Headlines. Here is vonnie quinn. Vonnie as francine was mentioning, it is the last day of the quarter and stocks are on an 11 trillion loss for the quarter. Stocks are rebounding around the world. Finished with their fifth straight monthly decline. 2008is a streak since the financial crisis. There is concern that japan may be falling into another recession. Retail sales showed no improvement. That is likely to intensify the debate on whether Prime Minister government should increase spending. In afghanistan, Government Forces have been unable to retake a city captured by the taliban. The pentagon has called the capture of kunduz a setback. The senate plans to pass a spending bill this morning that would avert a Government Shutdown. Mitch mcconnell says he is confident the measure will pass in the house. Mcconnell, john boehner, and president obama will meet soon to discuss spending limits for the next two years. John boehner is stepping down a month from now. There are number of things he wants to a college before leaving. John boehner if there are ways to get things done so i do not burden my successor, i want to get it finished. And google has come out with a highend tablet aimed at competing with apple and microsoft are it with apple and microsoft. It is also updating a set that a settop tv device. Tom the only one who does the event thing with people on stage is apple. I went to the samsung one at radio city is a call and it was like pretend. And Warren Buffett with berkshire hathaway, all that. Lets do a data check. As we go through this through three days of labor market coverage. Futures are up, down. Yield, 2. 09. The Second Screen i had to make this up. I had to struggle with it. At 26. 83. The brazilian real, a little bit of strength. Brent crude somewhat in the acidity of 50. You will see a lot of this chart in the next somewhere in the vicinity of 50. You will see a lot of this chart. What i did here was inflation adjust commodities back to 1956. This is a longterm commodity deflation. Here is that china uproar that we had, the lehman low, then we are back down here. You wonder if this is a trend we have seen over a gazillion years because of technology improvement. Vonnie exactly. Becomespersistent it with the inflation figures. Tom and it falls into disinflation and deflation at lower price changes. We took three days of jobs coverage. We consider a lowered rate regime worldwide and we saw it reinforced this morning. Francine lacqua is in london. I look at substantial negative yields in germany and switzerland. Francine and when you look at what mario draghi is facing, you are mentioning that inflation. For the first time in six months, the euro area inflation rate unexpectedly turning negative. If you are saying inflation being imported by Commodity Prices, this is oil. I do not have much of a fact, but i can do something to try to spur this. If you look at our bloomberg survey, about two thirds of economists we spoke to expect the ecb to signal he has expanded qe. What effect that has on the bottom line growth, we are not sure yet. It may prop up or prop down euro, which will help him. One analyst from nomura the bayers, the gloom, and the handwringing over commodities is flat out wrong. Once oil stopped falling, an American Consumer renaissance will occur. Chiefrosenberg is a economic strategists in toronto. He believes the canadians will win the stanley cup. Fabulous to have you with us today. People perceive you as a gloomy guy, always cautious. It has been a twoyour shift, and now youre ever more optimistic. State your case. David i am optimistic on the u. S. Because it has such tremendous autonomous domestic demand that it can actually decouple from the rest of the world. I never believe the rest of the world can decouple from the u. S. We talk about china so much. More thanmports 50 it exports. It is still the buyer of last resort for the worlds economy. And of course you see that in the deteriorating trade performance that is only negative for the u. S. Right now. You put it completely accurately, that you have to differentiate between what is good deflation and bad deflation. In the United States, being a net raw material importer, for commodity producers it is not good news but this is Margin Expansion for companies that use Raw Materials in their business input. For consumers it is a huge boon for their purchasing power. Tom Alan Greenspan would use the phrase conundrum. Janet yellen has the rosenberg conundrum. She wants to be an adult and look beyond the commodity implosion and say we do not care commodity, we are x deflation. How does that change her dialogue and analysis of december or into next year . David i think that janet yellen, in the opening months she took over at the helm of the fed, when she is talking about that time lag between the end of qe and the first rate hike, i think she did not mention it for roughly six months. The veryadline news next day, but it made perfect sense. In the spring they should have moved off zero. But they got freaked out over the negative, what turned out to be an negative First Quarter gdp with a seasonal maladjustment. Gdp, we hadminal that in the Second Quarter of this year. David i am going back to janet yellen. The thing that she said in her press conference was that the financial conditions had tightened, so why are we going to jump onto that tightening by raising rates at this particular meeting . Here is the problem. I think they boxed themselves in. Why, then, are we looking at thirdquarter earnings to decline 4. 6 . Companies are not feeling it yet. The consumer is not feeling it yet. David i think it is almost a bifurcation. , the s p,earnings that is not gdp. The u. S. May be 10 of the local economy, that affects a percentage of the gdp. Derived in sales are the Global Economy. When you are looking at europe, asia, things are across the pond things across the pond are pretty soft. Then on top of that you have a strong u. S. Dollar that has the domestic side of the economy is doing fine. Homebuilders are doing quite well. Retailers are doing quite well. We just saw nike report good numbers as well. Not in the u. S. , but in china. I guess china bought Running Shoes to run away from the stock market there. ,t is an idiosyncratic selective stock market right now. Francine you are talking about the softness across upon. That is where i am sitting, in london. When would you make the case for Interest Rates to rise for the fed and the rest of the world . David the only reason i would make the case for the rates to rise is you can live in the here and now or actually operate Monetary Policy with a view for its impact down the road. Policyknow that monetary operates with long and variable time lags. Central bankers do not operate their policy based on the view of what is coming down 12 months. They are operating it because they lived in the moment like everybody else does. The question is, can you perennially keep the funds rate close to zero where nominal gdp without creating major imbalances down the road . Tom David Rosenberg is with us today. We have much to talk about. Coming up later today on Bloomberg Television, a busy day for Federal Reserve comments, from the new york Federal Reserve. One William Dudley will speak. We will hang on every word as he voices a certain tone. Then a more important tone at 3 00 p. M. , when janet yellen will speak. And the man in the middle, james bullard, he of the st. Louis cardinals, will speak at 3 00 p. M. As well. We speak economics, finance, investment, and international relations. This is bloomberg surveillance. Good morning. Everyone. Morning, we begin four hours of bloomberg surveillance. Some important Economic Data out. First, we need our world headlines. Here is francine in london. Warning signsomic crop up in japan, raising the prospect of recession for the second time in as many years. Analysts expected an increase in retail sales, that they did not improve during the month. The trends might push the government and the central bank in japan to prop up the economy. Russian troops are one step closer to joining the fighting in syria. Lawmakers have approved president Vladimir Putins request to use military force. He is supporting syrias president , bashar alassad, in the countrys civil war. Key Economic Data came out today. The british economy regains the losses it suffered during the recession. The Second Quarter was higher than any level since 2008, but this eurozone, the inflation, unexpectedly turned negative in september. Unemployment in germany rose this month, although the jobless rates stay the same. Ins bring in hans nichols berlin. How much should we worry about 0. 1 . Ion being at how much should we worry about the german unemployment figure going up . Hans the latter one is almost more. Or story of the last three four months, leave aside the funky data we got out of greece where we saw greece gdp go back up. The story is germany is going along steady as she goes, and this is the first indication that germany might be affected by all the Global Financial turmoil. This number, the unemployment number, i doubt it has any volkswagen effect. It is too immediate. Longerterm, your flu your view on inflation is it driven by energy costs or is there Something Else putting pressure on wages . We need more data. It makes it all more important, the meeting of the Ecb Governing Council in malta. Francine . Are we expecting more qe from mario draghi . We think it is driven by the energy component. But if you are mario draghi, how do you interpret this . Draghis main signal is it the inflation number or the gdp . Deflation puts a little more pressure on him. If it is gdp, he may have a little more room. He has hinted that he will increase quantitative easing if he needs to. He has pushed it down just with his hints. We sayme of that and mx some of the dynamics, days of rosenberg some of the dynamics, David Rosenberg is with us this morning. Are we going to have a 1990s dollar . David there are probably about six questions right there. Tom i am fired up, david. Can look at the dollar as a crimp on u. S. Exports. But i look at the dollar as a low price. Tom it shows the strength of the american economy. David the u. S. Economy is the one id man. Oneeyed man. In 1998 the u. S. Dollar went screaming higher. Exports were going down in the second half of 1998. Isn was below 50 each month in the second half of 1998. We finished the year with 5 in real terms. You had 10 that was negative and you had an economy growing at a 4 annual rate. Tom p a trudeau, wanted to make quebec in canada a european province. The dollar was terrible. The Oil Renaissance came, and you are back to 134. Are we going to see another anothercanada as we see implosion . David canada is one of the underlying countries that have a lot of that is because of the weaker dollar has a huge antidote to inflation. We are talking about deflation here, talking about commodities. We are not living in the Davy Crockett paul bunyan era anymore. Is runninge cpi close to a 3 annual rate. So anything you can see, touch, or feel, that is deflating. But you cannot see services. Whether it is education services, entertainment services. Service sector inflation is being masked by deflation. You were talking about strength and dollar and how that is linked to strength in the economy. You have Central Banks that are clearly diverging. If you were to set Interest Rates for the global world, it would be going down, not up. How much is Dollar Strength linked to gdp and growth in the u. S. , and how much is it links to weakness everywhere else . David i would say that we have a template for this. Why we walk around not looking at what history books tell us. We have a third of the world go bankrupt in 19971998. Those regions go down 70 , 80 . Some of the economies contracted down to 20 . Take a look at what Interest Rates did globally during that punto. They melted. U. S. Economy did it ultimately go into some sort of destabilizing recession . Havehe u. S. Economy prosperity . Actually they did. Tom lets come back with David Rosenberg. Hans nichols, thank you so much, from berlin. We will continue with Francine Lacqua in london. Coming up in the next hour, we need to look at Digital Media. We have not done that in a bit. Ebook attempts to realize attempts to revolutionize their newsfeed. And linking advertising revenue to all these gizmos the kids needs to buy. Brian wieser, bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Francine lacqua in london. I am in new york. Heres vonnie quinn with the morning mustread. Vonnie speaking of the benefits of migration. This as European Countries migrants from in other countries. Vonnie i would argue that it is a little bit of a contentious oped from martin wolf, but he is the parents of refugees himself, so it is normal and desirable to move somewhere else when you are under political or economic pressure at home. Tom i thought exactly as you said, it was a very contentious article. Francine, give us an update on refugees and migrants in europe. What should we look for as we get to the end of the week . Francine this is probably the most important political decisions that the e. U. Has to take, not because it is a human story, but it also has the potential to bring up extremist parties. Watch out for this one. Angela merkel is paying is playing a very key role in this. Vonnie and hungary and a couple of other countries have said they will not take in anymore. Tom the count is the issue, the scale of it, rather. Thousands here, thousands here. It is a scale issue. As we move on from the ballet of the u. N. And all that, there is now what feeling that martin wolf gets in his column as well. We are with David Rosenberg. Stay with us on inflation. Good morning. Tom they are asking in the commodity patch, where is the next glencore . A real mystery about the fragility along trading analysis in commodities. A beautiful shot. Looking over with a ferris wheel in the near and present area. Right now lets get to top headlines. There is vonnie quinn. For thejust settling in night or you cannot blame traders if they breathe a sigh of relief because it is the most volatile quarter for market since 2011. Stocks rebounded around the world today. There are a number of reasons the commodities slumped. The slowdown in china and in exodus from emergingmarket assets. Japan may face it second recession in two years. Output unexpectedly fell for the second straight month. Retail sales were flat. That is likely to put pressure andrime minister shinzo abe the central bank to prop up the economy. Costco posted Quarterly Earnings that Beat Estimates. Sales rose, helped by a 2 gain in measured fees. Costco sells large volumes of at lowo consumers prices. It is the second largest retailer in the u. S. Eliminating 740 jobs, 15 of its workforce. The company has been hurt by falling Natural Gas Prices. They are down almost 60 since early 2014. And the nhl visits the scene of hockeys most famous comedy. Bay played an exhibition in johnstown, pennsylvania. Hockey is big in the small town of 20,000. The aging arena where the film was set, slap shot. Tom this was a huge deal a million years ago. The syracuse old dogs looked awfully good. The syracuse bulldogs looked awfully good. This is a great thing. I am going to do a massive shout out to jeremy roenick, who did pretty well in the nhl. This hockeyaft, put bill together. We had skates with metal on the bottom. Hasbottom line is, as kraft gone out and said we are going to bring the stars out to a little town they are doing that with hockey. It is great. You twothe next time are on together, i need some kind every creation. Of recreatee kind and. Tom it was a way different game back then. Much, much tougher. Vonnie it is already brutal looking to me. Bloomberg surveillance sports right now. R Toronto Maple Leafs going to help the best player of the game, the pittsburgh penguins. Will it work . David it will definitely work. It will take pressure off crosby and add offensive power to the best offensive team in the league. There is a little thing called the economy that we should talk about. Lets keep it up beat and look at a Housing Market that is decidedly upbeat. David rosenberg, optimistic even with present Economic Data. You like what is pending in housing . David i did not like the pending home sale numbers yesterday, but what i did like were the home buying plans index , which went up to its highest level in three months. Household formation is starting to pick up. Building permits are on a rising trend. My sense is that Housing Starts the next couple of years will be up 40 , 50 from where they are right now. Vonnie who will be buying . Not millennials. David we are creating job 25 to in that critical 30year category. A lot of these boomerangs that were living with ma and pa are starting to come out. A lot of them will move into rental units first. You could argue the Single Family has the single biggest impact on the economy. Tom but y