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tv   Bloomberg Markets  Bloomberg  October 30, 2015 2:00pm-3:01pm EDT

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from bloomberg headquarters in new york, good afternoon. here is what we are watching this hour. defenseman comes to the of valiant. he says wall street is overreacting to problems at the -- at the company. economyce to double its by 2020, so it is letting families grow. solar stocks are dimming. is the company at risk of turning out? at the markets desk, julie hyman has the latest. julie: stocks rising, although there is volatility. we are not seeing that big of games across the board. at my take a look bloomberg terminal, we have a bit of an earnings story today.
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we will dig into that in a little more detail. financials are the group that is holding things back by the most. in terms of what is doing the , i wanted to look at one of the best stocks in the s&p 500. the u.s. solar manufacturer that makes panels is surging the most in two months after a third-quarter profit almost quadrupling, and the game coming from the sale of a majority stake in a desert stateline project. even though it is coming mostly from a one-time gain, investors are still encouraged by it. they also saw bookings rise in the third quarter. third-quarter earnings beat analyst experts -- analysts'
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expectations. rheumatoidf a arthritis drug has been under pressure recently. we have seen some big rebounds on earnings reports. >> want them particular is holding things back? julie: we have a earnings news and other news pushing things down. there are declines in financials and in the s&p 500 more broadly. jen werth is an insurance company that has been battered by its long-term hair coverage. the ceo said there are limited options to -- long-term care coverage. the ceo said there are limited options. some analysts are saying they are paying -- keycorp is paying for first niagara and that is what is hurting the stock.
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>> thanks very much. that's julie hyman at the markets desk. let's check the bloomberg first news. mark crumpton has more. mark: the united states, russia, and more than a dozen other nations are considering a new inn to secure a cease-fire syria in 4-6 months. that would include a transitional government featuring both bashar al-assad and opposition members. following today's negotiations, john kerry spoke to reporters. john kerry: the united states position regarding syria, i emphasize, has not changed. we agree to disagree. the united states position is that there is no way president bashar al-assad ken unite and govern ashcan unite and govern syria. just how long bashar
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al-assad could remain in power under a transition is still unclear. president obama has received a spending bill for his signature. it ensures the u.s. will not default on its debt next week. the issue will not come up again until march of 2017. the bill also includes a spending cap. the republican national committee has suspended its partnership with nbc news for a inde -- for a gop debate houston next year. the front runner is donald trump -- front runners donald trump and ben carson called for a change in format. -- in awork, the rns statement to the network, the nbc did not said work in good faith as promised.
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the u.s. says signing a treaty to reduce global omissions is a good step not enough. the goal is to keep global temperatures from rising two degrees celsius by the end of the century. the world series resumes tonight. for theust win game mets, who trail the kansas city royals to-one and a best of seven-game series. the starting pitchers will be yo ventura for the royals against noah sondergaard for the ndergard for the mets. bill ackman was defending valley and pharmaceuticals. he acknowledges the company has problems, but says it is nothing that cannot be fixed. julie hyman was on the conference call this morning along with a few thousand other people. what did he say, material quest
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-- materially? julie: he set a very ambitious , saying thetarget stock could reach $448 in three years. tradingsee the stock is lower over the past year by about 26%. his comments are not helping. if you look at how the stock is trading today, over the course of his commentary, we saw it bounce around a little bit, but it is now down by about 12%. ackman did acknowledge that there are issues for the company. now that the pharmacy that has come under such scrutiny is , he says that is behind them, but there is an investigation that could last
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2-4 years that could come back to plague of valiant. overall, he said they can move forward and people should focus on the tour business. that is not what people appear on the core business. that is not what people appear -- focus on the core business. that is not what people appear to be doing today. not looking so hot. very quickly, he said he was going to take as many questions as he could, and he did take a lot of questions. there were questions about how he handled pr relations. julie: absolutely. he said the ceo of the company has been an introvert and has not visited people as much as he should have. he said because they have been so aggressive about cost control they have not spent as much on pr as they should have. it's unusual for a company of that size.
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>> i think he said he visited the company. thank you very much, julie hyman, at the markets desk. our reporter joins us now from san francisco. you broke a big story last night about what this company has been doing. tell us what you discovered. >> my colleague and i were working on a story we publish last night based on conversations we had with former employees and a document we -- obtained. it told us that employees had modified some doctors prescriptions. specifically, if a doctor prescribes a drug for a patient and they do not check a boxed be filled asas to written, they can choose to
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change it to a cheaper, generic version. >> what has the company done to improve its relationship with some of these big companies, cvs among them? yesterday, cvs and others announce they are not working with fillet or any more. this morning, fillet or said it was going to shut down operations. the big question that remains on the table is whether or not valley new about these happenings. that is still an open question at this time. >> put this in context for us. what happens next year with this company on the regulatory side of things? tour line: on the regulatory side, we have not heard if there are specific investigations. we do know the intern he general -- the attorneys general in manhattan and massachusetts are looking into patient access and
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drug distribution. that may eventually touch on them. whether or not regulators will look directly at them remains to be seen. >> i noted today in reading about bill ackman's conference call he talked about specialty pharmacies being the wave of the future. what was this company supposed to be doing, if it were on the up and up? >> specifically, a normal specialty pharmacy traditionally works with drugs that are a little harder for a retail pharmacy to work with. for example, injection drugs that require cold storage or drugs that may be have to be taken at a different dosage. medications.handle the idea is a pharmacy would typically be helping patients get the right drug, know how to and maybe handling the paperwork needed to get an insurer to approve them.
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that is how a pharmacy is supposed to work and traditionally works. accesslps patients get to difficult to handle drugs that may be more expensive. >> to me ask you about citroen research. -- let me ask you about citroen research. a bettervaliant has chance of going to zero then herbal life ever will. talk about what might be to come. predict because you never know. far, the main accusation he has made is that valiant may done some funky accounting of the finances. nt has cut all ties, we will have to see what next. very much.u
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caroline jenin our san francisco bureau. coming up in the next 20 is allowingna families to have two children, but is it the silver bullet the economy needs to power a long? and is there anything jeb bush'. ♪
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david: welcome back to bloomberg markets. time for a look at some of the biggest business stories in the news right now.
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micro some has increased its offer to a california chipmaker in a cash and stock deal. earlier, skyworks solutions made a cash bid. microsemi raised its bid. is on the verge of a deal valued at $20 billion. trying to acquire visa europe. an announcement could come as early as monday. the two companies separated eight years ago. delta ended its membership in airlines for america. wants to privatize control towers but delta does not. the idea is being debated in congress. you can always get more news at in china, officials have announced a series of measures to boost the economy, including ending the one child policy. fell below 11% for the first
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time in six years. andy, let me start with you and an announcement that got a lot of attention. when you look at the one child policy and the effect it could have on consumer spending, any tangible effect, or more symbolic than anything else? like i actually disagree with the a lot -- with a lot of the analysis of why china decided to do this. they actually ended the policy a couple of years ago. this was just a formal announcement. it is not going to change the fertility rate, which had actually started falling. this is all about politics. this is the chinese government saying we need to get out of your bedroom. unfortunately, all they did was move it from a one child policy
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to a two child policy. they still have it tell in the bedroom. dave: why do it now? >> at some level, they are under pressure to put forward any sort of reforms they can to help the economy. symbolically, i think this makes a difference because it is a andcy that in social economic terms had outlived its rationale a long time ago. besion costs are going to higher and labor force growth slower. those are not going to be immediately resolved by this, but i think it is the government showing it is willing to do whatever it can to boost productivity and output growth. it may not be a huge effect in the short-term, but i think it signals how much pressure the government is under to show that it is trying to boost economic growth. dave: there's a fascinating
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article on the bloomberg site about the degree to which the chinese people save money. i was just remarking on, when you look at household consumption back to 2013, 30 6% in china. in the u.s., 69 percent. what effect do you think that will have? measures,ook at other consumption growth is faster in china than it is anywhere else in the world. the u.s. treasury just published some statistics finding that only three countries have consumption growth faster in the crisisobal financial era. chinese households have the equivalent of a .5 trillion u.s. dollars in their bank accounts. that is greater than the trillion u.s..5 dollars in their bank accounts.
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highavings rate is so because the chinese know that the government is not taking good care of them in terms of their kids education and health care. so, they are saving for that. as they build out both of those, especially the health care system, i think you will see the savings rate come down. in the meantime, this is already the best consumption story in the world. dave: you are head of the china division at the imf for many years. i know it has been a long time that china has wanted to be among the reserve currencies. it seems like we are seeing some movement on that. >> the imf is going to make it official in the next few weeks, most likely by the end of about china being part of reserve currencies. china has undertaken many financial market reforms this year. certainly, china has a very -- does not have a very open
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capital account. the currency is not really market determined. but this is something china wants, and symbolically, it is going to be very important for china to be part of the big boys club. does noturrency status necessarily mean immediate capital growth in china. verysymbolically, it is important in terms of validating china's financial market reforms. it is not by itself going to be a game changer in terms of the international monetary system. dave: i have heard people say they could dismantle monetary controls by 2020. do you believe that? >> no. on the other hand, we have to acknowledge that over the last decade, currency controls have been taken down quite a bit gradually. there is progress. are they going to move sometime in the next five years or so to know controls at all?
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i think the odds of that are very small. you aboutme ask angela merkel's visit to china, the significant and significance of that and how it's gone so far. is there for the same reason everybody is there. china is a player on the global market. everybody has to make that trip at some point. dave: are there things that came out of the one child policy that you think demand more attention? >> i think the main thing that came out of the party meeting is the fact that nothing came out of the party meeting. this is a reflection of the fact that the communist party is pretty comfortable with the state of the economy. all they did was reiterate the kinds of market reforms they have been talking about for years. >> thank you very much. still ahead, oil prices are down, but there are some bright
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spots in the energy sector. we will have details after the break.
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dave: welcome back to bloomberg markets. as the worst oil market in decades continues, the energy sector is reporting more declines than any other sector and the s&p. it was not all bad news for energy companies. phillips 66, the largest u.s. refiner had stocks soar. for more, let's bring in peter pelikan. we are not talking about .ompanies in specific i am curious about broader trends. the e&ptially, for space, there is a funding gap problem. what does that mean? operational expenses are not covered by cash flows.
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this means they have a couple of .evers to the ful -- to pull they can reduce operational spending. some of the larger players that have dividends could trim dividends. are thee things framework of 2016. i think you will see more of it as we move forward in time. these giant companies, how quickly can they change course? >> how quickly can the titanic change course? they are essentially trying to right the ship. companies with great balance sheets will be able to do that no problem. companies with bad balance sheets are in for a rough ride. putting are they resources now? is it all in u.s. shale? putssentially, they can dollars into the ground quickly and get money out quickly. should prices rise or fall, they
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have capital flexibility going forward. dave: thank you very much. still ahead, we take a look at some of the big geopolitical flashpoints with the former nato secretary-general. ♪
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dave: from bloomberg world headquarters in new york, you are watching bloomberg markets. let's check in with julie hyman. julie: after falling, royalty -- oil turned around to rise pr tuy dramatically. a five-year low. we have seen e&p companies pulling back on their investments. if you look at the numbers of this has been the downward trend in these oil rigs. we also are dealing with the oil prices and oil rig numbers. exxon mobil higher-than-expected profit. you might think that that would not happen in this kind of environment but it has to do with refining margins. that has been more positive than just oil prices overall. refineries doubling to about $2 billion led by gains
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outside the u.s. this even as the company's oil and gas wells lost almost $5 million per day during the quarter as a result of lower oil prices. chevron joining the many companies in the oil industry and have been restructuring cutting down on their workers. cutting 10% of its workforce and scaled back on its long-term production target. that is we see the energy market slump and the profit beat analyst estimates. investors are pleased between the profit beating estimates and the company doing these cuts. most of these companies when they announce these types of restructuring and pulling back it is a -- you see a positive stock reaction. david: mark crumpton is at the news desk. sending aident obama special group of operations to northern syria. they will coordinate with local fighters to battle islamic state
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militants. john kerry said this plan had it in the works for a while. this is a process i have been engaged in and all of the president's security team for many months now. coincided.that -- it coincidence more than anything. mark: fewer than 50 americans will be involved. the president authorized warplanes. the senate gave its final approval early today and ensures the u.s. will not default on its debt next week but also lists spending caps. torrential rains have forced the iraq he army to temporarily halt its offensive to retake the city of ramadi from islamic state militants. groups are ordered to hold their position until the weather
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improves. iraqi troops launched in operation to retake ramadi from us -- islamic extremists earlier this week. the breeders' cup classic in kentucky will be american phar oah's last race. he could bring in $25 million a year by fathering a new breads -- of thorough speedy thoroughbreds. david: the u.s. is ramping up military action in syria. that theest cautioned action will not fundamentally alter the balance on the battlefield. call and the present has been quite clear that there is no military solution to the problems that are plaguing iraq and syria. there is a diplomatic one. the president has put in place a multifaceted strategy to degrade
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and destroy isil. this military component of that strategy is an important part of the president's top priority which is the safety and security of the american public. david: joining me is the former prime minister of denmark and one time nato secretary-general joining me from the kennedy school in cambridge, massachusetts. let me ask about something you have called for the past, a political change in a military one. but start with the military one. the u.s. is saying it will put no more than 50 troops on the ground in syria. is that enough when you look at the military state of things? we need a new strategy which includes a reinforced fight against islamic state. and while an air campaign is important and important to continue, it is also clear that an air campaign alone will not do the job. you will need local people on the ground.
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local fighters. -- in combating islamic state so decision toe u.s.'s help and reinforce local fighters. david: when you think about who else might do this, 50 does not seem like a terribly significant number in terms of quantity. how might -- who else might be providing support on the ground? guest: it is a very delicate balance. i would not suggest to deploy a great number of western troops to the region. on the contrary a think countries in the region should take responsibility for the security. i would not exclude any in advance. saudi arabia, the gulf states, turkey are excellent candidates for providing troops to such a local security force. david: john kerry spoke from
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vienna, talks were -- that were unprecedented. what he saidbit of afterward for the prospects of future talks. mr. kerry: the position regarding syria has not changed. the foreign of and minister and i agree to disagree. the position is there is no way that president assad can unite and govern syria. david: you know the link which of diplomacy well. counts for optimism there will be more talks. what do you make of what is going on and what can happen going forward? guest: without being too optimistic i think it is very important step in the direction politicalght be a solution. clearly there is no military solution to the conflict in syria. so we will need to gather all aroundor stakeholders
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the same table. whether you like it or not, iran is part of that. it is also important to understand that assad cannot be part of a long-term sustainable solution. own people.d his he has used chemical weapons against his own people. he has lost all legitimacy. for long-term political solution to be sustainable, it is important that assad must go. go, startinghat point would not be a good idea. so i welcome the talks in vienna. philip breedlove made a comment of what is -- about what is going on. do you see that as a deliberate thing that the russians have done here, have the exercise debate of subdivision to keep our eyes off what is going on there? guest: no. first and foremost, russia is strongly committing -- committed
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to defending and protecting the assad regime. but of course the fact that russia has now engaged more strongly in syria has moved the from the away situation in eastern ukraine. david: i wanted to ask about the ongoing refugee crisis in europe. there have been calls for nato, the organization to do more and i wonder what you would save to that. role for nato to play when you're talking about millions of refugees, shouldn't nato be doing more and what could they be doing? aest: i do not think nato has role to play when it comes to solving the refugee crisis. this is a european union manner. -- matter. .u.-wideear we need a e situation. the eu should do more to help
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countries in syria's neighborhood to accommodate we shouldnd finally also strengthened the common border control. david: surely we are reaching some sort of tipping point. the sheer quantity of refugees might demand the attention of nato. would you agree? is a nato business. not a military task. this is first and foremost for the european union to address and that would include summer best -- some robust measures. among them to strengthen the common eu border control. it is possible for the european union to handle a major influx
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of refugees. much forank you very your time. the former secretary-general of nato joining us from the kennedy school r harvard. after the break, is jeb bush is campaign spiraling out of control? a one-time blip or something more? that is after the break. ♪
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david: time for the bloomberg business flash. dupont has opened the largest -- world's largest ethanol plant. 220 $5 million i will refinery plant will make 30 million gallons of ethanol every year.
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recall involving airbags. honda is recalling 300,000 fords. 2008 inr airbags in the 2009 accord may be deployed even if the car is not in a crash. automaker needs to fix problems with breaks and airbags. you can also get more business news at thee: let's start with japanese yen. we saw the dollar fall against the chart. the bank of japan refrain from adding more monetary stimulus. it pushed back the timeframe for reaching its inflation target. we saw not only the dollar falling versus the yen on the day but also on the week. some traders say this will be
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short lived because we will see the fed raising rates and that could drive up the dollar. if you took -- take a look at my terminal i was looking at your today returns for the g 10 currencies. nc is thee fra best-performing currency followed by the yen which was down under 1%. some of the commodity currencies like new zealand and the aussie dollar have been the worst performers so far this year. while we are talking currencies, let's talk about rates as well. a decrease in the rates. a little bit of buying of treasuries. have traderso rejigger their expectations of when the fed will raise rates. and as those expectations go higher, gold has been going lower. the biggest weekly decline since
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august on the day falling .5 of 1% and this has everything to do with the fed here. david: thank you. have a good weekend. jeb bush trying to hit the reset button on his campaign telling donors, i can do better. saying he is not going anywhere. mark halperin joins us now. the line i remember best, the analogy about the french work week that he threw it marco rubio. mark: it was a disastrous debate. there are some thread he could lose donors. we all need to be patient and see whether the debates impact on the psyche of the lead impacts voters and a good news is no other candidate, ben carson or donald trump is doing particularly well in the polls and we have three months to go. david: there's this worry about donors. how salient is that?
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not an efficient way to spend money. while jeb bush's super back -- pack is sitting on tens of millions of dollars, how can they spend that? 't think the public wants to hear about money. they want to hear about a vision for america. i do not think the money will lead to a jeb bush come back. david: i clicked over to cnn after the debate. said was hehings he plans to go to new hampshire and when this the old-fashioned way. does he have a shot at doing that? mark: he had a visit that was a little bit off key to some extent. he has a bus trip coming up next week. and new hampshire is a strong state for him but i think and i
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maybe in the minority, i do not out of the running. so much of this will depend on who can rise behind or ahead of carson and trump in those states and again is jeb bush out of it question mark in some polls he is close to the top in that stack of people. well below carson and trump. david: you had the head of the rnc criticizing that debate saying that the rnc was no longer interested in working with nbc for the next debate. all that being sorted out. what do these candidates want in a debate? when they talk about what was wrong with they like to see? mark: the candidates would like a more inclusive top-tier debate. more substantive discussion. they wanted to talk about the issues, they did not want to talk about her sally or politics. while there is news -- room to
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highabout politics, the profile platforms should largely and maybe exclusively be reserved with a say they want, extended time to talk about issues in the position. david: hillary clinton secured an endorsement from our mayor and lyrics city, bill de blasio. he took a while to offer that. how important is that? mark: it was an air 10. he used to be her campaign manager and she ran for the senate. it shows the degree to which the progressive wing, the far left wing is gravitating toward what some view as inevitable, hillary clinton's nomination. with a lot of what she said. he said electability matters.
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he was quite clear in what he was saying that she is the more electable candidate, more likely to get elected and enact a progressive agenda than bernie sanders is. david: all eyes were on that room when she was testifying on benghazi. a little bit under the radar compared to where she has been. mark: she has been talking about financial issues and issues related to racial justice. the next and aquatic debate is often what she is trying to do which is the key is defend him in iowa and new hampshire. she has announced an additional [indiscernible] if she can do well in those states and beat him there she will be the de facto nominee. he for the republicans have a nominee and that will be an advantage. you.: thank coming up, we will go to the
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west coast and check in on a company that it has been sinking more than 20%. how can it tighten its belt? it is causing investors to worry. next. ♪
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>> they are lighting a fire under solar city.
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when your business is investing in hardware and getting customers to pay for that in increments you need free cash survivethe business can . this is obliterating free cash. this is a disaster. this company has blown through over $800 million in free cash flow in just one year. they had eight consecutive quarters of burning through cash. they are in a race to burn money and it is a disaster. -- free flow was over 40%. adding up to be sustainable and to be a growing business. grexit remember elon musk talking about 30's batteries. solar city was going to be involved in the installation.
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how has that helped this company? >> i don't know. do you need a next her reserve battery? ao do you know that needs $3000 or $4000 battery? we could we have -- become less dependent on the grid that has some promise. me a check. i will feel more dependent on you as well as the entire johnson family. it is an interesting notion of a business but it is not something that there is great demand for right now. it is not a part of solar city's business in any way. their business is in some -- installing solar on the roofs of the people whong own those homes to pony up for that overtime with the belief that over the long term as those units are on the roof they will start to generate profits for solar city down the line in the
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same way that a power company might build a power plant but there are a lot of questions with the basic notion of the business model. how long will those solar panels last producing power? solar city said they are good for 30 years and they have been able to sell those but we do not know what the degradation is going to be of those panels. more important, the power rates have come down across the country with the lowering of coal and the lower price of natural gas. there are a lot of places where solar city is installing these solar panels and it is cheaper to take the energy of the grid. it might be nice to be greener, i have solar panels on my house and i am all forward -- all for it. with cheaper power coming off the grid for consumers, buying the solar city panels in a lot of places is more expensive than what they are already getting and that is a hard sale to make. that is something that changing
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their business focus does not get you. it does not fix the underlying problem and you can see that in the shares today. david: ok, thank you. that is cory johnson. he will be talking to richard branson next week about the new s -- the new flights out of san francisco airport. ♪
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>> welcome to the "bloomberg
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markets." good afternoon. i am betty liu. markets are trading mixed. finishing out of banner october. party the ending soon thanks to the fed? a new reality for oil giants. the latest earnings reports provide valuable information on how the giants are adjusting in -- to life in a world of $45 oil. -- valeant in the news. they have a better chance of hitting zero thean the target


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