into the issues the two will discuss. a glimpse into my special "china: behind the wall." brendan: housing numbers are outcome of it could be better. betty: as carly fiorina rises in the polls, voters want to know more about her time at hp. it is perhaps her one achilles' heel. we take a look at her record. brendan: on brendan greeley. betty liu. 90 minutes into the trading session. let's look at how stocks are trading. we are near highs. disappointing existing home sales numbers. s&p up by 1%. over the weekend we heard from

various fed officials who say even though they did not move last week, we are on track for a rise in interest rates. even john williams, the san francisco fed president said, "i view the next appropriate step as gradually raising interest rates starting later this year." sondan: and he is dovish that carries weight. jim bullard saying we could move as early as october, which is a little shocking. let's take a look at treasuries. a six-story, yields up along the two-year, 10 year and 30 year. some confidence towards inflation. betty: right near the high on the yield. a reaction and the bond markets to the fed comments. a few hours, almost one quarter of volkswagen value has been wiped out. europe is down as much as 23%.

admitted friday it has been cheating on u.s. air pollution -- volkswagen admitted friday it had been cheating on u.s. air pollution tests and could be fined $18 billion. the u.s. has agreed to take in thousands more refugees from years.ver the next two john kerry made the announcement from berlin where he met with the german foreign minister. this year, the number was cap that 70,000. mr. kerry: we are going to up 285,000, it is not a ceiling, it is a floor. -- we're going to go up to 85,000, it is not a ceiling, it is a floor. in the next fiscal year we will target 100,000. germany may take and one million refugees this year. dijsselbloem in greece, alexis tsipras --

brendan: in greece, alexis tsipras regained power. syriza party will join with the new democracy party. >> we raise our sleeves to lift up the sound over our homeland. social justice and prosperity for our country. to be able to have a stronger and fairer greece. brendan: tsipras came to power austerity he now must make spending cuts he agreed to in exchange for another bailout. the second-largest u.s. homeowner posted earnings that beat estimates. lennar sells homes for entry level and move up buyers in 17 states. the largest department store company in the u.s. has announced its hiring plan.

macy's will bring on 35,000 temporary workers, about the same as last year. jcpenney will hire 30,000 people for the holidays. those are your top stories. betty: coming up in the next hour on the bloomberg "market day," the lockup on 63% of alibaba shares has ended. will some against shareholders, what will they do? a look at carly fiorina's tenure at hewlett-packard through just one chart. imagine taking to the skies without the hassle of an airport. now you can do that. you can even fly your own playing without much training. those stories coming up on the bloomberg market day. china's president xi jinping heads to the u.s. to meet with barack obama in a highly anticipated state visit. much is at stake for both sides. we travel to beijing earlier this month to speak exclusively with china's top foreign-policy .fficial

journey ison why the so important. >> the general direction of the relationship is developing. in the run-up to the president's visit, what i've heard from the general public in both countries is that this is a very important visit. we have to make sure the visit will be a great success. i think that is the true feeling of the people. brendan: we will hear more from yang jiechi later on betty's special "china: behind the wall." we go now to washington with the head of international affairs at the u.s. chamber of commerce. the chamber just met with president xi. last week in beijing. what came out of that? myron: we took a delegation of former officials

and ceos of u.s. companies. we want to talk about the importance of our bilateral , understand china's direction in terms of reforming its economy at a time when the world economy is struggling. we wanted to be candid in our views about issues in our relationship that are causing strain -- talking about cyber issues, market access issues, the regulatory environment, china's national security law that has tech companies and banking companies very concerned. there's a lot to cover in the conversation. china wanted to project confidence and talk about the direction of our relationship. we also said this is not a tipping point but it is a pivotal trip for the president. we hope he can assure us there's a path forward to resolving outstanding issues. betty: it is a critical moment in relations between the u.s. .nd china

top of mind is cyber espionage. thethe accusations that state government is sponsoring hacking of american companies. this is a serious allegation that the chinese deny, even up to the interview i had with yang. i want you to listen to what he said. : china believes that china, the united states, and other countries should really try to work together to work out rules for cyber security in the spirit of equality, mutual benefit, and mutual respect. betty: absolutely no recognition that they are in fact any cases of this. what is the reaction? myron: i've known yang jiechi for 20 years so i understand why

he's representing the chinese government in that respect. xi jinping also talks about these issues in the context of our discussions with him last week. the bottom line is that there are some activities going on in china, whether it is sponsored by the state or whether china can do something about it. they are questions that are fundamental to the trust between our two countries. there is a next vacation that china will acknowledge that they have a challenge and will take action in concert with the u.s. government to address the very serious allegations. and certainly we saw a very high level visitor from china come to washington and head of the visit with the intention to assure our government that there is actions that the chinese government is prepared to take to address cyber hijacking. brendan: let's take a broader look. the shots of the chinese ofity market are symptomatic a larger rebalancing in the

chinese economy towards more consumption. what do u.s. companies want out of china and need out of china? myron: there's been a lot of market volatility. we saw china's reaction to that and a lot of uncertainty about china's reaction. i will say this -- china has since 2005 largely appreciated the renminbi. even this year it is still appreciating relative to the yen and euro. 3% correction is not something to worry about short term. it is a political challenge in the u.s. that plays into our football political season. that said, what we wanted to talk about was china doing with soe's, they have announced an is reform package but there a lot of uncertainty about the scope of it, how quickly they are going to move. we want insurance is that the

direction of the chinese government is to reform the economy to make it more market efficient and remove discrimination in the marketplace. that's still a challenge for u.s. companies and foreign investors. u.s. investment in china is flat,, not down two in the last two -- in the last two years. betty: certainly a lot on the table business wise and in every other sphere. head ofilliant, international affairs at the u.s. chamber of commerce. two in a 9:00 for the special, "china: behind the wall." stay tuned for more of my interview with yang where he talks about the devaluation of the chinese currency ahead of president xi's visit. brendan: still ahead, the lockup on 63% of alibaba shares ended biggest, freeing up the

shareholders to sell stocks starting this morning. what will yahoo! do? ♪

brendan: welcome back to the bloomberg "market day." i am brendan greeley. betty: i am bailey. -- i am betty liu. a pretty big rally. julie: stocks rising. the dow, s&p and nasdaq up around 1%. dow was as high as 192 points, gaining since then. not up quite as much but a relief rally after a couple days of declines. investors trying to rejigger their expectations for the fed. a couple officials talking about a likelihood for a rate increase this year. we have been talking about

pandora after the stock was halted several times because of higher than usual volatility. hb halts -- you see the alts in the chart. analysts at susquehanna say that there was a ruling, not necessarily on rates but an incremental step that could be positive for pandora if the level of rates they will have to pay to music labels and 2016 and beyond. it is not going to actually come out with a final decision until mid-december. this could be a positive sign according to susquehanna. paypal, one ofat the best performers in the s&p 500 up i nearly 5% and upgraded to buy from hold by analysts as default. -- at stifel. productic about a called one touch.

we've seen a selloff in paypal shares. it was once part of ebay the spinoff was completed on july 20. i want to look at how shares have performed. short answer is not good. paypal is white, ebay is orange. the have waned since selloff. the out to him both companies would be better performing -- the optimism was both companies would be performing better separately protest lessons out its invite to introduce the model x on september 29. the optimism was both companies would perform better separately. tesla sends out its invitation to introduce the model x on september 29. sending shares higher by 4%. brendan: thanks. betty: the tesla model x, finally here. brendan: is going to change

everything, a magical unicorn will make money. betty: of course. brendan: did i just betray an opinion? sorry. betty: investors are portraying their opinion. of alibabaon 63% upcks ended, freeing stockholders to sell. friday the stock was down 31st from its record ipo. jack ma and the vice chairman have pledged to keep stock, eyes are on yahoo! to see what they do with their 15% stake. i will bring in cory johnson in san francisco. do we have any chance? -- any hints? cory: yahoo! is trying to figure it out. for a plano the irs for a tax-free spinoff, the irs would not grant that.

saying good luck with that, we are not approving this. show us what you are going to do and then we will tell you what your taxes are. yahoo! maybe having to find a new way to do this. the context of the lockup is like no other. , $105e the ipo is so big billion worth of stock becomes available for a sale, is now available that was not available last friday. that is a huge deal even though some of the biggest shareholders, the ceo and shareholder, softbank is a big holder, not selling. yahoo! has not announced what their plan is going to be. nonetheless, this is a company that is seeing slowing growth as a goes forward. what we're seeing from this company is it has done a bunch of acquisitions. they have done some peculiar moves with use of cash, not least of which buying back shares even though they just

want to the market to sell. so many shares becoming available right now. and talk let's stay with -- brendan: let's stay with the. julie walked us through how yahoo! has been underperforming. is yahoo! anything other than a holding company for alibaba stock? cory: the value of yahoos business is nil in the public market if you look at how much of alibaba they hold. how much are they going to pay in taxes? how much of the holding is going to go towards satisfying their gain in what was a fantastic investment gain for yahoo!. they are trying to avoid taxes. the question of how much will include shareholders is open. we brought up the revenue growth chart which i want to look at again. this also tells you there is urgency here. since the ipo a year ago is slowing in spite of doing all the acquisitions.

the chinese economy is slowing quite a bit. we can look at their efforts to grow internationally, still struggling for alibaba. this is a company that has its own struggle. then you look at the shareholders, i mentioned those who cannot or will not. if you look at silver lake, citic, firms that went into the ipo with gigantic holdings that are available to sell. all of those sold in the ipo a little bit. whether or not they want to sell given that the stock is down is an open question. what we know now is that they can and that is not good news for the stock. quite often the end of a lockup can be a lot of people waiting to sell. once that is flushed out of the system, the stock can sometimes rise. in this case, so much stock is coming to market. holders withggest

no indication of selling, it is kind of the worst of both worlds. betty: what if it does see a flooding? you must -- cory: you list your shares in a public company. other companies should take notice. a lot more supply coming to market. betty: certainly a warning. cory johnson on "bloomberg west." on the chinese consumer. the chinese consumer is not looking great. coming up, as carly fiorina jumps to second place in the polls, we take a look at her record as hewlett-packard ceo. one chart tells us everything we need to know. ♪

brendan: after the second republican debate, carly fiorina moved into second place beyond donald trump. let's look at her tenure as

hp-based on returns to invs,or her 5.5 years as ceo were not bad. i was kind of stunned by justin fox's article looking at what happened after she left. think history shapes everything. i tend to attribute everything to her tenure. his point was well made. she assured in a change in strategy. a shift towards a more corporate customer. betty: starting to look more like ibm. brendan: that has not proved to be such a bad idea. a shift that meg whitman is trying to pull off. betty: the stock was getting hit even before she arrived. it got worse when she was there. it performed better, as you were saying in the context, and the hp shares, there is the orange line, did do better after she was forced out. was of that was mark hurd

executing the strategy she laid out. brendan: i did not remember the history. the stock moves up before -- sorry, before she leaves. there was a recognition of the change of strategy. it is not like it was an amazing pop up her she had a contentious relationship with the board. betty: they fired her. brendan: two ways to look at this, other she was ungovernable or the board and hp is an un -ceoable board. there's evidence that might be true. betty: what i have found fascinating is seeing that the way she has acted on the campaign might be indicative of the way she was at hp. clearly outspoken and talks against, going against the grain. the cnned her way into

debate and look at what happened. you can see her leadership skills there. at least the way she manages. good point. if you are unafraid to tell people when you are wrong, how does that work out in the board room? looking at mitt romney's experience, justin fox made a compelling argument. this might be a hard sell to voters. laid out a i strategy and it only got better after i left. betty: is too nuanced for voters. it is easy to look at the stock chart, it went down, she was a bad manager. brendan: it is not too nuanced for betty liu and brendan greeley. talk with carly in may when she was starting her campaign. i asked about her tenure and how that was going to be her vulnerability. she said, look, i come from a world of business where results

count. speeches and titles are not a competence. she is saying she is out of the beltway she is not a politician like hillary clinton. of collectingr speeches and titles. she will try to spin it that way. brendan: it will be interesting to see her against donald trump. the republican party has always said is only a business person could run america like a business. it does not really work in terms of candidates and yet they keep trying it. she might be the right person to make it work. i've got to go, you are sticking around. betty: see you tomorrow. still ahead on "market day," more from my visit to beijing. ♪

betty: welcome back to the bloomberg "market day." i am betty liu. the residential real estate market hit a speed bump in august. existing home sales down 4.8% in

july. hans had sold at the strongest pace since 2007. prices were higher but down from a year ago. sales dropped at caterpillar. worldwide revenue was down 11%. reported sales were flat in europe, africa and the middle east. sales plunged in asia pacific, down 29%. part of that having to do with china. google has lost another round in the european fight over the right to be forgotten. union'sr, the european highest court ruled people could ask that links be deleted if the information was outdated or irrelevant. those are your top stories at this hour. the markets are closing. i want to go to mark and in london. a one-day fed hangover for european stocks after the biggest drop in two weeks two.

stocks clawed back most declines on this monday session. one stock market is down in greece, declining here at this stock market has risen second only to latvian benchmarks, that is one global stocks sunk the most in four years. the stoxx 600, europe's benchmark, valued at 15.5 times estimated earnings. down from a high of 17.3 in april. that's one of the reasons why investors put their money back into european stocks. have a look at the big decliners in europe. rsa, a u.k. insurance company. most in 13 years after zurich insurance abandoned its takeover because i lost in its own business. , preferred shares have the biggest one-day decline since

1980 nine. ordinary shares fell by the most since 2008. it has admitted to cheating on air pollution tests. preferred shares sank by 15 billion euros. semi-conductor, a biggest slump in nine years. agreeing to buy at mount -- a euros,r $4.6 billion more than its own market value. back to you. betty: thank you. mark barton in london. coming up on "market day," health care officials outraged after a pharmaceutical company buyed the price on a drug 5000%. the company's founder and ceo will join us to justify the price hike. making flying fine. all you need is 20 hours of training and $200,000 to get your own plane. dce a of men's wearhouse will

join us to discuss the latest tuxedor, an online rental service. the former ceo. .hese stories coming up back to china, the important visit by the chinese president to the u.s. comes at a tumultuous time in china from the recent stock market plunged to the devaluation of the chinese currency, the renminbi, that sent shockwaves through global markets. the chinese are ready to talk. explained -- they want to explain why they adjusted the currency and give their take on the volatility. yang jiechi, the top foreign-policy official in china, invited bloomberg to beijing. we arrived at the state guest house for an interview. we began on the renminbi devaluation. yang jiechi: we let supply and demand determine the value of renminbi.

generallynminbi, speaking, is quite steady and valuable. we will continue to do reform in china in various sectors, including the financial sector. when people look back 10 or 15 years from now, they will see that the market reform is really good, not only for china, but for the rest of the world. betty: let's say 12 months from now, will the rmb be lower in value? yang jiechi: i think it is natural for the currency -- it is reliable. more more people actually do their trade in rmb. sure the rmb will play a healthy role in promoting not only china's economy but the international trade and

investment and so on and so forth. betty: some have speculated that valuation - -- that the devaluation happened after the decision by the imf to delay the theinbi's inclusion in special drawing rights of the basket of currencies. yang jiechi: i think these are two separate things. we've had good cooperation with the imf and world bank and for that matter with other groups. we would like this good cooperation to continue. i don't think there's any connection about the dsdr thing and the currency situation. betty: were you surprised how the markets reacted to the devaluation of the renminbi? yang jiechi: every country has

its own challenges and problems. and every country should do a better job of their own economy. betty: they should mind their own business. yang jiechi: i don't mean that. what i mean is that the chinese economy is a big one. it's not that big. there are many players in the field. economic performance has an impact on the financial market and so on. adn the -- and the difference between the chinese stock the stock exchange of many western countries is there are far more institutional investors in the west. and of course, there's always room for improvement for anybody. so i do hope that people will

take a calibrated approach to in the financial market, wherever it might be -- and china or other countries. people should be respectful to and to be fair. china is a positive force for world economic growth and will continue to be. betty: for more on my interview with yang jiechi, tune in tonight at 9:00 p.m. for "china: behind the wall." we talk about everything from cyber spying to even what the chinese think of donald trump as president. ngill ahead, why turi pharmaceuticals started to raise the price on daraprim 5000%, $750.13.50 to the company's founder and ceo will join us next. ♪

[indiscernible] the price -- betty: the price of a common drug increased overnight from $700 per pill. the drug is called daraprim and was acquired by turing pharmaceuticals. martin shkreli joins us now. the reaction has been critical of the move. why? martin: we needed to turn a profit on the drug. the drug was being sold by several companies. it came as a package. no one even knew they owned it. betty: it was originally

glaxosmithkline. martin: it has been passed around. we have a first company to focus on this product. that is a great thing. ultimately the companies before us were giving it away. the price they were pricing it at -- betty: $13.50. thann: you only need less 100 pills. the price per course of treatment to save your life was only $1000. these days, cancer drugs sell for $100,000. red disease drugs can cost half $1 million. daraprim is still underpriced relative to peers. betty: to produce the pill it costs a dollar. martin: it costs very little to make daraprim. betty: how are they losing money? have distribution costs, fda costs, manufacturing costs not included for the ingredients but also the people that make me pill and make sure

it is made to specifications and those have increased. betty: they are up 5000%? drug was doing $5 million in revenue. i don't think you can find a drug company on the planet that can make revenue on $5 million. betty: they were losing money -- martin: and not providing dedicated patient services. rare diseases are not like buying adult. this requires a lot of attention from the drug company. they have to partner with the patients and distributors. that costs a lot of money. betty: some reaction in the medical community from various doctors, one in particular at sinai, the head of infectious diseases said we are going to have to look for alternative treatment. anymoret take daraprim and we will not be able to keep the drug in stock. that might delay treatment for some patients. martin: we've put the right

protocols in place to make sure that patients get the drug faster and with almost no cost. we have a co-pay system that will limit that there was limited free drug program and we has expanded that. half of our drug we get away for one dollar. that shows our commitment to patients. if you cannot afford the drug, we will give it away for free. especially if a patient is in need. betty: how does that intersect with your -- you know, your stated objective that you need to make money. martin: it is an impediment. we will never deny someone treatment for their inability to pay. even if we are having a disagreement with the insurer, we will send them the drug for free. that is another thing prior companies have not done. betty: because it is more expensive, are there going to be companies that will

say we will sell it for cheaper. thing. that is a great if you look at diseases like multiple sclerosis, they have been transformed by profit incentives. now that toxoplasmosis is generating a profit, this drug is from the 1940's. we can make a better job. betty: is that what you are trying to do? put the drug out of business question mark martin: we are spending tens of billions of dollars to make daraprim less toxic. patients deserve a drug that is better for them. they deserve modern medicine that can share toxic plasmas is. betty: you are find with raising the price because you want to make money, which you will put rcho alternative resea

to see if there's a better way to treat not with daraprim. better we know there's a way. we are developing three or four different drugs. no one has cared about this illness from a park city group -- from a pharmaceutical perspective. now you have an ally in our company looking to spend that money. we all know that drug development is expensive. only fair that we take the money and put it into the patients' hands. i do not advocate for companies that raise the price and do not do research. the spotlight on the is interesting. i know what we are doing is right. betty: doctors would say if it was working, library get? -- why breat it. martin: these bugs evolve. if we still had a focus on penicillin, we would be in trouble. by making a better version of daraprim, 2 billion people have

this. the latent form is a but if you become immunosuppressed it can kill you. if it evolves it will be a ticking time bomb and we need to be prepared in case it mutates. daraprim does not cure you 100% of the time. i think we can get it up to 100% with research. betty: thank you. turing pharmaceuticals ceo martin shkreli joining us. still ahead, the airplane that is like a flying car. the plane you store in your garage. ♪

betty: imagine going into your garage, unfolding an airplane and taking to the skies. it is not a daydream anymore. pimm: a plane that lets you take flight for fun. you can land on the water or land.

you need about 20 hours of training. you need about $200,000. curt hawkins is the chief executive of the company and he joins us. where did you come up with this idea? >> the idea generated from the faa making some changes. applicants -- airplanes have been kept away from the public and the faa is opening that up. a new category. betty: this sounds like a disaster waiting to happen. anybody can go buy an airplane. there's got to be different roles there. brilliant set of regulations which allows you to have access to flying. you can be trained and have easy flying, youe sport do not fly at night or data whether. -- or bad weather. we give you more training to

make you easily able to fly your own plane. pimm: give us the specifications. hour, it miles an flies about 400 or 500 miles at 20 miles a gallon. it is amphibious. giveirplane is designed to you an amazing life experience. everyone who has dreamed of flying. our objective is to make that more possible. an airplane that is intuitive, easy, fun and versatile. betty: how many hours of training? kirk: 20 hours of training. weekend -- do you want me behind the controls of an airplane? pimm: is it more difficult than the controls of an automobile? kirk: a little bit. it requires faa training, about two weeks. getting your scuba lessons. still very controlled. we train you in about two weeks

and it will be a life experience. pimm: tell us about the companies that build the hardware that goes into this. there's a screen that looks very familiar to automobiles. kirk: it is pretty unique. we have tried to -- the goal is to democratize aviation. how do you democratize any technology? you humanize it. we have some of the best and we said let's figure this out. let's make the first pure consumer product aircraft so it is intuitive and safe. betty: i still wonder about the airspace. how do you know you are not going to get in the way of other airplanes and where you can go, all of that? faa doesst of all, the not do things carelessly. betty: they better not. kirk: this is 12 years in the making and has been thought through. congested.e is not

the airspace around major airports can get congested. away from that, it is public airspace that is broadly unutilized. the faa recognizes this. pimm: what altitude? kirk: a sport pilot is 10,000 feet and up a little. like the off-road airspace. most airliners are 20,000 feet. pimm: where is this being made? kirk: we are in california. the company is in northern california and we are starting production. pimm: what kind of engines are you using? kirk: a4 cycle 100 horsepower. betty: how many orders? kirk: 1500. i think tesla at the same point had about 900 vehicle orders. betty: the tesla driver is likely going to buy an airplane. kirk: potentially. it is for anybody who wants to fly. betty: thank you so much, the

ceo. pimm: pim betty: i want to bring in julie hyman. julie: let's look at how stocks are trading. bounceback from a couple days of decline. theiraverages coming off highs. joining me is jim, a derivatives strategist at mkm partners. i've got to talk about the fed hangover. is it over? seems like day by day there's a different read on what we heard thursday. jim: i think what people have to keep in mind is we are still in the midst of a shock. edr view coming into the f last week was that equity implied volatility in the u.s.

would remain elevated for longer than people expect. the expectation was we had the fed meeting out of the way, spot vix collapses and stocks rip higher. that has not happened. i would say the hangover from the fed is not over. do you think we see a trajectory where things quiet down to some extent and then we start to see the build in volatility into the next fed meeting? jim: that is late october so not really. 20, thevix is below 21st oh, it really gets repulsed and moves higher. the inverse of that is stocks moving lower. we would act more defensively than not. it usually takes about five months after an event of this magnitude four spot vix to sustain a decline down below 20.

that projects out towards december or so. 18.7-2000w and then, and the s&p 500 is the range. particular,tock in that is lululemon. you guys upgraded it last week. morgan stanley thinks the company has been struggling, revenue is going to pick back up. is that what your analysts are thinking? jim: a rating andbuy -- a buy $69 price target. operating costs have been on a decline. the fundamental view is's sales are solid. they reported that quarter, top line up 16%.

margin miss again that nailed the stock down 16%. our view is that the inflections in margins is really happening now, fourth quarter if you will. what has been a head wind over the last several years turns into a tailwind. with that, we are high on the street with mid-20's eps growth. julie: your trade? jim: we want to sell downside puts in december. implied volatility is about 43%, the highest it has been in the last several years. sell a $47.50 put and create a 3.5% synthetic dividend. julie: talking about lululemon. we will be back with more market day. ♪

pimm: good afternoon. it is midnight in hong kong. betty: welcome to the bloomberg market day. shares of votes when in plunge after they admit it cheated on

u.s. pollution tests for years. we will look at where the company goes from here. presidentchinese heads to the united states and we got an exquisite look at the issues he will be discussing when he meets president obama. rises,as carly fiorina we will look at her record at hp. good afternoon. let's get a check on how the markets are doing. we are losing a little bit of our rally. julie: stocks are still pretty solidly in the green but the nasdaq is the laggard. the fed decision not to raise some officials are

talking about the likelihood we will still see a rate increase this year. let's talk about the dow in particular which has been the percentage leader today. seeing some leaders within the dow in terms of movers. looking at microsoft, analysts azure momentumnd is improving. 1.5%.shares are up about analyst commentary on nike helping contribute to gains but not as large print the price target was -- is being raised. is what the folks there are focusing on. usesis a measure that nike and they look at that versus

inventory. pimm: thank you but i want to find out about the inventories at the w. -- at vw. julie: we have been looking at volkswagen in germany. look at the u.s. shares. typically not heavily traded but it is today with about one million shares traded and the volume is usually low but you can see the plunge is like what we saw in germany on the news that volkswagen had been trying to link u.s. regulators with -- in regard to emissions. some of the suppliers to function, is thefpl the supply chain for volkswagen. and theseanies sell are the suppliers -- you can see might be the most affected. there is a percentage of these various companies revenue comes

from volkswagen. you start to see some u.s. companies. harmon is not really affected as an audio components company but if you look at the stock of these suppliers like borg warner. , those shares are trying lower. when you have a situation like this, you can look at the ripple affect from the news with something like volkswagen. pimm: thanks very much. betty: that's a huge story. emmy awardsed the last night, it was hard to miss the ads for the latest audi hybrid. >> it's not that easy being green. >> it is now.

i did not mean anything about skin color. i meant clean like environmental. >> no problem, i get it. >> it's a plug-in hybrid. i am not a racist. today nobody is laughing as their parent company admitted it cheated on outfitting automobiles as far as emissions. pimm: that has cost the company dearly. looking at the stock of volkswagen over one month. shares today plummeted, falling more than 17%. european and u.s. trading has been affected and a calls into question the ceo of volkswagen. with us now is jamie butters

joining us from detroit. what are the chance of a big management shakeup now? jamie: we don't know the will have tout we determine and what investigators will look at is whether this byision was made in the u.s. local operatives trying to meet the local regulations and they did this on their own or if the approval and decision to cheat rather than comply to the rules come from the headquarters in germany. then we will know if the carnage go that far. betty: explain to us what happened. i guess the company got caught when independent researchers tested the emissions level of these diesel vehicles? that's right, researchers looked into it and i thought it was incredible they were getting such good performance without

adding a lot of expensive other technology. there is a filter that helps remove the emissions. they had a normal test report on rollers and run it and it measures what comes out of the tailpipe. there is other equipment they had from west virginia that you in the trunk and unused ticket tailpipe -- the measuring thing in the tailpipe and drive it around on the real road where the wheels turn. they found the pollutants coming out of the tailpipe where 10-40 times what was allowed. they call this a defeat device and there were diesel automobiles that included audi and other vw jetta models? jamie: that's right, mostly volkswagen's.

defeatve had these devices. they are not new but they've gotten more sophisticated. it to getlifornia, your car approved for the emissions test, they had to open the hood. they had defeat devices were almost as simple as a refrigerator light. if the was open, you use the air cleaning technology and when it's closed, you turn it off see get the best performance possible. this is more sophisticated and done with a computer program that can recognize how the wheels -- whether the steering wheel is being used. it has got more complicated. the testers and regulators had ando a lot of sleuthing volkswagen played a lot of games. admitted that they put in that program. betty: if it's too good to be true, it probably isn't.

what about for the future of volkswagen in the u.s.? they have lagged behind others in expanding here and selling their cars. will this do more damage? the volkswagen brand has been struggling for so long in the united states. they don't have a pickup which is important here. you would not expect them to but that's a huge for this market. withdon't have an suv three rows of seats. baked their cars cheap when the consumer was going more upscale and i wanted more features. they have had a series of missteps and sold for fewer than 400 thousand cars per year and their aim is to get to 800,000 by 2018. it was looking unlikely they could get there before. of their sales/4

being diesel being tainted by this cheating scandal and it will be uphill and harder. cars thatnumber of are contained in this allegation ofback to 2008, a total 482,000 automobiles. think the maximum fine is $37,500. how much could they be on the hook for? if they get the full penalty per car, it could be over $18 billion. pimm: you got it, $18 billion. presumably it will not be to the full extent and if it is, vw has a lot of cash but there is serious money on the table they will have to reconcile. the cost of remediating, just taking care of the customers instead of the fines to the government but if you are a customer and you brought those vehicles, you probably expected

them to be clean. now they will have to spend money to make them clean. for many people, the expected a certain amount of power. the diesel cars have great low-end at work. --torque. what do you do to compensate those people? they could have to buy back a large number of these vehicles and fix them and try to resell them on the used market where they will be less valuable than they were thursday. pimm: and that's the good news, thank you very much. let's go right to the top stories at this hour. momentum and the u.s. residential sales market. sales of homes fell and closings declined for 8% at an annual rate of 5.3 million units. that is down from a revised andre of 4.6 million units

that was the strongest showing since 2007. home prices kuan to the number of homes on the market decreased from the same time one year ago. the second-largest us home builder posted quarterly estimate earnings that beat analyst estimates. lennar says the new home in rental markets could continue to have significant pent-up demand. the company sells homes for entry-level and move-up buyers in 17 states. betty: the president of the st. louis fed's is the central bank it raises rates as soon as next month. he dissented says last week. he is not a voting member. when rates rise, he says it will mean less risk for savers. >> clients that need income cannot find much in the fixed income markets of a have been forced to find income elsewhere. you are taking on more risk to do that and when the fed finally

starts raising rates, get a few rate hikes behind us, those clients will be able to transition back into some of the safer assets or income. that's where those types of alternative income products could face more significant headwinds. betty: fed chair jenna yellen could shed more light when she was desperate she is scheduled to make a speech. sales fell at caterpillar print worldwide revenue was down 11%. reported sales were flat and europe, africa, the middle east and sales plunged in the asia-pacific region, down 29%. another round in the european courts. appeal has been rejected in the european union ruled last year that links on search engines be deleted if the information was out dated or relevant for -- or irrelevant. pope francis is no average joe so he needs a special blend of java.

when he arrives in the united states tomorrow, he will be sipping on a special brew prepared by a kansas city coffee master. the vatican reached out to him and he has prepared 60 pounds of a special lens for the pope and his staff. beans on spilling the the ingredients. i apologize for that one. those are your top stories at noon. we are taking a look at the nasdaq which is down a little bit more than 1.5 points mainly because of weakness in biotechnology stocks. hour, up in the next alexiscepris wins back the job of prime minister of greece and what it could mean for the future of the nation's economy. betty: the chinese president will travel to the u.s. and we will look at why there is so much at stake for both sides including in the midst of the slowing chinese economy. carly feel rina is

surging in the polls, her record at hp is coming under more scrutiny. we will look at the highs and lows of her tenure next.

pimm: this is the bloomberg market day. greek voters gave their prime minister a second consecutive term. steered thes country into a new bailout deal and his left-wing party took 35% of the vote. it will continue governing by renewing its coalition with its nationalist partners. betty: let's get more insight on greece and what the election means for the future of the nation. let's go to tom mckenzie.

minister return in a stronger position? tom: he's going to be feeling very bullish today. he will meet with the president of the hellenic republic to be sworn in as prime minister. tomorrow, he will bring his cabinet together and they will be sworn in. he did much better than the polls expected. many in his own party did not expect this. he has managed to gain a coalition using just 4 seats for what he got in january, moving away from the rebels that have caused the problems when he signed up. no longer has to deal with those in he is a strong mandate and bucking from his party and has a momentous task in ample minting the bailout deal with creditors and time is of the essence. they have to re-customize the banks and they are going through ecb stress tests and there are

capital controls imposed. mark is a big question whether he can do this in the creditors will be satisfied. pimm: having to do with creditors, the price value of greek bonds rose today after the win. what is the most important thing he has to do after he takes office again? tom: they edged up in a markets edged up a little bit. the markets were sanguine when he stepped down on august the five. yes, there is an element of concerned. time is crucial. he needs to make sure he brings his coalition together quickly and the government is formed quickly which it looks like it will be any starts and acting these proposals. there is an october review from the creditors and he to be happy in order to disperse the aid that greece so desperately needs.

there is recap is asian of the banks, 25 billion euros and that will be done by the end of the year. the ecb could allow the greek banks to profit from some of the quantitative easing that the rest of europe is benefiting from. they have signaled that they will try to push back against some of these reforms. we will see how much tension that creates. tension,eaking about mohamed el-erian came out with a piece in reaction to what has happened in greece. he goes on to say that -- is that the case? tom: that's very interesting.

the president of the eurogroup and a big figure in the creditor group said this morning that we welcome the formation of its government and we're looking forward to working with them through these proposals. saying thebanks are political rest -- risk is been taken out. going to be tension absolutely and i think what's crucial in terms of debt restructuring which i'll lot of weight has been put on is that these reforms are implemented and then the carrot has been dangled by angela merkel. she said there will be some form of debt restructuring. possible after the first view in october. pimm: thanks very much. carrots dangling before the new government. coming up, we will take a look

at the carly fiorina track record as ceo of hewlett-packard. ♪

betty: this is the bloomberg market day. pimm: let's take a look at the top stories at this hour. saysted nations agency iran is making significant progress in cooperating with the nuclear deal. the international atomic energy agency inspected a key research building and says noah quitman linked to atomic weapons was killed -- that no equipment was linked to atomic weapons. putin has amir message for benjamin netanyahu -- relax. he said fears of syrian aggression against israel are unfounded. not soldnetanyahu is and says syria and iran are trying to set up terrorist operations in the golan heights. pimm: medical experts say

thousands of people have died needlessly and africa us able --break because of bumble bungling by the united nations. they say the world health organization ignored warnings in the epidemic has killed more than 11,000 people and is expected to be over by the end of the year. that is a look at the top stories at this hour. it is united nations andrnational peace day berger companies are breaking bread. they are celebrating with a brand-new burger. they have teamed up to create something called the peace b urger. king proposed this idea to mcdonald's but mcdonald's said no thanks. betty: instead, mcdonald's is rolling out its own plan by teaming up with the united nations food program. in 38 campaign will air

countries today bringing attention to the refugees of the middle east. this comes as john kerry announced his plan to take on more refugees in the united states. burger king is part of this .orld ad they are kind of teaming up, they just did not like the peace burger idea. a response from denny's saying they wanted to join up. i thought that was interesting that you have this back-and-forth debate which takes place usually in private. now it all takes place in public. that is a big shift. betty: they wanted it in public because you get free advertising. we will talk about it

as we are doing now. betty: and then you may go to mcdonald's or burger king. pimm: they did not mention in and out burger. betty: i am familiar. they don't have a variety. coming up, the chinese president makes his first state visit to the united states this week. betty: i went to beijing to find out what they hope to accomplish. is coming up next.

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accept u.n. condemnation of its cuba trade embargo. the obama administration might abstain in the next general assembly vote on this resolution. it asks the embargo be lifted. the u.s. restore double medic ties to cuba in july but the u.s. congress will not lift the embargo. the united states has never opposed a u.n. vote that criticizes american law. another republican candidate is facing a backlash for comments about muslims. press"son told "meet the that he would oppose a muslim as president. that weld not advocate would a muslim in charge of this nation. i would not agree with that. pimm: a muslim civil liberties group is calling for him to drop out of the race. days afters come donald trump failed to rebut a question or accusing president obama of being a foreign-born muslim. says: senator ron wyden

policies for clean energy, he says his plan will reward clean energy to spark innovation. it may be difficult to get through congress controlled by republicans. spend 140s it will million dollars to expand a factory in indiana. it expects to add a hundred jobs over the next two years at a fluffy at the facility. -- at its lafayette facility. pimm: that is a look at the top stories at this hour. coming up in the next hour, joseph a bank is undergoing a makeover and we will look at the clothing chain's plans to cut back on discounts and update fashions. betty: we will get more insight on the men's clothing business the former zimmer,

ceo of men's wearhouse. he is launching a new venture. pimm: chinese stocks again for a second session ahead of the president of china's visit to the united states begins tomorrow. that says new report the chinese economy is not as weak as it may appear. the morgan stanley head of emerging markets say that might -- says that might not be the case. >> the real problem in china for the next couple of years will be how to deal with the economic problem. the rise of china from a military and economic standpoint the next couple of years, the domestic challenges will be quite overwhelming as they try to come out of this tough economic time. betty: i traveled to beijing to meet with the top foreign policy over show. he is like the secretary of state for china. invited us rate an exclusive interview.

he wanted to set the stage for the president's visit. >> i think a lot can be accomplished during the visit. i believe that a lot has been sino-u.s.ith relationship. there is no major country relationships between china and the united states. this will be the first state visit by the president of china to the united states at the invitation of president obama. i believe this is very important for the two leaders to have in-depth discussions following their discussion in california about the international situation, about our respective y's policies and the futures of error companies, to

chart a way forward in our relationship. we expect there will be quite a few positive, practical cooperation results flowing from the visit. what people call the deliverables. i believe the president will reach out to the american , the friendship between our two peoples. still the american public has a mistrust of the chinese. a pew center paul said 54% of americans view chinese unfavorably. how can the president change that perception? >> the results of the open in paul vary from time to time and from place to place. my understanding of american society is that there is a deep awareness of the importance of

nurturing better relationship between our two countries. peopleve the american attach a great degree of importance to the visit. we have had some early harvest of this new model of major country relationship between us. for instance, the trade between the two countries has grown quite a bit. there are more student exchanges between us. on the international scene, there has been good coordination between china and the united states from the middle east to some parts of africa, from afghanistan to the korean peninsula. a better relationship is in the interest of both of our peoples and the world. relationshipe cannot be free from any problems. even people sometimes don't see

things in the common way. sometimes for countries they might have some divergence of views. that is not that important. as long as we the differences in proper perspective. what we should try to do is to further enhance mutual strategy and trust and try to tap into the potential for collaboration between the two sides whether it's bilateral, regional and that's really part of the purpose of the visit to serve the interests of building a better future for mankind. betty: that's all well and good. we are talking about the number one and two economies in the world so it's critical for the entire world that the two get along. there is some really big issues.

the president of china has a huge bath to try to convince the american public that china is not a threat. you hear it in the elections now. pimm: you mentioned the poll numbers and you framed it using that information. this was done in beijing. where did this physically take place? room ins a beautiful the state guesthouse where foreign dignitaries and diplomats have been there. pimm: so this is the place if you are a foreign dignitary, this is where you will be received officially by the chinese government. betty: exactly, and it's behind the wall. you cannot just walk up there. pimm: you are going there, can you give us a flavor of what and beke to be processed in this room with the secretary of state? betty: it's very formal. he had a delegation with ham of

probably a dozen people. pimm: so he's got a dozen handlers. betty: the deputy foreign minister was there -- pimm: they are all there to welcome you. betty: but also support him and be with him. this was a very important interviewed not just for us but for them. pimm: they don't do this very often. betty: they don't let foreign press in very often. when they do, they have an objective. they want the world to understand china even more. for me, this highlights how critical this state visit is by president hsi and how much he wants to around the opinions of china among the public but also everyone else. pimm: did you leave your mobile phone at home? betty: no, i brought it with me. my eyes were wide open. pimm: that is a big topic of

conversation between the chinese and the united states, the agreement to not weaponize the internet. betty: absolutely, that's a huge issue. i got a chance. for sixin beijing months 20 years ago and walked around a little bit. there i am. me how muchdible to beijing looks a lot like other modern cities. pimm: where are your glasses? where are your signature glasses? betty: i left them at home. i took my phone. give us the details of the special. betty: check out my full interview and our special program "china behind the wall" at 9:00 p.m. tonight. we did not get to the wall.

we went behind the wall. pimm: that's even better. still i had, we will talk about carly fiorina who is rising in the polls with that comes renewed questions about her tenure as the chief executive at hewlett-packard it will take a look. ♪

pimm: let's go right to julie hyman in the newsroom for the big stories of the day moving the markets. julie: we are seeing stocks give up some of their gains and the nasdaq has turned negative now. the s&p 500 and the dour holding onto their gains.

let's look at the breakdown. sectors,ok at the health care is a big red section and its biotech that is leading some of the weakness o. we are talking about five -- pharmaceutical companies. pimm: pimm you mentioned biotechnology. what is going on a health care? julie: in terms of some of the individual movers, there's a langros.called ma bought through nondisclosure agreements for a competing drug they make merck makes. each drug was not chosen but

it's down by 9%. merck is also declining by more than 1% which it -- which is a broad-based selloff in health care. strategists have crossd out the death which is a momentum indicator. this is a chart going out over the past year. the 200 day moving average. the purple line is the 50 day moving average and when you get that 50 day crossing below the 200 day, that is seen as a negative indicator. the stock was already down sharply following earnings and this momentum follows on the heels of what has been a 40% drop in the shares following its last earnings report. within biotech, some of the other bigweights in this down v,ertexgen is

falling for the second day. lexion is also taking a hit. pimm: thank you. carly fiorina, her poll numbers are rising due to a strong performance of the republican presidential debate. she is now in second place according to a new cnn poll attracting 15% of the republican vote behind donald trump who has 24%. rise, purple numbers there is more attention being paid to her record when she was chief executive of hewlett-packard. my cohost is mark crumpton. you've got a chart that looks at her track record? mark: now that she seems to be her tenuree steam,

at hp is coming under fire. donald trump called her tenure a disaster. if you look at the chart, look at those numbers. what do we see? she did not destroy hp. that seems to be the consensus. if you see how the lines are they had ae hp was, lot of changes and the criticism was that a lot of people got laid off during her tenure. pimm: she does not dispute that. and when she did the compaq deal, it was a challenged technology market. mark: she understood this and has been a fierce advocate of what she had to do given what she was handed when she took over hp. there was the controversy between her and some back-and-forth over what happened when mark hurd was there.

it and she has described i'm paraphrasing -- she dealt with what she was handed as best she could at the time. as the chart pointed out, it was not a complete disaster no matter how much the rivals say so. an associated press article perkins this and tom from kleiner perkins was on the hp board when she was there. he criticized her buddy told the associated press it was a mistake to dump her. he says she thinks she is brilliant and has got it unwarranted criticism. pimm: do you think she is getting extra criticism and scrutiny because she is a woman? mark: absolutely. i have spoken to her a couple of times. i have interviewed her twice and she talked about the challenge it was being a female in that environment in silicon valley and some of the hurdles she faced.

she was not reflecting bitterness but reflected the reality of the times when she was the head of hp. pimm: thanks very much for bringing that to our attention. what is coming up in the next hour? frk: i will interview vicente president ofr mexico. he is trying to help out their energy sector of a $500 million funds to get investors. some investors are skittish and i know if the mexican economy can stand on its own. i will ask him if the time is right. pimm: very good, thank you. i will see you in a few moments. the founder of the men's wearhouse, we know he is out that we will tell you about his new venture coming up with george zimmer. ♪

pimm: we are looking south over manhattan the empire state building and the freedom tower all the way to the harbor of new york city. attention tor retail and clothing, specifically men's retail. have becomeks suits a commodity in many places. they had been parodied by late-night shows. >> i spend a lot of my time cleaning up messes so i need something that's absorbent and affordable. what a way reach for? a suit from joseph a banks. that may be a comedy skit

but it's not funny for investors. the clothing store chain is getting rid of these aggressive promotions and is trying to modernize its brand. what is the right fit for the industry when it comes to formal wear? let's get perspective from someone who knows about the retail industry, one of the titans of men's fashion, george zimmer, the former chief executive of men's wearhouse and is launching a new online tux ito rental company called generation tux. thank you for being here. >> always a pleasure. pimm: you saw that spoof. do you think we will see a change where we will get away from -- we will give the suits away and make it up in volume? i think this was one of the problems with that i position was that the way they were doing

business was on this extreme promotional basis. free was theseven overall tone. the announcements they were going to change and exceptobably a good idea in the first 12 months after you make a change like that, you are likely going to have some significant double-digit, store decreases. pimm: that is the potential problem if you're going to change your strategy. you have taken advantage of a change in a business model by going online for tux seed of rentals. tell me about generation tux. evolution ofy the of tux ito rental -- rental. in 1999, i created what was the largest tux ito rental business in the united states and it was

done in store. some time to reflect, i realized it was perfectly poised to be done online and that's what i'm doing. about the price points and different things you can rent online. >> we rent tux ito's as well as ito's tux ito 0- tuxedoes as well as suits. i'm wearing one of the suits right now. the will almost denigrate product because it so inexpensive. we are renting these $495, tu withoutr suits accessories. we are trying to establish ourselves. pimm: $95 is the basic level for how long? event week ahead of the

and we ask for you to return it three days after the event. 10 days. pimm: what you think about this start up being better than the other startup? >> the other startup has always been intended to support this one. this is where the big money is. was my former employer doing north of $400 million in of the store,t the contribution to the bottom line was enormous. this is one of the most profitable segments in the entire apparel business. it is my hope that beginning now and going forward that rental apparel becomes increasingly important. pimm: where does the inventory come from? what kind of suits are we talking about? luxuriousrics are

wool. you will feel it is a nice fabric for $95. they are manufactured in colombia. themeople who have worn already, believe the fit and expression is extraordinary for the money. pimm: all we need now is a black-tie event. >> well, yeah. pimm: i want to thank you very much, georges zimmer, the founder of generation tux. coming up, the federal reserve left interest rates the same and we will tell you what it means for investors next. ♪ . .

pimm: mark: this is the bloomberg market day. books like in shares tank after the world's biggest carmaker

admits to cheating on air pollution tests. we will look at the legal consequences for the w. -- four vw. pimm: president obama has a big week on his plate. and how tough is it to do business in mexico these days? we will check on the business climate of that nation and get in up a on immigration from former mexican president, this into a fox. cente fox. pimm: good afternoon. i'm pimm fox. mark: i'm mark crumpton, thank you for joining us. pimm: let's look at the top stories on the bloomberg this hour. alexis tsipras says his party

has a clear mandate after an election. is during the country into a new bailout deal and credits young voters for his when. >> i want to thank the end thank the people of the popular neighborhoods of athens and other neighborhoods. you have proven to hard to die. even when on the firing line, we are close to the working classes where people toil and work. the left-wing party took 35% of the vote and will co-govern with a nationalist party. putinn president vladimir tells the israeli prime minister that fears about syrian aggression against israel are unfounded. but benjamin netanyahu is not sold. he says syria and iran are trying to set up terrorist operations on the golan heights. netanyahu is in moscow for talks

about the syrian crisis. a united agents -- united nations agency says iran is making progress cooperating with the nuclear deal. a key research building was inspected and they said no equipment to atomic weapons was found. the agency will report next month on iran's asked nuclear -- iran's past nuclear work. free fromers are yemen. the rebels ousted the government and are facing strikes led by saudi arabia and back i the united states. medical experts say thousands of people died needlessly in africa's ebola outbreak because of mistakes i the united nations. and investigations as the world health organization ignored shortages of staff and medicine. the epidemic has killed more than 11,000 people.

officials say it will not be stopped until the -- will not be stopped before the end of the year. -- pimm: let's go straight to julie hyman. julie: we noticed that the nasdaq turned lower and the s&p 500 turned lower and is now unchanged. the dow jones holding on to some of its gains. we talked earlier about health care and i attack. red line --big these losses are accelerating, down more than 2%. it looks like what is to blame is a tweet from presidential candidate hillary clinton who said the price of prescription drugs is too high and she plans to introduce a plan to combat that in the coming days. even though some other candidates, notably bernie sanders, have talked about this

issue, clinton sees her chances of higher reaching the white house, so what could this mean for the pharmaceutical industry? we see some big declines in the market with these biotechnology stocks. -- biogenfor example is down after some competition with mark. a majority of the 10 worst performers on the s&p 500 are biotech stocks. first the nasdaq turned negative and now the s&p looks like it will be following suit. well.h has performed very it has been a big momentum group. so big that it got the notice of janet yellen earlier in the year. etflooking at the biotech year to date versus the s&p 500. the s&p 500 is down here and here is the biotech etf, adjusted for percentage changes here today. even with the volatility we have

had, biotech has performed -- has outperformed the s&p 500. adjusted for&p 500 the percentage different and here is what we have seen in biotech. the group has been volatile because it has been somewhat vulnerable with all the gains it has seen and the elevated tries to earnings ratio as a result. pimm: thank you very much, julie hyman, in the newsroom. many investors are still worried about an increase in interest rate coming from the federal reserve and they are concerned about what to do with their portfolios. how do you maintain fixed income payments if interest rates are going higher? take ahould investors broader view? higher rates mean a stronger economy. which stocks could benefit as rates rise? us livechardson joins now in the studio.

first, the fed. by standing pat last week, did they throw everything into flux? heidi: we wanted the fed to raise interest rates last week. mark: why? heidi: i think they need to. if they wait too long, it could be too late. are not quite specific in terms of what they are watching, but employment is one of the numbers and inflation is still off. economic growth has been improving and better and it would have then a great time to do it. now i don't think it will happen in october but our base case is december. pimm: investors have to take the world that they find rather than the world they prefer. taking the world as it currently extra money or are thinking of changing your

asset allocation, what should you want to? heidi: be thinking about protecting your bond for folios. i would add some credit exposure, celeste -- less activity there. and add some investment-grade floating-rate. on the equity side, think about positioning a portfolio that could benefit. the cyclical opportunities in the market lace are improving. mark: at some point, do people tend to look more at the bond side as opposed to the equity side? heidi: i think the knee-jerk prices gos if bond up, yields go down. but it is about protecting your portfolio. of adding idea credits, where do you add credits? do you go into the banking sector or alternative

investments or shadow banking? is shorte of the most range exposure for investment-grade credit and would add floating-rate. having about even treasury exposure and having lower duration in terms of not going to long in the bond yield. given that energy shares are low and commodities have taken a hit, should they be looking at energy or is that too volatile? heidi: it's going to take a while for people to embrace investing in energy. inigh yield index has 15% energy, so they have been reluctant. yield spreads have died and look more attractive today. pimm: you started off describing you wished the federal reserve had raised interest rates last

week. does that make you revisit your other wishes or assumptions about how the market is going to operate? these are global interest rates. heidi: i think it's going to cause more short-term ability. the market is just looking for confidence and want to know what is going to be happening. ,f you look at the probability the futures market is pricing in a 40% increase for rates in december. we know it is going to happen. rates are going to rise and we need to start protecting portfolios. mark: what is the best protective measure when rates to rise? heidi: to try to protect the bond portfolio. pimm: if rates rise, the value of your bonds are going to fall. one of the biggest holders of that is chinese. it seems that janet yellen and

the fomc context was what is going on in china, not just here. heidi: if you hold the bond to maturity, it doesn't matter what happens if rates rise. but the value of their holdings will decline. heidi: i still think we are putting more money to work in the shorter end of the curve. mark: our tech companies position for a golden opportunity right now? heidi: if you look at the 10 sectors, u.s. technology is the only sector not laden with that. if they less vulnerable do start to raise interest rates, it means the economy is expanding. having that amount of cash, you can increase him and a activity. you are not seeing

anything happening this year with rates? maybe next year? heidi: right now, our best case is december. it is all data dependent. there's not a lot of data but that is why we think it is december. pimm: if it happens, you will think it is like christmas. thank you very much, heidi richardson. ahead, there is no more truth in engineering for audi owner volkswagen. the company admits to cheating on u.s. emissions test for its diesel automobiles. mark: we will look at how that impacts the business when bloomberg market day continues in just a moment. ♪

pimm: this is the bloomberg market day. i'm pimm fox. mark: i'm mark crumpton. thank you for staying with us. pimm: there is a positive momentum for the u.s. housing industry. homesof treaties we owned fell more than forecast in august and closings declined 4.8% to an annual rate of 5.3 million units. places -- prices climbed as inventories fell. mark: the second largest homebuilder posted quarterly earnings that eat estimates. lennar says the markets continue to have pent-up demand. the company sells homes and 17 state. pimm: macy's is hiring 85,000 temporary workers for the holiday shopping season, about the same number as last year. meanwhile, jcpenney's plans to

hire 30,000 people for their upcoming season. that is a look at some of our top stories at this moment. want to continue our coverage of our gimli the most important volkswagen, day -- parent of audi, porsche and lamborghini admits it outright cheated. software innstalled its vehicles to understate emission levels. leaves the company open to aliens of dollars in u.s. find. mark: the volkswagen ceo issued a statement saying i am deeply sorry we have broken the trust of our customers and the public. butters reporter, jamie has been following this. it justice?bers do how bad is the damage? jamie: you saw what happened on the stock market -- $15 billion of market valuation gone. certainly a huge blow to

volkswagen and its renowned engineering. we are supposed to believe in german engineering and the excellence that it can provide. so much had been put into this idea of clean diesel and if you didn't write, you could get as good of results as you did with a hybrid, so why not stick with this technology? but it just did not deliver the way they said it did. pimm: they have technology that actually fools the regulators when they go to test the automobile? jamie: they figured out how to program it so the car could tell if it is being tested and would use it cleanest, run everything to the cleanest filter possible. but when it was used in a non-testing situation by regular driver, it would ignore all the filters and give us the maximum joy of driving, the full power

and forget about exhaust. it's fun to drive, but if you bought the car or part of the government, you would allow it to be sold because it would not pollute too much. can you give us a sense of why volkswagen has had such a hard time in the united states? : the volkswagen brand is such a major brand around the world, yet it has struggled in .he u.s. since the first beetle they don't have the guts, they don't have full size crossovers, they don't have anything with three rows in it, crossover sport-utility vehicles. they kind of cheap and their product when american consumers were shifting more toward upscale, so they're just have in a series of missteps. and they banked their fuel economy strategy on these, -- on diesel, which has been really exposed. so much.nk you

coming up in the next half hour on the bloomberg market day, it is a decision that could upend the restaurant business. we will look at how much wrench ifs owners may have to pay the joint employer definition is applied to restaurants. warner's hbo was the big winner at the emmy awards it is the, but company's on-demand viewing service that's making just as many headlines. we will explain, next. ♪

mark: welcome back to bloomberg market day. i'm mark crumpton. pimm: and i'm pimm fox. will an upcoming labor decision turn the restaurant industry on

its head? cory johnson and carol massar were speaking on bloomberg radio. with join them now. when you work for a company like mcdonald's, do you work for the franchisee, the person who owns that store, or are the conditions of your work andby mcdonald's corporate therefore you are mcdonald's corporate employee and anything that happens in the work lace are ultimately the responsibility of the big employer? restaurant analysts joins us with carol massar in new york. what is leading up to this egg change and this new look at how people work and for whom? a decision awas few weeks ago. the national labor relations word decided on a -- national labor relations board decided

that their employees were found to be joint employees. people are now extrapolating this to mcdonald's. asonald's has a case brought well that is expected to be heard next year. a lot of people are thinking that the board is going to find mcdonald's and their franchisees to be employers as well. as were listeners on bloomberg radio and on lumber television as well. what does the implication of this ruling mean? this could go up to the spring court, but what are the implications for a company like mcdonald's? michael: if they decided is a joint employer with its franchisees, the big fear is that it is going to give the unions a place at the table. the first thing that could they would have to

change some of their contracts their franchisee and spend more in terms of compliance. the real fear is the unions can get a seat at the table, meaning easier to franchise with a small franchisee. to unionize those stores, which is a much easier feet than the entire chain. from there, mcdonald's would be -- lly forced cory: so not the local franchisee? in fact, they might be looking at the relations across the entire company? michael: mcdonald's would have to come to the table by law. if mcdonald's makes any sort of concessions and say we will give you here a break on health care were some of your hours, there are fears that could lead to

more widespread unionization in the restaurant industry. carol: what are the cost equations for mcdonald's and others? michael: the big fear is about health care. especially fast food, if their employees work 30 hours or less or they only have 50 employees or less, they don't have to worry about paying health care. union workers are known for negotiating very good terms in terms of health insurance and that's the biggest fear for these restaurant firms going further. cory: there's obviously a cut -- obviously a political component to this and new employees on the national labor relations board that -- there are people whose terms are expiring now and with the next president could appoint a couple of new commissioners? michael: if donald trump becomes our president -- if a republican gets then, they will have the

opportunity to appoint three members and that could completely reconstitute the board. this is going to be a very long saga. even if they rule against mcdonald's, there will be a few and it could be -- there will be a peel's, and it could be appealed to the supreme court. carol: union membership has been on the decline. michael: they are hoping -- this is a large block of workers in the united states, almost 10% of workers in the united states. it has been a difficult segment to get into. the workers are very temporary and it is an -- is a temporary job. the hard to convince them benefit of paying their dues now. they may not be the benefit because they don't see another job in a year.

carol: what is next in the timeline that investors should be watching? michael: one of the biggest trends we will see his continued innovation in terms of capital spending on technology and innovation. robots will be taking our orders and i think that's a trend we will see. carol: thank you very much. mark: thank you so much for joining us from bloomberg radio. pimm: i leave it in your capable hands, mark crumpton. mark: the former president of mexico will be joining us. we will talk about the energy sector and donald trump's comments. we will also ask esther fox about his presidential library. bloomberg market day continues in just a moment. -- president fox. ♪ sure, tv has evolved over the years.

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for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. mark: welcome back to the bloomberg market day. i'm mark crumpton. let's get to your top headlines this hour. subaru says it's planning to spend $140 million to expand a

.actory in indiana they expect to add 1200 jobs at its lafayette facility where it builds out back suv's and legacy sedans. it is subaru's only assembly factory outside of japan. crews in northern california are making gains on one of the worst fires in the state history. the blaze is said to be 70% contained. it has destroyed at least 1700 homes and killed three people. contained.lazes 30% it has destroyed 10 homes so far. the latest republican shows donaldpoll trump's support eroding. he has lost eight points in one month. among his controversial comments, he blamed china for the dow's plunge last month. eddie liu asked a top chinese official about that. betty liu asked a top chinese

official about that. guest: i'm not going to comment about a particular persons views . when you look at the u.s. stock exchange, sometimes it goes down, sometimes it bounces back. theysh america well and are having quite a recovery of the american economy. we wish the american economy getting better and better, and i say that is not good for anybody to point an accusing finger at somebody else. let's look at the facts and come to our own conclusions. carlycarly fee arena -- theina is up 3% since debate. when the pontiff hits the united states to morrow, he will be sipping on a special brew prepared by a kansas city coffee master.

out to him.reached he prepared 60 pounds of special blend for the pope and his staff. he is not spilling the beans on what is in the coffee. coming up in the next half hour of the bloomberg market day, speaking of the pope, president obama will greet the pontiff when he arrives in the u.s. tomorrow. we will look at the key issues that will highlight their meeting. shares of alibaba fall again as a lockup time expires. we will look into what key shareholder yahoo! may do. let's turn to the economy of mexico. the nation's central bank is expected to announce it will keep its benchmark interest rate at 3%. higherhas been keeping rates than the u.s. in an effort to attract investors as it troubles to spark economic growth. bill gross told bloomberg on friday that he sees good opportunities in mexico. bill: mexico comment terms of an interest rate going forward to in half years has a curved

toectation of 6% as opposed three. in the united states, we have a forward expectation of 1.5. mark: joining us now with more insight is vicente fox, he was president of mexico from 2002 2000 six. mr. president, thank you for your time. pres. fox: thank you, and hello amigos. mark: what is holding mexico back? pres. fox: this year, it will be one of the fastest economies -- fastest-growing economies in all of latin america. we will be at 3.5%, which is not bad in light of the global crisis. mark: the president campaigned on a promise of growth of maybe 5% or 6%. is this about mexico's energy sector or is there more political instability? pres. fox: it is a combination

of several things. he obtained this profound energy bringingich should be mexico back to rates of growth of close to 5%. unfortunately, the drop in oil prices came like an ice water bucket on it. but still, i think there are great opportunities coming. an investment capital firm together with american energy partners and the presidential library are joining shaleer to ring the phenomena to mexico. that should give us to faster percentage points of growth. mark: in the spring of last year, you said you would create the fund aimed at raising $500

million to invest in your country's oil and power sector. how much did you end up raising and are you focused on investing in mexico's energy sector? pres. fox: there is some confusion on that. that fund is prepared and launched by a group of mexican entrepreneurs. all of them young and visionary. they have a lot of institutional investment and especially these american energy partners, which are going to create a revolution on the shale issue. someone here in the states have been criticizing global companies from the united states that are going to invest in mexico and venezuela and the world. workss how today's world -- by trading and sharing investment. this investment does not affect what comes to the united states. the subaru case you just

mentioned -- subaru is investing mazdavolkswagen, toyota, are investing in mexico. america is becoming one single region and this guy trump is not seem to realize we are partners, we are neighbors, and we work together to build a better future together. mark: we will get to mr. trump in just a minute. let's get back to the energy sector. when the oil leases were auctioned, there was some disappointment and mexico because some of the big players in the energy sector decided not to take part. do investors still have reservations about mexico? the. fox: it is not clear level of the impact in the drop on prices today. what they are doing in managing this reform is adapting to market circumstances. what happened in that first round is not happening in the second round. it is full of investors coming and especially on shale.

just this company is ready to go in drill thousands of wealth the rocks of oil in mexico through this technology, which is horizontal drilling. week, the central bank here decided to stand firm on interest rates. a lot of other central banks around the world took their cues from the u.s. , mexico's central bank is meeting and we could hear whether they will move on the benchmark interest rate. do you think that's going to happen? pres. fox: i hope they do not do because the world has enough problems in the economy today. least thing we need right now is this increase in interest rates. i think the difference on interest rates between mexico and the united states has to do with the difference in inflation we have among our nation's.

better to invest in mexico. it is a solid economy and usually gives a better return than investing in the united states. so mexico has a place in this. mark: you mentioned donald trump and we know about the comments he made when he announced his presidential campaign. you say he does not understand we are all in this together. what doesn't he understand? let me say he is a false prophet. he has been saying so many things -- he talks so much without any sustainability of what he's saying, that he is committing error after error. he doesn't understand the economy. buildings and putting bricks is not running an economy. mark: whether we like mr. trump's comments are not, it seems to have sparked a question

or thought process about immigration and immigration reform in the united states. what should be done? processingto keep the migration reform being done by congress and president obama because we are partners. have to work together. it's difficult to understand this nation without a migrant force that is capable and productive. it is attending the harvesting of vegetable fields, it is construction, many migrants are working hard on construction. this power of this economy in the united states is not legal without that labor force. we have to administrate that labor force, but it cannot be eliminated through building a wall. wallou imagine building a when the chinese wall never worked? the berlin wall never worked. president reagan came and said hair off that wall.

buildingee this nation walls and isolating from the rest of the world. he will and like the fish, wet to his mouth. mark: you have an event february 1 at your library. what are you doing? pres. fox: we are blending -- theogy and engines engines that move the mexican economy. we want to put together 1500 top executives coming from the united states, coming from andco and this at -- discuss the future of mexico and nafta. big authorities are coming like the minister of the economy of mexico. we are going to have an opportunity for intense dialogue and networking. mark: vicente fox, the former

president of mexico. thank you for joining us. still ahead on the bloomberg market day, pope francis will soon had to the united date and meet with president obama and address a joint meeting of congress. why are some conservatives not on the same page as the hope? phil mattingly joins us when we return. ♪

mark: welcome back to the bloomberg market day. i'm mark crumpton. let's get straight to a check on the markets with julie hyman. before i mention anything

else, i want to talk about headlines coming from -- on apple from the "wall street journal." to ship an plans electric car by 2019. take a look at my bloomberg terminal as the shares climb. we don't have many details yet but we will bring them to you as we get them. let's look at tesla -- these shares have taken a leg downward . earlier, they climbed on the news that tesla sent out and invitation for a model x event. the invitation for that long awaited. now paring some of those gains if not turning out right negative. just wanted to bring you does headlines on apple. let's get to what's going on in the rest of the market. we had a rally out of the gate first thing this morning. we have given that up to some extent, but still hanging on to gains across the board.

one interesting thing a colleague of mine pointed out today is there is a lot of their edge sentiment out there. even when stocks are rallying, it was called one of the least loved rallies ever. this is an index of bullish to bearish sentiment as measured by the investor intelligence newsletter. see not only the low level right now of bullish to bearish just over one, but the velocity that we have seen that sentiment decline. it is the lowest level since 2011, but if i could max out this chart, the velocity of decline is the highest since the volcker era. what we have seen is when you have this level of bearish sentiment, it can presage a rebound in stocks. we will see if that happens this time. one thing fueling the rebound today is the idea that the fed

is indeed going to raise rates before the end of the year. jim lockhart that forward saying that he's confident the rate liftoff will occur later this year, making those comments in the 12:00 hour. i have up the world interest rate out ability to monitor. the number you want to pay attention to hear is this 1 -- 48%. this is what futures traders are pricing in as the level of a likelihood of raising rates. that probability has been fluctuating, but just under 50% as we get fed commentary. yields move higher today and especially from the depressed levels where they were last week. reflected in the dollar trade. the dollar has been moving higher against a basket of

currencies, pretty much holding steady since this morning with a 1% gain. getting back to stocks, one of the things fueling the push and pull on the bearish side, we have biotechnology pressure. these are two etf's that track by attacks. after a tweet by hillary clinton that said she planned to introduce a plan that would reduce prescription drug prices, it that had an immediate effect on many of these stocks. mark: thank you so much. a double medic whirlwind for president obama this week with back-to-back visits from pope francis and the chinese president. the president will personally welcome the pontiff at the airport for his first u.s. visit when he arrives tomorrow after wrapping up his trip to cuba where he drew who -- where he jury huge crowds. four insight, we turn to phil mattingly. what can the pope expect in the

united states? phil: he can expect huge crowds, no doubt about that. what will be interesting is how he deals with the political winds in washington. the white house is excited about this visit because they see this not just as a relationship between the president as the pope, which dating back to last year and their meeting at the vatican has been portrayed as positive i both sides, but because the pope pursues policy issues high on the white house agenda, including immigration and climate change. when he goes to philadelphia, it will include talking about criminal justice reform, an area of bipartisan support. on those politics, the people most concerned about the visit our conservatives, the same group of people who supported the pope at a number of 72% last 45%, that number is down to . the primary reason is climate change. that is the big issue. the pope talking about how

crucial this issue was to the world. you talk to republican lawmakers and this has made them very uncomfortable. so much so that one republican house member from arizona will not attend the joint session of congress the pope will be holding this week. mark: one of the things that has brought the pontiff into prominence was his, if you will, behind-the-scenes negotiations to help the united states and cuba get together and have conversations that proved, at least from the administration's perspective, to be fruitful. are we hearing anything of that nature? will there be any protests? there's still an anti-cuba contingent in the house of representatives. phil: you heard marco rubio on some of the sunday shows talking about how he disagreed with the pope's involvement in this area. when you hear about this from the white house, they like to give him credit because they believe he was helpful not only

to push with cuba and start the break through in relations there, but just in general, focusing on diplomacy, including the ever ran deal. one of the interesting elements of this visit that i have been hearing from white house officials on his what else can he help with on the diplomatic front? one of the areas you have heard on the periphery is while the iran nuclear deal has moved through and looks like it is pretty much clear going forward, there are u.s. prisoners in a ran. could that be an area the pope could get involved and in the weeks and months ahead? no sure thing, but that is at least out there now. mentioned that the chinese president will be coming to the united states. what's the sense of how the u.s. views u.s.-china relations at this point? phil: it is a difficult relationship and that has been the case for a long time. i was on air force one when the president went to beijing last

year and was talking with white house officials about the relationship between the chinese president and president obama was a blunt one. there were areas of disagreement, but areas where they thought they could agree, there's a constructive relationship there. on cyber espionage, the east china sea area is a real problem tween these countries. this visit is a visit where there's a lot of trepidation on both sides, whether the relationship is heading in a worse direction. this is a crucial visit, one that they hope sends things back the other direction. mark: phil mattingly running us from washington. thank you. still ahead, and the viewers last night were given the gift of free hbo, sort of. we will explain. ♪

mark: emmy host adam samberg gift --wers a little free hbo. >> the ceo of hbo recently said he doesn't think password sharing is a problem. here is my hbo now login. mark: the account worked for about a minute before too many people logged in. my cohost joins me now. i'm wondering if hbo was mad? peoplet: they don't mind .haring passwords if anything, it encouraged people to sign up for hbo. having said that, hbo quickly tweeted out to get your own subscription for 30 days for free.

but it's interesting because hbo go was what they are referring to, the streaming service where you have to have a cable system. that's the unbundled hbo. mark: i watched that part of the emmys after i watched the mets get a heat down. he's not kidding. scarlett: hbo is a huge winner at last night's emmys. they pocketed 43 awards and "game of thrones" one 12 out of its 24 nominations. julia louis dreyfus won best actress in a comedy series as well. mark: the history lesson night when viola davis one for best actress, the first time an african-american woman has one -- has won.

scarlett: she gave a great speech. mark: she quoted herriot tubman about where the line is. it was a passionate beach, a short speech in keeping with the dignity of the occasion. scarlett: and it was effective for that reason. the president of fx talked about how we are at peak tv. there are too many television shows now. in 2011, we had 211 primetime series and that ballooned to 371 last year. this year, it will get to at least 400. mark: stay with us. bloomberg market they continues in just a few minutes. ♪ ♪

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iyer.t: shares of alibaba we will look into what the key stakeholders could do next. expire. of alibaba insights intoe what they will discuss in our special presentation, china behind the world. ♪ mark: betty lou going behind the wall in china. our special tonight 9:00 new york time. straight to a look at the markets. a state of confusion after what to ask from the fed next after fed officials spoke over the weekend arguing for raising interest rates this year. stos there.