good afternoon. here's what we are watching at this hour. markets moving some of their -- losing some of their steam. the s&p powering towards its best week of the year. with the big gains, is the market slashing a bearish sign? to miss that.t the pressure is building on paul ryan to become the next speaker of the house. will a call from his old running mate forces hand? we are about one hour from the close of trade. i want to head to the markets where julie hyman is standing by. we are coming down. weard: julie: -- julie:

have been trading up and down. it has been a tight range. more significant here, the s&p is going to have its best week of the year. take a look at the map on the terminal. mixed picture here. mixed red and green on your screen, tech leading up the moment and energy is lagging. another group in the green's house care. -- for the house care. as we have been watching it has been rising on the day. rebounding from a choppy week, up 3/10 of 1%. selloffse biotech started to take off after the tweet about pharmaceutical prices skyrocketing. julie: that seemed to be the

catalyst. congress scrutinized pricing for drugs. index hasw the performed since the tweet. it is down nearly 14%. i want to bring back my personal favorite chart, looking at biotech valuation. the index versus the s&p 500, what you see as we have had a big drop, but they are trading at about 39 times estimated earnings versus 17 times estimated earnings for the s&p 500. about highererns drug prices, but the group is trading at lofty valuations versus the broader market. betty: thank you. julie hyman at the markets desk. let's get a check on the headlines on first word news. mark crumpton has more from the news desk. : president obama heads to

oregon to offer condolences for those killed and wounded in last college shooting, there have been two more shootings today. one is dead, another wounded, and another in custody after a shooting at texas southern university. the school was ammann down in classes canceled for the rest of the day. the shooting in -- the school classes werewn and canceled for the rest of the day. two separate student groups got into a confrontation. the confrontation turned visible. one of our students produced a of our and he shot four other students. one student is deceased. the other three are being treated at flagstaff medical center. suspect is inged

custody. on wednesday, eastern kentucky university canceled classes the rest of the week after a threat on social media. during his visit to roseburg, oregon, the white house says president obama will offer condolences to family members and friends of those killed and injured, and not on discussing gun laws. the president has been accused of trying to politicize the tragedy. investigators say a trained around and in west virginia was preventable. the federal railroad administrator says the accident was from a broken rail that should have been detect did but was missed in two inspections. the train was killing 3 million gallons of oil when it derailed in february. 27 of the trains cars derailed and 20 leaked crude.

the house of representatives voted to approve legislation, and being the ban on most oil x boards. the bill goes to the senate. strong dinner -- strong democratic support gives the bill some support, but it is short of the two thirds of the votes needed to override a veto threatened by the white house. look at our first word news. you can find the latest on bloomberg.com. betty: thank you. mark crumpton with the news headlines. .tocks are bouncing along a flat line today. the major indexes heading towards their best performance this year. a note today, saying we may have seen the worst in commodity prices. what a day for zinc, up the most in almost two decades. iver, iter rent it -- ol

feels better this week. ver: it feels like we are back into the bull market we knew, but we looked at margin debt. byare inspired by research doug ramsey. it looks at the two move closely. the higher stocks are, the more people have on their accounts. the same thing happens on their way down. we are looking at the rate at which the two change. if marginhis idea debt is decreasing, contracting at a quick rate, it columns the question of how much demand and confidence there is for the stock. a big drop in august. the data is through august. month over month, we saw the

margin debt shrank, fewer people taking out money. betty: do we have a chart of that? let's talk specifics. margin debt represented in the yellow. it is moving below. this is the seven month moving average. it comes at a little bit of a period of stress. many people, the demand is not there to go out. they do not want to step on the ledge if they have confidence in the support they are going to get a continued bull rally. it is not an exact science. go back in history, it does not foretell some giant move in the market. betty: has it in the past? did dip below on two occasions. it happened in october and 2011 as the market was peeling off.

youhe selloff started, if wanted to look at margin debt, you would have seen it might have given you a heads up over the next couple of months. don't people get worried when margin debt goes up? oliver: exactly. that is what is interesting about doug's thesis. you hear about margin debt when it is getting high. things start to fall apart and there will be margin calls. if you look at it on the flipside, when you see the margin debt that below averages, that is not the best sign. margin debt high is not always great. betty: may be no margin debt. then you would have no market. renikyou so much, oliver of bloomberg news. we are going to talk about margin debt and what else doug

ramsey sees. he predicted the august selloff that we had. -- ofthe cio of a group the leuthold group. he says the fed is trapped by the dollar, disinflation, and the climb in the --. up, streaming netflix movies are going to get more expensive. prices byy will raise a dollar for new customers. how will that play out? gap ceo calling out banana republic chain for not making better fitting women's clothing. who is going to take the reins from john boehner when he steps down? don't lookays nope, at me. ♪

betty: good morning. time for our business flash. johnson & johnson conducting clinical trials for in ebola vaccine. it is dean carried out in the area where the most recent cases of the virus have been reported. separate studies are being conducted in the u.s. and europe. news reporting credit squeeze may -- up to a billion dollars. they are under pressure to raise capital to protect against another financial crisis. suisse will put more

capital on banking in asia. the probability of a recession is at 15%. that is the highest it has been in two years. the federal reserve's reluctance to raise rates is a factor in the opinion of this increase. you can get more business news at bloomberg.com. you more toto cost binge watch programs on netflix, like "orange is the new black," "house of cards," and more shows. price ofraising the the plan to $10 a month. existing customers will see their bills go up next year. what is behind the change? will customers think twice before signing up? netflix has been a stock

darling. it is down today. i want to bring in paul sweeney. this is the second price hike in 18 months. if this telling you they are feeling margin pressure here? paul: a couple of things are going on. they feel confident in subscriber trends to push another pricing increase through. the last pricing increase was well received, unlike the initial one several years ago. they pushed through a pricing increase in europe and that was fairly well-received. they have confidence in where the pricing is for the product. , theare programming liabilities on their balance sheets are about $10 billion. there is a lot of revenue and cash flow they have to generate to meet those obligations. generally speaking, a

company never wants to change prices on it customers. it is not a good thing. is the pricing strategy off? is a function of -- a brand-new market place, direct to consumer internet pricing of the business. we are seeing, in the last six into thet new entrants market, such as hbo now. everybody is trying to figure priceere the consumer's points are. what will they pay and for how much content. as netflix adds more content, particularly original content, they believe that adds more value to the customers and that will allow them to raise prices. the last increase was well-received. we will see how this goes. why is the stock down today? why have stockholders reacted negatively. does not seem to be a

big move, unlike several years ago. increase theo price by 60% and split the company into two companies. the stock is braving -- is behaving pretty well. consumers are going to look at the next two to three quarters. subscriber numbers in particular. if there is any weakness in the market in north america, that will be a big challenge for the stock. betty: do we know what netflix's margins are? paul: when you think about netflix, you have to think about domestic business, which has been a mature business on a relative asus. margins.strong the margins are expanding. that is offset by the international business and those margins are negative. margins, theynal

believe will be positive next year and they will be able to grow overall. domestically, they are in decent shape. internationally, a lot of work to do. betty: i they going to watch this new steve jobs film? how big of a deal do you think this is going to be for universal? overall, in terms of this is what -- the fourth steve jobs by optic? expectations are for about a $25 million opening, which is not bad for a film. hypeis getting a lot of because it is not necessarily as positive about jobs as the others were. this gives more notoriety in the last couple of weeks. tim cook has come out and questioned some of the aspects of this film. it has gotten a lot of publicity.

that works well for universal studios. you.: thank controversy always sells. paul sweeney, thank you. of north american research at bloomberg intelligence. still ahead, banana republic sales sagging. due to spruce up the slumping brand? we will talk about that next. ♪

betty: welcome back. retail entering its most important season. holiday shopping season. dab ceo says poor fitting women's clothing is the culprit behind the slump at its banana republic stores. and september. the seventh decline in eight months. we want to bring in lindsay and

julie. lindsay, julie and i were talking about it this morning. for a while, we have known banana republic close to not fit well. what happened here? they have been transparent. they lost their way in fit and fashion. they brought in a new designer. she was there to bring fashion credibility back to the brand. she did. now, she is going to step down as the creative director and be an advisor. withompany is not happy the improvement. some pieces are selling well in other parts of the collection, the fit is not right, they are not versatile. betty: why can't they get it right? lindsey: it is unclear.

we thought marissa was going to fix everything. it does not look like she is the one who is going to fix it. julie: the stock have gotten punish, too. worst performing stock this year, down 35%. where the retail numbers have not been fantastic. lindsey: it has been a terrible year forget gap. their flagship brand has been performing poorly. the fashion is not right. the new ceo came in in february. he changed the brand presidents at banana republic and gap. the bright spot has been old navy. it was killing it. they were going to use the business model there at the other two brands. the brand president left for the

ceo job at ralph lauren. that is another hit to the company trying to orchestrate a turnaround. bizarre? and that you have a new ceo and seven months later, many of them are leaving or taking another role. is anyone saying -- what is going on? when ralph lauren calls you and says do you want to take over my company -- that is a hard job to turn down. old navy was doing really well. it is hard to say. is under a peck lot of pressure. we are going to see improvements under the gap and banana republic brand in the spring. he is under pressure to deliver a strong first quarter. vast majority have hold ratings on the stock. they want to see more. people want from him?

he says things will get better. have you seen any recommendations from analysts, investors, as to what gap does with the problems of its own making and external problems sen leaving? lindsey: they want to see improved product. art needs time. you can have a great team in place. works, itay retail takes six to nine months to get new products into the stores. -- it was what it was. there was not a ton he could change or his people could change. and analysts are giving them time to see will the changes be effective. the product get right. that is the bottom line. he has tried to put a good face on a lot of things. we are losing stephane larson,

but we had a team. the question is, can you pull it off? betty: the people leaving, where are they going? fashion is all anyone can talk about. h&m, zara. also, gap, across the fashion industry is discounting. it is fascinating how the economy has improved. yet, everybody still wants a bargain. require a bargain to go through the door. or, ir it is fast fashion was shopping online at the gap the other night and by the time i used my promo code in reward, it had been cut to almost nothing. that is a problem, not just at the gap, but at a lot of retailers. endy: even at the higher

retailers. saks fifth avenue, i am constantly inundated with promo codes. i used four of them the other day for one item. i saved 40%. what youro matter income level, you want a deal. that is big at holiday time. you're going to cut into your margins if you offer 40%, 50% off your store at christmas to get people in the store. seem to be retailers permanently discounting. it is not just seasonally. lindsey, thank you. julie hyman on the gap. mitt romney calling out paul ryan. ♪ we live in a pick and choose world.

choose, choose, choose. but at bedtime? ...why settle for this? enter sleep number. don't miss the columbus day sale. sleepiq technology tells you how well you slept and what adjustments you can make. you like the bed soft. he's more hardcore. so your sleep goes from good to great to wow! only at a sleep number store. right now save $600 on the #1 rated bed, plus 24-month financing. hurry, ends tuesday! know better sleep with sleep number. betty: live from manhattan you are watching bloomberg market day.

mark has more from the news desk. the united nations takes action to deal with the refugee crisis. after months of consideration, they adopted a resolution that allows the european union and refugeetions to seize smuggling vessels in the water. it will have a search and seizure operation that can be enforced militarily. pentagon will scale back efforts in syria, focusing on assisting rebel units. this is part of the failure to create those forces from scratch. and despite heavy artillery, isis still appears to be gaining ground in syria, taking villages. this could be the most significant advance in month.

world soccer governing body fee for says they will hold an emergency meeting on october 20. this comes after fifa filed an appeal against the ethics committee. down afterhe'll step an election to replace them desk to replace him in february. and an alert for scams tied to flooding in south carolina. people are being warned by the irs, because scam artists try to impersonate charities to try to get money or private information after a disaster. and that is a look at the news, you can always find the latest on bloomberg.com. betty: mark, thank you.

we are less than 30 minutes away from the close of trade. we will ask julie how stocks fared? julie: it looks like we will have the best week of the year for this s&p 500. closing today,at if there is any gain, the highest since august. i have been looking at the best and worst performers, you will see them. the green ones are the winners, radwanska are the losers. of these 10 winners, eight of them are commodity related. this is a diverse list, at the bottom we will get to this. looking more deeply, take a look at copper. 28% performing on the week,

gain. best one week performance since december 2008. that has come with a rebound of commodities and specific news on two board members that were cmoran.ed for freeport-m they are spinning off oil and gas units. and in the other top performers, transocean mother oil services and drilling company having its best week since march 2000. oil prices have also rebounded. reported this week, earnings missing estimates in china, not finding as much as yu m brands anticipated. there were streak since 2002. -- their worst week since 2002.

for the republicans, still looking for a speaker of the house. paul ryan says he will not run. >> we have confidence trying to work together, i know a lot of speculation about who should run. paul is looking at it, but it is his decision. he has to decide on his own. betty: republican turmoil occurring weeks before the deadline on raising the dead. that -- debt. and from the bipartisan policy that policy center. start with this, is anything going to get paul ryan to run? mitt romney and other bigwigs are calling him up. >> nobody really knows, not even

some of this was his allies. the consensus right now is that he has his dream job on the hill already, he is not looking at that leadership, but right now he has the world on his shoulders. cans the candidate that move forward on big deadlines coming up and that will be coming up, so at this point he is not ruling it in, but he is listening. his no has gotten a little less definitive. betty: this morning and spokesman fred he is still not running for house. >> that is right. when kevin mccarthy decided to step down, the word was you would not be a candidate, and he is going not running. again, i do not want to overstate this, there is a good chance he does not run and there

is an indication he does not want to, but there is still a possibility, given how badly they need him. he might reconsider if he is seen as the only option. he is a viable option to move forward. betty: steve, let me play for you a conversation we had this a congressman who is a friend and also from ohio. >> i do not think he wants the job, he will have to be convinced that he is called to it, but i do not think that he wants it. i do not think anybody probably in their right mind wants the job right now, but it is an important job in we need somebody to bring everyone together. there are a few people who can do it and all is one of them. betty: steve, what do you think will convince paul ryan to do this? him ready welcome i do not think anything will convince them. remember this, even if he takes

the job you will have 30-40 renegades on the far right that really want to influence the outcome of many debates that are only 30 days away. paul ryan is a very serious and able person, i cannot imagine that unless he gets a direct commitment from the house freedom conference, that they will follow along in compromises that will have to be made, that he will take the job and i do not know who can make that commitment on behalf of all of those members. betty: if you cannot get that, how can he or anybody diminish their influence or is there any way to do that? right now, with the far right has done is guaranteed as a de facto matter, that the losey will control the outcome on the inside. that is the ironing.

-- resigned, he said he will not be involved with people who are trying to defeat the very things they want to accomplish. that i will not have a part of. i do not think that anybody can -- commit these 30-40 members that they will follow along with compromise on spending, on the debt bill, on .he highway trust fund a whole host of items which i do not think you can get consensus on from the house freedom caucus. betty: is that your take? >> what i would say, at this point it is a kia arctic -- it is a chaotic situation and whoever does become speaker will face the same obstacles and john boehner did. -- the 30-40 people are a minority, they are up to -- powerful punch, they will

have an impact on the new speaker as they did on kevin mccarthy, they are withholding votes. daniel webster, he will not win, but they say that he will not get the votes, unless this person gives in to their demands. so this is a group that is powerful and they are backed by grassroots forces. is behind them right now, said they do not mind -- so we do not mind, and this is why nobody wants to step into this role and be blamed for this. betty: they will the influence -- weild the influence but not the responsibility. these, do you believe this will compromise raising the debt ceiling in a couple of weeks?

think the fact that they are acting this way will influence the outgoing speaker. he has talked about cleaning out the barn and i think that he means making deals that have to be made to get all of these items settled and sent to the president you think that what will a -- emerges with the opposite of what the house freedom caucus wants. much. thank you very sahil and steve, thank you for joining me from washington. much more ahead during the probability of the united states with being into a recession hitting the highest level in two years, what is going on? signsybe some troubling in the stock market, stocks dropping at a rate that we have not seen since summer. ♪

♪ betty: good afternoon, welcome back. time for our business -- uber offering a new service called uber so it's in san francisco, they are offering luxury the roles -- vehicles, doubling the rates of their service. they have been rolling out this new service over the next -- over the past several months. and dow jones customers may now be in the wrong hands, they admit that hackers breached their database systems and still info from current subscribers. andomers have been notified

they say that they are not aware of any misuse of private information, this could be part of a broader campaign that could affect other companies. and the president of -- says that the u.s. is powerful and ointment and -- full employment. they say that the unemployment rate shows that the fed achieved and fixed the slack in the labor market. a quarter of a percentage point increase in the federal funds. and you can always get more business news at bloomberg.com. the chances of the u.s. slipping into a recession and now at their highest levels in it two years with concern over china's economy and what is driving those fears? joe weisenthal, the cohost of joins us.u miss?"

this one from 10-15%. ,oe: it is still not very high the most in two years, but is still very low. i think obviously there is the china stuff, the global low, the manufacturing slowdown. think wee still do not are going into a recession, that being said, if you're talking about the fed raising rates, it is hard to think that people are skeptical that the said will raise rates -- fed will raise rates. betty: when did you make of comments today from dennis lockhart, saying basically we seem to be at a point where we saidto raise rates and he maybe in december. it hasat is funny is been basically a nonstop stream of people saying raise rates and

they cannot convince the market that is what happened. you are looking at probabilities from the future markets, it is still under 40% that there will be a move this year. seentil we need -- until we a stock market rise, that obviously helps the case for december, because the height and volatility in late august is definitely seems to have pushed those odds down, volatility has come way down. now they are making the rally. i do think that that will help the case for december, the markets however are not convinced. betty: what caught your eye today with commodities? storiesmany interesting in commodities, glencore cutting back on it zinc. -- back on zinc. and the florida orange crop at its lowest.

so i jumped -- soy junk. lowest gas fell to their , worst point since the financial crisis. they're all of these stories across the world that are very different. betty: so interesting. good to see you. you will be on next on "what'd you miss?" and much more ahead. ramsey joins us here and he will explain about the fed. ♪

♪ betty: welcome back to bloomberg market day, we are heading into the close of trading and julie .yman joins us with highlights looks like we will end in the green.

the day has been lackluster, seven dow for the up 3.7%,hree .7% -- and we are looking at strength in close of trading. intalked about some movers the s&p 500, we are looking at the best groups in the week and energy and materials have gained, but the point is that all of this is green. all industry groups have gained on of the week and i do not believe we have seen this sense -- since going back to april. as for energy being the best for warmer on the week, this has been because of oil prices, the rebound of oil, gaining for the second straight week. they are up 9%. some numbers that came out earlier on production, wife, they were not terribly bullish for oil. nymex thingo had

that lou -- is that they will be meeting, that could have raised oil. and on this growing perception that the said will remain on remain on hold, on that note i wanted to see what was being reflected for the 10 year, just last friday it went below 2%. reflecting that perception irate old remain low. we saw a gain in yields this week, so this is probably a stock bond rotation, pushing that up. betty: a little. fedsays officials -- officials, dennis lockhart saying we need to get off of the 0% rate. economye context of an

that is growing moderately, with sufficient momentum, the notion that we would have to use that tool in the near term is not possible. betty: but the fed is it getting derailed by what my next guest s, he is theree d' and doug can you explain the theory of the three d's. been thatthinking has we have already had a tightening. we saw these moves from january to october of 2000 eight, they .5% bond purchases from down to zero in a nine-month of time. the normal lag time in for policy moves to impact the

economy is a year, so we are a year removed from matt and -- from that and coincident with tapering, yout had this big spike in the dollar. so arguably, the dollar and movesng were tightening and if the fed had followed right at the end of those tapering moves with maybe a quarter point -- betty: that would have been better. doug: yes. and with disinflation, we have seen a nice reversal this week, but you still have pipeline pressures from the huge slide in commodities we have had over the last 12 months. betty: but if you look at the yields and treasuries, that tightness has not really been reflected in treasury yields.

doug: i would argue no it hasn't yet, it is arguably contributing to a repressing in the yield curve, we like to joke that this is our favorite economist, but is not very accurate. -- yeah, i mean it reflects pressure from the slide in commodities. betty: we were talking about you earlier, i don't know if your ears were burning, but we were discussing your thesis on margin debt and looking at what happens , all of her wrote that piece on your report, this is actually a sign that there is less confidence in the market unique cannot see it, but we are showing the graph of its shrinking. what exactly is it signaling to you other than investors losing

some confidence in the market? it is a background demand,r of supply and remember people got excited around this time two years ago in margin debt breakout above the highs of the last cycle. we argued there is not a lot of information, margin debt the whole way up is just tracing gains in the stock market, and never got overextended, and never really showed enthusiasm. there was not a real signal in terms of margin debt getting overheated, but now that has rolled over it is sort of a type to signal in our work. we never got the first signal, something that showed us the ramp up, but now you have seen a loss -- a lot in appetite. we get these numbers really

late, the 25th of each month for the prior month, so it is not a real indicator, but the fact that it is breaking down, i am interested to see how behavior was in september with all the movement from last month. betty: is it signaling a big selloff? wouldit is behaving as we expect in the early phase of a new cyclical bear market. people are focusing on the tech -- tick of the last week. we had a very short move this week. look at all the things that have fallen into place. betty: doug? right. we have got to run. ♪

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scarlet: we are moments away from the closing bell. i am scarlet fu.

am alix steel. commutedglobal stock that commodities and it their best week in years, and oil climbing. joe: the question is, "what'd you miss?" earnings season is about to really kick off, will the rally keep rallying? joe: risk of a new survey for just it is more likely then it has been, we take a closer look at alix: and the secretary-general. we talked to him at the world bank meeting. we begin with market, the s&p 500 has had their best in the year, but we did bounce around most of the afternoon. for the week, certainly a big week for them. data and en