the fed rate not decision, trick or treat for talks and ups. six days to midterms. republicans consider majority options. good morning, everyone, this is "bloomberg surveillance." we are live from our world headquarters in new york. i am tom keene with scarlet fu and brendan greeley. let's get to an explosive top headlines this morning. >> investors are waiting to hear from the fed this afternoon. rent a cap their two-day meeting -- wrapping up their two-day meeting. janet yellen and her console in the bond buying program as planned. they may also underscore their troubles by falling inflation. in the last month, oil prices have dropped 14%. failure for nasa kind of seconds after launch from virginia, an unmanned rocket carrying supplies to the national space station first and a huge fireball. was owned by private

company. the explosion caused no injuries. here is nasa pass describing what was lost. >> we did lose hardware with this flight. we lost quite a bit of research hardware, which we will work with the different providers to recover and get them opportunities back to the space station. in addition, we lost some spares we will have to replace. shares of orbital sciences plunged after the explosion, down as much as 17%. >> premarket trading does not like facebook. shares are down as much as 8%. projected fourth-quarter sales .hat projected -- that fell to phone ishe push working.

pimco continues to have a horrible no good year. it is been trying to stem redemptions. pimco was running a total of $6 billion in the funds, prudential will not save the move has anything to do with the grossest of barter. blackrock in the process of the new managers. kansas city and san francisco, it comes down to game seven. the royals scored seven runs and eight hits in the second inning. crushed the giants. the series all tied at three games each. it makes for an exciting game seven tonight. >> tomorrow night. >> tomorrow gekko ok. there is our baseball coverage for game seven. it is a commendation of liquid fuel to make kerosene, and solid

fuel on the rocket. i feel days -- like the old days, the first age, the new days in the second stage. you wonder what went wrong. it takes me back to tighten -- the shock we60, could not put a rocket in the air like the russians. "bloomberge is cold warnce" chief fo correspondent. bloomberg's international respondent hunt stickles is in berlin. there is a new cfo. will it save deutsche bank? that is a question for tom and the cold war rocket man theatrics. basically did something i will position to cover, having covered the white house, and that is they got a lot of bad news when no one was looking. on sunday night when we were all

in frankfurt and wondering about the stress tests, that is when they announced a third quarter legal provision of $1.1 billion. they announced it today and it comes out and that is why we see their profits down. they are down, i believe the onber was 94 million euros the net profit after tax. deutsche bank has a lot of challenges. the biggest challenges, they don't know how many challenges they have because no one knows what scope all of these litigation charges are going to take. libor, currency, mortgage backed securities. they have a lot on their plate. >> can you say known unknowns in german? >> i don't know. there's a long-running problem with deutsche bank, which is they don't have the tier one capital they should. apart from these legal concerns, the basic stability concern around the bank, too, right? >> correction. they now have had the capital

they needed to have had because they issued a rights offering. they raised a lot of capital -- i think it was three months ago. it was a sunday night. you get a call from deutsche bank and they say, can you come for an interview on monday? they did that rights issue and i believe they raised 8.3 billion euros. >> hans nichols, find a beer hall. thank you very much. >> very good. thank you. polity wire with us this morning from bloomberg business week with some important knowledge -- pol a wire with us this morning from bloomberg business week with some important knowledge. what is the backstory of the post ackerman age? >> deutsche bank, even though hans says they have enough to one capital, the way they get to it is by waiting their assets

for risk. a lot of the european banks do this. they are allowed to load up on sovereign debt in a sovereign debt doesn't really count against their capital needs. it was fairly easy for a bank to get to their requirement. deutsche bank -- >> how do you describe the in the suicides in europe that have been reported of bank executives , leading executives, and below that level yet though i don't mean to bring that over to deutsche bank, but the fact is, there are some unique tensions in european banking. >> i think that kind of thing has been happening all over the world. >> that is fair. >> it is troubling. i guess i would say stress does terrible things. when you're really under severe financial stress, you have personal problems, too. >> i want to go back to the known unknowns. deutsche bank is not unique in this regard.

european banks face all of these known unknowns. >> that's true, but deutsche bank seem to have trouble in spades. probably more than other banks because it is germany's icon. but also because it was involved in so many of the derivatives trading, the bad real estate, the currency trading, the libor scandal. they had their fingers in everything. they are undercapitalized. it was tough for them to deal with all of these things all at once. >> let's do a data check to get started. futures, negative one. the euro, a little stronger over the past 24 hours. it is a quiet screen. on to the next one. boy, have we been on a roller coaster ride over the last number of days. the currencies get our attention. weaker ruble, stronger brazilian

rial.- let's go to what really matters. 2:00 p.m., janet yellen and company will announce, michael mckee, among others, saying it is not a big deal. here's the blowout. the fed being accommodated. this is a punch bowl going up, up, and away. into balanceg over sheet restriction. >> you can see the berlin consensus. this is berlin getting exactly what it wants. >> i would focus on the april 29 meeting. i will mention that later as well. april 20 9, 2015. >> that is the meeting i am focused on. >> win they make increase interest rates? >> more on this. crude beanie on at 8:00 a.m.

with me and michael mckee on bloomberg radio. >> a surveillance correction because the kansas city giants game will be tonight. we were wrong. it will be taking place tonight in kansas city. >> and exclusive. >> for all of you rooted for the underdogs. works in the midst of a two-day university of southern california, professor of law and business there, and he looks at janet yellen and sees all sorts of challenges within the american system. i love the work you have done on fiscal policy. we have a better deficit. the president could take a victory lap on that. at the same time, our tax base is broken. how is a broken? improved anit has awful lot, but projection show after the deficit narrows new york two, he will start to widen again. if a long-term structural to address.eed

the fact is, it is a problem on the revenue side, not on the spending side. unless we're going to declare peace and go home, disband our alltary and somehow cure known diseases, we just don't have the revenue base to support the government we have today. >> what you have done so well is the study of how we got to this place. how do we get to such a narrow tax base of taxing, i'm going to say as an amateur, the upper third, more and more, were half of america doesn't pay any income tax? how do we get to that point? >> the pot of 47 -- the fact the bottom 47% over the income taxes is a little misleading. they pay payroll taxes. you pay payroll tax from the first dollar of wages. they also pay sales tax, excise tax. you don't think a lot about your gas tax. low income people, that hits them directly. >> the most mail i got was a

chart it did in the extrapolation of the social security tax. every rich guy in america sent me a hate note. >> let's get some more hate notes from every rich guy in america. there are some hand grenades. gets once in a law, a pin pulled. i'm going to read something from your book. defines itself through its hatred of taxation is narcissistic, self pleading, wrapped in a flimsy sheet of economic lingo. 50% of our audience just bid out their morning coffee. that isfor me, then, if the effect i had. it is true. people who have succeeded in life are very quick to ascribe all other success to their and merits ands to underplay the role of luck in their lives. we all have a lot of luck going on behind the scenes that define what outcomes we have had and also the life we were born into.

none of us chose our parents. none of us chose our health. >> i did not choose my parents? did not choose your good looks, either. >> well, there is that as well. ed kleinbard with us as well as paula dwyer. the election, six days away. we will have some interesting questions. >> our twitter question -- us.t ♪

>> good morning.

i am tom keene with scarlet fu -- branding get really brendan greeley decided to show up because he could buy gas or under three dollars. >> we've seen oil prices come down. gasoline prices have followed suit, and not a quite the same rate. much more elastic on the way up, less so on the way down. >> funny how that works. they have a lot of stock on hand. there's that to contend with. the stock target is the mechanism. >> airlines are up. alaska air. >> delta airlines -- >> they hope they can keep their prices up as well. >> delta airlines has come up with a price increase and it is clear a lot of the airlines are not looking to pass on the savings to customers. delta airlines reported earnings earlier this week. of course, they have hedged against gas prices. iny did have hedging losses

the third quarter, but they also said they took part in 80% of the price drop. and are taking advantage of that by not passing on the savings and increasing fares when they can, especially with the mystic flights still packed. it is interesting how the different copies respond. want to highlight amazon. it loses a lot of money from shipping all of those things to brendan greeley's house. >> constantly. >> 4.7% of net sales is due to shipping expenses. >> what about the drone strategy? >> good question. it is not approved yet. >> suggesting oil -- laura oil them directly. >> that a contract with ups. it should help. every little bit helps. >> a huge part of amazon's strategy is prime. you offer one price -- like an option.

you ask for one price of the beginning of the year and wrapping up all costs for the rest of the year. hydrocarbons is are huge part of making rice. i would think if they can sustain here or even drive lower, it is a profound affect. >> is a big boon for farmers and restaurants. no doubt about it. in terms of the immediate response you see in the market, you're starting to see investors price that into certain kinds of companies. let's pull up that chart that shows the differentiation between crude oil prices falling and gas prices, which have not kept pace. from 100% versus down to 85% for crude oil. >> we've been talking about the effect the chief oil has on investments. as you point out in your book, half of america doesn't have any investments whatsoever. most of those remaining have a stake in a 401(k).

lower prices affect everybody else who is not investing in these copies were talking about, that is just trying to the life and this economy? >> most americans live on the edge. most americans have almost nothing by way of cash reserves or any kind of a personal safety net. -- to get a reduction in gas prices, so 70 times a month you will go to mcdonald's, much less something more upscale than that. it really affects people's lives at the lower income and of the spectrum. >> this gift of lower hydrocarbon, i know it doesn't go into the election, but stunned if we break lower in price. >> in a way it does translate into the election because as ed said, most americans are very sensitive to the gasoline price. they say prices are below three dollars. they feel good because that means that more money in their pocket. they will spend that money.

rebuffed the script. is that why republicans have done better in the last 10 days? >> it should be credited to the democrats because they're the ones running the white house and senate. at i think it also is like trillion dollar stimulus. if you have gasoline prices going below three dollars a gallon, it is a huge stimulus. it should make people feel better about the party in power. >> you're describing a middle-class wealth effect, right? >> it is a liquid stimulus. 1 trillion.ed at $1. >> coming up the next hour, we will look at the emerging markets in the knockout effect of fed policy and oil policy. we'll continue our conversation on where is the global growth. stay with us. ♪

>> good morning, "bloomberg surveillance." we welcome you all to new york city. heartburn over the volatility -- >> i thought you were going to say over the world series. >> i thought you're going to set the rocket launch. >> so many things to give tom heartburn. >> let's get to the morning must-read. >> this is about the auto industry with all the different recalls, whether it is air bags or steering wheels.

>> i feel like the tell is as old as time. has had three dispiriting years reporting. it is a story of regulatory capture. you spent years working in congress. as the anyway to avoid that? >> it is really tough. the first instinct is to say executives in an important agency like fcc should not be allowed to come back and lobby their old agency. in the problem is, when you do that, you just can get people in in the first place. we don't pay enough. because we don't pay enough, given how difficult those jobs

are, people are incentive to go out to the private sector and unless we going to pay more, it old as time -- >> we could've had this conversation 20 years ago. over a cigar at the willard hotel. there. >> absolutely. >> what changes with these recalls and this call for more action? >> it comes down to the leadership that the president selects for each of these places. that is where president can make a difference is choosing people who are committed. they can set -- >> standards -- >> of expectations that their agencies to do better. it is hard ofy, have a magic answer unless we're going to start paying a senior administration official half $1 million a year. >> what else i found surprising, the safety budget is $134 million. will more funding change the game? >> i can't answer that because i don't know the inner workings of this agency -- >> but in general.

>> some agencies are very underfunded. irs, the national highway traffic folks? i just don't know. as weething to consider wait more recall news from all of the auto companies. >> october 29 is the date. the elections. midterms. >> the world is going to change. talks we will talk about it. there are some views of the republican string better than good. we will discuss that, next. ♪

>> election night, 5:00 p.m., they will give you zero bs on washington. there's washington waking up six days before election. many are saying it is an "so what" election. there is a lot going on. good morning, washington, and to all of you across the nation. >> the capital is under construction. the senate will probably have republican majority leader next time this week -- next week this time. , let's begin with your first assumption, republican majority will be interested in passing laws. >> we're not really even sure

about that, but we do know even some of their own leadership is saying that we have to show we can govern, show we are leaders because this election is really all about 2016. you already have people like kevin mccarthy and some of the moderate,ll we say, although i'm not sure what that definition is these days, saying when you do not do the usual theatrics, which is shutting down government and going up to the fiscal cliff or trying to default on our debts. >> we belong to the same fan club. putting together a realistic proposal on corporate and personal tax -- >> back got shot down. >> it just got dropped. what parts of that could be resurrected? >> i think they should not try to do the whole kit and caboodle, and that is what is legislation did. it debt with individual and corporate taxes. what we have been saying about editorial this morning, in fact, they should just wanted to

corporate taxes. there's a lot of corpsmen -- common ground with the president there. obama says to lower to 20%. for many faction, go to detroit 5%. there's not that much distance. if they can do that, i think that would be a big booster shot for the economy. >> what about the republican constituents? is that what they want? explain it -- we're not saying that is the only thing they should do. we also think they should try to do a few things and immigration. not the path to citizenship, but the dream act, for those who are raised to the schools here. and also maybe some more high skilled visas for the people who are educated here who have these great ideas and joe go back to their countries and apply -- >> for companies there. >> we think there's something second be done in terms of

infrastructure spending, which makes a lot of sense if you look at our kremlin public works system, but also if you consider this crumbling public works system, but also if you consider the borrowing rates are so low. >> you worked for years in the joint committee for taxation. you are a sausage maker. 20%, 25%, not so far apart. that is it possible to bridge that gulf? >> if we can get the standalone alone, yes.ax he is a sensible man indeed the great work in developing the detailed proposal, not just talking points. debatecan limit the tax to just corporate perform, then the spread is quite small. the problem is that an awful lot of republicans think that they have or will have a mandate to

lower individual income tax rates. there isn't the revenue to do it. there isn't the reason to do it. we just own have enough revenue today to run the government that we have. republicans have to get over the warlogical fixation on the individual rates. >> that is my quote of the day, if you can limit it to court for tax reform, the spread is pretty small. >> what indication is president obama given he is going to meet some of those republicans halfway? >> i think you would on corporate taxes. through public is of always wanted to package it together. the packaging is a problem for him because democrats always want a package of living and immigration together. no one is willing to let a piece go because. they didn't lose the advantage, looser leverage. >> if both sides will unbundle, -- >> paula dwyer used to be might editor, so i habitually defer to you, but i have to say every tax

reform proposal that has come the president's wife, he is dropped as if it never existed. he has shown singular disinterest in the subject. well, yes, because he is not getting enough of the tax increase on the 1% that he wants. constituents,is that is all they look at. in the same with for republican constituents, all they look at as they get a tax cut. it is a little bit hard to bridge that gap. that is why i think we should just drop the individual taxes. , raising taxes on the 1%, will that have an economic effect we want to have happen? >> we did raise tax rates on the 1% with the fiscal cliff deal, so we're little over 42.5% on the 1%. it could go up a little. companies european that we think of his having much more government, they don't have 70% tax rates on the rich.

the big problem with unbundling, with corporate reform, we're so much of american business conducted through non-corporations, through partnerships and other pass-through entities that are taxed to the individuals. republicans are very concerned if they were corporate rates, they will not have done anything for the so-called small businesses of america. talks are we presuming the ted cruzs of congress will be pliable enough? >> never assume that. dynamic in aof the republican majority senate, assuming there is one, is there would be a lot of tension between the two dumplings of the republican party, more so than we have been seeing. ted cruz also wants to be president in a run for president in 2016, but there's a different wing of the party that once bush-type, someone more moderate.

so they will want to manage to be the one who wins in 2016. so i think you'll have just as much tension within the republican party is yet between the democrats and the republicans. >> paula dwyer our guest host along with ed kleinbard joining us as our guest host. coming up, a recent market volatility raising concerns about whether we may be headed for another air market. our single best chart refutes that. this is "bloomberg surveillance." we are on bloomberg television, streaming. ♪

>> good morning, "bloomberg surveillance." i am watching the dow. extraordinary volatility over 16 or 17 days. will join us in the next hour. those pesky emerging markets. right now, pesky single best chart. >> it looks at the triggers of their markets. >> you gloomster, you. i'm shocked. bear markets are caused by tight manner recessions tight money or recessions or in some cases, both. here you have the year-over-year

percent change in the s&p 500. the big plunges come either during a fed tightening, the yellow circles, or recessions, which are the red circles. according to david rosenberg, based on the trends, the recession is at least two years away and a new rate increase is not likely to happen until mid-2015 at the earliest, if not twice 16. we are a long way away from any kind of their market. >> ed kleinbard, our bear markets everywhere and always a monetary phenomenon? >> no. your markets are not always a monetary phenomenon. the oil shock of 1973 was not a monetary phenomenon. monetary policy obviously place a big role -- plays a big role. not just a question of rights. the firms cannot finance themselves with liquidity, then we're going to get recession and the market is going to follow.

whenever you get an unexpected shock on the downside, of course, you're going to have the stock market drop. >> and a worry about -- i wonder about overseas shocks. exogenous shock. >> you're not allowed to say that. >> it is october. it is the perfect time. >> how about single best photos? photo, this is october 25, the rocket is still .hole sitting on a launchpad here it is taking off. that did not go well. it exploded six seconds after liftoff. tom has looked into the fuel composition. liquid and solid, nation. i don't have any skill set, other than it really struck me.

liquid is way back. robert goddard into the saturn mission and all that. >> i knew it. >> and then solid is what we tried to do when we sort of kind of like did it. you have to lift heavier weights, like 5000 pounds of food. >> is a calculated in gdp? >> i don't know. but this is like memories for a lot of us. >> government purchases are part of gdp. >> seriously, they have to get food up to people in orbit. >> the number two photo -- >> more fire. >> things on fire is the same this morning. lava flows in hawaii. it has overrun a cemetery and in danger of hitting 50 houses. there it goes. that is 1600 degrees fahrenheit. there is no way to stop it. an invading zombie

army. it is slow, but unstoppable. >> this has been going on for years. steady. said, slow but the number one photo, a specimen that definitely remembers the cold war, 38,000-year-old woolly mammoth is being prepped to be part of an exhibit in moscow. >> is that skin and hair we're looking at? >> yes. one of those amazing finds that comes from siberia. perfect conditions to never let anything decay. i missed out on the geographic test. very cool. so that is our photos. there we are. let's have a twitter question this morning. it can always be important.

investment in the human capital of the united states of america. stay with us. feel so warm and fuzzy. ♪

>> silicon valley. no, how about silicon alley in

new york city. environs of downtown new york, jo with this. -- looking for to aa chat upn on venture capital in the next hour. good morningn,e wilson "bloomberg surveillance." let's get to our top headlines. >> we start overseas. deutsche bank swinging to a third-quarter loss. took a hit on legal expenses. is set aside $1.1 billion to settle investigations of past wrongdoing. yesterday, the bank said shank will succeed the cfo. in manhattan headquarters according to "the new york times." the 6.5 a dollar project called for two new skyscrapers to a common date the bank 16,000 employees. the plan ran into some roadblocks over necessities.

investors are waiting to hear from the fed this afternoon. this policy makers are wrapping up a two-day meeting. janet and collateral in the bond buying program as planned. fed policy may also underscore the troubled i falling inflation . those are your top headlines this morning. >> inequality. it might as will be the word of the decade. it is all the rage. scream over the definition of inequality. ed kleinbard is professor of law at usc. two footnotes in his great book on paul ryan. we are better than this. our government should spend our money with the killer cover of the nation's capital, topsy-turvy. you are the lawyer that republicans and conservatives love to hate. why do they hate you? >> because i try to talk proved to power. the problem is, i don't have a problem with conservatives as such. it is not my politics, but people who approach the issues

fairly and have a different view than i do about what government can effectively do, i have a big andlem with ideology ideologues, and that is how i see the republicans -- >> wisconsin, one of the most poignant e-mails i ever got was from a gentleman on a friday night in wisconsin who said, tom, you're an idiot. big fan of the show. percent.et is 16.8 paul ryan is from that wisconsin. what is the disconnect estuarine has with his constituents? senior -- anight a awful lot of senior republicans frankly, bubble that, the book tries to pop. the bubble is one of a believe system that makes it impossible to see the faqs on the ground as they really are. , is this aa dwyer belief system that is amended from ronald reagan? it is not the reaganomics i knew. >> it is a belief system that

has gotten him over and over and over again. that is what it is all about. getting elected. once you get elected, then you can do things. there's this constant campaign -- >> is that true in the campaign as well? >> absolutely. that is why they were never discussed raising taxes. on the website of bloomberg politics, in the conversation, ted cruz has been marginalized. flux it is impossible to tell which force is in front. we have two years and six candidates on the republican side, but, ed kleinbard, you're also a linguist. he did great work in looking at what you call the of the facets of the tax debate. job killing regulation. here's a quote from the book out was curious about. it punctures the way we talk. when one looks at the official oecd data from poverty among citizens, the

results are appalling. u.s. has the a's properly level of any oecd country or even mexico does better. >> that is for the adult population and the poverty measure is a relative measure. it is saying how many people earn less than half the median income in the country? nonetheless, that is the world in which you live. if you want to buy house in the united states, what is relevant withinrelative poverty the united states. no matter how you look at it, the numbers are appalling. >> our audience, from your sure they're, i'm done cleaning up their coffee after they spitted on the floor, you're selling this idea to a very skeptical set of people who are cynically invested in financial -- who are equally as invested in financial rates. ?hy is this important to them >> first, let's understand, i worked for wall street for 30 years. i understand financial markets and individuals in this financial markets.

just the wealth as well as the political stability of the united states. we are a demand-driven society. >> scarlet, you read the book, i didn't. >> i love it says as a society we should care more about that than winning a gdp on olympics because there are other values that define us. you say pinpoint to the product and dime of goods we create. ?> are you looking at me >> out of the corner of my eye. >> you are reading my copy of the book. >> limitation on our part because we overlook some of the important things that hold us together as a society. >> it makes us very, very shortsighted as well. in corporate america, we worry

about the fact that firms live quarter to quarter. here come the same issue for the country as a whole. you need to take the longer view. what is important to americans is good quality jobs, frankly. that is how we define ourselves as individuals. that is where our wealth comes from. investing in ourselves. those are the kinds of issues that have long-term wealth payoff. >> we can't measure our is going to that far. >> i agree. i think the happiness index work is interesting -- >> that is a british thing. , you'reyer monitored the debate for a good number of cycles. what is different this election as we talk about this massive dish joint in america? i don't remember this when i was a kid. republicans and democrats sat around and have a conversation.

they don't do that anymore. >> jamming the dish joint between our elected officials talk and the way normal people talk? >> just american conversation is out of whack as we go into these midterms. american --he typical american is in paying that much attention, unless someone talks about ebola. attention.pay that is why you have ebola coming up in all of these ads all of the sudden. it is difficult for people who are trying to make a living, trying to get by, trying to really scrape by. in 15 years, the typical american household has not gotten a pay raise. they are not focused on who is controlling the senate because to them, it is not going to make a difference. >> i lied, i wrote the book. "the growth fairy" is the best chapter. jeff in melt agrees with ed kleinbard. >> the ironic thing is, in the

current environment of an economy that is doing it's best not to fall into depression -- what we actually need is a more vigorous government. i appreciate that is a hard sell. that is why the book is long. the government can complement the private sector. government investment -- >> 3% gdp, i need infrastructure spending, is that what you're saying? >> infrastructure is the easy case. right now we spent less than 1% of gdp on public infrastructure. if you look at our largest asset ,lass, it is ourselves investing in ourselves as human beings. that is where inequality really ends up being a gen that getse passed on because the risk can do so much more. >> a rocket depreciated last night. firestorm ofred a nostalgia. >> yes.

>> we want to thank our guest host for the hour, paula dwyer and ed kleinbard as well. >> ruble weaker. good morning. ♪

>> we do not react based on our fears, says president obama. the world health organization says liberia may have turned a corner on ebola. rate decision -- the fed rate decision is today. it's trick or treat. good morning, everyone. wednesday, october 29. i'm tom keene and scarlet fu and brendan greeley join me. >> six years of quantitative easing. expect it to come to an end. fed policymakers are wrapping up their two-day meeting and according to economists surveyed by bloomberg, janet yellen will and the bond buying program as planned. policymakers also underscored they are troubled by falling inflation. in the last month, will prices have dropped by 14%. the yield on the tenure hit the

lowest in almost a year and a half. a spectacular failure for nasa in its commercial spaceflight program, a second unmanned to thecarrying supplies space dish and burst into a huge fireball. used private contractors to ferry supplies since retiring the program in 2011. there were no injuries. but here was what was lost. lose hardwaredid with this flight, quite a bit of research hardware, which we will work with the different providers to recover and get them opportunities back to the space station. some spares we lost that we will have to replace. >> shares of orbital sciences longed as much -- plunged as much as 17%. facebook are down as much as a percent in premarket trading.

rate -- facebook projected fourth-quarter -- quarterly sales that fell short of the estimates. meanwhile, the ad strategy is pulling off an mobile ads now make up 66% of facebook sales. that is up from 60 to 2% in the second quarter. and t-mobile ceo jon lester -- john legere says he could not be anymore prouder of his company or its shares. the company raised its full-year forecast after adding more customers in the third quarter than estimated. with emily chang. >> we certainly had a great quarter, but i can tell you it continued right into october and we maintain, as you see by our as it waskeeping it in raising the subscriber number 4.7, which has annihilated the industry, and we are all very happy about that. >> he has forced rivals into

matching his price cuts. i have to say, it has not happened to -- it could not adapt happened to a nicer industry. >> annihilated. the kansas city royals annihilated the giants last night. they crushed the giants 10-0. the series is tied at three games each. he continues tonight in kansas city. the giants are trying to win their third world series in five years. the royals are trying to win a was in myes since i youth. it was a few years ago. >> most people have no idea who the kansas city royals are because they have not been on anyone's radar screen for three decades. are hanging on their fingertips and hoping they pull it off. perk it up.n will facebook, all sorts of ideas to talk about.

money is free, or forever will be free, according to the central bankers rekindled confidence in mergers and exhibitions and venture capital well into 2015. can the spirit be maintained? particularly given the setbacks. the gotham gal is here. zuckerberg doing a base is, essentially saying, forget about you on wall street -- doing a jeff bezos, essentially saying, forget about you on wall street. look at the future and invest. how quaint. but that is what startups are all about. what is facebook a startup? >> no, but when you start out, that is the course to take. 56 --y have gone four or or 5, 6 conference calls into it.

do you give them high marks? >> yes. do you think mark zuckerberg looks at his shares down 7.4% in market trading because his plan year? >>74% more this i'm sure he does. but he has to think about the future and not today. >> said -- can social networks grow internally, or will we constantly look at other networks trying to figure out how to bring them into your own ad sales machine? >> that is a good question. we will see a lot of large companies that started out as small companies 10 years ago acquiring some of the smaller companies that are more nimble and adept at what they are doing. but five years ago, we will probably have a company that no one us heard of -- no one of us has heard of. constantlyogy is evolving. whatsapp $422t forion, -- bought whatsapp

$22 billion. >> i think any company loses its mojo when acquired by someone else. >> what did people do in 2014 with a frenzy of easy money, your notoriety, what is the best practice you need to see when the hipsters from brooklyn walk into the room? >> i really answer all my e-mails. i look at every deck. >> she didn't answer my question. >> i'm getting to it. i highly curate what comes in my door. iere are a bunch of people constantly talk to about what we are all looking at. some deals make sense and others don't. but there are plenty of people that do cold calling to me and i think it is really interesting. i have them come in and pitch me. >> interesting. >> what are your bad and obvious pages right now that you are turning down? >> at a no fighting, put one in

particular, but i'm not a big fan of rebuilding a mousetrap. the explosive growth in startups and the past five years, it's hard to find things that are not so completely different that are not just shoving a square into a circle. >> speaking of education and women in all the kids in technology, how do you respond to the parents ago, my child, they have to learn to code. i'm hearing this more and more. >> you know, i think that learning how to code is like learning a language. it just put your brain into a certain way -- in a certain way that makes you think about the world at large. and i do think it is important that everyone learns how to code. i think it's important for every company going forward that people are using the internet, that they are using mobile. it doesn't mean you are great engineer, but you should at least understand the practice and how to manage it. >> you will be teaching a seven-year-old.

code python.to >> you can do it from your home. >> when you pitch, are you looking at their coding to dredge -- coding credentials, how well they can explain their idea? >> i'm looking at them and saying, how well can they execute on this idea? >> can't they just outsource that, coding? >> no, you have to bring in someone internally. that theremean building their own website, but there needs to be someone internally that understands what it means to continually build a website. let's otherwise you lose control of your product. >> you do lose control. on tods to be turned someone in the team that's going to keep this thing going. otherwise, it was a total waste of money and six months go by and your old again. the summern article about how hard it is to sell

your idea to avc of your older than 25 and have the audacity to have gotten married and have kids. is that something that you see? >> you after member that bc's responsible to their lps. they are looking at an idea and saying, is this an -- is this a billion dollar idea? if the answer is yes, then they're interested. if not, then they're not interested. >> if you look at the fed money that's out there today, has it changed the mathematics and the money equation changed because of this -- the distortion by the central bank? >> i don't think so. it's the same old business model. >> i agree. i hear from a lot of people that rater has come down. was last time a gen x or had pitched -- >> when was the last ane a gen x or had pitched

idea and it's come out? >> i see pages from all ages. sometimes it's nice to see someone with a few wrinkles on their face. it's important to have someone with a great -- of the little grey hair sometimes. >> because carlin and i actually have an idea. and i because scarlet actually have a start idea. it is called tomkeyisangry.com. >> stay with us. >> tweet us. we will be right back. ♪

>> good morning, everyone. weaker this morning. that trend continues even though oil does better than good. $82 a barrel is not the attic and he -- is not the agony of a week ago. but the russian ruble continues and we are watching them. >> had of the nyu women's entrepreneur festival joined us. most of your portfolio as women found it.

initially by happenstance, now by design. that is an old tech. in your tech, you have microsoft making blunders about the gender gap. unbelievable, right? >> i was flabbergasted. appalled, really. it's just not ok. if you take a look at the , 4% of vc's are women. you are talking about women going to pitch vc's, it's very hard for them to connect and understand their business. if you go back in time, a woman for the dishwasher, the chocolate chip cookie, the disposable diaper. the- a woman started dishwasher, the chocolate chip cookie, the disposable diaper. all of these wonderful things that we use in our daily lives. >> women are so prominent in e-commerce. is that a problem? is that because the vc's that are mostly men are expecting them to pitch certain types of products? >> i don't think so. >> it seems like a lot of the

success stories are that way. in my commerce, there are a variety of different deals. women spend 60% of the money on e-commerce, online. you make the majority decisions -- they make the majority decisions in their household. >> i see that look. are in my cap. is there a value to an mba? yes. women in technology look back to adam loveless, this coder who 150 years ago look -- worked alone and eventually it went nowhere. he was such a dispiriting hero to choose. is there not someone more modern that you can choose as a role model? >> there are tons of people. estee lauder, the woman who started as state -- peppering --

pepperidge farms. there was a billionaire that came up with a complete medical company. there are a bunch of women that women look to. it doesn't have to be a coder. i look at women in my portfolio. if they go public and they get bought at a large price, that changes the landscape. but joanne wilson of gotham gal adventures. we will be back with more. ♪

>> good wednesday morning. i'm tom keene. with me, scarlet fu, brendan greeley. >> let's start with top headlines. in north korea, kym johnson -- execute 10.

is erasing the remaining influence of his uncle who he executed last year. deutsche bank yesterday said of goldman sachs will be succeeding the ceo. and waiting to hear from the fed this afternoon. policy makers wrapping up their two-day meaning and according to economists interviewed by bloomberg, jenny allen will continue -- janet yellen will continue with ending the a-gon plan. -- the bond buying plan. >> the federal reserve is the central bank to the world. they will announce at 2 p.m. and wisdom will ensue. if chair yellen catches a cold, kuala lumpur over in malaysia,

they sneeze. goldberg is with us right now. how distorted is the u.s. economy from what the fed has done? you aren, it looks like starting to have significant amount of financial excesses. the ec money -- the easy money , but not so much with the economic risk-taking. >> this is a chart that were used to look at all the time. i will explain it on radio and send it out on bloomberg radio plus. years, down and down they go and they keep interest rates right at the zero bound. how does that affect malaysia and the other smaller economy? of moneyve a lot coming to the emerging markets. not that long ago just before the taper and we were talking

about the currency wars. money coming to emergency mark .nd -- emerging markets in some cases, the currency appreciating too much. they can push the market to lower rates. >> but then there is the surprising new world for blackrock in 2015. is it a currency war of weakness against the strong dollar? is that the solution for everyone? >> that might not be the solution for the u.s. the fed has communicated that a too expensive dollar could be, locating u.s. growth. we are in the middle of -- could be complicating u.s. growth. we are in the middle-of-the-road. not too hot, not too cold. >> like goldilocks. chapter 18 from ben bernanke. >> or like the chapter on the three bears. >> we are talking a lot about goldilocks in our team. we are starting to downgrade a little bit. you have a fed that will have to

be acting at some point. jokingly, we call it silver locks, the lower degree of goldilocks. >> i think she would like that. >> christine lagarde. typical, youvery know, silver locks. surveillance brings silver locks. >> pablo, there is a note from blackrock about emerging markets that caught my eye. you talk about the volatility of and currenciess and the perception that they are less predictable. this is a minute the baltic states said before they joined zero and no one took them seriously, even when they were responsible.

-- that no one took them seriously even when they were responsible. do you think there is something to that? policymakersarket are more reactive to what happened to the developed market . everybody got caught offsides with the taper here. moving, thatarts will mean a lot of emerging markets will have to start to react to what the fed is doing. it is the largest central bank in the world and that has ripple effect all across the region. >> uintah school in buenos aires. i'm old enough to remember when argentina was -- you went to school in buenos aires. i'm old enough to him or when argentina was the merging market. can you fix up late? >> myself? >> what would you do? >> i think investors are waiting for a change in administration and what the u.s. government will do following the court decisions in the u.s.

of a wait andre see mode. a lot of investors are starting to build some opportunistic, long positions thinking that there is going to be a change of 2015.in >> if you're optimistic on emerging markets, then you've got to be optimistic on commodities as well, right? >> lower energy prices are fantastically great for india, to for turkey. in some places can make you look at inflation, for example, inflation is coming down, thank you to lower prices. currencysses like hard , if you look across different asset classes, you can make money betting against inflation

in emerging markets. >> the fed meets at 2:00 p.m. this afternoon. pablo goldberg of blackrock. >> by the way, with all due respect tonight at 5:00 p.m., and mark halperin, john heilemann by your host. ♪

>> this is bloomberg surveillance. i'm scarlet fu with brendan greeley and tom keene. it is time now for some company news. a bad year for pimco continues. the company has been trying to stay in -- stem the tide of prevention since losing bill gross. pimco is running a total of $6 billion in funds. are the new managers. the number two u.s. health insurer raised its profit forecast. earnings per share for the third quarter excluding one-time items came in at $2.32. analysts were looking at $2.26.

wellpoint is adding patient protection in the vertebral care act. -- in the affordable care act. $6.5 billion project called for two new skyscrapers and 15,000 more employees, but a plan ran into roadblocks over subsidies and purchase plans. >> joanne wilson is with us today, chief executive officer of gotham gal ventures. of has seen the value science, technology, engineering, and mathematics, boy things that should be girl things. it's the hot topic today. i love bill bennett's book. forget about the politics, that there's got to be a balance. describe the joanne wilson balance in education. >> stem is incredibly important. not only does every kid understand that, but that this is the future. and every school principal

understand their needs -- this is the future. and there needs to be a better curriculum in order for kids to tap into that. but i also think you should follow your passion. if you are not an engineering kit, don't go after engineering. >> and within that, within the balance of liberal arts education, we've all been through this racket. what is overemphasized right now , in trying to get smart kids to look at technology company? >> follow your passion. a liberal arts education is the best education you can get. it opens your mind to a variety of different areas and thought process that that you may not have gone down. and you might find yourself in the world of opera. to me, that is a healthy thing. me, also applying rigor to it. with all of the bc's coming -- the vc's coming to business,

what is the best resource in education? all of the kids that come into my office, i thought about where they went to grade school, but they are scrappy. i think it's part of who you are. we will talk about silicon valley here later. abouts distinct saying what you and your husband do in new york city versus venture capital deals in other geographies? >> we really care about the city. my husband started -- >> 1996. >> yes. >> way back, ancient history. >> yes, well, i chaired mouse, way back, really about wiring schools and creating mouse grabs so that the kids could be the i.t. people in the indeed -- individual schools. and my husband went and scope -- spoke to a group of principals

in brooklyn and they were all over him wanting the prescription them -- the curriculum. the new macy's. when you walk by macy's now, what do you think of all of the investment they are putting into that urban spot? >> i hope the people running it know what they are doing. >> what is the challenge? cap -- >> it's a huge challenge for large department stores. more and more people will start buying online, there has to be a reason to walk in a door. you have to understand who the customer is not only in your house, but outside your house. -- youink he aspirational e-mailed the new new york person. they want to go to macy's. -- make them want to go to macy's. >> futures are lower in the market right now, indicating a decline in the 10 year yield. there is also buying in bonds.

the euro-dollar to my little changed right now -- the euro-dollar, and little changed right now. at 2 p.m., the fed will announce whether they will do away with the last the -- the last bit of qe. this is bloomberg surveillance. i'm brendan greeley with scarlet fu and tom keene. there's a morbid joke in syria right now. you ask, where is syria? and the answer is, it is south of kobani. the islamic state has not yet reached their -- has not yet reached their brutal and intractable civil war. the ambassador joins us on set. thank you. >> thank you. >> was there a moment in the last three years where anyone outside of suri cruise have done something? could -- outside of syria have done something? when hillary12

clinton was the secretary and the tray is the secretary of defense, -- and david petraeus the secretary of defense, this would have been the moment. >> is there still opportunity? >> it is a bit late. not been done will take longer down. >> do you think it is still possible? >> it is only possible if at the same time you destroy isis. if isis is not destroyed, then there will be no state --for a more moderate solution. >> tell us about a to do list for the united states. europe pointed out that airstrikes have limited efficacy. that you have pointed out airstrikes have limited efficacy. andith boots on the ground neighbors with interest, what

comes to mind first is turkey. building an understanding with turkey. they have a vital interest in syria to play a more active role on the ground. that is number one. >> ambassador, in your writing, you go to the heart of the , the borders of the middle east. are they forever shattered? >> not necessarily. there is a large interest shared by many states in the region not to touch the borders, because of the domino. change thehat if you border of one or two states, the normal system might collapse. >> can israel find common ground with steadier abi on maintaining those borders? -- find common ground with saudi arabia on maintaining those borders? there are quite a few issues that create common interests between them. >> explain the domestic politics

now in israel toward iran. we enter we as november on that premise venture and -- that timeless tension between israel and iran? >> if israel led by the united states comes that -- comes out with a reasonable outcome that keeps him run away from the bomb , that it remains a potential further,tate, but not there will be agreement. if there is no agreement, then pressure will continue to build in israel. >> you have set down with representatives of the assad family in the past. is there any way out for them right now? cannot rebuild the syria they had before. there is no way they will take control of 100% of the territory. they will try to keep what they

they have. and if that is not an option, they will go to the mountains, to the coast, where they have already have a connection to lebanon. in their -- and they will try to iete an à la white -- alou state. >> you have written about serious pass as the cultural heart of the arab world. is that over? syria was the heart of arab nationalism. arab nationalism is in deep crisis. what isis and similar groups arabarabs and muslims is, is the past and islam is the future. >> ambassador, thank you for coming on this morning. >> giving us a much into

perspective. coming up, we discussed silicon alley with joann wilson. and we talk about how women in the tech world are faring. our twitter question of the day -- who is responsible for investing in the next generation? tweet us. ♪

>> this is bloomberg surveillance. the fed will release its policy statement today at 2:00, but chair yellen is not speaking to the press. one has warned that the central bank may spark financial contagion by changing their policy sooner than later. iel willll be -- nour be on with betty liu of the later. and betty joins us right now. he called it right during the financial crisis, the mortgage crisis. he's got a few opinions that i will outline for you. this is what you will likely hear from him when he comes on. he says, yes, there are questions about the credibility of when the fed goes ahead and raises interest rates. doubt, quantitative easing will end.

that seems to be the consensus all around. but the fed will take a while before they really say "mission accomplished." he also said the longer it takes qe endingo even -- and rising interest rates, there will be a bigger risk, the longer it takes, bigger risk in fueling an asset bubble and three inflation. >> that would be the big unknown. >> yes, and the other things he mentions are the downside risks are globally in the eurozone. but the biggest upside risks are also in the eurozone. whether they get their policy correct. attentionlly got my with the phrase upside risk in the eurozone. >> upside risks surprise is what i mean. is it a risk? no, it's not a risk. >> is there a chance with -- we are saying there is a chance that we will see them get it together. >> there is a chance. and hopefully for the global

economy there is a chance. >> basically, we are talking about mario draghi doing more rather than the governments of germany and france and italy actually coming through with any physical change. >> exactly. we will be talking about all of that. that is just a glance of what you will hear from him. by the way, he still sees equities -- and people think he is a big bear. in thel sees rallies equity market. his baseline scenario is for a 5% increase in stocks next year. >> tom, you're also talking to him on radio later. what would you ask him? >> i will talk to him about the london school of economics, one person there who has a gloomy view. his essay is a bombshell. he does not believe in the future of the european union are -- union. and he has a unique perspective and history there about what europe can do.

he is one of the five or six people in the world that can really fold in. where'd they go from conrad adenauer onto now, and where are they in 10 years? >> a wonderful lifestyle as well. lavish parties, go to doubles. with "in the loop" begins at 8:00 a.m. our twitter question for the day, tweet us full stop -- tweet us. ♪

>> good morning, everyone. program, thehe chief executive officer of wind, -- scott wine, will join us. let's get to company news. >> we start with facebook, shares are getting pummeled in the market trading, down as much as a percent. they projected worth quarter sales that missed the highest analyst estimates. facebook also projected that spending will increase by up to 70% next year. meantime, double add now make up 62% of sales.

heatile is turning up the on at&t and sprint is the so-called un-carrier. they are offering lower cost plans. profitst third-quarter was shares of t-mobile up a little more than 3% at yesterday's close. and nintendo beat analyst estimates. the japanese company was helped by demand for new games. a weaker yen also boosted the value of overseas sales. the forecast for the full year is unchanged. >> it is going to be a mario kart eight christmas at the greeley house. x o, really? really?-- >> o, >> yes, the kids are five and eight now. x but you have girls. big difference a to the family? >> videogames make a big difference to the kids. you have discussed this at length before. >> when my husband and i went to normandy with my son, and my

husband was very psyched to show everything that happened in normandy because he grew up in a military family. and my son has plane minecraft thousands of times and it was like, no, right here, right here. the important things for videogames. themirls, you cannot get off of this, they are building dollhouses and they understand how engineering works. i think there is a shift in the younger generation that will help girls be more interested. >> are you worried at all about the misogyny that is in some parts of gaming culture? buts definitely out there, i do believe in the future. that is why i'm in the business i'm in. and i do believe that as we have a shortage of tech professionals that will change as more kids graduate from college and actually have that history. >> very good. , the view that she

seen across silicon alley, it was just 23rd to the district. and it widened to the bridge overpass. 2015, silicon alley has truly become a global success. joann wilson is widely understood to be part of that. of course, she is out on twitter as the gotham gal. how did this happen? the media loves to make a big deal about it. i don't think they actually get the pixie dust that happened from 1996 to now. madeis the pixie dust that it happen? >> it is the next generation of the web. technology has changed everything. new york being the epicenter of the world in my humble opinion, fashion, media, health, banking, and you have all these people building products that make each of those industries better. they have one foot in the industry and one foot in the technology industry. >> a day to day, when you are

looking at deals and structure, when you look at the success of silicon alley, is about five to 10 years out as the future of the alpha city where there will six major five or hub's worldwide? places like new york echo >> -- like new york? >> i don't know about that. in ohio, there is a burgeoning group of people. you will see more and more people with money. investorsngel, local who understand they can change those industries. >> there is a major connection between what you see in ohio, austin, and other places. >> and other places. but then you have institutions like cornell launching the tech campus. it will make a big difference. >> does it make a big difference? these megaprojects, do you like those? >> some are great and some are not. it is interesting to see change and community and conversation.

thean, no different than three of you having these conversations today, i mean, that changes the dynamic. >> let's bring up this chart. brendan mentioned this earlier this morning. there is the improvement rate in new york. so much of it is mentioned in joann wilson's world. >> i'm curious about the idea you pointed out earlier. it's so hard to get people to pitch something unheard of to you. in silicon valley, you got young, rich, tech savvy people rich,ng toys for young, tech savvy people. will that be solved in a better way in ohio, or here? >> i hope so. in general, entrepreneurs, particularly women, build products to fill voids in their lives. versus someone who goes to school and said, i'm going to be an entrepreneur and we will sit around the table until we come around an idea. voids toldt different products. >> yes. >> a banker said to me and all

that wey off the record have completely underestimate how old people would use digital. the stereotype that we have in san francisco is not there. all over the country, everyone is aggressively going forward. >> can i ask how old people use digital? banking, with a vengeance in banking. that is what i've heard from two major ceo's. >> even contractors and real keeping on top of it in a way that their businesses are doing better. career, youyour face a lot of obstacles and dissemination. you worked in the retail industry as a young female professional. when you decided to opt out and take time off to take care of your kids and at some point you said, enough, i want to get back in the game. what sparked that came -- that change? at some point above a lack of flexibility got to you, but then

you went back in head first. of anhink he was more intellectual need than anything else. i've always loved business -- i think it was more of an intellectual need than anything else. i've always loved business. it was very easy to go home for a while and raise my kids and it was the greatest thing i ever did. and i got back in again and then i got off again and then i got back in again. i've been very lucky that i have figured out the flexibility of my life and been able to reinvent myself every time, which isn't so easy. intellectual perspective, sitting at home everyday and baking cookies, as much as it is fun for the short-term, i could not do it in the long term. >> is their flex ability in the vc world? can you dictate your own sect -- your own schedule? >> i think you can. i wish there were more women investors. it's definitely an issue. you are by yourself and there is no team. women love teams. look at the statistics, when there is a company that has

a woman vc in it, they actually end up doing better. companies that are gender diverse do better. >> it's a good thing to bring into the world. our twitter question, who was responsible for investing in the next generation? the first answer, parents. parents are responsible for investing in the next generation , not government or business. >> i'm trying as hard as i can. but brendan is tired from trying as well. all of these excesses and billionaires and companies must do more, voluntarily. >> voluntarily, that is the key. there is a code in there, this dog whistle, which is not through taxes, but through charity. >> how about this one. americans, if you love this country, jurors possibility to keep her strong. investment does that. if you love this country, it is jurors possibility to keep her strong. investment does that. so it is on all of us. >> the charitable contribution

of americans is an outrage. it's a disgrace. tithing, we are not even close. >> actually, americans are much more generous than most people think. >> the richer you are, the less likely you are to give. >> that is stunning. we want to include one last answer because it was so good. china, let the world be their problem for a change. we are done. >> america is tired. >> you think china could be a new hub for innovation? >> absolutely. >> have you seen indication of that? >> absolutely. i think china is ready for change because you have alibaba, all of these people are wealthy, social people who want to have a different life. >> joann wilson, thank you so much for joining us. founder of gotham gal, and vc extraordinaire. most of her investments are founded by women. >> it's a quiet screen.

waiting for the important fed meeting. look for our coverage at 2:00 p.m. this afternoon. >> bluebird surveillance on radio continues. tom will be speaking with no uriel ribbing he. ♪

>> good morning. i'm here live from bloomberg world headquarters. i'm betty liu.

the chairman of ruby need global globalcs -- rubini economics joins me. what does he think now of the recent market volatility we have seen and where are the biggest downsides? walmart going live today selling used video games, competing with the almighty game stop. they have tried before and they have failed. can they do it in time for the holiday shopping season? here is a look at our top stories. investors waiting to see what the fed does later today. and otheren policymakers wrapping up there today meeting -- their two day meeting.