The british Prime MinisterBoris Johnson is Holding Strong on brexit. To delay he tweeted today quote new deal delay. Eal, but no earlier the Prime Minister had promised to send a letter brexit if he couldnt get a deal with the European Union by october 19th. And johnson are set to meet later this month at a theyt in brussels where hope to be able to sign off on an agreement. Deadly clashes continued in iraq today. Forces opened fire on hundreds of antigovernment demonstrators in central killing one protester. Shiite clerictop warned both sides to end the violence. The violence has killed more than 50 people and injured hundreds. Global news 24 hours a day on air and at tick talk on twitter, than 2,700more journalists and analysts in over countries. Im mark crumpton. This is bloomberg. Live from bloomberg World Headquarters in vonnie quinn. And live in toronto, im lang. Welcome to bloomberg markets. Were joined by our bloomberg audiences. The top stories were following from around the world. A downshift in the u. S. Labor market, hiring missed projections while wage gains warned, offering a warning that the record long expansion may be slowing. Plus, the shale patch slowdown. Whats next for the basin whose abundant americas quest for Energy Independence. And the big dogs of modern mergens and acquisitions arent tough anymore. We will take a look at what fails. When deal genius lets get a quick take on the averages. Its been a flippy week. Gain p 500 up at 1 of the now, even though after the jobs data we saw a bit of a decline and, of course, it has been a the majorfor averages. The major the and hav san fo averages are up 1 apiece, the potential on for fed cuts or just the data today, we shall ask our economist in a moment. Look at the 10year u. S. Treasury because were back to 152 and this is todays action, weve arranged in a four range. Oint all week its been a 10 or 15 point basis range. And, of course, one question been asking is just where equities go. Relativeng look at the value bond between the yields on equities and what to get from government bonds. At this inside your terminal and what youve got here is a comparison of the msci index, the yield thereof in ratio to sovereigns and at yieldingt, stocks are 1. 8 more and you can see just to put that in perspective High Water Mark going back almost to late 2008. Interesting to see that still, equities look relatively of course, thats bondsvely to government and that is as we see the u. S. Hiring and wage Growth Numbers estimates today. We, of course, saw it the unemployment data fall. All eyes now on the fed, but interesting to see the white house frame it today as a positive. Larry cudlow says he doesnt see a recession on the horizon. I think the economy is now in a turning zone and i think weve soft two quarters, but i think now were going to be moving into a much stronger story. C joesa is a senior economist and we have Bloomberg Opinion us. Mnist brian with thanks to both of you for being here. I want to start with you, obviously, we did see weakness in this data. You can see it, but you can read it both ways. It wasnt as weak as some had feared. At it . You looking i think markets took a sigh of relief given all the data the was coming into fridays employment report, they were expecting something a lot worse. Consistent this is with the slowing economy, right . Were not falling off a cliff, but it does suggest that the decelerating. The 136,000 jobs suggested a job growth is meaningfully slowing. The Unemployment Rate did tick 2 10, but i would note that it comes from a smaller survey. The sample size is much smaller data point doesnt make a trend there. What was really troubling to me slowdown in job growth. Average Hourly Earnings slowing 2 . That really isnt much overheating in the economy right now. And wages also didnt really grow as much as they could have, 2. 9 , still a rate, maybeth nothing to get too hysterical doesnt augur well. What happens at the Federal Reserve . Do they decide theres more of a easing . More i think the case for a rate cut has risen in october. This is a fed that really wants generate Inflationary Pressure in the economy and the wage numbers really push against and this is the fed that wants to get above 2 on core inflation and to do they probably need to adjust the path of policy to be accommodative moving forward, and i think that october. They can go in so then brian obviously, we have a lot of betting going on a recent story, ahead of any next move by the Federal Reserve. Is much kind of maneuvering changing because of the data that were seeing . Not a whole lot. I mean, we saw so much happen course of this week. All the bad news got priced in over 80 oddset of a cut within less than a steer its really hard to the bond market away from that and on top of that you have fed out,ers who are coming richard yesterday, for example, saying the economy is in a good echoing kudlow saying we dont see a recession on the horizon. Theyre trying to keep their open, but the market seems to see through that and sort of say theyre going to have to cut because you dont manufacturing and services signaling a recession. Why all ofu wonder the estimates missed, its not like we werent anticipating some kind of a slowdown. There has been a 20 basis point move in the 10 year yield just tuesdayr alone, 175 on and were at 152 now. What is that a sign of . Uncertainty . Theres just a feeling that theyre going to have to keep cutting no matter have these fedu speakers who say were kind of hesitant about another cut. Were not sure what good it will do and yet they go ahead and say well cut this tie and well see what happens next time and want toomething i might bring to you, joe. I mean, theres this argument point cutbasis doesnt necessarily do much. It doesnt move the needle, cost problemal isnt the with the system but is it sort of a feeling that thats really feds only policy tool at this point . Thats part of it. Its not just 125 point basis cut. Its cumulative easing thats going to lead to a more Monetary Policy, which leads to easier financial conditions, right . So in some ways, this fed is want to be proactive, we want to get ahead of any sort of weakness and thats why i think they got those insurance cuts in july and september and i think if they continue to see hints of weakness, continue to challenging,ok be they are going to continue to ease to kind of buffer against that. So obviously, this all happens joe in the context of other central banks, waiting for europe and additional moves there, quantitative easing kind of moves. That putpressure does on the fed and to brians point reasonse moving for even beyond the u. S. Economy. Thats right, and theres world,s around the right . So the Global Economy is slowing and obviously and the fed isnt the essential bank for the Global Economy, but the u. S. Is a big part of that story so if a weaknessto see abroad the concern is its going to spill over into the domestic economy and they really want to against that early on so that you dont actually lead since the fedon, that has less ammunition this time around compared to prior cycles. Its easy to your point, its easy to remember you is this hugee u. S. Economy, but the world is bigger than the u. S. Is as a whole, and so i mean and so if theres a slowdown globally, thats going the u. S. Domestic. Theres really no way about it, you have all these statistics of profitspercent that u. S. Companies get from overseas, so it just comes it fact that thethe fed cant go at it alone and moved at allhasnt from their unconventional policies, whats the fed to do . Trenchantose observations that we pay them for. That point, though, its a serious point. Any weakness abroad offset any weakness here at home or any strength, vice versa . It runs through the financial channels. Say thatpeople will the u. S. Economy is a big closed economy because 70 is theres clearly trade interactions there that are going to slow it down. Because of the Global Financial weakness abroad thats going to spill over into the see and we already start to that, negative yields abroad and thats driving a lot of the flows into the u. S. Pushing down on yield in the u. S. So the fed, you know, lets say that there is a downturn, they want to lower rates. Do . R that, what do they if the curve is already so flat, how much of an impact is that going to have . Theyre really in a tough spot right now, given that the stance of Monetary Policy downside. S to the and joe, i want to and brian you may have thoughts too. This, weve heard from the world trade organization. We know trade friction is having already. I was looking recently at the baltic dry index and a really precipitous decline, right . We have seen just a sheer volume come way, way down. We look as with the ism and think maybe this is a blip and doesbound or what point this all start to feed into a picture of Global Manufacturing decline, Global Consumption decline . I think this is showing that we are slowing gradually, right . Off a cliff,ling but there are signs there that the Global Economy is slowing slowing. S. Economy is its not just the ism Manufacturing Index that declined. Nonmanufacturing measure, as well. There is broad based slowing and theres concern that going to be spillover effects into the u. S. So were just getting brian announcement that the new york fed is adding overnight extending the operations. Were we anticipating this . Its kind of interesting, right . Clarita said yesterday expect to hear something about the Balance Sheet after our october meeting so that meeting is on october 30th so basically, what theyre signaling here is we want to support viational this temporary operation through the end of our meeting and most likely i would guess at the end of their meeting, end of october, theyre going to say were going to start gradually increasing the size of our Balance Sheet to add excess reserves to the system, maybe little tooing went a far, and we need to get it back up and running so we can control shortterm rates. Brian always ready with an explanation, thank you, perfect timing. Guests. O both of our joseph song of bank of america and brian of Bloomberg Opinion. And coming up in fewer than 30 minutes were going to be the fed chair powell in washington, d. C. Coming up right now, were sticking with the september jobs slowdown. U. S. Especially feeling the pain, the Permian Basin where everything from getting hit. Ls are well head to houston next for that story. This is bloomberg. Tory. This is bloomberg. This is bloomberg markets, vonnie quinn in new york. And im amanda lang in new york. Signs of a shale patch deceleration are evident in the the radio. Om ads on we have with us david, so david obviously, this is a big change the kind of doubledigit increase in things we were seeing years ago. Whats happening for shale . Its really shocking to see it in all places the Permian Basin. This was the Growth Engine for the u. S. Oil industry. This was really the first to the Global Oil Industry out of the slump that started in all these oiluse explorers discovered that you could get oil out of the Permian Basin a lot cheaper because pancaked layers of oilbearing rock and you go right and in get your oil out goingheaper than offshore, so the Permian Basin was the hotspot and so it almost fast where it was expensive to get a hotel room. Three, 400 a night during the boom for a Double Tree Hotel room, and now, comingotel prices are down a lot because youre not having workers come into the quite as often, partly because youve got drilling and fracking coming down so as drilling and fracking is dialing back because Oil Explorers are pressed by their investors to show more profit to shareholders rather than put it back into the drilling, youre having the whole drilling engine dialing back and thats having ripple effects to all the other suppliers that supply the oil industries. Thatsve got caterpillar now feeling the pain a little bit. Youve got a chemical company, provides the chemicals for fracking, theyre feeling the effects, and now, even as far as stations, theyre not hearing the job commercials waves. On the radio air now, permian employment is still growing, david, but at an anemic 0. 7 . At home prices are still increasing so are we on the cusp of whats about to be a downturn . Yeah, thats a very fair point to make. Plunging. Exactly were just starting to see the very first signs ever of so were still growing, but were growing a lot less year. Hat we were last and so yes, were at the very cusp of it. One thing that helped us last was frackingtime was coming down and, all of a sudden, it had sort of a resurgence for just a little bit came back down again. We wondered if we might see that again this year and it has yet yourerialize so all doing is just sort of having frackdown, down as far as crews being cut. Its leading to the potential that as Oil Explorers want to budgets and maybe theyve maxed out how much theyre going to spend this year a negativert of effect for going to the holidays as we end this year. Theo and obviously, one of interesting aspects is how fracking has played into the picture, right . Plentiful supply, oil independence, Energy Independence has, of course, depressed prices everywhere. Could this be the beginning of a trend that starts to reverse that . In other words, if we see if there iseclines a price at which fracking make much sense, do we see help for opec because of it . To wait and see just how much the Oil Production in the u. S. Is affected by this drilling and fracking because as of so far roughly 19 drop of drilling in the permian and yet production has still held flat a question of as we get better and better at drilling and faster, how much do you to take off the oil rigs for Oil Production to be affected . Atause were getting so good getting oil out of the ground that we dont need as many rigs as we did back in the 2014 boom time so its been really challenging to see when you would actually see u. S. Oil by thison affected cutting in oil activity in the oil fields. Right, and you would have companies and even the hospitality and the Healthcare Industries would be able to forecast this a little bit better, but clearly, its not an easy thing to forecast, david. Seeing a migration from the Permian Basin yet . Were talking about 55 million here. Yeah, i dont think we have evidence yet that were seeing a the permian as far as oil drillers finding a place to go. I think if anything its just a pulling in the horns a little bit and just saying this is the be. Spot we can we spent a lot of money to invest in properties here. Haul,re here for the long but were not going to be as active as we used to be. Youre not seeing tangible evidence that a massive amount of spending is moving from the offshore, for example. Its just sort of all subdued now. Now, as far as workers that used to work in the permian, there is the possibility that those guys in to get those jobs are just not coming back to the permian anymore. Maybe theyre staying back at home in florida and looking for lobs elsewhere and not trying to look for jobs anymore in the Permian Basin. Its a great story. Also your latest story its getting harder for shales producers to borrow from banks. A great slew of stories there bloombergs david. Coming up, they were titans in day, devouring corporations and upending entire industries. So what went wrong . This is bloomberg. Is bloomberg. This is bloomberg markets. Im amanda lang in toronto. And im vonnie quinn in new york. Powell will make remarks at a fed listens event in d. C. Ngton, we will bring you those comments begins. N chair powell meantime, in recent years weve powerhouses upend entire industries with their radical ideas. Fear and envy until it all came crashing down. Edning me now is bloombergs hammond. Who are these three behemoths fear, envy and greed . Two of them still do, you have 3g, the Brazilian Firm that done a lot of big deals in the food space, they did kraft, king, tim hortons and isaac bush and you have soft uber, with we work, with many other situations, last ofmobile and the the trio i think is valiant because valiant for a period of the sort of untouchable force in the m and a market. Every auction,at acquired a tremendous amount of companies and blew up fairly spectacularly, crashed and burnt a lot of very smart investors, acumen. Theome of them were architects of that, too. Its interesting and one name is rbi, off for 3g owner of tim hortons that canadians have been familiar with. From a stock point of view, it youturned out, but when drill into whats gone wrong here, is it that the models worked they worked in the past but that isnt a great predictor of the future or has Something Else changed about the things . re financing well, i think if you look up 3g and just the way they went had a verys, they aggressive model, they would acquire companies, they would cut costs significantly, but reliant on being able to go out and do more examinations to keep growing and tried the biggest deal that they had ever attempted which was a hostile takeover of unilever, they said no and war buffet said i dont want to do this, i dont want to be part of deals where you have an unwilling party on the other of reallyhat kind stole their momentum and it meant it was impossible for them do big deals where you dont have a winning party. Isnt gullibility a factor, ed . Gh, because to all intents and purposes, investors are buy a story. Sometimes, that story works out exactly the way it was intended and sometimes, its just all air. Yeah, more often than not it is all air. I think its a really, really good point. Verynk the market gets besotted with certain ideas for a certain period of time and these three companies i think empblematic of those ideas, valiant for a while, as i said, could do mow wrong. There were a lot of other specialty pharma companies, rose to extraordinary levels if you look at anything on a historic basis. When valiant went down, they went down. 3g, these rollup companies that were dependent on going out, and costs, zero based budgeting, whatever you want to call it, theyve suffered since and soft bank, its a very interesting thing. The question for soft bank now toxic in terms of anything they bring to the market right now . Automatically going to say we think its worth x minus whatever. Because your track record now bad in recent times. All right, ed hammond always story. O have you, great thats bloombergs ed hammond and fed chair powell will make opening remarks at a fed listens event in d. C. You live,ing that to you can catch those comments live on bloomberg. From toronto and new york, this bloomberg. Stuffiness, to the proceedings. As we kick off the 12th of 14 events, we hope todays meeting is anything but stuffy. Candidate serious, yes, but not stuffy. The Federal Reserve banks and the board and Holding Events around the country as part of the comprehensive public review of our Monetary Policy strategy tools and communications practices. Almost all of the events have been open to the press and live streamed on the internet. The breath and transparency of the review are unprecedented for us. One reason we are conducting the review is it is always Good Practice for any organization to occasionally take a step back and ask if it could be doing his job more effectively. We must pose that question not just to ourselves because congress has granted the Federal Reserve significant protections and shortterm political pressures. We have an obligation to clearly explain what we are doing and why. And we have an obligation to actively engage the people we serve so they and their representatives can hold us accountable. We have invited you here because we want to better understand how monetary loc effects the lives of the people your organizations represent