Vonnie russias president Vladimir Putin says he is trying to prevent the spread of terrorism. U. S. Officials say russian airstrikes in syria are not aimed at Islamic State, they are targeting opposition groups fighting serious president bashar alassad. Asidehas vowed to keep and power. Attacks hit one group of rebels trained by the cia. Secretary of state john kerry called for a political solution. He appeared with his russian counterpart. Even as we do not have yet a resolution with respect to some critical choices in the political solution, we think we have some specific steps that may be able to help lead in the right direction. U. S. Is concerned there could be incidents between russian planes and u. S. Warplanes in the same area. That government stimulus may be having an impact on manufacturing. Chinas measure of factory activity stabilized around a threeyear low. The report signals Government Spending on infrastructure gaining traction. Governmentrom forecasters, they cannot rule out the possibility that Hurricane Joaquin will hit the east coast this weekend. Uin become a major hurricane with winds of 120 miles per hour. Is east of the bahamas. Some say it will hit the eastern seaboard, others say it will veer away into the atlantic. Auto workers have rejected a contract for the first time in 20 years. Uaw members have turned down a proposed contract with Fiat Chrysler. Some Union Members were unhappy the deal did not bring an end to a two tier wage structure. Teams celebrated after clinching division titles. St. Louis beat pittsburgh 111 to win its Third StraightNational League central crown. Champagne after toronto won its First American league east title in 22 years. The blue jays were in fourth place two months ago. Tom what a great contrast. The blue jays, it is really special and new. The cardinals are a true sports franchise. Vonnie seems like every october we talk about the cardinals. Tom i dont know if you had this in ireland, in my youth you could turn on the radio and kmox in st. Louis was bouncing off the ionosphere. Vonnie definitely watched some cardinals games. The surprises of bloomberg surveillance. Vonnie quinn, a cardinals fan. Equities, bonds, currencies and commodities. A little red. Futures up 16. Within equities, bonds, currencies and commodities. Vix, 24. 50. Gold, south, brent near 50. Still negative Interest Rates in germany. Some optimism. This is auto sales. Im proud of this chart. This is 30 years on american autos. Heres the recession of 2001 that did not happen. They give us a lot of free cars. Heres the ugliness of 1991. Vonnie that is insane. Thats the interesting thing. As much as economists are not spending savings or the oil is not coming through, we are seeing car sales above 17 million. Tom this gap above the blue line is the uber effect. I m kidding. We will have michael with attention to that later on bloomberg surveillance. Of quiet markets, we dont know what to do with ourselves. Nevertheless, i hear this from , the idea of still negative Interest Rates. What does that mean for mario draghi . Jonathan it is difficult, bring up the two year with a negative yield of. 26 , the ecb cannot buy that. You have not seen and unwind in the bond market. Disinflation is still the same. You see it in the data as european factories cut prices. You see it in the market. Whats the policy response . We look to monetary and fiscal policy and shrugged, what are they going to do . Tom a fascinating moment. With lagardes comments, what do you learn in her important speech . Jonathan shes nervous. Come out andimf specifically recommend what they should do for policy. When that dropped across the terminal two months ago, im. Till surprised Jonathan Ferro with us from london. The debate is less the price of oil and far more the terminal value of oil. Is it 40, 50, or 70 per barrel. Exxon cares about this. So too, harold york, principal analyst. Wonderful to have you back here. I want to go to the future value of oil. How is the terminal value determined . We look at current demand and go out 10 years. We ask ourselves how does the market balance the demand. We look at existing nonopec production. How much of that goes into the decline. Eventually you come into a breakeven cost. Thats what it is going to take to get people to invest. History of the bright guys like you or Daniel Yeargin or name a sell side oil analyst of gaiming the price. Is it a dartboard . Skip it is a dartboard but we are better at it than the forward curve is. The market has to come back to the physical fundamentals. Anathan i want to ask question, when oil prices were on the way down we used to talk about a floor. We would go through 50 or 60. Do we need to switch the conversation and start discussing a ceiling. Resilient. As been is there a ceiling in the crude market . Skip i think we have always thought that 90 a barrel was in some sense the operating ceiling. That is what we needed to bring the last project in. You get political events and anything can happen once you get above 90 a barrel. 20112014, that was kind of driven more by the market fundamentals and then the nonmarket effects like middle east uncertainty. Great it is banks, energy Servicing Companies and Oil Companies cutting. How much more that do we see before the end of the year . Skip we think we are going to see another wave in the Fourth Quarter. Weve done cuts in the field. Costshave to compress further, we are coming into the headquarters. That is what the chesapeake move is. You are starting to see that the cost compression that has to be sustained to get us through 16 and 217 has gone from the field to the corporate centers. Is it is october 1, what your october shaping up as . What are you looking at that affects the price of a gallon of gas . Skip what we are looking at is how does the supplydemand balance correct itself in 2015 and when does that start to happen. Oil prices are flat until the second half of next year. That is when the market starts to see the rebalancing. It is similar to our longterm view, we are going to out to when does that destocking occur and trace back. Tom we will talk about the Balance Sheet adjustment later in the hour but the flow dynamics, no pun intended, is interesting. Jonathan it is more interesting when you account for what is happening in the u. S. When we judge whether it is a net positive for the u. S. Economy with of uti at 46 a barrel, we are using the economic models of the previous decade. The u. S. Is a major producer, do we need to look at the models adjust . Skip i think the models of the last 30 yearsskip , not just for gdp but the way we estimate how oil markets, there is of a shift that has to go on. In terms of how it impacts the net economy, it is two things. Well is expected that low oil prices would first be a negative impact as you cut back the Capital Spending and jobs. Confidentrs got more and start to see the benefits of the low gasoline prices you would see an upswing and that is what we have seen. It is very much a regional story. Texas and north dakota are hammered much harder. California and new york are better off. Skip york to give us perspective on your next gallon of gas. Getting him onks the show, he will be with us for the hour. Lagardes new mediocre. Ls about a global savings glut. Stay with us. Tom good morning, everyone. John farrell and Francine Lacqua joining a perfect day. The bridgehames, looking over st. Pauls cathedral. A Beautiful Day in london. We need world headlines. Heres vonnie. But time inress has the fight over spending. Lawmakers averted a shutdown by passing a temporary budget bill that keeps agencies in business until december 11. Conservatives will have another opportunity to try to defund planned parenthood. Report may new increase concerning the country is slipping into recession. The index for large manufacturers sell from june to september and will shrink further in the next few months at Large Companies that have benefited from the week yen are still not expanding domestic investments. Russia and the u. S. At odds over airstrikes in syria. Russia says the attacks were aimed at Islamic State targets. The u. S. Says what rush that really did was attack rebels opposed to bashar alassad, who russia supports. Lets bring this, in henry meyer from moscow. Ou are literally in russia is there any clarity on what russia is doing in syria . The russians claimed they struck Islamic State targets yesterday in syria. Says the areas which were hit were not areas in which Islamic State has a presence. This morning, the spokesman for tosident putin seemed confound those concerns when he said it russias goal is to support the advancing forces of president assad and the Russian Campaign is aimed at countering, as he expressed it, extremist groups. State. Ng islamic that would seem to feed into suspicions that russia has a brighter goal a broader goal. Vonnie this is going to be a problem, knowing what russia is going to do. In the financial times, wr when russianif and military personnel starts dying in syria, the applause might fade. Is there any good outcome . Even if president assad is supported by russia, the u. S. Is working in the opposite direction so were going to have chaos, are we not . Henry the risk is certainly that you could get a worse conflict. The Saudi Foreign minister two days ago said if russia continues to support assad, saudi arabia may have to increase support for the rebels. There are lines of communication between the militaries of the u. S. And russia. The russian hope is that actually they will construct some kind of Informal Coalition on the ground. We will see whether that happens. Tom there is a stereotype in the United States of a russian military, effort that is clumsy rusted, and not all that good. What is the quality of the military and aircraft that russia has in syria . Are these cracked forces . Henry the pilots are very good. The planes they have deployed are a mixture. Some are advanced and some are older models. That will impact the efficiency of the operation. Russia will have to deploy some aircraft at relatively low altitudes, which could mean the risk of being shot down and pilots being captured. This could have an adverse affect on russian public opinion. In general, these are crack forces. Tom we spoke to the latvian. Oreign minister yesterday focus off ofe the ukraine . Henry that is the goal. Will meet with his counterparts. One of the main objectives in syria is to get out of the isolation it has been under itce it and next crimea and asked it and ask it annexed crimea. Vonnie if we start to see civilian casualties at the hands of russia, what is the response . Henry there have been civilian casualties in syria. The concern is that the russian as carefulay not be and you will see more socalled Collateral Damage that has been the case so far. Theould also increase insurgency against president bashar alassad. You could end up with retaliation against russia. There is a risk of jihadist attacks in russia. Tom henry meyer, greatly appreciated. We will speakur to general richard myers, former chairman of the joint chiefs of staff. Over 4000 flying hours of duty in our military aircraft. In the myers, with us 8 00 hour. Stay with us, bloomberg surveillance. Tom good morning, everyone. Thank you for being with us. Vonnie quinn and tom keene, Michael Mckee and a bit. With us fromo was london. Time for a morning mustread. Robin wigglesworth in the ft, tamed . Y really be unsystematic on systematic risk. An emphasis on more safely. Pageis a fabulous one for all of wall street. Skip york with us on commodities. Part of this is the burgeoning etfs and matching your world of commodities with derivative hedging. Are you are we too smart for our own good . Vonnie it is is increasingly complex. The forward curve for oil does not reflect the oil markets anymore. Sometimes it is a head against a currency, commodity or a stock. Integration is going to do it but youve got to think your way through it. Tom robin talks about some players, cliff of aqr, ray friend,re these guys a of oury or a frenemy viewers . Think they are a frenemy. There is unintended consequences. Quite often, we understand what the consequence is after it has happened and then we adapt. Vonnie that is what they are talking about, the cobra affect. There was a bounty put on a dead cobra, more dead cobras will come about because people buried them in order for the bounty. Orderple breed them in for the bounty. When oil is going up and down, is it good for investors . This is where you have to trust your advisor. I was doinghings i do not look at my Financial Statements now. Tom why . Fretting on than what my funds are doing on a monthtomonth basis, im going to live my life. Tom ok. I am looking at the double every threesh fund, minutes. Robin wigglesworth, just wonderful. Good morning, everyone. Tom a washington, d. C. Where dreams can be made. He came out of reserve officer Training Corps at kansas state university. Richard myers became the chairman of our joint chiefs of of our military general myers will join us in the 8 00 hour. A Success Story in the military. With us later on on bloomberg surveillance. Top headlines. Vonnie thank you. Russia is rejecting u. S. Criticism of airstrikes in syria. Russia says its planes attack u. S. ,me targets as the the Islamic State. American Officials Say the russians bond bombed rebels opposed to bashar alassad. U. S. Warplanes are flying in the same aa. Russias foreign minister appeared at du and with john kerry. Response was to engage at the request of the syrian government. Establish channels of communication to avoid unintended incidents. Vonnie u. S. Officials say the russians gave them one hour of warning before the attack. China, Interest Rate cuts and Government Spending programs may be showing up in manufacturing. Chinas measure of factory activity stabilized last month. They are still at a three year. Manufacturers hurt by deflation and excess capacity. In afghanistan the Government Forces have recaptured the city from the taliban are the taliban denies the claims. U. S. Warplanes attacked after the afghans asked for help. Bernie sanders catching up to Hillary Clinton when it comes to fundraising. As much in collected the Third Quarter as mrs. Clinton and brought in about 26 million, most from small donations. Clinton took in 28 million, most from big fundraisers. Hurricane joaquin picking up speed as it heads for the bahamas. Where does it go after that . Hurricane joaquin is a category three hurricane with maximum sustained winds of 120 miles an hour. Forecasters say they cannot rule out that a hurricane will strike the east coast as early as sunday. Some models say Hurricane Joaquin could head into the atlantic. We dont know. Tom come on. Vonnie it is like a bowl of spaghetti, they call it the spaghetti model. Tom the cartographers at the New York Post say here we go again. The arrow points directly at the ritzcarlton. Shaking. Nder is vonnie it has become a hurricane to be taken seriously but we do not know tom hype free on bloomberg surveillance. Its coming vonnie we will be speaking to meteorologists. Tom speaking of hype, a jobs report tomorrow. Joshht of bloomberg of bloomberg intelligence. What will you look for tomorrow . Job they are all. Net growth. This month more so than ever. You got to look at what happened to revisions to the august number. 00, thatame in at 173,0 is much lower than the year to date average of 212,000. Policy makers are going to look to see if that gets revised upward. The moment,stion of arent these quality jobs . Theres a perception that they are not end there is push back on that perception. A lot of the nature of what work is has changed. There is a little cspan. Jobs for the sharing economy. It is interesting stuff. What makes a quality job, is it about benefits, autonomy . This is a conversation that is going to grow in this country. Neede what will traders to see before they start to believe that there will be a 2015 left off . Trendtheyve got to see a like number. The fomc has said they expect they are going to be lifting off as long as they see sustained progress. A 73,000 is not going to cut it. Youve got to have something that will make up the progress. Rk, have you been surprised by the layoffs . What is the level of ugly right now . Skip we are directionally down about 90,000 jobs. Tom how many more . Skip we might double that. Push that against your aggregate sense of 200,000. That means we are sort of normal at 250 or 260 . Skip our average last year was 260. Josh if we can get to 15 or 220 tom if you consider skips world, that is a great number. Fedie put into context the speak weve heard. There was confusion and now we have had all sorts of fed speakers coming out. Where would you say the committee is at . Josh i think they want to hundred 15000 and expect if the u. S. Data can hold. Management. T risk janet yellen overplayed her hand a little bit. She did not say anything, she just said we are expecting more progress. She said if we see more progress, we expect later this year. Placingwhy our traders a 43 probability on a december move . Josh traders have to price in the full range of possible outcomes, you have to get into catastrophic outcomes. The fomc is not talking about catastrophic outcomes, they have to focus on the most likely outcome. They do not have such fat tails. Vonnie our survey shows we are going to see 200,000 after 173,0