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tv   Bloomberg GO  Bloomberg  November 6, 2015 7:00am-10:01am EST

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the future of television. and your bentley has gone digital. want to customize your new $300,000 car? there is an app for that. david: welcome to "bloomberg ." i'm david westin. stephanie: i'm stephanie ruhle. it is friday morning. we are wrapping up our fifth week on "bloomberg ." david: day job numbers coming out. stephanie: we have a lot to cover. guest is also a fantastic singer. we might get him to sing later in the hour. termeff just coined the t.ince valeant'
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first, how about some news with vonnie quinn? the u.s. jobs report for october is due out. economists expect it will show nonfarm payrolls grew by 185,000. that is the consensus forecast. janet yellen said this week that data would make a rate increase a live possibility month's central-bank policy meeting -- at next month's central-bank policy meeting. therity is tighter after crash of the russian jet in egypt. thousands of british tourists are returning home today. no cause has been pinpointed. and in the next republican presidential fight, as christie and mike huckabee will be on the undercard. they will not be among the a candidates. they will be dropped into an earlier forum.
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did not qualify for either event. those of the latest headlines. you can get more on these and other breaking stories 24 hours a day at the new let's get a check on the markets. here is matt miller. matt: we are looking at little change on futures. you can see s&p futures and dow futures down slightly, nasdaq futures showing a tiny gain. we will get the big jobs number, and that will determine the direction of the market today. take a look at the bloomberg terminal, and you can see what futures are predicting as far as what janet yellen is going to do with the jobs number. right now, a 56% chance of a rate hike in december. that is unchanged from yesterday, up about 20% from a month ago. look at the front end of the curve. that is where investors are expected to move the most. rise to i two-year think a four-year high yesterday. now you are seeing a little bit
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of buying, so the yield is coming down, 0.83%. . also want to look at valeant we will continue to talk about it -- right now gaining a little bit. even in the worst-case scenario, it is worth 25% more than this price right here -- rather, yesterday's closing price. the analyst said even if the ceo steps down and the company is sold, it is worth over 100 lovers per share. stephanie: and they make botox. matt: i think she means even if the ceo steps down and the company is sold, it is worth $100. david: it sets up the nest recession. -- the next recession. the stock has come back from yesterday in premarket trading. you always say there is a hedge fund hotel. 22 hedge funds with major stakes in valeant have lost a combined
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$43 million in three months. oliver, explain to us what is going on with valley and -- with valley and -- with valeant in your piece. you had a stock here in a company that a lot of hedge fund managers could see themselves in. this is a company that goes out and buys drugs and rings up the prices and goes on to the next thing. they are constantly trying to find the edge. ofy are officially sort doing the same thing that hedge fund managers do, which is try to get an edge on the market. because of that, this became one of the hedge fund hotels. that is what drove the stock up so far. he does the hedge fund is brought up that far, who is going to buy this thing? they own such a large stake. it is absolutely a growth stock, and now it is going through a transition that maybe one could
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argue it is a value stock. i do not think a lot of value guys are going to be looking at valeant. you have to think about who is not just going to buy the stock. the question is, who will bring it up to the 260 price or even further? stephanie: this is a drug company. the fact that the structure they put themselves under under mike pearson is attractive as a hedge fund -- maybe this is one of the reasons that people hate hedge a farmnd that they think business is disgusting. >> when you are looking at pharmaceuticals and looking at a better way to get reimbursement, stocks react on the way up and on the way down. these drugs are by and large good drugs and people use that. the real challenge is, what were they doing as it relates to
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reimbursement. stephanie: that is not the issue, it is engineering. jeffrey: they definitely came up with some engineering on the way to get these drugs reimbursed. today aboutmuch what is going to happen with management and with the architecture they set up. until that gets cleared up, investors just stay away. there are no buyers because you're taking a big risk today. until this gets resolved. part of this is the blackbox nature of it. it looks like it is worth more than what it is trading for, but you do not know what is behind door number three. you do not know if there is out and out fraud. >> getting to the point of a knowability -- getting to the knowability, this is a company that has done massive amounts of deals, had massive
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change, and they do huge differences in price changes when they acquire those products. it is hard to get on that track record, and then they are using the pharmacy philidor to push them. there are a lot of variables here. they are definitely difficult to get a bead on and it makes hard for folks to value as far as where these things should be. is it a bargain at the prices it is trading at? matt: it is interesting to take a look at the debt. you can see aggregated debt -- -- blackst debtholders rock, capital world investors, fidelity management are the biggest debtholders. by the way, all of them are selling, you can see here. that is interesting because d rsk shows you default risk. $31.1s a company with billion in long-term debt.
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it has a lot of debt out there, and the chances of default are going out to 1 -- are going out to more than 1%. that is pretty high. stephanie: when you look at a hedge fund concentration, how hurt can they get here? ackman, he could take them under. what could the real impact be? jeffrey: if you look at the space in the last three weeks, if you own valeant and you are just bringing risk down across the board, we are seeing things like merger arm spreads at an all-time wide. funds, by and large -- there are thousands of them -- are not crowded into this trade. that are a handful of them are going to be suffering the most, and, listen, they have already suffered, so there is an argument to be made here --
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actually, there is a great trade to be done shifting into the bonds. i agree with what matt said. value inink that the the actual drugs themselves is going to be money good, and you do not want to deal with all of is uncertainty around what happening in the stock, you can own the bonds -- stephanie: it is higher on the capital structure. right aboutyou are the underlying pharmaceuticals, put whatever value you want to put on them, you will probably be made whole. there are some pretty good returns there if in fact the drug pricing holds. david: drew, how do they get out of this? drew: we saw some of these comments yesterday where there was speculation about is mike pearson, the ceo, still going to be there.
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stephanie was mentioning bill ackman before. .e e-mailed pearson yesterday he went on to say i disagree with some of the choices you make, but he is the right ceo for the company. the company put out a statement saying that pearson has the board's. port. but i do not -- that pearson has the board's full support. this thing got batted back-and-forth. intercontinental hotels group is looking at strategic options. this is the second hotel group to come out and say this because starwood also has hired advisers to look at strategic options. starwood, of course, the owner of westin and saint regis. intercontinental group is the
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largest hotel group in the world, only worth $4.9 million. the extent -- at at the london exchange trade as well. matt, we have to take a quick break. oliver, who broke this for us on valeant, thank you. drew armstrong, thank you very much. jeffrey solomon, you are with us for the hour. this guy just made you more competitive and give you trade ideas. kind of made you smile because there is a lot of shouting around hedge funds, so people love to see a big guy get hurt. we are only 11 minutes in. the jobs number has not come out yet. send us your questions. you can send us an instant tweet. up next, john micklethwait brings us an exclusive interview with the governor of the bank of england, mark carney. ♪
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stephanie: -- vonnie: welcome back to "bloomberg ." we begin with news about square. mobileent -- the payments company is setting its initial offering at 27 million shares. about $35to raise million. ceo jack dorsey will have 23.6% voting power. underwriters include goldman sachs, morgan stanley, and j.p. morgan chase. walt disney says fourth-quarter earnings beat estimates. it marks a reversal of fortune. --ney rigor -- decently disney's cable networks, led by the venerable sportscaster, boosted profits by 40%. that is the latest bloomberg business flash. stephanie: now to global go.
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we are joined by our editor in micklethwait, who has just returned. it is impressive how quickly you got here from europe, where he interviewed mark carney, the governor of the bank of england. welcome. john: thank you. stephanie: looking sharp. john: i think it is an attempt to imitate you. we should do a job swap. stephanie: talk about the conversation. in an interesting place. he had to deliver this news that things are yet again being pushed out. jokes aboutaking him being the unreliable boyfriend who never quite gives you the message, in the same way that janet yellen might be described as the female equivalent here. he has that set of problems. the most interesting thing is to fact that the reason why he decided to push everything out a bit is emerging markets, which are not that big of a deal.
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they are only a small portion of the economy. something there is worrying him, and it has to do with selling things. more generally, i think there are doubts about how solid the performance is there. that is quite interesting. stephanie: you spoke with him pretty extensively on china. have ahinese banks strong capital position. chinese authorities are aware of these risks and would take appropriate action. there is a process of adjustment, and that is why we think that growth there is going to slow. stephanie: did this surprise you? john: i think he is rather guarded. you talk to the other central bankers, and they are all just slightly looking to see what is behind the numbers in china. you have a certain amount of nonperforming loans, but there is a big gap between the nonperforming loans that are just about keeping up or the
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performing loans that are just about keeping up, and that is the general suspicion about the chinese economy that is beginning to worry many people. jeffrey: isn't this just a function of the fact that china through a big rock -- that china through in a big -- that china threw in a big rock? and the difficulty that we all have in understanding what is going on in that economy. everyone took a big breather to say what is the not-on effective that -- the knock-on effect. isn't that really what is going on here? john: you are sitting there and you are not quite sure, so you want to wait. it is causing difficulties in these relationships with the markets. everywhere you go, people ask when is yelling going to do something. in britain, it is a smaller version, when his carney going to do -- when is carney going to
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do something? i think there is, as you say, a slight element that they think their lives were upset by this thing they had not expected. but in a way, that is central banking. that is what the world is always like. signalhe also tried to that there would be a rate hike gets on point, but it will be gradual. you asked him specifically about core inflation and how it relates to his decision. john: that is quite important. core inflation is coming along as 1% or above that. the headline rate is practically 0%, and that is his problem at the moment. core inflation seems to be going in the right direction, or in a direction that enables him to think about rate cuts. ofdoes not like the idea suddenly the headline rate catching up to this underlying out, and then being caught
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because the economy has sped ahead too fast. mark: would i rather have the majority of the british people thinking rates are likely to go up in the next year he? yes, i would, because that is reasonably good behavior given the likely path of rates and the improvements the economy is making. him towhat i understood say is what is keeping the overall number down is a bit artificial outside, and that could go away quickly. if it did, then we have a problem. john: you are explaining things much better than i am. that is correct. you have all these outside shocks that could go away quite quickly. you had these changes in commodity prices. if you are running the central bank in a relatively big economy, you have difficulty in trying to measure, trying to work out how big an impact that is. all the central
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banks are pretty well correlated. we were correlated on the way down in terms of quantitative easing. i do not understand when we hear this debate about why the fed or the bank of england is not moving. we are correlated on the way back up. it is difficult for the u.s. or the u.k. to make great move or signal a trajectory of great moves when you have europe going in the other direction. we have to wait until we see the european economy stabilize. then you can probably see a trajectory. , theld say, in closing first moved and not necessarily mean there is going to be a bunch of moves behind it. i think the fed can do a one-and-done for a while. --have talked about i lot about a lot and we have done our fed surveys. john: i think the europeans or the ecb is the one going completely in the opposite direction. there is that problem and also this underlying problem -- the
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idea of inflation has changed. it used to be so easy. if you are a central bank you thought inflation would come back as you came out of these things. this time across most of the western economy, if laois and is not -- inflation is not coming back. that makes life very difficult, and that is why some people begin to look to whether there are structural changes underneath it. was your one big takeaway? john: he is not going to raise rates further until next summer. look a littlend bit and went janet yellen is saying. stephanie: there is only one plucky little canadian, and his name is erik schatzker. david: thank you very much for joining us this morning to catch up on your special interview.
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we will have a special of a different sort tonight. mark carney, and if was a conversation, airing at 8:00 p.m. on bloomberg tv. we will be right back on "bloomberg ." ♪
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stephanie: you are watching "bloomberg ." we have so much more to cover. tom keene will be joining us with his morning must reads. in one hour and four minutes, we will have the jobs numbers. coming up next on "bloomberg ."
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stephanie: welcome back. you are watching "bloomberg ." jeff solomon, the president is here and tom keene in some
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jacket has just joined us. tom: i am wearing it in honor of "spectre." i read an article on how to be cold. stephanie: it is working. david: first word to vonnie quinn. vonnie: everybody grabs onto that as a character. not the slow man running sequence but the actual running sequence. we are here with the first word headlines. the next major gain in the u.s. economy is out in one hour. expect the jobs report to improve by thousands. meet next month to discuss interest rates. bloomberg will bring you the numbers as soon as they are released. thousands of british tourists were grounded when they suspended flights to where the
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russian airliner crashed last saturday and they are going home. cause that has been pinpointed. cigarette sales in the u.s. could rise for the first time since 2002. analysts think the look at prices are leaving americans with more money to spend. -- analyst think low gas prices are leaving americans with more money to spend. you can get more on these and other breaking stories 24 hours a day at the new not come just did a model that killer jacket. it is time for this morning's must read. tom: this is out of "the new york times," and this is someone on the political left. even stuff that conservatives are forced to read. it is a political bearing of upton sinclair's line about how "it is difficult to get a man to understand something when his salary depends upon his not understanding it."
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sinclair, imagine a president trump or cruise showing up at the paris summit on climate change later this month and same, sorry, the united states no longer believes in science. we are going to go and we will be there in support of the ity's that have to deal with on a micro basis, but the macro base is copenhagen went down in flames while paris goes down in flames as well. david: this is part of a larger narrative. i guess it has been proven that the board to directors and ceo with some of the big energy companies new for certainty and they went out and instead of confessing, they funded various projects to put out contrary information. tom: i will go with that and you can always look back. the company can go back and look on rumors.
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they may domestic 42 years ago. i am the only one who remembers. stephanie: [indiscernible] tom: climate change and the idea of looking forward, i will but board to some of the articles on china. it is the kind of debate that has to be discussed. whatever the politics are. david: every debate has to start with facts and that is the issue. i do not have an opinion. i am just bringing you the heat that we see for mr. egan and i have seen conservative push back. >> let's quote another "new york times" columnist who wrote -- tom: a raging liberal. >> he wrote this book with the character that talks about a couple, i think every human
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being deals with this when they try to manage the, i want more, i want to more profits, i want more this versus legacy. couldn see the ceo have done the right thing and in the end, made decisions that leave his legacy in question. and i look at the republican candidates, i say, listen it is by at the end of the day how you are judged by history. i am hopeful that whoever gets elected inc.'s about that in the context of when they show up -- gets elected thinks about that in the context of when they show up. tom: we have to look at what we see, such as in greenland and the coal usage in china. david: we could debate what should we have done and i went to back and looked at. reviews, scientific journals and papers on global warming, and there was not one piece that denied it was happening or
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denied that humans were causing it. we could debate what you do about it the other side of the there are nots, supports in peer-reviewed science. stephanie: there are political leaders in the state of florida who's not even let climate change be used in the office. stephanie,e correct, to take it to the smaller level. iam doing that bloomberg if can speak for bloomberg philanthropy, the idea of there pue about macro the jobs today. david: you are all choked up. tom: the idea of world leaders and then getting together does not get you to the reality which is state solution or city solution as well. is an important debate to have. if you decide you want to do something, what is the best way to do it. tom: it would be a great day to
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have a debate versus copenhagen. david: the one goal they have is for that not to happen in paris. tom: david bank almost walked off the set this morning because i sang "let it go." stephanie: i'm so glad he is staying and he is here. >> you need to trade that jacket in for a storm trooper thing. star wars opens up december 17. tom: biggest opening ever? david: probably. tom: you will go three times the first day. stephanie: my husband and three sons, there are people who will go three times or four times. i'm sure my house will be taken over. david: david is sticking to "star wars," and that leads us to disney. profits are up and joining us is an analyst david bank. intelligence, did
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you expect this to do so well? cents we were couple of above consensus and we thought we were expecting that there. models a tough company to for a variety of reasons i think are beyond my comprehension. there was a 53rd week in the year. there, itn i was wouldn't happen every few years and it messes you up on a year-to-year because you have a good deal and then you have a bad year. david: the reality is the studio absolutely crushed it. the highlights are that they continue to absolutely blow it away. that is moving into what will probably be a pretty good shot at being the best movie of all time. david: or the most profitable. david b.: well -- david: not like "casablanca."
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i should site from a box office perspective. there was so much controversy around cork cutting and the evolution of the echo system at disney that there were no fireworks or shock and awe, no real incremental news about the quitetem, so it felt not business as usual but after the prior quarter, i shifted. stephanie: what do terminals tell us? analysts were expecting high revenue from theme parks. you can see that the game parks move in tandem with net income. that income in white and income for theme parks in orange. film -- i'm sure it will have a huge impact, but the business of theme parks is maybe more important to this company. david: by the way, they will be "star wars" themes coming to the
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theme park. matt: will the new movie be as awful as the last three? stephanie: it does not matter. we would see it no matter what. what is your take? as david pointed out, i think the biggest thing into the quarter was core cutting and i think disney did a good job of observing investor fears because they said they are see more than anticipated subscriber losses in investors again, so i think as coreght now, it seems like audience is not going to ratings. they are also showing more openness to embrace the platform. we saw this with their announcement of the new streaming platform in the united kingdom, so it looks like they are more open to putting the
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content out and embracing new technology. david: what i understood, tell me what you understood, he was not that [indiscernible] theha: he said he had not new to say, but at the same time, some of the concerns were whether subscriber losses were actual ratings and they did not say anything. there was no new information there. david: it is the fifth year of record performance for disney. that goes into the idea of the persistency of there was a flat line on disney five years ago to the moon and straight up, do you extrapolate that to the future? or is there a new, more subtle and softer slope to revenue? they were two factors, the first is with the acquisition of marvel that paid off in a way that no one expected. the studio exploded, and the fundamentals of the cable business. over 50% of the oi is espn.
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the fundamentals of the cable had just been on fire, so while we are not the sky is falling guys, we do panicky acknowledge that that will be a more challenging business. i think as you get into the later part of the decade, it is going to get more challenging. >> if we are looking at core cutting, it looks at how the millennials behave. if i was looking at what would happen, i would be looking at onm a graphics suspiciously thirtysomething's or twentysomethings. it does drop off -- david b.: we have this discussion all the time and my problem is, are we looking at the generational switch or a life cycle switch? as aat millennials generation or the behavior of 23-year-old kids?
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jeffrey: my son is a junior in college, no cable, not going to have cable, so we all know that consumer behavior patterns are established at that age. he is living a life of four years without cable. when he buys his first apartment, willie have cable or ethernet -- will he have cable or ethernet and stream things? i think that is something i would be looking at. david b.: we have really done the work with researchers on this. we are less concerned about what your 19-year-old son will do when he is 21 in his first apartment. when he has his first baby and doing a 3:00 in the morning feeding, will he want to sit on the keyboard and look up youtube channels or will he want to strain abc and espn? that is what i mean by a lifecycle as opposed to generational. how they behave at 28 and not 21?
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jeffrey: disney has moved content onto the desktop and wireless devices, unlike a lot of other players. i think that bodes well for them so i think you are spot on. stephanie: are you about to break into "let it go/" ?" solomon is an amazing finger and if you decide to go, -- amazing singe and if you decide tor, sin -- amazing singer, and if you decide to sing, he will bring you down. tom: disney will come up with a new story. pointing to the charts on the parks -- stephanie: we will have to let it go because he don't have time left. i will just drop the microphone on that one. tha, thank you for being with us. jeffrey, you have to get back.
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tom, you have to get back. jeffrey solomon, you are not going anywhere. stocks are heading steady and investors are looking to see today's payroll data to determine if the fed will raise rates this year. we will bring that to you i in less than one hour at 8:30 sharp. send us a tweet and we will ask jeff whatever we want. up next, hospitals finding new ways to improve care while keeping costs down. the ceo of the university of utah will join us. ♪
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david: welcome back. hospitals know what they are paid by insurers to know what the procedure costs. one doctor is getting answers
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and information to save money and improve the industry. joining us now is a health care ceo of university of utah, dr. lee. i was fascinated. people often say in business that you cannot measure it then you cannot manage it. it was notred measured in terms of cost. dr. lee: that was a shock for us. when i started my role at the university of utah, i said, everybody is talking about value and health care against quality and cost and we know some quality measures but i asked for cost and they said, we know a few, supplies, pharmacy, but what does it really cost to run the business? we did not know that. david: u s concrete questions like why this one minute -- you asked concrete questions like what is one minute in an mri cost? dr. lee: very important and basic business questions. manage to big
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business and health care organization. was the resistance on the part of the staff to try to measure these things? dr. lee: quite the contrary. our physicians and leaders were so curious. as a go through medical school and training and practice, we have never been talked about the cost of health care. it has almost been taboo to talk about cost because we are focused on quality and making sure we have the best outcome, so we are not supposed to be looking at the money side. when we started talking about this, the providers, physicians, they said they were curious. what does it cost us to do in the myra or operation -- an mri or operation? david: so we are saving lives and not saving dollars. university of utah, we have about 20,000 employees
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and students and we pay the health care bills. our insurance premiums go up every year, so we feel it ourselves. we turn it around and say, we need to be part of the solution. david: how far are you? dr. lee: we had developed a tool which has everything in our institution at cost and we are getting it in the hands of all the providers on the front line. we have been about 30 projects so far, everything from looking at hip replacements to coronary grabs, efficiency and operating room, and want to get it to everybody from psychiatry to pediatrics. david: and you are saving money already by measuring. dr. lee: as you said, you cannot manage what you cannot measure and it does impact behavior. in our total joint replacement, knee replacements that we all seem to have to get, we are finding that just in the first year of using actual, we have
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been tracking quality and the positions are really pushing up the quality measures. at the same time, there was a 32% reduction in cost. david: very promising. i hope it works out the way you planet two. dr. lee: i think it is because once you understand the cost, one thing we observed was the artificial hip, the most expensive compared to the least expensive we were using, about threefold difference. we never knew that. then you look at the outcomes for the patients and it is the same. you just really can start to drive the cost down. david: thank you dr. lee. -- thank you, dr. lee. stephanie: when we come back, we are talking bentley. we have the details on a new app that will help you make that $300,000 choice easy. it will be great for jeff solomon. we have another deal we will
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help you with, these shoes are taking leisure to a different level. up to $10,000 worth. the luxury website is partnering with square to launch my square. customizable leather luxury sneakers. python,pick crocodile, who would not want that? jeff solomon definitely once to to walk to the holiday party in apparent these cakes. tweet us, you are watching "bloomberg ." ♪
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♪ is this really what you want?
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living in the shadows? hunting, being hunted? stephanie: that needs no introduction, we are talking james bond, the 24th james bond film is coming out this weekend and expected to have a huge box office open. are you a james bond guy? : i auditioned and did not get it. stephanie: are you going to see it? jeffrey: absolutely. what are you going to read sunday morning? jeffrey: i'm on my way to pittsburgh for the steelers and raiders game. david: before that, jobs numbers in the next half hour. stephanie: making pittsburgh proud. ♪
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stephanie: the labor department said to announce hiring in october and what will it mean for the fed decision?
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sees the effect on markets. several major banks around the world making very big cats. we are taking a look at the future global bank regulation. -- the future of global bank regulation. ♪ stephanie: it is friday morning, 8:00 in new york. welcome to the second hour of "bloomberg ." i am stephanie rolled. david: i am -- stephanie: i am stephanie rolled. david: i am david westin. let's start with first word with vonnie quinn. tonie: u.s. expected announce kind of security steps for u.s. flights after the crash of the russian jet in egypt. thousands of british tourists are returning home. they were stranded and eight suspended flights to the area
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where the jet crashed. andeast 15 people are dead more missing after two dams burst in southeastern brazil. it happened yesterday at an iron ore project. they feel the water that flooded the towns are tainted with mining residue. on theabout half an hour latest reading of the u.s. job market. economists think u.s. payrolls grew last month by 185,000 or so. bloomberg openview the report at 8:30 eastern -- bloomberg will review the report at 8:30 eastern. you can get these stories and more at matt: some company stories today, we have been talking about disney coming out with earnings beat, but revenue was $13.5 billion and they were looking for $13.6 billion, so kind of a mess because of park revenue. shares trading down slightly in the premarket. dreamworks came out with the biggest jump in revenue growth ofce 2009, first quarter
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2009. tv is doing it for them, not movies. there has been no "shrek," or how t "how to train your dragon." saleseat for shake shack, of 17.6% to we were looking for 10.6% growth, so you stores driving the games and they are up in the premarket. and then men's wearhouse, you might not like the way you look ityou are along this stock, is down 35% in the premarket. a big mess on not only the quarter but the outlook because joseph a banks did worse than they expected. i don't know about this. i saw a commercial yesterday that joseph a banks guarantees you will love your suit or you can return it. whenanie: i will point out
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i lived to you this money, are you wearing a new one? matt: i am not. stephanie: you look pretty good. you year, new here. david: i don't care so much about me but i care about if my wife loves my suit. stephanie: there you go. matt: if you buy one, you get like six for free. david: which may be why the results don't look that stellar because they are giving await results. stephanie: that is light matt miller gives us the best technical analysis, six free suits from men's wearhouse. day, we are talking about the bigger number than six. analysts forecast 185,000 jobs created last month with unemployment holding steady at 5.1%. this report is important to the fed. they have got to make this decision on whether they are going to raise rates in december, so this data matters. grasping -- let's bring in an expert with economic advisor
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alan krueger. bachus through this number. what is the threshold -- walk this to this number. what is the threshold? is a i do not think there specific number, so i would say it is as a. if we get the number north of last month, i think that is raising the likelihood that they get off from zero in december, but we have another report before their next meeting, so this is one input. on the other hand, if we get a week number, i think that will give them a lot of positive on moving. david: they also make revisions. how important are they? they are huge. press and public do not focus so much on revisions, but revisions can be enormous. the average revision is less or minus 50,000, so i think that is one of the reasons there is not
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the reasons they look at a collage of statistics because numbers will get revised. stephanie: clive, what is the unintended consequence? we have so many revisions. back in the day with less information, it seemed easier to make a decision. now, it seems like janet yellen is sitting on offense. fed's one of the instincts is to be more transparent. the market once to put out more information, but i am not sure that helps the fed clarified the message. i think there is a real problem and it is not the fed's fault that the markets tried to toss every particle of information. the more information you give the market, the more confusing the outlook becomes. stephanie: it is the media's fault for amplifying numbers and not others? read between the lines. clive: i think it is somewhat. factor i think
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janet yellen says she looks at is underemployment. if if they have jobs but they have as many jobs as they want. measures --equently mentions a broader measure of employment which includes part-time people wanting full-time jobs. that has been coming down at a high level. in my view, the people working part-time for economic reasons to not count one for one with the unemployed because they do not represent as much slack in terms of hours. they may move from 25 hours a week to 35 hours a week, said that is not providing as much labor resource for the economy if someone is not working at all and moves to employment. have a question because you are the go-to guy on labor markets, is there any prospect of developing a better single number? getting people's eyes off headline rates and moving attention to new combatant that
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--es a better take on labor composite that gives a better take on labor? alan: they have been a study where they wait for different components of people not working and there are different ways you could not be working. you could be looking for a job, you could have given up looking, and they waited them that they move from working to not working. i think that gives a pretty good indicator that pulls together various measures. i would probably put a little bit less weight on those part-time since those moving from part-time to full-time is not moving from unemployed to full-time, but it is possible to synthesize measures and more informative way. clive: that should dial that up a bit and put more weight on that approach. stephanie: there's no platform with more data than the bloomberg. matt: i will share with you a bloomberg function that may blow your mind. s, easy to remember because i
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think of gary. stephanie: i was going to say. matt: you can see a heat map of the u.s. or so many different pieces of data, you can load your own custom data. this is employment and i have changed over the last year in employment. you can see the trend is good. only four states in the u.s. see a drop in employment -- in unemployment over the last year and you can see where it is bright green, there are strong gains. you can put in economic health, home prices, mortgage billy quincey's, carbon dioxide -- mortgage delinquencies, carbon dioxide, this is a new function and i am excited about it. david: pretty incredible. stephanie: walk us through. matt: this would be oil, exactly. the drop in oil prices lead to less production. these were the biggest states to add jobs this time last year and
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now they had the biggest losers. bees, you will all have bloomberg? alan: i have access. stephanie: when we take a dive to where jobs are being created, what can you tell us about industries or sectors where we see more deterioration? when you talk about oil, i think about texas where it is a good chance we see less job creation as opposed to new york and california. said, andatt implement rate in north dakota fell below 5% early. unfortunately, with oil booms, like innot that much silicon valley which tends to bring other industries with it. it is possible north dakota ofht be in for a long period
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stagnation given continued weakness in oil prices, which would be good for the rest of the economy but not good for north dakota. also, i think it is useful to break down data by other industries. andok at professional business services which have been strong in recovery, temporary help, a leading indicator, health care jobs rowing more slowly comes to get the rich picture. clive: it is not clear when you have that desegregation what it tells you on policy. a uniform economy moving at the same rate, compared that work you have to press sectors and sectors doing well -- or you have depressed sectors and sectors doing well. the jobs may be the same but in the case when you have the variation, internal variations, what does that imply for policy? do you move as soon as you see some sectors stressed or what? : excellent point, until recently, it measures how broad the job growth has been and it
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looks like we have had broadband growth. the federal reserve should pay attention to which sectors are more interest-rate sensitive because that is how they affect the economy. i think having the granularity has helped different policy makers. david: alan, please, stay with us. if you have questions for alan krueger, send us an instant bloomberg or tweet us. it is time for the yearbook game. this tech entrepreneur graduated from buckingham ground in cambridge, massachusetts. high school class of 1978. he joined the peace corps after that. ♪
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vonnie: welcome back. here is your latest is this flash. another day of bad news for takata. toyota says they are dropping
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the auto -- or a will use the airbag -- or it will not use thereby. there blamed for at least eight thats and honda and laws already made same move. alibaba line of website that is a lot like youtube. it will let the online retailer stream more content on the web in china. it can reach nearly 1/3 of china's population. this but building a new team to work on content creation. previously at microsoft research working on appscts like hyper for videos. confirmed that there are departures. that is the latest bloomberg business flash. david: thank you. and barclaysank retrench, they are taking a fresh look at regulation. are they help or hindrance?
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brendan greeley is in chicago attending the federal reserves banking conference. what are they saying about regulation? brendan: a couple things going on, antidotes to constitute a trend. we are seeing a global pullback, they are pulling out of foreign markets and a couple things driving that. there was research i saw yesterday that banks make funding choices based on conditions in the home market and not what they do blend in. if you have a problem at home, you pull back a brought even if there are good opportunities. different countries are requiring that their banks fund subsidiaries locally and that they be locally capitalized and that makes it more difficult to move capital around. daniel is at the conference and he spoke yesterday, a member of the governor's board of the federal reserve and he said, first, he pointed out it is likely that international banks to holdg to be forced
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the capital buffer above and beyond local subsidiaries, just for being an international holding company and you might have to hold the next of buffer which exit harder to move abroad. take a look at this, when thanks wary about having to fund locally, they call back balkanization, they are worried that their assets will be extended. this is what he said about that -- >> when you hear complaints instability, it will result in the balkanization of thinking. at first, it is not clear that developments since the crisis have organized banking, so much that they have shifted banking from ocd countries whose banks are disproportionately affected by the financial crisis to banks from emerging markets in developing countries. take away froml the conference was exactly his point. there is research that supports this, some out of the imf. we are looking at deutsche bank,
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citibank, we are focused on banks in europe and in the u.s. what we are missing is there are regional banks elsewhere in the world that are picking up the slack, so we are not seeing if there was a global pullback in banking but increased regionalization. in portugal sold some assets to latin american banks, and russia is buying up assets from austria's bank, and there is a regionalization of banking and not that assets are disappearing but the banks we talk about all the time are pulling back. stephanie: they are also talking about dodd-frank and how global banks are currently being affected by this role that seems to never end in terms of when and how it is supplemented. brendan: -- stephanie: when and how it is implemented brendan:. -- basically,ee,
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he is responsible for stability policy. he didn't think there could be some room for banks below $3 billion and assets in the u.s. to opt out of the role. there is a general understanding, even among isulators, that dodd-frank proving to be a huge regulatory burden on small banks that never engaged in dangers of trading on their own books. i am going to speak to thomas honing today, the vice chair of the fdic about that, so i think they will be some movement for smaller banks toward easing dodd-frank regulations. i do not see that for larger banks. david: thank you from chicago. max, you have an update. fascinating story from bloomberg news. goldman sachs has sold 1.3 leant shares that they were holding as part of collateral pledged for $100 million loan to mike pearson, the ceo of valeant.
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a personal loan which he used to donate to make charitable , his almaons to duke mater, to build a swimming pool and do other things. goldman sachs requires prepayment of the loans and they that theymed valeant sold shares in satisfaction of the loans. they represent about 1/5 of the shares that goldman sachs held in collateral in exchange for this $100 million loan. aleant -- at vl david: this is a standard trance, deal. m deal, youcecom can liquidate and sell it. that is all likelihood what they are doing. stephanie: doesn't that sound strange?
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clive: charitable contributions. stephanie: obviously, we do not have an answer, but we have to dig into that interrupt tax reduction. i would goldman sachs make a loan to mike pearson so he could donate $100 million? we talk about the questionable way valeant could be running their business -- matt: out till you why, he holds a large number of valeant shares and he does not want to seem to be selling them to increase his wealth because people will question his commitment to the company, so what he does instead is give the shares of collateral for a loan, goldman sachs gets in cash which he assumes you can pay back later and i think that is fairly normal. david: and what other relations are the between mike pierce and goldman? i am a public school girl from the garden state, but those numbers do not add up. i am so glad we broke that. "bloomberg " has a lot more
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to cover. we are a few minutes away from the jobs number. send us a tweet or instant bloomberg, what is your gas? you might be -- what is your guess? there might be a bloomberg mug in it for you. you are watching "bloomberg ." ♪
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stephanie: you are watching "bloomberg ." i am joined by alan robertson, robert, -- i am joined by robert. i have been on the road a lot, i have seen probably two dozen banks in the last months
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around the country and i have listened to all the third-quarter earnings. you do not hear a complaint about the economy. they have virtually become all satisfied that there is growth. they complain about interest rates. on the ground, this momentum is back. that is key. i think people are perhaps a little too morbid about what is going on, including the fed. stephanie: so they should move in december? robert: the tenure should be around 4% if you look at historical averages -- the 10 year should be around 4% if you look at historical averages and the fed has their foot off the brake and the need to get closer to it. the issue is not this monstrous inflation if they don't do this right, we have the problem right now and jimmy grant was good yesterday at collaborating. we have [indiscernible] in the system. we have a bond market bubble, surprisingly large home price
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double that no one is talking about. home prices have risen 6.5% for the last three years. the price of family income ratios are back up from the last crisis, so this is causing damage and i'm sure the fedand they are trying their best to do it gently and quietly, but they have to get at it. stephanie: there is one thing investors should be right now? robert: make your decisions, stay in equities, and the financials look strong. stephanie: thank you for joining us. that is this morning's morning meeting. we will be back with more "bloomberg " in a moment. stick with us. ♪ the only way to get better is to challenge yourself,
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and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. stephanie: we are less than one minute away from the jobs number. give me your numbers. we have viewers who have given
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their numbers. with gina nelson. >> 170. stephanie: ifo 169. i g 169. phil mattingly has the number. 271000 and the rate is at 5% which is the highest numbers and's december, 2014 well above the 180,000 estimates. the numbers get better but there were two soft months. net are now revised up 12000 and wait growth is another big number. month over month, up 0.4%. it was dragging a around zero poin 2%. -- 0.2%.
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the total number of unemployed plus marginally attached to the workforce is 9.8% which is the lowest since may of 2008. in labor participation, it remains the same area not any major gain there. industry,y professional and business services is one of the driving forces, up 78,000 compared to an average of 52,000 month over month. health care is another strong one with 45000 and retail and trade is up 44,000 compared to an average of 25,000. manufacturing had no major gain or loss. the only loser on this list is one that has been that way for the last couple of months, mining. number, 275,000. we had revisions and wage growth and when you add the topline number, a big overall jobs report. stephanie: we are already seeing
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a response in the market. equities are selling off. this is a huge number. >> it's a great report. this is a big relief given the last couple of months. it is a time the u.s. economy is continuing to improve. >> it's startling. it really is a great number. there is no longer any question -- david: it takes the suspense out of december. what we want to hear now is what phil gross -- is what bill gross has to say about these numbers. we are speaking with him now. michael: joining us now is bill gross. brighte there is a glow you can see from the west coast. 26thank you, unglued bloomberg and they are telling the same story. that the yellow
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light changes in december to break green. before going to bed last night, i calculated that any jobs number over 150,000 jobs would be sufficient. the fed views the economy and future inflation through a phillips curve lens that speaks to low unemployment and a new nehru around 5.25%. it's now below that at 5% so i think they are ready to go. tom: they recalibrate so what are they waiting for westmark why can't they have a meeting and get out front and provide the leadership the market desires? >> that's not the nature of the current fed. we would agree with that. they are gradual and they want to make sure that the markets are prepared and unlike paul volker who it one point in the late 1970's shocked the market with a 2% increase before
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telling anybody, i don't think that's the nature of this fed. i think the market is a rather quick increase of 25 basis points as evidenced by the two-year. tom: let's get back to the jobs record but i believe this bond yield is higher. have you adjust this morning? >> hopefully, you go into it as we did at janus with a negative duration. to tear for ait, , we are at aet down day in prices like today so yeah, early this week, negative durations, going short on the 30 year treasury as opposed to long and obviously making money at the moment. michael: the fed is going to raise interest rates likely in december. was to movel of
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investors qe out of the risk curve and move you longer. you are coming back in. if everybody is doing that, how does that affect the curve and how does that affect liquidity in the markets if everybody reverses a seven-year trade right away? >> i think that is a potential problem, yes. today, the chances in the market of a december boost was about 60% and today's report will tilt investors toward the reality of a fed increased and rates for the first time since 2004. thatentioned previously nine years ago was the first time they increased rates. although the fed has prepared i think thethis, markets may not be prepared because hedge funds and retail investors will look at this usetf's and maybe
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mutual funds is an exit vehicle and they cannot get out of the same time. --will be interesting to say to see today in early next week in terms of how quickly they want to hit the exit. tom: bill gross with us. we welcome you on bloomberg radio and television worldwide. i look at the compensating factors and where you see that is foreign exchange. is euro is $1.07 and the yen almost $1.23. what does the dollar strength signal to you? is that a construct for the was economy or his dollar strength something american manufacturing has to fear? >> i think so. i think the fed fears it, too. they took it out of the statement last month but prior to that, they were cognizant that a strong dollar has negative implications for emerging markets. i look at the mexican peso at the moment. 18 ticks and that's
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down 1.25% which is typical of emerging markets. the dollar is strong and there are implications in terms of balance sheets for many of these countries. i think it's very much of a concern, something the fed should think about that probably won't in december. michael: what can they do about it? to the lineme back of our dollar your problem. our mandate is the united states. >> i agree. to the extent that the global markets and the recognition that they are the central bank of the world which they refuse to acknowledge publicly, then inflation and economic growth and wage growth which we just talked about become the dominant considerations. it's just a question of priorities. i think they will look around and see how strong that dollar is.
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it is certainly a negative or the global financial system. and much dollar denominated debt will be impacted by this. tom: jason, come over with this camera. i will put this out on bloomberg radio+. this is gold. gross, what does gold signal if it breaks through to a new witness below $1100 per ounce? >> i look at my fifth bloomberg and on a long-term basis, it's up 3 or 4 basis points. for goldgative impact price because it makes more expensive relative to other alternatives. that's one explanation but i cannot give you the total solution. gross has been
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somebody who has said through the decades that retirees will be hammered in this nation because of the dynamics of the top line nominal yield and the real yield which is the way we really spend our money. it yields go up, that does not real yield goes up as well, right? >> not necessarily, it could go up because inflation is going up and the holds the line in terms of the new neutral fed funds rate. that is a possibility. you can raise interest rates by 25 basis points in december and that assumes that inflation is moving in the same direction. yeah, real yields a nominal yield could be entirely different in terms of going forward but at the moment, long-term real yields are up by 2.5 basis points. michael: before we take a break, janet yellen argued this week that it does not matter when they raise rates for the first time.
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what matters is when they stop, how far do they go. what are you seeing now? >> yeah, i think that's critical. your page fwcmately displays the active u.s. treasury curve going forward. just before 5:30 a.m., it looked saying theiding was market was expecting the fed over the next two years to move up by 150 basis points or just over 75 basis points per year. below the fed so it's the market versus the fed. i have a sense that what i just described in terms of the graduated increase is what is going to happen. the curve is pretty accurately reflected on what the fed will do. tom: we will come back with bill gross and continue our discussion particularly on investment for yield. stephanie: there you have it,
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thank you to our own boat surveillance" team talking to bill gross. we need matt miller to take a look at the markets. across the board are saying this is a strong number, much stronger than they had anticipated. it seems now that uncertainty is out of the market, the fed will likely raise rates in december. uncertainty will be gone in a quiz can rally? matt: the market reaction nu wasts. the markets went on chris. take a look at currencies. i have a live trade of the euro-u.s. dollar. , if you want to look at alive trade, it just dropped off a cliff. it's down to 107 .35. we were floating above 108 earlier so big drops in the euro, big drops in the yen. if you look at the yields, they were unbelievable.
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two-year andn the 10 year and have come back a little bit but the 10 year right now is 2.30. looking at the two year, we were talking about a seven-year high ed's 0.83 and we're looking at 0.91 and we were above that. a huge reaction in the market across the board. tom showed you golden it will plummet because if the fed raises rates, they are paying more interest on pretty safe money and gold pays no interest. gold will obviously come down. the interesting thing i thought was where there was no reaction. there was almost no reaction in oil. it finally came down about $.50. right now we are looking at a $.14 change at $45.06. that is interesting because that has less to do now with dollar strengthen more to do with what opec does in supply and demand. outside of that, everything went
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equities but futures have come back a little bit. stephanie: it seems like commodities will get crushed. we've gotten the market reaction. we got the bill gross reaction when we return, we will get the reaction from alan krueger breaking them these numbers. when you thought about the overhang that the cheney slowed and would have on the u.s. economy, that may have been overblown. -- that the chinese economy slowed down, and that would have only was economy, that may have been overblown. we just got a very big jobs number. ♪
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david: welcome back, we are joined by alan krueger and clyde brooke. -- crook. the top lineelow number, it's hard to find a bad
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one. >> this is a terrific report an american image of last month. you could find the silver lining last month but almost all the details look good this month. wage growth was strong over the last 12 months which is the best in over six years. hours were steady. the average work week was steady. labor participation was steady and that brought us a measure of labor you'd is always -- utilization. i'm reminded when i look at this report that when i went to the oval office to greet the president when the unemployment rate at the debt 10% and came down, the president said i remind myself don't get too high when the news is good it don't get too low in the news is bad. reliefport is a great given what we have seen the last couple of months. stephanie: it will cause a very strong dollar and you have to think about what does a superstrong dollar do and what to -- and who does it hurt? commodities will get crushed. it will cause more to get access to those dollars. what is this going to do to that universe, a universe that is suffering currently.
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the curve could flatten this could be tough. >> you are already looking for the bad news. stephanie: i try to do what the president does. >> my instinct are presidential and i agree that when you have a little reality check, this is a volatile number that goes up and down. it crosses my mind that we are looking at this undeniably impressive report, it's a great report. but it is foreclosing the feds options in december. what you've got is a combination of a terrific report and the kind of commitment to do something in december. -- i'm not sure where that is coming from. we want to see next month's number and see that what that will say. i don't think that's how the markets will take this. they will regard the december rate increase as a done deal. that kind of points to a problem with fed guidance, it seems to me.
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matt: the markets are looking this as a done deal. if you look at futures, you can see the market now calculates about a 70% chance that rates will increase in december. that has been as high as 74% in the last 30 seconds. it's more interesting to look at this graphic of expectations for december. take a look at mipr and if you click into the u.s. harris, yields could flatten. we are seeing that. the yellow is the historical curve and the green is the market implied volatility curve after this decision. you can see the curve is indeed flattening in reaction to this number. advisers bute wise in fairness, this is not just a single data point.
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numbers, was there anything that was going to keep the fed from raising? they have been looking at this steady stream of data that indicates the economy is doing pretty well. >> i think this will confirm the janet yellen point that the economy is performing well. on insurance -- unemployment insurance claims have been the lowest since the 1970's so there are indicators coming in showing the economy is continuing to heal. we are pretty close to full employment. the most interesting number today was the wage growth which confirmation that we are getting pretty tight majority market. stephanie: are we ready for the consequences that a rate hike introduces? have we prepared ourselves? >> i don't know if we have. it is so uncertain. we are coming off the edge of this remarkably unusual approach
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to policy. i'm not criticizing because i think the fed has done a great job but we had in an amazing accommodation and we coming off and everything will change. it will take markets a long time to digest this. a lot can happen. a lot can go wrong. stephanie: it makes it harder for companies to make money overseas. ceos say it's the international growth. how can you make money overseas in this environment? >> i think it shows they have the wrong strategy and they were putting their eggs in the basket of overseas. stephanie: also share buybacks. i think it shows they should have been investing more in the u.s. economy. we already started to get off of monetary policy in the markets the benper tantrum with bernanke you press conference two years ago when he said we will start to taper. and we weathered that.
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we may be in some for some volatility. as we start to remove the monetary stimulus but we will be in an accommodative stance for quite some time. >> look at the size of the fed balance sheet. it is uncharted territory. we have to leave it and ceos should invest more in the u.s. economy. buffett andarren alan krueger and clive crook. we are having quite a morning emily back with more. -- we have -- we are having quite a morning. we will be back for more. ♪
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david: welcome back. it's a big day because it's a big jobs number. stephanie: this job number has
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had huge market reactions. let's talk about where we see stocks. it's also the volume. we have seen so many investors since august 26 really just pull out and sit on the sideline not knowing what to do. they are going in our this morning. matt: this is certainty. futures are not moving that much but they came down severely after the number came out. the move in the 10 year yield is one standard deviation. we are looking at the same kind of move on the euro and the move in gold was to standard deviations. stephanie: this is some morning and we have more to cover. we had the blackberry ceo in the next hour. ♪
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david: we are just 30 minutes from the opening bell and welcome to bloomberg ." joined by erikre
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schatzker. how about that jobs report? erik: it's unbelievable. i was bullish going into the jobs report and i was looking for 212. let's bring you more detail. you saw the unemployment rate dropped to 5% and phil mattingly broke the news at the labor department. he is still there. 271,000 is a very big topline number, the has number of jobs gain since december of 2014. 5% unemployment rate is at which is close to the fed target of the one. you go to wage growth and this is one of the biggest underlying stories. at 2.5% year-over-year, that is the largest gain since july of 2009. barb in then the side of economists over the last year or two. there has been no movement in wage growth.
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2.5% is higher than the 2.3% estimated. industries,k at professional and business services is one of the big gainers. the industry has been averaging over 25,000 per month and retail, 19,000. positive news across the board in this report. it,: as alan krueger put it's almost the flip side of last month's job report. millerake you to matt here with us in midtown manhattan to look at the market reaction. between stocks and fixed income and currencies, it's pretty dramatic. matt: absolutely, the two-year is at a five-year high. i pulled up a chart over the last five years. take a look and you can see the yields just skyrocket.
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it's only 0.9%. that is the world in which we live. h indexlook at nfptc ecmi, there is a cool chart and you can put in -- erik: it was worth waiting for you to type that out. matt: i will put in gold. you can see this is the predicted one standard deviation move from the price of gold. it has moved to full standard deviations. i feel like i should wear a bow tie when i say that. the biggest move i can see of anything. thead huge moves as well in 10 year yield and huge moves in equities. equity futures came down right after this report came out. they recover little bit but equity futures are still off and it looks like we will open down as the probability that the fed move in december just shut up. at 70%.oking at wrip
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you can see on the graph at the bottom, it's a significant move. it's a big jump up in the chances the fed will raise rates. stephanie: i think there is an important point to make that we should not forget -- walmart gave is bad news a month ago. many investors has slowly been going long in the market. we don't want to get overenthusiastic because when you look at earnings and you it being harder to make money overseas with the strong dollar. we won't want to get overexcited. we need companies to make money and this will be challenging. magna international came out with earnings last night after the bell in revenue was $870 million light because of foreign exchange, because of translating the sales they have
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overseas. they are a massive auto-parts suppliers and it hit them by almost $1 billion in revenues. your point is spot on. this scared us in earnings and we have to get back to that. investment is not just following what the fed is doing. we have gotten ourselves back to fundamental trading and we cannot forget that. nn.t: let's go to vonnie qui of britishusands tourists are stranded in egypt and are now heading home. great britain grounded its fleiss -- it's flight after a possible bomb brought down a russian plane. at least 15 people are that and more missing after 2 dams burst in southeastern brazil yesterday at an iron ore project. officials fear the water flooded a nearby town and is tainted with mining residue.
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chris christie in my cut debate will be on the undercard in the gop race. they will not debate in prime time. they will be in an earlier form. three candidates don't qualify for either event because of low poll numbers. you can get more on these and other breaking news 24 hours per day at the new erik: it's time for the five stories that matter to markets now. here is number 1 -- the latest in the valeant saga. goldman sachs just called a $1 million loan and the ceo could not face of goldman sachs seized one million shares he had put up as collateral and sold them. in a statement, pearson said -- this reminds me of aig. when you think things are going awfully bad, the goldman sachs
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risk managers to make them go worse. david: it seems embarrassing because the reason he took the money was to make a charitable donation. erik: some of it was. it was to duke university and building amenities swimming pool. some of it was to pay his taxes and some of it was to buy yet more valeant stock. stephanie: it seems strange when you think about all the people who have negative opinions about market participants and corporate ceos and the banking industry, they look at this and say i'm sorry, this does not add up. erik: this is what happens when your stock is in a freefall. it's not that unusual for corporate executives to pledge stock in return for loans if they do not want to sell or if they don't have the cash. if they do that, they better be prepared for it to get sold as the value goes down. the bank wants to protect themselves. erik: it's a double edged sword,
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that leverage. stephanie: the bank should protect itself. i will take you to number 2 -- business is in talks with a voice brokerage business. it would reduce costs and a shrinking market. acquisitiontential because things are so cold. to redefine it as a technology business in both countries have suffered from years of record low interest rates which have curbed volatility in their markets. this is an industry you never thought would have been run by technology. these are the interdealer brokers, the big guys who have been sitting between the banks for decades going away. that means less guys at the yankee game. david: the number three story that matters to markets is china will lift its five-month freeze on ipos by the end of the year.
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it was instituted as a support measure for the stock market in the summer after months of instability and the $5 trillion route in august. the shanghai composite index rallied to a bull market this week. i thought it was good news. erik: yes, in theory. again, it's the chinese regulators who messed things up in the first place making the decision about what can and cannot be done. stephanie: i will give you number 4 -- intercontinental is the favorite hotel chain. is exploring strategic options including a potential sale or merger. the world's largest lodger is deciding whether to sell itself or combine with a competitor. think about it, there has been so much consolidation in this sector. some of the biggest private equity and real estate guys from superhigh end to low end. this has been hot in m&a for the last two years. erik: this is a favorite of
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ours. stephanie: you are one day too late. erik: it's number five, square is seeking, as of this morning, to raise $285 million in an initial public offering. the company plans to sell 27 million shares at a price of $11-$13 each. the stock will trade on the new york stock exchange. all the major banks of the major underwriters. twitter was valued in its last run around at $6 billion. at $3.84es twitter billion. stephanie: one more time, say it one more time area erik: $6 billion in a series e private round, $3.85 billion or thereabouts at the midpoint of the range for the ipo. what is significant in addition
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to the fact that is going public in a lower valuation than it was in the private market, which is what everyone was waiting for, barry diller was talking about this a few weeks ago -- stephanie: hold on, give us more details. he was not specifically speaking about square. he was talking about the exuberance of private funding in the tech world. erik: he talked about valuations not being anchored to reality. we would not know whether or not they were accurate, real, credible until the money started to find its way into the public market. stephanie: those are the words he used to describe donald trump that day. david: what about profits? erik: it could have been based on reality. stephanie: the magical future, we are talking unicorns. 5 those of the five stories that matter to markets now. stephanie: we have had such a big day.
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this tech giant graduated high school in 1978 and says his is "the blind side." tweet us your answer. who is that guy with the black turtleneck and button-down? downwe return, we will sit with the blackberry ceo john chan to talk about their new smart that erik schatzker has. you're watching bloomberg ." ♪
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erik: welcome back to bloomberg ." blackberry is debuting its new smart phone. it's called a seachange because it runs on android. the world's most popular operating system. it incorporates back in the beloved keyboard which slides out elegantly.
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here to talk about the phone in the future blackberry is none other than ceo john chen. stephanie: i like your demonstration. erik: welcome. i have been reading the reviews. they are mostly positive that there is a note of skepticism on just how well this phone can do. how important is the device to the future blackberry? >> it's always an important -- a device is an important part of our business. you also know that we are generating a lot of business in the software world and everything connected and iot and all the buzzwords so we are doing different things but it's still very important. erik: nothing creates as much buzz is a new consumer device. >> i know. erik: is that a good or bad thing? >> it's a good thing. that you some time ago like people to talk about you good or bad. the worst thing is nobody mentions you. it's a good thing. we love the attention.
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it's kind of challenging. we love the challenge. erik: why is it challenging? >> we lost our number one position a number of years ago in 2007. everybody had a blackberry back then. they were like everyday words. a number of things have happened and we lost that position. everybody is now becoming a critic in some remember the past and compare us to that and some have thought about the current competition. the other fruit companies, i don't want to mention our other competition. stephanie: many feel apple is unstoppable and the one place they could not get into was business because we all use blackberries for work. then you had ceos and executives walking to their i.t. department and saying i have this tablet or ipad, make it work. now that apple ecosystem has made its way into corporate america. what can you do about that? >> the first thing we do -- we
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did not like that happening. since that happened, the first thing we did is created software that manages everything. it's not just managing blackberry. if you talk about a sea change, it was because we made sure that all the know-how we have which is huge -- a lot of technology -- manages to be run on all devices. that's important but there are also a category of users that looks for high-end and looks for the keyboard for productivity. i don't even need wireless charging. featuresfor all these and security and privacy and that's what this is for. we are addressing a segment of the market and we hope it
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goes bigger. i will not name names but there of other people using this device. stephanie: you have to ask about alicia keys. erik: he has nothing to do with alicia keys. stephanie: there is a big thing tying yourself to celebrities. what happened, they are holding an iphone. iphones are: they think that product has that great camera. when you talk about celebrities liking or product, is that a dangerous place question mark >> absolutely. i am not asking celebrities to endorse us. i'm amazed and happy the fact that they are using it. have a going to celebrity spokesperson. erik: how much marketing muscle in dollar terms are you going to put behind this phone question mark >> quite a bit but it will not give you a number. erik: what is quite a bit for blackberry? we are still a $3 billion
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company and have over $3 billion in cash. we are pouring most of that into research and development. i agree with stephanie, this is not about getting another thisknown figure that uses -- stephanie: you're not looking for a kanye selfie? >> a selfie i can handle. erik: why now? i'm not saying android is not a good idea. there are users and customers and shareholders who want to know why you did not do this before? >> well, i just got here. a couple of years ago. erik: almost to the day. >> november 4.
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there is a dashboard in your that tells you who is pinging you and it takes time to do that. stephanie: thomas time do you need? we are living in an environment where the public and shareholders are very impatient. how much time do you need question mark >> i told everyone two years ago that i would take three years. in success, how does this new product relate to the rest of your business? you have a big business apart from cell phones. is it the idea that if i go and buy one of these, it's more likely i will user other products question mark what is
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that connection? >> back to the earlier conversation about enterprises and government using our phones. they use are far more securely because of our software, the the servers. it does not really have to but if you want to really take the highest level of security and privacy, then you should marry the two together. erik: this is what some of the enterprise and government customers are wondering. does not meet your expectations, what happens to the blackberry handset business? >> we would then migrate to more software. think mention software, i -- they think i'm talking about mainframe software but i am also talking about software in the phone. if we don't get a good hardware business going, we will more
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consider the software side. erik: will you get out of hardware? >> the market will tell us. 5 you're giving it until when? me answer it this way because i don't want my marketing people to go crazy. so far, it looks like we are good. matt: i have been looking into the bloomberg to pull out hardware revenue versus software revenue. hardware revenue are the blue 2006 andoing back to peaking in 2011. software is the yellow columns here. i expected to see a much bigger yellow column. industry,ing the auto the automakers especially the luxury automakers are using blackberry software. why aren't the yellow columns bigger and are they going to be?
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>> they will have to be. matt: the market is deciding. decide whether or not hardware is the business you stay in. a lot of the automakers -- i think we are in 250 car models. we get paid as they roll out the car so it's a royalty. if you think about charging people money when they use our software on a monthly basis, this is the reason why you should see the yellow line going up on a gradual basis. how big a business to you have in the automobile business? >> we don't break it out for obvious reasons. this year, we believe we will get about half $1 billion of software business. erik: of which automotive is
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significant? >> yes. erik: one company in the autonomous driving industry trades at 100 times forward earnings. if you had a significant autonomous software business, i believe blackberry stock would be worth more. >> i cannot answer any stock questions. i am always very biased. stephanie: you could be a possible acquisition target. eye could be a possible acquisition target. erik: it may be to expensive. are you still shopping for software? tothat yellow bar is going grow faster -- >> we made five acquisitions in the last 20 months. it's mostly due to good technology. erik: are there more coming? >> there will be.
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now i am picking your interest. stephanie: you are. producers are killing us. i like me some blackberry. erik: it's a fun phone. chen, thank you for being with us. the blackrock ceo will be coming up with us. ♪
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stephanie: the u.s. economy added 270,000 jobs. unemployment is the lowest since 2008 and we heard from bill gross. 100% that the yellow light changes in december to green. stephanie: we have heard what the west coast has to say so
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let's find out what the east coast says. rick rieder is with us from blackrock. what was your prediction for the number? >> we think the economy is operating at a good level. there were a couple of things at play in with think august and september of the weakest months of the year historically. we thought we would catch up. there was some interesting things with people dropping out of the workforce including this younger part where you get the transition around school. this is bigger than we thought. 4 stephanie: how does this change what you are about to do with investing? misperceive ifle the fed is more hawkish. it's a risk off environment but that's the opposite. when you go back to when the fed did not raise rates in september, the market went down 5.5%. and came out and clarified the stock market went up 11.5%
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from that day. it's hard to say what one day will do but i think you can take more risk because we now have more certainty and clarity about where the fed will go. david: it strikes me that there would be some industries that we worked at zero because he thought it was a nice place to be. finally we get to have some interest rates. >> i think is if you think i can happen. you look at the component parts of this and it's up 78,000 jobs. retailers, construction. people say the economy is weak. we talked about last week. technology is changing the world and we have industries that are really growing on the backside. no doubt a stronger dollar will help the exports. exports are less than 3% of gdp. it's different in europe and china in terms of if you slow down the next or dynamic. what makes you wonder -- erik: i don't know if everybody
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can see it. i'm looking at the fed funds rate against the s&p 500 going back to 1990. what i see is evidence of what you're talking about. in tightening cycles stocks tend to do pretty well. the stock market advances because the economy is heating up in the fed is trying to keep inflation under control. the only difference being is we have been in a bull market already for six years. that is not a condition precedent that i see in the historical record. >> integrate point. -- that is a great point. usually the economy is accelerating. two, there is discussion of good news and bad news. in the u.s. i would argue that good news is good news. and the economy is doing well in effect can rates -- raise rates gradually. it's europe and japan where it's different. it's a secularly tough economy. two leverage economies.
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in the u.s. as long as the data is good, it is good. the equity market has run up a lot. stephanie: we have to talk about topline revenue being lower. they are doing share buybacks. they are beating earnings through financial engineering. word, not use the"v" valiant. it's harder to do business overseas. how is corporate america going to be? >> there are a couple of things that play. that's a long discussion. first, i do think it's hard to grow up topline revenue. i think the equity market can accelerate. i think it will be ok. part of what we made it a call on is it will make more sense and parts of the high-yield market. stephanie: kerry makes more sense? >> if you could buy some of the higher-yielding markets, high-yield corporate bonds at 7% or just under, in a world where
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equities may only do nine or 10, it's a pretty attractive to take carry through yielding assets. we do like owning assets that carry.we willent be in a low rate environment for a while . to a simple investor, this is say longer short u.s. markets? >> i think it is hard to say that. i think it's accelerating faster than the rest of the world. your comment on the dollar is fair. it intoy likes to buck one asset class. emerging market corporate sarin a tougher position than the sovereigns. that's the big deal. the corporate surtout leveraged. they have trouble accessing dollars. stephanie: and the dollar is getting more expensive. erik: those emerging market
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corporate will find himself in the same markets they were in and 19 four -- 1994 in 1997 in 1998? >> emerging market sovereign's one through their crisis 20 years ago. they build reserves and the levered. -- the leveraged. they even party and putting on a german is amount of leverage. but we would argue it's a cover dynamic in places like brazil or china where the leverage is built on the corporate side. stephanie: what does the terminal tell us? matt: i have a chart that erik asked for about 45 minutes ago. [laughter] rate's infed funds green and the s&p 500 in white. it goes all the way back to 1990. were you trying to communicate bubbles? erik: what i was trying to say is in the past 25 years we have not seen anything like what we
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have seen today. the market rallying and a zero interest rate environment has not existed before. low interest rates as you can see in the past were not necessarily the way to stoke a market rally. when rates bottomed out the market was flatish. as race creaked up, stocks exhilarated. stephanie: you're the guest. >> to stephanie's question, you can think about this three ways, you can drive equity price. remedies, profit margin, or leverage. hard to grow topline revenue. hard to grow margins in the area of new technology. custer cost and puts leverage on your balance sheet. it's why you are seeing to miss issues with corporate bonds. big multinationals can put some gearing on the balance. erik: the era of balance sheet repair is over? >> yes. think about were big multinationals are.
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since the crisis they've been really conservative. you increase leverage but it is not scary. we are not in a bubble. stephanie: i'm dying to thought about foreign companies that by that tomorrow on dollars. matt: we are actually up. futures fell pretty -- wentially after the had a little bit of a stabilization. the dow was up 44 points. take a look at the euro. we were up it $1.08 in change. a forecast that said revenue report0 million -- a
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that said that because fx. it's got record earnings. they make auto-parts. men's wearhouse put out a profit warning. we been talking about this because of worsen excited revenue. it's got absolutely crushed. weight watchers should be doing relatively well. weight watchers came out with outlook.that beat the opera bought into this and now she's on the program. i'm not saying what he earnings -- erik: she is big on weight watchers. david: we are reaction on the job report from jason, chairman of the white house economic council of advisors. i know you are a discipline economics, but they must be drinking champagne today. >> last month i was not nearly
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as upset as a lot of people were. i have these numbers bouncing around from month-to-month. i am not popping a champagne cork but i am happy, especially with these longer-term trends. the last three years, the best job growth since 2000. the fastest way growth in the recovery and the broader healing in the labor market for things like a tough time for falling at the fastest rate it is fallen on the over 20 year. david: i would agree with every thing you described. the long-term unemployed are coming into the labor force much more readily than we've seen in the past. some youth unemployment which was a challenge. that is also improving. seven -- some encouraging numbers are? >> if you look at the broadest measure of labor utilization, that is come down 1.7% in the last quarter.
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in the last year's conduct faster than the regular unemployment rate. the official rate has been in the long-term unemployed, not the short-term. a broad-based healing in the labor market. we're not all the way there yet but we are making a lot of progress. wages up on ae monthly basis, what does that tell you about inflation? >> i think we can do better than that in terms of wages. i think our economy could support faster wage growth. i'm happy to see which growth -- wage growth, but i absolutely would not stop here. some of the things we can do is if we complete the researcher bill and do it well, if we get to the budget and do it effectively, we take steps we are seeing around the country like raising the minimum wage, those are all things we can do to foster even faster wage growth. stephanie: i you concerned about job loss on the impact the strong dollar will have on the
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commodities universe? commodities denominated into the dollar. they will get hurt here. what reagan did you the jobs it will be lost or are being lost in cities and states were there are not other industries? >> you did see in the mining sector 4000 jobs lost this past month. that is a little bit slower than the pace of job loss we've seen over the last year. you are seeing some stabilization in oil production. things like the rig count which was falling quite sharply have stabilized. absolutely. different parts of the economy are growing differently. when you see oil prices decline, it helps consumers in sectors like retail where consumers are buying things and creates a challenge in places like mining. >> one of the things around the , you will see some reduction in some of those
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jobs. thehe multiplier effect benefit you are seeing and saw this report for things that retailers and construction and some of what of the derivative benefit you get from lower fuel and lower commodity prices start to come through. presumably you would see more that going forward ? >> d.c. consumer spending growing at more than 3% over the past year. it's really driving our economy in the face of a global head wind. we still have the global head when that winds. consumers are powering through that drag and delivered economic growth and delivering job growth. >> we talked about what this will do to markets in new york. what about politics in washington? uh and infrastructure bills. you have the tpp coming up. will that affect it in a positive way up on the hill? >> i would like it to affect everything in a positive way. let me add another, tax
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extenders expire at the end of last year. he was something congress needs to deal with. we just set a model in the budget agreement of paying for the increases in spending. i think it would be hypocritical if congress one ahead and pass a two-year tax extender bill without paying for it, without doing anything for the middle class and for working families. it's something this administration would oppose if we see that coming forward. erik: i would go back to a point you made about the rate count, the number of oil rigs operating in america. based on what you see in the labor numbers and the rig count, has the u.s. oil market adjusted the crudest level? -- crude at this level? >> we are seeing a large decline in the price of oil. the way in which we produce oil in this country is novel and something new. the combination of these two is something we've not seen before. i think in general most of the expectations are for general
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stabilization in terms of the levels of production. i want to stress again that oilall leader -- that means prices are good for the u.s. economy. stephanie: jason, thank you so much for joining us. you have got to run a victory lap around the white house a couple of times. he's chairman of the council of economic advisers. rick is staying with us so you don't want to go anywhere. rick might like hockey but we are just hours away from the tip-off of men's college basketball season. -- kentucky,use maryland, and kansas are right behind. an exciting season of college hoops ahead. i know steve is watching. he has got a son, a sophomore on duke's team. that's pretty good. i wouldn't mind having a son on duke's team. you are watching "bloomberg
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." a big morning.
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♪ stephanie: welcome back. the latest bloomberg -- 271,000. the most jobs this year. wage growth accelerated in the jobless rate fell to 5%. that's a sign of labor market durability policymakers are looking for as they consider a year-end boost. it exceeded all estimates in the bloomberg survey. average hourly earnings have client for the most since july of 2009. alibaba is buying a video service in an all cash deal. ma isan of alibaba jack looking for chinese internet users to control a youtube-like service. it will help a live on -- alibaba deliver drama series two
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one third of china's population. former ceo is never presenting himself in a lawsuit filed against him by hedge fund founder general of american apparel. since placed a costly legal fight to regain control of american apparel. that's the latest. let's head over to the nasdaq and abigail. abigail: one stock we are watching is monster beverage. shares of this energy drink maker are soaring after they reported a great third quarter yesterday after the bell. they beat street estimates and i also posted stronger than expected rose on the top and bottom line. this is important considering the company put up a disappointing second-quarter that caused some investors to think the company's big growth front to be over. this is wayne of pickups around the coca-cola this region deal.
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that appears to be over with monster's ceo saying we are pleased to report good progress on the implementation of our strategic alignment with coca-cola bottlers. the strength is continuing into the current quarter considering the company announced that growth for the month of october is 6.8% on a year-over-year basis. turning to another earnings story, trip advisor. the stock is down significantly after the company missed its third-quarter forecast. they also lowered their 2015 outlook and decelerating hotel shopper trends could be to blame. another of street downgrades out there including oppenheimer's jack kelly. he ticket from enough to form -- outperform any cited near-term challenges including difficult costs and says that risks are more skewed to the downside. saying -- staying on the travel scene, home away is off slightly after some sources say priceline
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is unlikely to offer a competing offer to buy for $3.9 billion in cash and stock. considering it's up 25% on the week, i think the shareholders could be pretty happy. erik: regular much. -- thinking very much. she is down on the nasdaq is morning. rick is with us in midtown manhattan. he oversee some $700 billion. andkrock is a big company $700 billion is a lot of money but he do position heading into important events like the jobs report. how are you positioned heading into today's number? rick: this could be a firm number. it's always hard to position for one on a planet number because there is randomness. we did cut some interest-rate risks. we added a bit on the kerry side.
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number we do not think would be this big. erik: when the two year yield hits .95 as it did earlier, a big move, somebody is feeling a lot of pain. who? who out there is getting crushed and 95 basis points? rick: we have lived in a world for the last few years of crowded positions. it's been the short, the front end of the u.s. yield curve. somebody is on the other side of the trend. i'm: there are more people, not sure who's getting crushed, more people who were think the limiting to levels where the collateral markets can operate more effectively in the money market and cash positions can operate more effectively. there are clearly some leverage positions in the front end of the curve, whether it's one of the test markets that could come under some pressure. i think this is good for people in the markets. stephanie: you think you will
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see a lot of money but to work in the next few weeks? since august, even though some investors having going along, a lot of taken money out of the game and sat on the sidelines. will we see an increase in risk-taking that is good for banks because any the volume. you think you will see that? there are two things. people are under risk. certainly after what happened in august through november people have taken the risk down. yet seen it in the last two or three weeks. people that short positions inequities to protect themselves and they are under risk. i think it will add a bit more risk, yes. but there are two things we're thinking about. one, a school of thought that the fed hikes and you should be casas around it which is not a reasonable. i think it's the right policy. the other is moving into year and. you think about the time this year particularly, banks balance sheet and fluidity of markets is not what it has been historically. erik: matt, you know i love the
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yield curve. it's one of the thing bloomberg does. matt: a love affair. alix: i love the yield curve. erik: we can't really talk about things monolithically. nobody positions exclusively in a two-year. rick is nodding his head. what happened? matt: we have the yield curve over one day. right now i should say, one day ago in one week ago. it is flattening out. you look at the flattening of the yield curve. it's a dramatic move. erik: we talked a bit about currencies. how, again blackrock is an enormous money manager and can't talk about fixed income without currencies. we see the dx why in the dollar index at its highest level since march. $99 in change.
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what is the economy? from a trading standpoint? rick: you are seeing a lot of people jump on the long dollar tree. we believe the dollar should appreciate the yield curve and the disparities between what the ecb is doing and the bank of japan. i think people underestimate the reason the dollar will go up this because of where we are now a next -- next exporter of oil in this country. we think the dollar will appreciate. stephanie: you are not allowed to ask any more questions. they said it should be me and i can't. david: this week's highlights. england hasof inflation of the fourth quarter of 2018. i would are the victims it will rain a week from thursday. you had it for five years.
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the economy is growing. we understand it is ok and as a result i think the future is rosy for europe. >> i'm fascinated by human behavior near -- never needs to factor in some of these decisions. >> the people who populate the fed the day actually believe that if they can keep money cheap enough long enough, it may kick start the economy. >> thank god for the federal reserve. thisut the federal reserve country would be in a much, much worse place given the events of 2008. >> the single biggest mistake of the financial crisis was allowing lehman brothers to go bankrupt in an uncontrolled way. if i had time, i could've fixed the problem and it would've been a better outcome. i you had to look today, think the place there is more risk is in the non-bank, the shadow banks. >> this is a terrific report.
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the most interesting number was the wage growth which was the last confirmation that we are getting pretty tight in the job market. i think this will confirm janet yellen's point that the economy is performing well. stephanie: talk about going out on a high note. rick, thank you. time for the yearbook reveal. we told you this techcrunch really were graduated in 1978 and joined the peace corps. i know who it is. it is reed hastings, ceo and cofounder of netflix. i wish he still were black turtlenecks. way to go denise. great weekend and things are watching. this is "bloomberg ." ♪
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welcome to "bloomberg markets." ♪
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betty: good morning. here is what we are watching at this hour. it is jobs friday and the numbers are good. they are better than good. they are great. unemployment falling to its lowest levels since 2008. is is the number that will get the fed to raise rates finally. the first and 10 years. we will get the answer from mohamed el-erian. us, opening up to bloomberg about he is planning to revive the hardware business. he says more acquisitions are to come. we are about half an hour until the trading session and it would look in the market desk where julie hyman has the latest. we were up and now we've turned


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