 or 18 . This is something we have used a it from consumption and really came down throughout the last few years. I look at brazil, and with your wonderful experience there, there is a stereotype in america that argentina plays by their own rulebook. It is a belief we have going back multiple decades. Does brazil play by its own rulebook . This point in time and throughout the last two years, yes or not that much because we , foreign fundamentals reserves, almost 400 billion in foreign reserves. System is very healthy. The government has to obey some roles. Mike, here is a chart. I just put this out, wander over here and look at the brazilian gdp chart. These spikes are china leg. 8 , and then off a cliff. Is there any aspiration to get back to sub china like growth . Something that you have to pay attention. We now have to pick up investments. To the rate ofgo investment, both 20 . This will take time, otherwise you will not have steady growth in brazil. But are we getting enormous amounts of investment for falling out on the world cup . It has actually happened. So we do not have that much investments to get into brazil and not into the olympic games. Spending,rying to cut the legislature approving vetoes. Is that going to be enough, or do we need much more fundamental reform in the brazilian economy cutting spending . We really need reform. I think we have cut too much already. This year, we have cut 80 billion. It is not in general, we cut something close to 45. And we cut a lot of expenses. I think they do not have that much to do. Take a look at the at this package. It did not show too much of a cut. I would say they are cosmetic cuts. Tom in real, there is santa teresa and that is where the cultures clash. What is the slowdown doing to santa teresa as one in the city of rio . Lot not onlynged a is santa teresa, but the geography in rio, we had a boom do not to oil and now we have the boon anymore. We take a look at what happened, and we see the geography being assigned, a modern one, a terrorist one, it is losing track at this point in time. I think it is a symptom of what is happening in the growth in brazil. Thank you so much for visiting us in our World Headquarters<\/a>. Terrific perspective on one of the great moments in the Third Quarter<\/a>, a weakening brazilian rio. Bloomberg surveillance this , the insight your business is to move forward, find out what resident thinks and sign up for insights cohen reznick. That headline so for soon. It does not exactly are striking. Hey one presumes it is isis, as opposed to rebels fighting the sharp assad in there. The issue has been Russian Support<\/a> for assad. Russians have been fine Reconnaissance Missions<\/a> in the area according to the associated press. Today, they actually fired weapons. We saw ian tell us yesterday that he did not think the russians would go far with this. Maybe airstrike but they would not put actual troops into harms way there. This actually means, if you ask ian, probably not a whole lot. The advantages to look at the market, oil owns 44. 99. 48. Texas intermediate, received before when we had geopolitical events, it does not move markets, which speaks volumes. There is not any oil in syria which does not affect them. Markets are discounting, as in did, that the markets we get actively involved. Seen is airstrikes are not moving the needle in terms of isis. At this point, it is news but not for markets. Tom there are the headlines. I would note within the day of three fed speeches, we have heard from mr. Dudley. The two year yield,. 6 ,. 6 5, 65. That is something to see the two year yield plunging lower off the yellen comments at the press conference. And then to work lower here, a new lower on the two year yield, thatll be something. Im not predicting that, but something worth watching. Mr. They of japan, we thank him for attending at our bloomberg World Headquarters<\/a> yesterday. The mexican peso again under 17 and part of the risk we see this morning. , again, gold is giving away. This is the first time i said this in a week. We are on the cold watch to go down nine, 111750, dollars. It is not a big move, but it is three days of really pulling the bullish glimmer we saw on gold going back a week. The equity markets, futures up 21. Dow futures of 66. Up 66. Single headline, mr. Putin, russia now planning full scale involvement in syria. Stay with us. This is bloomberg surveillance. In ourm good morning, we are cozy, dry radio studio this morning. Rain is porting down in new york. Michael it will be an ugly weekend at this hurricane comes our way. Tom we will follow that more as we move into jobs day friday maybe when the hurricane shows up. We have a lot to talk about this miami to get some perspective on Foreign Exchange<\/a> right now. This is brought to you by interactive brokers. A stronger yen and the euro is 1. 12. You see the developing economies. I featured canada yesterday. That is my terminal chart of the day. Loonie is 1. 34. There is canadian weakness. A big move of canadian weakness over the last number of quarters. Thats enough on Foreign Exchange<\/a> this morning. Equity futures are up 22. Michael everybody in the markets and around the country wants to know if Peyton Manning<\/a> has lost it. In Libby Cantrell<\/a> from pimco to opine on that. To ask you about politics and stuff which is what you do. You cover Public Policy<\/a> announcements. We will get to the broncos in a moment but lets get to john boehner. He is retiring and will not play out his contract with the people of ohio. That is a problem, you are suggesting. Step back, i a dont think the ultimate outcome of him stepping down was a surprise. That johne speculated boehner was going to step down at the end of the last congress but did not because the majority leader lost in the primary last year. What was surprising is the timing. It comes in the middle of a jampacked fall with lots of fiscal deadlines and lots of room for error. Is that itnk increases policy uncertainty and increases the risk of a policy mistake and that is obviously bad for markets and could potentially be marginally bad for the economy as well. Phil mattingly says dont worry about a shut down this week. That it kicksting the can down the road and races the odds we will have a problem later. Exactly, the announcement last friday of his resignation improved shortterm stability. There will be a government funding bill passed today. The house will present with a majority of democrats any minority of republicans with the same playbook we have seen with the fiscal cliffs. As you said, that simply kicks the can down the road. Maccarthy more is the presumed successor to Speaker John Boehner<\/a>. He has only been in congress for nine years. Has a very unruly rank and file. How he navigates remains to be seen. Studied brown economics and there is a point and fiscal policy where you take a victory lap. Inm fascinated have nobody washington everyone is so miserable and nobody can take a victory lap over where the deficit to gdp is. At 2. 4 ,ficit is historical lows compared to the 30 year average. They have brought in the whichtionary spending looks basically flat because of the sequester which was put into place a few years ago. Why cannot they just move on from this issue . The spending caps and austerity issues seem to be resonating with this rankandfile of the republican party. Michael if we leave the caps in by doing a continuing resolution, the country gets bigger and that caps more tightly so austerity continues. The cbo which is the consummate authority on the flatt spending projects spending and nothing is done. They think there is some hope that there could be a broader budget deal over the next month when Speaker John Boehner<\/a> is still in place. There are only 14 legislative days in the next month so a bigger budget deal to relax these caps looks unlikely. It looks like probably flat fiscal spending and 0 contribution to gdp from the government over the next year, thats our case. What about tax receipts . We used to talk about this like a gospel. Are we at record tax receipts . Are well taxed. Michael they are getting record tax receipts from eyes. That matters because that will inform when the country preaches the debt ceiling which of the other fiscal Inflection Point<\/a> we had that congress will have to address in the fall. Has said we will reach the debt ceiling probably by the end of october. That does not account for the cash balances that treasury runs which is 125 billion now. Dip intos likely to the cash balance and that should push the debt ceiling deadline to around and of november. That is right when the Government Shutdown<\/a> possibility will be occurring. This convergence of fiscal policy events we think will lead to an increase in the chances of a policy mistake. Thats right when the fed is going to be contemplating raising the Interest Rate<\/a>. Michael does a drop in the market change the tax receipt picture significantly . You know, its not necessarily that sensitive. Impact. Have a marginal it depends what people are selling like longterm holdings. It doesnt help shortterm. Michael where do we see the receipts going over the next year . I guess that depends on your call on how much the economy grows. Yes, it is dependent on Economic Growth<\/a>. Our outlook has been around the 2. 5 for gdp for the next year. But not gang buster growth pretty solid growth. That is assuming Government Spending<\/a> is pretty much flat. If we saw a relaxation of the sequester and saw a mini budget deal coming together, then you could see marginally improved gdp. That is not what we are calling for. Tom i was talking about the importance of the afghanistan news. Its on the front pages. Its the war that never ends. U. S. Forces ined some form to assist against the taliban. End ines this washington . Thats a little bit out of my policy area. Tom from a budget standpoint, the pentagon is still fighting two wars . Yeah, effectively, and thats why you see these budget hawks in Congress Really<\/a> advocating for relaxation of the sequester on the defense side of the budget caps. I think there is a concern about National Security<\/a> and national preparedness. With afghanistan, we have a small troop presence in iraq and what you have going on in the broader middle east. I think people worry that if we continue to cut back on defense spending that we will be in jeopardy longerterm. Michael the republicans want to increase. Some republicans do. There is a real Division Within<\/a> the gop. You have the deficit hawks who dont want to see any Discretionary Spending<\/a> on defense or nondefense increased. Then you have a real outspoken contingency like senator mccain who is advocating for a relaxation. That is another reason why we policy uncertainty will increase because you dont have a cohesive view when what should happen within the gop now. Tom we will come back on this. It clearingly made from his reporting and washington that john boehner has shifted the dialogue in washington, the drama of midnight tonight is not there or thursday midnight. Stay tuned. Tom when does the Eastern Daylight Time<\/a> happen . Michael its the weekend after halloween. Tom in november . Michael they want the kids to be able to trickortreat when it is still light. Tom i did not know that. Futures are up 20 in doubt futures are up 163. The 10 year yield is 2. 08 . Tom good morning, everyone. David the major averages are on pace to show their biggest decline but we are indicating a strong open with the s p 500 up 1 . We have some of the notable movers. We are talking about ralph lauren and gap. Tech, and farm is what i will cover. , he himself is stepping down and in his place the gap president Stephan Larson<\/a> has been named as his successor. Looking at the premarket trading, lets see how thats performing ralph lauren is up by 6. 8 and 7. 1 . P is down id i understand ralph lauren will keep a hand in the business. Is probably not going to give up the company he started. He is getting up there in years. In two weeks he will be 76. It is perhaps time but its the but its his decision. Moving on to technology barrick cutera barracuda Security Firm<\/a> is reporting results down 29 . They Beat Estimates<\/a> for earnings per share by . 10 but they missed on revenue. That was not so much but they say that over the long term, they will be affected by the stronger dollar as well as longer sales cycle is in europe and the middle east. Seeing its lowest since september 13. Valley has been in the headlines over the past week and a half since Hillary Clinton<\/a> heated. I think i say that every day. Basically, some good news for valeant. Buy rating of two under 90. Thats indicating an 80 upside to the stock. Tne reason is because valean patentt see exposure to so they can manufacture drugs and not lose their exquisiteness. There has been the turbulence etom the Hillary Clinton<\/a> tewe and the subpoena earlier this week. what else do we need . Thank you so much. President of costa rica will be here in the building to discuss finances at 4 00 p. M. Eastern. This is bloomberg surveillance. Tom good morning, everyone. We say good morning on Bloomberg Television<\/a> and bloomberg radio. Havelibbyrful to cantrill here from pimco. As you look at washington, and as moderates try to figure out where they are going whether democrat or republican, is there that we that weeparty, find a new calculus of party five years out four years out, eight years out, 12 years out . We actually think about things in a cyclical time frame. Its very unlikely. There is certainly an antiincumbent, antid. C. Attitude. You see that in who is pulling first in the gop. Tom jeb bush is not doing very well. Thats sort of surprising. The most interesting rumor i recently heard was that bloomberg could be an interesting candidate. Tom who . Michael bloomberg is founder and owner of bloomberg lp and also this radio station. You did that so beautifully. There is obviously an appetite for something that is not the status quo in washington. Whether that means a thirdparty candidate is viable at this point even over the next four years or eight years seems quite unlikely. Michael we were excited about ross perot. But whatits unlikely that means for whomever will be the eventual nominee with the that would be the more interesting nominee than the democratic side you are even talking a lot about the 2016 elections. If you look back historically in recent history of all of the who had a lotates of momentum in the early days, usually, they flameout by february. You would not be surprised to see if that were the case this go around as well. Tom like the broncos. Hey now michael we will get to that but i have to ask one more question. Why does the Senate Banking<\/a> committee hate the fed . Tom good question. Michael the chairman of the Banking Committee<\/a> suggested that yes, we have nominees for the fed seats that have been empty but we are not going to confirm them and who cares . What is it with them . Not to give them a free pass but there are lots of parties that are conflicted in this. They might not be pushing for these nominees behind the scene as they should have. Chairman shelby is not bringing the candidates up. There has been lots of pushing in congress to provide more oversight to the fed. Those have not been successful so a lot of this is rhetoric that resonates with the base but does not go anywhere in a legislative perspective. It does not look like these nominees are likely to get confirmed in the foreseeable future. It could potentially happen next year. Who knows . We have to ask the key question does Peyton Manning<\/a> still have it . Know, as a fellow denverite, we saw john elway do this and adjust to a new defense. We saw him win super bowls at 38. Im not going to say that he does not still have it but certainly the last three games, it has taken time to adjust to the due offense. We are 30 and top of the afc west. The data does not lie. Michael on sunday, they play minnesota, the vikings. My husband is from minnesota. Fan of denverdent than he is a minnesota fan. He will give me a hard time up we dont do well. Michael they better do well. This is why they play her so much money. , to analyze the afc west. Football analysis more compelling than my political analysis . I will take that. Pimco need somebody who can step up and provide them with that perspective. We are both afc lovers. I will not say anything about the jets. Tom thank you so much. I look at the screen and you wonder if we are into eighth bday wait. So quiet,dp report you wonder where we will be at 8 35 a. M. Friday. It seems like what is moving the market is all exiles and is, japan, china, brazil, syria, those kind of things. Couple of days ago, we things wouldthat turn around and we would not recognize it when it happens. It will not say this is something that changes the whole market direction and people just start buying again. Tom go to bloomberg digital today and listen to David Rosenberg<\/a>. You know him as someone cautious. He is very cautious on Global Economy<\/a>. He is exceptionally enthusiastic about the American Economic<\/a> experiment. Optimist aboutht the benefit of lower Commodity Prices<\/a> to america. Futures are up 21, bloomberg surveillance. 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. Topd here are your headlines russia launched its first airstrikes in syria today. The attack started hours after russian lawmakers authorized president Vladimir Putin<\/a> to use military force there. Troopsdup of russian started at a base in Vladimir Putin<\/a> is backing the shaky regime of syria. Troops and plants in the u. S. Led coalition helping afghan troops in a battle with the taliban trying to retake the Northern City<\/a> that was captured two days ago. Its the first provincial capital taken by the taliban since 2001. The storm and the atlantic is now a hurricane called watch jean. Packing winds of 75 miles brower and warnings are up in the bahamas. Of ae is gearing up pyramid gadgets, offering a high end tablet called the pixel c which features a 10 inch screen and detachable keyboard. Its settopng device to challenge apple and amazon and roku. The futures are up. The s p futures are up 1. 1 . Everyone,morning, bloomberg surveillance. That is the opening bell. Report will be out with yellen and bullard to come. David wilson is an cyclic needed about the music business. We have lost a giant in a jazz saxophonist, phil woods, who had a legitimate jazz career and then a guy named quincy jones changed his life and our lives. He said lets take your jazz and put it on pop records with paul simon and billy joel. More than any other instrument or moment, it revolutionized what tone was supposed to be. It changed everything. Go, we are used to seeing saxophone on records. I come at it from an r b perspective. Clarence clemons and back to with gary u. S. Bonds. That is a different kind of sex. Tom this is alto sax. Imagine any single bone is event that changed things than when phil woods was on 50 ways to leave your lover. 83 and is a huge loss for the music business. Indeed. Dont stop, we are fascinated. Tom when you heard just the and it was the phil of billy joel, but ramon got this guy out of juilliard who was a total jazz cat and said this will work. We were nuts. Lets go to david wilson. Michael do we have a saxophone to accompany dave . You could but yesterday i had a chance to give you an Energy Update<\/a> but i didnt. Today, you get a double. National ciquefied Gas Companies<\/a> are up 3 . Heneer moves away from production after carl icahn tosed his stake in cheneer 2. 5 . Ralph lauren is up 9. 5 . The 75yearold founder stepped down as chief executive and was replaced by Stephan Larson<\/a> who headed the gap old navy unit. 8 in the are down wake of his departure. Lets talk Western Digital<\/a>, up 14. 5 . It agreed to buy a 50 stake from the disk drive maker for 92. 50 per share. That prizes 33 higher than yesterdays close. In othereing gains disk drive Company Memory<\/a> companies. Seagate technology is up 6. 6 at the moment. You also have a gain in sandisk which makes memory chips, up 5 . Fiat chrysler is up 5 . They may have a Public Offering<\/a> as far as friday. The ipo price may be set the week of october 12. Advance auto parts is up. Stake. Ue disclose a 3. 7 tom one more. How about rents track . It accepted a takeover offer c fromom score valued at 800 million. The combined company will be a rival to nielsen holdings. Up but nielsen is down in early trading. The decline amounts to 1. 6 . Can you getlse these comments on the markets and Clarence Clemons<\/a> . Michael we have to ask tracey holloway. No sacks for me. Michael lets talk about Something Else<\/a>. We can talk about copper. Everybody calls it dr. Copper. The dr. Is out. If you look at one commodity this week, look at copper. Michael do they use copper in saxophones . Tom they do. Marcus parsley, the great trumpet player, showed me a 1930s instrument with copper in it which give it a different town. Michael now we can combine the two. Copper on monday moved below its 200 month moving average. Its not the 20 Day Moving Average<\/a> or 20 months but 200 months which could potentially be a big deal. Since then, it has gone back above that level. Crisscross what some say is an important technical level and we see it feed into the wider market. We have glenn core moving because of Credit Rating<\/a> worries but glenn core is closely pacing and tracking copper at the moment. Tom this is why we love to have tracy hallow a with us. She did the aggregation theory and moved from where the amateurs are which is 200 days or even to what it weeks up to 200 months moving average. Ada doess whatuise yam every day. Michael tell is what it means . Continued weakness in copper if we see it stay below that level. It has moved up today maybe its not a coincidence that markets feel better today. We should be looking at copper because its an important indicator of market sentiment. Its feeding into emergency markets and feeding into glen court which is a big idiosyncratic news story. Tom what other research do you have . Lets do credit. It has been falling out of bed. We have bank of America Merrill<\/a> lynch analysts yesterday saying it looks like a train wreck in u. S. Junk bonds. Their big concern is we have seen some idiosyncratic weakness in specific Companies Like<\/a> shale companies. They worry that weakness is starting to spread. Its a big story. We have so my people talking about liquidity in the Corporate Bond<\/a> market. Bill dudley was talking about it today. The concern is that if prices in fallsonds get away, price will be more exacerbated them they would be otherwise because of lower liquidity. Michael the people of bankamerica say there is an appalling lack of liquidity in the bond market. Bill dudley said there is not much evidence of treasury market liquidity declining. Or Corporate Bond<\/a> market liquidity but bill dudley pins that on the regulation argument. Liquidity isay declining because of new rules that make it harder for banks to hold onto bonds and fit bonds and that cushion is not there anymore. Bill dudley says he does not think that is the case. We have had these years of low Interest Rates<\/a> that have encouraged people to pile into Corporate Bonds<\/a> and hold on to them. Why trade Corporate Bonds<\/a> if the paper is so scarce and higheryielding . Bill dudley does not address that side of the equation. He only looks at the regulation factor. Tom its the end of a quarter and we begin our Fourth Quarter<\/a>. Tracy, thank you so much. Shes got to run to her saxophone lesson. Tom billy joel just the way you are go. Chael piano man is my karaoke favorite. I can even do the harmonica solo. Michael there is a future segment here on surveillance. People are already writing in. Tom where up 219 points on the vix is 207. And the david a new report out this morning on women in the workplace. The most Companies Want<\/a> to level the Playing Field<\/a> but change is not easy or fast. If women and men were to participate in labor markets worldwide at the same level, gdp would grow by 28 trillion. Guest is with mckinsey. That economic number is so big. There are so many motoring fat motivating factors to do this. Why is this not as quick as people would like . One thing we see is that the obvious areas are not the ones we should focus on. Of the 118 companies we looked at, very few of them had attention problems. What they were saying is that men and women were leaving at similar rates which led us to ask what else is going on. We found an unlevel Playing Field<\/a>. We found ambition levels vary between men and women especially for the top. We found there are biases in the organization that impede the ability of women to succeed. Daivd is there a point where this begins to happen more and more . Absolutely, one of the main things we found is that if you can recruit women and promote them to their first promotion, help them get through the beginning, you have a greater chance of developing them through the organization. We found that women at the top were less likely to leave them early hired women. The barriers set him in the middle and upper 10 year levels. I am struck by how robust this conversation is. The Sheryl Sandberg<\/a> book did well and people are taking this more seriously than they did before. What needs to happen for that to become more actionable . Companies need to take action. One thing we found is that the vast majority of ceos, almost 80 , will say this is a priority. It is a priority to them but when you ask their organization and the men and women to rank them as a preorder two, less than 50 believe that is the case. In business, if you dont believe something is a priority, youll probably not act on it. The first thing is to amp up the intensification. You can make sure that keep a practical actions that can help. Are there sectors where this happens better than others . There has been a disparity in silicon valley. Are others doing particularly well . We see improvements in health care. We see that technology lags behind. One thing worth noting as part of that is related to the education pipeline. Likewe look at stem engineering computer science, not as many women graduates. We are seeing those numbers decline in the u. S. Over the last decade. The most jobs in so much opportunity is in the tech field. One thing is the early stage of making sure we bring women into the Education Field<\/a> and line them up for these jobs. In the technology sector, we dont see that. Thank you very much and the reports women at. Tomorrow, general Richard Myers<\/a>. This is bloomberg surveillance. Tom good morning, everyone, from our World Headquarters<\/a>, 59th street and lexington avenue, a rainy new york and we say good morning to all of you from bloomberg surveillance. Data, give mejobs background on 80 p. Michael 10,000 more jobs forecast than what the consensus is for nonfarm payrolls friday. Its pretty much where we have been. We are brought to you by National Realty<\/a> with 30 returns on rented real estate. Nira. Net. You can get a good cup of coffee in davos. Withe have an economist the World Economic<\/a> forum and joins us with a terrific report on competition. Good morning. Good morning. I look at your work and the importance of your work is done n of columbiaarti university on competition. Of theat him as one great global optimists out there. When you look at competition nation to nation, is it an optimistic report from the wef or not . Its an optimistic report in the sense it provides a number of solutions. We understand competitive activities. See is a new normal of lower productivity growth and lower growth over all. The only way to break out of this cycle is to improve productivity Going Forward<\/a>. We would provide a positive outlook on productivity. Tom where is your outlook on productivity . It about labor improvement, capital improvement, or total factor productivity . Its really all those factors that drive productivity. The factors that are the underlying drivers such as institutions, infrastructure, Macro Economic<\/a> stability. Financial, labor, and technological is important and innovation and sophisticated businesses are key. Michael you are suggesting the Global Economy<\/a> is adjusting to a new normal. Its lower growth but does it ,lso suggest a longer expansion may be slow, but we dont get in balance is building up . Growth isivity driven balanced growth. Productivity is strong and then the growth is sustainable Going Forward<\/a>. There is no contradiction between highgrowth built on solid productivity and fundamentals. If we get that, for benefits the most . Do we start to see the emerging markets overcome a kind of drag ism a fed rate increase or it the developed markets that can take advantage of technology and productivity that will benefit the most . See is those countries when you look back at the past seven years, those countries that have been most competitive which were the United States<\/a> and switzerland, those other countries that have that weathered their financial crises the best. We have studied these in the countries that are competitive are more likely to withstand the next crisis. We see small improvement in terms of emerging markets. We see improvements in india and the asianca but also countries of their small improvements in a number of countries that are not the biggest emerging markets but the smaller ones. In terms of advanced European Countries<\/a>, many remain stable or with only small changes. Positive signal is that italy and spain are going up a little bit indicating there is some movement. Thingsen i look at the that can upset the apple cart, the Swiss National<\/a> bank stunned the Global Economy<\/a>, there are those shocks out there. Which shocks did you see in your report that are worth focusing on . At there more looking shocks that could derail the Global Economy<\/a> Going Forward<\/a>. Competitiveness could help countries withstand the shocks. Switzerland, the country has solid fundamentals and has strong institutions and a solid Macro Economic<\/a> situation with the labor market. It has withstood the recent shocks relatively well especially the january franc shock. Growth rates for better than expected. Tom thank you so much. She is with the World Economic<\/a> forum as we look at competitiveness in the world. The report reaches beyond the new normal. Into three days of jobs economy, there is a new normal and a new mediocre and then to take an optimistic tack, there is a triumph of american resilience. We are different and i will tell you where i saw that. 2007 when hank paulson and the rest were trying to save the world, i read a fourpage report which became a 40 page report. I sat at a bar in new york with a martini next to me and read the entire 40 page report. Then we had a 100 page report which became a 400 page report but we cleared the market. So many other societies did not do that. They are still struggling with that. The reason we are at 200,000 jobs and arguing about 2 yield versus 1 yield, we cleared the market did michael some people would argue that we have not and thats why the fed needs to rates. Nterest there is a feeling that equities in particular have gotten an artificial boost from too low Interest Rates<\/a> from the buyer of last resort always being there and that has kept us from clearing markets and that is one reason you dont see a lot of Corporate Investment<\/a> or demand for loans, cash is floating ripped theit we had bandaid off earlier, we would have cleared the market, thats the other side of the argument. Tom the group of esteemed economists including Kenneth Rogoff<\/a> say do not initiate a rate increase because that part of society cannot withstand it now. That is per their argument. Michael the question many people have is that really true that you cannot withstand it now because we are only talking about a very small rate increase . There is an interesting please in the Washington Post<\/a> go peter rbich writes about all of this and says economics is a little different from politics in the sense that politicians, for the most part except for the people on the fringes, tend to see things they try to combine ideas together and Work Together<\/a> to get things past were economists tend to think of things is absolute. That is the debate we see over the fed. My view of the economy is the only correct one, how can there possibly be any other view . Raise anthe pro antiraise groups, each convinced they have the best solution for the economy. Quotecannot give us a on the jobs report friday. Looking at the adp for germany. Ism milwaukee. This happens every once in a while. 200,000 of the forecast for their roles on friday. The Unemployment Rate<\/a> will remain at 51 and that is the consensus at the moment and we will see by friday. Hopefully my bloomberg terminal will be on english tomorrow as we continue jobs coverage. This is bloomberg surveillance or co a. Welcome to bloomberg market day. Lets go to the morning headlines. Thatps the best things investors can save at the Third Quarter<\/a> is that it is almost over. We will summon up and look ahead. Investors say the worst is over. Researchers are facing challenging decisions. We will head to those to london for the latest look. By this time tomorrow Madison Square<\/a> garden may be trading as two separate companies. We have details of the split coming up. Stocks are closing out their worst quarter in four years. At least, right now they are on a high note. Lets check in with the julie hyman at a look. Julie that is correct, the s p 500 is down by over 8 . 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