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tv   Bloomberg Surveillance  Bloomberg  September 29, 2015 6:00am-10:01am EDT

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singles -- signals inflation abroad and in america. abenomics -- of prime minister abe speaks this morning at bloomberg world headquarters on deflation. this is "bloomberg surveillance ," of live from our world headquarters in new york. it is tuesday, september 29. i'm tom keene. with me, vonnie quinn. in london, francine lacqua. there must be an update on glencore. are they still open for business? francine: the main story where watching, you mentioned geopolitics. you mentioned it little bit of what is happening in terms of central banks. the markets, now the global route we saw yesterday, inching higher. we have the s&p futures advancing, oil advancing, and copper, for the first time in five days, is up. tom: i will not oversell that,
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but at least we found a bid on the market, at least until the next news flow gets in the way. maybe we'll see that for mr. abe as he makes comments. we need to catch you up on top headlines. here's vonnie quinn. vonnie: financial markets stabilizing, as you guys were mentioning today. a day after the selloff that billion off global equities. u.s. futures are up, and so are stocks in your. asian stocks fell. meanwhile, one of yesterday's biggest losers is bouncing back. shares of glencore up as much as 10% in london after falling 29% yesterday. glencore has gotten a vote of confidence from citigroup. i says if glencore keeps losing ground, management should take become a private.
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at the united nations, president obama will focus on terrorism, leading a summit on how to confront islamic state and violent extremism. castro,ith raul vladimir putin. their second talk. the general assembly will hear japanese prime ministers shinzo abe, but before he addresses what leaders, he will develop the keynote speech during bloomberg. majorcalled the first victory for the televangelist 2001. forces have captured the city of kunduz in northern afghanistan. it is a major setback for government forces. nato says the u.s. has launched airstrikes against afghan -- to support afghan troops trying to retake the city. led the greens
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bay packers to a win over the kansas city chiefs. green bay is now 3-0. the chiefs are 1-2. tom: some breaking news this morning. if you want to make money in santa fe, started tobacco company that is supposedly organic and does not have the chemicals in it. you call that american spirit cigarettes, from of the time -- from another time and place. then you sell it to a company that keeps north american rights, but unloads for $5 billion, that light blue pack of cigarettes. the american spirit cigarettes, and their international rights to japan tobacco. that is a stunning number for those of us who remember when those cigarettes first came out years ago. reynolds american unload the initial rights and assets to japan tobacco for 5 billion large. that is a long way from santa
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fe, new mexico. let's get a data check. equities, bonds, currencies, commodities. the euro churns. crude oil has done nothing for three weeks, which is something given the commodity meltdown. on to the second screen. show, a huge percentage yesterday. vix the two year is distant from the pre-yellen number. 224.r gets a bid, that is a stunning number from last evening. let's go to another currency right now, the canadian dollar. i put up just out of curiosity -- here is the weakness in the canadian dollar. erik schatzker tells me it has something to do with the toronto maple leafs. right through the 2008 weakness,
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and ever weaker -- an ever weaker canada. leavingpierre trudeau office, ancient history in the 1970's, the improvement, and here is that huge weakness in the canadian dollar, the oil boom, and then look how far we have come back to that weakness. the story, as we have come through the pierre trudeau weakness of another time and place -- this is underreported -- with canada really struggling with weakness. we continue with routing commodities. the knockout affecting currencies like loone global confidence. much more than glencore going on, francine. would you look at commodities in the city echo what are the market calls? francine: the margin call probably paid a big part in
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glencore's loss yesterday. if you look at the glencore story and the fact that these --modities that have been some of them look like they are in crisis and have a huge impact on glencore. first of all, is this a systemic risk, or could this be a lehman brothers moment if something were to happen with glencore? two, where is management? where is the ceo, the cfo? why have we not heard from them? if you are the holder of a stock and you do not hear from management when they share price falls 30%, you have more questions than answers. tom: we had simon kennedy on "the pulse" an hour ago. how many too-olds are left in the central bank toolbox? francine: it depends on what central banks you are talking about.
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if you're in emerging markets and struggling to contain probable outflows, then you will have significantly less tools than other central banks. even the u.k. has a huge problem, as we are hearing more notice that this could also the negative. when some economists say we are looking for a bank of england interest rate hike. onwhere he continues commodities and china, they may look at bank of india. this is probably one of the highest interest rates in emerging markets and asia, but they have gotten much more aggressive. tom: francine will be with us from london throughout the entire hour. we have a special treat. for any of you on global wall street, you know the name robert feldman, with morgan stanley. we have robbie feldman on this morning. prime minister shinzo abe will speak at our world headquarters, introduced by michael bloomberg
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in the 8:00 hour this morning. robert feldman happens to be in new york city this morning and joins us with perspective on mr. abe's japan. dr. feldman, let me begin with a simple question. the idea here -- is abenomics a success? yes, it is. it is not a full 100% success, but has strong performance so far. the has been corrected from a huge over valuation. with agricultural reform, corporate governance reform, series helmets of tax reform and other areas. i would give them a good grade on what they have done so far. the question is what happens next given the global turnover -- given the global turmoil. abe have support of younger japanese looking at
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decades of week nominal gdp? think japanese culture is important, but my key point performance-- as changes, culture changes with it. has done is lowered the age to 18 for voting. he also made a couple of comments about how the elderly have to be more self-reliant on their own resources, take less from the young, how they have to work longer. he is reorienting japanese social policy to be more in favor of the young and less in favor of the elderly. tom: is japan reaching out to the rest of asia right now? we have just seen the visit of the leadership of china to the white house. aes mr. abe reach out with new relationship with china and singapore and the rest of asia? abe has beenk mr. extremely aggressive not just with china but with the rest of
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the world as well. japan is a more active player on the global stage. to the it is a testament approach that he has taken, the and this -- the calmness the underlying desire to work on problems. vonnie: does this great financial experiment called , even if the yen continues rising? isby: the yen right now, it still at a level that is very weak relative to a few years ago. at a deeper level, the point of abenomics is how to get labor capital technology to work together to raise the underlying growth rate of the economy. the exchange rate is only a minor part of that. there arent -- demographic problems that have to be addressed. vonnie: we are finally getting a
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little bit of wage growth in japan, so why raise the sales tax? robby: the fiscal situation is very serious, and they do not have good choices on what to do. so the sales tax is part of it, that mr. abe has been clear on record that he wants to raise the sales tax as little as possible and use growth but spending control as more active in the way they approach problems. as you talk to individual investors, basically they want a third, maybe less than a third of the fiscal gap to be filled and two thirds or three quarters by spending control. spending control is important to the japanese population. tom: what is the thing that we most get wrong about mr. a be's japan. we are clueless on all of this. tell me what we need to know
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about japan about this moment. the key things markets are expecting is more monetary response to global week this. , but a quite unlikely physical response is more likely. mr. abe says he is not looking for a physical response -- for a fiscal response. that will change. it is a major opportunity for him. here is a man who knows what he wants to do, and the people who do not want to go along with it march scared by what is happening in markets right now. vonnie: are you saying that we have three arrows, we have six, and we will eventually have nine? robby: i am not sure we will go up to nine, but the original arrows are redone and repackaged. andnew one is population spending control. the new three arrows are a repackaging of the old three arrows but with emphasis that takes us forward. francine: i am sitting in
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london, and there is so much ofk about the japanification the euro. what advice would you give to policymakers to avoid that situation? robby: japan came out of its financial crisis with a commendation of strict asset assessment, public support, -- with a combination of strict assessment, and public support. it is a question of making sure the the incentives for financial institute are lined with the long-term growth of the economy. as japan has a growth strategy, so does the united states need that. dr. feldman, thank you so much for being with us this morning. robert feldman is with morgan stanley. again, we have an important speech this morning at 8:45. prime minister abe will be
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speaking at our bloomberg world headquarters. look for that across all of our platforms, including bloomberg television and bloomberg radio. we have wonderful guests to prepare you for the abe speech this morning. including adam posen. he will join us in the 9:00 hour. stay with us. francine mcguire london, vonnie quinn in new york. this is "bloomberg surveillance ." ♪
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tom: in the distance, what you see is potential margin calls as all of london really begins to adapt to commodity implosion. if you look at logarithmic charts, it shows the acceleration of pain in the commodity markets. one of our overarching themes this morning on "bloomberg surveillance." she is in london as well.
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let's get to world headlines with francine. francine: i do not have a margin call, but i do have news. more aftershocks from the volkswagen state commission test scandal. they have the emissions software installed -- vw says they have the emissions software installed but they will longer be sold. another -- in other world news, a surprise from the royal bank of india, cutting rates 50 basis points. that drop, benchmark repurchase .ate, to six point75% india's borrowing costs are among the highest in asia. in other news, shares of the giant commodity trader glencore are rebounding in london, up as much as 11% after falling from 29% yesterday. overdone, trop was
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and glencore has been caught up in the chinese slowdown. for more on glencore, let's bring in an investment manager at aberdeen asset management. great to have you on the program. when will we hear from glencore management about what is going on? >> that i cannot say. what i do think is that the reaction was not on the back of anything that they said. maybe they do not feel that they need to make communication, that the market should be making it. clearly is note in the best position as a moment. they know they have a lot of leverage to pull and they will do everything they can to ensure the balance sheet survives through difficult times. francine: are you worried that ?lencore will survive,
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louise: i think glencore will survive. they have incredibly smart management. they had a lot of letters to pull. --they had a lot of letters they have a lot of levers to pull. my base case would be that this is not a disaster, that the company will be fine. having said that, to investing glencore would be high risk. will one investor be enough, should there be another 5% drop in commodity prices? difficult to say until we find more details, to be honest, in terms of how much an investor is willing to help. i think anything at this stage would be helpful. tom: louise, thank you so much. really appreciate it, with aberdeen this morning on glencore. we have much more for you on "bloomberg surveillance," and
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through the morning, including our moment with shinzo abe in the 8:00 hour. joining us in the next hour, ian bremmer of eurasia group will and we will speak with mr. bremmer on the challenges of japan. this is "bloomberg surveillance ." good morning. ♪
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tom: good morning, everyone. "bloomberg surveillance" in new york city. right now, with our morning must-read, here is vonnie quinn. vonnie: i want to turn to geopolitical questions. vladimir putin spoke with president obama yesterday, the first time in 10 years that has
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happened. richard haass's writing in the financial times today -- saying isat he is that the u.s. idea to replace a shar al-assad with another leader is not going to wear. tom: it is almost a partition. vonnie: exactly. the u.s. has tried this before in other countries, and perhaps working with russia is a good idea. tom: and from the ft, they quote mr. putin -- "do you realize now what you have done?" which is vladimir putin lecturing the united states. and that great
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interview with john micklethwait saying that western leaders need to try to embrace russia a little bit more. he is not talking about sanctions. there are close ties with russia because of gas and oil, but there is a new reformed geopolitics, hierarchy, and russia needs to be brought back in because of it. tom: what else did you see within your reading this morning? vonnie: there is no question that prudent is doing this too -- that vladimir putin is doing this to an extent for his audience at home as well. a lot of what i have been reading is that he is playing to his audience at home, changing the dialogue, and syria is a real threat to russia. tom: within chatham house and the other think tanks in the united kingdom, is there an assumption that the borders of the middle eastern and middle east have been blown up from damascus to baghdad and south of there? inside thehose
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european parliament are extremely worried about this. they cannot really say publicly. tom: the photos in the american papers this morning were something. the photos of the president and mr. putin. vonnie: and you have to call it an opportunity, because any kind of rapprochement is potentially a good thing. tom: destined to -- dr. kissinger we call it an opportunity. coming up in the next hour, we will be joined by the latvian foreign minister on russia and the baltics. stay with us. ♪
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"surveillance" exclusive -- the lights are on loan in washington -- the lights are on in washington. possibleent shutdown
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-- possible on wednesday at midnight. we need to get to top headlines. here is vonnie quinn. vonnie: there is a big transaction in the tobacco industry this morning. reynolds american has agreed to sell its natural american spirit cigarette unit to japan tobacco group. the price is about $5 billion u.s. buyingobacco has been cigarette brands overseas to offset a stagnating smoking rate in japan. president obama gets a major boost to the u.n.'s peacekeeping force. he persuaded leaders of 50 countries to commit more groups -- more troops. right now there are 125,000 blue helmeted u.n. peacekeepers deployed in 16 complex worldwide. during the general assembly in new york, mr. obama will lead a summit on how to confront islamic state and violent extremism. he will also meet with cuban
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president raul castro. the prime minister of italy says it plans to bring russia in from the cold. matteo renzi says western leaders trying to end fighting in syria must accept rush upon central role. -- must accept russia's central role. >> russia is a great country with a great history and the great future. a future without russia is a mistake. more of thatan see exclusive interview with italy 's prime minister. investors have been concerned what yahoo! could take from the alibaba deal. carl icahn does not have much good to say about wall street. he has posted a self produced video in which he endorses
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donald trump for president. at the same time, he uses it to attack ethics on wall street. icahn: wall street does what wall street does best. it sells securities. the mafia has a better code of ethics than you guys. you know you are selling the scrap and you keep selling it. , and youg this crap keep selling it. video: it is a 14 minute posted on one of his websites, called "danger ahead." changed business this year with his comments on apple computer. in the last those two years carl icahn has changed the use of the cash debate. caution is much similar to ray dalio's. he does get the ear of
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management and he does get the ear of investors. to be activists in the political community as well. tom: it is a throwback as well. these guys are a throwback to another time and place. it is always of interest as well. right now we need to look at the government shutdown. i believe wednesday at midnight we turn into pumpkins. stan collender has seen the pumpkin before and has seen the clock ticking at midnight. der has decades of experience in the nuances of fiscal washington. you have been talking about the likelihood of the shutdown. what is the likelihood now? it is probably less than 10%. that is for october. but i am going to go out on a
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limb, and even this early, i will say for december it is probably already at the 50% level. tom: we keep staggering from shutdown threat to shutdown threat. why are we doing this? a variety of reasons. one is washington works on crises. if there is not a deadline or a fiscal cliff or a shutdown threat, or a default threat with the debt ceiling, it does not get things done. you have to keep in mind that washington is remarkably dysfunctional. this is not the washington that we grew up with, where everyone fought like crazy during an election but came to washing -- but came to washington to compromise. for a lot of folks, compromise is a four letter word. placehere was a time and you went to washington nationals baseball games and the players did not beat up on each other in the dugout.
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vonnie: i am not sure that ever happened. i think you need to fact check that one. stan, you say it was a black swan event the john boehner resigned but that it was predictable. tell me why kevin mccarthy becoming speaker would make it less likely for a shutdown? all, why would anyone want the job as speaker at this particular moment? the shutdown problem for december with kevin mccarthy, if he is speaker, is based on a variety of different things. the freedom caucus, which forced john boehner to resign, are feeling their oats. the seniorot republican official to go rogue, and they can do it again with mccarthy. if he starts compromising with democrats, they will go after him the way they are going after mitch mcconnell.
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plus, you have to keep in mind that the decisions they make in december will be for the whole year, unlike the ones they are making now, which will be for a few months. politicallyt more difficult for people to say i am going to compromise on this. there is an additional emotional issue with planned parenthood, the highway trust fund, and god knows what else. this is the equivalent of a fiscal cliff times three. vonnie: is there something he can give up to keep the government running? thing you can suggest to the new speaker is that he try to come up with some way to allow the freedom caucus, the ultraconservatives, to vent, or he starts compromising with democrats right now and basically telling the freedom caucus that you are only 40 people and you are not that important. tom: in the second quarter of
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2015, with 6.1% nominal gdp growth -- that is pretty darned good. stan: taxx receipts? receipts are coming in stronger, than where they had been anticipated earlier in the year, which is why we're able to go so long from the middle to the in the november -- to the end of november without a debt ceiling. receipts coming in higher than anticipated. vonnie: a quick word on the poles of the republican nominees and who that might be in the end, sam? stan: i don't have a clue. i don't think anyone who tells you they know what is happening with the republican nominee is telling you the truth. this is the screw realist election i have ever seen and what is possible here is that everything we thought about elections no longer hold. there sensibility or
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common sense or practicality to mr. trump's tax policy proposal? stan: it is very enticing to say we will take another 30% of americans and say you do not have to pay taxes. first of all, that is a reversal from the mitt romney theory of takers versus makers, that only 47% of the people actually take -- actually pay taxes. but what donald trump did not do, and the impractical part of it, is he did not say how he is going to pay for it. are we talking about an increase in the deficit, or reducing spending by an equal amount of lost revenue? none of that was included. positionhear that, the cannot really be taken seriously. tom: stan collender, thank you, from washington. the analysis is there is no practicality to it. vonnie: and it seems like this
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is the case every election cycle. even more so, you wonder how you implement some of these proposals, frankly, from both parties. coming up, we need to look at glencore shares three fractionally rebounding after the most ugly yesterday. we are going to look at the metals in our single best chart, and i will introduce my best chart of the year. "bloomberg surveillance." ♪
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tom: good morning, everyone. "bloomberg surveillance." tony dwyer pulls out his forecast of a bullish call. he moves it out to 2016. and david kostin of goldman sachs has amended his earnings and outlooks for the equities markets. simply, he recalibrate's to a single digit world of 6% and 5% s&p growth. there is some nuance in there. we have to get him on the show in the coming days. beginning to recalibrate, and some of it has to do with our single best chart right now. we did this yesterday.
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it has already been amended, the metals index. index. the equity metals this is very typical, in that metals have rolled over, not the to the 2008 lows, but gamma of acceleration is pretty as the gamut of acceleration is -- but the gamut of acceleration is pretty ugly. vonnie: if it does not stay at $50 a barrel, crude at 8% will have an impact. tom: that is an incredibly important point. forget about the commodity implosion. general equity calmness. the year the chart of after nine months of the year. sometimes we wait until the second week of december, sometimes we do not. this year we do not.
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here's the chart of the year for 2015. it is a wonderful bloomberg commodities index and for years the union bank of switzerland doing the math on what is critical -- doing the math. and what is critical of this is that we have gone through the so-called lehman low on this blended commodity index, gold being the heaviest. francine lacqua lock, this is a different commodity chart and most of the others, and it shows the immediacy felt in london. francine: it does, and when you look at glencore, it tracks it from 2011. if you look at glencore from the last 45 years. it starts at that second peak, and then they goes down much more then charts, and that is because of glencore debt. tom: gary shilling brought this up yesterday. it is not just about the industrial metals or gold in floating -- or gold in floating.
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gary mentioned -- or gold imploding. gary mentioned sugar as well. it is weakness that you will see in peru when you go to the commodities meetings. francine: there is still demand for agricultural goods. glencore contracted to sell off one of its units. tom: bring up the chart of the year one more time. i'm am going to get emotional here. bring up the chart. look at that regression back to the 1990's. that is a gorgeous chart of the year. there it is. vonnie: is francine mentioned, there is the idea of agricultural units splitting off and going in their separate directions. tom: what do we have with top photos? "a dailyumber 3 -- show" first appearance last
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night. the format is generally the same. one difference, the opening -- apparently it is -- tom: it is a generational shift. vonnie: and he made reference to that. tom: this is a big deal for tv with all new late-night people. he is 31 years old and perhaps not the first choice. so many people said no to this job. schumer -- they both said no to the job. it is a tough job to take on. tom: francine, i am so out of touch. i get tucked in at 6:20 p.m. francine: it is all about inequality. rallies in hong kong have
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started up again, marking the one-year anniversary of the umbrella protest. the signature yellow umbrella reappeared. many are gathering to shout antigovernment slogans. police have been deployed to block protesters from blocking highways like they did last year. andsands gathered last year they are regrouping, refocusing their efforts this year. tom: francine, if you were to interview chris patten now, what his hongsay about kong? are we totally beyond any memory of the british in hong kong? francine: we have stopped interviewing for quite some time. he was the big authority on hong kong. i would ask him whether china is going the right way in reforming. it is a huge generational shifts , and whether they have a handle on it. vonnie: and the parliamentary elections next year, we will see if the pro-democracy candidates
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win more. top photo -- president obama and russian president vladimir putin met for the first time at the u.n. general assembly. vladimir putin said his talks with obama were surprisingly open. tom: that is the stepdad in the middle. vonnie: they spoke for 19 minutes. the exchange did not particularly seem warm. at one point the president refused to smile during a toast. these are all very important in diplomatic relations, but you can interpret them in different ways. tom: ian bremmer will join us in the next hour, in charge of smile interpretation here at "bloomberg surveillance." an important program note -- a speech by the prime minister of abe in new york.
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michael bloomberg will make introductory comments. shinzo abe on inflation and the future of his japan. good morning. ♪
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tom: it is the litmus paper of the global system, former -- foreign exchange market mirroring what we see in commodities. the japanese yen stronger this morning. 120. shinzo abe will join us this morning. dollar-canada, indicates the challenges the canadians will face. just a symptom of what we will face in emerging markets. cut in india.te here is vonnie quinn with top headlines. for a: the senate is set stopgap spending bill to avoid a government shutdown tomorrow night. finance would government spending through december 11. the house is expected to pass
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the measure. shares of valley and pharmaceuticals fell 17%, the most in four years. democrats encumbers want to ant.oena vali they raised the price of a drug by 100% the day they acquired it. and one might question whether a drink that can cause physical dependence needs any for the promotion, but nonetheless, today is national coffee day. grabbingelebrate by free beans from krispy kreme, dunkin' donuts, and even aboard your jetblue flight. tom: this is a special treat. joining us, richard layard of the london school of economics. he owns the economics franchise in the united kingdom. it is a candidate -- a cottage industry known as economic happiness, and he has the courage to write a brave book.
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book,an important adult and what you need to know is princetonl cotman of wrote the introduction. how deteriorated is our mental illness industry, or every day are we doing a better job with those challenges? richard: we have the potential to do a much better job because we invented drugs in the 1950's, but there has not been much progress since then. the huge progress in the mental health industry has been in psychological therapy. what we need to do is to get that psychological therapy available to millions of people. adults areof all orfering from depression
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anxiety. we ought to have these relatively -- we ought to have these readily available. what we do not have at the moment are enough trained people to deliver them or insurers willing to pay for the proper dosage of treatment. it is extraordinary, i think. this is the main illness of working age. i do not know if you realize this. age adults'working illnesses are mental illnesses. the economics is completely different. mental health should be the main focus on economic grounds. vonnie.p in, vonnie: is it an insurance problem, or an awareness problem? think it is mainly
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now a supply-side problem. -- because public the public -- in england, we have huge -- we have had huge access the man's -- we have had huge access demands. what we do not have is the supply, and we have been developing, my colleague and i, , we hope of the book that the availability might happen in the states also. tom: thank you so much for starting your day with us. "thrive" is the book, on the challenges of mental illness. and breaking news, actual springer has -- tom: this is an extraordinary transaction. our congratulations to henry blodgett.
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exceptional transaction of business journalism. we have another hour of ian bremmer. "bloomberg surveillance." ♪
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announcer: this is bloomberg "surveillance."
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new -- considers its mediocre. the u.s. two-year signals inflation abroad and disinflation in america. obama and britain have -- obama and putin have spoken. we speak to ian bremmer. the state of abenomics. space thister abe morning at bloomberg headquarters. in new york. tuesday, september 29. i am tom keene. joining me, michael mckee and david gura. remember when business insider first came out, we were going what is henry doing? he was ab to sell 88% of the to axel springer.
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there was an original quote based on 100%. is gong to keep the remaining 12% of shares. henry blodget selling to axel springer. working,weisenthal, what did he make come of thousand $700 his first year f for$14,700 his first year henry. ith him, went to lunch he haas the oy meal they started this on a shoestring whatid henry blodgeto? michael: he took the idea of aggregating the news. find the stories on various platforms, rewritthem and put a catchy had line on them.
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tom: henry blodget a all of your investors, congratulations on a transactionhich has amended mode business journalism. right w, top headlines. david: a huge deal invoing one of theiggest names in th business. reynolds american is t selling the american spirit unit to japan tobacco group. . the pre, $5 billion the deal does not include u. operations. japan tobacco has been buyi overseas to offset a stagnating spoken right at home. investors tryingo right the ship afrring the selloff is boug back. 10% afterhares rose falling 29% yesterday. glencore is getting a vote of confidence from citigroup, a buy.
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citi says management should take the company private if it keeps losing ground in the market. nations, president obama will leave a summit on how to confront islamic state. he will talk with even president raul castro. their second meeting since the u.s. restored relations with cuba last year. the general assembly will hear from shinzo abe. mr. abe will deliver the keynote speech during bloomberg's japanese finance for this morning at 8:45 eastern. a cityrplanes attacked in northern afghanistan to help the government take it back from the taliban. it was the afghan taliban's biggest victory since 2001. the president says troops are already staging a counter offense. the packers travel by air to victory. aaron rodgers threw 5 touchdowns to lead a 10 point win over
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kansas city. deepak still perfect the season. tom: michael mckee, our nfl expert, is the running game dead. tom brady with 4 touchdowns. michael: it is on life support. collegea crop of great running backs coming up that might change the game. tom: a data check before we get to the ian bremmer. up we have improved. i will call it a downs off what we saw yesterday. the japanese stock market a little challenge. oil churning, 44.85. it is ever so possible that traffic in manhattan was not at a standstill yesterday, just mostly like park avenue. 30 blocks from the waldorf-astoria, all were stuck in traffic as in primer -- ian bremer from eurasia group was
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limoed in,. i've never seen the traffic as bad as it was yesterday. putin and obama. ian: subway for me. putin, historic day. completely at odds with each other. historic day for the g-zero. we have a power vacuum in the middle east in particular. the russians are showing they .ave repaired to occupy it tom: translate defaces any photographs, -- translate the faces in the photographs, putin and obama looking grim. have you seen that? ian: usually. that is not a reset. there was hope and there was change. that is obama representing the former and putin representing
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the latter. in the photoased because he feels resurgent strategically, he's been able to put the line to the notion that russia can be isolated, they have to crackdown on ukraine. every american's fear. we are bombing in northern afghanistan to help the taliban. why isn't syria going to be our new afghanistan? not wanted to have any skin in the game in syria because he does not see good options. the diplomacy the u.s. has engaged in has failed. at no point have you seen critics coming up with credible ideas for what the americans could do that would change the game on the ground in syria. russia is saying you failed for 4 years, now we are going to
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fail. the russians are putting troops on the ground and they are putting lots of military capabilities to support assad. assad is going to stay. we should not kid ourselves into believing the russians are going to fight. they do not want to take. casualties is relatively few ground troops. there's more to this russia'segically in the region to put americans on their heels. michael: russia seems to have a strategy where the u.s. has nothing. is syria a failed state? is it too late for either side? ian: it is not clear to me that russia has a strategy for syria. they want to bolster assad but the war is going to get worse. , they aresians fight
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one of the most anti-wahhabist regimes in the world, you will see terrorism in russia. 3000-4000 russian citizens are fighting for isis in the region. this is a tinderbox for the russians. they are doing this to try to change the american position. not only is it lost as a state, this refugee crisis, we are going to see another one million refugees from syria in the next 12 months. 95% of the syrian refugees have not made it to europe or turkey yet. that is going to unravel europe. even the agreement everyone ,000lded last week, 120 refugees that are going to be resettled, when you resettle them to a country they do not want to be in, how do they stay there with the schengen agreement?
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be talking with latvia's foreign minister. aould it be beyond assad to wider post syria collapse strategy, how do we deal with the detritus of what is coming. ian: ask him about his concern about little green russian men in the south of latvia. biggest concentration of russians in the politics and the next area you would be worried about if ukraine continues to unravel. in terms of what the u.s. should be doing in the middle east, you hear people like pataki and lindsey graham saying 10,000 troops on the ground -- the only way you beat isis is ground troops here no one is going to make the commitment anytime soon . not only does syria continue to have much more pressure on the jordanians and the lebanese posting these people.
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the potential for more fragmentation, for metastasis, is going to go up. tom: what would henry kissinger do? ian: kissinger would have been looking to find some sort of russians.ndi with the he would see that you cannot be the enemy of both sides. he would want to let the russians do the fighting and keep the americans out of syria but for iraqi would be working to go much stronger. tom: ian bremmer with us. 8:45, shinzoat abbe at our world headquarters. good morning. ♪
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tom: good morning, everyone. futures up 11 points. dow futures up 68 points. a rebound off the carnage yesterday. here's michael mckee. michael: why would you want to run for president? syria is just one of the problems out there. about meeting with xi jinping the last week. times," american
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and chinese presidents do not really know how to talk to each other. they are like computers on different operating systems. he points out all the different ways the country's think differently. we think of american exceptionalism and they think of communitarianism. both countries like to think of themselves as the preeminent force in the world and that is a situation that cannot continue. it: was the chinese that is -- was the chinese visit diminished because of the pope? michael: that is a public relations aspect. the real work is getting done inside the white house. chinese were upset about this, it took xi jinping at the -- out of the headlines. xi jinping was meant to be red obama,t act on cyber by he went to washington state with
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the tech executives. split because we would rather have the money than the clean conscience? ian: you have american corporations saying we want to do business and china. and the american government is saying we have national security problems that are hurting you. the chinese understand how to exploit that. we have former american high-level officials and british officials like tony blair, after they leave office they get -- they become lobbyists for these governments. the western economy's private sectors can be undermined and exploited by other countries. michael: why would anybody want
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to run for president? ian: look at the people running and i think that answers your question. tom: ian bremmer just took a shot at mr. trump. ian: i took about 19 shots. tom: ian bremmer with us. ian bremmer with the leadership of latvia as well. before affairs minister will join us. this is bloomberg "surveillance." ♪
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tom: good morning. a day of rebound after yesterday. 2015, a day of rebound for italy. 400 basis points to germany and the crisis. what an improvement. michael: three years ago, italy was on the verge of economic collapse. 10 year was over 7%
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and mario draghi was forced to promise whatever it takes. what it took was the 39-year-old mayor of florence. matteo renzi became italy's youngest prime minister in february 2014. yesterday he sat down with bloomberg to tout an economic turnaround in europe's fourth-largest economy. 2012-2014,from italy has seen an increase in than 353aving of more billion euros in the banks. really worried. if we give them confidence, i think we can achieve great results. you are talking about leading .he deficit, up to 2.6%
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is that part of that optimism? is it something that mrs. merkel is going to approve of? if you look at this year, you can see the u.k. at 5% of deficit. in the last three years, spain -- >> the u.k. economy is growing strongly. mr. renzi: i'm happy for that. but if i use a deficit at the spain, my of u.k. or economy grows. i have a problem, public debt. .e can combine together , thate first time in 2016 decreases in italy. this is crucial for us. michael: a lot of progress for matteo renzi to be proud of. john mikel slate is with us. italy has come a long way. have they finally unleashed
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animal spirit in italy? john: there's always been animal spirit and italy. against that, you've got the mess of italian government. he talked about public debt numbers. they still have debt to gdp of over 130%. look,y strongly says germany came to us when they went above 3% of gdp for deficit, we only want to go to two point 6%. italy let germany break the rules and germany should let italy do the same. michael: he's continuing reform efforts. you spoke about, he had to essentially neuter the italian senate. he can get this bill through that collapses and turns it into a smaller body and
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stops this complicated business. he thinks he can get it through without the support of silvio berlusconi. michael: how important is berlusconi to italian politics? john: he still is, that is one of the problems. , astill retains a big reasonable slice of the italian electorate. people close to renzi will say he has to deal with him. everybody in europe has to deal with what is going on in the middle east. what did renzi have to say about syria, the refugee problems and the russians? his pitch on the refugees is this should not be about money, this is about the meaning of europe. he said that europe without thinking about how to bring people in, if it ends up with walls, that is not the europe he wants to build. gettingimagine schengen into trouble quickly. tom: ian bremmer, dovetail the
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message from john micklethwait with the new europe? is it coalesced or is it polarized? ian: the italians are worried about schengen, they are worried about the response to the refugee crisis not being practical. that, it is interesting you have the italian prime minister more concerned about foreign-policy issues and libya. they are taking responsibility , they keepthe u.n. coming back and saying one more week, it is not happening and in.refugees are coming they think if their government work you have a crisis it is going to be as a consequence of field response to the refugee crisis. john: he refugee thing is huge and ties into the idea that he thinks europe has to concentrate more on that. he is a fan, generally. i think this is exaggerated a bit but a fan of trying to bring
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putin in. the only way you're going to deal with iran, syria and libya is to have russia there. at odds with the americans. ian: the american government is concerned it is going to be impossible to get europeans to re-up those sanctions. john: he would be a dove. michael: jargon alert, schengen -- the free flow of citizens across borders in the eu. tom: which has stopped. michael: we are talking about the legal framework that allows people to go back-and-forth across countries. john: at the end of the interview he says it is a big time for europe. schengen under threat, the euro a lot of trouble and the possibility of britain leaving. huge elections such as the french elections. it is a tough time. michael: a stable italy helps.
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john: italy is better than it was. tom: look for john micklethwait 's interview with matteo renzi through the day. shinzo are they our world headquarters at 8:45 across all of bloomberg media. ♪
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tom: good morning. you need to know that the market has a bid. i do not want to oversell it after yesterday. a fragile bid. futures up 9. of a lift that we have.
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top headlines. david: a huge deal by the second-biggest u.s. tobacco company, reynolds american is selling the american spirit cigarette unit to japan tobacco four $5 billion. the deal does not include u.s. operations. japan tobacco has been buying brands overseas to offset stagnating smoking grades at home. a commodities trading giant is getting off the map, glencore shares rose 11% after falling 29% yesterday. china's slowdown is hurting commodity prices. president obama gives the u.n.'s peacekeeping force a boost, persuading leaders of 50 countries to commit more troops. that will bolster the troops by 40,000. there are peacekeepers deployed in 16 conflicts worldwide. mr. obama will lead a summit on violent extremism and meet with cuban president raul castro. tom: you need a platform to
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changed and was in. he did it. joe weisenthal changed the dialect and the cadence of journalism. one massive threat to traditional journalism. this morning, he ever so modestly caches in with henry blodget and others as they unload business insider to axel springer. >> right off the bat, conflicted talking about this. i worked there for six years. . started very early on i do have a tiny slice of equity , which i will now be selling, so i'm happy. tom: you will be able to buy a one bedroom apartment. joe: exactly.
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beginning, this is about henry having a distinct vision that internet journalism was going to be different than any other thing -- in: what was his practice the first meetings where you said this guy is doing something .ifferent joe: when you are a startup in they were not great times for the economy overall. you do not have much latitude. course correct very fast. it is about identifying the stories that resonate with people and hammering them harder and identifying the stories that are not working. mike: here is my question.
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part,epend for the most other organizations providing material that can be rewritten. if they keep cannibalizing the news, that reduce how long can business insiders and the others survive? say that does not hold any more. in the early years when things looked like a blogging that was more of it. someone would break a story and you would add commentary. now it has been international newsroom and people who break lots of stories in san francisco . economics and markets reporting out of london. think the reputation -- perhaps it would be fair at one point that now that as a news organization they go toe to toe with their competitors. michael: there are a lot of competitors. can they all survive? is there space in the internet dailylism world for a
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beast, huffington post come the business insider and on and on? joe: i look at it two ways. it does seem like it is crowded. there has been investment in online content. i think it is possible we are getting closer to the top of the boom. on the other hand -- think of theit is still so big, traditional media players today. how much money is being spent on advertising and so forth. i think we are probably still at the early ages of online media. many of these brands, including others, could be much bigger. roe retire on this? joe: helps out. tom: joe weisenthal, thank you. . business insider, congratulations on a transaction. green on the screen, futures up 8. this masks tangent out there
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that is news-driven. veryl call it a bid, fragile off of what we saw yesterday. as we go through the trading day as well. crude, 44. 91. michael: this is bloomberg "surveillance." he was seen as the last best hope for japan. 4 years on, shinzo abe and his abenomics have failed to deliver consistent growth or inflation. hearing from the prime minister live in the next hour of surveillance. ian bremmer helps us assess what abe needs to say to keep the faith among investors. at this point it is not like he can claim that abenomics is the success that he touted when he came to office. what does he say? how does he keep the course? ian: in the diet session
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recently, most of the legislation for the controversial third arrow of abenomics was at 98%. a lot of this was controversial and difficult. i think he feels pretty good. now he has unveiled 3 new arro r s. helping important in with next year's elections. certainly talking about demographics, social welfare for a treatment of the elderly. also the nebulous arrow that has to do with a virtuous cycle of profitability and good governance and growth. there's not going to be much more additional reform before these elections except japan getting the transpacific partnership through. i saw prime minister all day on sunday. he feels pretty confident, the amount of support he continues to have from the eu elites and the political process, having
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become the prime minister of the liberal democratic party, it has brought japan back to a one party system. is the political success. where is the economics success? the economy contracted and they are back in deflation. ian: they have greater debt per .dp then greece demographics are shrinking massively. this is not a place you are going to be looking to suddenly create india style or china style growth. michael: can they create any growth? ian: japan is one of the most and perhaps the most resilient large economy in the world. the japanese people are prepared to take that burden on. the japanese fetishized other things, we fetishized growth. stability,etishized would be my amateur take. abe the second or
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third economy in the world? are they that big? ian: they are number three and they do not like that china is number two. we've also seeing meetings between shinzo abe and xi jinping. the military actions in the south china sea and not the east china sea. investment which went off because of concerns are now coming back. that, geopolitically, the impact that could have melted these guys down because they are more affected by a china rise than , they are trying to manage it. that is true even with abe talking about normalizing their military. tom: where do they fit into the phrase "pivot"? where's the pivot point?
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near tokyo or beijing? ian: we recognize that china is more important to us. germany is more important to us than britain but britain is a closer relationship. when you think about japan-united states, the fact is that they are our ally. the chinese are engaging in virtual warfare against american corporations. tom: japan has been power ally even though we push away the ghost of world war ii. michael: he also reforming japan's foreign policy. argument,ld make the given what japan is doing and the nature of the u.s.-china trajectory economically and security wise, that japan is the most important ally for the u.s. globally. the transatlantic relationship is much easier. exactly ais not
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friend. we have great relations with canada and mexico. it is japan. tom: wonderful to have you, ian bremmer with eurasia group. shinzo abe speaking in an hour worldwide on bloomberg. good morning. ♪
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tom: good morning. michael mckee and tom keene with
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david gora. david: let's start with the reynolds american deal, japan tobacco buying international rights to natural american spirit. what is fascinating is the need to do this because of smoking. bunchne day there were a of hipsters that had granola cigarettes. the hipsters just moved the international rights to 5 billion large. and business insider, where are we? david: of the tobacco world. be fact that we do not talk -- copper futures up .5%. such a huge decline yesterday. tom: a big deal. michael: we were talking about yesterday how people were
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starting to say this is a way overdone. the drop has been too far, too fast. tom: you and i have seen the rationalization of oil prices. as we start getting more economic data from china this month, that is going to have a big influence. tom: it is very much gdp proxy. michael: i want to talk about oil. data is expected to show that u.s. crude supplies continued. tom: west texas intermediate with brent crude under 50. let's bring in ian bremmer.of eurasia group with an update on saudi arabia. the tragedy the other day is a distraction from an overarching challenge for the royal family. what is their challenge, sub $50 brent. ian: one challenge is just after the hajj tragedy the iranian
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government blamed the saudis and said they would take it to the international criminal court. the rise of iran, their influence with the russians, the iranians are against the saudi's on every issue that matters. tom: does that mean putin is against saudis? ian: putin has a much bigger problem with wahhabism, given the dangers of islamic extremism tend to the associated the russianin republic. oil at 45, the saudis are eating 23% of their financial reserves to pay for their budget this year. they have to cut costs. tom: the quality of reserves nation commission is a mystery.
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as they "burn through their reserves. a high: the saudis have level, which has enabled them to play a game where they hold the price down in the hopes they can drive u.s. for hackers out of the market while maintaining market share. it has got to be eating into theirs. michael: -- tom: everyone is in new york for the united nations meetings. also joining us is the latin foreign minister. ♪
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tom: good morning. bloomberg "surveillance." let's get to our top headlines. looks like the planned parenthood fight will not shut down the government for now. congress is expected to pass a stopgap spending bill that includes money for planned parenthood. a new budget will be needed in early december, the battle could start again. shares of valeant pharmaceuticals fell the most in four years. heart drug was raised by more than 500% on the day valeant required it. one might question whether a drink that can cause physical
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dependence needs promotion, today is national coffee day. grab freebies from dunkin' donuts and even on jetblue flights. have a sip. tom: cheers and all that. we are having coffee. putin looking east to china. putin looking south to syria. maybe he will look west. there are three baltic states. edgars rinkevics is minister of foreign affairs for latvia and joins us with ian bremmer of eurasia group. ofh fighting the gridlock u.n. traffic in manhattan. wonderful to have you. what is the latvian distinction? estonia,n the map, lithuania and latvia. what is the distinction of latvian foreign policy with russia? mr. rinkevics: i don't think we
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have quite a distinction, we are united as baltic states, seeing the events in ukraine, the illegal annexation of crimea and the turmoil is totally unacceptable. there's no distinction between lithuania, latvia or estonia for that. tom: i look at the bloomberg terminal and i noticed the headline, no one killed overnight in ukraine. ukraineutin diminishing as he focuses on syria? do you assume ukraine will come back into the headlines? mr. rinkevics: while we are concentrating on syria, we should not forget ukraine. we cannot look at addressing syria or a crisis of refugees in , a consequence of syria,
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as one that can be solved at the expense of ukraine. michael: are you concerned that side, leaving syria a follows up the ukraine adventurism with moves to destabilize the baltic states? i do not think that we are in that kind of immediate danger of destabilization. i think there is already too much for mr. putin to handle. there is ukraine and now we see syria. alllways keep attention to the moves. we have every assurance package by nato approved last year at the world summit. we always should take into account that sometimes the russian foreign policy, the russian policy at large is not very predictable. tom: let's have some fun with the foreign minister of latvia. . briefing from ian bremmer
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you sit down with the foreign minister and you present, -- you brief him, go. ian: i tell him the issue in the getting politicized in terms of nato support in the region. on the one hand it is important to be decisive and show that ukraine is not going to fall and we will maintain allies. we do not think most of the europeans care as much about nato as they used to. the baltics could get lost in the shuffle. especially as we see the presidential campaign with so many people criticizing president obama for not providing an estimate of support , from your position as foreign minister of one of the baltic states, allies of the u.s., do you feel like the americans are there, do you feel like the europeans are there? mr. rinkevics: i was responsible for nato integration in the first years of our membership. i have seen that the kind of
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notion about the importance of the baltic states, the defensibility of the baltic states has changed dramatically. we have american troops exercising and we have european troops on the we had germans and european allies doing baltic policing. think what is really necessary is that we make nato stay as long as necessary. we will do whatever we can to protect all of the territory of the baltic states. natontly, the response of and the response of the united states has been adequate. what we lack sometimes is the very clear signal that this is .s long as necessary tom: do you need the signal from the president or do you need it to be more overt on the ground? mr. rinkevics: more troops on
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the ground, nato troops. american troops are nato troops. tom: we are trying to make news here. mr. rinkevics: we are looking forward as we appear for the nato warsaw summit that we will find the necessary resources to let them fulfill this. question, in the worst-case scenario, ukraine continues to deteriorate, if you define the situations where russians were having soft intervention, a little green men scenario, do you feel confident that nato allies, america, would be there to defend your country. do you believe putin believes that? what -- mr. rinkevics: what putin believes is the best question to ask him.
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we've seen that all of our guesses have been wrong on his foreign policy moves. i do believe president obama was alinn. in t we need more visible presence. nato is struggling right now. five intoput article meaning in the 21st century, it is not only about purely military but it addresses hybrid risks. work that is ongoing. alls not easy to define kinds of hybrid elements or hybrid threats that one can experience. how is the continent
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going to come together? the response so far is fractured and not nearly enough. mr. rinkevics: i do believe that the refugee crisis and how we are going to solve this is one of the defining moments. the threat has been very membernt opinions among states, especially about so-called quote is an distribution. i do believe that at the end of .he day we come to agreements the overall development of the european union as we know it can be in danger. from your perspective, what needs to be done to stop the flow? do you stop it in syria? if so, how? mr. rinkevics: it is not easy to talk about tackling root causes. problems ate major
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hand -- ukraine, syria, and libya. all of them require equal attention. what we need to do more is on external eu borders. we have to be much tougher on readmission policies. tom: i want to get to the question you have mentioned twice. ,o you need more nato troops boots on the ground in latvia? mr. rinkevics: when it comes to the refugee crisis, no. cash speak about yes istern flank of nato, believe we need the persistent presence of nato troops. it is strengthening our own defenses. the first line of defense is our own. tom: mr. minister, thank you. edgars rinkevics is the foreign
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minister of affairs for latvia. weinbergxt hour, carl from high frequency economics. stay with us. ♪
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michael: this is bloomberg surveillance. global leaders come and go in new york. reignsncertainty which in the markets this morning. today, japan. the prime minister here with us to explain abenomics and the outlook for the world passes third-largest economy. let's get you set up for the trading day and we will start in asia. hit targetslump today. since january. nikkei wiping out all of its games for 2015. finishing the day down 4%. investors searching for direction there. the stoxx is down .4%. the dax up by .1%. are stuck, sidewalks
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waiting for motorcades to pass and have been rethinking the equity slide, it appears to the s&p, futures are up by nine points, about .5%. higher, up points .4%. higherdaq is 21 points come up by .5% on the day. a the bond market, it did of rally. the five-year, 1.3 percent and the two-year, 68 basis points. might mention copper. we were talking about that earlier in terms of what is happening with top stories today. glencoretching rebounding as analysts say monday's 29% plunge will prove excessive. glencore shares in europe right
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.ow are up 8% analysts called the stock attractive now. india cut interest rates more than expected to bolster its economy. cutting the benchmark repurchase seven and a quarter percent. it is the lowest now since may of 2011. the u.s. government is a step closer to not shutting down. this qualifies these days as good news. the senate approved a spending bill that would finance spending through december 11. it still has to pass the house. we will of course keep an eye on that. as we mentioned, four years on, abenomics was seen as the last best hope for japan. they show the country back in recession and back in deflation.
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the prime minister is starting a second term. we will have him live on bloomberg surveillance coming up later in the hour. ahead of his appearance, we will look at abenomics, successes and failures. .e start with john for a long time in japan for a number of houses. on what people thought should have been done in japan along long time ago, massive withary stimulus coupled fiscal stimulus and reform. the economy retracted 1.6% in the last quarter. >> yes. coming off a strong first quarter. not meeting the technical definition but it was not a disappointment in the second quarter. japan is never going to be growing at a rapid rate. a declining demographic.
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for two or 3% growth, but more like a trend, 1.5% going forward. to get it, iing afraid. you might or one quarter, but not very often. concern in a major that corporate profits are more a function of the global economy and corporate profits have been .ising sharply it is not correlated to domestic gdp numbers very much at all. domestic gdp contracting in the previous quarter. ,ny evidence that the spending the stimulus for the bank of oran, is having an effect, is it just creating a massive debt problem for japan? not trying to stimulus too much. they do have a fiscal deficit .nd accumulated deficit
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that is quite serious and i have to be careful about how much money they spend. much not counting on stimulus. emphasize, i will would say, stipends for the middle-class. that will help some consumption going forward. other arrows are much more the fiscalhan stimulus. the monetary stimulus has been tremendously successful. hit their target, which i was told was too high a target anyway for an economy like japan. they have done quite well on a core basis. food and energy, the cpi is running at 1.4% six-month rate now. it is almost 1% on the year on year rate. a big success. whereas before, you can guess that number. it was -1%. a big success there and other --
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on the reform front, major achievements. everyone is a little worried about these not being so spectacular. the transpacific partnership is one of the most major trade agreements ever in history. it is comprehensive and covers a lot of countries. looks like it will pass this year and that would be a tremendous achievement because it opens up the agricultural sector and also opens up all these asian and pacific countries including the u.s. and latin america to more japanese exports. it is a tremendous achievement. corporate governance, it has been such an improvement in japan. a lot of achievements. you suggest we are looking in the wrong places. >> yes. and i think people get upset things are not working perfectly
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for japan. he realized corporate governance has been wonderful. will they give enough credit for that, i think it is dubious. i think they should because the government there has been a lot of pressure on corporations to raise corporate governance and profitability and to create the wealth effect here they have achieved that tremendously. michael: the third arrow is not finished her there is more to be done and people were concerned this past week when the prime minister announced more , the ideae proposals of childcare expanding the japanese equivalent of social security. >> i think these proposals are quite good for the medium term.
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they are also oriented to winning the house election next year. some people in japan have been left the hind by some of the inflation and he wants to simulate the regional economy and middle classes to a greater extent. he has not achieved everything he promised in the third arrow, but given japan's history and how much failure there has been in the past, i think everybody should basically give him a high grade for what he has done so far. michael: he is just beginning a mentionedm, and he the house of elections. one thing he seems to have done is wrought japan back to a one-party state. >> he has to tremendously popular in his own party. though overall, the voter popularity has decreased a bit, still extremely high by japanese standards. the opposition party has and does notloded
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that the to offer voters can really find attractive. so yes, there is nobody within the party even close to being able to deliver what it should be able to deliver. getting the fertility rate up in but iwill be a challenge, think it is critical to have childcare support. yes and working on that for the last three or four years and stillrogress, but there are waiting lists for childcare and it is one area that needs to be ramped up rapidly. it is one reason the birth rate is low, because people do not feel they can work? >> correct. a lot of women do not have access to childcare. what are you going to do? it is not just cultural. quite a lot of women want to
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ability they have the to have their children take care of. john from nikko securities is with us. the prime minister of japan will outline his successes and talk about what still needs to be done. in a country where investors remain to be convinced, the nikkei down 4% for all its gains in the year. for 2015. u.s. futures are higher this morning. the dow is up 55 points. i am michael mckee along with tom keene on bloomberg radio. ♪
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michael: this is bloomberg surveillance. >> stocks bouncing back after the worst decline in four weeks. ramy joins me now. what is the first you have got? i want to talk about johnson & johnson. deutsche bank is raising it from a hold to a buy. you can see it is up by about 1%
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there. we are shy of it by about $20. deutsche bank saying a diversified safe haven with capital to deploy, looking at the numbers, it is flushed with cash. only about $19 billion in debt. it has a lot of money to burn. >> i understand biotech is something else you keep an eye on. byy: we saw biotech fall 5.3%. now it is up by 1%. it is now in a bear market. earlier this morning, these chairs could fall by another 10%. maybe people are trying to get a little lift off the fall that we saw yesterday.
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we have seen these fall over the past 10 days. >> hillary clinton makes some comments on tv and twitter and it causes an incredible stir. it speaks to the power she could have. out after oneted man said, i just bought this hiv drug and i will raise about 5000%. a lot of people said he was the most hated person in the world. a lot of people came in and said, we need to stop this from happening and we need price controls. health care and general said, we are now nervous. if this happens, we're in for trouble. moving on to something a lot of people could start loving is mcdonald's. credit suisse is outperforming, upgrading the stocks outperforming from neutral. investors are loving that up 1.3%.
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are three key drivers. one is that sales are turning not just in the u.s. but also because of global sales, specifically in asia. a good thing people are looking toward his all-day breakfast. >> the japanese prime minister will be speaking in this very building today. for it will stream on bloomberg tv. ♪
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morning, everyone. michael mckee and tom keene in new york city. less traffic in new york city this morning to her joining us ,ive now with breaking news here is william stuck in gridlock. william: good morning. and nikkei fell 4% to its lowest broke 17000 and
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its trading range. the markets posting small gains and glenn share higher by 8% after falling 29% today. futures are pointing to a higher open. the 10 yield at 2.11%. today.he nasdaq they undercut august lows during yesterday's selloff. at 10:00, consumer confidence. track toid it is on send off the stake in 2015. he upgrades and downgrades this morning. mcdonald's raced out with 112. to, and a price target cut
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69 from 133 on regulation concerns. live from the breaking news's desk, i am tom maloney. : michael, what an interesting morning. daysme off three or four with complexity and relative calm this morning. >> relatively. it was a down day in japan and we will hear a lot more coming up. we have been talking with their chief global strategist. he came back to new york for a human week so he could stand on the sidewalk and watch limos go by. we were talking about successes and failures before the break. interesting point
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abenomics is not necessarily what is influencing corporate profit and what investors do. >> not all the time. it depends on how much credit you give them for the corporate governance. i think investors are really looking at how much improvement there has been an corporate governance and the effect on corporate profits. japan is one of the few countries that has rising estimates going out this year and next, whereas most countries around the world have 2016 earnings estimates declining. it is a very good story on the earnings market and we like it the most now. a couple of weeks ago, neutral and negative. because we like to the u.s. dollar and we thought it would make the yuan weaker, it would help the market. last night, it did not turn out to be the case unfortunately.
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it is trading, which is really quite attractive for a country having double-digit earnings increases looking out. michael: if you are discounting six months in advance, what is wrong with japan? >> the world is what is wrong with japan. it is a little infected by what is happening around the world. to chinarly exposed but not overly so. china.are worried about from 14 orhas fallen 15 times down. that is a function globally but japan is getting hit today. you are such a watcher. we talk about american
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exceptionalism, and mr. trump has brought this up. is there a japan exceptionalism and how has it changed? >> the prime minister wants to instill more pride in the country. it is sad to see the japanese always so despondent about their own future. he eliminated some of that countryncy thinks the and that theyial have to stand up for their rights a little more than they have in the past. how has business changed? i think korea. how have the big companies perceived japan? >> quite well. there is no anti-1% movement. more has always been the
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egalitarian society in the last, second wave that was announced it does show japan is more egalitarian. it focuses more on the middle-class going forward. and not would you positive for the country in the long run. some think capitalism is the best way to go but japan has never been that way. tom: thank you so much, john. it can be hard to navigate through economic uncertainty. device to drive it forward.
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it is a morning of international relations. you thee will bring prime minister from the world headquarters here in about half an hour. stay with us worldwide. ♪
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i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. david: the senate is set to -- lawmakers however check today demand by conservative republicans to defund planned parenthood. government spending through
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december 11. the house is also expected to pass the measure. yahoo! says is on track to spend off its stake this year. yahoo! plans on going ahead with the deal though the irs refused to give an advanced ok on it. carl icahn posted a video in which he endorses donald trump for president. he used it to attack on wall street. >> it sells securities. mafia has ay, the better code of ethics for you guys. you keep selling the scrap and your shorting some of this and that is what is really going on. is deja vu.
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>> those are your top headlines and it is time now for a check of the futures, up this morning about .5%. the u.s. 10 year, 4.86%. the zero dollars down .4%. we're waiting on the speech and headquarters. back to you in the studio. >> welcome back. economic indicators brought to you by commonwealth financial network. advisoran independent satisfaction among investor firms four times in a row. no indicators at 8:30 this morning. the s&p numbers are out. we are to see home prices up 5.2%. consumer confidence is out at
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10:00. the fed does not think it means a lot with regard to the direction of future spending, but it gets washed by the markets. a decline of 96.8 is expected. are you feeling more or less confident? tom: i think it is a serious debate, but i would put it more as a global confidence. there is a good american confidence, united kingdom confidence, and others. europe with a win behind their back. pretty good. and then another confidence out there is imploding, a good reason to speak to carl. his debriefing on japan as the prime minister will speak worldwide from bloomberg headquarters. we look for that in about 30 minutes. research notes, on the challenges that japan faces.
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are you in less of a panic then you were pre-prime minister? >> good morning. i have been thinking and i continue to believe it has not hit the nail on the head in terms of what is wrong with japan tosses economy. japan is challenged by its big debt and has not brought down the debt or made significant roads in reducing deficit. japan needs people, not monetary stimulus or fiscal policy. the population is shrinking. no move to increase the workforce by bringing women to work or bringing foreigners into the country. think he has done what has to be done to fix what is wrong with japan. >> he is talking about childcare for families in theory to help bring more women to the workforce. >> that will be great if it
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works. i would support that 1000%. culturally, japan is looking into bringing women back into the workforce after they get married. it is a social and cultural choice they make and the government so far has not been able to battle that ties. >> it will take a wild to work out. let's go back to the financial aspect, additional government stimulus and a lot of monetary stimulus and yet we're looking at a 1.6% contraction in the economy and deflation again in the latest inflation numbers. can we say he has succeeded? john was saying, yes, you have to look beyond the numbers. a lot of reforms that will take place eventually and payoff. >> i see trillions of yen in
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bond purchases i look at money supply pictures and i do not see the money going up. i do not see bank lending going up. i see cheaper yen, which means the money is leaving japan. accomplishedit has is a move some money out of japan and liberated some money from bonds. the money has not gone into stocks. notas done something but what it was supposed to do, stimulate the mistake demand. chart.put out a thank you for the comment out on twitter yesterday, the clarity of the signal. we are proud of the clarity of the voice when it goes out digitally around the world. throughtrend and you go 21 ¥40 by the end of next year. it is almost a perfect
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regression of abenomics. is that the sole solution, to depreciate the japanese yen? >> i would not say it is the sole solution, but the only thing it has accomplished so far in my opinion is to depreciate the yen. look at gdp, it has not gone anywhere pair the economy popped up, and as soon as -- it went back down. prices popped up when they raised the sales tax rate and now it has gone back down again. tom: you wonder now, why not just keep going? : when it started to fall after it was instituted, everyone said this would be a good thing for japan. have they gotten anything out of it? >> the cheaper yen helped exports a little bit but they are fighting an uphill battle
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and competing against aggressive competitors in asia, some of whom are out to get them. the are trying to increase exports in a world where world trade is going down. absolutely. there are exports in volume terms that are down. growth is subtracted from gdp. they may have lessened the losses from exposure to foreign competition and headwinds. they have not been able to overcome those losses. for what will you listen today? >> i was not planning on listening because i do not think he will deviate from the script. i am looking to hear a reaffirmation that abenomics is working and monetary policy will achieve the target though it is not. arrow will cause
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japan to grow even though it is not an i am looking for more of a declaration rather than an actual statement. tom: we will continue as we await comments from michael on as wellnd then from our world headquarters today. up dow futures this morning 72. >> the chicago-based foundation named his new >> macaca -- new class of geniuses. half $1 million each, a group that includes artists, educators, science is, and entrepreneurs. a really amazing new book, a letter to his son about growing up lack in america. women will get $625,000 in five years. no accountability on how that will be spent. amazing they do
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not have to produce anything. one of the people i'm looking forward to, he is a playwright and a composer. a lot of people know him as the guy behind the broadway musical. raceto bringing issues of through the latino american lens and bring it to the masses they're very cool. classes all collected in a secretive way. everyone is alerted by phone call. a cool thing. christopher way, a scientist at stanford university trying to make sense of all of this stuff. he is another one. you pick another? gary cohen. you know how we do not have merger -- mercury thermometers? it is because of him. those were phased out and he is responsible for the fact that we do not have many incinerators in
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the u.s. as well. thank you. coming up, we will stream the speech. ♪
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tom: good morning. shinzo abe will be speaking here 9:00 in the morning. we look forward to bringing that to you. right now, here is david. david: the tobacco industry. agreeing to sell its natural spirit cigarette for about $5 billion. the deal does not include the u.s. operations. overseasgarette brands to help offset a staggering smoking rate at home. in the web only publication business insider. 340 $3 million for 88% of the company. investors isf its jeff bezos. defending itself in hundreds of lawsuits over those emissions tests.
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lawyers in the u.s. want to remove class-action suits. they expect to demand they pay billions of dollars. buying up manhattan, canadians bought a record $3.9 billion of property in manhattan this year. canada accounted for more real estate sales in manhattan than any other foreign country. tesla delivers the first of its suv's tonight. s is combined to compete with porsche, bmw, and audi. look at the data before the market opens. >> let's look at futures. up .6%.res are not is some green we have
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seen in about five days or so. five days in a row of decline. slowdown,ing a lot of a lot of it happening from china. looking at the 10 year, you can see that is up there. decline atas on the $44. we have crossed over into the $45 mark. unbelievable and we have had all of this news. yesterday, we saw a rebound on the stock. trading jumped by 9% or so. in the past a on monday, it fell here by 29%. investors are saying there may too much zealous in this. glencore is definitely seeing a bounce back and we will see if
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anything has to do with london. hopefully we will see some stuff on the positive side. daye a few had a heck of a with all the news. you a look at mcdonald's and biotech or that is what we will focus on today. for theiting here japanese prime minister who will be speaking in this building shortly. this is "bloomberg surveillance." ♪
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tom: good morning, everyone. channel 119. we welcome you nationwide and in canada and of course in boston, san francisco, and new york this morning. for investment leadership. experience experts are just a click away. go online to subscribe to the blog and follow on twitter. there is a time a year ago,
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europe, europe, europe. particularly italy having spread wide, the world was going to end. that has changed, hasn't it? >> it spread 600 basis points. a shrinking economy. over 7%.yields were mario draghi was forced to promise, whatever it takes to save europe. it took the 39-year-old mayor of florence. the youngest prime minister of italy in february 2014. he sat down yesterday with john to tout a real turnaround in italy and europe, the fourth-largest economy. >> for the first time, usually, the italian government is optimistic. every year, we have a great , enough resolve. for the first time, the provision was zero.
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i do not know, absolutely better than provision. have some we can problems for china, yes. maybe. because our export is good. the export was in the provision of italian. 3.7 this year. in the first month, we have more than 6%. be not at would problem. suggesting animal spirit are returning to italy and italy is returning to the leadership i guess of europe. carl weinberg is the chief
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economist at high frequency economics and keeps track of all things around the world. justifiedme minister in the smiles we are seeing from him these days? -- carl: i think he hit the nail on the head there. enormous strides were made toward smoothing out in wii's banking system. that has been a big contribution to economic improvement as well. going forward, does italy continue in that? >> iamb worried about continued economic expansion in europe. thes pleased to see confidence jumped this month in its latest figures. it is not clear why. the numbers kind of stick out but they are promising gdp
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growth at 3% annualized rate for the third quarter. predictorot a perfect but an indication the economy is accelerating again. if europe accelerates, italy will be able to write along with it. samecan we make the statements about china? mike mckee is talking about italy become a positive for europe. is this an opportunity for carl weinberg in china? carl: i viewed what was happening in china as a six -- cyclical slowdown. the piece i'm writing for readers tonight, china's economy or adwind to global growth slowing moderating tailwind.
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growing at 7%, china is still letting 1.2 percentage points, it will struggle to grow next year altogether. even at slower growth, the economic power is formidable. tom: it is amazing on europe, if you look at smaller economies, there was the gloom months ago. there is a lot of gloom and if you talk to anybody in the stock market these days, they are suicidal because everything is wrong in the world. economists are telling us china is not as bad as we think and europe is coming back. what is your take on the global economy? have a in the we may global recession camp? carl: i am will trade is collapsing at a pace faster than we have seen other than 2008 in
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2009 downturn. nothing good has ever come from world gdp. looking for world gdp growth. if you chart out the world exports value, the growth of world exports from the imf database is tanking. the loss of income and emerging-market economies is being reflected back on commodity importing economies as the emerging economies that produce less stuff from them. it is a real negative for world gdp. >> in advance report on the trade deficit in the united states on a monthly basis, it is not widely followed as an input
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of gdp figures. for august, the number is just out. widened trade deficit from 59.2 billion in july. that would imply a much bigger drag on third quarter gdp growth than people thought. the reason it widened is exports fell 3.5% in the month of august. on the see an effect united states from what crowe is talking about in terms of global trade. tom: i just put out, carl weinberg does exports in the imf. it is much like the early 1980's. that? what happened in the early 1980's? carl: we had a big recession in the united states and that triggered a drop in world trade. what we're seeing now is different than anything we have seen before. it is prices for time up in
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canada right now and here, they're really demonstrating what is going on with the price shock on commodities. commodity prices fall. we import as much oil as we did before. you get paid less for it. companies,oducing they have smaller profits, invest less, and the economy slows because the income has to pop up somewhere. notes in hisn forecast that while he is bullish overall on the economy, he sees domestic demand doing heavy lifting and the economy able to move forward and grow despite the trade. tom: what you just heard there, folks, from dr. weinberg is the foundation of the nuance we are trying to get at on "bloomberg surveillance." he parlayed the 1980's as a unit differential of exports in now
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disinflation. it is a price differential. two things make up the pie. unit and price. a difference that was absolutely brilliant from carl weinberg and a great way to set --rselves up for scarlet: shinzo abe speaking here in 10 minutes. michael: you can watch the entire thing online on a lot of interesting things to say. andok at the refugee crisis particularly an interesting comment in russia. tom: it was a generational change for italy. andael: 20 to 39 years old he is 40 now. very young and quite a change. tom: it says you and i need to do the show from florence. so.ael: probably
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our viewers and listeners are clamoring for it. tom: they demand it. we will get there. futures up 10. dow futures up 70. next our ♪
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michael: welcome back. the numbers are due out any moment now. home price numbers, people follow for an indication of how we are doing. the month over month indicator shows an actual decline on a seasonally adjusted basis of .2%. by .2% asmonth down well. i year-over-year basis, home prices across the country have gone up by about 5%. it is a little lower than the forecast for 5.15% increase. home prices are still rising, but at a slower pace. at theey are and we look month over month, which carl was always really big on. a year-over-year price, that is what makes headlines it i will
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suggest mike mckee, city by city, boston with a list. good morning, boston. cleveland of all places doing well this morning as well. out west, still -- miami is a little soggy. percent is up .5%, let three months annualized. that is better than it has been for new york. boston, i thought, was pretty good. 7%, a nice 1.1% move. dallas is better than boston. portland better than boston. washington does not do all that well 8% three months annualized. michael: we are the nerds and we look at the data and we love the data. he would also tell you do not look at the seasonally adjusted numbers because it is the month to month change you're looking at her they like to look at unadjusted number. that was up .6%.
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it is not terrible news. we need to do a day to check right now. futures up 11. our futures up 70. the yields have cut and without question. the all in statistic that you want to focus on is the u.s. two-year yield. remember the hysteria about the fed? it seems ages ago. six days ago, you were in washington for the press conference before the announcement. the two-year yield was .80. it is now .66 and has come in a good for basis points in the carnage of the last few days. market indicators are heavily influenced by safety concerns. the same thing we are seeing with the japanese yen. you cannot really separate that out. i strongly support that
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analysis. if you go out five years and then five years more, there is a market expectation and it is pretty grim. it is a dis--- dis-inflationary tone. we are getting ready right now for comments by the prime minister of japan. we will wait to hear some comments at our headquarters. we are going to get a data check here as michael mckee mentions. the yen, 11999. a much weaker japanese yen through abenomics. between 80 and 85 and we either depreciation of the yen to assist japanese exports. carl weinberg mentioning that as a fact but less of one than a stereotype but also a competitive yen.
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up against other currencies. the singapore dollar weakening a lotget into the phrase of people do or do not go with, such as a currency war. watching the japanese yen. here to introduce the premise or is michael bloomberg. ifs career was on the line you did not mention me. other than that, do not want him to have any pressure. that is just the way it works around here. if you put your name on the building, you would have the same views. i love the german comment. i am not sure the friends from germany did but that is ok. good morning and welcome. it is an honor to be here and i hope you enjoyed the first part of our day passes events focusing on japan. it seriously could not come at a better time. many here are counting on strong japanese leadership to navigate these uncertain times and deliver a bright future.
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i think you know who i am talking about. picture --k yankees which are -- the new york yankees pitcher. it is probably because of him. somebodynored to have else, another strong leader from japan. our very special guest, the .rime minister, shinzo abe i want to extend a warm welcome to the prime minister. i got to know him last year and our relationships with japan have only continued to grow. japan is one of america's most critical allies and economic partners. each of us benefits when the other succeeds. the more we do to strengthen our partnership, we all know the better the both of our countries will be. we are grateful for the prime minister's leadership. glad he is here today to share some of his thoughts about the future. you should know, is one
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of the most important markets for the company. we sold the first bloomberg terminal back in 1980 32 years after the company was started. we decided to open the first office in asia, we did it in japan in 1987. that office is still growing. i'm glad to say the first person we ever hired in tokyo still works for us after all of these years. 1987 was two years before the japanese stock market reached an all-time high. the country passes economy went through very challenging times since then. not easy, japan has proved itself to be a highly resistant culture and country. the financial collapse of 2008 was followed by the tragic earthquake and synonymy of 2011. 'sder prime minister abe leadership, they have continued
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to build momentum. advances in corporate governance and a rekindling of economic growth, pawing the economy out of inflation for the first time in two decades. technological-- innovation. japan, like america, faces a lot of challenges to we are not the only country's growing. we are not the only countries that innovate. it has become a more competitive world. so far, both countries have more than held their own. today, many global investors are looking to japan with renewed optimism and heightened interest. the prime minister's's success enabled him to maintain leadership and his party and he is on track to become japan's longest-serving prime minister in four decades. i'm sympathetic to that. if you had term limits, do not
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worry about it. you can only change those things. i do not know why everyone always assumes president obama is leaving office a year from november. he just has to change the constitution. seriously, the prime minister's's ambitious plans to grow the japanese economy, what is often called abenomics, has attracted global attention and last week, he announced bold new goals for growth and outlined his plans for reaching them. investors from around the world are now watching closely to see how the plans translate into policy in the months and years ahead. we will today hear more about them firsthand. fierce economic reform is difficult in any country and it takes time. but there is a clear vision from japan's leadership of what needs to be done to set the country path foronomy on a growth paired good reason to because confident in japan's future. one of the prime minister's priorities, helping japan markets rise to the highest
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point in nearly two decades. we have seen increased demand for our services in japan. the lush electronic trading platform to help banks comply with new regulations there and our company's's presence in japan has been helpful to them and us. demand to provide global investments to the economy. more than 60% of investments in the nikkei have come from abroad. japan certainly is reaching out. it depends on the rest of the world as the rest of the world depends on japan. company in aur unique position to help investors make smart decisions for the news and data we provide and by bringing people together like we're doing today. markets are just one piece of japan's growth agenda. itsn is also stimulating
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economy by increasing public investment in infrastructure, a very wise thing to do. history shows one of the strongest predicate or's -- predictors of economic growth is investment in infrastructure. it is something we need to do more of in the united states. japan faces many challenges still. those include an aging workforce. this is a challenge around the world. investors around the road are hungry for insights on how japan will address these challenges. that is a reason bloomberg is committed to serving as a global host for dialogs like today. on behalf of everyone in our company, thank you for coming. we hope it is a service you like. i am honored to present somebody i can now call a friend. our special guest, prime minister shinzo abe of japan. [applause]
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shinzo abe: good morning, ladies and gentlemen. it is always good to be back in the city. thank you, mr. bloomberg for your warm introduction. i have just cited one of your courts you have made as mayor of the city and i share your view. there is no other place like new york, brimming with opportunities for dreamers. 35 years ago, a young man came to town. becomed litter -- later the prime minister of japan. a return to the city this time to promote the japanese economy. i must stop there because i did not come here to tell you my
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personal history. [laughter] in new york, i see a lot of who loveke you business, all that is open to new opportunities. i am fighting off the risk of getting sleepy. hours, due to the 13 hour jet lag. you for this power breakfast. at least once a year. morning, we have the duhon, in fact, the only one who
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maintains that the japanese economy is being grossly underrated. this was three years ago, shortly before i took office. at the time, very few people paid any attention to japan. power country of deflation. continued for 15 years. three years on, i will make this country once again for fill its potential. for two consecutive years, it has gone up.
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demonstrates perceptions in the household era on the year. by 2%.will rise the mindset long hot -- long haunted japan. we have now shrugged this off. mindset, that is what -- the conventional mindset of the japanese government and of the japanese companies. now cast-off. ladies and a woman, -- ladies and gentlemen, that has just ended.
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away thenly swept 50-year-old regiment of our culture. reform. effect to the health care system. and distribution. vested interests, how they were. journal, somee rocksolid relations. that drill is still spinning fast. reforms, i have stressed many times the reform of corporate governance -- to top off my
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agenda. you are all aware, i'm sure, that our new corporate onernance has been enforced all that listed companies exceed , to sudden in number this year. companies,of such that is how independent nonexistent board members have doubled over the last two years. all institutional investments operate -- we injured is a new. course, reality matters more. system may ahe
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tangible difference. we areell you now that going to build a new system whereby ceo's and other board members should be transparently further dissolved. the government and the stock exchange, walking in tandem. dynamic reforms should advance farther. i feel i must allow the japanese economy to fulfill its potential. happening as far
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as the companies go. the gross total of their 500nary profit before tax, billion dollars. in fiscal year 2014, a record high. increased on equity to the than 50% compared three years previously. now, with a deflation mindset gone, our government, investment fund, it is undergoing reform. such as by changing its and hiringanagement more professional managers.
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plan1.2 trillion .esponsible investment they are the biggest public funds manager in the world. we pay -- play an even more important role in the global capital market as time passes. we also hit a record-breaking in the voter activities of the japanese companies. year, demand was almost $70 japaneseevidence that
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moreers have become careful. and the government of japan will those japanesest companies appearing to work in the global arena. resolve, for instance, to ,onclude the ttp is unwavering i spare no effort promoting top-quality infrastructure projects. across the world. reduce the effective rate of corporate tax, bringing 30% over the next several
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years, making it globally competitive. now, coming back to mr. bloomberg, it is a well-known story that when he started his ago,ess more than 30 years he had a terrible time as any other startup. he woulday after day, pour some coffee for his clients and take them up and those people chatting with him over coffee turned into his future customers. hismberg essentially built customer relationships. for his business --
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question that his persistence was what drove his company to become bloomberg as we know it. persistence that did pay off. japan, my party, the liberal the elections twice. the elections in the year before that and last year, the lower house elections. japanese to persist. forge ahead with abenomics. and granted me great power. month, my fellow
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colleagues afforded me three more years as head of the party. the time is right, ladies and gentlemen, to launch what i call abenomics 2.0. [laughter] our political condition is terrible. stability, the first priority is economic growth. determined to do whatever it -- i would do my most to expand consumption through the economic keep
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cycle rolling on and on. one more thing. i will fess up to the very core of japanese difficulties. that is our demography. never before has any of aistration spoken target in regards to demography. but i have. goalve set our national people.r 100 million
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education for preschoolers free of charge. we will give substantially more support to those mothers and that there are many children. the female labor force has increased in number over the thanthree years by more 900,000. revealed that female nowr participation in japan has numbers -- in the u.s.
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not all japanese women are homemakers. indeed, my wife -- our own wonder ifalendar, i she is even aware i happen to be in new york. [laughter] i am of course joking. [laughter] we should not forget that in japan, not actually owed. many are in good shape.
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haveimportantly, they knowledge and experience. we should encourage them to pay a greater part in the labor market. abenomics 2.0. country rich in its potential. i'm asking you to please take that. a new golden age. the next five to 10 years. it is extremely promising.
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this is the latest prediction made last year. confidently addicted three years ago. hiseatly appreciate confidence and it is my responsibility to make it a reality. i am determined to carry it out using all political resources available. because, first, second, and third most important challenges economics, economics, and economics. we look forward to your investment.
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age together.lden thank you very much. [applause] mr. bloomberg: i was just thinking, if my spanish ever gets as good as your english, i will be just fine. have a seat. we will talk a little bit. i've basically one question. are all this time focused on reduced demand for products and services from china.
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a big country and an important market for japan and for the united states. my only question to you is, how will japan deal with that? >> with the three arrow policy, japan is improving with jobs and wages. there is a steady progress to moving out of deflation.
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>> certainly, we explore a lot, we invest a lot in china. therefore, the economic relations between japan and china are very close in the field of trade and investment. therefore, there is a need to that we have to watch very close -- carefully the path of the chinese economy. >> however, japanese economy fundamentals are rocksolid. our policy is unshaken in that we are trying to aim at reshaping the japanese economy with our postwar history. as i mentioned in my presentation, the economy is my highest priority.
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>> in the event that, due to external factors, if our economy is going to experience a major confusion, we will have a -- economict management policy in place so that we will be prepared. >> together, i would like to mention that we need to develop our amicable stable
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relationships between japan and china. i think both countries must work to that end. already, we have gone through several rounds of meetings. develop theg to beneficially mutual relationship based on strategic interest. >> i think we should have a candid exchange of views at all levels with the leaders of both countries. at the same time, we need to work closely and pay attention to the structural problems which at the- which lie backbone of the chinese haqqani.
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at all levels i would like to engage in discussion with the chinese leadership. >> mr. prime minister, we have run out of time here it i want to say that i think it is interesting that japan, china, and india all have very strong leaders today. perhaps the most important thing in any government or business is strong, intelligent leadership. japan is very lucky to have you. congratulations, and thank you for coming. [laughter] [applause] liveu have been listening in our headquarters. our producer is discussing live with shinzo abe, the prime minister of japan. they touched on themes that are important for driving structural themes within the japanese society. that seems to be the next arrow, if you will, that they seek to
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drive forward. arrow they started on this process. this week, they announced another round of third arrow ashes. they discussed the fact that their biggest problems are the population decline. he is working towards mitigating that, if not changing it. tom: it is particularly important to find someone an international economics to comment on abenomics. who would that be? is a scholar of japan. h of what the prime minister discussed earlier this week, his plans for abenomics, and his defense for the performance of abenomics. one thing that stood out for me is that based on his economic
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policies, japan is on the verge of a new golden age. when you look at the market happened sowhat has far, it doesn't appear that investors feel the same way. to you and tom for having me back. i think that prime minister abe is overselling. a golden age is a very strange thing to be speaking about when all of us in memory remember when japan had goldleaf in its bathrooms. that proved to be a misleading state of affairs. the substance of what he is saying, i think, does do better than what it has been getting. i would empathize if you things. mics is for real. they have added over 6400 women to the workforce the 64,000 women to the workforce, in large part because of his policies.
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affirmative action tight quarters. it matters. second, corporate reform is nothing like what we might want, that it is miles ahead of where it was. part of the reason i would argue the japanese stock market is up is not just qe, but they are unlocking value by making major japanese corporations more transparent. third, it hasn't happened yet because we have not concluded the transpacific partnership deal, but abe has set up a huge amount of agricultural reform that is likely to come to pass once the u.s., japan, and other negotiators agree. that will free up income for japanese people and free up markets for emerging markets in u.s. and canada to export to japan. finally, he hasn't been confrontational with china on the exchange rate. they have been passively enjoying the huge decline in the yen, but not mitigating. tom: we want you to join us when
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we come back from break, but before that, do we need currency manipulation? adam: it is already below anything and corporate japan versus the dollar. this is enough. they don't need further appreciation. tom: he is with us from the oferson institute international economics. when he returns, i have a instion for him about life japan. i'm going to make that chart on break here. it is an extraordinary experiment crucible that all of japan has been in. is asserting what is becoming a lengthy term. abe: while prime minister was talking, the s&p 500 is two gains higher, a 10 point for the dow, and a 13 point gain for the nasdaq.
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s&p 500 is lower, two points. europe turned negative during the morning. they had been up for much of the day. japan is finishing down, the nikkei up by 4% today. this is "bloomberg surveillance."
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tom: good morning, everyone.
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"bloomberg surveillance" from new york city. we need the headlines for the morning. mike: a full agenda today for president obama the united states. he will talk about funding british -- islamic extremism. u.n.bama gave the peacekeeping forces a boost. --persuaded over 50 liters 50 leaders to introduce more troops. there are now more than 50,000 peacekeepers -- peacekeepers worldwide. it looks like congress will not shut down the government. they are going to pass a stopgap funding bill. a new budget will be needed in early december when the battle could start again. volkswagen's diesel powered cars are no longer being sold into
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european markets. spain suspended import of the cars. the lawmaker's commercial division says nearly 2 million vehicles have the software. they are expecting hundreds of lawsuits. the trading giant is financially robust. they rose up to 22% in london. they felt 29% yesterday. analysts say the selloff was overdone. the slowdown has been hurting commodity prices. caffeine fiends might say every day's coffee day, but this is the official national coffee day. you can celebrate by grabbing freebies from dunkin' donuts, krispy kreme, even jetblue flights. those are the top headlines. let's get a check on the markets. let's take a look at the markets. they have opened in the last 13 minutes or so. you can see markets are in the red. this was slightly different from paris markets when he saw things in the green. if this continues, this means we would down for our six straight
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day in the red. the s&p and the nasdaq had hit lows monday not seen since august 24. but he's doing and commodities and biotech were the biggest laggards. industrial profits were down the most in the past four years. as you mentioned earlier, glencore is up the least in london trading. in the u.s., i thought trade was up by about 15%. we'll see if that continues on the site. people are saying that so was overblown. i took a look at some s&p 500 biotech indexes. it is down by about a third of a percent. it is continuing decline over the past seven days. it is not as much as before, but if it continues on a downward trend, we might see an eight day right there. david: i know they will continue to talk about the prime minister's speech.
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>> it is interesting to hear and talk about these new three arrows. he has talked about three other arrows in the past for monetary. this seems to be a populist kind of move talking about, for example, social security, and also addressing women, as well as a generational growth. for example, we know there is an inverted pyramid when it comes to japan's operation. thank you very much. mike anton continue their comments on prime minister abe's talk. ♪
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tom: good morning, everyone. "bloomberg surveillance." adam pierson is here with us. we will get to that in a moment. bloomberg this morning is brought to you by powershares. visit for up to the minute holdings pricing. powershares, leading the intelligent. etf revolution. mike, it is quiet, and then it's not. begin with two years and two basis points. the tenure grind is down. 2.07. brazilian real blows out on 14.4.g to
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not quite to where it was. oil is not bad. it is a mixed response. we've got to say, markets are on the move this morning. mike: they reversed in europe in the last hour of trading. our you see, there is some concern out there. the panic is not over. adam is one of the premier japan experts. we were just listening to shinzo abe, discussing his plans to reinvigorate the economy. his new third arrow is in part designed to address some of the social aspects of japan's economic problems. support for senior citizens, and in particular, support for working families. that is where i want to go with this.'s
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i will member larry summers telling me this 15 years ago when japan was, and it -- in essence, graphically doomed because the work force is falling, the birth rate is too low, even giving women more childcare so they can possibly go to work isn't exactly the solution that they need, is it? adam: it is part of the solution. there are lots of things going on. tax disincentives. their taxes are setups that the second person in the family going to work gets punished. the penalty is huge. they are talking about changing that. , there are imply lots of cultural issues in terms of workday and availability. on the other hand, very small japanese kids can go wandering around the city, and no one will bother them. you don't halve the hole carpooling thing that americans
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have. tom: i am going to put on a fascinating chart. mention 99, japan finds the zero bound. the united states finds in 2008, 2009 with those lows. about life atarn the zero bound from the japanese going back 16 years? tom, it is a lot to learn. first that deflation is not as bad as we thought it was. while deflationmade japan's problems worse than it would've been, he didn't cause the spiraling disasters. that is important to recognize. second, that once you get stuck in, once people started expecting zero or low inflation, it is almost impossible to get out. now, we are seeing that replicated in europe, the u.s.. i don't want to say impossible,
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but it is very sticky. it is not like inflation jumped up the moment the economy starts spending or the tank starts printing money. otherwise, abenomics would have worked. the third thing zero bound is that you have to quantify these things, but a lot of the effect comes to the exchange rate, a lot of it comes to the stock market. if you want to stimulate domestic credit growth, you also have to have structural reform and is back to abenomics. tom: when we bring the fat into it, they are concerned about disinflation -- bring the fed into it. adam: the experience i have had is that once you get into this really low disinflation state for it while, it is hard to get out. that is part of the lesson that we have exquisitely taken from japan, part of why they were so aggressive starting late 2008, 2009. we have seen results of that. i think we will see normalization of inflation in the coming months.
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japan showsg that is that once you get into a situation where there is huge downward rusher on wages, it is very hard to get inflation up without having something positive on the wage front. we are not seeing that yet in the u.s.. this came up earlier. mike: one of the questions people asked me about his is tom being too hard on japan about their growth rate? because gdp per capita is still rising in japan. arrest --nd analysts obsess about the wrong thing. pointed thiseague out a couple years ago and people tend to forget it. absolutely. what we care about are the actual citizens. per capita income is going up in japan. other demographically challenged countries i germany, per capita is going up.
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where the democrats come in is first on can you support your pensions, welfare state when you have more and more people retire and people relative to them working? it doesn't tell you about per capita income growth. the second thing which we have seen in japan but you cannot ,rove is there is this sense they seem to be less willing to innovate, less willing to move into new industries, to change things as you have an aging work worse. that is anecdotal though intuitive, but it is something to worry about. he has a point. tom: can they move ahead? dom: i think they will better in the next couple of years. there are several factors keeping down the inflation rate. japan in a way it hadn't in a long time. some of the corporate rise of profits is for other reasons, not just generated.
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the long-term adjustment of the end becomes real, too. notink the fiscal policy, wisely poor long-term, but at least in the short term, will be relatively easy. i think japan outperforms. they outperform better if you look at the per capita gdp growth as you just said. they are not going to set the world on fire. they are not going to be an engine for the rest of the world. it will not be able to nation as prime minister abe said. mike: thank you for joining us talking about prime minister abe. tom: overlooking the imperial garden from bloomberg news, mr. abe in his speech this morning mentioning history in japan going back to 1983. wonderful to have you here. are the swans flying in the moat? going around in circles. it may be a metaphor, i am not sure. tom: i looked at the office, it is stunning.
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speaking of stunning, what did you learn in a speech today? was it by the book or was there a nuance there? you read it in japanese. >> i think one important take corporates focus on governance. i think he chose it for a couple of reasons. first of all, he was speaking about his audience of investors. that is also the area where it has been absolutely successful. there is no question that investors have been pleased to see roe's rising and the number of outside investors increasing as well. that was interesting. he also mentioned that the government will continue to persuade or urge or should -- suggested to companies that they should continue to unwind cross held shares. this has been a problem. that is a lot of capital that is set up in these cross share things. it is not being used effectively. that was another take away from what he said today. mike: when people in japan look at what is going on, how do they feel about his comment about a
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new golden age? >> i think people in japan, they have been through 20 years of deflation. it is going to take a little bit r phrase to pretty p shake them out of this diversionary mindset. it is the same with corporations. one of the things we have in watching for a long time, we know that i'll be your next -- abenomics weakened the yen. record earnings for two straight years. we have not seen wages increased by any strong degree. we haven't seen more hiring. just the other day, there was a report that toyota might actually ask its suppliers to cut costs that toyota pays for these supplies. that seems to be going in the opposite direction of what abe intense. tom: wonderful to have you here on a short notice.
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abe speaks in the u.s. here in our new york headquarters. byare produced worldwide richard truman. ♪
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>> welcome to "bloomberg market day. let's get to the morning's headlines.
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one of the world's smallest states want to do is is with the world's largest country. we talk about how trade with china will create jobs at home. finally, good news for glencore as shares rally. can the rebound continue? job reports encouraging signs from small businesses. the latest index says mom and pop are higher. this is our senior markets correspondence julie hyman with a quick look at what is happening on wall street. julie: we are already in today's session and we have bounced between gains and losses. right now, we appear to be in the positive column. definitely, we have seen volatility thus far. just a few minutes ago, we had dipped into negative. it seems as though after the big decline yesterday that investors are still trying to figure out where to go from here. mark: one of the biggest shops on wall street getting more pessimistic. what is that about? julie: goldman sachs.


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