Of michigan confidence. A lot happening. Ies have decelerated should say accelerated to the downside over the course of the past our. They are down about half a percent. King and burger Procter Gamble are at 7 00. Chevron at 8 30. Berkshire hathaway after the bell. Chryslers july auto sales up. That is below that i stocks, bonds,t currencies, commodities. Linkage between the futures. Dow futures 110. Under 134. The nymex crude, well under. The six near 17. There is the dow. Will have the graphic on that and a moment. Dollaryen, 102. 94. Gold into 1300. Alan krueger is joining us in the 7 00 hour. Here is a regular Unemployment Rate. In 1981. He recession down we go. We roll over to the 6 . The red line is chair yellens headache. Highers a much Unemployment Rate of 12. 7 . Cap here versus the gap year. Why of fed policy right now. They are moving in the same direction and that is the pushback. We looked at the front pages. We did not know where to begin this morning. Scarlet fu will help us out. We have the latest on israel versus hamas. The ceasefire started falling apart just hours after it began. In the last 90 minutes or so, we have reports of firing. It is not clear. We have conflicting accounts of the breach. Israel says hamas broke the truce. Was that it would lead to a lasting agreement. Thehe headlines come across terminal. We are getting down to counting rockets. Seven rockets from gaza fall in open areas. Eight rockets fired at israel. That is from the israeli army. I think the death count has been updated to more than 1400 palestinians and more than 60 israelis. Right that this was brokered by the egyptians question mark which they were born working across borders. It is almost the wrong word to use. They want a lasting were going to check in with Elliott Gotkine to find out the latest. We want to get to our second frontpage story. The equity selloff that began in the u. S. It circles the globe again. It is not the baseball trades . Big losses on u. S. Exchanges. Dalles falling almost 2 . The racing gain for the year. 97 of members declined. U. S. Futures, sinking lower. When we got up this morning, i thought we are going to get a little pause. Over the course of the morning, and spite be better data we got, we will feature this out with christopher roan. A terrific technician. Here are the numbers that matter. We are going to try to give you the markets without a lot of hysteria. Haiyan july 16. There is a collection correction. 18 . I could have gone a little grammar. Grimmer. Down 300 points. It is painful and it hurts, but we have gotten so accustomed to all of this fed sugar we think we will only go up. You go to cash or do you do Something Else . Are you buying after yesterdays selloff . What are you doing . Tweet us. We want to hear from you. I am investedwhat in double leverage cash fund. 200 cash. Republicans on capitol hill fighting among themselves over immigration. John boehner had to cancel the plan to vote. Cruz is urging lawmakers to oppose leaders. This is happening as Congress Gets ready to get out of town for their fiveweek recess. Today is more of this after they get five hours sleep. In the house. They only get five hours sleep the day before they go on recess. Last night ande my take is this is a huge defeat tor new post eric can leadership of the house. A handful of republicans have hijacked the party. Some fighting within the republican party. We have a Global Market selloff again. A wonderful person to speak to today, Graham Fisher. He links and markets with finance. Us, you get lucky sometimes. A nobelspence is laureate. We will speak about his summer essay. Market selloffs, you talk this at stanford and migrated to nyu. Stanley fischer has been known to throw chalk. I never did it. How weael spence on control our emotions when things go down. This is there are two things going on worth attention. The markets have not figured out how dangerous the Global Economy has become. Secondly, we have these better than expected gdp reports. Monetaryslated in policy. Two crosscurrents. Josh rosslyn, you are shaking your head yes. Isyou agree that this possibly global contagion . As a global contagion, no. I agree we have a larger issue. The rate of recovery globally has not been what it has been expected to be. If you look and dig into participation rates, we have real reasons for concerns. There is too much irrational exuberance. What did you mean a moment ago when you said Global Markets are dangerous . The Global Economy, the tradable side of it relies on flows of people, information, capital and goods. Four are under threat. We are shooting down airplanes. Whereis a problem about to fly. Cyber security as a bonus contention. Tons of tension. The middle east is a disaster. Underpinnings, the basic stability that underpins these global flows is questionable. There is a wall where investors have to face. Everyone comes back to the idea that there is so much liquidity around the world. As long as the Central Banks system, thento the path of least resistance is higher. That has been true, especially in the united states. And questiono stop whether without functioning infrastructure, those flows make it to end markets and that is the reason we have not seen a stronger recovery, even with all of the increase. Quickset think our audience would be fascinated to know how Michael Spence invest. Academics have a strong opinion about how to place capital. Formula . He spence after the crisis, i became conservative. I went to a specialized small Investment House that found a way to find yields. There is a longerterm set of investments in private equity and absolute return fund. Thank you for that clarity. This is something we will follow through the entire morning. Across equities with bond currencies and commodities. Futures are at 13. Company news. A major new player in the tmobile bidding war. Bidding 15 million for a stake in the company. Tmobile has been in talks with sprint on a 32 billion merger. Frances number two Bank Reporting a better order. It rose almost 8 . Some General Motors dealers say the automaker pressure them to boost sales figures. They were asked to buy more cars last month. That is how gm showed a 1 gain. Julys sales figures are due out later this morning. We will break that for you when they come up. When we come back, argentina has slid into the fall for the second time in 13 years. Resident kirshner says they did not default. We will debate semantics. Who is to say . Onoomberg surveillance bloomberg. Com. We will be right back. Futures 12. We will keep you abreast of the markets through the morning. Part of that is jobs day. Later this morning,s perez. He will be with betty liu, in the loop. What a lineup. We speak with tom perez. This friday, this is bloomberg surveillance. I am tom keene. Scarlet, we go south. We Global Contracts have a global selloff. Where to start and what is driving it. The timing of a fed Interest Rate increase. Ongoing debt crisis. We will focus on what is next for the latin american nation. Josh rosner has written extensively. He is here to provide us guidance. You say there is no global contagion from argentina, but it is part of what investors faced. Why does the default, whether s p says it defaulted or argentina claims it did not, why does it matter for investors . We are going to see if there was a failure to pay and whether there is a represent over a notion of debt that has been is then or argentina most expensive dead to ensure. That would be problematic for the country. For some degree to its trade partners. I dont think it will have a global impact. It is occurring in a faltering economy in a faltering region. It is just adding fuel to the fire of concern. You less context. We talk about how argentina has on Global Markets for 13 years. What is it missing by not having access to that capital . Which they have left Foreign Direct Investment on the table. Paying the settlements and having access to Global Capital market, they have lost a 70 billion to gdp at a time where gdp is already faltering. Theis going to contract for First Time Since 2002. Gdp is relatively low, two over 45 . It is going to get worse. Gdp will rise as debt levels rise and as gdp falls. If it is not cured, we will put them back on the path to a 1989, 1991style crisis. The Supreme Court has already said that Elliott Management is due money. The money was not paid. How can there be any conclusion other than default . It is hard to understand, especially when you read the language. Bondholders have not been paid until the money is in their pocket. It has not been. It is a bank of new york mellon. It seems to be clear. Let me bring up a chart. It is one indication of the trauma. Spence would not let me do a log chart. There were 14 types of floating currencies. Thergentina part of International System or are they so far outside of that we can separate them . I think they are in the completely, but they are not completely disconnected. People are investing in other latin american countries. Important companies are located there. They are not disconnected. What they are is going off on the wrong course. Should the imf step in . I do not think so. There is no fundamental basis for an agreement right now. Around andas to turn move in a different direction before the imf. What is the single he then you will be watching for that could make things worse . Judgments. Second, if they do not negotiate a settlement within the next 60 days, you will trigger a default clause, which could lead to an acceleration on payments to the 93 who did take part in the agreements, which would wipe out the entire foreign reserves of the central bank. Beyond that, we have other significant problems. The Exchange Bondholder clauses from 2005 and 2010 also have the same language that was included in the suits that elliott and others one. Others won. It sounds ugly. It also sounded ugly when we were talking greece and we got through that. Greece decided to be part of a solution and worked with creditors. We have seen the exact opposite behavior here. It is still small, like greece. Our guest host. Is the talk about the fault has you down, how to ride away. We are going into the labs of specialized. It is Michael Spence. We have the model of the bike that won the tour de france. That is coming up later. Does not have training wheels, i am not on it. This is bloomberg surveillance. A selloff friday morning. We are streaming on your phone, your tablet, and on bloomberg. Com. Usalan krueger will join later. Futures 14. A digression. I thought this was sharp. The success of putinism will depend a great deal on the and russiaputin under him. If you try him sing ukraine, turning it into a basket case that comes big inning comes begging to moscow, he will look like a winner. With her inagree one sense. I think it is to isolate yourself as a failing economic strategy, but it may work in the short and medium term. As a political strategy . Yes. Of ukraine andut russia this morning. How curious that mr. Putin gets quieter as he becomes more isolated. Sanctions is the really beginning to click in. We will continue our discussion on this jobs day. Coming up, robot taking away jobs from workers, what kind of workers come out on top. Michael spence is here with his answer. This is bloomberg surveillance. Good morning everyone. You see gaza this morning. So much for the truce. This is bloomberg surveillance. With me, scarlet fu and adam johnson. A quick data check. Markets continued their descent from what we saw yesterday. Futures, 13. Dow futures, 105. You see this with hydrocarbons 32 on west texas intermediate. And we are keeping an eye on developments in the middle east. Brokeredu. N. Ceasefire has been broken. Both sides pick the blame on the other. For more, we go to elliott. Give us the latest. The latest is that, although the Israeli Government does not have an active policy of saying cease fire is over there is no official return to full hostility, they are saying that the ceasefire is over basically. It is hamas who says they have blatantly broken the ceasefire, to which they committed. Israel is blaming hamas. This is after the 72 hour ceasefire went into effect. Have we heard anything from john kerry or the united nations, who are at the forefront of negotiating . Yes. All of them have signed up to it. We are not hearing any word. Phone calls are not frantically going to hamas or the israelis. Do not forget, this is not a proper ceasefire. This is meant to be a threeday, temporary humanitarian truce, to allow food and medicine to get gaza,bt the to get to and also to allow breathing space in cairo. You have been so good on the fractious nature of hamas. Are we speaking to one hamas this morning . In terms of the delegation due to go to cairo it was hamas and other militant factions. The u. S. And israel consider them terrorist organizations. Egypt would be there in the Palestinian Authority would be there to mediate. We do not have specifics as to who would have provoked the israelis as far as the israelis are concerned, that is what happened. Do have some headlines from the last 10 minutes or so. Tank fire kills at least 27 palestinians in south gaza. This is according to the associated press. How has the ground or changed . Originally, it was to destroy the tunnels. Israel has been pushing for the demilitarization of gaza. Hamas uses to infiltrate israel. I do not think that objective has changed. The forces remain on the ground and the wording of this ceasefire agreement was that israel would not be able to advance beyond its existing positions. It would be able to destroy tunnels behind its lines in ga za. I do not think it has deviated from that initial objective. There are heavy operations to ely, but imas complet do not think that anyone thinks that is an objective. The silence out of the arab world is deafening, according to the New York Times yesterday. Is there any sense that israel is cooperating . Well, overtly, no. Not explicitly. We are due to hear from the saudi leaders in the next hour. They have been conspicuous by their silence. The objections egyptians have not been silent. The jordanians have been silent. You have the saudis and to the egyptians and the jordanians on one side. Then on the other side, you have the qataris and turkey, who support hamas. Not explicitly, but these things are there. We have not heard the usual condemnations of israel united throughout the arab world. The silence is deafening. We will check in with you later as well. This is my summer essay. It is from Foreign Affairs magazine. Andrew mcafee and Michael Spence, on the new world order. A new Creative Class that is disrupting all we know or knew about labor capital and the betterment of our human ca pital. To the fear of many americans, the new digital capital Michael Spence, congratulations on flogging this on children a month once. Why did you write this essay with the two professors at m. I. T. . They wrote a really good book in which they try to lay out the evolution of a very powerful Digital Technology that is changing the world of work, the world of manufacturing, and so on. I have been working in parallel on the same kinds of things. We got together and thought nsa of this kind might help people to think about it. The fear of many and what janet yellen addresses is the slack in the economy. Are these americans left behind us permanent losers . Well, there is hope. It requires significant investment by individuals, by governments, by societies, and getting ready for a very different world of work. T andich service is dominan your ability to deal with value added is knowledge and so on. A combination of robust and 3d printing will do many of the manual things that we did before. So, we still have people doing manual things. I do not think construction is about to become automated yet. You can, they do say 3d print most of a building at this stage. I will believe it when i see it. Spence, you say that people with ideas, rather than workers or investors, will be the scarcest resource. How do i prepare my children to be valuable, productive adults . To get them an Ivy League Degree . That is not a bad start. One of the implications of this is not new. There is a premium on having highquality education and getting as far up that letter is you can get. D up. Oks to be going up an du there is more competition from china, from russia, from brazil. These are skills that can be traded, if you like. They are services that can be traded. I recommend eight weeks of math camp. I can understand how that would be the message to your students at nyu. In the scheme of things, that is a privileged few. What is the message to thousands of americans who are looking at the numbers and do not have a College Degree . I think we have to help them. , the big challenge is this transition we are in. Many americans prepare themselves with society for a world of work that is moving away from them. We have labor markets on equilibrium. Their skills on the supply said the do not match with the demand side is asking for. There is no perfect solution for this. For people of all ages, we have to help them close that gap. Move toward the demand side of labor. It is regression july. This is the first day of august. Were really talking about returns to scale. Traditional ways to measure efficiency within the economy. You three academics come over to the power level. Explain the power law and what that means to our viewers. Power law distributions are basically fat tail distributions. The traditional bell curve has narrow tails. If you make most of the gains. Exactly. A few make most of the gains. The extreme version is winner take all. A lot of people that