>> we did it at the same time. am scarlet fu. i >> i am alix steel. here is what we are learning, we will hear from the interactive chairman live in just a few moments. his interview with erik schatzker. plus, an about-face on the energy unit, brought back in just two years ago, free point -- freeport may want to spin off energy unit. -- will be the cheapest point for most of the u.s.. scarlet: in the meantime, let's

head to julie hyman who has the latest. it looks like the rally has come to an end. much for a five day win streak. take a look at the nasdaq. we initially saw that begin to get a little bit lower, but it is now down and the dow is the outperform or today. i want to take a quick look at why. contributeg this most to the dow. coleman said she was stepping down and green is taking over as ceo -- as edward breen is taking over as ceo. -- come in and make the changes that the company has been trying to make. chevron and exxon mobil is

continuing to rally, but despite all of this, we are seeing declines across the board. go lower,aw the s&p so you with think that in a sector like health care, it would do well. that tends to be where you want to go when you want to save money? not anymore. it isn't the defensive stalwart that it once was. there are all of the concerns about higher drug pricings. take a look at bio gene, there is some commentary out this morning -- a doctor called by or gin's price index absolute in tennessee -- absolute insanity. to send these stocks down, and once again, it is not just a biotech, it is the large cap drugmakers as well. , they are all taking

hits as well. the new transpacific partnership may limit the exclusivity on some drugmakers. if i can take a quick look at the terminal, we talked about the pricing for drugs. take a look at the pricing for stocks. valuations have come down, but take a look at the relativity. as we have talked about several times, we do have pricing concerns. that wereare stocks price very high compared to the rest of the market and still are. i love that charge, by the way. can you tweet it out? it shows the difference between the broader market. that was julie hyman. breen you live interviews with some of the most influential leaders in our time. alix: let's go to the bloomberg market's most influential event.

erik schatzker is with very taylor -- begin, you know, because we have done this before, that i like to ask you questions about valuations. you bring a different perspective to the question they an aeight trader -- the trader. i want to begin with the unicorn problem. they are supposed to be rare. count 131are at last startups with a valuation with $1 billion or more. it only makes sense in a closed circle where it doesn't matter.

delusion.about is that means that when you go, the latter financing rounds dilute the original. and so they have no reality. it is not like anybody actually believes these valuations. what they are is new money coming in. and old money argues for these delusions, because they are all betting on imaginary high upside. it does not matter. so the only thing that matters is when the shoes drop. an enormouseen amount of money coming in and no shoes have dropped yet. ,hen that begins to happen because none of these companies make any money. when it begins to happen, , and then there

valuations will become more rational. erik: is it possible -- >> it doesn't matter. erik: if it doesn't matter, should we be not paying attention to it? does it matter if uber is worth -- >> of course it doesn't matter. why would it matter to anyone who isn't being diluted. they brought in all of this they got these tosumably intelligent folks say that -- but they were buying into, they are investing in many different things. the 99e buying into /1. there are no economic consequences.

why does the surreality exist? zynga is another shoe that did drop pretty hard. scheme of this, more money has come in and we are in of, because of mobile, more than anything else, but also the natural development, we are now in this time of hyper invention and formation of business. to see a wholeg sequence of things happen which, they will happen, and that it dry up the money. the valuations will get rational and then you will also have, on the other side of this, on the buying side, not the selling side, you have people paying

opportunity costs. disney buys maker, it doesn't ,ake any money, the price again, it only makes sense if , i want to get into this, i will pay this huge opportunity cost. so you have those two forces. i don't want to predict the timing, but at some reasonable relatively near-term, rationality will fall. i don't mean that it will fall. you will take the big pressures off of the buying and the investing. erik: in the meantime -- barry: in the meantime, it is craziness. are in the business of buying things and selling things. buy things att

multiples that we don't think our rational. can't -- we, we start things that have -- we inder it cost us, $500,000. erik: and now it is worth what? barry: who knows. [laughter] actually have to some net revenue. question, it is -- i am pretty sure that it is going past the phase where if it wasn't sustainable, it would have dropped. it sold its growth for long enough. is the contrast, we invested in that, but we didn't

invest very much. if we buy businesses, we by businesses that have relevance. -- y: erik: barrel of fish? plenty of fish? barry: yes. if we are buying something we would say it is an opportunity -- ande will buy things there are many things i would love to own, but we can't do that because they are not rationally priced. erik: is it better to be a seller? barry: yes, in this environment. you could say, sell everything. erik: leon black did. are a companyyou like ours who has been creating

assets and spinning off companies which we have now done multiple times. that is our business formation. we either by at an early stage that wee a business hope to get to a point that we hope will stand on their own and they are independent, it is good for them and for shareholders. that is what we do. -- we are not in the business of saying, if one thing out of 60 things works, we are happy. that is not our model. how do you approach the challenge of recycling the capital that he will have when this liquidity event comes along? barry: buy things that we think our rational. waiting doesn't usually work.

we will wait for the world to turn rational, and then you sit and that doesn't make a lot of sense. what you do is what you can do. there is always something you can do. of travelt businesses, we just paid -- we just bought orbitz. we paid a lot of money, but it was a rational price. go,t is not like we won't it is just that our filter is devoid of extraneous fillings. except for our own silliness. erik: do you find that the money you might be competing with is at spotting the kinds of opportunities that you look for? barry: no. why would they?

maybe they have been burned a few times and learned some lessons? again, for their investor, i'm not an that the record has been, i don't know. but some would say good or average. -- realitybility does eventually he come -- does forme reality, except reality television and our current political situation. but in this case, just to answer your question -- [laughter] no. [laughter]

let's talk about your portfolio. are you happy with the way it is bills right now? do you see trends developing more technologies emerging that you want to take advantage of in a way that would require you to restructure? expedia is on a very good growth track, it was under a now it is competitive. it is a worldwide business, it is growing, we have been very inquisitive, he continued to be , the path is very wide, it is not going anywhere. i'm not going.

look -- expedia is a tech company. a pure tech company. does, toto do what it take an extraordinary amount of information and be able to pull responsento an instant to a request for this or that, it is an immense task of innovation and technology. so long as it continues to invest in technology, i have no worries about it nor any desire to redefine it. isfar as i see, that company well, it can go in any direction and it will go where at -- where it has always gone. it is totally opportunistic. comes in the door,

we will put the money down, we will not worry short-term or long-term. really disturb us to put a stick in at any moment and time and essentially say, that is enough. others would say, we failed. we can say, we thought it was a good idea, we screwed it up. at that point, we, not happily, we eat it digestible, and go on. the only thing i don't want us to do is to make a big mistake. that means something that essentially changes the net profit that the company is engaged in. it needs to continue to build by businesses and get them to a

level where they can stand on their own. it is a unique model, no one else does it. unique doesn't mean it is smart. although it has been on the record fairly often. and: outside of travel are four main businesses that you are in. you have an application's business, you have the content and digital publishing business. which of those holds the most promise right now? barry: i don't know. i can give you a good little argument why each has possibility. -- it dependsnds upon execution, and some things

we get right and some things we don't. some things are timed. can't -- ing is, i don't think it's wise to say, well, this one. all of the areas we are in have promise and potential. all of them. the question is whether or not we can execute anything sufficiently. and we may do well over here and not well over there. so i can't go there. i have just gone there and it was not very productive. true -- well, let's contemplate the flip side of the valuations question. as opposed to buying and selling. valuations have been immensely challenging. is going to be going

public into a market that could continue to be challenging. case, do youe wait? you mean, do you not do the ipo? the consideration for us is, can value.n a minimum decent hopeis not a value that we will go up crazily the next day whichk, it is a base upon that we hope, if we continue to fewhe work well, that in a years it will be worth much more than it is now. so our consideration is not the last -- if it falls below what we think is the minimum, then we won't. we can't predict that, because

you can't predict much of anything today. certainly political figures. erik: we will get to that. august was notable for another won't soon be forgotten in american media. 4, bob siegrist said that espn experienced some moderate subscriber losses. disney shares are down 15%, discovery is down 17%, and the list goes on. was that a watershed moment for the industry? barry: do you mean the announcement? erik: no -- barry: sure. you,ershed is that america, have been in close communication systems since

radio. why? television was limited to broadcast television, a limited spectrum. satellite and cable, it was much less limited, but the people who owned it wanted to tell everybody how limited it was so that they could grab from them rights that otherwise they could not otherwise get. so we have lived, up until really, 5-7 years ago, when you speedsransmit videos at that were able to be received. broadband, that said, wait. there is a limited, absolute capacity. you can drive any train down that path. happened, these closed systems became and are

vulnerable. so when you have a closed system, you can price things essentially without much precision in terms of the consumer. but once you have transmission systems that allow you to pick a norm is and to have capacity, then all of that does go away. that kind of surprised this realization came as late as it did. thatse these systems mean no one inside the system anymore has real pricing value. previously they had pricing power with the consumer and with programming over cable asership, so did broadcast

-- all of the pricing power is going to disappear. so i think they are vulnerable. so it is very much for real? barry: of course it is. --e you do it, it really is nothing in the day on is going to hold it back. major content producers tried hard. they said, what are you, crazy? we're not doing that. we want the most people paying anymost money without discrimination, because then we get the most money. breached, onceis that happens, it is vulnerable. it does not mean cable is going away, it means that the word cable, broadcast, satellite, they will all disappear. because now they are data transmission systems and they

transmit cable programming, broadcast programming, digital programming. so all of those historic things lose smoke. erik: let's think about the major players in this industry. i mentioned a couple of them. you referenced a couple of others. who business models are most resilient? any model that relies on a closed system is full marble, but that does not mean they are going out of business. they will do what they have always done, they will find something else to build on. is a business model of believing that you can increase prices on the consumer to is what ishich happened over the last 25 years. that is over. when you think that you can in christ -- can increase that

will, i people who think, do better are people who own individual programming. because individual programs can be priced. game of thrones can be priced. the good wife, a tiny little i have been gone and that show came on and it is on netflix or apple. and i like the good wife a lot. up, $44 for the season. bought it, i'm not the normal consumer, i grant you. but the ability to price individual programs for people who like them will mean much fewer people because you can essentially

adventitious lee. formations, i think there could be a lot of productivity there. are good business models and bad business models. going to that is happen is that there could be a lot of creative destruction. that is what i am wondering. barry: they do what they are doing. they try to diversify, they try to get into this other area, several of them have said that they don't want to give away dollars for pennies. why, they wanted the dollar in the closed system versus the pennies of the open system. that is lovely until you don't get the dollar anymore. and that is inevitable. i don't know. question fors my

the guy who built fox broadcasting, the guy who built usa broadcasting. here is my guy my -- my question for the ceo of paramount, is virtual reality for real? it is interesting, i have probably seen everything that is , as well as a few things that are still in a prototype, and it is a different experience. it is most applicable to me to , because of sports the ability to get different angles. i don't think, and this is just me. i am an old course. i don't think it is for storytelling. but i could be completely wrong. i think it is definitely -- it is another dimension. 3-d was another dimension.

everybody thought 3-d is everything, it is, but it is only applicable this way. thing is truesame with virtual reality. i'm not talking about it as it relates to health or science, i am talking about it in terms as an entertainment medium. let's go back to the politics issue. whose fault were you predicting? barry: well. if donald trump doesn't fall i move out of the country or joined the resistance. [laughter] aren't you already part of the resistance? no, i mean what is necessary. the real resistance. [laughter] no, truly, i don't think

i'm moving or joining the resistance. i will take any bet that it won't happen. so i just think it is a phenomenon of reality television as politics and i think that is how it started. reality television is based on conflict. nobody wants to watch reality television with two housewives talking about where they will get their hair done. it is all about conflict. and all donald trump is is about conflict. it is negative conflict. anybody gets away with the idea that john mccain isn't a hero, because he likes people who don't get caught, it is insane. even that i am saying it is silly. why would you even think about it? he is a huckster. he is somebody who learned long

ago in real estate that if you make a big name for yourself, it can get you dollars. so you -- he is a self-promoting huckster who has found a vein of meanness. barry: i don't think it has anything to do with anger -- erik: what about his communication strategy? barry: he doesn't have a strategy except to be what he has always been -- a nasty, mean person who is criticizing people and doing silly showmen stuff. where did he get a national reputation? from "the apprentice." what did he do on "the apprentice?" he fired people. that lasts a little while until it doesn't and then you get b and d celebrities to come. of time,ore we run out

what will prove to be the most successful approach or strategy as this campaign moves forward? what is going to win? win iswhat is going to you are eventually going to have two candidates, hopefully with some qualifications, and one of them will win. [laughter] wealth is there. we have run out of time but it occurs to me -- one last question. you have had the rare experience of running multiple companies at the same time. what is your advice to jack dorsey? how does he make a success of square and twitter at the same time? think there is a capacity to run multiple businesses. so that's what he does. it's not like people say how you allocate your time. nobody i know who runs more than a soda stand does the kind of

precise time allocation. he will bob from one to the other as issues arise and he has capacity as a manager, which we don't know yet. square is a developing company and he really did not manage twitter. he founded it, he's the creative drive of it. if he's a good manager, handling two public companies is not that big a trick. erik: square is not public either. barry: true, but it intends to be. erik: we have two and our conversation there. thank you to barry diller. [applause] scarlet: that was very diller speaking with erik schatzker. iz and we have lots of interviews today, including bill ackman at 4:00 p.m. eastern. stephanie ruhle will be

interviewing bill ackman. we are really looking forward to that. in the meantime, we want to check in with mark crumpton. he has our headlines. much.thank you so a former united nations president is accused of taking more than a half-million dollars in bribes. federal prosecutors say john ash was paid off for steering lucrative investments in government contracts. he was the u.n. president in 2013. a wealthy macau developer and four others are facing charges. the national transportation safety board has opened an investigation into the sinking of a cargo ship near the bahamas. all searches have found is one body, a life riserva, and a heavily damaged life vote. the ship sank last week. 33 people were aboard, 28 of them were americans. south carolina gets a break today -- the rain has finally tapered off.

floodwaters will keep rising in parts of the state. off likes are cut islands after the record rain storm washed out roads. at least 14 people have been killed in south carolina with another two dead in north carolina. some 40,000 are without drinkable water. president obama has cleared the way for emergency aid. there is something to be thankful for in november -- average u.s. heating costs are projected to be the lowest in four winters. the reason is warmer than usual weather and low fuel prices. energy information administration says those who burn natural gas to keep warm from october through march will pay an average of $578, down 10% from one year ago and the least since the winter of 2011-2012. that's a look at our first word headlines. you can find the latest news on bloomberg.com. freeport-mcmoran and is

considering its option as it deals with huge slump in commodity prices. they're considering selling their oil and natural gas unit they brought -- they bought just two years ago. scarlet: they are also cutting their number of board members from 16 to nine. this is about the company responding or preemptively acting to prevent carl icahn from calling the shots. it looks like carl is calling the shots a little bit. he's trying to spin off the oil and gas business but it needs a lot of capital. it's going to be a little difficult with the debt they have, so where do they go from here? they still need to find a buyer for the unit and there has been a lack of m&a because of the spread between the head and ask. resolvingwind up

itself or does freeport need to sweeten the pot? sell lesswanted to than 20% for accounting reasons and they thought they would get $1.5 billion, which would value the company at about $7 billion or $8 billion. now they have to find another solution. everything is on the table right now. carl icahn also took a stake in the first lng export terminal that will be operational in the u.s.. how many more of these activist investors will we see in these deeply entrenched commodity businesses? ken: you are seeing it all over the place. you have glencore, you have what's going on with the chemical companies. broken up.ing there might be some whispers that you better do something. this entire space which is in deep trouble right now, the activists are swirling because the assets do have value. freeport-mcmoran shares

are rising by as much as 5.3%. that's the biggest advance since october 5 and highest level in three weeks. help to unlock value is the theme. will clean energy become more widespread? tom stier think so. asked whatschatzker it will take to change the republican party's attitude toward climate change. tom: we are asking candidates to come out with a plan to get us to 50% clean energy by 2030. the majority of publicans -- of republicans agree they want the candidates to stand for that. it's not a question of convincing people because everyone agrees this is something we have to do together.

of real point in terms interactions is for people to care about it a lot. if this is think your 10th most important issue, you're not going to change your vote. people have to think -- this is the generational challenge, this is something we have to do. beare going to internationally competitive in a way that is our growth strategy for the whole country. you have to make people into single issue voters. tom: people have to think it's urgent. david: even if they think it is a problem, they think it's so difficult to address. it's painful and will change their lifestyle. people tend to put off things they think are really hard. tom: that is true and they are wrong. point in economics

for the cost of her noble energy has come down so far that solar, utility grade solar and wind are often the cheapest sources of electricity in the united states. david: even without government subsidies? tom: without anything -- by 2017 and most of the united states, it's going to be the cheapest form of energy. in lots of the united states, it is the cheapest now. that every year, if you think about the way this energy is getting created, it's getting created by technology. -- everyut cell phones year, they got smaller, more powerful and cheaper. >> what opportunities should we be looking to? david -- tom: solar city announced a panel that was more efficient than any other panel than had been put out.

cost is only going to get cheaper and more efficient and it's going to drive everyone out. dropcting that continuing in price is going to happen. it's exactly the way it happened with microchips. they got cheaper every single year. there's one problem -- markets do matter. when you look at solar city or sun edison, which has become something of a hedge fund hotel, stocks down 55%. people like david einhorn getting creamed. he may not be the long-term investor you like to see behind that stock but if the investor loses faith in the promise of solar power, what happens to the industry? tom: is no question that individual companies and individual timing may be different. being early is as bad as being

wrong. i'm looking at something on an industrywide basis. the fact that we are moving to , therent energy generation electric car industry, tesla -- we are seeing things that have to happen. how that's going to happen company by company is the job of people looking at stocks. stephanie: they are also happening in a rich person's world. when you look at the income inequality and the prices we are facing, how can you get people to say this needs to be my number one issue when you have people making minimum wage you can't feed their own family? tom: there's a very simple answer -- this is the job engine of the future. good paying jobs. that's the future. we will push to prevent climate disaster, but only if it promotes asperity for all americans. specifically not just creating

jobs, but good paying jobs that you can support a family on with dignity. that was tom speaking with the whole crew. scarlet: tomorrow, a trio of a list guess -- we have larry summers, kevin plank, and michael lewis all live with stephanie ruhle and david westin starting at 7:00 tomorrow morning. short" changed my life. i can't wait. scarlet: coming up, the european union striking down a transatlantic data agreement that may disrupt companies like facebook and google. we will head to the nasdaq to see how their stocks are trading. to thet's another blow coal industry -- citigroup is cutting back on financing for coal mining projects. scarlet: forget about buying a luxury watch -- how about making

one for yourself? of all speak to the ceo swiss watchmaker offering a free course in the usa. ♪

scarlet: welcome back to the bloomberg market day. alix: let's check in our top business headlines. we begin with southwest airlines. for 42 years, they've made money by emphasizing short-haul trips in the u.s. starting in october, they will fly to six cities in latin america and the caribbean. the problem is southwest has run

out of cities in the u.s. it wants to serve so it is going international for growth. scarlet:

it has seen the south korean tech giant shares dropped sharply. on the slumping sales and a --ewarm responsibility samsung may dip into its $55 billion cash pile to calm investors in the form of a buyback. final numbers come later in the month. analysts expect a profit of $5.7 billion. sales are projected to hit their lowest since 2011. and we are going to

focus on the nasdaq where matt miller is live. out theu just pointed top court struck down the safe harbor act which allows businesses to get information out of europe. it affecting a lot of businesses like google, which is now called alphabet, as you can see behind me. those shares are down on that news. trading -- the -- it will make itself in-house. and some new surface gear, including a stylus to go up against the product. there were a number of cardiac --ice makers falling today they make batteries that power pacemakers and cut their forecast and we see a number of

cardio device makers falling, including hardware and biotech. the biotech index plunging. biotech drugses or anything related to it has seen its share price hit because of concern prices will be cap. hillary clinton famously tweeted about it recently. that's a problem for these stocks. finally, i want to hit on tesla. one of the most closely watched analysts in the auto industry and a big bowl on tesla is pulling his warrant in a little bit, cutting his price target. but heill a long way off says the model exes priced so high that it may be difficult for tesla to hit their 2016

volume target. of course you would and on tesla. alix: citigroup has decided to cut its financing of coal mining projects. year, another bank decided to turn away from coal financing as well. activist them policymakers are zeroing in on coal as the biggest source of fossil fuel pollution. scarlet: our bloomberg reporter joins us from chicago with more. citigroup andke bank of america are reducing their financing but it's not like they are cutting it off completely. guest: that's true. they have come out and said they are going to dial back the financing and lending to some of the coal industry, particularly toward those that engage in a practice of what is called mountaintop mining, where you

essentially cut off the top of a mountain to get to the coal seams. it is important to note that this is a dialed back but not a full out elimination. but it's already going to squeeze out the guys feeling the pain. coal is still used to generate 40% of the worlds power, so we still need it. what happens as the financing gets squeezed? mario: if you imagine king cole as this big santa claus like figure for the last two centuries or so, it's going through a dramatic diet right now. this term is overused, but it is goingonetheless -- it's to a new normal wear it has to slim down in the world is moving away from coal and reducing that exposure, particularly western nations like countries in europe and the united states. thank you for providing perspective on this.

you can find his story on bloomberg.com. on the bloomberg market day, we will have much more and talk about luxury watches and get you a check on the markets when we come back. ♪

alix: welcome back to the bloomberg market day. when we were wrapping up the markets earlier, one thing we did not get too was european stocks and the strength it has seen of late. it was an interesting day for european stocks. all across the board, they ended higher. however there was not a lot of volume.

the volume for the euro stocks average and inhe terms of the intraday chart of the euro stocks, you saw them come off their highs of the session when you got the imf announcement that they were cutting global growth. a little sensitivity but considering the bad news from germany, you would have thought it would have been worse. you look at the industry breakdown and come inside the bloomberg terminal -- we have 19 groups in a stoxx 600. 3% falling on the heels of a rebound in the underlying price. health care shares are also seeing some weakness. they have been real losers in terms of the momentum play in the united states and that carried over into the european market. energy stocks are up and health care stocks are weak.

are we in a new range for the s&p or are we waiting for some kind of rake out? scarlet: and what's going to provide the rake out? the federal reserve. next halfng up in the hour of the bloomberg market day, we will continue to monitor the markets and look at oil, luxury markets and more. scarlet: and emerging markets. and ofou have a bull their taking two totally different views in emerging markets. scarlet: we will be right back with more. ♪

alix: is 1 p.m. in new york and 6 p.m. in hong kong. scarlet: welcome to the bloomberg market day.

from bloomberg world headquarters in new york, good afternoon. i'm scarlet fu. i'm alix deal. the imf cutting its global outlook on the emerging markets slowdown, but should you invest in them question mark there's a wide range of opinions. scarlet: fulks flag and is being forced to hit the brakes on a number of projects as the fallout from the omission scandal continues. pepsico reports earnings that beat estimates. we will look at why the company's healthier options might be improving their bottom line. first let's head to the markets desk where julie hyman has the latest. higher butocks are the u.s. stock market, where are we at? looks like we were going to give up our gains or in the rally.

julie: the dow is still higher but the s&p and nasdaq are still higher. i know i talked about this an hour ago, but it is worth reiterating. this is the dow, hire slightly. the nasdaq down more than 1% and it is i attack selling off. it has also been i attack that has been hit so hard since the highs of the market we saw over the summer. this is ranked by performance since july 20 and we've seen so many various steep inclines in the smaller biotech stocks. it has been an incredible time for these stocks and this underperformance was preceded by outperformance over the past several years. alix: just looking at the nasdaq seems to gox -- it

above its five and 10 day moving average, it could not hold that level and then declines. it seems to be some kind of technical selling responsible. technical have really seemed to gain in importance. i liked the chart that we looked at with oil stocks versus the s&p 500. what is the correlation between biotech and the s&p 500? about .8, so a one 21 correlation is absolute. high correlation and we have seen a surge in that correlation as well. when health and biotech underperforms, it has been detrimental to the market. this is valiant. valiant has been the poster child of this concern about higher drug prices and will they be clamped down on.

when you look at who has been feeling the pain, it has been the overall market but also a lot of hedge funds. pershing square, paulson and company, so the pain has been felt by those large and small in the market. i like what you said about poster child -- it's model is to acquire others and go from there. alix: let's get bloomberg first world -- first word headlines with mark crumpton. let's begin with south carolina. the rain is getting a break and the rain has finally tapered off. rising ins will keep some parts of the state. some towns are cut out like islands. at least 14 people were killed in south carolina and another

carolina.n north some 40,000 residents are without drinkable water. president obama has cleared the way for emergency aid. the army says bombing the doctors without borders outpost was a mistake. the admissionas made this morning during testimony before a u.s. senate committee. >> on saturday morning, we provided close support afghan forces at their request. tobe clear, the decision provide aerial fire was a u.s. decision made within the u.s. chain of command. a hospital was mistakenly struck. we would never intentionally target a protected medical facility. he said afghan and u.s. military forces have retaken the town from the taliban. a medical examiner says the american airlines pilot who fell ill while flying from phoenix to boston died of natural causes.

captain michael johnston was 57 years old. officials ruled on the cause of death after an autopsy and luminary talks ecology test. the plane inanded syracuse after he became unresponsive. there were 147 passengers on board. pentagon wants to avoid any misunderstandings in the skies over syria and russia apparently agrees. responding to a call from u.s. defense secretary ashton carter, russian officials say they are willing to keep talking to ensure the nation's planes do not interfere with each other. criticizednato russia for irresponsible behavior for allowing its warplanes to cross into turkish airspace. federal investigators are heading to florida to try to find out why a cargo ship sank in the bermuda triangle. the ship went down in waters nearly three miles deep. it straight -- it sailed straight into the hurricane

which was a category four storm. 28 americans.ded one body has been found. is a look at our top headlines. you can find the latest news on bloomberg.com. we want to turn now to emerging markets and a bullish call from franklin templeton. on a valuation basis, this is a multi-decade opportunity to be buying very cheap assets. not all emerging markets have good value. we are not investing in turkey, south africa are russia, but there is a handful being caught up in this turmoil that we think are the diamond in the rough. i should point out that he posted that on youtube, which is critical. for more of the debate, we want to bring in our guests to talk about both sides of the emerging market debate.

let's continue with what we heard michael talking about. where does he see the opportunity and what is so oversold anything -- oversold that he thinks is right for a bounce? guest: he thinks the sentiment toward emerging markets have been poor. these are the currencies being punished unfairly during the selloff. scarlet: he had some very clear picks on what you should avoid. guest: he is avoiding south africa, russia and turkey. these are more shaky countries in his view. but countries like mexico, he is pushing through the reform. they have low inflation and the currencies are historically very cheap. these are good things going on for mexico. we spoke to paul mcnamara and he said pretty much the same thing -- it's not necessarily a

fundamental call. they have been so oversold. but it's very different from the call which seem to want to run for the hills. have been covering mexico for a few years and mexico is one that everyone is like mexico will pan out. mexico has not rewarded investors in the short term. is making a huge gamble on oil at the worst possible time to be making a gamble on oil. and they are in a rate hike dilemma. will they hike when the fed hikes mark their economy is very slow. of how: it reminds me people can decide whether the fed should or should not raise rates. ceormer deutsche bank commented on emerging markets, but he was a little more worried. he is focused on the

credit cycle -- emerging market companies that borrow in the international market and a corporative in the emerging market. it has tripled in the last five or six years to one point $3 trillion, according to bank of america. when the economy is slowing down, the u.s. is poised to raise interest rates and all these factors are creating headwinds. they need to cut down their debt doubles which is going to be a headwind for the economy to continue growing. alix: and that is the issue when you look at this call comparing what is happening to the 90's when the fed was hiking and did so aggressively and there is a huge fallout. guest: bridgewater made a great point a couple of weeks ago where they said one difference that the emerging markets had going for them is that because the fed was raising rates

beforehand, they were able to lower rates and we saw the fed lowering rates and that was able to boost everything. but now, the fed does not have that ability anymore. it's not going to make a huge difference if they lower them back to zero. you get to money managers who have made successful calls in the past and make two completely different calls with the same data set. it is a fascinating moment. to a lack of beast visibility out there and how decided you are on how china is growing right now. alix: coming up in the next 20 minutes of the bloomberg market day, and the missions cheating scandal is rippling through volkswagen's is this. we will have to look at which projects make it cut. scarlet: pepsico getting more revenue from products like diet

pepsi. we will look at whether there turn toward healthier items can continue to boost its business. and a luxury switch -- luxuries with watchmaker is out with a new course. ♪

alix: welcome back to the bloomberg market day. scarlet: let's check in with our top business headlines right now. airlines isest messing with success. 442 years, they have emphasized short-haul trips in the u.s.. starting on october 15, they will start flying to six cities

in latin america and the caribbean. southwest has run out of cities in the u.s. it wants to serve, so it is going international for growth. workers the united auto are telling fiat chrysler they plan to go on strike tomorrow after 65% of workers voted down a labor pact. gap for narrow the pay second-tier workers. for: miller has a message budweiser -- this bid is not for us. the brewer rejected an informal takeover offer from anheuser-busch. some shareholders were looking for an offer any $110 billion range. no word if they will come back with another offer. you can read more headlines at bloomberg.com. ourlet: let's head over to markets desk were julie hyman has a check on the market movers. julie: coal miners are ripping

today -- much higher and in some cases by enormous amounts. and coalnergy up miners have been battered this year, there is a barclays note that says the pain will ease next year as the conversion to natural gas slows down. there have been other analysts commentaries recently that would stabilize for coal if not -- we have seen a decline over the last five years or so but we have a bounce off the lows. perhaps that would be good news for some of the coal miners. i want to look at the s&p 500.

many oil producers are among the top-ranked performers as we have had oil prices bounce today. seeing a lift on the idea we will see oil reduction in the u.s. come down. chesapeake energy, transocean and should near have been rallying -- and should near have been rallying today as we have seen a rebound in oil prices. carl icahn is a big holder of these. today, we oil prices see this continuing rebound, up 4% today. alex pointed out something going so oil traded-- in london, it has actually moved above it 50 day moving average. up we haveg leg seen, it is above that level.

has been hovering at or above that level for several sessions. about then, it's all -- scarlet: the ceo of volkswagen has announced it will have to cancel projects. it will not be enough to cover fines and potential legal damages. alix: joining us now is our auto reporter, jamie butters joining us from detroit. what kind of investments will be shed right now? jamie: they are going through everything right now. until they can figure out how big the liability is going to be, they're trying to put the brakes on everything. it ultimately comes down to deciding what they can go forward on and it's going to be painful. they have been planning or delaying in the u.s. markets for so long and they might have in

the past tried to cut back on electric vehicle development expensive ando there such a little market for it. it is a real challenge. what are people saying in terms of concept cars? these are things you spend a lot of r&d on. shown -- theyve's have shown as many great concept and new ideas -- i've mentioned this three row suv for the u.s. -- they've shown a few ways they would like to do derivatives of that, but if they can't bring that out or can't support it with similar models, they could lose out on a big market opportunity. fast -- what investment is pared back and how fast can it be replaced?

when oil companies like deepwater -- you can't shut that investment because it's going to take years to get it running. jamie: lead times are typically between two and five years. and they are just now starting to show the fruits of the new it is but they've been able to make. has to cut andn new product development stays down for a year or so, they could be really impaired until 2020. scarlet: you have said management was told it would be painful. will that extend to management paychecks? jamie: that would seem to be likely. you have the german structure with half of the board made up of representatives of the workers and half for management. information sharing but it gives a good chance to remind some of the executives that the optics would be very bad if they were to pay themselves large bonuses next year and the year after.

thank you very much. if they cut investment, what does it mean for germany? they contribute through exports and factories. scarlet: about one out of seven jobs in germany is tied to the automotive sector. alix: i did not know that. much moree have coming up in the bloomberg market day. we will look at the hurdles ahead for the pepsico ceo, switching focus and healthier customer is in focus. ♪

to the: welcome back bloomberg market day. one stock we are watching today is pepsi -- shares are gaining after the company were worded better than estimated quarterly results. alix: however, overall revenue was down for a fourth straight quarter. the ceo continues to grapple with falling soda sales,

expressing the need to step up innovation. our guest joins us now with more from chicago. you have been a consultant in this industry for years. is it she doing right and where does she fall short? isst: the food industry under a great deal of transformation. there's a egg difference in how they sort things and buy things. cpg companies have struggled to keep up with how rapidly the consumer is changing. see a look at pepsi, i balanced portfolio and she's done a good job separating the product she-- hasn't too good for you, better for you, and fun for you. she's done a great deal of innovation of where the products need to go next. it's just tough right now and

the food industry is in a time of low growth and band -- brands that are not on trend for authenticity and things like that are really struggling right now. a big part of the ceos job is to craft a narrative. story that pepsico they are telling? every brand needs a story and the way she has crafted pepsico as an organization has to look at each of the brands she hasn't realized that some of them like mountain dew are going to be more on the indulgent side and other brands have more of a health and wellness story. i think she has nurtured those be notthat have that may so good for you perspective but have invested heavily in some of these new age brands or products like health and wellness. of innovation one

and it goes to show how hard it is. done ond all of this the back of fighting with nelson tells as an activist investor. how did she fight that battle? activist by their nature feel like they know more about the business than the ceo and that is why they are best. i think that she had a strong vision of where she was taking the company. some compromises made. a lot of times, they get their way in terms of breaking up the company for value and did a good job of standing their ground. not, shehe one or still articulating her vision right now. outlasted allas

but one of her predecessors. thank you for joining us. what is interesting is you can broaden this out to other fast food companies like mcdonald's. you can see they are going to all day breakfast, which is something they resisted for a while because it is expensive and challenging. they have to use different equipment and it shows what kind of stress these past two guys are under. scarlet: and they have had to deal with management turmoil. ♪ the only way to get better is to challenge yourself,

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we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. alix: from bloomberg world headquarters in new york -- a

sunny and beautiful day. i'm alix steel. scarlet: i'm scarlet fu. we want to check in with our first word headlines with mark crumpton. are searching across the campus at philadelphia community college for a student they say pulled it done on another student in class. of shots no reports fired or injuries, but people are being asked to avoid the area. placed onng has been lockdown. this comes one day after an online post threatened that attack at a philadelphia college or university. the u.s. federal aviation administration is seeking a $2 million fine against a drone operator, the largest fine to date. agency says an aerial photography company endangered safety by using unmanned aircraft in the congested skies over new york and chicago. the company -- they say that the company did not have permission for the flights. the company has 30 days to respond to the allegations.

a former united nations president is accused of taking more than half $1 million in bribes. john ash was paid off for governmentcrative contracts. he was the u.n. president in 2013. a wealthy developer and others are facing charges. u.s. deportations of immigrants in the last 12 months dropped to a nine-year low. government figures indicate total deportations are down 42% and 2012. just over half the 231,000 immigrants deported in the last 12 months were convicted criminals. on the clinton is going attack. later this month, the democratic front runner will testify before the house benghazi committee. yesterday in new hampshire, she accused republicans of lettuce sizing the investigation. ms. clinton: this committee was set up, as they can -- as they have admitted for creating a permanent clinical issue out of

the deaths of four americans. i would never have done that. if i was president and there were democrats or republicans thinking of doing that, i would have done everything to shut it down. mark: last week, kevin mccarthy has boasted of the political damage the investigation has done to the campaign. he said that he did not intend to imply in any way that the work is clinical, of course it is not. that is a look at our top headlines. you can find the latest news on bloomberg.com. thank you so much. from political watchers to watchmakers, patek philippe is opening up a course to watchmakers. it's the second training program outside the company's headquarters in geneva. our guest is the president of patek usa. why did you choose new york and

what do people get out of the program? thet: like the rest of industry, we are looking for trained watchmakers. watchesrying to create for 150 or 175 years and we need people to repair them. we realized there were not enough trained people in the field and we thought we would cut to the chase and try to teach them ourselves. when they get done with the two-year program, they will make an immediate impact and be able to work directly for patek philippe if they score well. scarlet: put this into context for us. servicing a luxury watches a big deal. it is in demand. guest: some of these watches can take months to service. if you have to send it to an artisan in geneva -- i've heard horror stories of people being without their watch for 14 or 18 months.

if you spend $100,000 on your watch, you don't want to be without it for two years. to have the service in new york is a big deal. alix: what has the response been like? guest: we thought we would really have two market but we went to trade schools and two-year colleges and people looking to maybe find their passion. we end up with over 400 applications and we called it down to six candidates. what is your criteria? itst: we had to expose -- went down to 80 individuals and then we expose them to what watchmaking was on a daily basis. some fell out at that point but we were able to get a look at how passionate they were about it and how moldable. employers regulate point out that there's a skills gap in this country and they can't find people with the right skills to match the job they need filled.

what is your experience like recruiting for this program? there are a lot of bright young people out there and i think you and i both have felt when you are coming out of school, you don't always know exactly what you want to do. you may have all the skills in the world but it is more about finding your passion. other luxuryee watchmakers going along the same path? labor shortage in watchmakers has been around for a while. in the 70's, when quartz watches took off, people thought mechanical watchmaking was dead and nobody trained. theou have this big cap in 80's with old watchmakers retiring and no one trained because they did not think there would be watches left to repair. people like rolex have already set up schools where they train people and it's on a slightly

larger scale and they are covering more brands. but i don't think they are going totally outside the norm and training your old -- training your own labor is the best route to go. you are offering students a stipend during the two years. can you give an idea of how much this is costing the company? guest: the investment with the director and equipment and laboratories is several hundred thousand dollars. but long-term, it is clearly worth it to train these people and have them understand patek philippe movement directly out of a two-year school as opposed to having to apprentice them for a year or two. guest: the workshop is currently 19 people and you say you service 10,000 watches a year. do you see that number growing in terms of the people you need and the watches they are servicing? last year, i think we

made over 50,000 watches for the world. with the awareness of watches growing, i don't think it's going to go away. vintage watches are becoming, like the watchmakers them selves, it is a growing base. you have tech people and financial people interested. it is a broader group of people. scarlet: forget the apple watch. .uest: the iwatch is fine as long as they want to put something on their wrist, we hope eventually that they find us. alix: really fascinating. thank you very much. scarlet: coming up in the next 20 minutes, u.s. stocks counting around today and the nasdaq taking the hardest hit at the moment. we will check in on the markets. alix: online lenders are taking on traditional banks and shake thing up the way we lend money. and an employee a draft

king is under fire for possible using inside information on a rival website. we will look at the potential fallout from that. ♪

alix: welcome back. the trade deficit soared in august, rising 16% to more than $48 billion. exports have been heard by the stronger dollar. goldman sachs says the fed may not raise interest rates until well into 2016.

the firm is still forecasting a december rate increase. a slowdown in output may prompt the fed to hold up. alix: bloomberg news has learned bain capital is liquidating a $2.2 billion hedge fund. their absolute return capital lost 8% annualized over the last three years. that's a look at our top business headlines. you can read more at bloomberg.com. i thought you are going to say bloomberg nerds. let's head to our fellow nerd, julie hyman. i would love it if we changed to bloomberg nerds. anyone can join. theee a mixed picture with dow jones doing the best such as it is of the major averages.

but i want to look at some of the other asset classes. the dollar poised for its longest slide -- both of you looking at the dollars -- the dollar against a basket of currencies. this reflects the view that the fed is going to be on hold for longer. we will hear from a number of different red officials this week, we will hear from esther george and john williams. maybe we will get some more insight. rates to check on fluctuating in the 10 year yield. it has been a relatively choppy session for bonds. 2%ll very close to that threshold. isdman sachs says the fed going to delay its interest rate increase until well into 2016 and perhaps even later. iss reflects sentiment that

becoming more conventional wisdom in the market. bloomberg at the terminal here which prices and the probability through interest-rate futures. only about 34%. the bottom chart is that trajectory for the december meeting. in other words, we had seen the probability hovering closer to 50% and then we have gradually seen a decrease in that probability and now we are not seeing it going out until march. it is fascinating how it has become conventional wisdom that the fed is on hold for the rest of the year, even as the fed continues to say it is not the case. extends to the bank of england. it is a central bank

credibility problem. alix: can the fed actually move if the fed is not pricing it in? does that hamstring the fed? julie: one of many right now. scarlet: lending club is the online largest marketplace for connecting borrowers and investors. the company went public in december of last year and since then, shares have fallen by about 6%. alix: joining us is joe weisenthal and his special guest , the lending club ceo. start -- they mention your stock price down 6% after going public in december. does that bother you? do you pay much attention to it and what do you think wall street is taking away right now? guest: i think we are very focused on the long-term. we are a transformative company

with the potential to transform the entire banking system. i think we have our eyes on the horizon, five to 10 years horizon and we believe as long as we are focused on delivering a great expense to our customers and continuing to grow fast. joe: you mentioned transforming the banking system. what's the concise explanation of what lending club does? renaud: we are a two-sided market place with borrowers coming to us to access credit, generally at terms that are better than you get from the bank. people refinancing credit cards and taking a loan from us at a better interest rate. then there are investors providing the capital and expecting a higher return. joe: we have seen an ugly few weeks in the credit markets. we have seen spreads low across

the spectrum. impact yourt business? have you seen any this inclination to defund those loans? we are in a way that private market for credit. investors are sheltered from the volatility you would see as the public credit market. would -- the investors appetite, when you are going to the next credit cycle, it will continue to set investors in a way -- you mentioned discipline. he started just before the financial crisis but you haven't been around that long since there has been a downturn or default cycle. notdo you ensure you are

going to have a huge wave of defaults when we get the inevitable downturn again? in 2007,e did launch so we have data from 2008 and 2009. what happened at that time is loan performance obviously was not as good as it is now. 4% on an annual basis. investors are continuing to go 3% to 5%. joe: we've seen a lot of money flow into this space. what does that do for your cost of marketing to get people onto your platform? we have twoaud: sides. on the investor side, there's a lot of capital coming to us and a lot of new investors signing up every day. focus on building our

borrower base and we now have more than a million customers on the borrower side. joe: thank you very much. joe weisenthal, thank you very much. coming up on the bloomberg market day, a nightmare for the online tennessee sports business isan insider trading scandal raising the question of whether the games are on the level. scarlet: a level playing field? alix: i like the pun there. ♪

alix: welcome back to the bloomberg market day. scarlet: the growing business of online fantasy sports is in a nightmare situation. the "new york times" is reporting one of the employees of draft kings use confidential information to win $350,000

playing on a rival site. this amounts to insider trading, raising serious concerns about the integrity of online sports. joining us now is our bloomberg .ews reporter, chris paul mary this condensed to -- this comes down to the idea that this is not regulated at all. this is a brand-new industry and has grown so quickly that it's not considered gambling. and it iss not basically self regulated at this point. it sort of snuck in the back door. now you have an employee from draft kings, one of the leaders in the business, made 350,000 dollars on a $25 bet on another site. his employer said he was not using inside information but he did have access to who bet what on what players and that kind of brought in concerns that the average player cannot play at the same level as some of the more sophisticated

people. insider trading becomes hard to prove because you have to prove intent. is it the same looking at a fantasy football situation? chris: there are people who make a living playing these things. the use sophisticated algorithms to do it and a soundly good bloomberg customers. they find a way to keep the casual player involved. with multiplele games that it cannot play and you can just that in pools with your friend, and they are trying to create a level playing field. in a situation like this creates a lot of problems optically -- optically. is it so dangerous for unemployed use confidential information? why does it give them such an unfair advantage? chris: you can see where the money is flowing and try to put an alternate back that will give a better payoff.

and seeable to do it where everyone else is going and head in a different direction. right now,both companies have put a and on employees betting on competing sites. whether that stays permanently, we will see. you basically described a situation where employees are making the markets in the market they are participating in. the fantasy sport website are sponsors of professional leagues like major league baseball and the national football league. chris: they are leaders and the business raised over $500 million. major media companies to investment firms and even some of the sport leagues -- major league baseball is an investor. casino companies say this looks a lot like gambling to us. how come these guys -- sports betting is only allowed in a few

states. how come you can't bet on sports but it's ok to do this? get: is this going to kicked up the chain? ?oes it have to go hire can the companies regulate themselves? chris: right now, you have a situation where a lot of lawmakers and attorneys general are looking at them. there are calls in new jersey for congressional hearings, so there may be a situation where the industry has to do something. scarlet: trying to draw a pro between fantasy sports and gambling, it seems like the more have would be between fantasy sports and investing. kings the head of draft spoke last week and said it's like investing in the stock market. somebodyhess where wins a million dollars a week.

it definitely a business people should take a good look at. what are you looking for in terms of the next shoe to drop? chris: we will see what the companies propose themselves. the attorneys general and casino regulators, to see what they are doing and monitor to see what kinds of things are happening online. scarlet: it's definitely a story inning a lot of buzz. hockey season starts tomorrow, so my entire family is there. aren't you in a league? scarlet: i didn't make the team. i tried out but i didn't make it. we have lots of great

interviews on bloomberg tv from our markets most summit. that includes lachman coming up at 4:00 eastern. and tomorrow, bloomberg surveillance has an all-star lineup from citigroup. alix: that will be a fantastic lineup. you will get the stocks and commodities and economic respective. 55% levelr a recession chance due to china, so we will get more specifics on that. scarlet: we have much more coming up. "vanity fair" ranks the most influential people in tech. ♪ ♪

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(don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. >> it is 2:00 p.m. in new york, 7:00 p.m. in london and 2:00 a.m. in hong kong. >> welcome to the bloomberg market day.

>> from bloomberg world headquarters in new york, good afternoon. here is what we are watching this hour. bolts wagon pots ceo says there will be more pain ahead as the company plans to delay non- essential investments. -- volkswagen's ceo. oil surging to a one-month high, closing at $50 a barrel. late drop in crude production use the glut -- will a drop in crude production eased the glut? minute he bear has released its list of top 50 innovators. has released its list of top 50 innovators. julie hyman has the latest. julie: we are seeing this mixed session today.