Rating to junk. The highest Interest Rates in nine years and a recession. There is a corruption involving petrobras, the state oil company. No more secondclass citizen status for apple tv. The settop box has taken a backseat to the iphone. Tom im buying one. Tim cook has unveiled a major upgrade. We believe the future of television is apps. In fact, this transition has already begun. We are spending more and more time on our computers and mobile devices, enjoying great tv content through apps, such as itunes and netflix and hulu. And bloombergtv, of course. There is also a bigger i cut design ipad design for business customers. Tom im buying one. [laughter] they dont like the iran deal, but they are not bound by the deadline because president obama has not given them details of side agreements. New York Governor Andrew Cuomo is prepared to support raising the states minimum wage to 15 per hour. He will make the announcement today during an appearance with Vice President joe biden. The state senate blocked a move earlier this year. Pro football gets underway with the new England Patriots taking on the pittsburgh steelers. Tom yes, yes the nfl will bring in more than 12 billion according to the wall street journal. Revenue from corporate sponsorships is up 15 this year. Brady is a think mr. Little motivated to do well tonight . I would think so. Tom we are motivated to bring you a data check, particularly after the evaporation we saw yesterday. We bounce up again today. Stay with Bloomberg Television and radio through the day to give you market updates. Second screen, lets get through this quickly. Gold, south. That is my headline today. Recent support for gold. Real will be ugly today. Lets talk brazil. We will go to sao paulo in the next hour. Olivia, this is back to january 2013. Year in price. This is classic panic in the bond market. Olivia the Ratings Agency confirmed the panic markets were already indicating. The real off 25 . Tom there seems to be more symbolism. There was the brazilian miracle seven years ago and now we are back. Olivia we are back to junk rating after seven years. Tom the brazilian tenyear apiece. Stop gains evaporated overnight. Brazil crushed by the s p ratings downgrade. First, lets it over to london. Francine lacqua. Isn in london, everyone focused on brazil. What did you see in Research Notes this morning . Francine stocks are incredibly , falling not only because of expectations from the fed, but repercussions from merging emerging markets. We have a lot of exposure. Because of the spotlight we had on brazils Credit Rating being cut to junk, a lot of people say this was a kneejerk reaction that prompted a lot of analysts to cut down on these Retail Stocks exposed to brazil this morning and that accentuated the decline. A new zealand rate cut, as well. I30 you and jonathan are going about the mystery of what the bank of england will do. Is there really a mystery . Francine the mystery will not be on Interest Rates. It will be on how they look at china. You were mentioning new zealand. You see a lot of Central Banks continuing to adjust Monetary Policy to combat slowing economic activity. We are not expecting anything real from the bank of england. We will try to get an insight about their view on inflation. See if the turmoil they have seen in china and the emerging markets will delay their Interest Rate hike. Olivia that is certainly what we want to hear. Last summer, we were expecting the bank of england to be the First Central Bank to tighten. Now we are waiting on the fed. What has changed . Francine we have had a lot of disappointing Economic Data in the u. K. Wage growth was there, but it was so minimal. That thebout the fact u. K. Is strong, but services are not as good as expected because of the extra burden of regulation. Recent evidence points to disappointing data and manufacturing. That is coupled with turmoil in the fact that the u. K. Is such a smaller economy compared to the u. S. A lot of people are saying, why would you go first . Tom right. There is a price to pay, possibly, for going first. Francine lacqua will join us at the net top of the next hour. We turn to the American Economy. One of our most popular guests with an exceptionally popular cautious call on the American Economy and number of months ago. On glimmersto date of optimism that you see or do you go with the recent Economic Data and possibly a growth slowdown . Glimmers of optimism. The glimmers i would pullout is that we dont see a recession yet. That is a glimmer of optimism. When you look inside of the ,mployment, the jobs market there is one cohort that is doing better. When you look at the employment when you lookio at people who do not have a high , they haveoma recovered most of their recessionary job losses. Americans havene not recovered anything. Tom im so glad you brought this up. There was a fabulous chart this weekend showing what you are talking about. The quality of the jobs, the 200,000 jobs per month we are creating, the great theme is that they are lousy jobs. Do you buy that ig idea . Lakshman that is what the employment ratio shows. It is on the backs of very cheap labor. If you are banking on a consumer to show up at the Holiday Season purchasingon, the power is not there. If you are blanking banking , theflation to show up reason the phillips curve has failed for so many years is because it is right there in the data come the people who are getting jobs are not earning very much. Olivia this hits on your idea of the two americas, the two different economies. If the fed does raise rates, how does the fed justify that . Richard fisher says lets get going. Larry summers and Richard Fisher could not be farther apart. Lakshman we asked the question in january 2015, if not now, when . Since the beginning of the year, we have been decelerating. This is not a forecast, this is a fact. When you look at the coincident together,puts it all it has been slowing since the beginning of the year. At the forwardlooking indicators and the slowdown is not over. That is an unusual situation for the fed to hike in. Olivia what you have been thatng at is telling you the economy has been slowing since the start of the year. Lakshman if you look at it on a yearoveryear basis, it is at a oneyear low e. If you look at gdp and gdi, the government is producing both of those together. The same quarter, gdi is a 0. 6 . Both of them are faulty measures. When you put them together, it is at a oneyear low. Olivia how about the jobs report jewels report yesterday . Lakshman ok. Job openings have jumped up and hiring some gone negative. Look. The coincident index is at a 16month low. We are not in a recession yet and we dont see one yet. That is the good news. But the vector, to use your word, is in the wrong direction. Tom we will address the disparities in america coming up in this hour. We have a special treat for you next. Gene munster of Piper Jaffray on apple. Everybody is not focused on the iphone. I agree. The magic is the upgrade cycle of the iphone. We will talk about what that means for the financials of apple with gene munster, next. Bloomberg surveillance. Tom we say good morning to you across asia from our Hong Kong News bureau. Kong inlear across hong the evening. Our top headlines. Here is david. The Justice Department is responding to criticism that it is too easy on whitecollar criminals. Emergency crews in japan say they are overwhelmed by calls for help as flooding spreads. Rain is pushing rivers over their banks and causing landslides. The area north of tokyo is the hardest hit and one person is reported missing. The u. S. Open will be an allswediss semi final. Federer is trying to make his first u. S. Open final in six years and will face his countrymen stan wawrinka. Olivia yesterday, we got the latest and greatest from tim cook. Tom is now on the wait list for the hermes apple watchband. Tom i love the double wrapped one. Olivia david gura has his eye iphone. Rose Gold Investors are not impressed. Shares closed down by 2 . Gene munster was front and center at the event. He joins us on the phone from minneapolis. I could not wait for the apple tv. We have been waiting for the big Game Changing apple tv product for years. This was not the live tv device i was hoping for. What did you make of it . Gene it is a starting point and it is a platform for the living room and they are really trying to lay a foundation for more apps, more aiming gaming, better discovery. It is a significant upgrade from where they are at. For the first time ever, apple will start financing the tohone direct can consumers. Is this a game changer . Gene keep in mind that verizon and at t are about 20 of apple sales. They dont want to go to hard after those because it is huge distribution. They are probably testing more for growing this out internationally, where plans like this are more appealing. Tom you are a class act for joining us. How many hours of sleep did you get . Gene about four. Tom we like that. We like having gene munster on sleep. The New York Times said the iphone is a quiet bomb. Do you have to mark down your margins forward after what you observed yesterday . Gene we dont because the changes in the new iphone a relatively subtle. They added this 3d touch, which is a new way to interface. For the most part, typically on these s cycles, they have better margins. I think there is probably more upside than downside. Tom how did you change your stock price . Screaming buy or just acquire shares . Buyinge are aggressively. 60 upside. Tom is that good enough for you, olivia . Hermes and thet watch . Olivia, help me, here. An did tim cook arrange herememes . I dont know. Im not the most fashion forward person. I will leave that one to tim cook to answer. Olivia i know a lot about this. I was surprised that they could even get enough leather supplied to do this. They are fabulous looking watches. Tom i thought it was a home run. Is the iwatc going to get traction . Hgene it is going to get a meaningful update in a couple weeks with native apps that are going to make it easier for you to do things with the watch. I think this is probably 2017 where it really goes vertical. Tom one more question, if we could. Anthe new ipad, is that imac killer . Gene it will compete with the imac. This is probably going to help shift a little bit more back to the mac. I think the mac is still going to dominate. Tom thank you so much. You made us smarter this morning. What a trooper. This is what we love. This is great ar. Our Bloomberg Businessweek cover this week. Important comments from apple leadership. That is our simple cover with all of the work we have done over the years on apple. We will continue this conversation coming up. Michael wolff will join us on and in defense of marissa mayer. This is bloomberg surveillance. If you are ever in london, take the bridge. It is much longer than you think. 1000 feet. The millennium bridge. And it is a footbridge. It is a success. Do you agree . Olivia you take it right over to st. Pauls. We are building our new headquarters in london, available in 2018, over to the left behind those buildings. That is a beautiful shot of your london. Lets get to a morning mustread. Olivia i recently bought a home. Im talking about how landlords are eating the world. This comes from an oped by noah smith. He says, landlords are eating the world. Location is an inherently scarce commodity. When it becomes more scarce, it puts a break on growth. ,om it has always been there this is always the way it is. Everyone always wants to live in the same square footage. The dynamics of rent and buy in. When has it not been there . Olivia the economist discovered that it has been skyrocketing. Do make a couple points, saying that this is driving inequality, in the europe and the u. S. What do you think . Lakshman i dont know about the last 50 years. In the wake of the crisis, access to credit just disappeared. Inyou need some money to get and put equity down on something, you have to have some assets in order to do so. You could see how that would exacerbate things. Maybe now, if some credit eventually starts to flow, people who were lower down in the economic layer can get some access. I dont know. Tom you were wired into the new york community. Olivia was just in austin, texas. Low inflation drives migration to cities. Lakshman sure. Tom there is a lot of Historical Research on that. Urbancenteredb with the lowinflation in equity. Lakshman totally. In fact, you saw globally. Look at london. My gosh. And a lot of city centers around the world, you have seen some insane property prices. Lowinflation is not going away. Wish as we want, it is not going anywhere. Tom lets come back and address inflation in the United States in a moment. In our next hour, we need to look at the thinness of the markets. Bart chilton is kneedeep in the reality of regulation. Our children will join us. Stay with us. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Tom it is the Dome Restoration project. They are taking lead out of the dome. They are going to fix it, fix the cracks, all that. It sort of looks like the 1860s. Lincolns second inauguration at much the same look to it. A beautiful morning in washington, indeed. Lets get to our top headlines. David Standard Poors has underscored the worsening outlook for brazil. Seven years after the country was returned to investment grade, they have been rated at junk. The president is embroiled in a Corruption Scandal with petrobras. The brazilian real has fallen 30 against the u. S. Dollar this year. China wants to make it easier for other nations. It is opening the Domestic Foreign Exchange market to overseas Central Banks. It has been pushing to become another reserve currency. Republicans are still opposed to the Iran Nuclear Deal. They dont want to vote on it yet because president obama has not given them details of side agreement. Republicans say they will consider a separate set of measures. President ial candidates ted cruz and donald trump spoke to a tea party rally against the iran deal. Trump blasted the president for not negotiating the release of four americans held by iran. If i win the presidency, i guarantee you that those four prisoners are back in our country before i ever take office. I guarantee that. Ted cruz said the next president should be willing to rent the iran deal to shreds. Rip the iran deal to shreds. Denmark is suspending rail connections to germany after Police Stopped hundreds of migrants at its border. Nearly 20,000 refugees who entered greece from turkey are heading north into macedonia. Police in new york city are investigating the takedown of a manhattanoutside hotel. The nypd says he was mistaken for a suspect. Blake, who is black number retired two years ago. They regret the incident, but the Police Department has not apologized. Tom this is in the New York Post. On this. Ite up he was thrown to the ground, among other things. The commissioner of the new york Police Department says it is very disturbing. This is a new york city story, but the point is is that it is not. James blake. Bad call. Help with this, karen. Bad call down here at the bottom on mr. Blake. It appears in the article that he is taking the high road, as always. Speaking of a high road, john edwards came up with the phrase, two americas. A recovered america and a recovering america. Then there is another. Massively out front on identifying the different cycles. Nvolving two parts of america many people in that group would agree with you on your caution on Economic Growth. You look at employment data, what does it say about two americas . Lakshman i think that the key finding is that wage growth is flat as a pancake. Everybody is hoping it is going to go up, but it has not been going up. You see the concentration in jobs growth is very much for the lowpaid worker or uneducated worker. Tom there are a lot of people who are going to buy a new ipad watch. Ne or the hermes they are not a part of this discussion, are they . There is a whole other part of america. Lakshman im not saying that we are not having growth in the economy and there are people who are doing better in this economy. There are. Apple will sell and hermes watchband to those people. We are in a bubble in the city. Forget it very as they are in other cities around the world. When you look at growth in the economy, when you talk about all of america, you are seeing longterm Growth Trends declining for decades. That has been exacerbated by the reaction to the Global Financial crisis. In london, they are going to talk about the lack of growth. Im not just saying the fed. Im saying the reaction to the crisis. The chinese did monetary and fiscal spending. Olivia printing money. Asset prices. Lakshman twoputted in perspective, in china, in three years following the crisis, they used much more concrete than the you nice United States