a new strategy has smartphones and microchips flying off the chills. -- off the shelves. "bloombergwelcome to go." i'm stephanie ruhle. david west in. thanks for being here with us. >> i have to tell you i am a bit rattled today. i am. i sat down with bill ackman last night. we will be sharing that interview with you. his production for 2016 was not about the fed about herbalife, about biotech. it was about mike bloomberg. if you are looking for "bloomberg surveillance," you

still have it on the radio. tom keene, in just 30 minutes, will be joining us for his morning must-read. later in the show, kevin plank, the under armour founder. and michael lewis will be joining us. david: first, news with vonnie quinn. --nie: and has anheuser-busch inbev is hoping the third time is the charm. they have made another takeover offer for sab miller. the offer, $104 billion. it would combine the two largest beer makers in the world. sab miller says they undervalue the company. the fighting in syria has entered a new stage. russian airstrikes were a company by a syrian army assault. there is no word on casualties. u.s.a says it may assess proposals on court meeting against islamic state militants in syria.

carolina,a, south tuesday was the first they without rain since and cover 24. officials warned that flooding is a danger. -- without rain since september 24. water is flowing toward the sea, which is stressing dams and could lead to more evacuations. it is being blamed for 15 deaths. now for a check on the markets, here is matt miller. matt: futures are up across the board, half a percent of right now. that is after europe gains. companiesl and energy are gaining -- take a look at oil right now. it is the story of the morning, west 49.51 per barrel for texas intermediate. everything across energy is gaining. a huge gain yesterday, almost 5%. you will see a when you're chart of oil. the average is now -- we are above the 50-day moving average,

hitting above 100 and 200. let me zoom in on this and show you that we are at the highest we have been since july 21. oil is really coming up now, and that is bringing up the rest of the markets with it. get to larry we summers, we want to check in on a story from overnight. anheuser-busch in best is raising its offer for sab miller, this time to $104 billion. matt campbell is with us in london. stephanie: that is a lot of beer. david: is this enough to get the merger done, do you think? the $104 billion? matt: i think that is a very good question. this is not at all a done deal yet. his board of sab miller put out a statement today saying it substantially undervalues the company and they are not going to go for it. but there biggest shareholder is austria, better known as philipp ria, better known

as philip morris. the chairman says one thing, then a major shareholder says another. david: thanks very much, matt campbell. now let's turn to larry summers. thanks for joining us. been reporting for weeks now on volatility in the markets, pretty much across the board. equities, commodities, debt, everything else. someems sometimes there is -- what is going on? there seems to be a global slowdown. you are a student of data. how bad is it? nobody knows, but i think the risks are to the downside. if you look at the industrialized world, and it was ok-ish for the last several years. but that was in part being propelled by the emerging markets. now you have emerging markets

submerging. you have china clearly slowing. china is going through an adjustment. even if they do everything they want to do, which is very much in question, they are going to move from being an investment, capital goods structured economy to being a consumer service driven economy. that will not be good for people selling products to china. china put in place more concrete between 2011 and 2013 then the united states did in the 20th century. potronie: juan martin del larry: -- stephanie: one more time? china put in place more concrete between 2011 and 2013 than the united states did in the 20th-century. that pace is coming down.

maybe they will serve each other a lot more restaurant meals. maybe they will move to provide all kinds of urban amenities, that will not do the same thing for the world's copper producers and iron ore producers as what they used to do. stephanie: then let's take all of this data. things were ok-ish, now things are worse in the emerging markets. what does that mean for the fed, for the rate hike that the market is so focused on? larry: i will leave it to others do.redict what the fed will i have been very clear. there is no reason to raise rates until you see the whites of inflation's eyes. i look at the data out there, and i do not see inflation as close to the horizon.

i think there is a lot to be said. aboutis a lot to be said looking and markets to gauge expectations. if you look at inflation expectations, looking at the other bonds, working all that out, it is basically saying that for the next 10 years -- 10 years -- inflation is going to be well below the fed's 2%. stephanie: the markets are perverse if you look at the fact that they are addicted to this fed stimulus. we had not looked at the fundamental problems around the world. larry: some people would call it that. iser people would say it monetary policy that recognizes current reality. current reality is different than what we have had historically. there are a variety of reasons why people are more prone to save now. there are a variety of reasons, starting from a slower population growth, why firms do less investing than they used

to. therefore, normal interest rates and normal -- normal interest rates in normal times will be lower than they have been. so levels of interest rates that have been traditionally stimulative are going to be less stimulative. do you have any concern about what janet yellen has said about running the economy hot, and that by running it hot and letting unemployment drift below historic norms, that we will see an inflation blip and the fed will get behind when they need to put the hike in place? larry: first, i always have concerns, and it is never right to dismiss any of these concerns if you want a more prudent view. myond, i work and live professional life on a college campus. it is harvard, where the kids are pretty fortunate. i feel the kids leaving, and it does not feel like an overheating labor market to me.

a lot more are living with their parents when they graduate than there used to be. david: and whether they get jobs, apart from that, why aren't wages going up? larry: because the power is with employers. there are more people looking for jobs than there are jobs, so the power is with employers and they do not have to pay more. in the very few sectors where if you do ahortage, certain kind of software engineering, your wages are skyrocketing. specific groups of craftsman -- of craftsmen have that. our labor is brought in with competition from labor around the world. it has shifted against labor, and that is why we have more a quality. that is why we also do not have

inflationary pressure. for the fed to pile on on top of that and try to slow things down right now, i think would be to take a real risk. stephanie: we have heard from extraordinary investors who are saying i am not saying that the fed is asleep at the wheel, but one said the fed is behaving like they are completely scared of the market, scared to do anything, and that is reckless. steve schwarzman wrote an op-ed who said that the next financial crisis will be government and regulators. that therebig sense is in action from notable investors. is that just wrong? larry: i think they are. you have to balance the risks. we would all prefer that the economy was stronger and that the right thing to do was to raise rates. but wishing it does not make it

so. you know, seven central banks around the world in the last few years have followed the reasoning of the people that you quote, saying that things are a bit better and zero is a problem, so we will raise rates. seven central banks that raise rates have had to retreat and pull them right back. that is not what the fed's credibility needs. may iow, stephanie, last was on the other side. i thought the right thing to do was to keep rates at zero, which is what the fed did. but i can see how last may you could reasonably have made the argument that there was growing enthusiasm, that it had been at zero for a long time and it was time to raise rates. i do not see how you can look at third-quarter growth forecasts that are running at about 1.5%

-- 1.5% -- that is pretty close to stall speed. when you are at stall speed and you close down, it is not good. i do not see how you can look at where we are right now and then say that this is the right time to be hitting the brakes rather than the accelerator. >> are you saying that they missed the window, that that could have happened, should have happened? said was, i was against it in may, but i understood much better the .rgument in may, on balance i still think the risks of tipping the economy into recession, -- in the context of the current , in the context of

the current signs of inflation or deflation in the united states, in the context of a current slowing of growth, it is hard for me to see the argument for locking in a rate increase. but i think the fed is on the right wicket when it talks about being data dependent and monitoring the data flows. to data may come in pointing sharply rising inflation. if and when it does, i will be the first to say it is time to raise rates. fell fortime america preemptive war in iraq, it did not work out so well. i think a preemptive war against inflation right now would be a serious policy error. david: let me ask you a simple question. larry: that does not promise a simple answer.

david: if you had been chair of the fed, would you have been doing things differently than what has been done? larry: i have a lot of admiration for what janet yellen has done, and i think it is very hard to try to second-guess without seeing the same data thatand full context people do. i know at various moments when i have been in office, there have been people who have been in out of office who had -- people who before.n out of office i feel that if they knew all the things i knew, they would be saying something different. that, while i expressed my opinions on the issues of the day, i would not second-guess what officeholders were doing. but in all seriousness, i have great respect for janet yellen. stephanie: what grade would you give her jacket would you give her an a?

you said you are living on a college campus. larry: i have an answer already. this kind of question comes all the time. i would give her an incomplete because her term is not yet over. as i say, idone -- have great respect for janet yellen. matt: if you look at the data, you can look at the break even the difference between tips and treasuries. the five-year level, back in may we were at least -- we at least had our head above water here because the fed target we think is about 2%. we were over that for a few months. now we are back down at 1.84%. if you look at it from a 10-year basis, it is even worse. let me just pull up the u.s. versus japan and europe.

i have germany here. the united states will get 1.4%. when you look at the 10-year 1.2%, 0.8%. it looks like they could have but maybe wey, were not really there yet as far as increase. larry: you have got to recognize that it is a little technical, but there are two different price indices. there is the consumer price index, and the so-called pressure in later. the second one runs 30 or 40 basis points south of the first one. so when you see two, you should or 1.70. once you do that, it is very hard to see a case for raising rates. an important point,

which is that the case for raising rates -- if there is one, and, stephanie, you are trying to use various investors to make the case -- is a case around accelerating inflation expectations and stopping it. but you have your bloomberg graph there, and it speaks very clearly that inflation expectations are not just not rising, they have fallen significantly since may. nothe way, since may, it is like oil prices have particularly fallen. so it is not just some kind of commodity thing. you look at the last employment report. no wage growth. no wage growth, plus some productivity growth means, if anything, deflation. that is not really where we are right now.

but i think you have got to have a database case for acting. the case now is a theory-based case based on the phillips curve theory, which has been a pretty dismal predictor of events for a long time, and based on a kind theoryd mirror version that interest rates have been below one used to be normal for a long time, and therefore things have to get back to normal and all of that. i think the idea that by raising interest rates we can make things ok, we like the idea that by leaving your raincoat at home you could avoid rain. it were so. you wish there was not going to be rain and you wish you did not need your raincoat, but that is not a reason to leave your raincoat home. he hoped that the economy would be stronger and would function

well as more normal interest rates is not a reason to raise rates. , surprise,surprise the bloomberg terminal is inflated with questions. we have questions coming in from twitter. would more deficit spending help the economy act of larry: sure, -- would more deficit spending help the economy? larry: sure, it would. you guys been to laguardia airport? it is a disgrace. it is not an isolated disgrace in terms of our country's infrastructure. look at kennedy airport and almost anyplace you fly to from kennedy airport. is a timeink about with a short-term interest rate was zero and the long-term interest rate was 3% for 30 years. what would you think about a time when a fraction of men with less education were working is

less than it has been at any time in a quarter-century, except for the height of the financial crisis? you would think that was a good time to be rebuilding america, to be renewing our infrastructure. and yet, if you look at federal infrastructure investment, taking out depreciation, it is essentially zero and lower than it has been any time since the second world war. it is madness not to be investing more in our public infrastructure. by the way, there are studies in massachusetts and i am sure in new york that we are all paying the equivalent of a dime or more fromlon in a kind of tax the extra repairs our cars need because the roads are not cap in reasonable -- are not kept in reasonable repair. i think there is a compelling case for more public

infrastructure investment, and for doing things that would encourage private infrastructure investment. stephanie: i want to get to our own correspondent in hong kong, shery ahn. let's take a look. we are talking about the bank of japan this morning, and this morning the big news out of asia. we are seeing that the bank of japan is refraining from any more stimulus. although some economists have said that japan needs -- that policy makers need to do more to stimulate the economy. we have seen the japanese economy started to shrink, and people are scared that it has fallen back into a recession last quarter. still, the boj kept its current monetary policy unchanged. they are keeping monetary case at an annual $670 billion. the governor said that he is going to keep easing until the

economy is stable. many expect the central bank to expand stimulus at its next meeting at the end of the month. david: thank you very much. let's come back to china. larry, you were saying that you believe that the rate of growth in china -- how confident are we of the numbers? iswe have insight into what going on in the chinese economy that you rely on? larry: you should not be completely confident of the numbers in any country. you probably should be less confident of the numbers in china. having has changed that a statistical system in china would be difficult in the best of times, and china probably has a less independent statistical system just like it has a less

independent central bank than many other countries. whothere are various people watch closely the different kinds of indicators. when you see gdp go up fast and you see electricity production go up slow, that could be because phenomenal -- that nominal changes are taking place or because the gdp statistics are not exactly right. there are probably some elements of both. my guess, reading the literature on this and talking with people who track the indicators on a weekly and monthly basis, is that growth in china is probably running slower than the official statistics. if that growth were measured in the way we measure growth here in the united states. but they are still growing at rates that are substantially more rapid than europe or japan.

thehanie: do you have concerns you had a few months ago in april when you wrote the "washington post" bed. you said this past month may be the moment the united states lost his role as the underwriter of the economic system globally. this was your take of the role of china and what it looks like in response to the united states. do you feel like we are still in that same scenario, given the slowdown? larry: i think china growing slowly is still growing more rapidly than the industrialized world growing fast. the particular column you are referring to was actually less about china's growth exceeding hours than it was about china setting the cadence in terms of andomic integration financial institutions. and i thought, as i still think, that period when china proposed

a new international institution, the united states appeared to be opposed to the creation of that international institution, and the nations of europe, led by our staunchest ally, the united kingdom, all fell in line behind china. i think that was something you have to stand up and notice as an american. is plentynow, there of room for debate and discussion as to just what the right posture was for the united states, just where the united states was. but i think we allowed an unfortunate,at was in which we seem to be trying to get the world to go in one direction, and then not just for the people who went in the other direction, but they were led by britain. megan: they certainly were. i want to turn back to this issue about the numbers.

if it is at 6.8, 6.6, 6.3 in terms of growth, are we too fixated on that number? as you point out, it is growing so much more rapidly. has this become the statistical obsession with china's growth rate, distracted us from the larger issue? stephanie: the good news is, larry, you have time to think about this. we will have larry summers when we return. you are watching "bloomberg go -- "bloomberg ." stick with us. ♪

stephanie: you are looking at a live shot -- it is under construction.

that is our nation's capital in washington, d.c.. because to be in nyc larry summers is with us and so is megan murphy, who lives in washington, d.c., and tom keene has left the radio booth to join us. how about some news? asked: south carolina worst may be yet to come. officials warned that a huge mass of water is flowing towards bc and that is threatening dams. the flooding is blamed for at least 15 deaths. the obama administration will release 6000 inmates at the end of this month. it is a move aimed at ending overcrowding, it is also part of a move to roll back long sentences given to drug dealers. david cameron has leaned out --

has laid out his vision for the next five years. andave diesels for prison education. he will run for reelection. now, to matt miller. matt: futures are up across the board, despite the slight drop had yesterday. and nasdaq are gaining a little bit more right now, speaking of the nasdaq, look at the biotech index, it has been crushed. it fell to a six-year low yesterday. we are looking at a drop of 3.8%. obviously the concern about hillary clinton's tweet back on september 21 -- since then, the biotech index has come down 16%. we did have congress looking into it, and france is getting into the game. they're looking at putting a cap

on drug prices. take a look at brent crude. dr. sommers gains, mentioned that crude hasn't fallen all of that much if you look at may-june. in fact, we are at 53 on rent. to a friend talking of a chair of a biotech company, he says it wasn't so much the tweet as it was the subpoenas coming out of the company. stephanie: either way. david: so tom keene. i looked at larry summers -- we looked at the financial times, this goes back to august. we talk about the theme of the moment, secular stagnation. excluding -- it is difficult to measure housing, it is less than 1%.

market-based measures of expectations adjust that over the next 10 years, inflation will be under 2%. if the currencies of china and other emerging markets depreciate, u.s. inflation will be even more subdued. do the models that you are working under, can you use them oray given low-inflation, does yanis yellen -- does janet yellen need to invent a new one? we are in uncharted territory because of how long we have been at the zero interest rates. because of how soft the economy has been. we used to think that the a cycle, ande was things went down, and then they came back. is one of the main and painful lessons of this last

period is hysteresis. the idea that something is history dependent. so now when you go down, you don't come back up. so now the economy is 12% below in 2016 what we thought it would be. seven or eight years ago. your criticism says it is a defeatist attitude and secular stagnation -- a lot of that started at your harvard. do we still have the american spirit, can it allow for a cyclical cycle? larry: i would rather be playing america's hand than that of any other country in the world. look at our resources, silicon

valley, our universities -- we have a basic resilience in the united states, we have deep structural strength and that is a huge thing. but it is not a huge thing that carries you through macroeconomic and financial difficulties. the structural strength in 1928 didn't stop other painful decades from following. so i think we have to be focused on making sure that we're doing everything we can to grow this economy. i talked before about public investment. there is a lot we can do to spur private investment. the government does need to recognize that -- is the cheapest form of stimulus. stephanie: harvard is doing a lot of it short and very things, they are the highest paid out

there, and their performance does not reflect that. what is going on up there? larry: i no longer have responsibility for the performance of harvard. i am a professor on the faculty, but as a professor on the faculty, i have looked at the , and the university would be much more affluent if the endowments had performed as well as those at the other ivy league schools. stephanie: look at heal. yale. david: harvard has done pretty well at getting new contributions. larry: harvard has done great at getting contributions, the president has done a wonderful harvard's name,

being able to name the engineering school. stephanie: but he bring the money in it, it should be invested and you should do well. what are they missing? larry: i am not close enough to it to know. i do know that the difference between their performance and yale's performance would have been aliens of dollars. but our company has new leadership and the leadership has the awesome responsibility. tom: one of the treasured family photographs is lawrence summers walking into the harvard commencement with the oldest graduate, my uncle. my great uncle, whatever. that was years ago. i'm sure you remember the day. moneyea of institutional comes down to the desperation for returns. within your new secular stagnation, is it a single digit

world in the desperation for alternative investments? are we going to go back to clipping want coupons like my great uncle did 17 years ago? larry: i don't think we're going to go back. there is no question that in a , the returns-bills that investors can expect to earn are lower than they were when the base interest rate was 5% or 6%. the did you ever walk into president and say good morning, sir, we have negative interest rates. larry: i walked in and said we rates, andnterest they are a sign of the various developments we have been talking about. not that many people want to invest. hashanie: we know what tom

read this morning, how about you? imf worldead the economic outlook. it is sobering stuff. that i can tell you. we warned of the possibility of a global growth recession in 2016, they expressed concern about risks in most places. have as they very much sense that i share that you can focus on everything. the primary focus for politics has to be on growth, going forward. tom: when dealing with this, we are looking at -- the idea of a stagnatione, secular

, and we're doing that within financial stability. now there is concern that there could be instability ahead which is why we can't raise rates. do you agree that there is the risk of financial instability? and that janet yellen has to stay on it for months? the answer to all questions that begin "is there a ," is yes. have made it clear that this is not the time to raise rates or to commit to rising rates. on the other hand, if we started to see inflation accelerate, the right and responsible thing to do would be to raise rates quickly, and i don't think there is something in the financial totem that would be a bar raising rates. there are a lot of issues going forward with the financial

terror how we built a misfeasance, which the world hasn't quite figured out yet. there are issues of liquidity, there are many issues. but at the same time, there are important things that have been done to make the financial system more stable. david: tom keene, thank you so much. larry and megan, please stay with us. return with -- of under armour, we would like to know what you think. coming up, we will talk to larry about liquidity in bond markets. coming up on bloomberg . ♪

stephanie: here is your bloomberg business flash. budweiser is making another run at sab miller. offering $104w billion after its first two bids were rejected. sab miller says it undervalues the company. however, austria group supports the ab inbev approach. -- have rejected a proposed contract. they want an end to the pay system. volkswagen says that in january, it will start recalling the cars involved in the scandal, up to 11 million cars received technology to cheat the test.

all the cars should be fixed by the end of 2016. that is our newsflash. david: we want to take a look at regulation in this company which has changed since 2008. i want to start with something that ben bernanke told charlie rose last night about the possible prosecution. forhe thinking was that those corporations, they are legal fixtures. they don't have morality. ,ny action that is taken whether it is strictly illegal or unbiased, it is taken by an individual. so i was saying that to me, it would have made more sense, instead of penalizing the firms as a whole, and the shareholders, it would have made better sense to determine who the individuals were. stephanie: you can watch that full interview tonight at 6:00 on bloomberg. david: this is a hot topic about

whether there should be federal prosecution -- do you have a view on that? bernanke'sare ben outrage. if there were people who could possibly be found guilty beyond a reasonable doubt, they should have been prosecuted. rather than their companies being prosecuted, whether there were such people, the prosecutors didn't pursue the whether in extremely complicated situations, you know that something has gone badly wrong, but you can't prove somebody guilty beyond a reasonable doubt, that is the question, and that is not something that i feel able to evaluate from the outside. but yes, you look at what happened, you look at the degree of irresponsibility with individuals, and i think it is a pretty hard thing to defend. have hit the quandary

right on its head. only look back at the crisis, it is incredibly difficult to single out a chief executive, very single members of the board for specific decisions which caused the crisis. the crazy thing is, what we are seeing six years later, it is the manipulation of what went on at the time. we have now found that so many different markets, we are looking at commodities, silver, where there have been criminal prosecutions. it was so much easier to pick up the single people at hand -- stephanie: the people they keep going after our men -- i agree, but they have found it difficult to trace the chain. if you look at some of the worst behavior, whether that is with sanctions, and that was systemic.

if we look at credit sweeps and systemically shielding u.s. supervision, for lack of a better word, that is a different situation, but i think it is difficult to go back and look at the issues that cause the crisis. it is such a broad system. that is the other level that larry points to, the practical level. you have to get 12 people of your peers, put them up in a complex financial case -- megan: don't underestimate juries. we just got john hayes. david: it is a different system in the united states. if you look at the track record, it is really hard. shocked as you that they got a conviction, but don't undersell juries. in my experience, more often

than not, a jury got it right. i think we have to understand that these cases are complex, it is a lot of money and time, but we have to send signal of how important these executions are to make people feel confident in the financial system and the integrity of the financial system, and you have people renew confidence in the sector. larry: we also have to hold people accountable for their supervision or for their non-supervision when there are , very seriousious problems. individual accountability is a spectrum. it is criminal at one end, but stupidity is not a crime. you can't prosecute people for stupidity, and you can fire them for stupidity. you can shame them for stupidity. you can make that clear. and i think, looking back, it is

a reasonable question whether there should have been more rapid and embarrassing turnover on the boards of some of these institutions, whether there turnoverve been more and accountability. it may well be that there are cases that should have been prosecuted, but were not prosecuted. that you docaution not have guilty beyond reasonable doubt standard, and there are some people who are left to the conclusion that because bad things happened, there must have been crimes. and the crimes might have been stupidity. that is a different thing. megan: what about when you see a $9 billion penalty for long system -- long-term systemic

invasion. do you think that is fair? in terms of putting them as an shouldn'tnal level? we have had a prosecution at a senior level? are we letting some big financial institutions -- because we are concerned about the risk? david: -- stephanie: but do you think it is only banks? all of the bartenders in san francisco said they were going to lie on their mortgage application. here is the problem. yes, i would like to see more individual accountability, and when you have things that are pervasive, you sense that there was a senior executive who was accountable. i do share your suspicion. but here is the other thing you have to remember. what comes with the $9 billion

is a and the -- complicated and serious ongoing, go forward monitoring program. those things aren't perfect. but if you just prosecute a resignedpeople who from the company four years ago, you have less leverage with respect to the go forward behavior of the company. you have greater confidence than i do in banks continual ability to monitor behavior. wherever people clamp down on risk and behavior, it seems to have just migrated to another area. this is not a criticism, it is just the nature of the game. it is directly a criticism, and i think it is a valid criticism.

the question is, what is the best thing to do? is that we dow need more individual accountability, we need an end to too big to jail, that does need to be over. but you also need to do things to preserve the leverage and institute monitoring for these institutions where there have been serious problems. that is not a substitute for individual accountability, but if all you have is exposed accountability, you will lose leverage on these problem's. stephanie: we have to move on, i have to play up or down with you. one year from now, u.s. dollar, up or down? larry: up. david: wti crude? larry: up. stephanie: s&p 500? larry: up. david: u.s. unemployment?

larry: constant. -- they justrway passed their $820 billion rainy day fund. shift -- in the drop in oil pricing? this is dangerous stuff. larry: if oil prices stay down, sure. stephanie: how deep can this go? larry: it depends on the oil prices, but people accumulate reserves, if the price is $40 a barrel, that is a rainy day. that is when you are supposed to use your reserves. are with suche dire consequences of a weak financial system, but yes. a year from now, the u.s.

fed rate. above or below 50 basis points? larry: below. you said earlier that the data is making you more concerned than less, how bearish are you? on a scale of one to 10? 10 is totally bearish? i can't object if you ask this -- six. stephanie: he says six. larry summers and megan murphy, thank you for being here. up this ceo kevin plank of under armour, and much more on bloomberg ♪

david: former harvard president gives janet yellen and incomplete. welcome to the second hour of bloomberg go. stephanie: with us for the hour, under armour ceo, kevin plank. native,her maryland brendan greeley. p.endan: and son of a ter michael lewis will be here later in the hour. we'll get his take on activism

and more. itid, larry summers gave janet yellen in incomplete. did you ever get an incomplete? david: no. but in fairness he thought she was doing a great job. stephanie: i definitely got incompletes. let's get to the first word news with bonnie -- with vonnie quinn. i bet she was straight a's. vonnie: no comment. after being rejected twice, another takeover offer for sab miller. more than 100 billion u.s. dollars. a deal with combined the two largest b are makers in the world. -- largest beer makers in the world. the fighting in syria is entering a new phase for the first time. an assault on rebels was backed by russian jets. the coordinated attack proved russia's primary goal is .ropping up bashar al-assad

the american commander in afghanistan reportedly now thinks that u.s. forces wrote their own rules and the attack on the hospital. the new york times is citing direct links to general john campbell's thinking. markets, here the is matt miller. matt: a lot of breaking news before i get to markets. we are seeing headlines across from monsanto. earnings are out. more interestingly, sab miller abinbev's offer. stephanie: $104 billion was not enough. matt: they said yesterday they wanted to see 45. david: it increments up.

matt: this is how haggling goes. use a 45, i say 42. earningsthey released early. stephanie: there are no other bidders. this is a game of chicken where they have to be careful. no one else is going to pay them more. matt: they only have seven days left. october 14 is the deadline under u.k. regulations for a bid and if they meant that -- if they miss that deadline they are not allowed to bid again for six months. let me get to what we are looking at in markets. futures are up across the board and they have been climbing today. the key is commodities prices. energy is the hot topic of the day and if you look at oil you will see we are getting closer and closer to $50 per barrel. on nymex, 49. 43.

take a look at brent climbing as well. the interesting thing, the wow moment of my morning was morgan stanley's note on metals and mining upgrading that to an overweight saying it is attractive. metals prices goes up. more interesting, you will see movement in stocks like rio tinto. movement in bhp billiton. even barrick gold and newmont asing, this note was killer the london team out of morgan stanley upgrading metals and mining stocks to an overweight. stephanie: exciting stuff. we will stay global. global market volatility is front and center. the imf cut global growth forecasts. in the u.s., we have seen two months of weak jobs data. 78 --es a company with

7800 employees, exposure to world markets and desire to expand do during all of this? kevin plank under armour is with us. you just finished your investor day where you outlined your plans. you plan to double revenue to $7.5 billion by 2018. kevin: congratulations on the new show and set. it is spectacular. amazing team of people at under armour. more than 11,000. our ambitions for $3.84 billion in revenue this year and we made the claim to say that by 2018 we will be at seven point -- we will be a $7.5 billion company. 30%ill have an average of bottom line. that speaks to the culture of

our company. it's about winning. it is truly cultural at under armour. winning is as much a part of our culture as things like you losing are in others. david: 30% compound annual growth, that is an aggressive target. kevin: i think it is something we have been thoughtful about. we are under penetrating in the u.s. globally we -- our goal is to be a global company. more than half our revenue should come from outside our home company -- our home country. we promise a 50% cater. david: part of the gross will come from going overseas. kevin: we grew 96% last year as a company. we had a great leader, a guy named charlie mine off who is our leader. it is not as pushing the

markets. about 62 countries today. it is the consumers asking us to come. david: you just got back from china. as that market starts to grow, the question for consumers is, how to you define luxury? is it affordable luxury and what can you learn from a company like apple? kevin: let me set the table. all throughout asia, i had a great travel partner. a guy named stephen curry. the bold ambition for us to accomplish five asian cities in five days. baltimore, oakland, oakland to tokyo, tokyo to manila to manila to beijing. stephanie: what did you learn? kevin: they love seeing stephen curry shoot three-pointers.

matt: i was wondering about what you're getting as far as price action in china. allund an index that tracks of the goods and services sold on ali baba's website. this is going back to 2012. it comes down with a slight recovery but we all know what is happened in china in the past couple of months. i don't know how important this is compared to what you sell because you are focused on the higher end of the market and on shoes. i wonder what you're getting as far as price action. kevin: how do things relate? the difference between a $600 iphone, $25,000 car versus a pair of what hundred $30 stephen curry's. we are driving global desire. it demonstrated what a signature athlete can do for us. we finished with not a very large presence in china. we got going in 2010.

watching the explosive growth from 2013 to this year. throughout the month of september and october we effectively opened 30 stores. we finished the year with 68 stores in china. we will finish 2015 with more than 25 stores. -- with more than 125 stores. we are still growing here. our largest business is the company. we celebrated our 21st consecutive quarter of 20 plus percent growth. celebrated business its 23rd consecutive quarter. we are seeing it happen in the u.s. david: is china your biggest opportunity overseas? kevin: i think there are lots of them. and larry last guest summers gave a great view of it. i think there are companies that can live in the vortex of a powerful brand and a consumer

that wants it. this is not a u.s. story. that is happening in markets in tokyo. $100 million in china next year and that is from basically nothing going back as recent as 2012. david: please stay with us. coming up next, we will take a look at kevin plank's business more. tweet us your questions. why some sportswear companies are paying too much. later we will have michael lewis joining us on bloomberg go. stephanie: your question cannot be will you send us free under armour. stay with us. ♪

stephanie: welcome back. it is time to give you a business flash. vonnie: the united auto workers union is planning to go on strike against the yet chrysler tonight areas members have her checked at a proposed contract. they want an end to the two-tier pay system. the uaw represents about 50,000 employees. volkswagen says that in january it will start recalling those cars involved in the emissions scandal. up to 11 million cars. oil is heading for its longest rally in six months. west texas intermediate is rising for its fourth day now. oil inventories dropped last week. that is our business flash at this hour. david: it is time for focus go

where brendan greeley is here to give us a big idea. brendan: we know that sponsor sip -- sponsorship costs are going up. it turns out we have kevin plank right here. stephanie: not tv sponsorship. brendan: it is very hard to predict what those costs are going to be. i'm looking at a paper produced by researchers out of ohio state contracts andncaa trying to figure out what determines the value of those contracts. size of the home market, irrelevant. you would think it is relevant but it is not. here are the things that allow us to predict what a sports contract will cost. the number of athletes total at the university. attendance at football games and aggregate number of times the

men's basque ball team has shown up at an ncaa tournament. of what companies should be paying for sponsorships at universities. a couple of outliers here that seem to be overpaying. adidas, overpaying. evidently, under armour overpaid by $1.4 million to maryland. it turns out we have kevin plank of under armour right here. did you overpay? kevin: i'm curious. idid not go to ohio state but will tell you having been at abc, we put michigan games on. how many total alums, that is the question. that is a big driver from the tv side. this is a massive amount of art the goes in any one of these deals. it begins with fit.

you've never heard anybody -- one of my directors, the former head of espn said to me, we were talking about assets and he said, we never regretted overpaying for the right assets. i think our list of schools is something we are proud of. we announced a new deal with auburn. collegiate sports have historically been an undervalued asset. we compare them on a global stage to things like global assets. when you have these massive bodies drawing 100,000 people to a stadium and people rooting for your event -- stephanie: jordan spieth is clearly on fire. that is one individual athlete in a sport losing steam. when you think about college sports, it's only getting bigger. kevin: an individual athlete can get an injury. auburn will not be injured.

golf is not losing steam. there is this rivalry growing with jordan in another golfer. you are starting to see energy. youth is a critical component. we balance between the better sponsored team or league or the athlete. we will have strong opinions for two or three years and probably this exact opposite opinion. brendan: what is your next epl team? kevin: there are some unbelievable assets. epl is especially global. tune into any bar television at 9:00 at night in hong kong and they are watching epl. we will be in the beautiful game competing at the highest level. in paulo football club brazil, one of the top three clubs in brazil we just signed. we still have work to do in the united states and in north america as a whole but we see

amazing opportunity around the globe. having the discipline to not only protect what we have here but finding ways to peel off resources. when we signed sao paulo football club, we are doing in brazil, we are not justified doing that today. that is a part of the story we told investors today. we will come close to doubling revenue, the dollar amount of our operating income too. stephanie: is maryland going to win this year? kevin: this program -- brendan: this program has a huge audience in brazil. to the corinthians fans we say, we are sorry. stephanie: brendan, we loved having you on. when we return, we will give you a morning meeting. citigroup is taking us into health care. bloomberg go, we have a lot more

to cover. ♪ matt: oil is headed for its longest rally in almost six months as u.s. industry data showed crude stockpiles fell in the world's biggest consumer. wti crude is trading at the highest level since july near $50 per barrel after prices touched a six-year low back in august. joining me now is scott bauer, he joins us from the cme. talk to me about the increase we have seen especially yesterday for wti, a 5% gain. what is behind this rise? scott: a lot of upward pressure and news coming out of opec saying the estimates are going to be that the supply is going to be down to 120,000 barrels down from 400,000 barrels last month. they said there will be increased demand. what we have seen over the last global of weeks and months since

we bottomed out, we have seen from a technical standpoint higher lows and higher highs in oil. we are breaking out of this 44 to 48 range. because that is what we call a 50% replacement level from the highs we saw a earlier this year in the 60 range to the lows we saw around 40. if we hit 50 and it breaks through, 55 is the next stop. fundamentally, we are seeing all this news come out about increased demand, lower supply and that is what is pushing prices higher. matt: we will see more data points coming out at 10:30. the department of energy comes out with a slew of data. how important is that and what do you think is the next thing that moves us on oil? scott: it is really important. 120,000 is the key estimate out there. if we see that supplies are below 120,000 which is what is

estimated, we will see $50 plus oil. if the number is significantly higher, we will probably fall back a little bit. i think a temporary bottom has been put in place. we have seen higher lows and higher highs. my guess is we don't trade lower than 46.5 to 47 over the next couple of days. it would not surprise me to see that 50 handle sooner rather than later. matt: thanks so much. more bloomberg go, next. ♪ stephanie: let's take you straight to morning meeting where leon kalvaria, vice chair of the institutional clients group focusing on m&a in looking at health care where consolidation continues and biotech techs are under pressure. good morning. leon: good morning. david: tell us what is going on

and bio techs. has come biotech index down considerably over the last few months. the marketplace had had increases starting the beginning of 2014. the levels were very high as people were looking to buy into growth. a fairmont of air has come out of that. many ipos in the marketplace and frankly biotech is still a strong focus for consolidation as people look to meet unmet needs and large pharma continues to use biotech on the acquisitions side exit -- in addition to their existing rn d. -- r and d. stephanie: is the punchline that the beat goes on in terms of biotech? it has been a hot area and we should not completely ignore the volatility but it is a sector that will not be hit by it? leon: to an extent you could say

you could ignore it but i think the bp k is off 25% from the high. it is still very elevated relative to where it was two years ago. i don't think you can completely ignore it because as large companies look to consolidate and they will look at the market value and want to ensure they are creating value for shareholders. insofar as certain stocks trading at levels perhaps in excess of where they could reasonably expect to produce returns, bastad set ended up potentially coming down -- those stocks have ended up potentially coming down. premiums in the sector have been all over the place. david: to what extent is government regulation possibly a factor? also, the tpp which involves biologics and things. leon: it is somewhat of a factor. people continue to buy into emerging markets.

the health care business in the emerging market continues to grow the bigger working-class. large pharma and large biotech will continue to buy into the sector to expose themselves. people will always be concerned that they are able to market products at a reasonable cost to patients relative to the unmet needs being dealt with. i think continued focus from a regulatory standpoint, the marketplace will want to ensure that people are buying products that are safe and that the fda remains an important factor as people look at drugs going through phase two in phase three. -- and phase three. stephanie: kevin plank is still with us. baltimore is where you are based. we got a question in from twitter. in building your portfolio, any plans for the underprivileged neighbors? kevin: i think it is the story

of every city. one of mike bloomberg's big initiatives. you are starting to see urbanization happening around the country. really proud of dan gilbert in detroit. i think what we are doing in baltimore, i don't believe cities need companies that i believe city -- i believe companies can help cities. when the buffalo bills played the baltimore ravens a couple years ago, the article written in the journal was, the only two nfl cities without a fortune 500 company. the opportunity we have, the commitment we just made -- david: thank you very much, kevin. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, 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. david: welcome back. i'm delighted to have michael lewis here. i got fred most of your books -- i think i have read most of your books.

and of course, kevin plank still from under armour. i think we should go to first word. stephanie: a lot to cover with these gentlemen. maybe we should give you a little news. vonnie: in south carolina, the worst maybe yet to come with residents coping with floods. officials warned us huge amounts of water are flowing toward the sea. moravec you wish is near columbia, south carolina. the flooding is blamed for at least 15 deaths. kevin mccarthy is telling conservative republicans "i am not john boehner." conservatives may block mccarthy's of elections unless he agrees to various demands. california is stepping up efforts against global warming. governor jerry brown will sign a bill increasing the state's renewable electricity use 50% by the year 2030.

democrats wanted to cut petroleum use by half but that proposal was beaten back by the oil industry. matt: we are seeing a moderate rise in futures but i wanted to focus in on individual stocks. you see behind me yum! brands. yum! brands posted growth in china of 2%. we were looking for 10%. kfc and pizza hut are not doing as well in china as they could be. taco bell as well. they have had some issues with the credibility of their meat sources. in him and brands is getting um brands isy getting walloped. problems headwinds are making them cut their forecasts. point 8%.op down 15 at the chinese are not buying as

much of the cosmetic oils there are selling. i want to touch on tesla. morgan stanley's adam jonas downgraded -- lowered his price target to $450. it is trading at 237 today. .loser to where it is now both of them saying tesla will have problems ramping up or selling the model x. i'm sure they will get as many of the door as they can make. can they make enough? skin cosmetic oils and meat sources. thank you so much. finance.unders versus we have seen a rise in activist investing in recent years. we saw try and management take a stake in general electric. , kevin plank and joining us, michael lewis.

what is your take? green mail has been all around for as long as i can remember. overall, would you think it is a good thing to help companies do a better job and help investors would you think it drives more short-term focus in the boardroom because they are so worried about the activists? that level of discomfort is a good thing. stephanie: corporate chafing. michael: the market should be able to decide what the activist investor -- whether what the activist investor wants to do make sense or not. it the company has a longer-term strategy it will be spoiled by the activist investor who is trying to boost his price of the stock in the short-term. i think there is an argument

about how the company should be run. companies get claustrophobic. and very smug. i like the idea of these guys running around causing trouble. stephanie: kevin, you took action to change your share classes. kevin: i think every story is different. every company has its unique tale and different lifecycles of the company. a balance, it is probably not bad thing. you see companies get old and stodgy. imagine, what happened to those companies. that threat is important at some level. when you are looking at growth i think you have to look at performance. in our situation i thought it was -- we had a compelling growth story. our structure works for us as we have it. the idea of someone forcing a

director or someone else -- imagery and culture are so important. your try to make sure your new baby can grow up. we will turn 20 next year and that is a great sign for our company. we also delivered 2300% growth since our ipo to our shareholders. that weour trajectory are 98% approval to offering --rd dashed offering we go confident about that for our business. david: do you think the market is sufficiently evaluating long-term versus short-term? michael: i think there is an emphasis on short-term. david: you think that is wrong that the market is a clearing mechanism? michael: the market is messy. it makes all kinds of mistakes. in the case of an investor coming in and saying, do x instead of y to maximize value,

i think the shareholders can listen to the argument and make sense of it. if he set up a shropshire where it is hard for someone to come from the outside, the investors approve of it and there is some reason for why he has done that. is the market efficiently -- the answer is probably no but that does not mean the activist investor does not serve a purpose. you can always but with your stock. if you're telling them what the play is an saying you want to be a part of it or not come for us it is saying, look at the history. if you have performance it changes things. if something were to change with myself or the way we are set up, the capital -- the governance structure would change as well. you are not going to get away

with things you might have gotten away with 20 years ago. michael: i wonder if companies get the investors they deserve. if people manage very well for the -- stephanie: what is an investor they deserve? michael: investors who will stick with a long-term plan because they have faith in the management. kevin: when someone walks up to me and says, thanks a lot i made a lot of money on your stock. i say, i'm glad you were able to make money but does that mean you sold my stock that you do not believe and where we are going? i am passionate but a motion can come in from time to time. the other side of the trade is saying, get on board with our company. i'm happy that you made money but i'm looking to go, i think we're just getting started and the best days are in front of us . i think it's a good buy even today. stephanie: isn't that somewhat of a nonsense dialogue? every investor loves to claim i'm a long-term investor. they love to say that.

when you look at a new issue, and ipo and you see it is everyone and their brother. kevin: we priced at $13 in our ipo. day.ened at $26 later that the one thing you need to know when you become a public company, it's not the finish line. the fact is, you're just getting started. like youit seems to me look from industry to industry and if there is a private company in the industry and a bunch of public companies, the private company is better managed. think about your business, do you think it would be easier to run if you do not the -- kevin: we did our first private equity deal in 2003. significant discount for the evaluation we could've gotten. , i did not want

to commit to being a public company. i took that discount because of it. within a year of having brought on smart investors and smart money and they helped me see the power of having a strong balance sheet, access to capital liquidity. a kind of company we wanted to be was best in class that we did not have to hide behind -- we say this is how we did four times a year. i don't think there is a bearing between one versus the other. stephanie: you can make better long-term decisions if you do not have to worry about shareholders knocking on your door. kevin: we are a business. we have celebrated 30% topline and bottom-line growth. i think people are deemphasizing the importance of being profitable. to me, profitability is as much about cultural idea of winning and not accepting the fact -- we lost money in europe for a long time. it affects the company and the

team. and makeat that down success and profitability. it is the idea of, our company is used to winning. we like that. the idea of winning at everything. david: michael lewis, kevin plank, please stay with us. we want to know what you would like us to ask michael lewis. tweet us your questions. next up, what is the future of connected fitness? ♪

vonnie: for a third time sab miller has said no to the

biggest brewery deal ever. the beer makers board has rejected a more than $100 billion takeover from a be in death. abinbev. they will go on strike tonight if they do not have a new contract. they rejected a proposed deal because they want an end to the two-tier pay system. at direct just joined the unicorn club, a startup with the evaluation of at least $1 billion. the company raised 110 million u.s. dollars in a funding round. marketplace that includes distribution. stephanie: connected fitness is a massive growth area.

under armour planning a device and has spent $600 million on fitness apps. $600 million for two apps. apps that don't make any money yet. what are you doing? has it paid off yet? --in: i think it is bullish i think we are bullish about what we have. apps, we haveur -- the third is my fitness pal, a nutrition act. we have over 150 million people on our platform. over 100,000 people downloading one of our four apps every day. since the beginning of this year we now have over 6 billion foods

long into my fitness powell. 1.3 billion -- imagine the fact that if facebook means, -- if linkedin means business, who means health and fitness? your number one asset is your health. how many days did you get sick last year? you have to call hr and check with them. have you not know i get sick every time fall goes to winter and winter goes back to spring, why aren't i projecting that? there is nobody who has assembled that. we think we have the ability to make a compelling case that it takes this idea of technology and puts in a place. stephanie: michael, you are a cynic. michael: no. stephanie: you are a cynic. michael: i'm such a softy. stephanie: what do you think of

all this? connected health, connected fitness? michael: every now and then i am seduced into buying a watch the tells me how far i walked in that day. they are piled up on my dresser because i can't figure out how to make them work. the kind of person who was disciplined enough to use all of the stuff is probably disciplined enough to stay in shape already. the kind of person who really needs it probably does not have the discipline to actually use it. cool.ms kind of i workout everyday, i don't think i need it. i don't really want to know my own data or have a hunger for how many steps i took her how the calories i took in. i go by how i feel. the natural narcissism of humanity and want to know

other data. david: that's not cynical at all. michael: you've got all these things because right now, if i -- kevin: i now have to go to jawbone or fitbit.com. we want to create that dashboard, regardless of your device, we are the ones that can be the central depository of what your dashboard is supposed to look like. matt: i don't use any of these devices. i know how many times i got the flu last year. as cynical as you can be and i'm just as cynical as michael, the money that these guys are making is unbelievable. they are operating profit growth has surpassed operating margins. it's unbelievable how many things they sell. if you had jawbone and kevin is

agnostic, this looks like from a money perspective it makes a lot of sense. stephanie: nordic mike wants to know, what kind of growth competition does under armour expect in smart clothing? you have ventured into the space already. kevin: it is our ambition. you saw be role of a woman adjusting the microclimate that controls the climate between her apparel and skin. we are not waiting for apple or samsung or someone else to build that apparel. we should be meeting them on the other side so being that technical company. today, it will be the super users that will be engaged in using this data. if you skim the $7 billion -- the 7 billion people on the , i'mt, they are saying curious about biometric information and if i can give you a case why you should measure it, it's the only thing in life you do not measure. why

don't you measure your own health? i would love to know how many irish flute days that had last year. matt had.lu days stephanie: we have to take a commercial. there is a lot more to cover here. theael will take us inside movie we are all talking about. ♪

>> outsiders saw what no one else could. sure the world inks the incentive is agreed. -- is agreed. david: so much fun i could hardly get back in. that was a clip from "the big

short." we are diving into the business of media. a twitter user asks, what is the big short truly about, greed or genius? michael: neither. i think why i was interested in the story, it was fascinating to me that the egg banks had come to dumb money. if someone had made money against them, when i was working on wall street, the last thing on theed to be was other side of salomon brothers. there were guys were smarter than the institutions. was -- it was about the qualities in these people that led them to make smart that's. they were there to make money but it was more like figuring out what happened. people were honestly

dumbfounded at what the system had done and many of them were like, we were in the markets. a lot of them could not have told you what a mortgage bond was. they had to figure it out. it was a way of explaining the crisis to a reader who did not know anything about it because they themselves had to figure out what had gone on in sibling which. stephanie: what has been the most compelling story? moneyball, the big short, what have you been most intrigued by? this sounds wishy-washy but the truth is anytime i do a real book -- some of the books i do our magazine articles coupled together. book like objects. a different process. subject to be interesting enough to me that i'm willing to do the work to write a real book

and it is such a pain to do it, i'm absorbed by it. the real books were equally interesting. buyers poker changed your life? kevin: we don't play video games. we kept ourselves. -- kept ourselves busy playing liars poker. and it -- an effective tool for executives to find out if someone knows how to make a good decision. stephanie: during commercial we will play liars poker. kevin plank, thank you so much. ♪

david: we are 30 minutes from the opening bell. bloomberg go.

guess who we continued talking to. erik: michael lewis, still with us. michael lewis one ups me with the purple. michael: today is purple. almost bank, that close -- almost pink, that close. erik: let's take you out to matt miller was a look at what is moving ahead of the open. matt: a quick snapshot to lay the foundation for what you will see in the markets this morning. futures are up and they have been all morning. the 10 year yield, kind of a risk on trade. investors are getting out of bonds drive up the yield. we are looking at 207. i thought larry summers, one of the most interesting things with his prediction that we would see

the 10 year yield flat in a year. take a look at crude oil getting closer to $50 per barrel. brent was leading the way earlier with some gains. yesterday, crude was up 5%. solidifying that today. as far as metals, you have some moves, especially copper. hopper up 1.5%. gold and silver are up as well. will be theand oil base of the market story today because of morgan stanley's note that it is overweighting metals and mining. stephanie: you lost your mind over that this morning. matt: i think it is a gutsy move and that is what they are supposed to do and that's where they make their money. i'm glad that someone made a gutsy move. stephanie: you mean is not a bank saying there's a 51% chance we will see a rate hike? erik: matt miller with a look at markets.

blackstone beware because calpers wants everyone to know how you make your money. america's biggest pension fund is ready to disclose how much it pays private equity funds and so-called interest. carried interest is so controversial. i am a big believer that sunlight is the best disinfectant. what do you think happens if a fund like calpers tells everyone how much people like steve schwarzman and david rubenstein not just make but make off of pensioners? rate.l: a lower tax people on the streets would be protesting with signs. i think it could have a big effect.

had a big effect earlier this year when they said they would not pay hedge fund managers. you sense a change in the air in the relationship between money managers and the people who was money they are managing. it feels like it is less respectful. erik: is that a good thing? michael: i think it is great. stephanie: who would you get to disagree? wooden everyone say you should have that transparency? erik: is the issue with the schwarzman's and rubenstein's of the world or is the issue with the people who run calpers and ofer public pension funds the country who have made the decision for years already to agree to that? stephanie: they did not have much of another option. there is a different skill set in investment opportunity between being the guy who is getting paid $120,000 who has

limited access to deals who runs calpers versus steve schwarzman and henry kravitz. erik: i'm not sure who's had they want on a platter. david: we may have lost what you just said. you think fund managers make too much money. michael: i think the more transparency there is, the less money they will make. david: you demystify the process. michael: i think you are right. when you let people see what people are being paid and what they are doing, there will be pressures put on them to lower fees, i think. stephanie: it is not that dissimilar from why do banks hate all of this regulation. they do not like opening their komodo. it turns out the third time is not the charm. sab miller's board rejected ab

, a to about $100 billion. this is a game of chicken in dealmaking. do you have a view/ ? michael: not at all. huge quantities of the news i ignore. a would be so hard to deal with these stories as they roll through and pretend each one is equally important you. stephanie: all the ones we don't talk about, we don't care about. behind -- 3gtal is capital is a vicious cost-cutting operation. to the cynic across the table, i wonder -- stephanie: he says he is not a cynic. erik: should we celebrate

cost-cutting? michael: no. i assume that is the right answer. if you describe it a different way, efficient management of enterprise, yes. you have to explain to me what they are doing exactly. if they are cutting costs and it is making the business more efficient, it makes sense to me. i don't know anything about this so you are asking the wrong person. we have known they want to make an offer, it is rejected at the meantime there is fiduciary obligation not to walk with him to do -- not to walk with him too good a deal. grading janet yellen. how good a job is she doing? earlier we asked the man who wanted to be fed chair, larry summers and this is what he said. >> i give her an incomplete.

her term is not yet over but she has done -- i have great respect for janet yellen. david: this is a tactful larry summers. he basically said very nice things. michael: if you like he was not saying what he was thought? david: i would never ascribe motives to anyone. what do you think about how she has done? michael: my first taught was the minute she got the job, of course. this is the time when a woman gets to take responsibility for this mess. a woman is going to take the fall for what happens next. stephanie: thank you. michael: finding a female to blame things on. i thought, things are about to go wrong because they gave the job to woman. i think it's an impossible job. she is in a trap. every time they go to raise rates, markets rebel and they

cannot raise rates. david: we just talked about transparency and paying fund managers. can it be too much transparency? we gone from greenspan who could never understand the was saying to a world where all of these fed governors are giving speeches constantly. michael: do we really want to know or do we want some mystique? a very fair question. the fed has operated under the assumption that people can't be trusted with the truth. bernanke possible memoir he more people cannot be trusted with the truth. i think the conversation is moot because we are headed that way anyway. we're not going to still -- going to restore mystique artificially. people needing to know things, i think we are going to know how they do what they do.

, i think she has been put an in impossible .ituation i have no complaints about what she has done. i'm not an expert on monetary policy. the voice i don't hear very ,ften about fed policy is nobody seems to be afraid of inflation down the road. do you hear anybody talk about it? david: janet yellen in her remarks says that's why we have to be careful. the: folks who are part of austrian school of economics are talking about inflation. michael: you three-month bills trading negative. maybe foreign investors are paying the government so it can

borrow from us. stephanie: the world's biggest toereign wealth fund about get smaller. norway says it will need to withdraw some of the $820 billion invested in nor just in the budgetoles and stimulate the norwegian economy. sell state owned businesses and assets. place like norway that people view as bulletproof startup to take action doesn't make you worried about the global economy? michael: if i was not here i would not be worried. you made me worry just now. i would be home scratching myself. stephanie: it was a few years ago that you did take -- you looked at all of those different countries around the world. michael: norway was not on my list.

norway is a curious case study. it is a welfare state premised on the price of oil being above a certain level. it is a mess there. oil prices stay low for a long time. a cultural mess. talk to norwegians and they say people have forgotten how to work or that they have to work. what happens if all of a sudden it is like the inheritance runs out? stephanie: if you go to norway you will hear that but when you have people here they say norway has the right model, look at the family leave policies they have. michael: having said that, i'm not as weird about norway as places like nigeria, venezuela. those countries have real problems and have always had real problems. it will be a new experience for norway.

bank customers are starting to pay the price for that currency rigging scandal. granted associates found dealers are providing less sales information. electronic trading is surging and instant messaging chat rooms are falling out of favor. it makes me wonder, you having documented another kind of market manipulation with the-frequency trading, when balance of power is starting to shift back from the dealer to the customer. no -- i don'te see it. how would you test it? stephanie: the person you have to point to, you have to go to barney frank. why is wall street not getting trade ideas anymore? the job functions where those

ideas were generated from do not exist. it they came from businesses where those banks had traders who were making big views. if you have a view on the market average work at a bank now? michael: my litmus test for wall street is the balance of power shifting from the intermediaries to the investor. do the seniors at harvard business school -- right now you would say wall street is not a talent in the way it would have 10 years ago. .he data shows it that partly has to do with action elsewhere in the economy. say the tech bubble or whatever it is, say the nasdaq collapses and all of a sudden silicon valley is not hiring people and nobody cares what your app is.

i think wall street would look attractive to seniors at harvard. stephanie: all those kids dying to work at hedge funds and private equity, they want to work at goldman for two years and get a free graduate degree get paid for it and then go to the buy side. is our five stories that matter to markets now. stephanie: send us a tweet or a bloomberg message. we have more to cover. ♪

vonnie: fiat chrysler workers are threatening to strike tonight at midnight. members of the united automakers .- autoworkers projected the union wants a bigger slice.

volkswagen chief says the needles of cars at the heart of the scandal will -- vw built 11 to -- 11 million cars with software that tracks the missions tests. sab miller is spurning the biggest or rate deal ever. the beer makers board rejected a inbev.r offer from ab matt miller is here at -- here with what is moving. matt: one stock we talked about earlier this morning, yum! brands. the growth of only 2% in china where it's taco bell in kfc restaurants were expected to -- specter to grow 10%. we have an issue with the quality of their meat and the avian flu problems. they have not bounce back from that. they have not been able to get market share back.

i want to talk about lululemon, the maker of women's yoga pants. stephanie: men's too. matt: they got an upgrade to buy. the strongest by a number of retail stocks. they love lululemon. a price target on the stock for $69. it is moving in the premarket. all-pro, very interesting call. morgan stanley downgrading go pro moving the share price target down to $35 from $62. analysts do not think the kids are loving go pro's session cameras. the small black cube. they say the kids prefer the quality of the old silver rectangular cameras better. the lowest target on the street.

still abroad -- still above shareprice becoming almost in half their outlook for go pro. at gooodman and the guys pro, morgan stanley does not think they have a good enough job with new products. erik: matt miller with the latest. michael lewis is still here with us. he wrote the big short, liars poker, some of the greatest books about wall street. 16 years ago you wrote a book about silicon valley. i want to share a more recent take on the valley specifically the proliferation of billion-dollar startups. here is what barry diller told me yesterday. >> they have no reality. it's not like anybody actually believes these valuations. what they are is new money arguesin an old money for the least dilution. since they are all betting on an

unimaginably high upside, it does not matter. the only thing that matters is when the shoes drop. erik: is silicon valley living in some kind of make believe world? is not new.s it this is what silicon valley does. it's kind of terrific. i like technology bubbles. it throws excessive resources at innovation, people trying to create things and entrepreneurship's. some of the companies will work out and be wonderful. the end of a new -- the end of the new new thing, jim clark who has made a fortune says he is getting out because he is scared. he is scared because kleiner perkins has given $25 million to the startup called google she thinks is outrageous. why would anybody give $25 million to google?

it is a silly name and a search engine is a commodity. nobody knows. these companies are lottery tickets. some of them will pay off. matt: an interesting snapshot of the last five years. google was in the late 90's early 2000's -- the late 1990's and early 2000's. if you grab venture capital money raised versus tech valuations, they correlate almost perfectly. as much money as we can raise, that's how much everything is worth. it doesn't matter. david: i have invested in a few startups. ,ne of the things i found was you don't know whether your investment is a good or not. as soon as someone comes in for a higher valuation you think, i made a good investment because someone else came along and validated. michael: if they are asking me

for money, we already have a problem. you are so far away from the source of the action that if they get to you, probably not a good sign. david: you don't do startups? michael: i'm not a really rich person but if i was i would for fun. david: the reason for me is tuition. it's not that much money and you learn a ton about an advisory board and you learn a lot. it's worth a few thousand dollars to learn. erik: would you go back to silicon valley and write another book? michael: it is such a hard place to write about. content. emotional it is a cold place. a bunch of autistic people wandering around. ofack of emotion, the lack

-- people get artificially excited about technology but does not feel warm or hot. stephanie: what is your advice? , former ceo of twitter is now going to be writing for the tv show silicon valley. if you think it's hard to write, good luck. michael: i always have to feel something before i write. usually i have emotional connection to the story. i had a hard time feeling -- stephanie: even though that is your hood? michael: i live in berkeley. berkeley is funky. i would not live in palo alto. it is a nice place to visit. street are clean and everyone is findbut it is hard to something you love their. there's something about it. the business is about plowing under.

david: michael lewis, thanks so much. next we will hear what bill ackman and jeff smith had to say to bloomberg's most influential summit on bloomberg go. ♪

vonnie: let's check the latest headlines. syrian opposition leaders say a new wave of attacks show russia's true intentions. russian jets supported syrian army troops. opposition leaders say it shows russia's primary goal is helping bashar al-assad. more evacuations in south carolina. students in the charleston area reopened today. schools at least. it flooded roads are blocking buses.

17 deaths in the carolinas are blamed on flooding. -- pollsn ben carson indicate that ben carson would beat -- the survey matched ben carson against hillary clinton, bernie sanders, in joe biden. every president since 1960 has won at least two of those swing states. opening bell is a couple of minutes away. stephanie: how about a little three's company. erik: stories that the market is buzzing about today. volkswagen's new ceo has pledged to finish all diesel recalls by the end of next year. i will bring matt miller into this conversation because matt, you were just telling us that there is something -- this is not enough. editorializing which

i don't always want to do. volkswagen prepared the markets for a solution today and they said we would get a recall plan installed by today. they have not released any of that information to the markets. they said they will recall the cars by the end of next year but they told german regulators because of different in different markets, they have had to come up with not two or three, but thousands of different pitches. david: there is a reason investors are so interested in what they have to say. it is right behind you on that chart. it is a technical analysis term, breakaway gap, which we are highlighting in the circle. explain it to us. matt: as we take a look at the bp chart, they are similar to have been during this story -- comparing the story to beat us his story ever since it happened.

david: the point is the stock almost never recovers. importantly, today, we look at volkswagen stock trading in germany, my feeling is that this is kind of a copout, and it is not shared by investors. myyou take a look at terminal, you can see a great function on the bloomberg, showing us it is up by the most it has been since april 2012. i was not even born then. full swag and was doing incredibly well in german trading. we have been talking all morning long about this new approach, or at least third approach. that is the deal not getting done, at least for now. it is not like it is a deal off. david: they are negotiating. >> but it has not happened yet.

isthe meantime, heineken buying out some stakes to control, $781 million. a whole lot less than 100 billion, but it allows heineken to take control of two joint -- we applaud,s that matt miller loves it when people swing for the fences and there is no question there swinging for the fences with this deal. build a business with smaller acquisitions. stephanie: this is exactly heineken's strategy. if you look at where they have been making money, it is emerging markets and fringe business. one of their best markets has been the congo. second to that has been the caribbean. i did a lot of work in haiti.

they had a massive brewery there. it is really not off-base. >> when you set down this morning, did you ever think stephanie would pull out the congo? david: heineken is really a pair company and they can focus as hard as spirits. they are focusing on a particular segment of the market. >> let's move on to number three. we heard a little bit about this already. the first walkout since 2007. unionize workouts -- workers are calling to end the pay structure and the return of cost to living pay wages. when the company was facing hard times. >> this does not mean they will go on strike. i have gone through a lot of of

negotiations. my father was out on strike. this could just be the bargaining hand of the unions. had to do basically this. the union negotiator lost credibility by going to sergio first. he would have typically gone to general motors first to make a .eal he made the decision, dan liam's, to go to sergio first because they have a good working relationship. he thought he could get a good deal that the union would agree on. workersed the union $3000 to vote yes. a bonus. i am not saying he was trying to buy their votes at all and i would not suggest that. let's when you negotiate the union, it is a different negotiation when a leader says, i will walk out on strike right now if i want to. it focuses the negotiations. i would be surprised. i think it is negotiating. matt: i think a lot of analysts

are saying the same thing. maybe they go on strike, maybe they use this as a bargaining chip for a short amount of time. union oner wants a strike. just a moment before we move on, doesn't it say something that the auto industry is back in a position now where the union has enough of a bargaining -- it actually threatens strike? on monday, he made this point, they are the victims of their own success. it is an indication of healthiness and we have seen the same thing happen over and over again in the airline industry. stephanie: it repeats itself. there you go. been talking about 3g earlier. you know who is a super fan besides warren buffett? though ackerman. he was in the burger king deal

and was yesterday in our house. most influential conference and i had to ask him what he thinks of the latest move by the fellow activist who took a big stake in ge earlier this week. >> the company has been a failure in the terms of the way they allocate. the entrance into the oil and gas industry, they have not done a good job and have only stuck and airplanets engines and kind of the core businesses. up stock would have been multiple over the last 20 years. they have used cash flows and the growth of the value of their business that comes from core businesses to make serious acquisitions that turn out poorly.

my understanding of ge is to make it up in the ranks, you have to show your stuff by doing deals. it is the dealmaking part of ge that has been the problem and not the way that businesses have run. a lot of talented ceos have come out of ge and ge is one of the best training programs for running a business and a terrible place to learn how to invest money. it is an amazing point. just not great deal makers. but that was not the only thing we talked about. nelson and bill are invested and i said, do you think nelson just could not get it done? he said, listen, we are on the same page and we believe in what they can do. heinz, wholook at believes in this 3g model paired we also talked about dupont. the end andnning in bill said, maybe if allen had been willing to work with nelson , which we talked about.

it does not have to be an adversarial relationship. it was such a battle that one was going to have to win and one was going to have to lose. nelson one. -- won. he won the game and the warp. matt: carl icon will go to the i want to do this and this and they will say, basically, go to hell. story, two of carl icahn passes appointees will be named to a board. speaking of activist investors and what they can do, take a look at shares just jumping after this. you see today's trade obviously. we kicked this off in the markets have been open at 89%. appointees,icahn's we will get you the names.

courtney and andrew. an agreement with carl icahn. >> the markets like carl icahn. money in theing short term. an 8.8% stake. i will contrast that with what nelson took in ge, a near 1% sliver of a much larger company, $260 billion in market cap. it made me wonder what it takes nowadays to have skin in the game as an activist. require istate do you put that question to jeff smith. >> the company's management and board are making decisions so out in left field over here that the shareholder base is irate.

you show up owning 100 shares or one million shares, and you are aligned with what shareholders want over here. it does not really matter how many shares you own. as long as what you are asking for represents the interests of shareholder basis. >> the opportunity only exists because we represent the majority, hopefully all of them. we are stepping into the void. the board of companies is supposed to be doing the best job i can -- they can. doing thee always best job they can and they are confident they are representing their interests in a terrific way, there is not an opportunity. the opportunity is when there is a gap. board and a management team were taking the company and away the shareholder base is not as excited about. we can step into that gap. what you see today is a divergence. it used to be when you went back 10 years ago, we need to own at

least 5% of the company. in order to have the credibility to represent the interests of the shareholders. the more stock you own, the more votes you control. the more skin in the game and the more upside. even if you own 5, 7, 10% of a company, it is not a majority. you need to be representing what the shareholders want. withecause you are aligned shareholder base, it is possible today and it was not possible 10 years ago. >> what a seachange. something in the order of 2% stake. there is so much power now that they do not even need to carry that any longer. >> a friend of mine involved in the area says the biggest change

is the willingness of investors to back the activists. it used to be the activists had to put together their proxy. in this day and age, investors are much more interested in listening to what they have to say and voting with them. in some cases, get with the program or she left out in the cold. the boards are becoming their own activists. that may be what happened at dupont. stephanie: activists used to look at smaller companies where they do not have to make such a big investment. small stakes can a big impact. we will take a break. tomorrow, the hits keep on coming. .en bernanke will be joining us tweet us your questions. and, an exclusive interview

a surprising clinical take. ♪ -- political take. ♪

a software reseller has just joined the unicorn hub. the startups with valuations of at least $1 billion. san francisco rates $110 million and a funding round led by current investors and jpmorgan. the company is a cloud market-based vendor. a billionaire is bullish on twitter. the stock is now at 25% this year. the investment firm, now twitter policies second-biggest shareholders. twitter says he posted his holdings to $1 billion. jack dorsey -- jack dorsey. being investigated in new york state, the attorney general wants information from draft

and fans. workers used inside information to win big payouts. that is the latest. you enough for a little politics from one businessman to another. here is what the chairman told me yesterday about republican presidential candidate donald trump. all he is is a huckster. he is somebody who learned long that you canstate make a big name for yourself and it can get you an extra dollar. all he is doing is a self-promoting huckster, meanness and nastiness. if donald trump does not fall, i will either move out of the country or join the resistance. david: making just a few headlines with that last remark. twitter,: if he is on

because if he is, donald will be coming for him. matt had a little bit of the feast on this last night. it is not that people have not been outspoken on donald trump because many have. but i have not heard them and it be that unspoken. people are not emphasizing the meanness. he is a large fellow. there is an underlying current that is not hard to find when it comes to immigration, a variety of things. stephanie: women. do notnegativity people focus onto her they focus on how he is larger than making money and things. point i want to introduce is pricking the notion that something is special about trump's media strategy. he gets a lot of credit for being able to manipulate the

media as well as he is. is others -- diller said it not creative. at realityb television. the media is taking advantage of him and getting higher ratings. a higher rating. he is not in it but "celebrity" moves on. i sat down with bill ackman. build it was a big surprise. at the end of the interview, the big cough or 2016 was to see mike bloomberg running for president. what i found interesting was donald trump's popularity. it is one of the things that drives him. so muchwhat people like about donald trump, the idea of who he is, he said donald is not actually that here and mike is. bill's words, not mine.

>> later, emily chang will sit at the vanity fair and san francisco. right here on bloomberg television. best we will look at the of the day. that will be coming up on "bloomberg ." ♪

stephanie: welcome back. we have had big and special names with us today. let's take a look. >> i think the risks are the downside. the industrialized -- industrialized world are ok. now we have emerging markets

submerging p are not have been very clear there is no reason to raise rates until you see the whites of inflation's eyes. i have respect for janet yellen and a job she is doing. it is not yet over. kevin plank. >> one thing to know, it is not the finish line. so many entrepreneurs get in line with fat you are really particular, really in undervalued asset when you have massive bodies that are drawing 80 now -- 89,000 people. it's the market should be able to decide what the investor wants to do makes any sense or not. >> i find it is such a hard place to write about. it was the singer's -- single hardest book i wrote.

it is like a lack of emotional content. >> there you have it. post what you will be able to share. very easy when you have got guests like that. >> it is michael lewis saying the single hardest book he wrote, that was a surprise to me. i read all of those books. but this was the hardest one. people talk about wall street being soulless. it is not because he likes wall street. his easy to hate. summer's. was we did not capture that moment in the excerpt we ran. it is likening the notion that you have to fight a preemptive to the disaster which was the preemptive war in iraq. reflecting his uncle,

which was 103. i like that. david: that will do it for another day on "bloomberg ." lineup, bengreat bernanke, former morgan stanley ceo john mack. bloomberg market day here on bloomberg tv. stephanie: thanks for watching. ♪

>> it is 3:00 p.m. in london and 10 a clock p.m. in hong kong. welcome to "the bloomberg market day." ♪

betty: good morning. here is what we are watching this hour. a new to this in the beer wars. snubbed,t offer was saying, try harder. 100 billion for the proposal was just too low. of -- asot the results candidates prepare for their first national debate next week. ceo will join us live from the new york stock exchange just as the flash did a company goes public. we are a half hour into the trading session so far. it looks like another big rally. all the asset classes are moving up. let's get to julie hyman with details. the sixth a da s