tv Bloomberg Surveillance Bloomberg October 2, 2015 6:00am-8:01am EDT
job shortage. another, millions underemployed. krueger ang, alan princeton. it is a healing time for markets. it has been a good week. gold loop south. -- moves south. mr. putin is in paris. at this moment he will be near holpalace with talks with lande and merkel. on this jobs day, we welcome you to new york. ready for jobset day. looking at everything going on right now. i'm surprised how quiet the markets are. jon: equity markets are reacting. but i am with you. it has been a couple of quiet days. but what i'm looking for is the federal reserve read across. the question for us over the next hour. whether the federal reserve's head agreement from the labor markets to get a move on. tom: there we are.
we start with our coverage from london, new york and boston. our top headlines. vonnie: we'll in begin in oregon. a 26-year-old man has multiple guns when he walked into a community college class and opened fire. at least nine people were killed inumpqua committee college roseburg. the gunman was killed in a shootout with police. there is no word what his motive may have been. one witness said the gun man demanded students religions before shooting them. not long after the killing, president obama sounded exasperated. president obama: there is another community stunned with great and communities across the country relieve their own anguish and parents across the country who are scared because they know it might have been their families or their children. vonnie: the president said congress is standing in the way and won't even on the government to collect data on how to reduce
gun deaths. more protections now showing that hurricane --projections showing that hurricane joaquin will not strike the east coast. it pounded the bahamas. there were no reports of injuries. the prediction calls for joaquin to sweep south and east of massachusetts by tuesday afternoon. russia has launched a third day syria.ksf in it destroyed in islamic state trick training camp. the u.s. has joined six other countries and calling on russia to stop those attacks. they accuse russia of attacking opponents of syria's president assad and not just islamic state. russia is backing assad. secretary of state john kerry appeared last night on cbs's late show. he said what is happening in syria is a human catastrophe. secretary kerry: if russia is
serious about wanting to save syria, then they can join us in the effort of persuading assad to be the savior of this country, not the killer of this country. vonnie: according to the associated press, the pentagon is talking about whether the u.s. should use force if u.s. trained rebels and syria are attacked by the russians. in fact, president vladimir putin is arriving right now. due for talks with angela merkel and french president françois hollande to discuss a ukrainian cease-fire. we are seeing live shots. andelysee palace president putin arriving. amazon will stop selling media streaming advice -- devices from google. they are not compatible with video.s prime the move shows that amazon is willing to give up sales to promote prime. gene: it's producing to see how this is going to play out and they -- it seems like
monopolistic behavior. at the end of the day from apple's perspective, amazon is not a big channel. vonnie: amazon will keep selling roku, xbox and playstation. all three work with amazon prime. night lastizzling night in the bronson after the yankees beat boston, there was a damage of champagne. the team celebrated after clinching a playoff spot for the first time in two years. who were inayers the minor release when the season started hit home runs. it was the 10,000th win. the daily news had a story on the back page -- vintage yankes. they are talking about the vintage champagne. mike: it probably was not given that so much of it gets wasted. tom keene is in boston. i think tom, you're up there to sit shiva for a different baseball team. tom: it was vintage red sox. lots of hopes and prayers in february and march and it
disappeared. about april 15 is when i, may be able 20 i wrote it off. jon ferro in london. what we are going to try to do economicsu nuance on and the linkage into the markets on jobs. let's get to the markets. ek, what ied we noticed is lower interest rates and the european barometer of the german two year yield fell self. -- fell south. do you presume negative yields forever. jon: what is really interesting as we are not just seeing it in germany. you look at the treasury yield curve -- rates aren't going to raise any time soon. inflation and growth will be so low that even if they do get a move on, the future rate path is going to be very shallow. so with equity markets march higher, the bond market is doing all the signaling. and that is what i am looking at. gulfthe "surveillance" stream was down less my. i had to take delta.
jon, there i am in -- and madama lagarde rushes by me. as she tries to control the world pitch he has been in the news a lot. as she goes to peru. how does madame lagarde fit into the central bank discussion? jon: it is the cautious tone. she has got the likes of mario draghi whom she called a friend, her friend because the response of the ecb has been an active this one, i read a lot christ -- a radicalized ecb. when she looks to the fed, maybe there is some caution there until that's september meeting which for me was a bit of the game changer. all of a sudden, the world economy got a beat on the fomc. the last month's been a big change not just for the global economy but for the federal reserve. tom: jon ferro, thank you so much. michael mckee, i look at the jobs report, uni do this month
after month at 8:00 jim glassman do thisus -- you and i month after month. what is the particular distinction that you see in this morning's report? mike: what is his kind of finding is remember how important last month was because ratehol e idea of a increase turned on the jobs report. this month nobody expects the fed to do nothing. -- to do anything. a lot less focus but people are still going to be looking to see what happens with wages. jobse going to get 201,000 as you can see on the chart. that is the forecast, but it is really wages that people are focused on because that is what janet yellen is to be focused on. are they rising? .2% is expected. very interesting chart this morning from bloomberg news. it shows that ever since that fed meeting, fed officials of an coming out and saying, we are going to be raising rates by the end of the year. as they do, every time they do,
bond yields go lower. the bond market is not a buyer. tony rodriguez is the managing director of fixed-income at nuvine asset management. nobodyere to explain why is taking janet yellen, bill dudley and company at their word. tony: it is a good point you bring up. one of the keys is that the market is buying into the fact that if the fed starts to raise rates, an economy that already has limited inflationary pressures which is supported for medium to longer term bonds, is less likely to suffer from high inflation pressures if the fe fived -- fed finally starts to normalize interest rate. that may be the interpretation of round -- why medium to longer is supported 30's by the view that the fed may be does hit lift off.
vonnie: what is your call? we had the san francisco fed president overnight saying that it is very likely there needs to be one. what do you think? tony: they will move in december. the markets is pricing in not 50/50 probability. their data dependency will be supported by the employment report that comes out today. some of the data that comes out over the next month or two to is goingu.s. economy to be able to withstand some of the growth pressures we are facing. and therefore, again, getting off of this emergency level of extraordinary accommodation is a good first step. i think the economy can handle it. vonnie: tom, i believe you have a question in boston? tom: i do. tony, we are going to talk a little bit later here about the single digit world. macron michael mckee's economics into the real world of financial repression. are we the same financial
repressed as we were when ben bernanke was chair? tony: i do not think it is the same because i think the overall fundamentals of the broad u.s. economy are stable to improving. so when you look at the employment picture, there are more jobs. not a lot of wage pressure. there is a relatively high level -- we're showing a better place. when you look at the auto sector. doing much better. you look at the housing sector doing much better. obviously, the energy space not doing very well. there is much more pressure on the export protectors as a result of the strength of the dollar. that when you put that together, it feels to us like the economy in the u.s. is going to remain at this relatively, i would call a moderate rate of growth. so, therefore, the financial repression, i think it is a little bit different today. and the biggest difference, again, the economy can withstand the beginning of a return to normalization from the fed. mike: let's bring it back to the
jobs report today. is there any kind of number that would cause you to really trade? vonnie: or revision to the previous month? tony: you would have to have something in the neighborhood of 100,000 off the expectation. those kinds of numbers would be the term game changers for market. again, that is not what we are expecting. it has been a consistent 200,000 for quite a while. mike: and that is the forecast for today. 201,000. tony rodriguez with us throughout the are. up next, european leaders are meeting in paris to discuss the ukraine situation. president putin has just arrived. will russia's airstrikes in syria overshadow the talks? we are live from the french capital after the break. this is bloomberg "surveillance" tom keene is in boston. in london.s we are on tv, on your tablet and phone and bloomberg.com. ♪
bloombergis is "surveillance" i'm vonnie quinn with michael mckee in new york and from london we have jonathan ferro. let's get to our world headlines. jon: thank you. afghan government forces are in control again in kunduz. it is not clear if the taliban pulled out and were pushed. militants occupied the capital for three days. the leaders told reporters by phone at the taliban left after scoring a symbolic victory, but afghanistan's president says the troops routed the insurgents. street skirmishes are still being reported. russia is claiming today that is just destroyed in islamic state command center ins yria. american military leaders
russia's first air attacks in syria targeted rebels, not islamic state. u.s. backed rebels who are trying to overthrow assad. pentagon leaders are trying to decide whether to protect them. asking russia to stop attacking the opposition forces in syria. russian diplomats of the on the spot today when ukraine peace talks resume. they will meet today in paris with leaders from ukraine, germany and france. vladimir putin says ukraine is not living up to the terms of the truce. a ukrainian official says the government will pull small caliber weapons out of the battle zone if the cease-fire holds. ryan chilcote is in the french capital where the meeting is taking place. will this meeting be totally, entirely eclipsed by the situation in syria? ryan: well, you know, the ukrainians and the germans on
the french will do their best to make sure it is not entirely eclipsed, but that is what all the journalists want to know about. i am sure privately, francois hollande and angela merkel want to hear from putin about what his intentions are in syria as we enter into the third day of russia's bombing campaign. the russian president just walked into a meeting with friends what holl -- francois hollande. they are going to talk front hour. i'm sure they will discuss ukraine. . president will have a meeting with the german chancellor. only after that will they sit down for the four party talks. it is fair to say that the issue of syria is going to get a serious hearing today in the conversations between at least the germans and the french with the russians. jon: what i want to explore is the linkages between the situation in ukraine and the situation in syria.
things going to become more and more connected in the months to come? ryan: it is an interesting one paid ukraine-wise things have quieted down to a large extent, most of the parties are saying that the piece that is in place in eastern ukraine is the best peace they have had since hostilities began there. so, they will want to see more progress on that front. they all believe that's thanks to vladimir putin stopping funding the fighters and stopping sending troops into eastern ukraine. issue of syria which were they will try to keep separate, they will simply want to know what he is going to do from here because the french and the germans have been pretty vocal in expressing their displeasure with the strikes thus far. i mean, the french defense minister was the first out that said the russians hit everybody but the islamic state. and the french president has been very clear that he thinks
assad should go no matter what, which is not what the russians think. so, it is going to be linked. know, if the russian president, pressure plays ball in ukraine, then they will get more of a hearing on syria. tony: i'm wondering -- present obama has been criticized for not being able to respond when president putin was here in new york for the u.n. meetings because he has no cars to play. -- no cards to play. to the europeans have any cards to play? ryan: that is a good question. i do not think they have very many cards. the europeans have other sanctions they imposed against russia. those are up for renewal come january. vladimir putin will be lobbying behind the scenes for those sanctions to be eased. i do not think anyone thinks they can be removed.
beyond that, you know, in order to play a role in the resolution of the crisis in syria., you have to usually military might the french of started bombing, but mostly the reliance is on a coalition of forces in syria. and a think a lot of people, the opposition in this country, have looked at what is happened over the last four years and said the alliance thus far with this bombing campaign prior to the russians appearance on the scene has been unsuccessful. so, no, they do not have a whole lot of leverage against putin. tony: ryan chilcote coming to us from paris. putin arriving for talks on ukraine and syria. you have got breaking news. vonnie: albertson company -- in angeo it has set an ipo r between $23 and $26. boise, it had acquired safeway.
it is the second biggest supermarket chain behind kroger. mike: be interesting to see how this plays out. looking at the supermarket index, down 17% in six months. how much interest is there going to be? coming up in the next hour, we are going to be joined by alan krueger from princeton university. he is a professor there. former chairman of the council of economic advisers. do a lot of work on the labor market. ne this is bloomberg "surveillance" i'm michael mckee with vonnie quinn, jon ferro and tom keene in boston. ♪
boston, massachusetts and new york. we welcome you on this important day. it is jobs day. giving your perspective on the american labor economy. right now and important morning must-read. here is michael mckee. mike: it is important because we often spend a lot of our time on this show talking about bad news from around the world. we have the tragedy in oregon leading the headlines, but there is an important comment from nick kristof in "the new york times." writing about how journalists are vultures. we cover planes that crashed not playing for takeoff. he hopes that most -- the most important thing happening in the world today is something we almost never cover -- a decline in poverty, illiteracy, and disease. he points out that the number of extremely poor people in the world, those who earn less than one dollar a day has dropped by half. 10 years.in the last the same thing is true of the number of children who died from diseases at very early ages. tom, the world is getting better
and we don't notice it. it has been a major change in the last decade. tom: i am so glad you brought this up on a friday. we are horrified by what we see out west with the shooting. the number one guy on this and you know him quite well from davos. xavier martin of columbia university. he is the guy who wears the bright colors sport coats, day-glo, neon. he is the best at this. things overall are much better. 95%: nick points out that of americans according to recent surveys think they are getting worse. that may account for some of the sour mood that affects the economy. vonnie: i think it is lovely to point this out and very important to point out that we are getting huge shifts in countries like even china where we consider almost the developed market at this point. still on the verge of developing and developed. and countries like india where
you have prime minister modi making huge efforts. including countries around south africa and the african continent which are making great strides and things like illiteracy and privacy. mike: slow growth worldwide. we bring our heads about that but we are seeing things improve around the world. vonnie: the morning must-read from michael mckee. investors are anxiously awaiting the monthly jobs report. we will bring your preview next. this is bloomberg "surveillance" on bloomberg television, streaming on your tablet, your phone and bloomberg.com. ♪
for it may show whether the fed is gathering enough speed for a lift off. we will get to september employment figures at 8:30. the latest forecast shows the economy added 201,000 jobs. the fed has said the strength of the labor market is a major factor in deciding when to raise interest rate. the east coast may dodge a bullet with hurricane joaquin. it's pounding lightly populated parts of the bahamas. there are no reports of deaths or injuries. the national hurricane center has shifted its projected track for the storm. its model says the hurricane will sweep south and east of cape cod by tuesday afternoon. police in oregon are trying to armed witha man multiple guns at how he walked into a college campus and opened fire. nine people were killed in the attack. at umpqua community college. man andilled the gun
issued a. one witness says the attacker demanded to know students religion before shooting him. air force transport plane has crashed in afghanistan killing 11 people. the crash occurred when the c-130 was taking off from an airfield. the casualties include cisco american -- six american crewmmemembers. there was no enemy activity at the time. musicturned the world's and smartphones on their heads. now it it's -- turn. out think they will come with a car. "the wall street journal" talked about 2019. the automotive industry is going to get turned upside down. i am not an expert in automotive. in the last year, because of what apple is doing, it feels like it is a painfully backward and old type of a structure that can be made more efficient with electric. it may be thes
year 2022 before an apple car is sold to consumers. i wonder if by 2022, will not be driving teslas. mike: are leading the car drive itself. what is interesting about apple's help people line up to get the new products. i could see a line around the block at some auto dealers. vonnie: exactly. i had to walk in out of curiosity to see if there were still lines. movie like in the shrek where the line was wrapped around for iphones. mike: tom keene would be in line since he is not here today. vonnie: i saw the steve jobs movie over the weekend. it made you question the whole apple complex and why we are so attached. jobs day.s normally, i and investors would all be excited. last month to remember the fate of the entire world seem to rest on the number. today, the churn isin in the atlantic with hurricane joaquin.
which is going to have a less of an impact, the hurricane are the jobs report? phil: this is my brief respite before i dive back into the pouring rain to head over to the labor department. the most inducing thing today is not the topline number, though that will be what everyone is looking for. that oning 201,000 jobs a plummet rate remains at 5.1%. but i'm looking at average hourly earnings. -- the employment rate remains at 5.1% around has been lagging 2%, for the better part of the recovery, economies are estimating it could be 2.5% based on september of last year. i think that is going to be more interesting to me. and also when you look at august over the last 12 years, august has been revised upwards in a big way. i think that is the other element you're looking to, besides the topline number. mike: in a way, it is a confidence referendum.
business, did they get scooped by what happened in china and what happened during the month of august around the world? phil: i think that is absolutely right. you look across the board what everyone has been looking at over the last two months. that includes the fed and i think one of the interesting elements of today, even though when we were doing this last month, it did, it seems like the bisping in the world. today it seems like a lot less. but this is an important gauge or anybody who is looking at what is going to happen in october and decembetheor not ang to move. we are looking at fed futures at 44%. the december 16 meeting is the time to move. i think today plays a large role or at least a key element in that decision no matter what the numbers are. jon: want to bring up what phil is talking about. in the city of london, this is the least anticipated jobs number in months. i look at federal fund futures with an 18% chance of an october
hike. i wonder, the people have realized the green light is flashing in the labor market and people are looking to inflation data. mike: it seems that what we're looking at is a situation where, yes, the green light is on for labor and we're looking to see if it starts flashing yellow or now. right now phil mattingly, it does not look like it is going to. we are going to come up with the same numbers we had month after month. phil: yeah. all expectations, again, we have seen with the medium forecast at 201,000. average on the year so far has been 212,000 jobs per month. there is no expectation there will be a big variance on that number. i think the only thing that would shock people to your point is if all of a sudden some 50,000 that -- like 1 rolled out. then there would be major concern. other than that, expectations are that if everything stays in line, markets will accept this report and move onto the next
thing. vonnie: i to bring in our guest host for the hour. at nuveen. the fixed income specialist, taking care of all those portfolio managers. how is the treasury market position for today's jobs report as opposed to a fed tightening overall? we are seeing the two year yield at .66. it is wellnot think positioned for a strong number. the market is benefiting, the treasury market is benefiting from a significant safe haven buying we are seeing is a result of all the fears on global growth and the commodity price rout. so, there is a little bit of a premium in there for that. i do not think it is well positioned for a strong number any data that begins to reduce the fears amongst investors about the chinese slowdown leading to a broader global recession. so, i think as we see better data and i think it will take some time, i do not think it will be one employment number,
that you will see some of that fear received and now it will cause rates to rise, not significantly, but gradually. reverse some of the moves we have seen recently with treasuries coming back down. mike: even on the trading floor, people trade on the headline, but phil was pointing out that august is revised much higher. say we get 200,000. exactly what was expected but you get a big revision to august. does that influence what you were saying about not positioning for a strong number, or do people pay no attention to the revisions? tony: the narrative will gradually changed one of less fear, of really kind of the overall global economy hitting a major wall. and that is been the fear because commodity prices did hit a wall. extending that out. our belief is that in fact there is a little bit more resiliency to the broader global economy. we do not think it is a strong global economy by any stretch but we do not think we are moving into recession and we think some markets have begun to probability ofer
a global recession that we think is valid. so a revision would be supportive of changing that narrative a bit. london.ck question from we look at the on employment data and the key data is just the market. if the market is not expect in a rate hike, then the fed is not going to move? is right.ink that that the market is not expecting a rate hike. anything that pushes markets into thinking october is a higher probability than what's priced in which is zero, 20%. that would be problematic and create some dislocation near term. we are not expecting that. we think the market will 50%ually move towards above probability of a december move. we saw janet yellen come out and try to speak to the market that i, janet yellen, think december is in play. i think that is an important message for the world to know, because i have always believed that there are three votes that matter.
yellen, deadly and fisher on the fed. iswing what their view is critical. the data supporting anything she was saying will help to move the market in that direction. vonnie: fisher is in boston today. mike: tony rodriguez is cohead at fixed income at nuveen management. our thanks to phil mattingly. hope he can stay dry. i'm sure he would rather stay in the studio. but he will be there to break the news at 8:30 wall street time. what are payrolls going to be for the month of august? coming up in our next hour, we will talk with alan krueger of princeton, the former chairman of the council of economic advisers. how's the quality of jobs? are they paying a lot? do we get benefits? what is the expert think on bloomberg "surveillance" ♪
later on, jim glassman will join us from jpmorgan. we need the single best chart. a hurricane is coming. i'll be lucky if i get home tonight. we did accomplished single -- a complex single best chart. michael mckee, help me out with the u.s. two year yield. those blue circles are all those fed meetings. boy, have we given it up since the last fed meeting. the important point is the red arc down in the right side. that shows you those dovish moments of very lo interest rates. wwe are not there yet but we are getting very rapidly to very low interest rates. mike: we are, but what is interesting is that we are making higher lows. the market is beginning to believe that the fed will do something. they are just not sure maybe one it is. you look at the low on the two- year all the way to the left meeting. last fed
they gave up because they did not raise rates, but it did not go as low as we saw in june. to talk over you, but i'm looking at that chart and thinking about the yield curve and treasuries. wondering about what that says about the domestic u.s. economy. there is a question about whether that is a reflection about what is happening globally. can you answer that? does the treasury turf tell you what it used to tell you about domestic u.s. forces? mike: it is an interesting question. how much of the curve is influenced by haven buying. we tend to see it more the longer end than the shorter end. the shorter end is something you do not get into an out of as much as possible. let me ask tony rodriguez very quickly. are people haven buying in two years? tony: they look longer at the curve. the haven element at the front
end is that back end buying pushes the curve down. you see some flattening when that occurs pretty we think the curve will continue to flatten. the two year will more accurately price and expectations for a few fed tightening's. tom: to me, this is the distinction of the jobs report. jon ferro, over here is mike mckee mentioned, we have a series of higher lows in yield. you don't have that in europe. my biggest surprise this week -- gold has come back but it is the german two year. is it acting like the u.s. two year yield? jon: you talk about those ratifications in the higher lows at the front and. the front end of the german curve, pinned to the floor. it is the expectations that rates are not going to go. we are talking about q.e. before we wrapped up q.e. one. tom: i need a mike mckee clinic. what is the difference between
q.e. in america and q.e. with mario draghi? mike: the way it worked in the past is the u.s. bought assets while the europeans basically rented them. that's changing a little bit now. it's really now become a matter of degree. how much money are you putting into the economy when you buy bonds? the ecb situation a lot more complicated because of the rules on what they can buy and the many sovereigns they have to buy from. jon, i know mario draghi, if he had his choice, would like to buy one sovereign rather than having to spread it out among 19. jon: you trust in that. when you think about -- you touched on that. they had to sterilize their bond
vonnie: welcome back to bloomberg "surveillance" tom keene is in boston and jonathan ferro in london. a quick look at foreign exchanges we await payrolls. the dollar index is stronger. the dollar is stronger versus the japanese yen. and the euro is weaker. 1.1158 before the crucial data. of volatility.it our top headlines. there has been another hacking attack aimed at consumers. t-mobile says 15 million community -- customers who filed credit applications with a wireless carrier may have had a personal data stolen. the hackers stole names and addresses and social security numbers by experian. sprint is hoping he can cut its way back to profit. it plans to reduce $2.5 billion in costs over the next six months. that includes job cuts, although
sprint is not saying how big they will be. 80% of sprint. he is the world's worst-performing billionaire. thanks to china's market collapse. the chinese telecom mogul whose fortune has plunged 84% this year according to the bloomberg billionaires index. $1 net worth has fallen to billion for he is using his personal fortune to find a nicaraguan challenger to the panama canal. these telecom moguls are like the cable cowboys. they can have billions of dollars net worth one minute and literally a a few minutes later be broke. out: i am trying to figure what it would be like to lose that kind of money and still have $1 billion. funny story that said unless you bought a whole bunch of boeing airplanes at
once, but if you live the normal rich persons lifestyle, you cannot spend $1 billion. return in a single digit world, what are fixed income manager supposed to do? are we in an environment of return for a risk? tony rodriguez is our guest host for the hour, head of fixed income at nuveen. a team of managers scouring the fixed income spectrum. what looks attractive right now? think thet now we credit markets actually offer pretty attractive opportunities for investors. investment grade corporate credit, high-yield bonds. quarter, they underperformed. what i see in the market there is that we are pricing in a very high probability of recession. spreads have moved wide of historical averages. when you look in earnings, cash flow, interest coverage and debt levels, accessibility financing is at recently healthy levels. vonnie: we ask about the
corporate bonds, do you tell them it is not a problem? tony: we think there will be financing available in the high-yield markets. companies that push them out significantly. conditions are more challenging. global growth is slowing down, moderating. but pricing has really dropped dramatically. there are no bad bonds, just that prices. we think we are pricing in more severe fundamental to cherish and that what we will see on the credit side. mike: a lot of talk about whether december is an opportune month for the fed to move because of liquidity issues. oky: i think december is an month for them to move. liquidity is very challenging in the market now. and i think that is a structural feature of the market. so while there are some drop and liquidity that happens towards the holidays, i do not think that should be a significant enough issue for them to defer. mike: they give very much for coming in this morning. cohead of fixed income at nuveen. we thank him and jon ferro in
the american labor economy. we will bring that to you at 8:30. there are two americas. an america booming and an american looking for the next job. in this hour, alan krueger of princeton university. the markets quiet this week. don't tell that to yields in germany and gold moves south threatening $1100 an ounce. it's a gig economy. everybody wants to work for uber. i am buying a suburban. i'm working for uber monday morning. good morning, everyone. we are live from boston and new york and a bit from london as well. we welcome all of you on our economics, finance and investment with a focus on the jobs economy this morning. and we will get to alan krueger. michael mckee in new york with vonnie quinn and jon ferro will be with us with one final look from london. our top headlines. vonnie: than you.
we begin in oregon. the gunman who killed nine people at an oregon campus singled out christians. the father says the gunman asked those in the class if they were christian and opened fire. nine people were killed. one woman said she survived by playing dead. i happen yesterday att a milesity college 180 south of portland. the gunman was killed in a shootout with police. officials identified him as 26-year-old chris mercer. president obama fear such attacks will not stop its gun laws are not tightened. ayesident obama: i hope and pr i do not have to come out again toing my tenure as president offer my condolences to families in the circumstances. but based on my experience as present, i cannot guarantee that. vonnie: it was the 15th time the president has addressed the nation after a mass shooting since taking office in 2009. forecast of this morning are saying hurricane joaquin will
not hit the east coast. the storm is pounding the bahamas with rain and top winds of 130 miles an hour. the national hurricane center predicts joaquin will sweep south and east of cape cod tuesday, but alerts are up from florida to long island. a government news agency and russia is reporting today that the country's latest air airstrikes destroyed in islamic state base. six countries are asking russia to stop the attacks. they say the airstrikes are targeting syrian rebels not just a former state. -- just islamic state. russia is backing assad. last night, secretary john kerry called the situation a catastrophe. russia iskerry :if serious about wanting a solutia and wanting to save syria, they can join us in the effort of eersuading assad to be th savior of this country, not the killer of this country. areie: pentagon officials
discussing whether action should be taken to prevent them. amazon will stop selling media streaming devices from google and apple. the reason? they are not compatible with amazon's prime video. the move shows amazon is willing to give up sales to promote prime. gene: it's edges and to see how this is going to play out and if they will be allowed to do this. it seems like monopolistic behavior -- it is interesting to see how this is going to play out. i'm apple's perspective, amazon is not a big channel. vonnie: amazon will keep selling roku, xbox and playstation. all three work with amazon prime. we have news out of glencore. people familiar with conversation say the sovereign wealth fund of singapore is among investors that have expressed interest in buying a minority stake in agriculture business. mike: glencore was looking to sell off a portion of its agricultural business. bloomberg reporting today there is interest in it from asia.
that is propping up the stock price. it is now up i 4%. let's go over to jon ferro and see how that is affecting the markets overall. i'm looking at the response on an intraday basis. to thisreak it down individual component, the objective is to pay down the debt. the good news there is a buyer potentially for this stake. the unknown will be the price. citigroup putting a price on the unit north of $10 billion. the price will be important but a little bit of optimism to wrap up a very choppy week for this company. i have the stock up 4%. mike: tom keene is with us in boston. he went up there because he could not stand the idea of being in new york when the new york yankees clinched a playoff spot. his boston red sox kind of slunk out of town. tom: that is what we did. news, at the glencore michael mckee. and anybody that has been
through balance sheet adjustments in commodity companies, whether outright like like bhp billiton on or rio tinto, or the trading vehicles like glencore, it is all the same. you have to adjust the balance sheets. what i would notice is the global reach of glencore, which means you do not know where the mysetery is. we will not know for weeks and weeks to see how glencore unravels. right now trading almost as a penny stock. somewhere around $1.40. tothis job stay, we need bring your perspective not only on the minutia of market reaction, but just as well on the state of the american economy. there is no one better to speak to than the former chairman of president obama's council of economic advisers alan krueger. he joins us from princeton. professor krueger, you and i talked about two americas before. are you seeing jobs formation
for those that have been left behind? are the people that have suffered for seven years, are they even doing better now? prof. krueger: they are doing better but certainly not well enough. we are continuing to see polarization of the workforce. job growth at the bottom and at the top, but not so much in the middle. i think what we need in the near term is a stronger economy overall to help lift wages. in the longer term i think we need to have more of a balance in favor of workers. tom: the money question, alan krueger, is we have wonderful second quarter 6% plus nominal gdp. then all of a sudden now we are worried about exports. can we run an academy -- an economy with a diminished trade economy or is that of great concern? prof. krueger: it is a concern, except we are fortunate in that the export sector is small compared to other countries. much more important now is
service sector. can handle that we the headwinds that are coming our way because of a stronger dollar. weakness in the rest of the world. we face weakness in the rest of the world throughout this recovery. so i think this recovery can continue to go at a gradual pace. the longer it goes on, the tighter the job market gets. that will help wages overall. mike: disentangle it all for us, because, yes, we lose some jobs in exports. but we gain because import prices are lower. but then we do not get inflation and the fed is concerned about that. how does this all balance out? are we at a good or bad period? prof. krueger: we are all stuck the sweet spot when you think about it. we are not that far off of the 2% inflation target if you take out energy. unemployment is down to 5.1%. we have this hole we are digging our way out of, but if you look at how far we are off of the
fed's targets, we're not that far off. the stronger dollar will put pressure on inflation. that is good for american consumers. typically, the u.s. does not import deflation. the amount that we import is not so great. we tend to trade in dollars. so the exchange rate does not get passed through the same way it would with other countries. wei think that the affects are seeing from the stronger dollar are probably going to be transitory on inflation. vonnie: we are seeing raises in the minimum wage across several states, because we are creating some a service sector jobs and they are low end, low paying jobs. does this help reduce the dispersion from high to low it all? prof. krueger: i think it helps. the studies have found that the erosion of the minimum wage in the 1980's accounted for 20% of
the rise in inequality. it certainly affects the bottom 10%. about half of the states now have a minimum wage above the federal level. not uncommon when the congress has been slow to raise the minimum wage that the states step in. that would be better if congress set a more reasonable minimum wage. that might free up some of the states that are going to create uncertainty and difficulties for businesses because they have to deal with different wage scales in different areas. but one of the things that we have not seen in this recovery that we did see in the past two was a minimum wage hike at the national level which is one of the reasons why frankly wage growth has been lagging behind. tom: very quickly, alan krueger, are we going to lose jobs to mexico because of a stronger dollar? we are not there yet but when is the when of labor arbitrage where mexico picks up the marginal investment and the marginal job? prof. krueger: that is a tough question, tom. i think you need to look more
broadly than mexico. we are seeing the opposite dynamic with china. china is get pushed to its limits as far as intersection. wage growth has been strong and china. we are seeing more companies -- more countries in sourcing jobs. one of the more noble aspects in this recovery is that manufacturing has been strong. on that we may lose some jobs to mexico. on the other hand compared to the interest of the world, we will continue to expand. mike: we shall see coming up at 8:30, the jobs report. we are excited that tom keene will be an uber driver monday. alan krueger says the labor data does not tell the whole story. a new category of workers might be needed. ♪
tom: good morning. fromberg "surveillance" new york and boston. we welcome all of you on this job stay. michael mckee and alan krueger with us for the hour. right now vonnie quinn with the morning must-read. to return to the middle east. nouriel roubini is writing about the middle east meltdown and global risk. he talks about geopolitical risk today. none of them being greater than the long arc of instability stretching from a grab to the
afghan-pakistan border. only through military means rather than relying on diplomacy and financial resources to creation.owth and job the region's instability will only worsen. such a choice would haunt the u.s. and europe and thus the global economy for decades to come." if i can bring in you and tom on this. the same idea that sort of global jobs and job creation and growth in countries around the world are the solution to everything. mike: there is no hope for that in the middle east now. in syria, in iraq conflict is making that not possible. and so, there isn't much for the except consider military options, and nobody wants to do that. . we will see a vladimir putin wants to put troops on the ground tom, we have been told over the last couple days that that is not really what the russians are interested in.
tom: it is a mystery. i think we go into the weekend with a mystery. weekend was the richard haas of the council on foreign relations. he's written in the ft. this idea of let me know where the borders are. i do not know where the borders are from damascus to baghdad. vonnie: they are being redrawn constantly. part of the problem is that countries are getting smaller and balkanized. each country has its own tribes ownits own sect and relations and they are getting involved. and we are seeing this across europe as well. this is why we are seeing the rise of extreme parties on the left and right all over the world. mike: we need a new map of the middle east. the one nature has not led to good outcomes. vonnie: it is interesting how europe as much as it tries -- another attempt at europe is managing to hold its borders for now at least.
mike: when we come back, we are going to return to the jobs report. we will talk with alan krueger about a new quality, kind of worker out there. three fed speakers to watch. pat harker, his first speech as philly president. , everyone wants to know what he has to say about the global economy and the u.s. monetary policy. ♪
tom: good morning. bloomberg "surveillance" from boston and new york this job stay -- jobs day. i took delivery on the dakota brown mercedes-benz wagon. the g550 four wheel drive. i will talk about that with alan krueger. i'm going to drive for uber. right now i will give you with vonnie quinn. o headlinesu. vonnie: afghan government forces are in control again in kunduz,
but is not clear if the taliban pulled out over push. fortants occupy the capital three days. their leader told reporters by phone that they left after scoring a symbolic victory. but afghanistan's president says the troops routed the insurgents. claiming today that its just destroyed an islamic state command center in syria. american military leaders say russia's first air attacks in syria targeted rebels not islamic state. the u.s. backs the rebels who are trying to overthrow the syrian president assad. its allies in the us-led coalition are asking russia to stop attacking the opposition forces in syria. and russian diplomats will be on the spot today when ukraine's peace talks resume. vladimir putin arrived in paris a little while ago to meet with leaders from germany, france and ukraine. he says that ukraine is not
living up to the terms of the truce. ukrainian officials said the government will put small caliber weapons out of the battle zone if the cease-fire holds. those are the top headlines. rhetoric all a game of it seems and symbolism. it is very difficult to know who to believe from what is posturing and what is reality. that is diplomacy, always. mike: we do not have friends. we of interest is what they say. official monthly snapshot of the health of the labor force in the u.s. and it is going to be out in an hour and 10 minutes. it fails to capture the evolution of labor markets. the gray areas increasing according to alan krueger of princeton. a labor economist. he proposed a new categories of "independent worker." explain what that works and how the bls could collect that data. prof. krueger: this is the proposal for a legal system then for the bureau of labor statistics. right now many of the workers in the gig economy work as
independent contractors. many elements of independent contractors and some elements of workers. they fall in the gray area. i think our system would be better if we created a third legal category of independent workers who would receive some benefits from the animator is they work with, that receive life insurance or health insurance. the intermediary could also pay half of the so security tax. security tax. some of the benefits would come out of their fees, for right now we have court cases and confusion about what the companies are going to be required to provide and what the workers will ultimately receive. vonnie: you are saying with all of these disruptive companies where seeing from uber to amazon, i guess, that we need a third category of worker, disrupting the labor market. prof. krueger: i think we can make the labor market better. the categories we have are antiquated.
they do not fit the modern economy. we are at the very early stage. only 1% of all workers fall into the gig economy. most workers are traditional employees still, and i think that will continue for a long time. on the other hand, we are seeing incredibly rapid growth in copies like uber. uber has been dropped -- been doubling its drivers. this category has been growing quickly. we are not capturing it well in our statistics because our statistics show the decline in self-employed workers while the irs shows an increase. i would point out, tom, i have in the past been a consultant for uber, which enabled me to look at the statistics. tom: they told me i can make $300,000 a year driving back to jfk. we will see how that works. your work is brilliant. i like the 1% of america idea. full time employment is very
good. there are a lot of smart people that say full-time employment is great. quality of those full-time jobs the same as you and i remember in our youth? prof. krueger: no, absolutely not. they provide fewer benefits. workers are much more responsible for their own safety net now. and also we have seen for the bottom half of workers a decline in their annual salaries. mike: you are talking about how much uber is expanding but how much more can it grow? is there a market for this kind of job that is going to get saturated because there are no benefits? it is similar to the freelance economy. prof. krueger: i think it is part of the freelance economy. uber has been attracting enormous mix of drivers. 1/3 of drivers have another job with their working full-time. yesterday when i came to new york, i had a driver who told me that he works for a company, but
he has a lot of downtime any switches over to uber. 1/3 of the drivers work part-time for uber and part-time for another company. the flexibility in terms of the drivers getting to choose their tremendouss a attribute. that is one of the reasons why they have had such meteoric growth. at some point, that will become saturated. that would be a good thing because they are going to have to raise compensation at that point to attract drivers. anyie: i you seeing traction in washington, d.c., on the idea of a different category of worker? prof. krueger: senator mark warner has been interested in this area. possibly step in and threaten the emergence of this new sector, which i think would be unfortunate for the whole economy, for workers who can work there and customers. then i think we may see some
this could embolden the federal reserve to raise interest rates. we will break down the numbers as soon as they are released this morning at 8:30 eastern. the east coast might not feel walking of hurricane --joaqwuin. the national hurricane center predicts it will sweep north and east, but is still a dangerous category four storm. the gunman who killed nine people at an oregon campus repeatedly -- reportedly singled out christians. the gunman asked those in the class if they were christian and opened fire. nine people were killed and seven were wounded. it happened yesterday at a community college in a world town 180 miles south of portland, oregon. the gunman was identified as chris mercer, killed in a
shootout with police. at least 11 people are dead after the crash of a airplane in afghanistan. six airmen were killed and an unknown number of contractors were also victims. the taliban and says they shot down the plane but offered no proof. .hey often make false claims apple turns the world's music and smartphones on their head, now it is detroit's turn. >> i think they will come out with a car. the wall street journal has talked a lot about this, 2019, that seems a little bit early. i am not an expert. because of what apple has been doing i have learned a little more about it, but it feels like a painfully backwards and old type of structure that can be made more efficient with electric. might take apple
seven more years to bring their car to the market. on a if you are living fixed income, a used to be you could put your money in treasury bills and you get 5% and you could at least grow your nest egg a little bit. that has not been the case since 2008. 2010 we hit 1/10 of a percent on t-bill rates and it has not been a lot more since. people complaining about the federal reserve and the fact that they have not raised interest rates, but it is only getting worse because of the people in washington. this is for week one month treasury bills. this is a zero. look what is happened to the rate. it has been below zero for a couple of months now because of the debt ceiling and budget debate. everybody wants to buy t-bills to put their cash in,
particularly when you have a. of instability, but there are not enough t-bills for sale because the government cannot sell them. the fed can raise interest rates, and all the talk about that has started pushing up two year yields, but money market rates well below zero, and no prospect of them going higher. vonnie: you say it is because of the debt ceiling debate. does that mean we can look forward to those negative rates through december? mike: there's a good possibility of that. if the treasury department feels they cannot take on more debt, they are cutting back on the number of bills they are issuing . they used to sell 25 billion at an auction. now they are down to 10 billion and they are talking about going to five. vonnie: is the market flooded? are people able to trade these? mike: people are getting
desperate holding onto them because they are hard to get. vonnie: investors in europe are losing money all the time. yield, attwo year certain stages those have been negative. allen, wait again on this negative yield. how destructive are they? destructive, and a reflection of the very low inflation in europe. i think our situation should show more clarity soon because sent a letter to congress indicating we would hit the debt limit by november 5. vonnie: you think that is a good thing? alan: i do not know. i am hoping speaker boehner gets a lot done before he leaves, because as he says, he will clean the barn for those coming after him. vonnie: we are going to return with alan krueger.
futures pointing higher. the two year yield at .655%. this is bloomberg surveillance. i am vonnie quinn along with michael mckee. tom: i am michael mckee, along with vonnie quinn. -- vonnie: -- mike: i am michael mckee, along with vonnie quinn. tom is in boston. last month, the fate of the entire world seem to rest on the number of it, but the churn is not in the market. in washington is at the labor department, trying to stay dry. some respite from the crazy weather. if you thought last month was
kind of the super bowl leading up to this, today feels more like a preseason game. you are probably going to watch for a little bit, but probably will end up switching the channel because it does not really matter. that is the perspective we have been getting. as vonnie laid out, about 200-1000 jobs -- 200-1000 jobs added. no huge numbers expected. what is going to be interesting is when you drill into the numbers a little bit. august over the past couple of years has been revised up by about 60,000 jobs. it will be interesting to look at revisions and average wage growth. mike: janet yellen has been very concerned with the wage numbers. what are we expecting? phil: the forecast is 2.4% year
over year. it has been plugging along almost through the entirety of the recovery. there was some positive news. i think the market responded positively to the wage growth last month so it will be interesting to see. even janet yellen is acknowledging that we are near that full employment mark. wage growth should start to take up. if it does this month as expected, that will be positive news. if it does not, that will be more important because of the expectation that finally we should be hitting that point where growth will be a thing with pay attention to. vonnie: we have had all those cuts in the oil patch, the energy patch. they probably will not have that much of an impact on the overall number for the u.s. as a whole, right? phil: i think that is right.
we saw hints last month about the global situation, the economic reaction to what is going on globally. it will be interesting to see as we did in sector by sector to see if there is more indicators of what has been going on in china. sector,point, sector by it is tough to see if there'll be a major impact on the top line number. to try and grab what this report mains, those are things you will be paying attention to. tom: alan krueger from princeton. phil mentioned the cyclical nature of the economy. history forstate of embedded long-term unemployment in america? alan: i think history is affecting our economy. when it comes to labor force participation. the labor force participation
rate is about the percentage point lower as a result of the great recession, if you compare it to the trends before the recession. sadly, the history of u.s. recovery is that we do not see much of a cyclical recovery in labor force participation so i think that will have a lasting impact on our economy. tom: phil mattingly, you are in washington. when you look at the labor economy on capitol hill, are they attuned to a 5% unemployment rate or are they still claiming it is a 7% rate? a 7% still claiming it is rate, and that is not just in washington. i think what they are feeling from their constituents, the constituents do not feel the 5% rate right now so they are reflecting that. phil mattingly. we will have all the numbers at 8:30 when the labor department reports on august, and we will
i am vonnie quinn along with michael mckee. as we await payrolls, there are other things going on. casino operators are arriving in the premarket because macau revenue only dropped 33%. in line with forecast. that is why people are taking such a good view. mike: it is all about china and whether they are spending any money. vonnie: it has been a slump for macau and it seems to be stabilizing. china is setting stabilizing methods for macau's economy. ofe: it seems to be sort incentive inducement for people to do well, spend money. if they can keep that is something that people aspire to, it keeps the economy going. vonnie: what is interesting about macau is it had been a dead serious gambling hub.
that is changing a little bit now. the entertainment aspect of it. glencore shares rising but there is news. we are that a sovereign health fund of singapore has interested -- is interested in buying a sector -- we hear japan might get involved but we know that glencore could be looking to sell that business to reduce debt, or sell a stake in that business. mike: this is something glencore was discussing before the stock went earlier this week. because it could bring them 10 and a half billion dollars, investors seem that is a good boost to the company's balance sheet. vonnie: glencore depends on leverage to a much greater extent than some of the other miners. the underlying commodity dropped 5%.
the leverage ratio can skyrocket very easily. at 96.he stock was it has almost recovered everything at lost this week. vonnie: you could see the differences in analysts saying, coming out. the report that started the whole cascade in the stock price in the first place. biggestding for its weekly drop since march. ,efore the u.s. jobs data signals the strength of the economy. mike: what does gold ever signal? the world is going to heck and no one buys gold when it was supposed to be a haven. there is no inflation. gold is its own thing. vonnie: one thing we can say is it has fallen for five straight quarters. mike: all the gold bugs will be writing in and saying, it is
just about to turn around. coming up today, we are not watching gold. we are watching the jobs report, .he fed, and speeches look at patrick harker, the new president of the philadelphia fed. introductory remarks. heard from, we have him but stan fisher is always a newsmaker for the markets. that is this afternoon. ♪
.om: good morning, everyone bloomberg surveillance in boston and new york. 42 minutes away from the jobs report. i will be focused on the revisions. here is vonnie quinn. hands: hackers have their on more personal information from shoppers. about 15says data from million customers who filled out credit applications may have been stolen. took names, addresses, and social security numbers from the credit tracking firm experience. sprint is planning to reduce up to two and half million dollars in costs in the next six months
, including job cuts. european leaders are gathering to talk about bringing peace to ukraine. angela merkel will meet with residents of france in ukraine. government will put small arms at of that zone if the holds.ire vladimir putin is also taking part, and he blames ukraine for the breakdown of the troops. we solve vladimir putin arriving about 45 minutes or so. mike: i do not think we get the kind of european kiss hello that we saw from angela merkel and francois hollande. talk, and you, never hear a word i say. they have talked to vladimir -- infanthe night him
item and he continues to do what he wants. tom: let's wrap up our jobs coverage for this hour. we will continue for the next hour on bloomberg television and radio worldwide. alan krueger of princeton university with us. taking a victory lap off his fed call. we expect the same excellence from him this morning at 8:30. carl, we were talking about the gig economy. the fact that i'm going to drive for over. . carl, on the measurement issues that dr. krueger speaks about, do you as a marker -- market economist have any confidence in the numbers? carl: the numbers are certainly not perfect.
as the economy evolves, they tend to miss things. there will be revisions after good as aso it is general barometer of economic activity and hiring. .ertainly it is not perfect as there are new industries evolving and new types of jobs evolving, that tends to be missed. in both tale ends of an economic cycle, in the initial downturn counts tend to be a bit off. that is why they have this adjustment that tries to correct for that. tom, you said you were interested in the revisions. the august downside miss was almost twice as large as the average, and that maybe hin that there was something morets if areas of play than just a seasonal anomaly. it was more than just that pattern at play. they are veryger,
good think tanks at the economic policy institute that really take issue with the americans that have disappeared from our accounting. how many millions of americans are uncounted? alan: we know the senses mrs. millions of americans. ssese know the census mi millions of americans. more people are not china -- responding. they are underfunded. so i think we certainly face big challenges. on the other hand, we get a complete count of employment from payroll tax records so we can benchmark the data and get a better sense. there, not everybody is included either. driveru become an uber
you will be paid in 1099 income, and you will not be included in the establishment survey. mike: i want to ask carl about payments. the focus has been on jobs and wages, and whether more jobs are creating higher wages. it is supposed to push of higher numbers but you are not enthusiastic. carl: we will see that when we get closer to full employment. we are not seeing it just yet. you can kind of tone down your focus on the unemployment rate and average hourly earnings. up in theet a perk year and the year change but if we stick to a study to tents and two/10th.month, -- watch the pace of job creation because that will tell us the direction of the economy. alan: i would just add one thing
that suggest the job market is getting a little tighter. the strongest real wage growth that we have seen in a decade. part of the challenge is we have these negative inflation shots, particularly the oil. the fact that the unemployment rate has fallen from 10% to 5.1% i think has put some upward pressure. carl: i would agree we are moving in the right direction. we saw the shot to the global economy and august and september. had enoughink they time to process that for the september jobs report, but i think october and november there is a risk we could see some increased caution by hiring managers. just as the fed is getting ready to lift off, they see this deceleration in job creation. period, blthe survey
thes says they did -- that does not include uber drivers. important thing for them to do is the contingent worker survey. they have not done it in over 10 .ears now administration requested funding for it and congress has not provided the money. that provides us with a lot of information from the household survey, alternative types of work arrangements that people have. are they freelancing, or they on call, and are they part of that emerging gig economy? tom: we barely talked about wage tell you which will the interesting jobs report we have in about 30 minutes. is there a wage growth? carl, do you see wage inflation of any type?
carl: i do not see much. we are stuck in this 2.2% to 2.3% range. i'm confident it will turn higher as we get closer to full employment, what it is like waiting for good though -- waiting forgodot with the wage inflation. we will definitely get there, if not in q4, early next year. mike: the forecast is that unemployment will continue to go down but the pace of inflation is going to fall. why do you need to raise interest rate anytime soon? my answer would be coming interest rates are still going to be quite low. even when they start raising rates, the fed be accommodating the economy. it will take probably a year before the short-term interest rate gets above the inflation
rate. because monetary policy operates with a long-term lag, they need to start acting. mike: carl says there is no pressure. carl: it is a long run to neutral. vonnie: numbers for today, carl, what are you looking for? carl: i am looking more forward to the october jobs report than september. i think we are steady at 200,000. vonnie: alan? alan: the best predictor is the consensus. i would not be surprised if the unemployment rate nudges down. carl: i grudgingly went with the census. tom: thank you. we will continue here with our coverage. vonnie quinn and michael mckee in new york, i am in boston.
hurricane coming to you morning. i am michael mckee. tom keene is in boston. he will be with us because it is jobs day and he would not miss this, unless the boston red sox signed him. let's get you a quick market check, because everybody is waiting for the jobs numbers. these numbers are all going to change. forchinese markets closed the day and not much moving in japan, but europe has been bouncing around. onestoxx 600 is higher by and a half percent, as is the footsie in london. the dax 100 points higher. some expectations for better news today from the united states. we see the same thing in futures here. points,500 up eight