with big money. a virginia community bank has become the goto lender for hundreds of millions of dollars in campaign cash waiting for candidates to spend. scarlet: furniture economy surging. is there a carryover effect? we was big with a ceo of one of the biggest online richard wei e places. matt: good morning. i matt miller. scarlet: i am scarlet fu. matt: let us take a look at the markets right now. we see losses continue across the board. there is a brief recovery in gains. now we are back down 30% or 60 point in the dow jones.

s&p is down a little bit less. the nasdaq is down two thirds of a percent almost. scarlet: not so bad considering so many people were expecting much deeper losses giving apple's results. let us go to where you see more big losses, gold. it is the longest losing streak since 1996. goldman sachs predicting further decline saying that goal may drop even more. index stillities hovering near a 13 year low. let us take a look at the top headlines. without with housing because we have not seen the housing market like this since 2007. sales of previously owned homes rose last month. the increase more than 3%.

home is notice of a as high as price ever, $236,000, of 6.5% from year ago. apple posted a record third-quarter profit but it missed estimates on iphone sales and revenue forecasts. investors areaid focusing too much on the sales number. >> expectations were for 49 million iphones. seems like a nonevent. for investors, that means that even though it is a slight miss, this idea that there may not be big upside in the future is why the stock is down today. this is just an overreaction. scarlet: apple also reported the largest ever cash call.and now has $203 billion. matt: the country's biggest home-improvement chain is getting bigger. home depot is buying a company

. the european central bank is increasing the amount of emergency a to that emergency aid to greek banks. the move comes hours before greek parliament takes a second vote on an austerity package. that must be passed before creditors will negotiate a new bailout. sells everythingale on his e-commerce site but this is a first. chinese spur banks offered to payment of $300 for their donations. more than 50 million infertile couples. scarlet: coming up in the next hour, a whole new meeting for the government term the executive branch. we will tell you about the

wher.r version of a bank matt: maybe they just gamble it. scarlet: and look at saudi arabia's massive affordable housing project. how it stacks up and who it benefits most. watch out washington. the weather may be sunny today but you have a high chance of sharknado tonight. these stories and more ahead. matt: have you seen any of those movies? scarlet: i have not but i love the fact that the movie is called "oh hell no." matt: icy. -- i see. now, i want to get back to corporate earnings stories. you can thank price hikes and process rather than organic growth. yawner.

matt: what a boring chart. aaa rising the most in a year -- chipotle rising the most in a year. credit covers both companies and he joins us now. let's talk about chipotle first because that company has raised prices at least once. if they have it, they will raise prices again. the sales are all their highs but still up 14%. craig: they are doing well today. the stock dipped aftermarket when the salesman became out but then you saw it slowly creep up. the raised prices earlier this month. customers keep coming back. matt: they said if you buy the shares, we will send you tens of cash -- tons of cash.

that helps. craig: there is an incredible brand loyalty winter ball you do not see another change. they raise prices twice now. have not raised prices in the market where port is off the menu. people are trading off from state to something else that tom -- from steak something else. they have pages and pages of standards for how animals are raised. they say they cannot find it. they suspended the pork supplier. they have carney does on the menu back in 100 restaurants in california. they say they will be back fully across the united states by the end of the year. there may be some skepticism about that. matt: the flipside is that sales are still doing pretty well. scarlet: absolutely. the numbers matt was giving us

is truly a growth stock in this sector. craig: there is no question about it. sales were 4.3% of. -- up. analysts estimated 5.8%. would signf chains up for two bullies numbers in a heartbeat. matt: i go in there and order something and i am out in three minutes. fastlse -- that is a fac food restaurant. scale of fastve a movement and ran has a loyalty because of the premium ingredients and they have done great job with marketing. matt: coca-cola has more brand loyalty than 40 chevy -- ford and chevy. craig: i will pay more to buy a smaller can of coke. scarlet: with your name on it. matt: especially if it has my name on it.

you want to feel like you are healthier. craig: it is fascinating. sugar is the bogeyman now. don't drink a giant. matt: especially if it is corn syrup. craig: they brought out smaller cans and a smaller size and it has helped a numbers, particularly in the u.s.. it is a global company but those smaller cans have done well for them so far this year. scarlet: the smaller cans allow them to raise prices. are the raising prices on other beverages as well? craig: they are. higher prices have been key for coca-cola so far this year. matt:'s mentioned my name being on the can of coke. minus not the only one. one.mine is not the only scarlet: you have to market to international audience. scarlet will not show up anytime soon. matt: i bet they have it.

they have pretty much every name on there and then husband, mother, daughter. that must help sales. craig: the marketing budget for them is up double digits this year and that includes this campaign would you like. they rolled it out in australia and introduce it across the globe. it is a simple thing. it was the subject of a little bit of mocking on social media when it first came out but it clearly works. someet: there are regulations with activist investors. craig: you don't hear so much about that anymore. but it weighed in on that a weighed in-- buffet on the little bit. scarlet: thank you so much for joining us. presidentialhead, millions ofised

dollars in a few months and they can spend it just as quickly so what kind of bank can handle such a volatile accounts? we will show you. ♪

scarlet: welcome back. i am scarlet fu. matt: i am wan matt miller. julie hyman has a look at the markets. julie: i wanted to look at the apple effect we are seeing in today's session. apple is a big drag on a major revenues because of the sheer size of the company after they miss in terms of its iphone shipments last quarter. shares are down by 5%. physical function on the bloomberg terminal, splc that stands for supply chain. at whichs you the web

apple is the center. these are the suppliers to apple. there are so many suppliers. these are its competitors down here. these are the customers. potentially you are talking about 290 suppliers, 165 customers, 12 competitors. these could all be affected when you see a drop in the apple shares. you had an important report coming from the semi conductor industry. not a huge industry, with earnings that missed estimates. sales will fall 7% until percent in the current quarter that 7% 7% to 12% in the current quarter. we are seeing analog devices others here that are up on

suppliers all falling today. definitely there is a big web we are talking about today. like sprint and verizon are lower today as well. with our whole selling fewer phones, that means fewer subscribers or feed through for these guys. matt: in the terminal, we have blackberry as a competitor. julie: it still is. not a big competitor. matt: other people that say i should get the new iphone or my dad's old librar blackberry? scarlet: they are still competitors. matt: i am joking obviously. i tried out the blackberry that came out last year. it was pretty cool but it lacked the intuitive aspect of the iphone has. scarlet: thank you so much, julie hyman. let's get you the top stories

crossing the terminal right now. amazon is expanding to 13 cities for his home services. to installan use it theaters, peter holmes, or get guitar lessons. in march, it opened in several cities. chicago and atlanta are among the cities being added. there has been a take over in the medical devices this morning. tag is $3.4 billion in cash, with represented 40% premium over the average price in the last month. 007 is back. >> why should i trust you? >> because right now i am your best chance of staying alive. scarlet: dan opec returns for -- daniel craig returns for spectre. he will be driving an aston martin db10.

matt: it doesn't exist in real life. scarlet: there is the usual amount of sex and violence you would expect from a 007 film. comes out november 6 in the u.s. matt: it will be driving a jack white that will also not be made in real life. a really interesting movie for gearheads. scarlet: like a fantasy movie. matt: a small bank in virginia as 40 employees. it is holding hundreds of millions of dollars. it is called cambridge bank. and has more money from presidential campaigns in any other bank in america. bill mattingly joins us from washington. how did this happen? it seems pretty astounding. are: it is but it was a happenstance. this bank was started in 2007 and the idea was to be a lane plaina that's a plane -- vanilla bank.

be a traditional bank model. john mccain's campaign was using whilachovia. they got into a lot of trouble. is compliance people checked out the bank, like the balance sheets, and so his campaign dropped $60 million in deposits ridge in a single month. this bank has become the top two specialist in this industry, a difficult one to get your head around. it has become the one that every republican candidate for the most part goes to a this point. matt: it crosses party lines. democrats and republicans both are using this same bank. bill: primarily gop candidates on this front. the democrats tend to have their own banks. hillary clinton and o'malley of a bank that has a lot

little connections. bb&t is the other top-tier political bank when it comes to campaigns. somebody comes to you and says i want to open an account. i need 50 plus credit card for staff members and i need to be able to wire millions of dollars i went in minutes and i have no background to go on. on? big bank will go scarlet: if all the gop candidates and there are 16 of them now bank at this one bank, it is volatile. matt: surely trump has billions and billions of dollars somewhere else. scarlet: what if they all want their money at around the same time? as the bank have that kind of cash on hand? bill: they do. they are deposit heavy in a volatile business. they keep the vast majority of their cash on hand or in a reserve account at the federal

reserve. they do not make a lot of money on this. is primarily a breakeven business right now. if interest rates change, that is when this business can become lucrative. that is when you invest in short-term securities and the spread becomes more than they are getting. pointsow, 25 basis before fdic and other fees. not a super lucrative business. matt: by that they have powerful friends. thank you so much. you can read the full article in this week's edition of bloomberg businessweek. scarlet: coming up next, massive affordable housing projects in saudi arabia. widely risk and kingdom is looking to help the not so rich citizens. we will be back. ♪

scarlet: at the height of arab spring, saudi arabia's leaders are missed to spend billions of dollars -- saudi arabia's

leaders promised to spend billions of dollars. matt: it has been profiting wealthy businessman. breaking ground on a new housing development outside of riyadh, this man knows his country's construction industry means big business. this is among dozens of developments sprouting up in the desert air forming part of a multibillion-dollar state effort to build have a million new homes. >> it is for the people who cannot own or buy or get a house without the help of the government. revenues havey, left the expanding our relation with limiting housing stock. 11, political violence wracked egypt.

saudi leaders were worried about overcrowding and low homeownership rates might be a similar instability here. you will be a better citizen. >> much better. >> low-cost suburbs may solve the immediate problem. some saudi's say a cookie-cutter approach to homes may not create long-term cohesive communities. >> we are seeing more and more construction. not really architecture. draws on hissamir own construction methods that have grown increasingly rare in saudi's rush to my modernity. >> we are repeating the mistakes of others. >> like tdubai? >> it is a good example of what not to do.

a neighborhood is extremely important. >> some developers may skim on construction, public agencies are paying huge premiums for land that was once given away for free. >> land with goodwill was given to serve some people as gifts. this is a big problem we have to find a solution for. peopledo you encourage that own land to develop the land for housing? >> the defensive they really profit or they0% want to be a participant in the development of the country. ishe says he participating by building homes for his fellow saudi citizens. the government is now his largest client. he may also be building himself a small fortune. scarlet: here with us right now

someone to tell us more about this. where is this public housing? >> typically these projects exist on the edge of the -- of saudi arabia. and some of them are 30 minutes out into the desert. one of the challenge finding land that can be developed that is not owned privately. historically, they handed it over to princes and favored individuals. those people sat on the land and the prices have gone up dramatically and have been sold to other holders. they do not want to go through the hassle of developing it, which means there is not a lot of land left in the city when there is plumbing and power. scarlet: and presumably where a lot of these people live. willem: right. will need to build the roads and transportation 3040 minutes into the desert. calm the have to people down so they don't

overthrow your incredibly lucrative oil monopoly. willem: that is a strong direct causality but in yes this was one of the reasons going on in 2011. they were worried about what was going on in the region. they wanted to spend $60 billion or $70 billion on new homes. that hasn't happened quickly. some people were not very happy about that. matt: needing to get it done fast or face their own arab spring. willem: i will not go there. scarlet: that is the idea. thank you so much. great reporting. footage.antastic scarlet: you are off. matt: i will see later on. ♪

. . ♪

(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...)

man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. welcome back to the bloomberg market day. let's get a look at the top stories this hour -- an experimental alzheimer's drug from eli lilly has shown some

success. the result shows it has the potential to slow alzheimer's. patients treated earlier with the drug did better on memory tests than those treated later on. than $30ing more billion of market value today. shares falling after iphone sales fell short of estimates, even as they were at big overall. apple's revenue forecast missing also. still, a piper jaffray analyst says it's a little much. >> it's something that happens with a lot of successful companies when they train investors to expect a big upside. it's a curse on days like today, but ultimately it is an opportunity. for investors who believe in the bigger picture, which is market share gains of the iphone, you have to put up with some volatility, but there's an opportunity to own it at a discount.

scarlet: apple did not break out sales of the new watch. bloomberg estimates apple shipped 2 million. apple forecasted more than 3 million would be shipped. workers in new york airports say they are going on strike tonight. they will walk off the job at jfk and laguardia. the union representing them say workers want a pay raise of -- pay raise to $15 an hour. let's switch to the markets now because the european stock markets are getting ready to close. >> it is the second day of .eclines for european stocks on the stoxx 600, every industry group heading lower. it is commodity producers and technology companies that have been leading the losses. i want to drill down into the detail in and i will show you the bigger picture.

let's start with mining companies. it has been a bit of a meltdown for them today with falling commodity prices. it is going to cut production in three out of four of its raw materials. companies,at tech let me tell you what these three have in common other than the fact they are all declining -- they are all suppliers to apple. holdings reporting its quarter today with sales missing estimates. it is a bit of a mixed bag in stock -- the athens exchange still closed. we have the vote in greek parliament happening tonight. it is not going to open until after the vote happens. the ftse 100 leading the losses today. why? is being dragged down by minors and arm holdings. scarlet: thank you very much.

coming up on the bloomberg market day, cloudy with a chance -- chance of sharknado. plus, is the key to demolishing donald trump must presidential bid online and taking him seriously? we will speak with a republican insider for the strategy. and how retailers set sale prices -- making the process more transparent. hoping hear from a ceo to be an amazon slayer. a hot housing market and digital technology, you have good news for online furniture companies like wayfarer.com. the purchase of previously owned homes has climbed to an eight year high, so what does that mean for home furnishings? look at this chart -- sales of furniture and existing home sales tend to move in tandem.

furniturewe have seen sales dipped a little bit even as home sales are rising. for a closer look, let's bring in the ceo of the second largest online retailer of furniture, retailer. -- wayfarer.com. is this consistent with the overall picture? guest: thank you for having me. we are seeing really strong growth, but i think we are seeing it for two reasons. we are seeing the housing market be strong, but the shift is buying online from off-line. scarlet: before we go into your specifically, i wonder what you are seeing as far as home prices moving in different cities. we have not seen start

differences between the geographies. what we see is pretty strong strength across the board. more,t: what matters orstruction of new homes people buying existing homes, which is the lions share of the housing market. who buys more furniture? when there is construction of a new home, there's categories like lighting and flooring that can benefit. the bigger opportunity for us is when people are either moving into a new home and furnishing it, which can happen with new construction or a move, or if they are refreshing a home. scarlet: new construction, a lot of that comes from the contractor themselves. what kinds of partnerships or deals have you made with construction companies or contractors to get in on that level? what has been interesting

is that our business benefits from consumers living online, but we are having strong growth from contractors buying directly from us because of the access of selection and convenience. a lot of these guys are out all day and if they can do something from their phone, it makes it easier. i wonder, from your perspective, this expansion in housing, do you see it withstanding the prospect of a rise in long-term interest rates? how does that affect your part of the business? obviously, interest rates at some pot, if they rise enough, it will manifest in the mortgage rates which could impact housing prices. for us, the thing we benefit from is the shift from off-line to online. in growth accelerated to 63%

q1 in our direct business and that's far in excess of the market. we have a secular wind at our back and interest rates effect us, but for us, they are less of a factor. us some you gave numbers, but here's a big number. buyof your web visits don't anything. you encourage it because you have the ability to monetize off rooming.web they do their research and may or may not buy somewhere else. how did that come to be? guest: if you want to build a brand consumers love, and that is what we are doing, we want to be there go to for home. if they are coming for ideas or to understand broad range of prices or do research, we still want to be the place to go. we think we will end up getting more purchases over their lifetime than we would otherwise. we have programs like get it near me, which allows local brick-and-mortar retailers to advertise on our site.

if someone doesn't want to buy an item online, they can find great local places easily on our site and go there. our view is we help the consumer and that is good for us. on advertisersg makes you more vulnerable to perceived swings in the economy. your subject to the cyclicality overall and more tied to it. how do you minimize that or try not to get too caught up in it? guest: what is interesting is that in the 2008-2009 financial crisis, when financial firms were having the hardest time, there was an acute pullback by consumers. but when you got into the spring of 2009, they loosened up in the online business was growing nicely again. comedownturn, consumers much more sensitive to prices and getting access to that selection. in a booming market like i think

we have now, consumers are excited and convenience rules today. thank you so much. joining us.ayfair still ahead, the u.s. and cuba have reopened their embassies in yet another step towards freer travel between the two countries. we are looking at how americans can actually make it over there. ♪

scarlet: i'll come back to bloomberg market day. let's look at the top stories crossing the terminal right now. oil inventories rose, keeping the price of west texas intermediate around $50 a barrel. down onbound has slowed

signs of what will persist. ons also putting pressure dollar denominated oil and other commodities. shares of caesars entertainment down as much as 19% and have come up a little bit. the casino operator is in court to restructure over $20 billion in debt. have support not from two thirds of the creditors of needs for its plan. golfer jordan spieth will let superstition stand in the way of a check out this picture on facebook. he's traveling back to the u.s. drinking from the jug awarded to the winner. a lot of players will not start the championship trophies if they haven't won it. you don't want to fend off the possibility of actually doing it yourself. the u.s. and cuba have restored diplomatic relations and reopened embassies. but the big question is when can americans sip he does in havana

ojitos in havana? we spoke about potential travel to cuba. guest: cuba is a huge market. if you look at 2014, they had 2 million visitors into cuba, such a big market for europeans and canadians. for the u.s. market currently, easy mostly cuban-americans going down there now. brands, appleter vacations, announced they will be offering tors to cuba through the people to people category. from a regulatory standpoint, how hard is this? when you think about not just the red tape, but what you need to go through, that people who already use you, your client trust you, you never spent time in cuba, you don't have relationships with hotels there, so this is a risk for you.

guest: certainly there's a process you need to go through. you need to qualify for that people to people category, but it's a fairly reasonable process and an interesting market with a terrific history and a lot of demand for the market because people want to get there before he gets fully commercialized. stephanie: let's talk about where the demand comes from and who your clients are -- is it baby boomers or millenial's question mark who does the word cheap attract? guest: we have a broad demographic ace that we target. purchasers tend to be female most often and we look at the 25 to 55 age range. millenials.ell with millenials have the highest propensity to want to purchase a package as well as boomers. it is a pretty broad-based market. stephanie: travel is all about

desire. you have to have done research around it. what does the word "cheap" do? guest: we just went through a and if youexercises look at what is the definition of cheap, it's paying a price for something less than its value. why it works for us is many people search for cheap caribbean vacations when they are doing the research. we felt like it works really well. at the same time, caribbean is in our name and that indicates the special position we have on beach vacations. that is all we do. googleie: you mentioned searches -- how much time, effort and money do you have to devote to your placement in terms of search? guest: absolutely, it is a major channel for us. we think it works very well for us. people continue to search through google.

we are also getting into videos as well where we see engagement with customers who are interested in seeing where they might actually be going. that was stephanie ruhle speaking with the cheap caribbean.com ceo. coming up,h more including keeping an eye on the selloff in gold prices and apple shares. ♪

scarlet: when jpmorgan was hacked last summer, the tank and officials blamed the russian government for trying to undermine the u.s. financial system. turns out they were wrong. have arrested of you people with ties to the jpmorgan hack. and it isovers this not the arrests the fbi was hoping for. could you explain? when jpmorgan was hacked

last august, it was quite a big deal. cyber securityor leaders called the white house and intelligence agencies and said they believe they are under attack from the russian government. hasfbi and secret service been looking intensively at this and made the indictments come out yesterday for essentially peripheral crimes. these are individuals investigators believe have ties to the hack but no hackers were charged. it's not the outcome anyone was expecting. information tore come subsequently, but this was not the outcome people expected. this is in a way, amateur hour compared to what they were looking for. what's the difference between previous hacks on jpmorgan or the other banks? guest: there are a lot of similarities. three of the guys are accused of a pump and dump stock scheme -- classic stock fraud scheme.

the other guys are accused of a coin money laundering scheme. banks face these kinds of threats every single day. there's nothing particularly sophisticated or unusual about them. what's unusual in this case is that these guys allegedly have ties to the hackers that stole data on more than 80 million customers of jpmorgan. but there are many unanswered questions about what level of involvement they have with the actual hacking. scarlet: you said there might be more to come. what is next? guest: we were surprised yesterday when no one was indicted for the hacking. that was the key thing the fbi was looking at. you can bet what investigators are doing now is trying to get to the bottom of it and match hackers on the actual

behind the fraud. even if they are not in the u.s., they can sanction them even if they cannot put handcuffs on them. scarlet: we talk about how this is a pump and dump scheme and trying to make money, but were these hackers trying to access data or personal information that they could sell off? that's one of the interesting findings of this case -- what was stolen from jpmorgan, we were scratching our heads saying 83 million names and e-mail addresses. you break into a place like jpmorgan, the bank has so much more valuable information. all signs point to the hackers took this data for spamming purposes, so they can send out spam e-mails promoting these penny stocks. in that sense, it achieved its purpose, but it is a head scratcher because jpmorgan spent

a lot of money on security, $500 million a year. cyber securityof defense operators and it is kind of mind blowing. it is a possibility hackers may have been doing other things, but based on what they stole, it fits nicely within the scheme charged yesterday. scarlet: if you were breaking through, you would think the data a take is more valuable rather than just spamming everyone. i appreciate you joining us. one of the authors of the story, you can find it on bloomberg.com. let's head to julie hyman for today's options in sight. coming to the top of the hour, let's look at how the major averages are performing. a number of disappointing earnings reports, particularly from tech giants like apple and microsoft. that is pulling down the nasdaq

today. joining me is the senior equities the rigid is -- .erivatives strategist a lot of options activity and you have been watching the energy complex and energy stocks . what kinds of interesting activity are we seeing their? we saw a lot of volume on the big energy names. some of these stocks were trading options to or three times their daily volume. , lot of those were large clip but if you look across the sector, a lot of these single stocks have options bid at levels suggesting massive risk aversion. when you think about the fundamentals, a lot of these companies had earnings estimates cut in half from where they were at the top of the cycle. international aims have diversified and tightened up, so there's a case to be made that

all this negative sentiment and pessimism among managers is massive, and sentiment among the north american plays are that there could be some upside, even if it is just short covering sentiment. julie: i'm just glancing at my bloomberg terminal. it looks like five of the 40 energy companies have reported, so the vast bulk of these we are going to be hearing from. when you look at the energy complex and see pessimism, where do you think there is the most opportunity for upside surprise within energy? is it oil services? guest: the north american shale plays are still risky, especially the more leveraged ones. but if you look at exxon, companies that have tightened up operationally or with broad international exposure, some of this excessive sentiment may have spread to those firms without reason or accessibly.

i want to switch gears a little bit -- we had existing home sales today, the largest part of the housing market. an eight-year high and you, -- you italy -- we are think there is more chance for upside? guest: we do. you can pick almost any economic indicator and housing and it has been beating for the last few weeks. what's now looking like a trend instead of a string of data points suggest there is not just increasing sales, but as prices have increased, demand has not weakened. the millenials everyone is looking for to climb out of their parents basement and form households may have the kind of pricing power to keep up with price increases and i think that is the key variable for homebuilders. can they raise prices and not hurt demand too much?

julie: what would your trade be? guest: i'm looking at september, trying to buy the 38-39 call spread. you can do that for about $.28. the reason we are doing it as a call spread is there is more room for proof, especially the employment cost index. we want to see confirmation in wages and that this trend is off to the races before getting fully bullish on the sector. julie: and there are rates to contend with. thank you very much. a very timely trade given housing data today. don't go anywhere. much more bloomberg market day coming up after the break. ♪

>> welcome to the bloomberg market day. starts -- stocks falling around the world.

>> your got american express set to report on executive l. it will take a look at the turnaround plan following the loss of cosco as well as big layoffs. betty: donald trump has searched to the top spot. h'll get insight from doug ye. scarlet: good afternoon everyone. betty: let's begin with a look at how markets are trading. an upset stomach for bowles today. the s&p, the dow and the nasdaq trading lower. this is incredible. a company that says they have grown