>> from bloomberg world headquarters in new york, i'm mark crumpton. ," thes "bottom line intersection of business and economics with a main street perspective. ♪ to our viewers here in the united states and to those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines on this thursday. matt miller tells us that the world series ratings match the excitement of game seven between the royals and san francisco giants. julie hyman tracks new developments from department store giant sears.

and bloomberg's washington correspondent peter cook tells if republican control of the u.s. senate means gridlock or the road to compromise. first, let's get you right to the top stories we are following at this hour. the economy of the u.s. expanded more than forecast this quarter, capping the strongest six months and more than a decade. gdp rose at an annual rate of 3.5% in the third quarter. the numbers come one day after the fed's decision to end its unprecedented asset purchase program. >> i think the fed has to lead knowledge that there had to be some reason why they were ending the program, so they had to ignore knowledge that there has been some considerable and substantial improvement in the labor market. but that does not mean they are at their end goal. the had to acknowledge that economy is robust enough they can stop the program, but that does not mean raising interest rates next week because the economy is booming. it ain't.

look at the dow jones industrial average -- up 1.3%. dow.oint rise for the the s&p 500 is up .8% at 1998. the nasdaq composite index rising as well, up almost .5% at 4570. kox underi hic quarantine orders in maine after working with ebola patients in africa left her home for a defiant bike ride. she was followed by police cars and news trucks as she peddled for about an hour with her boyfriend. the governor of maine says he will seek legal authority to compel her to stay at home. she has shown no symptoms since she arrived at north liberty international airport six days ago. officials they at least four people are dead after a small plane reported losing engine power and crashed into a building at a kansas airport. at least five other people were taken to a hospital and for more

are unaccounted for after the midcontinent airport. officials say the pilot was the only one on the plane, and the people confirmed dead were found inside the building. boston is mourning the death of former mayor thomas menino. he was first elected in 1990 three, was the city's first italian-american mayor, and served in office for more than 20 years. mayor menino was diagnosed with advanced cancer in february 20 14 shortly after leaving office. he announced last week he was suspending treatment and a book tour so he could spend more time with his family and friends. thomas menino, the former mayor was 71 years of atlantic city's first republican mayor since 1990 faces the closing of four casino's so far this year -- trump plaza, caesars, showboat, atlantic city, and revel. that means the loss of almost 7000 jobs, and that number will rise if trump taj mahal fails, too. the city'sbout

gaming industry, the labor market, and the outlook. certainly, we would not put all our eggs in one basket with gaming. ofare at a point diversifying what we are doing in our city both in terms of tourism and not tourism and giving you and everyone else in philadelphia reason to come back to my city. at the top look stories we're following at this hour. giants wonncisco their third championship in five years last night. san francisco may have come at a big winner in a big game, but the series has been a loser in the battle for ratings. matt miller is here with a look at the numbers. how did the fall classic do this year? >> if it had not been for game seven, it would have been the lowest rated world series in all of history. if you look at world series ratings over the last 10 or 20 years, you see a pretty steady

decline. it is clear that this championship is really losing out to all of the other big sporting events. here are the ratings by game. you can see that we had some pretty load numbers. an average of about 12 .5 million viewers tuned in for the first six games, and even less -- 10 point 5 million, 10.7 tuned in for games three and four. because of other events, they lost billions of viewers. they always lose to the nfl, even though it is a regular-season game for football and a championship game for baseball. this is one of the problems that the incoming commissioner is going to have to deal with. >> also last night, too, because we are right in the middle of the opening week of the nba, too, so they lost some viewers to nba games as well. >> last night, they did pretty well. 15.2% rating. 38% of the folks -- little more than that in san francisco -- tuned in.

58% of the folks in kansas city tuned in to watch their royals and surely hope to win a championship there. unfortunately, they did not because bumgarner did so well on the mound, as he has done for all of the last three san francisco championships, but there were some positives for baseball. this was the first world series ever where there was a score of more than five runs in each of the five worst games, and it was also a really -- it was also really positive as far as young people tuning in. that has been a worry for him lb, that their demographic is getting older and young people do not watch. young people between 18 and 49 tuned in in five out of the first six games for more than any other show. >> was there a concern that maybe people who did not live in san francisco or kansas city just not care? you have major markets in san francisco versus a small market team in the midwest. .> there's a real concern

other sports -- i mean, football seems obvious. to watch.uch more fun hockey is beating it out as far as what kids would prefer to be watching on tv because the games are getting longer, and they are not scoring that much, but this was a different story. a lot of scoring in this world series, and when it leads up to game seven, people tend to tune in. >> bloomberg's matt miller with world series rating numbers. thank you so much. coming up, the health of the u.s. economy -- we look at what troll stronger than expected growth in the third quarter. stay with us. "bottom line" continues in just a moment. ♪

control of the u.s. congress, republicans need a net gain of six seats in the u.s. senate. it's not a slamdunk, but the odds are in their favor. if it happens, what we gop control really mean for the final two years of the obama administration? chief washington correspondent peter cook has been gauging into his crystal ball. prospects for bipartisan dealmaking? >> prospects are not good. early indicators from strategists in both parties on an outside capitol hill really believe we are looking at gridlock on steroids over the next teat of years if republicans take control of the senate, and that's not a lot, as you said. tina parties so split, conservative republicans so opposed to everything the president wants to get done, they are already starting to -- push back against any head of compromise. already pushing for votes to

repeal obama care, approved the keystone pipeline, and that could really poison the well early on in the next session of congress. plus, republicans see little indication right now the president wants to play ball with them. >> i think you will definitely histhe president breakout veto pen on republican priorities. i don't think he is going to want to change anything regarding his obama care bill. i'm sure on major energy issues, he will not want to change anything. i think you are going to look at trench warfare over the next couple of years. >> mitch mcconnell said in an interview this week that if he is majority leader, a full repeal of obamacare is not on his immediate to do list, given the likelihood of a presidential veto. he would instead target individual provisions. that sparked immediate criticism from conservatives within the republican party. that is a backdrop for what mitch mcconnell faces if he is indeed majority leader next

year. >> but some people still see opportunities for compromise, right? >> it's a narrow view, but that scenario would actually have the two sides urging their differences, cutting deals because it would help both sides politically going into the 2016 presidential race show they could get something done, and because they are not as far apart on certain issues, particularly some issues really important to the business community. at the top of the list -- business tax reform for the president, and publicans have both talked about lowering is this rates and using some of the corporate has parked overseas for infrastructure investment. trade deals as well because the biggest obstacle has been harry reid and congressional democrats, not the white house, and there is even talk on immigration because republican leaders -- maybe not the rank-and-file -- they know they have to get this issue off the table if they want to win the white house again in 2016, but it will be a heavy lift on any of those issues, but that's it there is an area of compromise, it some of those business issues that could be at the top of the list. >> thank you so much. coming up, more on the election.

trish regan will have a live interview with the president of afl-cio coming up of 4:40 five eastern time. remember again on election , the, with all due respect election all nighter beginning at 7:00 new york time here on bloomberg. the u.s. economic recovery may be gaining momentum. at anw at an annual rate of 3.5%, capping the strongest x months of growth in more than a decade. jp chief u.s. economist at morgan chase joins me now from his office here in new york. welcome back. thank you so much for your time. >> thanks. good to be here. >> is the strength we are seeing due in large measure to the big drop in gas prices? >> i don't think we've seen that quite yet. normally, you would expect to see that support consumer spending.

consumer spending in the third quarter was actually 1.8% growth, which is not particularly fast. if that does support the economy, which we strongly expect it will, we think that shows up more in october and november, consumer spending them is, so we think it will be a support. we just have not seen it yet. >> you wrote in a note today that the solid third-quarter numbers are actually borrowing a little gdp from the fourth quarter. what does this reallocation of growth say about the fundamentals of the u.s. economy? >> i don't think much. we did have a little bit of an upside surprise this morning in the gdp number. some of that was things like defense spending, which tends to be volatile quarter to quarter and does not tell you much about underlying business and consumer behavior. in terms of businesses and consumers, they did pretty much what we and other economists were expecting, and we think that momentum carries on into the fourth quarter, but i think what we're seeing in the third quarter -- as i said, borrowing

from growth in the fourth quarter. i think you kind of average out the third and fourth quarter, are bothlook like they running around 3% on average. >> why do consumer spending numbers continue to show weakness? >> that is a good question. i think the easiest answer is simply that wage growth has been weak. without income, there is not as much wherewithal to spend. pickup, whichages we think will happen is the labor market tightens here and the unemployment rate falls, but until that happened, we are probably seeing consumer spending continue to look little soft relative to historical averages. chief speaking with the u.s. economist at j.p. morgan chase. one of the biggest surprises was that 16% annualized increase in defense spending. that was the most since 2009, and it did help government spending increased at a 4.6% rate. what contributed to that spending surge? >> this is a vault -- very volatile period.

sometimes it's very strong, sometimes very weak, sometimes for reasons that are hard to pin down. we did see that occur in categories for things like nondurables, and not really in the big-ticket durable kind of jet fighters and aircraft carriers and that kind of stuff, so it may be a little bit related to the build up of tensions in the middle east and in the crimean, but i think at this stage, all we can say is that it is a volatile number, and you can probably expect it to come back down in the fourth quarter. >> let's talk about the fed for a moment. policymakers focused on data yesterday. was that the hawks on the fomc leading the discussion? >> it is interesting. the hawks kind of got their way because you did see that foster and fisher, two hocks that had been dissenting in the prior meeting, did not dissent yesterday. overall, what you saw in that statement was relative constancy in how the head -- how the fed is approaching things. they remain focused on the data

here at home, which is essentially what matters for their mandate of full employment and price ability, and they are not getting to, i think, responsive to market moves up in that, so i thought respect, it does seem a little hawkish, i guess, compared to what we have been expecting to see. i think there is a perception janet yellen will be overly sensitive to minor growth or inflation disappointments, and we saw, i think, instead, what looks like a pretty steady hand yesterday. >> speaking of statements, the fed kept its considerable time guidance language -- they kept that at least on interest rates. why has this phrase been used so repeatedly? what message did it send to the markets? >> this is, as you know, a very hotly debated phrase. even some in the center of the fomc have issues with the perceived promise it may be giving to the markets -- keep rates low for six months or something like that. they had been keeping it in the statement in part just -- it seems like there is some caution

and hesitancy about taking it out for fear that the market may rush to over interpret that as meaning imminent rate hikes. what we saw yesterday was they kept it in but watered it down by saying it will be a considerable time, but if things get better or worse, you know, all bets are off. i think that really watered down the meaning of the language. >> could i ask you quickly in 10 seconds -- is the era of purchases and large-scale assets over? >> for now it is. >> chief u.s. economist at j.p. morgan chase. always good to talk to you. thank you. >> likewise. >> a little later, a topline boeing executive weighs in on that orbital sciences rocket that exploded right after launch. we continue in a moment. ♪

inspired by halloween, our julie hyman is looking at the spookiest stories and corporate america. you have a lot to pick from, don't you? from a balance sheet respect. this hour, we focused on sears, which has been called out as a near dead retailer for quite a while now. that's an understatement. the company got a lifeline, though. >> the company has been getting very a slides of financing from its owner, and now, it is getting yet another. the company is doing a rights offering, and eddie lambert is going to be one of the major subscribers to it. once all of this is said and done, he is going to be

accounting for about 48.5% of once this is all finished. it's a little bit of an unusual rights offering, and that is because it is partly in bonds, which will cost subscribers $500 a piece. they pay out 8%, and then there's also an option to buy about $28, which is below where they are now, so that would be, at least the erratically, attractive for them. the effect of all of this is that it raises more money for sears to keep going for a little while longer and also helps lambert consolidate his control and potentially take more advantage of the real estate of the company, which is something that has been talked about for a while. >> when you say a little while longer, what are we talking about? >> i have seen anywhere from six months to 12 months coming from analysts, that this buys them a couple of quarters, gets sears

to the holiday season, gets product in the stores, such as they are and such as it is, for people to go in and buy, but if you look at the track record of the company and the operating losses that it has seen, particularly at the domestic units, quarter after quarter after quarter, you are looking at 30 quarters of declining sales at sears, and you can also seen inlosses they have operating income, again, at the sears to mystic is this. there is a write down a couple of years ago that caused an even bigger loss for the company. -- at the sears domestic business. sears canada is being spun off, again, in order to try to raise money for the core company. >> just over a week ago, sears said it was going to close one of the stores outside the galleria mall outside of pittsburgh. >> it has definitely been gradually closing off stores. at the same time, it also just announced it is going to be leasing out space in some of its stores to a u.k. retailer,

another way to try to buy some it some money. >> thank you so much. 26 minutes past the hour, bloomberg television is "on the markets." good afternoon. >> very good afternoon to you. we've got some green on the board. you can see it right there. triple digit gains for the dow. we are up about 212 points after data showed the u.s. economy expanded more than forecast. i want to bring your attention to what happened earlier, 15 or 20 minutes ago. the new york stock exchange and the new york stock exchange markets appeared -- experienced issue involving publishing. according to the new york stock exchange, the issue was resolved in about 10 minutes or so, but it did have some impact on some stocks. i want to show you one in particular, united health services. you can see right there it did .it and intraday low

i spoke to a traitor on the floor at the new york stock exchange, and he told me that this was uncharted territory right there. we'll be on the markets again in 30 minutes. stay right there. "bottom line" again in two. ♪

>> welcome back to the second half-hour of "bottom line." .hanks for staying with us sequestration and tricking defense dollars pose a challenge to major contractors like boeing. could the election altar that outlook? peter cook is back now with a view from one of the biggest players, boeing. the second biggest defense contractor in the u.s. boeing's defense and the companyt --

number two in terms of defense contractors in this nation. aircraft flying over iraq and syria right now. some republicans are promising to bolster the defense budget and turn up sequestration. boeing is not banking on big changes. can't believe it's going to go one direction or the other. stays come as much as we prefer the cap skim off, we have to be the most efficient we can in a difficult and trying environment going forward. >> you have to anticipate the budget outlook going 40's it is as challenging as it has been the last few years or so. >> we have to prepare for the downside and we will be that much more competitive should budget start to turn in a different direction. for 2016,e changes another $35 million in automatic defense cuts next year.

he does not expect the election to change that overnight. he doesn't think the threat posed by the islamic state could change the budget outlook overtime. >> boeing is also a big player in the space business these days. >> a very big player. an important contract. they find themselves in growing competition with elon musk's spacex. they won multibillion-dollar nasa contracts to fly astronauts to the international space station with boeing getting the bigger chunk. he says the company is ready for the head-to-head competition with elon musk. >> in a strange way, elon musk and spacex and other competitors , jeff bezos and what he is doing, has really entere energized the industry and there is a reminder that there is competition out there with disrupting innovations. it's a challenge to us as we head to our 100 anniversary, to

be more at gile and continue -- be more agile and continue. >> elon musk has criticized you another players. he says we can do this cheaper. >> we welcome the competition. our focus is inward, heads down. we are going to surprise some people with what we deliver. this based business is still a risky business. disaster for normal sciences rocket -- for an orbital sciences rocket. the companies vying for a piece of that cargo business as well. bad news for orbital sciences. >> peter cook, thank you. nasa's shuttle fleet fluids last mission in 2011. one nasa vehicle is coming out of retirement . one of the world's largest land vehicles.

>> coming up, nurse hickox takes her quarantined the finds out for a spin today. it started a debate among politicians, scientists and the general public. ♪

ofin the latest edition bloomberg businessweek, apple's ceo tim cook writes "i'm proud to be gay." -- here is anked excerpt -- be sure to check out the latest edition of bloomberg businessweek with the cover story "on the global economy."

you can read it on the go with our new business we cap. -- business week cap. -- business week at. app.siness week voted to raise the points.k by .25 the world's largest iron ore producer posting a surprise loss after a week of brazilian -- falling commodities prices push down sales to the lowest since 2010. iron ore prices have fallen by more than half since the 2011 deal.

that is your latin america report for this thursday. kaci hickox arrived at newark airport last week after helping care for ebola patients in sierra leone. she has gone back to maine where she lives. this morning, she was seen taking a bike ride with her boyfriend. for more on the debate of quarantine's, trish regan is here with me now. we are having a debate on quarantine. >> what side are you on? >> it doesn't really matter. there, i'm a over journalist covering this story and i come in contact with people who have this, i can tell you absolutely i would feel like it was my obligation to self quarantine myself for the 21 days. i have children and you have children. we would never want to expose family members to this.

backituation when she came into this country was not a good one. we certainly should be treating all of our health care workers with respect and care. , i just can't help but -- if i were in her situation, i would want to make sure that i was absolutely 100% ok before i endangered anyone. >> what is the other side of this argument? , here you have politicians getting in the way. you have chris christie and governor cuomo and other people saying this is what we are doing for the public good. secure.kes people feel we have president obama saying the exact same thing. we are looking at signs and fax.

-- science and facts. people are very worried. people say the flu was so much easier to get. chances are, if you get the flu -- i know people die from the flu every year. you are a flu and decently healthy person, you have a good shot at recovery. with this disease, people see it very much as a death sentence. , incan be perfectly healthy the prime of your life and if you get this, it's going to be very, very difficult to recover from it. that is one of the reasons why people have gotten so scared. >> this is one of the topics he will discuss-- wants to make sure people are being properly treated. he will be speaking out on the need for better workplace safety

workerster hospital contracted ebola. we will be looking at midterm elections. he will be joining me. >> trish regan. thank you so much. the halloween pop-up store business. how one retailers taking advantage of an industry that is worth billions. ♪

>> we have breaking news. >> it's a critical moment for one of the first american cities to file for bankruptcy. located an hour east of san francisco, has one quarter of bankruptcy protection. plans, at onen

--nt, the bankruptcy righ protecting public worker pensions. this is a case that was watched by other california cities. the city was looking to reorganize $1 billion in long-term debt. stockton will approve that city's plan to exit bankruptcy. this has been a city that has been marred by thousands of foreclosures and facing a lot of loss in terms of property taxes as well. much.nk you so the national retail federation picks americans will spend $7.4 billion on halloween this year. ricky's nyc pioneered the concept of halloween pop-up stores. the company specializes in professional hair care products, skin care, makeup and seasonal merchandise. the ceo joins me in studio. you are wearing an orange suit.

the pop-up halloween business, why is it so popular and how did the model gain credibility? >> great question. the pop-up business, i don't know when it started. did pioneering in the city, here. doing opportunistic business. unoccupied, to make a couple of dollars, they were striking up ao conversation and going in and taking hold of halloween season. generate some cash flow for the business. it was good for everybody all around. >> it was not an easy sell. you going to a store and say i want to lease the space for one month. no, we do one year, two year. >> it was often based on relationships. and have ae-to-face

conversation and they believe the company is financially healthy. it is worth the chance. it became license agreements. we license the space. handshaketed out as a deal between people is now formalized into a very global business. >> how does real estate factor into this? >> it is used as a testing ground. we used the temporary stores as a chance to go into neighborhoods that were not servicing customers. >> you are always on the lookout. >> absolutely. year-round. >> how far in advance does the start? >> i look all year round. 365 days a year. >> you also have at least a workmanlike gauge of how the housing market or retail is doing. >> we have great opportunity this year. people were interested in having

us test out their spaces. much more so than last year. something, iauge would say there is a reasonable amount of vacancy and a lot of deals to be made. maybe it's a little soft. >> the owners of these retail spaces, have they come to understand that even a short-term license agreement or lease can pay dividends for them? >> absolutely. i would like nothing more than to do so well in the space where i would have to sign a 10 year lease. that would be my ultimate goal. to get into a temporary store, knocked the ball out of the park and stay for 10 years. >> you will sometimes lease the space for a month or two months. then you go right back in next year. >> that happens many times. it's one of our best stores. we are in talks with staying on a yearly basis as a permanent

halloween store. a lot of the costumes are comic superheroes. what happens if the movie bombs at the box office? have a lot of outlets where we can sell and liquidate. we have partners in the business. that does happen. sometimes it works in other ways. i don't know how the teenage me ninja turtle movie did. the costumes are phenomenal. >> what is the average price? >> for a child, $19-20 nine dollars range. , $39-60 nine dollars. >> do you get dressed up? >> last year, i was walter white from breaking bad. timely because the series ended around halloween.

>> you wore the suit, you obviously enjoy the holiday. do you have to have that childlike quality to do some direct this? >> you just want to have fun. i like watching people smile. i like watching them turn their heads and get excited. >> you are married and have a family. what does your family say? >> they love it. they participate. my son is six. he sits and he stocks the shelves. he gives me pointers on what hot costumes are coming up. >> website? >> ricky's nyc.com. of ricky's nyc joining us in studio. stay with us. another check of the market movers is on the other side of the break. ♪

>> that is it for this edition of "bottom line." a mark crumpton. thank you so much for joining us. on the markets is next. street smart at the top of the hour. i will see you tomorrow. ♪ >> it is 56 past the hour.

bloomberg television is on the markets. but get you caught up. this is what the pictures looking like so far. we have gains across the board. almost a three digit gain for the dow. treasuries, a very different story. all of this on speculation that the federal reserve will raise interest rates next year while inflation remains restrained. below 1200 onng positive gdp news. keeping and i on financial. fund saw the worst outflow of money since 2009. 's sectore for today report -- what happened to the

xls? >> the biggest outsell of funds since 2009. it has about $17.5 billion in funds. the outflow was about one billion. we are trying to figure out what's going on. it's very unusual for this to happen in the span of a week. it can happen over a month. >> what prompted the dramatic outflows? people don't withdraw putr money entirely, but their money in a different sector. this has to do with the fact that people are more negative about the financial sector than we have seen in the past and more positive about cash. the earnings are good, but not great. we are kind of thinking, ok, what is going to happen next?

going into the fed meeting, people are dovish. volatility has been very high. it is turning into bad volatility. >> with interest rates up on the horizon, what does that mean for how this etf is going to play for the rest of this year? >> we think it's going to go pretty well. the fed's announcement was more hawkish than anyone expected. the gdp numbers look really good. we think the markets are going to stabilize. >> when you look at some of the liquidity issues with getting -- what do we know? in terms of getting access to this etf. i think this has to do with the capital market. volatility has been high.

people make it cut of money from trading gains. people have been speculating that volatility is bad. >> we sell that huge spike. we have now returned to better levels. >> absolutely. the general consensus is that throughout the rest of the year, things look like they are stabilizing. that is going to both really well for the banks. -- boat really well for the banks. ode really well for the banks. ♪

>> welcome to the most important hour of the session. 60 minutes to go until the close. i'm trish regan. this is "street smart." the u.s. economy is growing faster than estimated. counting down earnings. sounding off on lebron james, adam silver and steve ballmer. we have it. i want to take a look at the top stories we are watching ahead of the close. a nice rally underway