>> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line," the intersection of business and economics with the mainstream perspective. retail sales in the united states climbed in august at the fastest pace in 4 months. we will look at the top schools in america. to our viewers in the united states and to those of you joining us from around the world, welcome. we have coverage of the stocks on stories making headlines today.

alibaba, china, and the issue of censorship. phil mattingly reports on u.s. secretary of state john kerry's role in the war on terror. we begin with alix steel at the implications of expanded sanctions against russian companies.. >> let's dig deeper and find out which companies will be impacted. the real issue will be for the big oil companies. previously, the u.s. said you cannot sell advanced technology to russian companies, but now you can sell services. that is -- cannot sell services. that is people, people going over there and helping them drilled. bp is by far the most exposed. rosneft.20% of the rest of the oil companies don't have a lot of exposure to russia. it is interesting. if you look at exxon, they have eftoint venture with rosn

what it is only 2% of their overall production. shell, 5%. impacting immediate production for the companies is not a big deal. it will impact future growth. >> speaking of impact, talk to us about u.s. reaction and how that will impact investors. >> reaction to the sanctions? >> yes. >> they want to put pressure on russia to roll back what they have done, which means removing troops from ukraine and removing supplies from ukraine. once they do that, they say that we can roll these sanctions back anytime, guys. the impact comes in the oil services companies, as well. they stand to lose a lot more money. look at the big guys like schlumberger, they stand to lose up to $2 billion.

share and deepwater are pretty small portion of the revenue. schlumberger has given up about three cents. >> what about the defense sector? >> that is a little unclear. we have about five companies added to the sector that have been sanctioned. someone andg to bloomberg intelligence and he said that the u.s. buys little from russia and russia buys little from us. it really is about commercial airplanes and what that might mean about -- what that might mean for airbus or boeing. russia might be reticent to do that because they don't have the technology to fill that hole. >> alix steel, my hero and mom to be. best of luck on maternity leave. >> see you in january. one of the toughest challenges with america's escalated offensive will be

getting regional allies on board . the man tasked with matchup, u.s. secretary of state john kerry. phil mattingly joins me now with the latest. how is secretary kerry doing so far? >> there is no more central component or complex one to achieve that trying to secure those regional allies. he stopped yesterday in saudi arabia, where he was able to spin the commitment of 10 -- secure the commitment of 10 original nations. there is a tepid response in the region, one that the secretary is trying to overcome in the underscore the reasons why yesterday. >> this meeting cannot happen at a more important time. and frankly, it cannot include a more important group of partners . every single country represented here today, including, especially, iraq, would be a

critical part of the effort to destroy isil's ability to terrorize. >> is a mark of what the secretary is dealing with as he works to bring these nations on board, a credibility issue. the president has long been wary of extending force options in syria. many were encouraging him to do so, including last year when he went right up to the line of bombing bashar al-assad's government but decided to pull away. the single most important country in that region when it comes to cooperation? >> every country is getting a focus for their is 2 you can pick up that u.s. officials are picking on. one is saudi arabia. they received a very, very important commitment from the saudis in training and equipping syrian rebels in the country. secretary of state john kerry was there yesterday. on the other side of things is

turkey. secretary of state john kerry landing in on, to meet with -- landing and ankara to meet with turkish officials. one of the key reasons, according to u.s. officials from more than 40 turkish government officials are being held by the islamic state. until that changes, there is going to be some where in -- some wariness. >> coming up, americans are spending money again. we will tell you what that says about the overall u.s. economic recovery. onk and michael mckee join me.

year, china'spast internet has become even more control. it comes with pressure on chinese companies like dalai lama, which is going public next

week -- like alibaba, which is going public next week. >> if you look in the filing, obliged to, it is the chinese government, which they can step in and censor content on the web. i spoke to potential investors who told me that china and alibaba have a long-standing relationship that goes back to 1999, and specifically that dalai lama and china -- alibaba and china sets the rules. don't really expect the company to get on the wrong side of the chinese government. thata, is there a sense american investors should be concerned about alibaba possibility to become a global player? >> what i'm hearing from investors and potential investors is yes. anytime you have a chinese abroad, you have

to think about whether or not beijing is going to interfere in operations or in terms of financials. nyuoke to an investor at who teaches a class on doing business in china and he told me that the expansion upwards in the u.s. specifically because beijing monitors social media content. they're looking to grow sales as well as specific social media platforms. those other platforms where people can go on and what the content out to the masses. they're not really worried about peer-to-peer, but they are worried about a type of post that goes to the masses. mia, thank you. retail sales in august rose at the fastest pace in four months. could this be seen as a sign that the economy is getting

stronger? let's turn to our roundtable. from chicago, i am joined by diane swonk, chief economist at mesirow financial. here in the studio, economics editor michael mckee. today's sales numbers, what do they tell us about the american consumer and what do they tell us last month and when the data -- last month's employment data? >> not only were sales very good, but we saw upward revisions to the month of july, which flatlined on the initial port. it affirms that what we saw was more of a fluke than a trend. consumers that don't have jobs don't spend money, and they were spending more money in the month of august. for megabitrospects and this is important -- it doesn't mean everything is well, but it seems we have seen an improvement in employment and last month's jobs number was more of a fluke that a trend. >> american wages are still flat

but it seems like they are still willing to part with money. up aey are starting to go little bit and more people are confident that their incomes will be rising in the future but why haven't they so far? that is the 95 chile dollar question -- 95 chile dollar question for janet yellen. we are starting to see some wage pressure building. it can only be good news for the economy. but as diane points out, we have had job growth. why haven't the additional people coming into the labor market contributed to more spending? we are starting to see that, maybe. sluggishane swonk, wage growth, is that the american economy's achilles heel? >> is the achilles heel. the bottom 50% of americans are still losing ground relative to where they were prior to the recession. that is very important. the bottom 50% is not a small

minority. it is half the american public. the effectsto see of recovery in home prices. materialsing building and modeling, repairing, rating, buying furniture and appliances. financingssive incentives. it is much easier to afford a seven-year loan at a five-year loan. there is some accommodation in the few places we have seen loan growth. areas where it is easier to get a loan relative to other parts of the economy. i would put out one other thing. we did see gas prices fell. you do not see it show up at the counters and much on back to school -- july clothinge store sales were rise

significantly so maybe we will see that. back to school was captured early in the numbers. i have a question for you, though, diane. we saw a big rise in retail sales for the decline in the number of retail employees in the month of august. what is going on there? >> that was kind of a weird thing where we had grocery store employees in england who went on -- in new england who went on strike. as he get into the month of september, 8000 casino workers city.ff in atlantic this will be a moving target. even though we have been generating jobs and there is a little more meat on the bone on some of those jobs come in general the volume of jobs has been large for the quality has not been terrific. that is one of the issues, two. >> let's talk car sales. sales of cars and trucks rose to the highest level according to

ward's automotive. is this about consumer confidence or gas prices? >> it is about a lot of things. trade-in values, financing on a seven-year loan, and boy, that was a bad winter. if you look at the entrance numbers, we destroyed a lot of vehicles and created more pent-up demand. i think a lot of factors came together in the month of august, including the growth of financing. it is not necessarily a sign of underlying strength could the auto market is one of the bright spots, but seven-year loans on a car? wow. >> i have a question for both of you as we come to our final minute and a half. u.s. federal reserve policy makers are going to meet next week. what will it take from the retail sales numbers? you.el, let me start with >> yes, that is what they're

looking for, the economy to begin picking up steam so that when the fed is not supporting the economy they can stand on its own. we are seeing signs of that particularly with gdp picking up. revision by the commerce department to service industry spending in the second quarter. a big increase suggesting that growth was faster in the second quarter and will be faster going through the third quarter than we had anticipated. diane, let me let you get the last word in. say thate and i will janet yellen will do all she can to make sure she is paving the way for a smooth transition. end with a superstitious no, october 29 is the anniversary of the stock in 1929.ash >> out.

[laughter] on that note, diane swonk, michael mckee, thank you both so much. what is surprising in the latest "u.s. news & world report" rankings of top universities, a big name is out of the top 10. "bottom line" continues in a moment. ♪

>> the "u.s. news & world report" annual list of top national universities is out. while princeton tops the list again, dartmouth is getting attention after the ivy league school fell from the top 10 to number 11. our higher education reporter joins me in studio. why do the rankings matter? >> thank you for having me,

mark. when you are doing the college search there is so much information to go through and where do you start? a lot of families rely on these guys to get information and help in a really daunting process. i i was interested because interviewed david beckham this weekend we talked about soccer teams and there is something called promotion and relegation where if you don't get x amount of points, you get bumped down to the lower division. what does it mean to get into the top 10 of these rankings and what does it mean to get kicked out? >> if you are a rockstar kid and you are thinking, gosh, where should i apply, who has the best academic, who should i be applying to, the top 10 may make a difference to you. ofs. news" uses lots different types of criteria to get into that top 10. .2.5% of that is reputation

it is what other people are saying about you. if you are being talked about a lot in the national press, maybe not the best of light -- for example, dartmouth is almost the entire cover story this week must -- this week's "newsweek," on the fraternity and dragging problem. that's drinking problem. >> is that when it dropped out? >> no, it also needs to be a topless ash also used to be a top -- it also used to be a top school in teaching. janet, what is the best source for parents is not a place like "u.s. news" in their annual survey? >> what i rely on is a place called college navigator, and you have to google it. it is a government website, schools who report to the education department. they have a very good data based

on default rates, graduation rates, crime on campus, lots of information that may not be as sophisticated as the "u.s." rankings. >> comparatively speaking, is there a big difference? can'f -- you can find ways to compare schools but it is just crunching numbers. procedure,e rankings you mentioned that some of it is about reputation. is it more often than not a popularity contest? >> there are metrics messages graduation rate that our firm numbers. there is a ranking that is partially based on the number of applications you get versus the number of kids you take. you talk about schools sending out one million applications to kids to improve acceptance rate. of higher. department

education is scheduled to release its own rankings in the next couple months and how will they differ from the rankings in "os news and world report"? >> the education department is very focused on outcomes could for example, the graduation rate . average student debt at graduation. for lower-income students, affordability. that will be a key difference, not just what you are getting at college, but how to decide value for when you get out. >> what is the name of that other website? >> college navigator. >> how did you find it? >> it is from the education department and they don't have a marketing campaign to let people know about it. >> have never heard about it. janet lorin with great advice. thanks so much. bloomberg television is "on the senior markets

correspondent julie hyman is standing by with details. >> let's get a check on where stop trading right now. two/three -- two thirds of 1%. retail sales data came out better than economists had estimated. stocks are lower on speculation that the fed will perhaps raise stairs --er than the then investors are anticipating. in this $2.2 billion deal would give alliance the ability to advertise across the web and measure the effectiveness of marketing campaigns. conversant, by the way, used to be known as value click. we are watching shares of lululemon as well. up stock is getting pushed after the company raised its full-year forecast top -- and top profit estimates. that is something further its

gain. we will be back "on the markets" in 30 minutes. ♪

>> welcome back to the second half-hour of "bottom line" on bloomberg television. i am mark crumpton. we are only a few weeks away from the view of our new bloomberg politics broadcast, "with all due respect." it will launch on monday, october 6, 5:00 p.m. new york time only on bloomberg. small biotech companies have a challenge holding onto funding while developing a drug that can take years to go to market. one company develops drugs for

inflammatory diseases and cancer. the ceo recently spoke from the tel aviv stock exchange on his strategy to bring the pipeline of drugs to the market. >> bringing any drug to the market, it will be a collaboration with big pharmacies because we have enough money until the and. n-fite trades on the new york stock exchange. since elevator footage of ray rice hitting his fiancé surfaced, there have been concerns over domestic violence, but will the nfl -- but will they stand behind the nfl if it turns out commissioner roger people about his knowledge of the matter? trish regan, what is at stake for the sponsors? >> so far they have said they

will stick by the nfl, but if it turns out that roger goodell did know what was on the tape, it will start to shift. people will say that this commissioner is not doing right by the organization because he just went on national television and lied to the public. the oldody on espn is howard baker term but watergate -- what did commissioner know and when did he know it? >> espn reported that ray rice reportedly told roger goodell that he did in fact hit his then-fiancé, now wife. if that is the case, why is it that roger goodell didn't actually try to seek a bigger punishment or make a bigger deal about this earlier on? the other thing, i got to say, mark, that is surprising to me is that a number of these companies, run by women, like soup,ary barra, campbell pepsi -- why aren't we seeing more of a proactive response

from these sponsors? yesterday afternoon our sports reporter was reporting that pepsi has said no comment on this issue. one of the guests on the show said, look, there is no place for no comment right now. ,hey are a sponsor of the nfl an organization run by a woman at that, and then he really would think that pepsi would have more of a response. we have started to see just in the last 24 hours some sponsors come out and be a little more proactive. they have been saying, well, we do not condone domestic violence of any kind, but we are going to continue our advertising relationship. symmetry could remember was going on with the olympics and russia and gay rights advocates calling on sponsors not to sponsor the olympics because of coverage going on there. the sponsors drop deals with the nfl, what happens next? >> is no longer lucrative to be

broadcasting it on television the way we see fit not just the nfl, it is the television networks broadcasting these games. then there could be a real shift. roger goodell would lose his job and it would be much more of a stronger mandate to crack down on this kind of violence in the league. that would be a good thing to see. olympics, business cap really start to have an effect on social issues. can.liket the old coach of the atlanta falcons said once, the nfl stands for not for long if you don't change her ways and policies. what is coming up? >> great show planned for you. we will talk about this ray rice issued. espn'sbe speaking with governor mel, yesterday reporting that ray rice told

roger goodell about what happened ahead of time. he covers business and sports. we will be talking with darren. we will go into the islamic state and the sanctions being placed upon russia. >> interesting about the ray rice thing. espn is also reporting that ray rice and his then-fiancée were extremely forthcoming in the interview with commissioner goodell and told him exactly what happened and that ray rice apologized, but apparently the commissioner of everything. > -- new everything. >> which is not good for him. >> thanks so much. appreciate it. about a decade from now, 65-year-olds and older in new york city, that number will rise to 30%. in orlando, 70%. we will look at how that affects real estate demand. ♪

>> time for today's "latin

american report." ordered aduro prosecutor to take actions against a harvard professor. the government says the economist was trying to destabilize the country by suggesting the country default on its debt. in an interview today, the professor was quoted as saying the question is not whether that's not will venezuela default or not. -- not will venezuela default or not. venezuela has already evolved -- defaulted. the argentina president is calling on consumers to buy durable goods with their paces, not dollars. the government mechanism was created in january to meet the demand for foreign currency after the evaluation. -- after devaluation.

pricewaterhousecoopers looked into a trend and what it means for investors. the head of the real estate advisory practice in studio. welcome back to "bottom line." fueling the demand for medical office buildings? >> an aging population across america. in my cohort, mid-50's, we are going to the doctor more. specialization in the medical profession, a little bit of managed care forcing specialization has individuals going to the baxter more -- going to the doctor more. >> what is the affordable care having -- enrollment > >> you can go back to hipa and so many documents had to be created -- >> we will give you this might

-- >> you didn't hear that? >> we will get the microphone picks up and be back when "bottom line" continues in a moment.

>> welcome back. technical problems solved. i am joined by the head of the real estate advisory practice for pricewaterhousecoopers and we are talking about real estate and what is going on in that sector. got cut off we were talking about the impact of the affordable care act has been having on open enrollment for real estate properties. >> you look at the legislation on health care and it has created an increased demand for space. go back to hipa, which require paper to be filed come and i don't think it is one specific legislation. all ofhe aggregation of

them, and this megatrend in medicine. a lot of referrals to specialists, more demand for office space. >> what do the fundamentals look like and what do the yields look like for the medical office space? >> trades about 100 basis points higher in yield than what i would call suburban office space. that is an interesting yield. asis in the mid sevens opposed to the mid-sixes. goingoing up, occupancy up -- it is an interesting play for investors. >> the medical professionals who are renting this typefrom what is it looking like for that, especially -- this type of space, what is it looking like for them, especially those who are not as established? thoseis one of

demand-supply imbalances that are going to drive renting. the problem on the tenant side, the emerging medical practices can't just pay the rent. it is where landlords and tenants have come together -- have to work together. the offices are going for mission -- niche real estate and they will make it unaffordable for tenants and will be unkno -- unable to deliver for customers in the way they want. >> office of flight is not keeping up with increased demand. -- office supply is not keeping up with increased demand. >> a lot of it is the purpose thing. landlords are saying, well, how can i fill this space there? they are repurchasing it and getting it to focus on the medical office. you go to the doctor and the doctor refers you to a radiologist for an x ray and it is better for the patient, and

you have to wait for the leases to rollup. it will take some time, but if you look at the aging population and the trends we have come it is good overall long-term for medical offices. >> do we have any idea geographically aware of these offices are at? >> you look at the cities with a greater aging population than those who don't -- >> we mentioned new york and orlando. charlotte,, orlando, denver, dallas -- they have a greater percentage of the aging population. if you focus on the 65 and older demographic, you are missing some of the point. 45 to 65, detailing the baby boomers, -- tail end of the baby boomers, those are going to be the patients and those office spaces. as as. health spending

percentage of the economy is at nearly 18%. how does that compare with other nations, and what are those numbers going to look like as the population ages? >> you look at the u.k., is 9.5%. for an industrialized nation, the u.s. spends more on health care than any other industrialization could the thus the there, and push for affordable health care, but that is one side of the equation. the other side is the increased cost of providing those services to patients. you would think that as the economy grows, perhaps the percentage will go down, but who knows? we spend more in this country on health care then other nations do. >> no down. always a pleasure. >> thanks, mark. >> it is friday, so we bring you an encore, a look back at the most notable newsmakers in the week on "bottom line."

>> although we see a normalization in rates happening, we see that on a slow pace. a place where real rates will not have to be as high as they were before, given the slower growth. that environment is very supportive of equities. i think that means that investors might not have paid attention to a geopolitical risk that they may have in another environment. >> miami is going to happen. >> you sound pretty confident. >> i believe it is going to happen. i know it is going to happen. when i first went into this, i was proud to be part of the mls for the years i was, but i was more proud to continue to believe that i feel that soccer will grow into being one of the best leagues in the world in this country. >> a lot of experts, including

me and others, like general zinni, believe we need 10,000 to 15,000 personnel to enable the rescue of our local allies. if president obama is ruling that out and will rely on airstrikes alone, though -- it will be hard to dislodge the most powerful terrorist group in the world, isil, which controls the space the size of the united kingdom. >> no longer do you have to be a guru or hacker to perpetrate a malware fraud. you can be a five-year-old purchasing malware online. it makes it easy for anybody to execute a malware scheme. >> let's get you the bottom line on what is happening next week. yang yang is in washington with the preview. going to be a very full agenda for congress.

not only do lawmakers have to move on backing president obama's call to combat the islamic state, they need to pass a government spending bill by september 30 two aboard another government shutdown and renewal of the export-import bank. on tuesday, the 69th session of the united nations general assembly will convene at unh quarters in new york. on tuesday, big agenda items for ebola, iran, how to deal with the islamic state that. monetaryse of the fomc policy statement -- this set is expected to reduce monthly bond purchases by another $10 million , down to $15 billion. according to economist surveyed by bloomberg, janet yellen will follow the release with the news conference. on thursday, foreign affairs will be the theme. hold a referendum

on independence from the u.k. the latest polls show a tight battle there. ndc, president obama will host ukrainian president poroshenko at the white house. it also marks the alibaba ipo day. china's largest e-commerce company has received enough investor interest that it plans to stop taking orders for the sale early. for u.s. investors, that means 4:00 p.m. on tuesday. alibaba has a fundraising goal of $21.1 billion and will begin trading on friday on the new york stock exchange. also in stock news, it will include earnings from adobe, fedex, general mills, and oracle. that is you look at what is happening next week. >> thank you so much. have a good weekend. another check of the market is on the other side of this break. ♪

>> get the latest headlines at the top of the hour on bloomberg radio and streaming on your tablet and bloomberg.com. that does it for this edition of "bottom line." i am mark crumpton, reporting from new york. have a great weekend. see you on monday. >> is 56 past the hour. that means bloomberg tv is "on

the markets." i am julie hyman. the s&p is extending declines, now down .8%. retail sales beating estimates this morning. however, investors have been speculating that maybe the fed -- the fed will tighten sooner that investors are expecting. sometimes the stars aligned for an etf when outside forces come together to give it a boost. joining me on when they happen in the right place at the right time -- he talks to us about etfs every friday. when you are trying to think strategically with etfs, there are some that make sense at particular times. the first is the european hedge equity etf from wisdom tree. we get the quantitative easing in the european union. talk to me about how this

capitalizes on that potentially. has been a boon for a long time but this one in particular goes wrong but it hinges out -- goes long but it hedges out the currency could we have seen this movie before. the central banks are weakening the currency on purpose and that lists the stocks and decreases currency. it is almost like a package trade. if you look at the return this atdj is up 6%. the currency impact cannot be underestimated. it can be a big part of the theme. you get to play that ecb perfectly. on investors.st this etf is red-hot in terms of flow. it has taken $2 billion and quadrupled in size. it is no secret, is climbing the

flowchart as fast as can be. etf, about to become the the european etf with the most flows this year. >> another topic, a hot one, is the alibaba ipo. bloomberg out with the story saying that the orders are full. if you are a member of the public you are probably too late. but there are etf ways to get in on it without buying shares of alibaba itself. >> it is hot, it is basically going to try alibaba on the 12th trading day. a lot of indices are a little archaic. they don't take them that quickly. so this is a good choice. the other thing is that it is not just alibaba. china tech in general is so hot that this etf is up 50% since it came out 18 months ago. china tech has been the engine

of china performance and this captures all of that heat in one shot. >> very quickly, the last one, the i had, the treasury flatten her. ener.easury flatt the ten-year long and short two-year, a captures the flattening. >> pre-civil -- pretty simple. etfs in the right place at the right time. "street" starts in a few minutes. ♪

>> >> welcome to the most important hour of the session could we the markets lowers as the u.s. is to tighten sanctions . wall street is waiting to see how vladimir putin might retaliate. whations persist about gdellsioner robert iger may have known. starts now.t"