Transcripts For BLOOMBERG Bloomberg Surveillance 20140911

Slowest in three years. You add it all up data that is subdued. Initiale u. S. , we get jobless claims. We got center low nonfarm payroll number last friday. At 9 45. Index coming up. We should mention in spain, catalonians are taking a page out of scotlands paper, a prefaceibly we will address that with ian bremmer. Was 9 11. S ago today that is when the terrorists struck the World Trade Center and the pentagon. We will have coverage. The day, particularly for those in new york city who witnessed the silence which is still challenging. Heres a shot from downtown. Worldwide, a recent visit new york city, boy, have they done a job. It is spectacular. This is really the first year i would say where it has all come together. It is open and everyone can actually go there as opposed to being a construction site. There is less of a sense of payment, you dont panic, you dont belong here. Slowly trying to get back to some sort of normal place. The president visiting this morning. Lets do a data check. I will call it a careful turn to the market. Futures down. Yields churn. Crude is lower. Lets move on to the next screen. That was up yesterday afternoon. Continued weak yen. Ruble, continued weakness. Crude well under, down 12 now. Incredible. Without the concern, especially in the middle east and risk gently to iraq supply, theres been no evidence of that. Heres a longterm chart, so much of what we will talk to ian bremmer about with our two hours this morning. Out to today. Here is opec and all the politics of the 1970s and 2008 andhe balloon in then we rolled over. That is a cool chart. That is the inflationadjusted price of oil . Adjusted for our rising wealth. We dont have the pain here we had in the 1970s and 1980s. Ian bremmer will steal this for his next book. Lets look at the front pages with scarlet fu. President obama ordering an expanded military campaign against the Islamic State in a nationally televised speech last night, singer will be american airstrikes in syria. Plus, another 475 advisors being sent over to the grade and ultimately destroy the Islamic State. It is a longterm challenge that could very well put american lives at risk. As i said a few moments ago, i watched the speech and he was far more resolute by my own reckoning than he has been in any of the previous speeches ive seen over the past, i would say, here. He was very focused. The u. S. Indicating saudi arabia will host a training and provide other support as well. We will check in with our White House Correspondent shortly for more on the president s speech. Our next story, a blow to supporters of the Independence Movement in scotland. One week before the vote, a new leading. S no is last week in, another poll showed yes was ahead. Interesting, banks and other companies have to make plans are ready. Rbs, lloyds said they plan to move some operations out of scotland. Sterling got a bid on the daily record poll out of moscow glasgow and these images from scotland are important. One is from david hume memorial, which sits south of the edinburgh castle. Those images show those linkages between london and edinburgh. It is a battle. It is an emotional issue and we will discuss it further with ian bremmer later. Our third from page story, alibaba. Ipo whento price its we for today, likely to be the biggest ever in the u. S. There is a lot of speculation. Adam, i remember you saying alibaba spent 4. 5 million . On acquisitions. Andhey are to have the cash are making acquisitions, why do they need to necessarily go out and raise 20 billion more or is out . Ma effectively cashing other companies have done that. I dont think that is due to alibaba. I spoke to Matthew Levine yesterday and he made clear the tone coming out from this institutions is of a wellrun business. That is the headline. That is indication so far. Who will they buy . Some say yahoo is on a shopping list. Today is the fourth city . Who had the best lunch . It is all over chicken. We want to point out here on bloomberg television, were a special thanks to the team at bloomberg west, taking a look at alibabas rise from small internet upstart in china to one of the most viable Tech Companies in the entire world. They sell more than amazon and ebay combined. It blows my mind. This scale is massive. Were the special tonight at 9 00 p. M. Eastern time. With ourget started interpretation of what the president said last night. Phil mattingly is in our Washington News bureau. He sifted through the seams and back stories. What was the backstory last night . Ive Read Everything inside about this. What was the sweat factor as the president spoke to the nation . This has been coming together really over the last couple of weeks. You saw in the stone yet, wales last week, working very hard as top devotees working hard on the coalition theyre putting together. You have seen his top deputies deployed to middle eastern states, working on the original coalition, saudi arabia being one of the most recent that gave a commitment yesterday, a crucial commitment, to a strategy forward. When it comes to the speech itself, they were looking at what happened with the Iraqi Government and what they thought they could do. The president made clear last night that he is expanding airstrikes in that will include syria. Moreover, ive made it clear we will hunt down terrorists wherever they are. That means i will not hesitate to take action against isil in syria as well as iraq. This is a core principle of my presidency. If you threaten america, you will find no safe haven. A little bit of backstory on the willingness to take action in syria. Senior officials i spoke to last night in the lead up to the speech made clear it is not an if it is a when. There is no more reluctance. They are ready to go. What is the republican response you witnessed . Cautious. Look, there are some a dynamics at play here. Were 55 days out from the november election. They obviously dont want to look supportive of the president in any way shape or form but in general, they support the idea of a more robust response to the Islamic State. They support the idea of a more robust u. S. International presence. There is going to be some backandforth on capitol hill this week regarding specifically funding for training and equipment for Syrian Rebels, but in all, more or less, republicans will get behind this and democrats will get behind us. Thank you so much. Joining us this morning, Benjamin Mundell of citigroup. Hours,r our entire two ian bremmer joins us on this september 11. I am thrilled to have you here. Parsing theesident distinction between iraq and yemen. Ieffort that we will do dont care what anybody says, putting soldiers and our resources and harms way. Is it tilt toward a yemenlike effort or iraq effort . That is probably what he is trying to do. I take a lot of republicans will say, isnt this the war on terror were been talking about you are doing much on . I thought the speech last night was good, but i also do not think was very different from the nonstrategy that he had a past couple of weeks. By the way, i dont think that is bad. I think obamas policy on isis has been measured. One of the most clear things he said yesterday is isis is not a direct threat to the United States yet. In other words, in the last couple of weeks weve seen all americans believe isis is a threat to the United States. We have to take amazing action against him right now. He is basically saying, we are going to destroy them. He said that before. Kerry said that. He does not want to be out in front angela coalition is a put together. I assure you more mickens will get behind the strategy of receipt gulf arabs are writing checks for and other countries that goes to the coalition. To find the coalition he mentioned. The coalition is coming together. A work in progress. Looks one of the reasons he said it is not a question of whether but when the u. S. Is going in syria, it is also not a question of whether but when the u. S. Is going to not just to grade but worked to destroy isis. We are not destroying isis today. Part of the reason is because isis is a much bigger threat to a lot of other countries, both in europe and more portly, the middle east, than they are to the united face. Obama is saying, yes, were going to do more but were not going to make these commitments in a firm way, transparent and clear way, without a strong coalition. I think that is the reality. That is the policy that most americans want to see. If the United States had come out and taken a leadership role with a strategy a month ago, allies would applaud and they would sit on the sidelines. Everybody else would be waiting to criticize. Now you will have more coordination. I think that generally bodes well. Such a smarter policy than were seeing that on russiaukraine. You mentioned isis is not a direct threat to the United States yet. Are there parallels to be trumpeting what the president is doing and syria and iraq with what president george w. Bush with iraq in terms of going ahead and doing a preemptive strike and Saddam Hussein . Is interesting. I think there are. Theyre going to be so many people you saw the wall street journal saying cheney is right. Politics will be played with the fact obama is actually sending folks back on the ground in iraq. Boozed consistently, no on the ground. We will have 1600 people on the ground in iraq. Apparently, they are not wearing boots. Going to have americans in harms way. Youre going to have to start the spot the targets. We will see americans get killed. I dont want to say that, but it is a reality. Obama is going to have to prepare america for that one where the other. I appreciate your comments. Dollaryen, 107. 01. About 6. 5kest yen in years. Our twitter question of the day we will be right back. Good morning, bloomberg surveillance William Gross will join betty liu in the 9 00 hour. Global slowdown, tough economic data. A resilient america. Bill gross at 9 00 a. M. This morning in the loop. This is bloomberg surveillance Dollar General taking things a step further in the Dollar Stores war. Trying to win over Family Dollar , taking its offer directly to shareholders. Speaks to the Consumption Patterns in the United States, where the middle class retailers that cater to that class are being pushed out, and you have highend retailers on the luxury side and the low end, whether it is warmer or the Dollar Stores, trying to go after this Customer Base with or is it a lot of room for margin. If we look more broadly, the pattern is generally pals live positive across the spectrum. Highfrequency data is shown consumer fairly easily and. Highend and lowend consumers. Degree till stores have been posting big backtoschool sales. That historically pretends very good christmas seasons as well. Consumer confidence has been a cycle high. Automobile sales have been very high. There is a confluence of factors that do show some strength in the consumer sector. Jeffwant to bring in mccracken who covers m a for us at bloomberg news. This particular threeway takeover battle in the u. S. Dollar store market has a lot of elements to it. Your focus on the antitrust aspect. What is the backstory we need to know . A couple of things important to know is Family Dollar was hoping Dollar General months and months ago would take a run at it, and the never seem to be able to get to a deal. Family dollar turned its eyes to the number three guy, dollar tree, and came up with a merger, which seem to surprise Dollar General. Now Dollar General is making a late entry. It is all about antitrust. Family dollar feels they know the offer from dollar tree is lower than what Dollar General is offering by five dollars a share, so several hundred million dollars. Theyre worried there is huge antitrust risk. Roughly a thousand Dollar Stores are in the same threemile radius as a Dollar General store. They are worried any deal they try to pursue there would months and months from now get blocked by regulators and it would be left with no deal at all and dollar tree would have moved on and not in a position to do this deal or bought some of the else. What indications has the federal trade Commission Given that would be more aggressive in reserving competition . It is a big part of the story. I would say, i dont have firsthand knowledge, but what i know from talking to people close to Family Dollar is, they feel the federal government is going to be pretty aggressive on this end. The threat, what Family Dollar once from family Dollar General is a whatever it takes clause. They will agree to the deal and do whatever the federal government tells them to do. The problem if your Dollar General and you agree, you give so much regulation to regulators. Jeff mccracken, thank you so much for giving us the backstory on the Family Dollar russian us a family, but Dollar Store Wars taking place right now. How theconomist view on low to middle in consumer is doing . Well, i think generally speaking, fun a metals are improving. As i said before, that is cross the spectrum. Disposable income measures are up 6 this year. Where you see a difference is in net worth. The wealth regulation over the past 12 months has been about 10 trillion and most of been driven by heis that is the highend. That doesnt look for people having trouble making ends meet. Were ecb distinction is in where youket see the distinction is in the asset market. The income statement of the households, yackley see a lot of progress along all sides of the spectrum. Thank you so much. Coming up in the next hour, were going to be focused on Foreign Policy with john hellmann. He and his partner were discussing their adjudication of the speech last back. Their new show, with all do respect, is going to be herering october 6 right from airing october 6 right here on bloomberg television. We will meet him shortly. This is bloomberg surveillance good morning, bloomberg surveillance good morning this september 11. Here is my morning mustread. This is 73 years on from pearl harbor. You wonder where we will be in 2074 on september 11. Here is where we were three days later. 2001. With me, dr. Ian bremmer. I think the point of his bestnts, we really had the outcome. Everything considered with our ugly american process, weve done a phenomenal a political job of moving on 13 years. I think that is right. I think we havent politicized terrorism in this country. We saw that last that with the president. Is difficult is governing is in this country right now, as partisan and divisive as we see congress and broadly speaking, everything happening in washington, i dont think you will play politics with the the combataving isis. They will hit obama hard, but they will be bipartisan support in congress for that. Are how a kid, stopping on the summer seven. Everyone said, this is our pearl harbor. Will scotland vote yes or no on independence and what is the Ripple Effect on other secession movements around the world . We will discuss coming up on bloomberg surveillance good morning, this is bloomberg surveillance is in a southrius African Court right now, waiting to hear his fate. The judge is reading a summary of the trial. He is accused of fatally shooting his girlfriend on valentines day of 2013. At least 35 people were arrested in ferguson, missouri late last night. Demonstrators said they wanted to bring a rushhour traffic to a standstill, then entered the interstate. There were ultimately blocked by police. This is the latest protest since an officer shot an unarmed black teenager last month. The dramatic new twist in the saga of the nfl and ray rice video of him assaulting his then fiancee was sent to the leak five months ago cording to the ap, the commissioner Roger Goodell insists nobody saw it earlier this week. What happened . Former fbi director Robert Mueller has been hired to conduct the investigation. Tom stirling caught a big yesterday with a better pull out of glasgow. That is better than good news for the Prime Minister of the United Kingdom. Good news for an edwards in our London News Bureau as a gives us a seachange in scotland. Tell me about the undecided voters in scotland. Who are they . A number of into categories. Looking back at some of the recent polling, some of the undecided voters are women, typically working class voters who have been recently increasingly swinging over to the nationalist party. Women voters were shown to be more undecided than men. That is why weve seen a bit of a change in the tone of the campaign. It has become a little fluffier. The Prime Minister saying, please, dont break up our family in front of all of the papers. Right now we have the leader of the scottish party, alex salmond speaking in scotland, clearly enjoying the International Stage is grilli walking. He says there on the cusp of making history. His message to the scottish people, they have their destiny in their hands. The recent poll puts the no camp ahead by six percentage points. They do look very tight. Neither party giving up the campaigning right now. There will be more polls. One week to go into this referendum. There really has only been one pull him and that was on monday, thats just a people has flippede it back. Does anyone believe at the end of the day there will be a secession . These polls start to become a feedback loop is established, isnt it. The polls we saw the beginning of september that showed the yes camp was gaining ground very fast and one case, explained a sure they were in the lead. That feeds back into peoples voting intentions. If youre planning to vote for independence just as sort of a protest vote, perhaps you are unhappy with the conservativeled government in london because the conservative come a more Rightwing Party in the u. K. Only has one westminster scottish or other parties on the left have many, so if you feel unrepresented, he would use it as a protest vote then you saw the yes camp could win it, you rained back on your enthusiasm for independence. There will be more polls. Anna edwards, thank you. Ian bremmer, i dont know where to go with this story. Let us start with the basic idea. It seems to have an infection across europe. In thebarcelona Northeast Area of spain getting a bit of the scottish disease. With what were seeing september 18, ken has spread to europe . Sure, it can come if they vote yes. I dont think they will and we can talk about why, but theres no question if you are spain, for example, in the scots vote yes, the impact that is going to have on the ground, catalano will be huge. That means they cannot allow the scots to actually get into the eu. The response against scotland would be sharp. Why will they take the day . Cameron is doing every thing possible. They will actually dumped bucket of haggis on his head if they decide to stay the union. Im lying about that. Theyve done ever think short of that. They understand the brits are taking this seriously. A few weeks ago, they were going to the motions, but they did not believe a yes what was possible. This secession would of been an economic disaster. They can this close to voting for independence. The scots can do it as well. If youre thinking about a yes vote right now in scotland and are still undecided because, yeah, you like alex salmon who soanya a lot of things that some greater youre not sure, yeah, you believe ultimately you can stick with easterly but youre not sure, you believe to stay in the eu but are not really sure, those undecided votes are going to translate into no votes. I think it will not be as close as people believe. I think will be a fairly go onve vote and we can stop talking about scotland. Maybe move on to catalonia. The backdrop is interesting. The first was icelands break from danish rule. The most recent was the creation of south sudan. 27 of the independence boats have been in favor while 23 have been against. No, if the final vote is a doesnt best of the campaign for the next secession vote . There a lot of decentralization. You cannot have the kind of economic differentiation between the periphery and the core. You can have the kind of hardship that you have been extrinsic in places like spain and even italy and the kind of austerity and not expect the small areas will want to break away. That is precisely why the secession movements are picking up steam. That is also why the europeans desperately have to Start Talking about stimulus more absolutely. It is flat gdp. I will go with that. What is your United Kingdom desk say about this battle in scotland . As september 18 draws closer, the realities of what it means to go through a long period of negotiating independence will become very clear and the gdp . Potentially dampen gdp. But how do you decide on dividing up the assets . What currency will they use . That is key, isnt it . The script. P up if rbs and lloyds live scotland, will citigroup enter . No comment. We put you on the spot, on. Come on. I heard a yes vote. I want you to try to tackle this in thein theory, the Oil North Sea would go to scotland. That is a huge asset on the Balance Sheet of what would be scotland, huge loss for england. Can you comment on the impact of that . Production levels have decreased and will continue. Scots have questions about what they would do with her debt and how to sustain their budget. The uncertainty for scotland is overwhelmingly on the negative side with this vote, as it should be. That is not counting the political backlash that will necessarily get from the eu. Fairpoint. I want to bring up my morning mustread which ties this in. Professor at Princeton University writes about how the rich role and says what i found interesting, the yes votes clearly targeting lower income, lower wealth scots. Women, the minorities, those were not part of the battle u. K. Economy. You can make the same argument with some of the sea party in the United States. The question is, is it enough . My view would be, like in the developed world even for the working classes is nowhere near as dire as it would need to be to actually have the kind of tumultuous sense that you are seeing from the arab spring, for example. Why . Middle classes that fall off in places like egypt, they are starving. They will revolt. Some of them will radicalize. I dont think we see that in the u. S. Or scotland. We might see that in greece. That is the question. Will some of these developed targets becomes emerging markets . Over time, it is possible. This is important. This is out of the european union. They announced sanctions will go into force tomorrow. Exact suggest this is headline of the bloomberg terminal. Terms for review of sanctions. Sanctions on russia to enter into force tomorrow. You see it immediately with the fourday wrubel chart. This is up near record with us. Were really touching through that. Weaker russian ruble off the bloomberg terminal. This is a shock. They have put off making any decision about an earlier this week. We thought it would drag out. You can understand why given the fact it is getting colder in the european state all that russian gas to heat their homes. We will talk to ian bremmer about this. Looks good thing he is with us. Copley to in the middle east. The former soviet union. What about east asia . The likelihood there. Good morning, bloomberg surveillance it moves the currency market, breaking news, the european sentinel enter sanctions into force tomorrow. Say no intersections into force tomorrow. The russian ruble boost a new to news moves weakness. A number of ways to mention the ruble. Ian bremmer with us. This was a surprise. Arent we worn out with sanctions . Can sanctions work at this point . Im worn out, because theyre not working. That is different from us. Europeans, surly the leadership on a disease sanctions certainly, the leadership wanted to see sections. With the ceasefire holding, albeit tenuously, several european states and, wait a second, we want to see how we can get away from the sanctions. In the financial times, receiving less natural gas from russia. Will we begin to see russia use hydrocarbons as a russi weapons against sanctions . In november, you start needing the gas that comes from russia through ukraine to just about everybody. It is really hard to say the russians arent going to use that as a huge lever, especially when theyre getting hit so hard and the sanctions fighting the russians. I think it is tough and i think if this continues through fall, and i suspect it will, youre going to see the europeans start to break apart on sanctions. This is probably this morning as the High Water Mark for the europeans in a collective way for sanctions. There it is from ian bremmer. Ruble weakening. The cemented a single best chart is a graphical tension and military conflict, but this time in east asia. This is a new poll from the china daily, staterun newspaper. A japanesestyle profit shows the majority of Chinese People surveyed expect china and japan to go to war in the future. 52 expect a is a military conflict in a few years are the future top two slices. That is up almost one percentage point from a year earlier. On the left side, the japanese, the proportion is smaller. 29 this year versus just under 24 last year. Let me say as bad as that sounds, a Record Number of chinese last month actually visited japan as tourists, more than any other month because they are not going to malaysia anymore. They have to go before this war, right . Or see what it is going to be like when they take it over. The fact is, they hate each other, but theres also been more integration economically. It is warmed a little bit on a persontoperson basis, and economy cases basis. Lets say they are not missiles that go back and forth, but what about Economic Warfare . That is a lot more plausible, isnt it . It has much more to do with chinese antitrust, which is hitting western multinationals more broadly as in gauging their , andconomic transformation anticorruption. It is harder for western corporations to invest unmolested in china these days. Can i say the reason that in bremmer is here is he is more cynical than i am . If you want to check it out before they go to war you are more cynical than you usually are. It is so freaking early. On whether this in a modesty animosity effects trade flows . The bark is worse than the bite. A good example, in october 2012, there is a spike in tension between japan and china, geopolitical tension. You still have a brandnew imports of japanese automobiles on the streets of beijing. Some had a sticker that said, ours. Islands are h i know took my parents 20, 30 years before they bought their first japanese car. The speech that president obama may last night, the question to you, our twitter question of the day accomplish what he needed to accomplish . Tweet us. We will be right back with the feisty ian bremmer. This is bloomberg surveillance lets get you some company news. Not everyone is celebrating microsoft possible purchase of the Swedish Company that makes mine craft. Macs, ipads, sony playstations, not microsoft devices. Videogame maker activision, the company says this weeks release marks its biggest lunch yet. Sales have topped 500 million. Destiny was launched worldwide in more than 11 midnight openings. Debuts in france, italy, and the netherlands. It has raised 31 million of Venture Capital as it tries to bring bitcoin into the mainstream. That is this mornings company news. People traditionally have spent less as they retire, but not baby boomers. Says our guest host. He says theyre wealthier than previous generations and will spend more. Ben, im curious. First of all, where the wealth is coming from. The wealth is coming from a broad array of sources. It is coming from equities, the Housing Market recovery even though housing is still 15 percent off its highs . Thats right. Inh an increase of 13. 4 2013, so we saw this longawaited recovery that did a lot to boost the assets of not just the wealthiest, but a broad array of homeowners. So we expect that to be a boon to Consumer Spending going forward. Eventually, tugofwar. Have aone hand, we do tendency or people have a tendency to reduce consumption going into old age. The average Consumer Expenditure of 75 years old is half as much as 45 years old. Even though economic theory says people smooth consumption over their life cycle in practice, it is a big downgrade. That is the demographic fear that gets instilled in many. But it is different this time around . Thats right. In the u. S. Company is different. The pattern of assets across age groups is changing rapidly. 1950s, this idea of the lifecycle hypothesis where households can relate assets through middleage and then run them down into old age to finance consumption, consumptions moves. That gives rise to distribution of assets is inverted u shape. In the u. S. , that is been distorted. In the 1990s, it was an inverted u, this days, the older households are just much more wealthier the number households. Could your thesis play out in japan or europe for this event aging demographic faster than we have . Japan is about 20 years ahead of us and europe is about 10. It is mixed. In europe, we also see signs the older households, their wealth has been increasing at a fast rate the number households. In japan, a little less pronounced. Japan serves as a cautionary tale for country on the horizon that is not quite fast you dont see that. On the one hand analysis, visit the older people are wealthy for that younger people are poor, not accumulate in fish not accumulate in . Well hasdian household been increasing in absolute terms, albeit slight face for the youngest households. 02 Boston College and a fabulous work, anyone percent of americans are buying just behind a ball and a retirement plan. Formula modeln isnt there. We need a change for future prosperity. Ask if he asked me to a lot of americans are laughing their not so interested in supporting the kind of u. S. Internationalist engagement historically, they dont see the benefit. They dont think it will benefit from. That is hard. Quickly, is there a little bit in other words, so many really uber wealthy people that they are skewing it . The survey Consumer Finance shows the same distortion of Household Net Worth for the median household within each age group. It is action a much broader phenomenon than that. Very good. Thank you so much. Continue withll us and our next hour on the september 11. They may a report right now. The idea of the ruble. Ms. On ruble off that you sections announcement. Coming up, we will continue to discuss overall is Foreign Policy with ian bremmer, which brings us to the twitter question of the day, how effective was the president speech last night . Did he get done what he needed to get done . He and his bloomberg surveillance in the loop and in an effort to take out isis. The september 11, a vibrant new york city. Isd morning everyone, this bloomberg surveillance. It is september 11, im tom keene. Our guest house for the hour, ian bremmer. Lets get right to our morning brief. Overnight evidence the Global Economy is slowing. The International Agency cuts its Global Oil Demand forecasts. Consumer price index falls to 830 month low. Initialthe u. S. , the consumers in comfort index comes out at 9 45. Kroger and radioshack both announcing earnings before the market. Catalonians are taking a page of scotlands book pushing for a vote for independence. Catalan dayay. 13 years ago is when the terror struck the World Trade Center and the pentagon. In some ways we have come a long theand some ways president will be in new york city today after his speech. Let me do a quick data check, i will rip up the scripture. Euut 20 minutes ago, the said they will put in sanctions force wasnforce in the phrase that was used. Tosian ruble going down 35. 71. That will be interesting to follow through the morning. A warning shot across the bow of the cable industry. Sony reaching an agreement for its planned webbased television service. Trial the service by the end of this year. Scotlands flirtation with independence. Rbs and lloyds could decide to leave the country no matter how the vote goes. Ana botin becomes europes top banker. Her father died earlier this week of a heart attack. Philts go to washington, shortery, looks at wars, except the word war wasnt used. Why is this a war . A semantics issue. This is a war. This is a longstanding engagement that the president laid out. S is a president that speech that the president didnt want to give. Strategy of arming the rebels is something he called a fantasy just a few weeks ago. That thehave seen is facts on the ground made this unavoidable. Kiesel isil is a terrorist organization and has no vision other than the slaughter of all that stand in its way. Our objective is clear, we will degrade and ultimately destroy isil. Strategy includes multiple parts. Arming and training syrian ,ebels that have been vetted there is the International Coalition put together on the eu ,ide and with saudi arabia being the most key. Thosee also going to see expanded airstrikes. Senior Administration Officials the, the president opened door to the authorization, but there is no question at all that those strikes are going to happen soon. We pose our twitter question to the of the day. Was the president successful . What are they telling you . Publicly, republicans are wary of giving a hug to the president this close to the onction, particularly Foreign Policy and issues they feel he has been weak on. Aides,ed to a number of and they feel like he hit the right tone. Have a robusto willingness to engage internationally. They feel that while they may point,sagreed up to this he is in a position now where they have to follow the Islamic State threat. Publicly today, you will hear a lot of lawmakers criticize the president for his broader Foreign Policy. In general, people are in line during line. Dr. Bremmer, quite a speech last night. Peter baker in the New York Times calls it a grueling generational struggle. Begins struggle september 11, 2001 . It has clearly morphed. That was a good speech by obama. We republicans response is, want a strategy, not a speech. That implies they recognize the speech was good. There is no question that this is a war. It will be going on for a long time. 1500 americans will be on the ground as advisers. At his boots. They may not be wearing them, but americans will be in harms way. You mentioned the republicans, someone that would support the president is Nicholas Kristof and the New York Times. Comment, his if isis were top priority for president obama, if he believed it was a Critical National Security Threat and intended to destroy them, then the United States would be sending a fighting force on the ground to iraq and syria. That is clearly not what we are doing. This is not that kind of threat to the u. S. Tone. Lance is the right americans are reluctant but we also want other people to support us and write the check. Thats why the americans are here, not leading from behind but not jumping in. How will damascus interpret this speech . They have to like that the destruction of isis will include people fighting on their territory. Obama is saying we will be providing training for Syrian Rebels on the ground in saudi arabia and we will be providing military support. That is something obama said he was not going to do years ago, months ago, even weeks ago. The reason obama calls isis, isil, when everyone else calls misys isys, syria. He doesnt want to bring attention to syria. War like its not a standnixon said, when you in the middleoftheroad you get hit from both sides. You just nailed it dr. Bremmer, the branding. Does our pentagon care about branding . If theyre going into harm way do they go with a Clear Mission . It is a small mission, a contained mission. The destruction of isis, which the president has been talking about for weeks, is something we are preparing for the next president. Preciselyr republican because it is not priority number one. It is not a direct threat to the United States. Most americans happened to the and that position. John mccain may not be. Do investors care about the branding of isis or isil . Im not sure they care about the branding, but they do care about the threat. We consider all of the direct or indirect threats, at some point they have to care about that. What does that do run the retaliatory perspective toward he u. S. The second one that we have to consider is the radicalization of foreign fighters. Reacting relax now but that does not mean it will remain the status quo. The dayer question of as we try to mold this over with ian bremmer and Anastasia Amoroso. Thethe president rallying country last night . Whether it is iraq, or the russianukraine, have all of it here. , willerg surveillance be right back. The World Trade Center this morning, this is bloomberg surveillance. Tom keene scarlet fu and adam johnson. But get to our morning must read. Might is out of the wall street journal by dan henniker. He says the following he goes on to effectively say that has been absent for so many months and quarters. If president obama is not able to bring republicans and democrats together, to accomplish anything, why do we think he is necessarily able to bring other countries together . Isi think it is because isis recognized by an a lot of countries as being a direct threat to them. If obama, instead of having a no strategy strategy, had come out at the beginning and said we are going to lead, were going to go after them everywhere, American Allies would applaud and do nothing and everybody else would be waiting to criticize. A policy that americans will get behind for the longterm, and obama knows that. I agree that president obama has not shown a lot of great leadership on Foreign Policy, but this time he has done it right. Can saudi arabia focus east or the Islamic State. They need to show that they are not the ones behind isis. That it represents a threat to their way of life and a threat to the continued stability of autocracy their f16 flying next to our f16 is one big so what. According to whom . Know, butl i dont what will they do . They need to provide where the rebels are, in the first gulf war you had the saudis and the kuwait is sponsoring it. The american taxpayer does not want to be sponsoring a war against isis for many years and obama needs to get there. Up with ammer, coming look at diversions around the monetary world. Bloomberg surveillance, im tom keene, ian bremmer with us and Anastasia Amoroso. And center, the u. S. Readying for an expanded military campaign against the Islamic State. President obama outlining his plans. The calls for american air strikes in syria are the other 450 advisers headed to iraq. The president said his goal was to degrade and ultimately destroyed the Islamic State. In the past several minutes, a judge has said that Oscar Pistorius can not be found guilty of murder, but she did call openable homicide a competent verdict. Arguments will be heard later today. You know that the disabled track star is accused of shooting his girlfriend on valentines day in 2013. Nfl. Matic twist in the a lawenforcement officer says the video of ray rice assaulting his then wife was sent to them five years ago months. Excuse me, five months ago. The market is on the move and this sets up our next topic. Oil down sharply in the last matter of minutes. Down 1. 13. Here is the russian ruble, i sent this chart out on bloomberg radio, this is stunning. The weakened ruble. In the past hour we got breaking news that european looters leaders have decided to add around the sanctions against russia. Is this something we will need to look at as well. Do you adjust your strategy on europe and russia as a result . Not really, we know sanctions have been on the table for quite some time and investors have become comfortable with the fact that that is a constant overhang for russian equities and european equities as well. If you are to plot out a sustainable thesis, you do have to see those sanctions not be applied but reversed. For the Case Scenario eurozone and russia is that in october if this is pulled and they reevaluate the sanctions. That is the timeline. The only thing we can say with certainty what it comes to russian stocks, it is a highly volatile stock market and it does move up or down with the direction of the stocks. The russian index is trading at 7. 1 times earnings, it is cheap. Can we really believe those earnings are real if in fact sanctioning is going to take away or inhibit there is a lot of overhang to earnings. The doesnt help the russian stock market either. At some point, if the russian banks are not able to tap the u. S. Capital markets, you could see a slowdown in lending a couple of banks have already been shut out, right . It is not only exclusive sanctions they have been imposed on the largest state banks and russia. There also affecting other parts of the market as well. Om, even though it is not being affected ian bremmer to my your thoughts . What will support anastasias case is weakness. Weakness in the ukraine. Then recognize theyre not able to defeat the russian separatists so they are willing c fireworklk with a directly with the separatists. They are now willing to talk more about federalism which before they were reluctant to we and european weakness, as move toward november, the likelihood that europeans will say we dont want to push on tougher sentience, some of them will start peeling off tougher sanctions, some of them will start peeling off the United States. Second aid convoy to be accompanied by red cross, lets review, would they are still shooting each other in the ukraine and troops advance today for the first time we have sanctions, but there is a ceasefire. Are these institutions working together or is it a charade. Charade, weit of a see a headline one day that russia has pulled back the troops, then that the convoy is being deployed. It is difficult to know who to trust. One thing that we know is a 12 point land to enable the ceasefire. It is in the best interest of all parties involved. Whether it is eurozone, ukraine or russia. There is a willingness to implement the ceasefire. We need to see if there is a willingness to execute it on the ground. Ceasefire potentially in the ukraine, and the opposite story, as we look into iraq. How effective was the president s speech last night in rallying support . U. S. Warships, u. S. Jets over iraq. Coming up, the president doubles down on middle east strategy. We will speak with john heilemann. This is bloomberg surveillance. Im scarlet fu. Lets get some company news. Twitter is tapping debt markets for the first time, theyre hoping to raise 1. 5 million. One will mature in five years, the other in seven. Hawaiian airlines was the most punctual carrier in july. Scheduling performance improved with three quarters flights arriving on time. Rethinks its ban on visible tattoos. The poly policy is a target of an online petition. A Spokesman Says starbucks is reconsidering its dress code. Our guest house, Anastasia Amoroso, she considers economic worde for late 2014. Businesses of economies around the world the verge from one another what does diversions mean for americans and the Global Economy . I agree with your Research Note on this. Is divergence good for janet yellen . , because it iss allowing for another offset, for another bank to support this. If all of the central bank is withdrawing that support at once, you could come up with a scenario where it is not allocable in the market, but the divergence is clear. Likely,er, the fed is while ucd will step up. Jpmorgan, and Bruce Katzman and your economic team, when we look at diversions we seen the volatility of foreign exchange. Today, is this new volatility part of the new divergence. Yes, the volatility we have been accustomed to has been quite low, but that will change. Ofecially between the time qe end and the time the first rate hike comes during it propped up the longterm part of the yield so far has been technically driven. It has not been fundamentally driven. It would indicate higher yield. Within the Anastasia Amoroso world, the idea do i choose between divergent markets or go to cash and put it in the United States . Logger term, the choice is in the emerging market debt. We used to think of it as a small sliver of the global landmark, but today it is not 1998 or 1994. Certainly not. If you look at portfolio allocations, there is still the size that company composition would dictate. Andtterm, volatility, emergingmarket debt is not going to be the place x one of your advantages of being russian, and decidedly european, is that you intuitively get the real economy over there. Is that real economy forced into your session recession, with these diversions is . I think sanctions are a big overhang, no doubt about it. Reluctance is a keyword. Reluctance and it does translate into higher sanctions. It is not working very well. I think a prevailing factor is that the Consumer Sentiment in europe has stabilized. Yields have come down tremendously and the catalyst i see now for better recovery is now lending. If mario groggy mario draghi doingds, and is everything he can, then you could see that lend term positive in the next two years. If lending turns positive, that is the economic stimulus the eurozone needs. Eight more questions as always. Adam, we need a data check. Likes we do because there is a lot of red on the screen. Stocks at this point trading about. 25 lower. The 10 year yield is also lower. When you buy bonds it pushes the yield lower. This is what we heard from president obama, ratcheting up american involvement in iraq. This is bloomberg surveillance. Bloomberg radio streaming on your tablet, smartphone and bloomberg. Com. Pushing for the end of the militant group known as the Islamic State and he is calling for other countries to join in to aid u. S. Efforts. Sound familiar . Joining us now from washington is john heilemann. To see you again. You did a good job last night hosting the special. We know that saudi arabia will be playing a role here in terms of training and providing coalition,at this who might be involved . First of all, thank you for welcoming me and saying those nice things, there is a new character to this coalition. A lot of old partners and european partners, nato partners who will be on the board here. But as you point out, saudi arabia, a very dramatic announcement that they will be hosting the training of syrian opposition. Sense, theve in some tacit members of this alliance that are traditionally thought of as bad actors. Iran and syria itself. This is an odd coalition, a strange coalition. It is a big question hovering over this. Be greatproved not to coalition partners, what then happens . What happens to American Public opinion . Talk about the Fragile Coalition of international partners, what about Domestic Support . I think the president is interested in support from congress, but he made it clear that it is not essential. He does not ask for authorization, he believes he has the power to do it already. He would love to have it in congress, republicans in particular, but he is made it unambiguous that he will do it one way or another. On double down, there is a transient sentence you could have written last night, under president s National Security team there is no consensus. What is the consensus this morning . There is a reluctant consensus that this is where we have to be. Some members of the Administration Speak about isis in apocalyptic terms. The president is clearly more cautious and calculating. He has come to this reluctantly, if not an enthusiastic warrior, he is not a reluctant warrior either. He is ready to spend the rest of his presidency focus on this area and who is in a better position to lead right now . I dont think it is a question of who is better, they will both have to lead. Secretary kerry has spent an extraordinary amount of time in the region. He will be essential in building up the coalition. The president needs john kerry to be the force of latitude in this region. Those two will be working hand in glove on this. What is the distinction on this effort versus the effort clinton wouldve made onefour years ago . What is the distinction between clinton and kerry . I dont think there is that much daylight between the two. On this particular question, i think secretary clinton has made clear that she was more on the hawkish side. She would be in favor of what president obama is doing now. She and secretary kerry would see this problem in the same way and be handling it through shuttle diplomacy and spending time in the region itself. Good seeing you john heilemann, thank you for your perspective. Newco show all due respect. October 6, with alld ue due respect. Good morning, from new york city it is bloomberg surveillance. Wasas a quiet morning, that done. The eu announced sanctions against russia and markets moved decisively. Peak. Down 15 from its the russian ruble on the new weakness. We see that in the retail market, everyone is struggling. Remember the nook . The only one who bought one. Noble, we know that the booksellers are having a tough time. Bnn, the ceo has decided they will try to get a piece of the toy high. Everyone loves toys, the parents and the kids well maybe not parents. But they have done a smart strategy, and ive noticed this myself with my kids where they put these toys next to the kids books and they make it a play area. It is a devious ploy. They have seen the sales that toys r us, and target focus on toys as well, and they say we can bring in a high and a strategy. Else at the auricular question mark do you want to cue it . Other retailers are employing a similar strategy. I mentioned target as well. They want to be more of this onestop shop. I go to target, i have one near my house and they have expanded their grocery footprint as well. They have gone into what youre getting at is that everybody wants to be everything. Amazon, target, they are trying to sell everything. 100 . A hard timeving because walmart is selling groceries. You can get one the paper, candy theyre all kind of merging into each other. Grocerypreading our dollars. Not just that one place. We go to different places and pick up different items. Into yourone comes story you do whatever you can to get them to spend money. Tom goes into barnes noble and he is picking up an elsa backpack. Dont miss tonight on bloomberg, talk about selling everything. Rise to aalibabas company that sells more products than amazon and ebay combined. Tomorrow, an american economist joins us as a guest host starting at 7 00 a. M. Albraith joining us. This hour, ian moroso. And anastasia a not everyone is celebrating microsofts possible purchase of the Swedish Company that makes mine kraft. Ony play minecraft nonmicrosoft devices. New heights for video game maker activisionblizzard. Destiny marks their biggest launch yet. Sales have already topped 500 million. A consumer Bitcoin Service debuts in europe. Providerdigital wallet has raised 31 million in Venture Capital trying to bring bitcoin to the mainstream. Cant believe were still talking about bitcoin. Thank you for saying that, when does this go away . Maybe it will be the future. Been september 11, it has quite a summer, 13 years after every American Life was changed, we consider the path forward. Ian, the tone here of every nation for its self, and the president speaking about something that is not a nation, g20, to g0 tofrom g3 . There is no question we will be fighting isis through the Obama Presidency but will not be on the headlines every day. Talks and russiaukraine, and the war happening there. One of the reasons obama doesnt want to call it a war is because it is and have that level of priority area and yet, priority. Yet, the American People respond to isis. Of americans believe that there are isis affiliate terrorists in the United States. Which is not true to the best of our knowledge. I think 13 years after 9 11 we still remember it. As much as new york is now resplendent and we are feellding, we still all it. I think americans at some level havent gotten past 9 11. I want you to synthesize what we hear with international relations. Saying ourhard haas Foreign Policy starts with economic strength in america. When you synthesize these different themes, what is our grammar prescription forward to 9 11. 4 and 44 after its that we are focusing much more domestically, and no question. Are not is interested in providing the kind of support the coalition will not be there . There, but just for fighting isis. Obama can work with syria, he can work with the republicans, but that doesnt mean they are allies. They have a specific common goal. Will be a Broad Coalition to remove isis from power overtime, what that does not say anything about america getting and iran deal done Iran Nuclear Talks are getting done today once again. When you guys have me back here in november, i assure you we will talking about ironic and the impact of the oil markets that will be the priority. Are we going to have him back in november . Yet youll have me back in november. What were really getting at, my question to you anastasia is not ain the u. S. It coalition of the willing, but of consumers. Havee end of the day, we American Consumers spending more money but how healthy are they. We planned poorly for the last recession than we might have imagined. We are trillions of dollars above where we were in 2007. 1wood look at the unemployment rate, im sure we can dispute it all day long, that we have created more jobs than we lost and the prior recession, so the consumer is in far better shape than we were. And arguably better than they were in 2001 as well. Is that healthier consumer supportive of a president who seems to be leading us into harms way . I think that obama is still facing an enormous amount of concern, it is a lack of leadership issue. President bush was considered a leader who didnt like to think, obama is considered a thinker who doesnt like to lead. In 2016, what happens but that is a thought that continues to be present for. A lot of people who voted for him and say, wow, it doesnt mean as much American Power as it used to. We need a leader. Is it all just about oil . Are we still just doing this because of what we put in our cars . Not at all. The Energy Energy revolution makes that clear. One of the reasons the u. S. Saudi relationship has deteriorated is precisely because the focus of oil has changed, longterm. Its not clear to me i would be betting an awful lot when their future is clearly linked to oil reserves. Lets get to our twitter question of the day, how effective was the president s speech . There is a critical were there, hope. A dangerous word. It is audacious to Foreign Policy. Initially we were talking about a timeline of three years, that doesnt seem likely at all. A generational struggle. Enu took longer than three years . Ian, you took longer than three years . I absolutely do. The financial cost, the human cost is something no one is prepared to accept. It was over before i knew it was on and there is that talk of it today. Somebody people talk about this shift in tone. Americans are more supportive of going after isis, but the president doesnt have the support either. His Approval Rating is abysmal. I did not find it surprising, but i find the actual u. S. Policy to be constructive, precisely because it is limited in the long term. Are goingf saying we to do it all before you have other folks sign up, it is hard for the United States to get allies today. Therefore, it takes longer. This is not a bells and whistles speech, this is not a guns blazing speech. Thanks so much for your contributions as always. Scarlet as we go, the markets move, futures, negative eight. You see in oil that correlation to russian ruble during it was a bit of a surprise. We dont have the details yet. I just want to point out once again, 13 years ago today everybodys life changed. Its hard to believe. Surveillance continues on radio. Liu, isoop with betty on next. Good morning, this is in the loop. I am betty liu. The president laying the groundwork for an offensive against the Islamic State. Was it a turning point for dealing with the extremist . Reactions from both sides of the aisle on the hill. Later and the next hour, im a chronic congressman, brad sherman from california, and one of the democrats who has been very critical of the president. Is linked to a healthy economy, dont miss pimco chief investment officer. First, here is a look at our top headline this morning. President obama says he will ask and his offensive against the Islamic State and is calling on regional partners to help