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tv   Bloomberg Markets  Bloomberg  October 27, 2015 10:00am-12:01pm EDT

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from bloomberg world headquarters in new york, i am betty liu. here is what we are watching right now. shares of alibaba are searching the most in five months. the company has to find a slowdown in china's economy. shares have climbed by over 30%. closeors are playing attention to the sales of the new iphone, they will get a preview of what to expect. and behind-the-scenes drama has led to a budget deal in washington last night. a lot happening this morning. we also have breaking news out of moments ago on how american consumers are feeling. i want to head to the markets desk where julie hyman has more. julie: we're just coming out from the conference port, that
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number is falling more than expected, coming in at 97.6, the estimates was 102.9. and the prior one is also being estimated lower. it has come down in the last month, reflecting what we saw in august in terms of the august selloff. let's check what is going on with markets to see if there is any reaction. all three of them are doing -- we have a lot of earnings out today. [laughter] anyway, let's take a look at the bloomberg terminal to see what is doing the best and worst. we have a lot of earnings out today but energy is really the big drag. that has to do with energy prices.
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big stocks like exxon mobil and chevron are pulling back because of oil and natural gas tumbling today. oil fell to a two-month low. we are seeing natural gas trading below two dollars for the first time since april 2012. in both of these cases, it is still a question of the glut that we are seeing in those. we talk more about this with oil, but it is happening with natural gas as well. shale has something to do with both of them. betty: but there is not a tumble with alibaba earnings. julie: definitely not. alibaba, thet shares are soaring. they are said to have their best month since they went public. out withny is coming earnings that did better than estimated because people were looking at the chinese economy and not expecting much. but
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through partnerships it had, when we looked at my imap -- health. the largest performing group, pfizer and bristol-myers squibb are both out with earnings that beat estimates. both of them are raising their forecast for the year. bristol-myers is raising the forecast for the third time this year. so much tok you julie hyman with the reaction in consumer confidence numbers. let's check in on the first word news with vonnie quinn. vonnie: thank you so much. we start with a new poll and a warning. -- european neighbors don't solve the crisis. more than 80,000 people have entered in the last 10 days.
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private security guards are being hired to help police. meanwhile, the european union is stepping up talks with the u.s. over a data agreement. gave u.s. access to private details, but once it traveling tors are rescue survivors because of the earthquake in afghanistan and pakistan. the death toll is at 339. border is a long pakistan and china. new insights today in a hospital in the u.s.troyed airstrike. a green beret officer said that he thought that the taliban and had control of the hospital. but doctors without borders say they told the u.s. that there were no insurgents in the clinic.
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30 people died in that attack. china is denouncing the u.s. for sailing a warship into their waters. south china sea but the u.s. does not recognize these as a territory. the philippines have competing claims for the island chain. news rightook at the now, you can always find the latest news on betty: that was vonnie quinn. we just saw consumer confidence numbers dropping this month. how are america's feeling about owning? home prices continue to rise. index is climbing at an annual rate of nearly 5.1%. that is the biggest jump in a year. -- told us yesterday that the outlook for the housing is positive. ok, that is what he said
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yesterday. in the meantime is the cocreator of the s&p schiller index, robert shiller of yale university. prices,rprised at home we had a huge august drought in the market. people were wondering, oh my goodness. rbc and other crash? so were you surprised by that? not surprised, because we are reporting the august numbers at the end of the summer seasonal. normally, home prices are week in the fall, so if you look at seasonally adjusted numbers, they are flat. up 1/10 of 1%. so seasonally, that does make sense to you. at the do we look for end of the year? in the next three months? robert: it is difficult.
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the indicators seem to be pointing every which way. we just saw confidence falling today. betty: we saw new-home sales yesterday down to a 10 month low. robert: yeah. i used to forecast formally. one thing that i have noticed is that the -- over the last six months to the year matters. a year ago, our home prices were going up every 10% rate. now they are at a 5% rate. because this is not the stock market, this is the housing market. that shows there could be a decline in home prices over the next year or two. betty: what is behind that? robert: i think psychology. [laughter] the fed is about to raise rates and that is affecting it.
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do this year is not going to have a big effect but the public is very focused on that. unnaturalng with terms at 0% interest rates. sayy: i've heard people that ahead of a rate increase, that might encourage people to go out and finally refinance or go out and finally by the home. he does this may be there last chance to buy a home with ultralow interest rates. why isn't that working? robert: i think it did work really well in 2012. during one of those qe events when mortgage rates hit a record low, just over 3%. and that did give a housing --m, but now, interest rates you might be right. i don't know. [laughter]
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you have to talk to ordinary homebuyers and see what they are thinking about. betty: ok, so let's just say that we get softer prices not just through housing but still doesn't like it is picking up, gdp numbers are likely to come in very low. does that mean that the fed is still going to raise rates in december? robert: probably not. we are in a puzzling economy. it has been going on for 7-8 years. this week economy and it is worldwide. a long-term i think that right now, people -- there is a fundamental long-term -- that is going on. in terms of technological
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unemployment as computers replace jobs, it is creating a sense of anxiety. hold back further recovery in the economy. it might keep prices high. investing in long-term assets becomes a lost hope that people have to reassure themselves. betty: speaking about anxiety, we have a great report out today on bloomberg about the statistics about right now, we have six million people in america who are working part time. so this is an incredible number. and might that be a number that and useslen look set as a justification to hold off on raising rates? i know janet yellen, she is a very caring person. she is not a numbers person, although she is good at numbers as well. so you are right, there is a
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malaise. there are also a lot of people who say they are tired and they couldn't get back into the labor force even if they wanted to. that is a big concern right now and i think that might incline her and others to keep rates low for a lot longer. we don't know how much longer. other countries have a raise rates and had to cut them back. fact, shew, and in will possibly be raising rates in december. arethat will be when they adding more stimulus. so that will push us even more in the opposite direction if it pans out that the fed raises rates in december. so bottom line, do you believe they will do this by the end of this year? what is your forecast? robert: it is not going to be until next year and we may get bad news that delays it even another year or more. i don't know. but right now, it looks a little
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iffy. that was robert shiller from yale university, thank you so much for joining me. we are going to stay on housing and we will speak with one of the biggest property players here. washington, john boehner is speaking right now on the budget -- that is not boehner, that is kevin mccarthy. aboutl be following up the late-night budget agreement that was forged. there is much more ahead in the next half hour of the bloomberg market day. a slowing shaking off chinese economy. investors are celebrating. we will have much more in a moment. ♪
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betty: good morning, welcome back to bloomberg market day. it is time for a bloomberg this is flash. forl crown -- opens business today. the resort hopes to appeal to families and non-gambling customers. cochairman tells us that casinos will still be the main financial driver going forward. casino gaming will be the financial engine. without that component, we couldn't build these amazing, fantastic stuff. at the end of the day, non-gaming does not generate the cash flow that we need. at the same time, we are proud
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of it. i think the future customer that we see, the demographics of the future customer, they will want more than just gaming. betty: the hollywood themed ande features gaming tables -- hotel rooms. posted third-quarter earnings that missed -- they attracted more than one million new subscribers to t-mobile but that also put pressure. up later today we will be speaking with the ceo, john ledger. don't miss that interview. you can always get more business news at doolittle isil live at the nasdaq. marvin l is plunging right now to the lowest intraday level in two years after the -- after --nounced
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resigned from the accounting firm. saying that they need to expand the 2016 audit. are lookingthey into the possibility that it could be recognizing revenue early. clearly there seems to be some sort of an issue here. company is nowhe down for its eighth straight month for the longest losing streak. shares are plunging. down more than 18% at this time. about 2%.dex is off and on the green side of the ledger, we are looking at the china related stocks on the tail end of alibaba. is up on their strong quarter. they do have a 15% stake in the company. that could be a relief to
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investors after yahoo!'s disappointing earnings. it is now on pace for the best month since 2013. so much.ank you that was abigail doolittle at the nasdaq. -- reporting a massive 32% increase. mobile was a big driver even though prices are getting cheaper and cheaper. shares are up about 5% right now and they are bringing yahoo! along with it. yahoo! has a big stake in it. ok, so, this is surprising about where they got the growth from. >> it is. it shows that there are more and -- users using ipads
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iphones. they have tried to tap into that. it is a good time for alibaba going forward. betty: what about the cloud business? >> i believe it was over double growth year-over-year. however, you have to remember that it is still very small in comparison to the rest. you can see what they are shifting towards. >> they want to be the next amazon. they want alibaba cloud web like amazon. so how are they building towards that? >> they are building new data centers. they are trying to follow domestic companies overseas. and i believe they will try to move with international companies as well. how much of their business is china? 83%.
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it is still the majority of their business. betty: we had daniel zhang on the conference call, can we play what he said about china? when you have a chinese economy that is only 37% penetrated in terms of moremption relative to developed countries, you are looking at over 60% of the company that is consumption. so there is a secular tailwind driving consumption growth. ok, that was joseph tsai, the vice-chairman of alibaba. can they just continue to grow at this pace in china alone? absolutely. there is very little penetration into the rural areas. there are thousands and thousands of villages that are through thed
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alibaba platform. that is where they are targeting. betty: we will be talking about that all day long. take you so much for joining us. turning now to the budget and the budget battle. or maybe it is not a battle anymore. you're looking at a live picture right now, that is john boehner saying that this is a good deal for the economy, but how could it affect who will succeed next. we will talk about that latest on the budget battle. ♪
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>> it isn't a whole than what he and senator murray have put together. betty: that is john boehner, he is at -- he is answering questions about the budget deal. he said it is good for the economy and it is what they needed to do to have a clean slate for the upcoming house
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speaker, paul ryan. so that is what he is saying right now. thiser, u.s. lawmakers -- ascension of the debt ceiling. it turns out there are plenty of reasons for the jitters with the debt ceiling. mattingly joins us now from washington with more. so is this good news? have we averted -- have we averted a government shutdown? is obviously a huge wild card and that is the people who are technically following john boehner haven't decided to vote for this. staffat the white house and the senate and house staff were able to agree to should take all of the major crises off the table over the next couple of months. that is very good news for paul ryan. the 2011ok back to debt ceiling crisis and the 2013 crisis, the accountability
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office said that $1.3 billion were taken on by the treasury department in 2011. in 2013, use our rates skyrocket. so real market impact because of these crisis in the past. , and by allhrough accounts, it is on that pass, that is a big deal not just for the next speaker, but also for the participants. betty: how are they going to pay for this? phil: they are going to look at the strategic petroleum reserve. the u.s. has hundreds of of oilds of barrels reserve. they will be selling this off. in the near term, this is not a good idea, but there will be changes to social security and to medicare as well. the big issue here is that not only is the debt ceiling off the table, but because the spending levels being set for the next two years, the government
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shutdown looks like it is off the table. much. thank you so that was phil mattingly in washington for us. still ahead, it is one of the most iconic buildings in the world, the empire state building. what about that view downtown at the world trade center? we will talk to anthony malkin. next. ♪
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world live from bloomberg headquarters in midtown manhattan, you are watching the bloomberg market day rid i'm betty liu.
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good morning, bonnie. good morning. we start with the polls. ben carson has trumped the donald in polls. with 22%.econd the rest of the gop presidential candidates are in angle digit. -- single digits. more than 60 republicans join democrats to advance the bill to approve theex-im bank. u.k. authorities are looking at charges of possible money laundering related to feed for. david greene leads the uk's serious fraud office. at least 14 executives have been indicted. south korea plans to raise defense spending to deter the
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threat from north korea. are signs that north korea has been expanding its nuclear arsenal. that's look at our first word news right now. you can always find the latest news on betty. betty: thank you. --ton own here in new york, blackstone here in new york, and now a sale of multifamily homes to bury sterling. $5.4 billion. for has earned a reputation predicting market swings. joining me now, another property player in his own right, tony ofkin, the chairman and ceo empire realty and trust. tony, good to see you.
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tony: nice to see you. betty: what did you make of that sam zell deal when you saw he made it? tony: go mets. betty: go mets. betty: this equilibrium between the way the public and private right value real estate now and public companies are rewarded mostly for lower levels of debt. private equity players are able to put on larger amounts of debt . debt is very available, very inexpensive. there is arbitrage. sam, who i know, is very smart. , who i know, is very smart. they are looking at the exact same picture from two different perspectives and is logical for each of them. big pricing is a public and private.
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will that change at all when the fed changes rates? the feds that went in, you see them pull back a little bit when they think the treasury bill might go up. folks that went into private equity, many are looking at the store of wealth, a protection against downsized, so those returns could be much greater. there is no question in my mind people make a decision every minute, reducing their exposure to publicly traded stocks, and folks who have money to put work private equity, is like a tube of toothpaste. the only differences there is a sell by date, and use by date, and you're never putting that toothpaste back diane. betty: you are publicly traded, right? we are publicly traded, but from our perspective, we are at one of the lowest levels of
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debt. we are really playing for the long-term. i am the biggest shareholder. from my perspective -- bother youoes not isugh, tony, that the reit down 10% so far this year? bother me atn't all. and beyond that, we are a different beast. we are building out and internally embedded derisk gr our to turn around portfolio. we have a great balance sheet to do it. betty: let's talk about the empire state doping. empire state building. are you getting your starbucks delivery? they have not let me made a copy, but i have been in there. the tenants love the amenity. and we have the size to justify
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that kind of venture by starbucks in our building. the building is doing well. we report earnings this week. betty: yes. tony: that being said, i can rely on what we have said in the past. leasing velocities are good. betty: what about signing tenants? we have good work we have done. we will release our results this week. we continue to perform well. we are pleased with how we are doing. is in one company consolidating office space? tony: they splits. -- they split. are reduce sing the number of floors it occupies. our global brands groups floors, the third floor of the entire state building, we least to linkedin. betty: they expanded. tony: linkedin was something we put itle to take and
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into linkedin. we are building a campus on our campus. we offer a campus within a building at the empire state building. betty: what are they adding on then? adding at is linkedin question mark they have more jobs. they have expanded in the building. they are quite pleased with us. they are building quite something innovative within the building. a campus within a campus. we have excess elevators, particularly as we upgrade them. they have all sorts of private vertical transportation options for their employees. it's very healthy what is happening with global brands groups. they don't need the space. we are taking it off their hands. you've rankled a few people. your rent to linkedin, but you will not rent on -- you won't rent to startups that you say are gig workers?
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gig: linkedin is not a worker. they are a real company. they have a tremendous amount of embedded growth. they have demonstrated the ability to execute. these are different businesses. betty: they are established companies. startups, we are not interested in. we have a division of ebay, linkedin, shutter stock. those are our tech clients within our portfolio, and they are real businesses by any measure. do you have a redline question mark a tech company, but it has to be public? tony: what is the future cash flow? my background is private equity. we have a private family office. we do take venture capital risks, but if we succeed, we make 2, 3, 4 times our money on average. in real estate, all you are
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doing if the company succeeds is you are collecting rent. i would rather collect rent from someone i know has a certainty of paying it. value of the observatory in empire state building is very valuable and continues to draw tourists. there was a decline of 5% that was reported. tony: the revenues are slightly up. arey: ok, i guess people spending more. is that because of the world trade center? tony: it could be partly because of the world trade center. activities in new york city are down in most instances by double digits. we know different service vendors to pride different -- attractionserent within new york city. what we see right now is a diminishment and foreign travel to new york. why is that? stronger dollar? tony: stronger dollar plus real
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economic downturn. these have real effects. and if you are looking at the high-endults, the hotels are reporting down. at what is actually happening, we think we may be in a had went due to tourist trade and travel. that may be somewhat attribute double to one world trade center. betty: what are you going to do to combat larry? all, i don'tf think it's fair to set me against larry. i'm 53. he's a little older. we are constantly upgrading at the observatory. we made improvements last your. the nice thing we like about our business, it is important that we make a big expenditure, but were definitely looking at what we need to do to remain competitive. we are not in this to compete during we are in it to win.
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betty: tony great to see you. tony: great to see you. more ahead on the bloomberg market day. everybody is expecting apple earnings after the bell will come down to iphone sales. plus drugmakers reporting results as well. at the look at more follow-up from this incredible valeant drama. the stories and more when the bloomberg market day is back. ♪
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welcome back. we are just over an hour into the bloomberg market day. for more on the markets, let's go to abigail for more on the nasdaq in midtown manhattan. you are starting with jeff lou?
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reporter: it's an interesting quarter. they beat earnings estimates by one penny for 142% growth year-over-year. so, you would think that would be pleasing to investors, but the stock is up more than 8.5%. the octoberreason, passenger revenue was off. if you look at the stop longer-term, longest winning streak ever. 65% relative to the composite index of 6% and from a year140% ago. tremendous performance today, not so much. and a bigger loser is marv l. tumbling toer is his lowest level in two years after price waterhouse coopers resigned as the company's
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external auditor, saying that marvell needs to expand its 2016 audit. did come out and say it would look at revenue recognition, seeing if it is doing it to early. they downgraded to a cell from a is and now these stock piece of wallpaper. it is record long losing streak today, down more than 16% at this time, betty. betty: thank you so much. the nasdaq.ittle at now for the bloomberg business flash. his new stories making headlines. hit theulators automaker with a record fine of $105 million in july. they said that they failed to due to flaws.s
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estimates ford tesla. -- for ford. joined byg to be ford's cfo in the next hour. united parcel service posted third-quarter profits that missed estimates. bases cd's on the package's size, not wait. negotiations are ongoing. you can always get more business news at staying on another company story, the world of big pharma is shifting to israel. joe poppa is in the middle east, trying to persuade
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investors to reject the $27 billion takeover offer. >> we have high-level confidence that our long time shareholders recognize this is a bad deal for perry go -- perrigo shareholders. it will look -- if you look at pe perrigo standalone multiple, it will be depressed. we have a high measure of conference -- confidence it does not work. reporter: you said that it was inadequate regarding that offer. what price would be less insulting? perrigo is not against doing deals. this deal is a bad deal. i will not say what the right number is. this is a bad deal put forward by the mylan organization.
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the mylan takeover is bad at any price? we think this deal significantly undervalues the long-term values for the company. is a bad deal. i do not want to speculate on any individual price other than the deal on the table today. reporter: there are three scenarios, right? from 50hey shipped percent, deal off, 20%, extended, 80%-plus, deal. what happens if we go from 50% to 80%, what will happen the morning of november the 14th? me start saying first and foremost the most likely outcome for this is this deal will not -- will be rejected by the shareholders and will not get to 50%. having said that, i think it
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will be rather chaotic. mylan would still need to run the company. all of those things would still have to happen. i think it would be very chaotic and for that reason, we think it would be more difficult to synergies and the right answer is to reject this and not get 50%. meanwhile, as this has been going on, have you been holding talks with other parties being bought? the onset of this i did receive some calls in april regarding activities. but we believe that this is a bad deal. a badecause mylan put deal, we do not believe we are on a shot clock to get in answer soon. we will do what is right for
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shareholders. we did for additional transaction since april. admittedly smaller transactions, but once we decouple on november 13, we think there is a chance to go out and do what we have done in the past, and in the 27t years, we have done transactions where we have continued to grow our business 920% total time, shareholder return. joey: that was perrigo ceo papa there. -- ones on apples as apple as a gets ready to report its earnings. it all comes down to the sale of one product and one country. guess again. next. ♪
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ok, it is the iphone that dominates. welcome back to the bloomberg market day. i am betty liu. as apple releases its earnings after the bell, investors looking at apple for the holiday season. there is growing concern that apple demand will not be what it was last year. john butler sat down to talk more about apple. john, you say it comes down to one product in one country and it is china, right? say it comes not completely down to china, but it's a big, big part of the iphone story. 20% of iphone sales, and iphone is 70% of apple's total sales, goes china in many ways, so goes the iphone. betty: and so goes apple. so goes apple, right.
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what is interesting to me, betty, if you look at the growth apple's chinana, business has been growing at two times the overall iphone business. i should clarify, apple's iphone business in china is two times faster than the overall growth rate for iphone. betty: it makes sense. john: any affect in china is going to get magnified across the franchise. is going on? is there speculation that the demand is not there yet? there there is -- john: has been concern as economists come out and say we are worried about china, what is the real growth rate? is it decelerating? is it stable? is it accelerating -- i don't think so. what does that mean for apple? does the power of the brand rise above all of that economic noise? in a way they have done that
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time and time again. the alibaba results though. clearly people are buying in china. john: that is the big question. is this all much a do -- much g do about nothing here? betty: or is there some worry for next year? john: it's all about the outlook. that brings us to the next point, which is how are the new products doing? if you are going to sidestep the transition issues everybody is worried about -- if iphone which has been rising rapidly over the years suddenly plateaus, you have new products that can come in and take over the slack? betty: how is apple doing with product transition? john: i think apple has the right set of products. i do not think they can pick up any meaningful slack and iphone sales. apple, seen before with
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these products can ramp quite quickly under the right conditions. betty: exactly. you hit the right time. the ipad. apple pay comes of age, apple music, apple tv, a lot is going on. about we have heard semi-and the problems they are having. does that signal a bit of a problem with phone sales in general? john: it could. these players are the canary in the coal mine for the tech companies a lot of times. people watch these closely. they make chips for the ipad and the iphone, and apple has a lot of different suppliers. they may have just switched suppliers. there's a lot of questions around whether or not to worry about that. i think we will find out more tonight. we will get more
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clarification. outlook.s all about people are trying to read the tea leaves. looking at apple pay. i'm looking at apple watch. greatapple watch has potential, too. i don't think the square works. -- the rectangle works. i think we need a round face. betty: thank you. me, jon leger, the ceo of t-mobile will be joining us at noon today on the bloomberg market day. ♪
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betty: it is 11 a.m. in new york and 3 p.m. in hong kong. welcome to the bloomberg market
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day. from bloomberg world headquarters here in new york, good morning. i'm betty liu. here is what we are watching of this hour. alibaba beating wall street estimates with a 30% jump in revenue. the company is searching, shrugging off all the worries about the chinese economy. pharmaning news and the sector. former ford cfo bob shanks is joining us. of the automaker are falling. i want to head back to the hymans desk were julie has the latest. we have economic news and earnings. julie: it's not helping. the news we have gotten thus far, a lot of the big earnings have been relatively negative
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this morning and after the bell last night. in addition to that, we had economic data, consumer confidence and durable goods orders both coming in the low economist estimates. all of that is putting pressure on the major averages, although i should mention health care is starting limit the decline. she will dig more into that in just a moment. i wanted to dig into the transports today because we're seeing a lot of selling in the transportation average is, down more than 2%. let's look at the movers. jetblue airways. most of the earnings metrics beat estimates, but i was just meeting with one of the bloomberg intelligence analysts to say that the company may be adding more capacity than investors wanted. there are concerns an airline industry about adding too much capacity. will that put pressure on earnings? missed estimates, and holiday forecast
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looks good, the earnings news is putting pressure on them, and union pacific down 3.5%. another bloomberg intelligence analyst pointing out road runner coming down below estimates, putting pressure on the railroad across the board. we have other negative earnings reports i want to touch on. ford falling, third-quarter profit up. it looks like it was a higher tax rate. matt miller will be speaking to the cfo a little bit later on, comcast shares. i think with a chart. here we go. comcast down. finally hartford financial, tumbling. it had a higher number of auto claims than it had people driving their cars for longer, so that raises the chance they are going to have some issues, some accidents. betty: right. don't forget the fed meeting though. meeting,, the fed
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right. it is almost an afterthought because there is no expectation in the change in rates. as we see that economic data, we see the rate on the 10-year come .own come a 2.02% it meansrrency market, nunnally buying treasuries, but we have seen an increase in the yen in recent days. the japanese yen going to a seven-week high. this is the dollar lower. at and we see the dollar strengthening still against the euro because more accommodation is expected in the eurozone. betty: ok, julie. thanks so much. our markets correspondent. checking on our bloomberg first word news, courtney donohoe has more from the news desk recording? we start with the deal on spending in the debt limit. president obama and congressional leaders reached
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that deal last night. now they have to sell it to their members. default.t's a possible the deal also imposes cuts on medicare. house speaker john boehner says the vote will be held tomorrow. he made need democratic votes to get the bill passed. speaker boehner: the agreement is not perfect, but the spendingve was a clean increase without additional support for our troops or entitlement reforms. this is a good deal for a troops, and taxpayers, and the american people. hardline republicans are likely to vote against the bill. imo, it is expected there will the exporto reopen import bank. conservative republicans view of ex-im bank as a form corporate welfare.
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warships sailed through waters the chinese claimed. it passed within 12 nautical island. an artificial slipping it is warning it will --ce off its borders if the slovenia is warning it will for his of its borders if the agreement on refugees is not reached. ensure theys it will safety of its citizens. and the world series starts tonight in kansas city. the royals face my new york mets . matt harvey well take the ball for the mets. new york is making its first appearance in 15 years. kansas was there last year, -- santo fran francisco
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francisco. you can always by the latest news on betty. betty: big names and big pharma out with earnings. we were talking about that earlier. analystizer, all of the estimates. we wait for julia -- gilead after the bell. and hello, valeant. joining me now, our guest. we kind of wish that valeant did not happen because it is taking it out on all of these other stocks, isn't it? even some of their peers that did not engage in that kind of behavior like acorn pharmaceuticals had so off as well. reporter: did you look at it? -- betty: did you look at it? jeff: yeah, we looked at it. ,e always favored allergan which does a lot of the same things, but less aggressively.
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betty: do they have the relationships with the specialty pharmacy companies? jeff: no, they haven't. what will break that correlation? right now they are all getting sold off. jeff: i think you just need some time. maybe the next earnings release from outer again, just to put those fears to rest. in on the you listen valiant call it all, out of curiosity? jeff: yeah. they answered a lot of questions, but not the newest round of questions. employees work for both companies and there's not really separation between the two of them. those things are still out there and it's going to take time to answer it. betty: so, there's no buying opportunity in your opinion? jeff: we would rather on a company with a safer name.
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to getif you were comfortable with valeant, what would have to happen? jeff: they have to sever ties with this pharmacy. that's where the allegations that come about. and then go back to the traditional wholesalers in the pharmacy network. there is nothing wrong with that. they have claimed a lot of minimum impact on the business. why not clear the air right now? betty: let's move on to the bigger pharma companies. what did you make of merck? jeff: they had excellent results. medicatione diabetes , is doing well. overall, it was an excellent number. betty: it was. they beat handily. a drughe big thing is that is being used today in lung cancer. it's going to expand to skin
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cancer and a lot of other soft tissue cancers. they did about $160 million in the quarter. they will do well over a billion dollars next year. betty: and acquisitions by mark? jeff: they have done some. i don't think they're going to do anything big though. i think it will be smaller acquisitions to bolster the pipeline and it will keep increasing the dividends and buying back stock. betty: gilead will be reporting after the bell today. what do you think? jeff: i think they will have a great quarter. we saw bristol-myers has a great number for hepatitis the and those drugs are usually paired together. that bodes well for them. i think all eyes for gilead are on acquisition. they publicly said they are out there. they are just going to be patient and look for something that is the right fit. betty: anything on abbvie and what the fb it -- what the fda
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found? jeff: there was that safety warning. patients who already have liver cirrhosis should not use the abbvie drug. a small percentage of patients already in the late stage of the disease. that it has a reputational impact on it. i think that gilead will be the leader for a long time to come. betty: jeff, do you feel like the fda is getting more aggressive question mark it seems like there have been more warnings. would actually argue the other way. 10 years ago, there were a lot of scandals. the fda was very strict and very tight after that. but now that we have gone 10 years since that, i think that they are listening up and have created pathways for accelerated newoval and the number of drug launches has come back to a new high. i think it's a very friendly fda right now. jeff, great tot,
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see you. much more in the next half hour of the bloomberg market day. living up to its promises. still not we talked to the chief financial officer bob shanks. and warning lights about the global recovery. the former latvian prime -- the eund the you commissioner will be joining us. and investors wait to see how sales of the iphone's six and last quarter.d we go through all of that in a moment. ♪
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betty: good morning. welcome to the bloomberg market day.
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businessthe bloomberg flash. real estate not slowing down. home prices in 20 u.s. cities rose faster than in august. prices were up 5.1%, the biggest increase in a year. as you heard from robert schiller earlier, there are warning signs in the housing market. also, americans are not as optimistic about the economy. indexnsumer confidence fell in october. however, the number is higher than the average during expansion. and t-mobile paying the high price of user growth. the wireless carrier reported earnings that missed estimates. than oneed more million new subscribers, but that also put pressure on the bottom line. coming up in the bloomberg market day, the ceo of t-mobile, atn legere is joining us noon eastern time.
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you can always get more news at let's go to julie hyman to check another company movers. julie: rabble not doing so well today. the company reported an increase in active diners, but the daily average fell, although they did rising year-over-year. the company projection for fourth-quarter revenue and eva. below estimates as well. they are off 20% as well. if you look at my bloomberg terminal, you will see what the last year and a half has been priced $26. the ipo you have seen it already far -- fall below it. it looks like it is going below once again today. it is trading right around that 20 dollar mark. also, we are watching consol energy. the coal and natural gas producer.
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the loss of much wider than next debate -- then estimated. $.28. the estimate was three cents. trading sharply lower by about 12%. and of course coming's, as well, the engine maker. sales internationally were week in latin america. shares down 9%. here in the u.s., sales looks as a resultcummins of that will be cutting costs -- cutting jobs to cut costs. if you look at my bloomberg terminal, there is a function where you can track the job losses for a company overtime. this goes all the way back to 2007 for the company. as you can see, the little circles here delineate these job losses. cut have not had a job
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program since late 2012. it has been a couple years since they seen the need to cut jobs, and the fact that it is doing it, sometimes you get job cuts and investors are happy about it or they think that is the correct move to make, but in this case, it looks like the earnings news -- betty: that is a cool function. julie: matt used it earlier. he turned me onto that. full of terminal functions. julie hyman at the markets desk. alibaba reported a 30% rise in revenue, thanks to ad spending. they are growing in mobile acording to the ceo on conference call today. >> the mobile transition has deeply changed people's consumption patterns. -- a lot ofld say
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inple will enjoy shopping the middle of the night when singles they has started. betty: singles day is coming up. i want to introduce cory johnson from san francisco -- is comingles day up? betty: i knew that you were going to ride on me that -- rag on me for that. alibaba, though it is a big company doing $22 billion -- it is a big company, but is growing really fast. sales were 32% year-over-year and that kind of pace of growth, you can see it is really disconnected to whatever is going on in the chinese markets or the chinese economy, because there is this rapid move, the .ind behind alibaba
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forgetting their international notions of expansion. this is happening in china. so many more people online, of course, embracing mobile, as they mention, as if desktop was ever a factor in china. it wasn't. they are working on mobile and getting commerce to happen in mobile. it's really their game to lose. in china that is a rapid growth story. it is a changing demographic, regardless of the slowest gdp growth in 25 years. betty: we are looking at alibaba's share price. it is awfully high so far this morning, so can you interpret anything in that? it was a huge jump right at the open and now it's coming off. cory: if you look more carefully at the earnings, the revenue growth, i think, is the thing to pay attention to. mind you, i am not forgetting companies that don't make money. separatelyve a company.traded
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they recognize that in the core. they give the actual earnings as net income and the earnings-per-share a huge boost and i think that have my number grabbed attention before people took the time to actually, god for bid, took the time to read the press release. over $20you're doing billion, 33% year-over-year sales growth is nothing to sneeze at. impressive indeed area -- impressive indeed. betty: cory johnson, thank you so much. i had on the bloomberg market -- ford third-quarter results. we have an inside look at the automaker. ♪
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betty: welcome back to the bloomberg market day. fourth-quarter earnings are on a roll. detroit where in he is speaking with ford's
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chairman bob shanks, who is in detroit. sadly, i am not in detroit, but bob is in detroit. thanks for joining us. let me ask you about the miss on the bottom line. your pretax profit was a lot better than analysts forecast. was it just the tax rate that analysts did not calculated correctly? guest: let's talk about the estimate. we blew through the estimate on the top side and in terms of cash flow, we blew through that is well. on operating pretax, we were spot on and there was a tax rate difference of one percentage point. we guided originally at 30%, and we came in at 33% and the it 32%. were that is the difference of the penny. but overall, we outperformed ends we nailed it. i'm just curious.
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we had 45 and a half cents in our survey. shares are off three or 4% today. what do you think is driving the stoploss? you think ist do driving the stoploss? alix: i think there -- guest: i think there is a game about whether you beat or not. revenue was far, far stronger. our net income was up 129%. we grew share. volume is up rid revenue up. strong performance. i think over time, once we get and -- did they beat or not people understand the quality of the performance we delivered, the value will be recognized by the market. well, i think we understand profitability is strong, average transaction prices are big, margins obviously are a model for the industry.
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adam jonas, a well-respected analyst over at morgan stanley, though says it is time to get out. he does not think that this kind of profit is sustainable. what you think about that? guest: i think we have quite a bit of room in front of us in the u.s. market in particular. there is no sign from any of the leading indicators we will see any type of slowdown in the momentum ofovery or the u.s.. there is still a lot to go in terms of how we will support stronger sales of our pickups and we have opportunities to opportunity -- with opportunities to improve business outside of america. value willhe continue to be created and the stock price appreciates. matt: i put up a chart yesterday . the average age of a car on the road is 11 and a half years. all busily credit is easy right now. you can get a loan pretty cheaply. you mentioned the
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housing rebound is strong. do you think you can hit 20 million units this year? is that about what you're projecting for u.s.? for this year, we are making a call of 17.7 million units. that would be up about 5%. that includes medium heavy. there are three or four different reputable firms that think somewhere between 17, 18, and higher than that for the next two years out through 2020, which supports our view there's a lot more road ahead of us in terms of the recovery in the u.s. look let's shift gears a at europe. since i have been covering this industry, you guys have had touble over there, looking break even, get profitability. you say there is more to come. when? when are we going to see that? how profitable are you going to be there? the industry seems to be bouncing back quite well in your? guest: the industry has come
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back quite well. we saw a reduction, a loss of about 60%. we saw topline growth, both in terms of volume and also revenue, as consumers were responding to our products, so we feel very positive about the track we are him. we think we are running way to profitability and we will talk about that in early 2016. matt: do you think 2016, for the full year, we can expect a profit out of europe? guest: i will let you know in a couple months. the: what you think about situation in asia? your results there were disappointing compared to some estimates on the street. at you are getting a lower amount out of a chinese jb. is that the only issue? what is going on in asia that is a problem? we have always performed
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to expectations in america and the offset is the asia-pacific. in the second quarter, we knew we would have to the stop our dealers as we tried to keep up with the slowdown in the overall industry, and we did a relatively good job, but we had more to do, and we said we would do that in the third quarter and we did. that affected profits to the tune of about 130 million dollars. we also had a supplier constraint that probably reduced profits by $60 million. those two things are behind us and we are looking for what will probably be a record profit in the third quarter and that will be driven by china. your view on china is not as pessimistic as the markets.. you expect strong growth. can you put a number on that? are calling for an industry start at 24 million units, which is the high end of the range we provided a quarter
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ago. the reason we are at the high end, the government has done a ,umber of stimulative things including a significant reduction in purchase taxes which will benefit about 70% of our lineup. we feel very positive about the impact on us is a company, but we do think it will give the industry and the fourth a bump. all right, bob, things for joining us. bob shanks, chief financial officer for the ford motor company out of detroit. betty. matt, thanks a much. a check on the bloomberg first word news this morning. courtney donohoe has more from our news desk recording? inrtney: rescue teams afghanistan and pakistan are trying to reach remote area struck high the earthquake. the death toll is likely to rise. was magnitude 7.5 centered in a mountainous region in afghanistan. tomorrow onll vote
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a spending and debt compromise. it averted possible default. impose cuts on medicare. house speaker john boehner says the budget deal stinks, but "there was no other choice. -- no other choice." speaker courtney: a number of house conservatives are expected to vote against the deal. another part of that budget deals with the plan to sell millions of barrels of oil from the reserve. a percent of the government's holdings. four sitesstored in on the gulf of mexico. -- 8% of the government's holdings. ben carson is ahead of donald trump in a new national poll. the first time the retired neurosurgeon has outpolled trumpeting nationwide survey. carson has 28% support. trump is second with 22%. the rest of the presidential candidates in the single digits.
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student that keeps rising. the average debt of u.s. undergraduates was almost $29,000 in 2014. up 2% from the year before. borrow to payads for their studies. that is a look at our first word news right now. you can always find latest news on betty: not looking forward to that college payment. .hank you, courtney let's head to europe where mark barton has the latest from the london trade. mark: a very good day to you. the fed meeting, the today fed meeting is looming large over today's session. groups, the industry the energy companies tracking the price of oil. every single energy company called 23 reporting commodity producers doubting the
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strength of the global economy. is on track for its biggest monthly rise in four come almostng 7.5% wiping out the third quarter 8.5% decline. that was the worst quarter in four years. , the dax in germany. it has risen by 11% this past month. still 13% below its record set in april earlier this year. let's talk technical analysis. is above 70. for all those who know their tech analysis can rsi above 70 means an asset is overboard. a look at sterling. we had the gdp data for the first quarter.
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by 8.5%, but it was not as much as economists forecast. manufacturing contracted for the third quarter come construction declining by the most since 2001. services rose. i know you have a big interview coming up any second now. with the eu commissioner. have a look at the european bond market. investors are getting very excited about the ecb meeting in december after mario draghi intimated there would be more qe. does he agree? betty: love that. you've just set up the interview. thank you so much, mark barton in london. we do want to stay on europe where growth has struggled. let's bring in the eu commissioner responsible for the europe dialogue -- you talk
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about monetary policy. he oversees the growing refugee crisis in europe. --t does threaten the growth commissioner, what about the ecb meeting that is coming up in december? awaiting there meeting. the you agree on more stimulus for eurozone? europeanof all, commission respects independence of european central banks. it's for european central banks to decide on their monetary policy tools. ,hat is important here something mario draghi has also emphasized before, only with those tools, you cannot solve structural problems in the economy. thisconnotative using quantity recent, they are buying time for eu member states.
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it must be used wisely to do necessary structural reforms. do -- it is you your responsibility and focus are you worried or concerned that more stimulus in the eurozone could destabilize the european currency? once again, i must emphasize that the european commission is inspecting ecb's independence. targeting the not exchange rate, they are targeting inflation. currently come inflation is still substantially below ecb's target, which is inflation below 2%. that's why the ecb is using some monetary policy tools like one of debuts in. betty: absolutely. right at the start, you
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mentioned it's up to the fiscal governments in the eurozone to step up and help along with what the ecb is doing. we've seen austerity and parts of the eurozone, we also know that many budgets are being exacerbated by the growing refugee crisis in europe. where do you see the budget rules or outlooks and whether that will be in conflict with what we are seeing from the central bank? first come on the european commission's macroeconomic policy priorities, how we see we can strengthen the recovery in the eu, is to stimulate investment, structural reform from eu member states, responsible fiscal policies. in regards to fiscal policies, growth in we expect
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the euro area. the fiscal policy accompanied by is the right mix given the circumstances. we also expect the european authority to strengthen next year. betty: let's move on to the refugee crisis. this could also possibly threaten the european growth in the economy. atvenia also looking erecting a fence in the same way hungry has -- hungary has. faith that theg accord put together to deal with the refugee crisis can be rightly implemented. how do you tell these countries seeing millions of he's coming coming to thees
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eurozone, how do you tell them this accord will be and limited -- implemented well? wasust two days ago, there the balkan migration route -- this is something that needs to be resolved at the european level. it cannot be resolved at single-member state level. proposalsnumber of for the relocation of refugees, reaching agreements with countries in our neighborhood ,ike turkey and other countries managing the migration crisis, addressing the root source of this migration crisis, the war in syria. those are all things we need to address. it goes beyond the scope of one member state.
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it has to be done at the european level. betty: greece has seen thousands of refugees come to its border. do you think that growing refugee crisis is going to derail the promises that greece has made on their budget in order to comply with their bailout? today, i had a number of discussions with greek authorities. there is a clear commitment from the greek government to deliver on its fiscal targets, to work intensively towards successful completion of the first view of the program. is raising questions of budgetary applications of the migrant crisis, because it's creating additional expenditure. we are looking at this and will be coming with proposals.
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itarly, we recognize that needs to be taken into account. betty: thank you so much for joining us. us, whoissioner joining was responsible for the euro and social dialogue. anticipation growing here in the u.s. for apple. apple earnings out this afternoon. insight into the crucial holiday season. t-mobile added 2 million customers last quarter. it came at a severe cost. john legere joining us live to explain. ♪
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betty: welcome back to the bloomberg market day. we have breaking news on ibm and their share of epic program. -- share buyback program. julie: the company authorizing a $4 billion buyback. the $2.4n addition to billion remaining in his authorization at the end of september. a cashpany is oking dividend as well. unclear exactly what it is. returning cash to shareholders. uptick in a bit of an the stock after it came out with these headlines. shares are still trading lower by more than 1%. of returningeturn cash to shareholders. $6.4 billion is the total buyback authorization with this
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$4 billion edition. addition. betty: for a closer look at the u.s. market, want to get to abigail live at the nasdaq. >> we are looking at mixed trading, stocks slightly in the red. big gains made last week. one-stop nicely in the green is yahoo! this follows the company's own week quarter reported last week, but investors are very much interested in the 15% stake in ibaba. one word pops out, volatility, down 32% year-to-date. on pace right now for its best month since 2013. another stock is trip advisor.
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shares off on a downgrade by macquarie to neutral from outperform. advisor may be giving us near term of monetization. he cut his price target to $84 from $86. , 69%we go into r bloomberg of analysts have a hold rating. electronics is said to be mowing over david ferrer child semiconductor. semiconductor. betty: let's stay on the markets. making money may be harder than you think. still feeling are the pain. how hard is it? says youet's top bull
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have to be a ninja to escape the pain. he joins us on the phone from toronto. all over with some perspective on this. one of the most well read stories when you said you have to be a ninja to be in this market. what do you mean? tom: the last 50 days have been the toughest for managers because of the number of different turns taking place. rally, theelloff, a -- because of the number of twists and turns, i think he really had to be really nimble to not get hit over the last 50 days. betty: even though we had this
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rally from the bottom, you have to be nimble? >> that's correct. if you look at the move from the bottom, the gains that were leading -- you've lost money if you bought health care near the bottom. if you got involved with energy or industrials, your up double-digit's. double-digits. one of the lessons we start think about, when you start to see is a lot like this, let's you can recognize it is a regime change, you do stay pretty close to the benchmark cannot get hit hard. betty: who lost in this? oliver: you were in these health care types, you did not do so well. in terms of the types of investors, this is a pretty interesting story because throughout the last two years, there's been little dispersion in the markets, low
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variation in the stocks. when are we going to get some opportunities -- betty: this is where the vanguards of the world reign supreme. >> people are getting reminded that picking stocks is pretty darn hard. hit thee some that got past couple of months. , managersedge funds in these names that got really crowded, they try to get out, there was a bit of a squeeze getting out the door and they got burned on the way out. are just benchmark s&p, you did well. a lot of stocks got hit pretty hard. we had 13 instances of companies that lost more than 10% or more the past two weeks. this only two other instances in the past four years that happened. media stock selloff in august and the big oil route. hurting, weare 's
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had walmart down. -- health care space is hurting, we had walmart down. betty: do you think the market has been wrongheaded in the approach on china, the china narrative? tom: i think there is an argument to be made -- what we -- china asting as an economy is hitting a wall. numbers, thethe -- the economyr will be going fine. betty: tom, thank you. oliver, thank you so much as
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well. for the west coast wake up today, we are taking all the --nings rolling out today alibaba sales jumping 32%. don't forget twitter. take apple really quickly. it will be about the iphone sales, right? >> it's all about that today. the holiday quarter is the most important for apple. it earns more profit and sales in that quarter than any other time. there are new iphones out. that and is really on china. will consumers and china step up again and help boost growth? , we were coming off of a blockbuster quarter with the new iphone six were sales grew 30% for apple.
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the prediction for 3% sales growth, is that enough? this is apple, you can always see a surprise on the upside. betty: let's quickly moved to twitter and what jack dorsey has to say for investors. >> earnings today are coming off . very busy period jack dorsey became ceo, he is cutting a percent of the workforce. steve ballmer is an investor. the key here is to keep expectations in check. the twitter turnaround story has just begun come even though we've seen a lot of views. what we are looking for in the numbers today is some sign of turnaround. i don't think people should start to expect some sort of big bang just because we've had a lot of news the past few weeks. betty: thank you so much.
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read stephenson in san francisco. much more ahead on the bloomberg market day. ♪
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julie: time now for today's options in sight. -- insight. you've been watching signs of risk in the market here. and a time when we are seeing stocks rise and people are buying protection. >> we've seen the big rebound in the nasdaq 100. on friday, what was telling with microsoft was up over 10%. google up over 5%. apple of 3% going into earnings. what was interesting, that the vxn was up over 6%. a lot of people were taking out insurance against the nasdaq 100 further out to collect
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themselves. we may be at a top here. amazon came out with earnings and we had a trade that was a biweekly call going into it. we saw that called double during the day. it came all the way back down. that's a market leader as well in the consumer discretionary space. we are seeing a lot of alarm bells and people have a lot of conviction going to this rally. >> a really interesting trade from you today. you think the year will end andly well or really badly you have a trade that takes advantage of both sides of that. >> the options market is a great place to have a trade like this where you think it will go up or down significantly. the a straddle so you by 2065 put right here and by the 2085 call on the spx index
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option. the cost is around $100 for this trade to buy both of those. you need the market to move 48% in either direction. this goes out to january. you will get through the end of the year. this rally does have conviction, he should go through the 23 ice wesaw in may -- 2030 highs saw in may. a great way to play both sides. we will stay flat, get into a temperature like this. -- type of trade like this. ♪
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betty: welcome to the bloomberg market day.
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from bloomberg world headquarters in new york, good afternoon, i'm scarlet fu. the federal reserve is meeting as we speak. when will they finally be ready to tighten? t-mobile missing third-quarter earnings estimates. uncarriercarrier -- underperforming? growing tensions in the high seas between the u.s. and china. first, we want to head to the markets desk where julie hyman has the latest. the lack of action and rack of like of direction. julie: there's a tiny bit of suspense. a number of different


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