bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line." the intersection of business economics with a mainstream perspective. to our viewers here in the united states and those of you joining us around the world, welcome. we have full coverage of the stocks and the stories making headlines on this thursday. humbert's chief washington correspondent peter cook is on capitol hill with details on the senate leadership elections. shelby holliday looks at toymaker hasbro's bid to buy dreamworks. first, let's get right to the

top stories we have been following. president obama urges a leader to hold elections next year. the president said he had a candidate discussion with president obama, saying his country needed more time to implement reforms. obama is there to attend the association of southeast asian nations annual summit. past six years, we have made great strides elevating and banding the partnership. but i think we all agree we could do more. that is why the united states is committed to strengthening both as an institution and as a community of nations bound by our shared interests and values. >> president obama will meet with an opposition leader on friday. alibaba is planning its first u.s. on sale. to raise $8king million. the company raised 25 oh in

dollars from its initial public offering. looking for capital to stave off what it calls a default next month. a defense spending and fewer firearm purchases by consumers. the weapons maker has been struggling to service a $308 million debt after losing u.s. defense contracts. amazon resolved a dispute over at ebay prices and -- you book prices. amazon will prominently feature those books in promotions. orders earlieree this year for some of their books, including the silkworm, a new novel by j.k. rowling. top is a look at the stories we're following this hour. republicans officially tapped mitch mcconnell to serve as their senate majority leader next year. as they head into the minority,

democrats are adding a new face to their leadership. peter cook has more from capitol hill. support for mitch mcconnell was unanimous. >> a huge surprise that mitch mcconnell will be the next majority leader of the senate? we knew this would happen. the only drama in this meeting -- whether or not he would get the full support of every republican senator. ted cruz threatened a few days ago that maybe would not support mitch mcconnell. at the end of this meeting, we learned it was unanimous and supported by an act of omission. no major changes within the republican leadership team on capitol hill starting next year. the one change that is in there, roger from mississippi will take over as the head of the national senate campaign committee. they are responsible for selecting senators in the future. that will be his job.

keep that republican majority senate in 2016. much of this focus on what the innda would be next year 2015. the big issue hanging over this for republicans is the president's threat of executive order. well over the next two years. >> a surprise democrats are sticking with wieters? >> they have their own leadership election. the same time harry reid once again will be the minority leader. it was not unanimous there. two democraticst senators withholding their support for harry reid. they suggested we should take the results but it is not happening. with reid has a new face him, elizabeth warren, joining as a strategic advisor to the democrats policy committee. she will effectively be a laissez -- liaison.

>> i believe in what the democrats are fighting for. is doing very well and ceos are bringing them money and smart. families all across the country are struggling. we have to make the government work for the american people and that is what we are here to fight for. i am grateful to the leader, i am grateful to the caucus, for giving me a chance to be a part. >> he does real reasons for elizabeth warren joining the leadership team, she is incredibly popular among democrats. harry reid would like to have that. as a member of the leadership, also hard for her to go rogue on democrats and angle outside of the democratic leadership on policy positions. two goals for harry reid and that one fell. on in the other chamber of the house of representatives question mark >> leadership elections as well.

we expect john boehner to be the speaker. we will look their very carefully to see if he has any revels in his conference on the republican side. some indication of what kind of trouble he could have next year, but most of the other leadership positions over the house republicans and democrats, largely some changes in particular positions, but not the top job. >> peter cook joining us from capitol hill. peter, thank you. congress must also approve additional funding for the war against islamic state extremist spirit president obama asked for $1.6 billion to finance additional u.s. military personnel to train, equip, and assist iraqi and kurdish forces. william cohen joins me from washington and is now chairman and eeo of the cohen group, which provides for tj device to her but clients. welcome back. good to see you. chiefs chairman

general martins dempsey told the house armed services committee that the u.s. would consider sending a modest number of u.s. troops to iraq to help in the fight against islamic militants. is that a start of the slippery slope? >> it is a statement of reality. this has been avoided by the administration. when the president said, no etc., i think everyone at the pentagon and believehave talked to there has to be some element of combat troops on the ground if this were to be successful, if only to make sure the kinds of strikes called in were headed by us and not by iraqi forces which are well trained to do that. i think this was almost inevitable. there has to be some element of combat force on the ground if this is going to be successful. and we have to define what success means. the notion we can degrade isis,

that is a reality. we can do that. the notion we can destroy it is not realistic. isis, like other terrorist elements, it is sort of like mercury on a mirror. you push down on it and it goes elsewhere. we can continue to degrade. destroying it i think is a mission impossible over the long-term. >> when a secretary of defense tells congress like chuck hagel did today that the american people must be prepared for a long and difficult struggle against the enemy, does that type of openness embolden? >> no, i think it prepares the american people for saying, much like what john talked about, the war and struggle against communism, this is a long twilight struggle against terrorism. we have to understand it will not be over tomorrow. i will not be able to identify under all circumstances. there is no endpoint you can point you to say it is over.

this is really trying to prepare the american people for the world of disorder that we are living in right now and are likely to face for the next several decades, to say the least. >> what are the cost associated with planning and executing a strategy against an enemy who, in terms of timeline, has had a head start? >> it depends how you identify what the requirements are. this is where one of the first things president obama, when he returns to washington, he should and republican senators house members and democrats as well to sit down and say, the first thing we do is repeal the notion of a sequestered, across-the-board cuts. defense can be cut like any other budget, but you need to make reductions consistent with your strategic goals. right now, it is just across the board and the same thing applies to the civilian budget. we're talking about people at a time cuts have been made to all of our house programs. when you have nih being cut

without regards to what the impact will be, you can see sequester is something that is contrary to american security interests. i would repeal that and say, we can make cuts, but let's do it smart and make sure use a and not a butcher's on this thing and make these kinds of herbal cuts. >> i'm speaking with the former u.s. defense secretary, william cohen. let's switch gears. nato and the pentagon accusing russia of sending troops and sanctions to eastern ukraine. russia calling these allegations groundless. that was saidon today on the verge of spinning out of control? >> i think we look at what take it withnd we a grain of salt. we have seen what russians have done. been waging what i would call a hybrid form of welfare. namely, they're are undermining the security of ukraine.

they have annexed crimea and they are doing so i'm sending russian special forces units them asaine, masking somehow local insurgents, moving equipment in. they took down a civilian aircraft. no one was able to claim responsibility or try to. they prevented any kind of investigation into who was responsible for killing all of those civilians. it is clear to me what russia is doing is trying to undermine and destabilize the ukraine. doing so by sending forces there to keep ukrainians on their heels and affecting the economic interests of the ukraine as well. >> we have about a minute left. pressure's defense minister said today russia will send long-range strategic bombers on regular missions around the world, from the arctic ocean to the gulf of mexico. should the west view this as a provocation? perhaps not.tself,

taken together with the kind of activity we are seeing now in the you rain, and we are eating russia has now declared that the european union and the united states are enemies of both russia and china. if you take those long-range bombers, in the contents of what is being said, it is pretty provocative. toy like we have a right have an aircraft in international waters, so we have to accept that and we have to send a message back to the russians. they cannot continue to wage this hybrid warfare without consequence or that his economic tensions and also means we have to consider putting, on a permanent basis, increased vote. on the baltics and , romania, those countries really at risk of russia trying to destabilize them as well. that is something we have to look at aggressively. andilliam cohen, chairman

ceo of the cowen group, joining us from washington. always a privilege to have you on the broadcast. thank you for your time. coming up, we continue the weeklong look at risk. we look at how one company is joining the fight in the next generation of cyberattacks. "bottom line" continues in a moment. ♪

>> welcome back. we have breaking news this hour

from dow chemical. let's go to julie hyman with the details. >> activist investor dan loeb is increasing rationing up the pressure to some degree on dow chemical. he owns a 1.87% stake in the company as of the last filing. he has held meetings with the ceo and has tried to increase pressure on him to improve returns on dow. today, he is taking his campaign a little more public and , which has website video that details what he says are dow's recent failings. also, an advisory board was created of various folks it says it will draw on for advice as to how to improve the dow's returns. they include steve miller, the therman of aig, as well as chairman, ceo, and president of foster wheeler from 2001-2011.

the dow has already been investing various units in part because of the pressure and just yesterday, agreed to selling a unit for $1.22 billion and also announced more measures to improve shareholder returns amid the pressure. it looks like that was not enough, and loeb is not taking the latest measures. >> julie hyman with breaking news at this hour. thank you. all week, we have been examining the theme of risk in the economy. today's focus is stopping the next generation of cyberattacks. security platforms provides real-time -- the chief operating officer joins me now from washington. welcome to "bottom line" and thank you for your time today. >> thank you for having me. >> in terms of real-time, does it mean just that? that the second this is happening, protocols are in place to put up

a defense against this? >> real-time to me means you respond fast enough that you are detecting compromises and you can go from an alert that matters to a six. before people broke into your network with on authorized access can have any impact negative to your organization. instead of compiling alert after alert, we focus on, these are the alerts that matter and these are actual compromises. let's go fix those things. is one of theity main challenges corporations and governments face. it is like a disaster happening in slow motion. what is being done to counter that threat, to stay one step ahead of the cyber criminals? >> i have been involved in responding to computer security issues for 15 years. a ton of things we are doing. one of the things we are trying to do is make sure if a company has had a breach, they can report certain things and other people can get threat

intelligence and get smarter. company wase, if a breached, no one learned what happened and no one got the details to say, let's prevent that same attack from working on us. we will get the law in place sunday, and we are all raising the watermark with standard legislation of regulations and products we are adopting. a you recently released report, a window into russia's cyber espionage operations. do you believe -- you believe the attacks were state sponsored? >> it is a group we have had -- we have been able to track for several years. whenever you have had seven years of insight into the behavior of a group, you can observe what companies they're breaking into. what sorts of things do they take and what sorts of things do they do? a summit targeting and the longevity of the attacks we have seen, it is highly probable it is in fact a nationstate or it

is overlooked by the nation doing this. let's put it this way. threat actors in the united states, they get caught, they get arrested. in other countries, it is obviously being condoned. >> how fast is the danger to the cyber landscape escalating, and is the united states caught in the middle? >> the united states has the currency on the internet. if you could get u.s. credit cards, that is what people want. that is the holy grail of being able to fraud julie by things. right now, based on the geopolitical situations in the world, you're seeing chinese cyber asked the notch against world organizations, a scale of compromises out of retailers that is almost be will during how widespread it is, and i believe we are getting sucker punched in cyberspace right now in the united states because basically, the save -- the safe harbors. there are no risks or repercussions if you hack out of

china make now. >> in the last 30 seconds, should some of this stuff be mandatory or voluntary? should the federal government take the lead? >> it is complex, because one company, what he needs to do in one industry, it is different than other companies. they will have different risk profiles and different requirements. the bottom line is what people are doing is they are starting to address cyber security. about a decade ago, we worried about, how to protect our networks and then we went into, how to detect when something bad happens. we are finally at the stage where we evolved cyber security too, if something bad does happen, how do we quash it? >> achieve operating officer joining us from washington. thank you for your time. we appreciate it. stay with us. "bottom line" continues in a moment. ♪

>> bloomberg television is on the markets. less take a look at wall street on this thursday. we are seeing market boards right now, the s&p and dow industrials and the nasdaq are all in negative territory. the s&p right now is down one third of 1% at 2031. the dow jones industrial average is down fractionally, and the nasdaq composite index, it is down right now, just over seven points at 4467. small caps have been dropping today as well. let's look at some of the movers first. shares of yelp falling by the most in month -- in a month and a half. facebook's places directory lets you search for user generated

locations, restaurants, hotels, and other attractions. shares surging to a new all-time high today. the fast food chicken chain topped wall street estimates and raised its full-year profit forecast. ♪

>> welcome back to the second half-hour of "bottom line" on bloomberg television. i'm mark crumpton. thanks for staying with us. we are taking a look at the airline industry. so far this year, the airlines index is up more than 58%, boosted by lower fuel prices and rising revenues. joining me from new york within outlook, an analyst for s&p. welcome back. good to see you again. america, the airline backed by richard branson offering shares in its ipo today

is in at -- even as airline stocks reach a 13 year high this week. the industry overall enjoyed a tailwind this year? >> it is long-term. a trend where airlines have been good at cutting capacity and have regained pricing power and so revenues have been rising and over the last month or so, one of their largest cost to fuel has been dropping sharply. there has been a -- an imbalance on supply and demand. gains madeed about in pricing power. how does that differ from recent years when airlines would curb the number of available seats so they could charge more? question past cycles, airlines behaved in a different way. when there was a dip in demand, they would not cut capacity. this time around, after a large scale bankruptcy, re-mergers, what they have done is they decided to cut capacity any time there is weakness in demand. that has allowed for them to

maintain pricing power and maintain profits. >> we are talking about over the last nine or 10 years, there have been so many bankruptcies and so many reorganizations, is this just a cyclical thing? is it the airline's time? >> there will always be booms and busts. i think the industry has right sized itself in terms of capacity and a number of competitors. there is a difference in behavior and airline executives this time around where they are focus on long-term sustainable profits, return on investor capital. they're looking for profits in the future. >> they had to do this or they would not survive? >> that is certainly true. they have probably seen the light that you have to have a return to your shareholders putting this capital into the country in order to keep the stock prices where you want them to be. >> left off the oil. heading for the first annual

decline since 2008, average ticket prices continue to climb. what is the rationale for higher affairs of oil prices? do airlines have no incentive question mark >> when fares are low and airlines are losing money, passengers do not voluntarily say we will pay more so you can make profit. that is not how supply and demand works in the country. in anes have low capacity time when demand is strong. there's no reason for them to lower affairs. they will really be able to reap the benefits and a lot of lower costs will find their way. >> is that the thinking why airlines will not get rid of fuel surcharges as well? i feel surcharges should come down over time. it is a situation where there is a lag it's clean where they take place and when they recoup those costs. they will be reluctant to lower them but if oil prices stay where they are now, they will have to lower fuel charges. >> i am with an airline analyst

for s&p. which airline seems to be getting the most out of these right now? >> we are positive about the entire sector. we have strong buys on every major u.s. carrier right now. one we would like to highlight is delta airlines. refinery and it is reaping the benefit of spread between oil and jet fuel prices. doing well for that as well. >> it seems like up until a few weeks ago, passengers were concerned the ebola virus could make its way through the united states through its travel. how were they able to clear that turbulence and find their way through the fear being spread and to some extent by us in the media? >> there was a lot of fear. if you were an investor at that time, you were probably afraid of what happened in stock prices but it turned out to be an entry point. weredc and u.s. hospitals very good in quarantining that

and as of right now, there is no legal in the united states. ebola is something really hard to catch. there was a lot of fear because of evil and as it turns out, it has not been born in fact. >> holiday travel season will kick off soon. what do you expect? >> i expect a nice holiday season. aligned withell demand. consumers feel a little better this time around. low oil prices are helping them at the pump. they will have more money at their pocket. consumer confidence is at a high. it is expected there will be strong demand this year. we think the airline will do quite well in this quarter. >> an airline analyst from s&p joining us in his office here at thank you. always a pleasure. tomorrow, daylong coverage of the bloomberg year ahead 2015 conference. business leaders will gather in washington to discuss the

biggest economic and industry issues that will be on every ceo's agenda in 2015. the year ahead is all day tomorrow. talks is set to be in with dreamworks animation and dreamworks is asking for a hefty premium. why would hasbro pay up for a struggling movie studio? that answer when we continue in just a moment. ♪

>> a reminder. there are multiple ways to watch bloomberg television. we are on the web at bloomberg.com, on your mobile and amazonle tv, fire tv. welcome back to "bottom line." i mark crumpton in new york. it is -- time for today's latin america report. insider trading charges next week. it is after he lost in the field for a change in jurisdiction. he was once the richest man in

brazil. his banking accounts remained frozen. 's lawyers said his client is innocent. a problem tracking fans. only 15,000 people purchased tickets to watch portugal play argentina. organizers in manchester say they need to sell its 45,000 seats for the exhibition game. he is the reigning world player of the year and used to play for world manchester united. is your latin america report for this thursday. hasbro is reportedly in talks to acquire dreamworks, which would give the toymaker a bigger foothold in entertainment. but it would be paying a big premium for the company. shelby holliday joins me now in studio. why would hasbro want to buy a struggling movie studio? senses story might make

because we have a toymaker who wants to sell more movies and a moviemaker desperate to sell more toys. forces ando can join do it successfully, they may be able to diversify revenue and find more success. guess who is really good at that. disney has done a tremendous job at practically mastered the art of releasing big hit movies and selling tons of products surrounding them. one can assume that is the goal with the deal. >> if the deal goes through, what can we expect from the new company? >> on the dreamworks side, this would be great. dreamworks right now relies on feature phones heavily. about 70% of their revenue comes from movies and the movies are hit and miss their they have been trying to diversify and trying to sell more consumer products. hasbro is in a great position to help them. hasbro investors do not seem as optimistic. that is concerning

investors is hasbro only death already has great deals with disney toys. to sell frozen, and some of those big franchise toys. their ability to renew the contracts in the future may be up in the air if they do in fact have a deal with dreamworks. >> you were at the dreamworks event here and what with the atmosphere and what was the mood like? >> what they are doing is setting up these small santa rides. experienceugh a huge at the end, you can buy dreamworks products. interesting idea, but it is not amazing by any standards. it is definitely not like going to disney world. they have shrek. shrek is old. last movie was five years ago. they're trying to push old man track on these little kids and trying to sell shrek tronics and madagascar and penguins. it felt like they were klein at

any kind of chance to sell a toy. about, attalking least in the short term, are the challenges huge for this? >> is huge. have is successful, as we seen with disney, if you can release this and merchandise, which is a great way to diversify, the opportunity is huge and the risk might be big as well. >> is destiny has become the template. >> it is the model for the industry. >> shelby joins me in the studio. thank you. up next, trish regan joins me for a preview of what is next at the top of the hour, including how the u.s. senate runoff election in louisiana is taking center stage in the debate over the keystone xl pipeline. we continue in a moment here at -- in a moment. ♪

>> in the week the hoverboards came a step closer to reality, another batch of the future -- is almost realized. the flying car. >> is it a bird, a plane? no, a car. just not in the conventional sense. it is the closest anyone has

come to making a vehicle made for road and sky. .t runs on natural it is about the same length of a luxury saloon, so you can park it on the street and hit top road speeds of 150 miles an hour, so it is no slouch. in the air, there is a range of 430 miles. did i mention it can fly? traffic jams could still be a problem. flying -- they need at least 200 meters of clear road to take off. regulators may stop the car from getting airborne in the u.s. and europe. the prototype could not fly in austria this week due to aviation rules. identifiedd it china, australia, and the middle east as potential first markets. can still only imagine owning the prototype, designers hope to start them in the next couple of years. expected is just over

$280,000. election runoff is coming to capitol hill. republicans and democrats are scheduling votes on the keystone pipeline. trish regan joins me now with the latest on the pipeline politics. who knew politics would be involved in keystone? >> this has become apolitical football. mary lander is in a fight for her seat in louisiana. she is moving forward, a democrat moving forward to schedule a vote in the senate. we anticipate we will have a vote in the house tomorrow. this has been a political issue. there are a lot of questions as to what might happen next. assuming this happens in the house, will they have votes in the senate? if it does get through in the senate, what will the president then do? don't forget he vetoed this back in 2012. you have seen a groundswell of support among a lot of people in states that would benefit from this. they would like to see those jobs coming to this country and the benefits this would bring in

terms of our own energy independence. we will talk about this coming up on street smart. a representative will be joining me to talk about the house vote tomorrow. we have also got major m&a news to talk about. dreamworks animation. and warren buffett is making a big bet on batteries. is agreeing.haway i will get some insight from a team of expert m&a folks. we have a whole lot coming up, all that and more at the top of the hour. >> asked to keystone for a minute. for senator landrieu, the political calculus is obvious. she will support this and not a lot democrats are. does she feel her vote might give her the ability to sway some democrats to support the pipeline? issues she hasig

confronted is there has not been a lot of support in the louisiana for the president. this is an example for her to show her constituency, that she is not just one with him, and that she has a mind of her own and is thinking outside the party box, if you would. otherare not a lot of democrats out there that might be willing to consider a similar set of circumstances, only given what we had saw the for with midterms. you have seen the country has grown dissatisfied with the president in many ways. that might be something she is able to touch on in terms of recruiting other democrats. continuing along the road of political calculus, even if this passes both chambers, the president can still veto it and if he does, it could take two thirds in both houses. those votes are not there. >> that is the big question. would he veto it? no one is entirely certain of

that, given there has been an increase in voter support, given that there is a push for america's energy renaissance, given that we want to be as energy independent as we can, you take all of that and contrasted with environmental ,ssues that have been raised and if both the house and the senate improve it and he goes forward with his veto, you can imagine that will be more political baggage she will have to do it then a lot of his party will have to deal with come tuesday. >> all right. trish regan, we will see you at the top of the hour. stay with us. another check of the market movers is on the other side of this rate. -- this break. ♪

>> get the latest headlines at the top of the hour streaming on your tablet and bloomberg.com. that does it for this edition. i am mark crumpton reporting from new york. thank you for joining us. next.e markets" is i will see you tomorrow. >> it is 56 past the hour, which

means bloomberg television is on the markets. i am matt miller. take a look at where stocks are trading. a bit of a roller coaster day. we continue to see fluctuation but the s&p right now is down and the dow gained 20 five points. 17,006 37. the nasdaq unchanged. the index little changed all day long. i want to highlight a couple individual movers for you. walmart, though shares are hitting an all-time high today. third-quarter earnings beat estimates, boosted by an increase in sales in u.s. stores. on the flipside, coles posted third-quarter earnings and revenue that fell short of estimates. the retailer of same-store sales fell, missing analysts -- they never like that when the shares are down two or three quarters. the retailers are the focus of today's sector. joining me with more on earnings, a preview of tomorrow, and then a look ahead to the all-important holiday season,

mark, managing director. thank you for joining us. let me ask you first of all about this earnings season. we see some conflicting earnings reports. that is obviously to be expected. not everyone will do well and not everyone will do poorly. >> it is very mixed. retailers are using lower tax rates to hit their numbers. the top line has struggled. october, warm weather, it really hurt sales. start.r is off to a nice cold weather is definitely driving demand. >> when we are colder, we want to buy parker us -- by partners. -- buy parkas. >> this weekend, a real need for cold weather close. mainis holiday season, the

thing on my mind is gasoline at the pump. we will have extra money there. i just realized if it is so much colder, we will need to pay money to heat our houses, as well. >> good news is heating prices are down. it will still be a good trade-off there. and oil is as positive. the biggest issue is still driving traffic. we have seen mall traffic struggle. part of that is related to online. other things driving demand. it will be a promotional environment. are they driving mall traffic. i know on this side of the barely dead,s are compared to some of the malls i have seen in the midwest which have events, and are kind of the goto spot for the community all over again. >> you need to drive traffic, you need to be creative, you need to try to find events like that. i think on the coast, there is

more of an urban draw, you are competing with that, the natural cities for the traffic there it that is a big thing. loveing into hanukkah, we lululemon. parrot headsew myself. thank you so much for joining us. "street smart" is up next. stay with us here on bloomberg television. ♪ ..

>> i am trish reagan and this is street smart. big day here for deals. hasbro talks to dreamworks. we are counting down to earnings. are going to talk about the keystone pipeline and how to cut the islamist state off from financing. we are watching a couple of these stors