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tv   In the Loop With Betty Liu  Bloomberg  October 27, 2014 8:00am-10:01am EDT

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week away. are the kochonors brothers m sheldon adelson that we will tell you about the gop donor that almost no one knows about. staying on elections, i will dive into the gop digital strategy going into the boat and how the gop is using big data. the rnc chief digital officer will be joining me in just a few moments. peer to peer lending seems like it is taking off with people like mohamed el-erian and the crown pendant getting into the game -- and crump ended getting pandite game vikram getting into the game. most of the banks that fail the ecb stress tests have been let off the hook. tonti five european banks fail but only eight are still on the list to raise capital. the others either plugged to the cap are satisfied the ecb with
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their plan to get smaller. german bundesbank executive board member -- >> there are some parts of the stress test were more vigorous but others where we are less but it's a rigorous stress testaments he only way to regain credibility and revitalize the market eventually. ecb becomes, the the financial supervisor of the euro area. affectedre somewhat -- by the dilma reelection in brazil. the brazilian real is down today. to captured 52% of the vote 48% for the opposition. under rousseff brazil posted its lowest growth in decades. in ukraine, a big election victory for the party that wants closer ties to the european union and they will form the
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next coalition government. russian leaning parties from eastern ukraine lost sadly and voting took lice during a .thee-fire brokered by president of ukraine ukraine has been battling pro-russian rebels for seven months. >the white house is not happy with the new ebola policies in new york and new jersey. anyone traveling from west africa who has been exposed to ebola faces a 21 day quarantine at home. in new jersey, a nurse who works with ebola patients in africa has not been quarantined at a hospital. new jersey governor chris christie defended his policy. >> i don't label you are dealing with something as serious as this that we can count on a voluntary system. this is the governments job. if anything, the government's job is to protect the safety and health of our citizens. and ie taken this action absolutely have no second thoughts about it. >> the obama administration considers the new york and new jersey policies not grounded in science.
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toyota and volkswagen are battling for the title of the world is car seller. the japanese company has now pulled ahead in the first nine months of the year. they sold 7.69 that's 7.6 million vehicles. sales are ups. almost six percent so far this year. let's get back to the ecb stress tests. the central bank gave most lenders a clean bill of health but none of the biggest european banks fail the test and not a single bank from germany, france, or spain is required to raise capital. let me bring in erik schatzker. in london, francine lacqua. let's start in london, our investors convince these stress tests were credible and that most of these banks have a clean bill of health? eric will disagree with me on this. if you look at investors here,
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it seems they are split. some say these tests go far enough. if you look at the seven percent of gdp, that is more than the fed stress test or the bank of england stress test. however, there is a problem of deflation. let's go through the figures. if you look at the stress tests, they don't focus on the capital shortfalls would look smaller because they have had enough time to raise capital this year. give some credit to the stress testers, the ecb. the worrying part is too high asset valuations into low provisioning. there is the problem with deflation. that was not stressed tested enough, right eric? >> that's a very good point. i'm not sure i would disagree with you. you raise the notion that the ecb stress test while stressful did not include some things we now know to be true in europe. for example, the threat of deflation. deflation can wreak havoc on the banking industry.
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geopolitical risks we have seen introduced into europe and the possibility that the russians will cut off gas supplies to western europe. there is no guarantee that will happen but that is the whole point of a stress test that you consider things that might not happen to see what would happen under those circumstances. it's not like the stress tests are not credible. the consensus seems to the that says -- seems to be that they are more credible than they otherwise would be. >> and more credible than last time. in addition to not contemplating deflation and geopolitical risk, the stress tests allowed banks to use some kind of capital -- capital is the buffer against losses -- that will be phased out over the next several years including goodwill and tax law carryovers. we know that 25 banks failed the had that cap dublin disallowed, 34 banks would have
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failed including the bank of greece, alpha bank in and austrian bank, and a spanish bank. they are not big banks. it is more than 25. >> i think deflation is the crux of the problem. to the benchmark of german businesses and they said the ecb do not talk about a flirtation -- they do not talk about deflation. when you listen to the words of the ecb vice president, he answered those questions yesterday in the news conference. he said the scenario deflation is not there because we don't consider that deflation will happen. the ecb isthat almost intimating that it deflation were to go below 0.2%, they will intervene. it is almost saying they will do whatever it takes once more. victorconstancio spoke at
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the press conference yesterday and he addressed another fundamental problem with the stress test which is -- can they get european banks to lend? credit is like any market. there is a supply and demand side. it is absolutely -- i would not say absolute -- in all likelihood true that the lead up to the stress tests called does cause banks to husband their balance sheets and not extend extendoans and not to more credit because they wanted to make sure that they passed. that is the supply-side. what about demand? costyancio said the absence of these credit supply restrictions that the banks would lack capital or liquidity are not enough to ensure that credit will grow because it's a question of demand and there is indeed a lack of aggregate demand in europe.
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just because the banks past them because they are healthier than we thought -- them with the a were, does not mean that they will end. it's like selling a product. i'm i have a product to sell but if you don't want to buy it, i have no business. does this increased capital flows across borders after a test like this? thank you to both of you. it you didep aside, this quite well. in other global headlines, the result president roussef won reelection with 52% of the vote in the closest presidential election since the return to democracy in 1985. he promised -- she promised change in her campaign with a new government and ideas beginning with the new finance minister has not yet been named. arks has been following this election very closely.
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she just squeezed by? >> it was very close and i think she had a big challenge over the last three weeks of this runoff election trying to persuade voters that she represented change which was part of her slogan. the challenger was saying there have been major problems like corruption and they would be more efficient in terms of government spending but she managed to hold off well in the north of the country which is typically the more active part of brazil. >> how the markets reacted? investors are giving a thumbs down. etf's related to brazil fell eight-10%. people see much of the same thing with the slow growth fueled by inflation. >> it's not a surprise that every time there has been a poll over the last three weeks, it has shown that this woman was going to stay in power and we have seen this reaction to the markets and we see that again this morning. many people in the investment committee worried about what the
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candidate would do to accelerate growth. when you are in ordinary brazilian, you have to bear in mind that unemployment is at a record low. gains topped off around 10%. these are things that make ordinary brazilians, the voters, think they could be were soft but they were happy with the devil they knew. >> she mentioned that she was going to appoint a new finance minister. do we know who this is and what difference could this make? >> there is a cottage industry in brazil surrounded the idea of who will be the finance minister. we are not really too sure. the only confirmation i have is that the energy and mining minister which is important will definitely be changed. he was going to be moving on anyway. the way she will show to the brazilians that she is intending to bring about changes to river cabinet. she will stay in charge and it's a very centralized government and she really has her hands in
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a lot of pies on a comes to the ministry. that will be have she represents change. >> thank you so much. back here and politics in the u.s., facing pressure from the white house, new york governor andrew cuomo softens requirements from people returning from ebola ravaged countries in western africa. we have the latest on the quarantines debate. it seems to pit the white house against the various governors around the country. >> that's right, it's politics and public health wrapped into one big story. the administration got andrew cuomo to dial back and is urging other states to do the same. the administration is worried that if these rules are too strict, first of all, it does not make sense in terms of the medical science out there. and second of all, it will keep some americans from volunteering to go to west africa in the first place to deal with ebola at its source which is one of their big goals right now that people might be scared of going
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altogether. andrew cuomo listened to the pressure from the white house. anyone returning from africa can be quarantined for 21 days but it can happen in their home. they will be able to see their family and be reimbursed for any lost income either by the state ir employers don't do it and they will be open to unannounced visits from state health officials. it's a middle ground from where he was on friday and where the administration would like him to be. >> what about the chances that the administration has toughened some of these rules on ebola quarantine? is there any chance of that? >> there is a chance of that and the administration faces its own pressure for being seen as not being as tough of the governors of new york and new jersey. chris christie defended his similar roles despite the pressure from a nurse who is in quarantine right now inergy z hospital and says her treatment is inhumane.
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she says she is asymptomatic. hadadministration, they just the president and his team are likely to step up the rules for those coming back from west africa, not as dramatic as what we have seen in new york and new jersey. these are graded steps depending on how much exposure you may have had them we get ahead of that from the head of the infectious disease unit at nih that things will be changing. it is not going to be quite as draconian as what we have seen coming from new york and new jersey. there will be tougher federal rules for people returning to this country and that seems clear. >> it was a mixed reaction from the public, thank you so much peter cook. coming up, much more on the stress tests on the european banks. it's not the end of the world as you just heard for some of these banks. there are a billion reasons why steve ballmer is loving being an nba owner. ♪
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as we mentioned, the european central bank released the results of its year-long bank audit yesterday and most of the lenders that failed the stress tests have been let off her good behavior except for 25. they need to go ahead and raise more capital. joining us now is jason kierkegaard. he focuses on european economies and reform. -- jacob, this is very different this time around than what we saw a few years ago. do you feel this pass muster? are you confident in the european banking system? yes, what has happened is that the european banks have taken a very large step towards normalization.
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this is sort of a next step in what has been a five-year process. what we have now for the first time is european banks that now have a credible impartial regulator in the ecb. i don't think anybody is going to be second-guessing the quality from a technical point of view of these stress tests and worry about collusion between the regulator and the individual banks. -- we have ahink number of what is clearly no strong banks in the euro area. it is clear hand, the european authorities and the ecb did not actually take the opportunity to kill off all the potential zombies and the european banking system as part of this exercise. the reason we can see that as use did not choose to what's called a fully loaded
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basel three capital requirements but allowed a lot of transitory capital to be counted as part of this exercise. markets,uess that the when they take a look at the data that is the disclosed, they will not be as forgiving. i think we will see a lot of market pressure. >> that is exactly what mohamed el-erian is saying in his bloomberg new column this morning in reaction to these stress tests. let me refer you what he wrote in his piece. he said look for the stress test for failing banks to raise capital and shed assets and in some cases, merge into more solid platforms. tois what you are pointed when you talk about taking care of some of these banks and what happens after. know that thewe new capital regime under basel
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three will be gradually phased in, all of those banks that even today do not qualify as a healthy bank under rules we know that are coming, they have to be asking themselves and their ward will be asking -- do we have a healthy business model? do we need to raise more capital? doing a to merge with a strong rival? i think is what we will see in the coming years and it will go well beyond the 25 banks that have been fingered as part of this exercise. >> you don't believe that this will be a repeat of last time at all? saw stress tests and shortly afterwards, some of the banks actually failed that past. that is a pure technical quality of this stress test, the thoroughness which has been done, the external advisors and not least of which, the very large quantity of data that has been released means that the likelihood that we will have
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another bank that passes a stress test in 2011 only to low up a few months later. i think the probability of that is externally low. -- is extremely low. out, what will be important is the cross-border capital? you say the chances of that are? we will see the banks that have passed this stress test and the banks that even under the new capital rules still look very healthy, they should face absolutely no problem accessing cross-border capital in the euro area. this includes the vast majority of large banks even in the periphery of europe. at the same time, it is clear there are smaller and medium-sized banks in italy and spain and elsewhere that will still face problems. >> jacob, thank you so much. in two minutes
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on "in the loop." ♪
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>> you are watching "in the loop" on bloomberg television, streaming on your phone, your tablet, and here is a look at our top headlines -- a big day for america's second-biggest drugmaker, merck which posted quarterly earnings that beat estimates and they have breakthrough status of their cancer drug. that may helps the the drug approval for lung cancer. hasswedish company saab signed a deal to sell fighter jets to brazil. it will start delivering the planes in 2019. it's a consolation prize for them. voters rejected a 3.3
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billion-dollar jet deal with the company. the l.a. clippers have not begun the regular nba season yet but new owner steve ballmer looks like a winner. he paid a record $2 billion for gaineam but he stands to as much as $1 billion in tax benefits over the next 15 years. that's not bad for steve ballmer. he does not have to do a lot of shouting anymore. "on the markets bloomberg television is now"on the markets ." julie hyman is with us. . >>. thank you let's talk about futures and focus and specifically gold. gold futures are edging closer to $1200 per ounce as investors look at the fed policy meeting later this week and the idea of stress tests and europe. -- in europe. jo andme now is joseph
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joeiaccino. i want to talk to you first about the fundamentals for gold. with risk aversion coming back a little bit into the market, you have these stress tests and the fed expected to wind down qe this week. are people seeing any reason to buy gold? >> right now, you are seeing many people wanting to see if the federal reserve does and its quantitative easing program. if you get that, you might continue to see more selling. it is wait-and-see because we had decent manufacturing data out of europe and jobless claims. toot now, i don't think many traders are saying they really are certain they want to buy. >> bob is one of those folks. it is not want to buy. what is your argument for being short on gold? joyike you said, not only
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not want to buy it, i want to sell it. when you look at a larger term chart, every time we ounce office $1203 level, we have made lower highs. that's because fundamentally, you are not seeing a reason for the global shock purchase of gold. you're still seeing people who want to add a little bit of gold to their book, physical model purchases are going up but etf outflows continue. hedge funds have bought a little bit more goal but overall, the etf's which is where you see the volatility. in price, the outflows have continued you're not seeing this global shock risk and gold anymore. you see it more in treasuries and that's a reflection of short-term fears, not long-term like we saw during the credit crisis. >> there has been more physical buying of gold. is there any perception that could create a floor? >> certainly, many people think this time of year that you have a lot of buying out of india for
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holidays. they say physical buying is in the market and it keeps a floor. at the same time, we look at the euro area like germany and traders are saying we have to keep an eye on manufacturing. if the data continues to be up and down, there is still a little bit of encouragement right now to say maybe we should keep an eye on golden not completely get out of it. >> i'm curious what your trade is. it looks like you are not seeing much of a floor.this morning floor but, there is a i think it is closer to $1100. i want to sell gold anywhere 1229-1231 and i want buy that back around $1122. i want to start get out of it as we approach what i think the floor is which is probably around $1103 and that's a long-term floor.
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it's a good opportunity to sell and buy back around $1122. it's a good risk/reward trade. >> how long-term is it? >> you can probably be in this for two months. it's normally longer than i look at it. gold is volatile day today so in terms of trading gold, i have to take a longer-term view rather than a large position that you can get crushed on one terrorist attack. not a safe place to be. >> thank you both so much. >> thank you so much. just say no to apple. that is what some retailers are saying to apple pay. many companies joined walmart and bypassing the apple payment system to use their own. can the retailers take a big enough bite out of the market to matter?
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olivia sterns joins us with more. why would any retailer say we are not joining up? >> what's happening is that there is this war brewing in the mobile payment world. you've got apple and all of the credit card companies and they are together tacking apple pay. on the other hand, you've got the retailers with efforts being spearheaded by walmart and best buy and target and cvs and they are backing something called currency. out, they pay came said hundreds of thousands of retailers can accept apple pay. any system that has near field technology could actually accept apple pay. could also accept the google wallet and soft card. over the weekend, cvs and rite aid because they do not want everyone to get comfortable using apple paik, turned up there near field communication and blocked apple pay but also
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google. >> why are they doing this? what's the problem? >> the retailers want to cut out the credit card companies altogether. they are annoyed that they pay about two percent of all transaction costs to visa and american express and mastercard. the other reason is data. if they can market directly to the customers, they can get more transaction data and will be able to offer discounts directly and they will be able to run their loyalty programs directly to consumers. anonymity --ng apple pay is promising anonymity. >> they have this -- they have their own system? >> it is called currency and is through the quick response codes, the bar-code devices where you put your phone over it and scans it. it is different from the near field communication technology. currencyo that the
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merchants can have more information about the uses but it's not available on 22015 -- until 2015. it's a bold move for right aid and cvs to say we will not make it easier for customers who want to pay with apple pay. you have to hold out for us to roll out our own proprietary system. >> thank you so much. 2015 is a while away. week until the mid term elections and we are following the money trail. up next, a look at one of the biggest republican donors that nobody is talking about. who is he? have republicans been successful in their bid to out campaign the democrats using big data? we will check in with the rnc chief digital officer next. ♪
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>> he may keep to himself but his money speaks volumes on the campaign trail. hedge fund operator robert
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mercer is the third most generous republican donor this cycle. he has cut checks for a total of $37 million over the past six years. this year, he gave more to the koch brothers organization, the freedom partners action fund, then the koch brothers themselves. who is robert mercer? linsky profiled in a recent article. and weot very well-known know sheldon adelson and the koch brothers but how influential has he been and who is he? >> yes, it's a great question. he is a brilliant individual. he has upended two fields he worked in. first he was a pioneer in the field of computational linguistics. that's a very esoteric field. and then he moved to work for a hedge fund and went on to help build and now lead one of the world's most successful hedge
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funds. >> he is a hedge fund operator and started off in computer linguistics. why is he going to go from that to being so politically active? what is in it for him? >> that's another great question. it's very difficult to read into the motives behind some of this giving but he is giving an externally large amount. you just don't see that that often. there is so few people in the country who can give million-dollar checks and do. mind isnt that comes to his fund has been hauled before congress. aboutummer over questions how it calculates taxes. asking -- they were using a method to calculate taxes that saved his investors $6 billion over 14 years. that suddenly makes $8 million
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in political giving not seem so big. >> it doesn't at all. by the way, the reason you're not seeing a lot of pages of this man -- let's roll the one picture we were able to find of him. he accepted a hall of fame award for his work in computer linguistics. we only could find one photograph of this man on the internet. he has declined is big for your article and to appear on television as well. from what we know, there are some issues he appears to be passionate about. are there some candidates he is very close to and do they know who he is? >> i think they do know who he is. are very people who hesitant to talk because he is a new donor. on the republican side, you have seen the real big money donors have died in the last two years. he is somebody who nobody wants to offend and nobody wants to be
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quoted talking about him. people talk about them off the record but are hesitant to say anything on the record. those a did talk say he wants to -- he is interested in fiscal issues which makes sense given his position. in particular, this one candidate in oregon on who he has been close to and he is been giving to for years and years and has very little chance of winning. it's art robinson. he is a scientist and maybe they have that in common. this year, you see so much more money in politics. it's funded by folks like robert mercer who are opening their check books in ways that they have never done before. >> thank you so much. as you just heard, republicans are aggressively campaigning as americans go to the poll in one
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week. at least one republican is feeling very bold. >> we are also defending nine governorships and states that president obama has won twice. we have a pretty daunting task on our hands and everybody expected us to be a little bit on our heels. it's now quite to the contrary. we are on offense in most states. >> with me this morning is chuck defeo, the chief to total and deputy chief of staff of the republican national committee charged with mining and leveraging voter data to get out the party's message. do you know robert mercer is? our am grateful for all donors. i don't know who he is but i'm grateful for anyone that is giving $20 or whatever amount they can provide. >> clearly, he is not giving out information. it is very much hidden behind the scenes. you are trying to gather information. you are trying to get as much data as possible in order to give the republicans the biggest advantage as americans vote.
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what have you found so far in the last 6-12 months? what is the data you're gathering that is most important come tuesday? a number ofpened up sources we are using to collect data but it's more important how we act on it and how quickly we are able to put that into the hands of our field program. they are knocking on doors and making phone calls and directly contacting voters. we put a lot of effort in the cycle to make sure that people who we know are republicans and don't typically turn out in eight nonpresidential year, we make sure that their vote matters this year and they are turning out for our candidates and we are seeing strong success already with the early vote programs we have. >> tell me about that. what is your data telling you about how the senate race will turn out? >> as you know, there is not one single senate race, there is a number of different ones and a number of open seats on a number of public and senators up for reelection and democratic
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senators. we see really good results coming out in many of the more contested races like colorado and iowa and arkansas and alaska. we're continuing to work closely with our field program on the ground as well as those campaigns themselves to make sure that as these early vote programs are online that people can vote i mail or vote early in person. it's our voters that are shown up to the polls and we are seeing strong distort results. >> -- strong historic results. >> are you able to single out which campaigns are working better than others based on more aggressive digital data strategies? >> it's the republican campaigns. >> i know but -- why are you here? as the republican national committee, we are not running campaigns themselves. what we do is provide the
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resources to our candidates to make sure that they have the data and they have the messaging strategy that they need. it's their job to go out and execute. i am excited. i looked up and down the ticket. i think the joni everest campaign and i/o is doing a fantastic job. the colorado campaign is doing a fantastic job in terms of what they are doing with digital and what they are doing overall and how they are using their own operations to turn out the vote. it's our job to support them. >> correct me if i'm wrong, but wasn't part of the idea for the datao centralize all that gathering and have a central hub for technology? itording to some reports, has not actually happened. the goals were to centralize the information but the reality is very different? know, this is complex
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stuff. some of the reports don't always come out and understand the complexity of what we do. this is not my first election cycle. this is the second time i worked. at the republican national committeeand i am familiar with what has happened in the past and what we are doing now i am confident in saying this is the best operation we have had a long time. as far as how we are utilizing data, we have never tried to create some kind of command control structure. we have created a platform where everyone can access that data. campaigns --ta our that we are receiving from the field, is coming through the api we have built which allows them to build applications on top of it that they can use to contact voters directly themselves. yes, the data comes back to us and we allow that to feedback out and do strategic analysis and applied voters to it and push the data back out.
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we help define who they need to be talking to as a result of what we receive. have we got as far as we want to go? this is a job is never finished. i am confident in what we deliver for our candidates now. it's one of the best operations the republican national committee has been able to provide a long time. i think the results will be shown in about a week. we will have a very good election day. ultimately, our work will be judged by how we do at the polls. >> that's true, thank you so much. coming up, we will dive into one campaign the gop is focused on which is corporate tax reform and one tax policy that has americans renouncing their citizenship. they're giving up being u.s. citizens because of taxes. plus, bypassing banks -- we will go into that in a moment. ♪
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line of may be a long people waiting to become u.s. citizens to come you're but a growing number of americans are actually going the other way. they are choosing to turn in their passports rather u.s. taxes cookare fed up and peter is back with us with more on this story. it's up 39%? >> that's right, a lot of people are heading for the exits. a number of americans renouncing their u.s. citizenship is rising 39% in the third quarter this year and there could be several reasons why they did that but thateason is a new law took effect in july that makes it harder to hide your assets overseas. the law is the foreign account tax compliant act known as fat ca.
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they were pitching u.s. clients on schemes to hide their assets from the u.s. -- from the irs. they paid a penalty. u.s. institutions to require a 30% withholding tax on payments made to foreign banks that don't agree to identify and provide info on u.s. account holders. there's a possibility of exposure to more americans choosing to turn in their passports and drop their u.s. citizenship. 776 data from july-september which is far more than the same time last year and so far this year, you have seen 2300 53 americans turned their u.s. citizenship renouncing their u.s. citizenship which is a new record for the year. this is controversial. country the taxes citizens no matter where they live. those with dual citizenship don't like fatca and the change that took place in july. >> the law is also? helping the
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irs find these tax dodgers >> that's right. there are some americans who are choosing to maintain their citizenship and pay more taxes. law first bass, the estimate was that it produced a $.7 billion in additional tax revenue over 10 years. we will see if that pans out but it's a much tougher set of rules and terms of identifying assets overseas. it's forcing the foreign banks to comply otherwise they get shut out of the u.s. market. >> mike is so much. -- thank you so much. -- the, the le bon lebron james comeback and how the city will benefit from his return. ♪
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isthis morning's big number $215 million which is the estimated economic impact of
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lebron james returned to northeast ohio. king james is from akron and agreed to return to the for $42d cavaliers million over the next two seasons and we constantly figured out his second tour there will lead to 200 $15 million in tourism, taxes, and service industry spending. the cavaliers business, they are in line for increased ticket sales and sponsorships and television money. they have not had a winning says in -- and winning season since he left for the miami heat. it is 56 and is past their richmond bloomberg television is "on the markets." equity futures are slightly lower. there are concerns about what happened overseas including in rousseff wonzelma by a small margin and most european banks past their stress tests. bearxt, the ceo of build a
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weighs in on the company's new partnership with macy's in time for the holiday shopping season. ♪
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>> there is a look at our top stories -- willes indicate stocks open lower in the s&p 500 is coming off its best weekly rally since january 2013. the index rose more than four percent. welcome back to "in the loop." most of the european banks that failed the ecb stressed test have been let off for good behavior. 25 banks were found with a capital shortfall and of those, only eight lenders have not plugged of their capital gaps and satisfy the ecb with their plans to shrink. earlier, we talked with the former ecb president jean-claude tree shape. -- tree shape -- jean-claude
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trichet.e [ - - >> they were done and they are admitting to confirm that most of the banks in europe are healthy and would resist extraordinary difficult drama. >> the ecb becomes the financial supervisor next week of the euro area. investors are hammering brazil a day after president villa recep was elected to another term. the above best of fell almost five percent which puts it down 20% since hitting a bull market high last month and the brazilian real fell more than three percent today. she won 52% of the vote over andsition candidate nieves she provided over the slowest brazilian growth in nearly two decades. the white house is no ebola policies in new york and new jersey are not grounded in science. in new york, anyone traveling from west africa who has been
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exposed to ebola faces a mandatory 21 day quarantine at home. has workednurse who with ebola patients has been quarantined at a hospital. chris christie defended the policy. >> i don't believe when you are dealing with something as serious as this that we can count on a voluntary system. this is governments job. if anything else, the governments job is to protect the safety and health of our citizens. and so we've taken this action and i absolutely have no second thoughts about it. >> the nurse quarantined in new jersey called her treatment inhumane. giants are one win away from his third title in five seasons. they had four hit shutout last night as they beat kansas city royals 5-0 and they lead the series 3-2. san francisco could wrap it up tomorrow night when they play game six in kansas city.
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under 30 minutes away from the start of trade and i want to count you down to the open with the top 10 headlines. olivia sterns and matt miller join me on this monday morning. saidr 10 is toyota that global sales were up in the first nine months of this year. you know all about how much these carmakers are racing each other. they are now in neck with volkswagen? >> it's a dangerous race because we are seeing so many more recalls and so many more deaths related to problems with production. production, toyota says they are entering uncharted territory because they are making -- they are selling more than 10 million cars per year and they said they need to keep the quality under control. is now making 7.6 million cars in the first -- toyota is now making 7.6 million cars in the first quarter.
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>> is there any fallout from the recalls? they've got to try and make the cars better and make them safer. they will not give up the number one position very easily. they will continue ramping up car production. >> the rav-4 has done well for tioga? >> the highlander is probably more popular than the rav4. the camry is a massive -- >> it's the number one car in america. >> number nine is solved, -- saab which signed it government for $5.4 billion for the development and production of wordy six -- of 36 aircraft.
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the english translation is griffin. it's the thing that sits on the corner of a building. >> a lion with wings. >> right. >> this is a comeback for saab? >> and they are not selling any more cars? >> it's a totally different company. saab the plane maker and carmaker broke up 10 years ago. .> i liked saab growing up >> they are only a plane maker so they are making these fighter jets. they are using volvo engines but not volvo the carmaker. >> it's good news because they're european clients are cutting back on spending. brazil now re-signs them. theome are calling for president of brazil to quickly
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appoint a new finance minister from outside her party to show she is ready to scrap the policies that fueled inflation and slowed growth. a few years ago, people were bullish on brazil and many of them still are. but there are a lot of questions on whether she would just be more of the same with slower growth and record low unemployment but deal by inflation. >> and technically, they are currently in a recession. business confidence is worse but it's interesting that voting is mandatory. you have to vote so i wonder what the results would have been if it weren't. >> they legally are obliged to vote? not only in brazil but in many of these countries in south america. >> these people have seen their quality of life materially improve under rousseff. >> we will have to see but right now the markets are giving her a big thumbs down.
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>> unemployment is at a record low in brazil. the google ceo is number seven, larry page giving his top lieutenants most of the product leadership of the company. that move would free up larry page to focus on longer-term strategies. bullcrap. >> ooooh - >> this is larry page saying i'm going to dust my hands of search and engineering and android. i will leave that for this guy because i want to work on google glass and i want to work on self driving cars and i want to do the fun stuff. >> he's the freaking ceo. >> is a billionaire and the ceo and his 41 years old. the consultant a lot out of life with all that money. >> somebody else is 41. >> i am not yet 41 years old. >> you don't look a day over 40.
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>> thank you. >> this is an incredibly young company. on this coast come you don't have companies that have a 42-year-old ceo and a 41-year-old founder who is stepping down to focus on the bigger picture. >> this is a big change and is larry page giving off a big chunk of the business to his deputy. number six is steve ballmer. as $1nds to gain as much billion in tax benefits as a result of his buying the l.a. clippers for $2 billion. >> i think he is juiced up. from listening to him on charlie rose and reading about him this week and over the last couple of
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weeks, this guy would have done it without the $1 billion tax benefit. he does not care. he wanted to buy the clippers and he is super psyched about being a basketball team owner. it does not matter to him. >> that is probably true but the way the current tax system is written, gives them a massive subsidy for very wealthy people to indulge their passions. >> thank goodness for those very wealthy people. >> ego is a big part of this. one of the biggest question ceos have after they leave is -- what is my next act? steve ballmer is literally in the game. >> it is also probably fun. >> you get free tickets for life. coming up, how build a bear is faring as we head into the holiday we will hear from the company's ceo up next. ♪
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we continue to count down to the opening bell and we are now
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halfway through and that means it's time for our deep dive at number 5 -- it's build a bear and the retailer reported earnings this past week and a new partnership to feature build a bear shops within five macy's locations. you can build your bear anywhere. with us this morning is the build a bear workshop ceo sharon john. >> great to be here. >> tell me first about this macy's partnership and why you decided to do these shops within a shop. >> it's an exciting opportunity for us. we have had a partnership with macy's for years. we have been on the parade for quite a few years. we really build on that opportunity and the partnership to have these shops and the reason we wanted to bill those because it's a great opportunity to put our story to build a bear theory inside the macy's holiday tradition particularly where we
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are featured in the santa land area. to think we would be in areas where there is so much tourist traffic and so much holiday square in the herald location in new york city, the state street location in chicago , it builds the awareness for build a bear and allows consumers to have a really special holiday tradition associated with macy's. >> it comes at a time when department stores like macy's or nordstrom or if you look at sears or jcpenney, they are seeing lower traffic. they are having a hard time because people say we are over retailed? did you consider any other candidates? >> macy's is ideal because of the pre-existing relationship. when you think about their location, they are in the premier locations. harold square, union square in san francisco. those particular doors are not mall-based which is where the traffic is challenged. cities,cities -- in big
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they are standalones. >> what about the holiday shopping season? where are you seeing spending? there will be 17% more spending among african-americans, hispanics, and asian-americans than the rest of the populace and they will increase their spending by about 10%. for the others, it will be about 17%. are you seeing that in your stores? >> not particularly come i had not heard that statistic but if that's true, that's great for us. we have quite a few consumers of diverse backgrounds and that would be terrific for build of their. we appeal to anyone and everyone. i told you that my kids had build a bear animals when they were younger. in my view, they have outgrown them.
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they are 10 years old now so how do you make sure you keep that that signs on it for a five years old but how do you keep them as they get older? >> our core consumer is sex but most sales go to people over 14 years old -- our core consumer is six but most sales go to people over 14 years old. we have a lot of after 90 consumers. we have our boys and girls market and our adult affinity consumers. when you look at the license products including the upcoming , they arer "frozen" being bought by adults as well. some of the run on the products are adults and that's what drives a lot of interest in our social media. >> what about hiring? do you see anything different this season in terms of hiring? >> build of there has been fortunate because a lot of people love to work it build a bear. we have been in the fortune 100
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for the best places to work in the last five years. >> are you seeing as big a talent pool? >> the market is getting that her and it still a really fun holiday job. >> thank you so much for stopping by. coming up, having dinner in san francisco, check your bill carefully because the tip may be included. we will tell you about a growing trend in a moment. ♪
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to "in theback loop." matt miller and olivia sterns are joining me. number four is a story that olivia spoke about earlier --
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apple pay has been getting a lot of hype but not everybody is on board. there you are. there i am a bloomingdale's which accepts apple pay but walmart, cvs, rite aid and best buy are rejecting it. basically, you have a war brewing between the retailers who have teamed up with the credit card companies and the retailers. that side of the fight is being spearheaded by walmart. they want to cut out the credit card companies. >> none of those places olivia sterns frequents. >>? >> you can get advil. definitely not cigarettes anymore. >> i have not smoked since college. out the trying to cut credit card companies because they don't want to pay two percent on their transactions and they want all the information and want to see what customers are eyeing an offer them loyalty programs.
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they want to use this thing called currency that goes from debit accounts rather than credit card accounts. >> that a rival system. >> i love this story, number 3 -- in response to all the minimum wage protests around the country, five restaurants in san francisco are now taking tips literally off the table and they are putting it into your bill. they are automatically adding 20% onto your bill. >> is worse than you think. .it's revolting and disgusting >> why? >> it's a crime against society. they are taking these tips away from the wait staff. normally the waiter or waitress works very hard and tries to impress you and you reward that person with a high tip or if they do a bad job, a low tip and they pocket that money and take .t home in california, the law is that
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tips are to be kept by people that get them and cannot be distributed. >>. they are not taxed either >>? theywill give the steps of the waiters and waitresses >> now there is no tip at all. it is a service charge to accountants of the restaurant revenue and they will spread it out to its employees on a merit races. -- on a merit basis. that's what they said. >> some of the restaurant owners say it goes back into revenues -- >> they will give it to kitchen staff and valets and pocketing what they want. >> they will not pocket it. >> this is the norm in europe. >> that's why service sucks in europe. it's n license. -- it's not pleasant. >> third-quarter earnings after the bell and investors will focus on the number of users twitter has added in the next couple of months. dick costolo has been open at
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the problem twitter has which is less of their users are bots, not like people. who is really logged on and engaged? how will they make money off of this? >> people like matt miller. many people also >> we are in the business of information so why would your parents or someone else - >> my mom is on twitter. >> they might be casual users which is why costello is under pressure. people who are casual users watching what's going on a people want to know what that number is and he's not ready to reveal it. because it will not help them make money. >> they still have to prove to getadvertiser that they can a huge number of eyeballs at one time for more than just the
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world cup or a sporting event. >> as we near the opening bell, we are "on the markets." the futures have settled down. our top story is next. ♪
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>> welcome back to "in the loop." bringing you the most important stories before the bow. turning effort to year at. both of you used to live in europe. releasing bank stress test results, 25 sale but eight have to raise capital. it appears to be a small' banks. applies for the banks. going toof them are shut down or selloff. ke a group of banks in
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austria, they are done. half of those are in italy, the ones that have to raise capital. >> one has a 2 billion euros shortfall. it does not sound that much -- >> don't bury the lede. bank.he world oldest >> they might have to sell or merge. there is no blood on the floor, the bank had been flailing for years. >> say it one more time. [speaks italian] some people mispronounce things. >> date they issue is whether -- the bigng to
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issue is whether this is going to get capital flowing. >> they want to inspire consolidation. like it will. >> i went to bring in the chief market strategist at an air prize financial. looking ahead to this week's fed meeting, the kiwi program -- the qe program will be ending. not sound like you believe the selling we have had it will deter the fed. endhe fed has wanted to qe for a while. in the a lot of slack labor markets and inflation is below expectations. we are importing disinflation from overseas. >> so you are buying?
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not necessarily. i think there are unresolved issues. what isary one being the pace of economic growth globally. the u.s. is in a better position than most. open question how robust are on growth could be if we are not going to get help from overseas. you see what is happening in europe, declining indexes in germany. >> what you expect overseas. is deflation still a threat? seemed to go off without a huge hitch. they still have the growth ingues and problems confront their inflation rate. >> the stress test removes a hurdle to greater capital markets and lending activity.
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it does not necessarily jumpstart it. that is not going to happen until there is an expectation demand is going to pick up. it removes a roadblock but it panacea constitute a for growth. in the absence of demand, it suggests disinflation will continue. >> it is a catch 22. you have to bulk up how have on your books, you are less inclined to lend them out. the opposite of what the ecb is trying to do. do you feel that he stress tests were too easy on the banks? >> again. >> it seems that they were credible. the one thing i like is the fact that the ecb published thousands of data points on each bank so that the marketplace can make up its own mind. the transparency here seems to be pretty good. as a result, i think it is
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probably a credible result overall. make up your own mind because the information is now available. >> the fed is going to have their meeting and they will be issuing their statement wednesday. do you believe that going to be any change in language in the fed statement? qe,ust the dropping of the allowing it to expire. i think that is going to be the only change. if they do anything else it is going to be a real process of their accommodative posture -- if they do anything else it is going to be a great emphasis of their comment of posture. they may adjust the issue of slack in the labor market. there are some saying we are not going to get wage demand until you get below 5.5%. i think it is qe comes to and and and the rest stays where it is.
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>> thank you very much, david joy from and their prize ameriprise- from financial. behind me.n two. man behindmeet the the peer to peer lending platform. the redmusk raising flag on artificial intelligence. stay "in the loop." ♪
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>> as we have been discussing, p or two. peer lendinger to is having a moment. even mohammed el-erian is
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backing a company called payout. about smally feel that businesses and poor households are being underserved. success is helping these people get out of bad debt. they can lower the cost of credit cards for a household and help them find a way to get out of debt. that is a really good thing. it is a great mission and they are passionate. >> other financial bigwigs are getting into the business. the former morgan stanley ceo .omedy former citigroup ceo they just invested in a company that links institutional investors with peer to peer lenders. joining us is the founder and ceo, matt.
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great to have you with us. as wall street becomes more involved with this, does this turn less into we are regular guys helping regular guys into another vehicle for wall street to make money? it started out and peer to peer was the concept. people have started referring to it as marketplace lending. it is not just the average investor. it is a diverse, institutional investor in addition to retail investors. >> tell us how your platform works. institutional investors with origination platforms. our goal is to make the process simple and scalable. early days it was difficult to put large amounts of capital to work. offices,ve family
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hedge funds -- >> but not banks? >> some banks have gotten involved. i spent a lot of times at the banks explaining the space. they are trying to figure out >> they get involved by lending money, isn't that how? >> that is one way they could. >> isn't that what your platform is addressing? people who are not able to get loans from banks without paying theyhuge fee, that is why are coming to institutions like yours? >> if you think about it from the consumer standpoint, their interest change. walking into a bank ranch and filling out of a lot of paperwork and waiting months to find out if they got a loan is not the experience they want to go through. it is consumer's desire for a ister experience that
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driving these platforms. >> to get a loan from your group, how long would it take? on the top platforms, you can get fully funded in a couple days. some of the newer platforms are trying to do same-day funding. >> and you? >> we connect to this platforms. we do not touch the borrower directly but we help investors decide which ones they want to find. >> how much are these hedge funds? how much are they putting in to your platform that will be dispersed? been in the and has hundreds of millions. it is growing exponentially. this is just the beginning. i have a technology background. i came from google and about half of my company has a background from there. we saw in the early days of online advertising when all the infrastructure started being built, in the early days it is small but growing rapidly. within a couple years, it could become a massive industry.
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same thing is playing out here. most of the technology banks use for lending was built before i was born. >> wow. >> we are seeing the reinvention of that infrastructure. end of the day, what happens when a financial crisis hits? when the borrower cannot pay and you have a massive amount that cannot pay, what happens to peer to peer lending? >> it is more stable than the existing system. it is completely transparent. we know how each loan is performing on a daily basis. the originators are toching investors want one. all the risks are known up front. there will still be borrower demand for loans, even if we go through a financial crisis. it will be region of the rate
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and the risk. i think it will only get stronger through the next downturn. other than having marquee names in your company, what are these former ceos saying to you. how are they helping your company grow? new ande charting a building some technology that has never been done before. is something we have done successfully. >> are they giving you advice? making surecused on we are surrounding ourselves with the right group of inestors who have experience how these markets operate so that we can build it the right way the first time. >> and they have contacts to the people who have deep pockets he will give you money. thank you so much, founder and ceo of larger platform. much more.
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a look at the top technology stories. may go public. roku may try to raise $150 million in an ipo. the company makes one of the most popular devices that allows consumers to stream internet video onto the television. does everyone want to work? google. according to a new survey by linkedin. google tops the list of the most in demand employers. the rest of the top 5 -- apple, unilever, microsoft, and facebook. a warning from elon musk. it has nothing to do with cars. elon musk warns about artificial intelligence. which he has called more dangerous than nuclear weapons. he spoke at a symposium at m.i.t.. >> with artificial intelligence, we are summoning the demons. all the stories where the guy with the pentagram is sure he can control the demon. it did not work out.
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>> it will not be going to mars. complex,way more putting it to shame. referencing a space odyssey. musk apologized. catch the latest in tech and media on "bloomberg west. new possible cases of ebola popping up. a five-year-old boy here in new york at bellevue hospital. a possible case in japan. we bring you the latest headlines, next. ♪
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global outlook.
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brazil's currency getting pounded after dilma rousseff was elected to another term. down 3%. dilma rousseff one with over 50% of the vote against opposition candidate neves. in ukraine, the next election will be dominated by parties favoring ties with the eu, they defeated russian gleaming parties. the election was held amidst a cease-fire brokered by petro poroshenko. , learning about new cases around the world. in japan, a man who traveled to west africa is being tested in tokyo. a health official says a five-year-old boy is being monitored at bellevue hospital in new york. bloomberg is following these developments. >> expecting the results from the five-year-old boy this afternoon. we will know whether or not he tests positive in a few hours.
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there's some news about a health worker who does not have ebola. the nurse held in a new jersey tested negative but was held in the hospital under a mandatory quarantine order from chris christie and andrew cuomo. >> which she objected to. >> she was threatening legal action. we got a statement from the state of new jersey office of the governor saying she's has said negative, she's leaving the hospital and has requested transport to maine. as long be quarantined as she is in new jersey but once she leaves the state she's free to go. >> once she leaves new jersey's borders, what happens? >> that will be up to maine. all the power to quarantine and restrict travel lies with the states. i've been talking to health law professors.
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they say this is tricky. we do not have experience people.ning well they are not showing symptoms of ebola, at least in the case of this nurse. to implement. law it is state-by-state. once she leaves new jersey it will be up to the government of maine to decide whether she should be quarantined or if she can go and public likely saw the doctor who has ebola here do in new york. >> it is a states rights issue. , whatory quarantine rules are the challenges? >> there are big challenges. the professors of said first of all you have to figure out how you are going to quarantine them. usually it is up to the person to stay at home. unless they break that quarantine, then you can get police involved or force them to stay somewhere. with all the health workers, are we going to have police monitoring them, are we going to
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hold them in hospitals? that is unclear. how will the states identified he workers coming back? when they fly into the country, the customs officials are federal officials. require them to notify the state employees about whether or not they need to quarantine people. it would require compliance from federal officials. as we saw this weekend, there was backlash from the federal government over these quarantined. we aregest concern hearing is the new rules might deter people from going to west africa in the first place. >> a lot of unanswered questions. thank you so much. that does it for today on "in the loop." from the top ceos housing, auto, and hotel industries on the american consumer. we speak with ceos about the luxury homes market and the ceo
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of automation. we talk about lodging, hotels. the ceo of choice hotels. tomorrow i 8:00 a.m. ♪
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>> it is coming up on 56 past the hour. bloomberg is "on the markets." let's take a look at where stocks are trading. declines across the board for the major averages.
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not huge declines. last week was the best for the s&p 500 since january 2013. energy stocks leading declines as we are seeing a falloff in oil prices. let's look at the treasury markets. treasuries,at yields moving lower. we had another busy week. big events. some the fed will meet and get a decision on my three policy. qe?d this be an end of any suspense about whether this will be the end of qe? think overall the federal reserve will come in with a dovish message. i would not be surprised to see them bring down their great expectations for 2015 from the 1
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3/8 to 75 basis points. janet yellen knows after the inflationng expectations came down considerably. that is something she's trying to avoid. she is going to calm in with a dovish message. >> does this have more to do with what is happening in the u.s. or the fed bank looking around the globe, they are cognizant of the risks in europe? global growth looks like it is decelerating in the emerging markets. growth is they want to make sure the financial system is more relaxed. there's been a tremendous amount of volatility. policy has been a sedative to the financial system. in the u.s., the economy is
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at a three and out. you have a earnings growth that has been robust. 6%. topline growth between 3.5% and 4% for this quarter. that bodes well long term for the markets. the fed is keeping an eye on the eurozone. >> you guys are overrate in areties -- you guys overweight in equities at the moment. what areas are attractive? >> we like health care companies. a new position is added lives -- a new position as abbott laboratories, 15% upside. technology large cap names. looking at cisco systems. around $23 a share. share onrs of cash per
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their balance sheet. it is growing. >> i'm looking at abbott laboratories, it gets 41% of revenue from the u.s.. global- cisco is a company. how much of a risk is buying multinational, especially given the strength in the dollar? >> we've had a corrective phase. -24 monthn 18 perspective, not a five or 10 day trading day perspective. >> we will be "on the markets" again in 30 minutes. "market makers" is next. ♪
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>> live from bloomberg headquarters in new york, this is "market makers." with erik schatzker and stephanie ruhle. selling off are stocks and hammering the currency a day after dilma rousseff wins reelection. >> playing doctor or playing politics? new york and new jersey impost quarantines for anyone exposed to ebola. the white house and happy. -- ain't happy. >> perp is paycheck. not all


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