this from the ceo of airbnb. he wants to be regulated. it is a bloomberg exclusive. stephanie: welcome to bloomberg . i'm stephanie ruhle. david: i'm david weston. we have a lot today. we have our favorite friend. our very special guest host for the hour is the ceo and chairman of starwood. david: matt miller, can we have some breaking news? matt: we are looking for $1.45 eps, and the numbers have not rolled across the ticker yet.

what we have seen this morning so far is a $10 billion share buyback. johnson & johnson plans to repurchase $10 billion worth of shares on the public markets, or through privately negotiated transactions. it has about 2.70 7 billion shares outstanding -- 2.7 7 billion shares outstanding. the covenant can do this not just because they have no ideas, but because they think their out of price. thatanie: or they figure -- i want to talk with barry. we need to get to the news first. here's vonnie quinn. vonnie: thank you so much. in china, imports in china are on the longest losing streak in six years. it reflects the plunging commodity prices. domestic demand in china has been falling. vladimir putin fires a shot at

the fed. the russian president says that fed policy changes may be driving capital outflows from emerging markets. he also said that the p of rush upon second on the crisis has passed. in iran, the parliament has approved the nuclear deal for the west. nearly two thirds of those present voted for it. be sendingncil could the issue back for discussion. the supreme later says the decision is up the parliament. now back to matt miller for a check on the markets again. matt: take a look at futures. we are seeing many contracts down across the board. the nasdaq futures are all down right now. i want to switch for a look at the cash market that are not obviously open for trading in the u.s. yet. but look around the world what happens in europe. europe is trading down across the board. overnight, asia down, read

across the board. if you look at metals, do you know that china is not only the biggest producer but also the biggest user of copper, iron, zinc? there are so many minerals that china rules the roost in. copper is the one that most economists say is the best thermometer for china's health. you can see it down right now just about 1%. take a look at the 10-year. it looks like investors will be piling in, and that pushes down the yield right now to 2.06%. looked,arry stern ernlicht,- barry st welcome to bloomberg. if janet yellin were sitting here with you asking you questions about the data points you are seeing, whether in real estate -- you have insight into real estate, energy, infrastructure -- what are the data points that you think will

be helpful yeah go barry: we have some really good real-time data from our portfolio. 40,000 -- we manage one called try point on the stock exchange. it is a big homebuilder. , thousands of residential's arid and we have probably 700 or 800 hotels. every sector is doing pretty good. david: in terms of prices? barry: hotels are doing 4, 5, and the u.s. economy is doing -- is reacting to a slow growth u.s. economy. a lot of new space has not been built. the u.s. economy has been

suffering from a lack of capacity of workers right now. legacies are shrinking. the hotels are doing good. the stock market does not think it is over. they think we are ending the portion of the rally. i don't know. i think what you can see is that we have unusual macro environments. withave political issues unusual people leading races that we are not used to. you have the bernie sanders effect, the donald trump effect. is second thing you have geopolitics. you have all the bad actors coming out. being bombed syria by putin. the nuclear iran. your headline is that they are not going to have nuclear weapons. that is actually not right. they will have nuclear weapons, just delayed. and then you have this experiment, this monetary experiment around the world, which everyone knows it is

toxic. you should not be able to do what is happening. there is no imminent repercussion, but when japan is printing money with 258% to debt gdp, and a normal economy you should not be able to do this. they are doing it all over the world. does that mean market volatility is here to stay? the fundamentals are pretty good for the property market. we have a big energy business, and it will make money in the gas business because the cost of production is so low. there is good momentum. the global economy is weakening, and there have been no structural reforms. you are kind of pushing gas into an overfilled tank. stephanie: what does it mean for janet yellen? barry: she should raise rates

and return the market to some sense of normalcy where people feel the fed is not so involved and manipulating of the domestic economy. it really does not matter. i think that 25, 50 basis points .- she should raise rates try to slowly deflate an asset bubble that the fed has created. let capital flows resume. the dollar may or may not strengthen very much from here. one and done probably is ok. and it gives them something else to do. people worry, what else can the fed do? as she raises rates -- she needs to raise rates. economies getting too tight. we cannot find people to serve lunch in new york city in our restaurants and hotels. we cannot find construction workers to build houses. we have to get back to normalcy. david: what about in terms of capital markets?

are you seeing difficulties? you have a completely different situation with the lack of liquidity in the markets. makingre no banks markets the way they were. there is no dealer inventory. -- you have a lack while.ere for a it is very uncomfortable, a very uncomfortable space. we are standing on quicksand and the ground is not feel firm. stephanie: uncomfortable for whom? barry: investors. once. get hit all at everything goes down because somebody pushed a button. every tech stock, every chemical is no and there differentiation between the companies because the etf's on the margin are dominating

trading. stephanie: a year ago you said if i were to start all over again, i would like to be a hedge fund manager. they do not have to put their own skin in the game. barry: they have to put their own skin in the game? i do not know if it is considered a move very much. i travel the world for my business. stephanie: does it surprise you when you see fortunes on the macro fund? barry: it is almost the smarter you are, the worse you are doing. it is a very difficult market. david: does that apply to you? david: no, i hope not. -- barry: no, i hope not. the stock market moves on a dime and you do not know why. the stock market real estate, the reeds might do that. you are trying to catch waves. the wave is good for the u.s.

the property sector is my favorite sector just because of the liquidity. you can get in and out. back to the real estate market, that is probably the best major market to invest in right now. not only do you get reasonable yield out of properties today. but you have an opportunity if i am right, which is one thing i have not mentioned. falling oil prices have masked the rise in inflation. that is maybe done for a a while. will see wage inflation, which is inflation in general is good for real estate. you have a free call on inflation in the property sector, which i do not think is priced into that sector. david: than what -- stephanie: then why sell? the paint was not even dry yet at the baccarat hotel.

barry: i think they made a great investment. it is doing very well. stephanie: it is beautiful. barry: have you seen the one at central park? that is our luxury green hotel to match the one in south beach. and then we opened one in brooklyn also. they are killing it. sixth right behind the ritz. capital flows? it is something we have not really talked about. there is a lot of money in the world looking for yield. in the more volatility in the equity markets, the more people want to invest in the property sector. we have clients all over the -- we have -- i had breakfast yesterday with a client in the middle east, another sovereign wealth fund. there is so much money looking at property, looking for yield,

from all over the world, and the u.s. recognizes this as a safe place to invest. a lot of investors got hurt investing in the emerging markets -- brazil, india, columbia. they have really hurt. colombia. india, they have really hurt. the situation here is much better than anywhere else. says -- on the margin, we made the mistake of investing in brazil a couple of years ago. david: the way you describe your business, you are feeling good about it. what is the biggest challenge? down. pricing is coming returns are coming down to match the lack of returns in other asset classes. returnt is a good enough of our clients right now? it is hard to figure out. we are opting for safety, so we

are seeing the major investment in food groups like apartments. we will just do office investments. we will talk geographically later in the show. stephanie: you mentioned markets getting whipped around, and you mentioned etf's. we have seen sophisticated guys like howard marks say etf's specifically in high-yield, are risky. when market liquidity gets tested, they could cause true drama, crisis, to the markets. do you agree? barry: yes. the natural bid backs up, it disappears and the banks are not holding inventory. they clear the bid out of the way. all of a sudden the stocks dropped 20%, and the etf is just a program. they do not really care. there is no value guy stepping up saying i am going to catch this. these are really good ideas, but

as implemented, they are kind of toxic. they are dangerous. that is the beginning. trades, they have to sell and the market goes down. they buy, and the market goes up . they do not understand the implications of how it overlays. it is like bad makeup. you take the makeup off, and there is an ugly duckling behind it. stephanie: what are you talking about, barry? who do not know what they are invested in? barry sternlicht with us for the hour. you are watching "bloomberg ." , we are going global. where barry sees opportunities across the world. and russian investors saying the peak of the crisis has passed. ♪

david: welcome back to "bloomberg peter: now we're going --." now we are going back to global go. russian president vladimir putin just spoke at a russian investor conference. ryan, tell us what president putin is talking about. ryan: look, he is talking about how he thinks things are about to get better. he has just said he thinks russia has reached the peak of the crisis, the worst of the crisis may be behind it. it is easy to understand why he is pushing such a narrative. we have seen some money come into equity markets over the last month. the stock market up about 20%, 25 percent. the reality on the ground is an ugly one. it is predicted the economy will

contract by 4.5% this year. inflation stands at around 16%. while a lot of people think the theory might help russia and kind of lead rush out of the cold and maybe lead to an easing of the sanctions that may be some western countries decide they want to do with russia, we are not there yet. the sanctions remain in place despite him saying that he is ready to cooperate with other countries when they are ready for that. stephanie: ryan chilcote, thank you for joining us this morning. we have got to stay global. global stocks are down this morning. numbers out of china represent a mixed picture. the latest is a 20% drop in in september-- imports, and we see weakness in china affecting the markets globally. to take ahave got thi trip around the world. what is your take on china? we get such a mixed response here, while the data and information is getting more

negative. steve schwarzman says i do not shop in china at malls. jim chanos sees it as somewhat constructive yesterday. barry: we do invest all over the we have made two investments in china. one is in a small company and one is in an office building in beijing. we have probably not made an investment in four or five years now. stephanie: why? , but: i know i can get in i am not sure i can get out when i want to get out. i always think china is a company masquerading as a country. so there are rules that they play by that i am not sure foreign investors should trust. not sure i'm getting enough of a return premium for the risk i am taking. we are not interested.

there is going to be a distress cycle in china. the banks will have to take losses eventually, and then they will sell their assets. there are a lot of people there. it is hard because from a real estate investor's perspective, they decide they will build a new city, they will build a new city and they do not care what happens to the old city. they move the center of the city. so the central planning is not always obvious to a foreign investor. and again, interest rates are not that low, so you have the inverse in the u.s. where if you are buying good real estate, you might find that if the yield on than therty is lower cost of debt -- that is one of my red flags. do not do that. we are worried about china. if you consolidated the wealth of the country's balance sheet

with the banks that are undercapitalized, they show a 10% capital ratio. they have not taken any losses and you see the pictures of all the empty buildings, and they are on the books. so the big bang portfolio we bought in the u.s., they are paying $.37 on the dollar. there it might be $.10. 1%, 2%, 3% onf their marks, there is a lot of of money that has to go from the country's balance sheet, getting infused into the banking system to shore it up, the important number that they ran last night is really something, down 17% in imports. the economy is slowing. you wonder about the numbers they are putting up. david: that was for september and that was absent the you want evaluation. -- the yuan evaluation. want -- yuan

evaluation. there is a rapid move to urbanized. people come in from the field, there must be opportunities in real estate. you think foreigners will benefit? david: that is my question. maybe some bad actors started out as a purge of corruption, but one might take the view that there is a purge of people who do not agree with the policies and the opponents of the regime. we call it a corruption cleanup, but that might be -- that might be what all of history has ever said about people who did not agree with them. capital can go anywhere. why would it take those risks where you do not know if the numbers that you are basing your investment decisions on our real

-- ouare real? not support a ban when we had a ban on iranian oil imports. they form some agreements and trade, and they are just playing in their own little -- i always feel like the chinese government can say stop. right now they have told the chinese insurance companies to diversify. other investments that are about to announce major investments in the u.s. sometimes you wonder -- the government will say, stop, come home, and support the economy. stephanie: you have been fundraising globally for the last year. these wealthy chinese investors -- is it trying up for them in terms of when their economies getting hit so hard, are they still able to be major investors? we are hearing about other deals with investing. sovereign wealth has a lot of

capital to invest. i really like china. i would like to figure it out. i would like to be able to invest. i love the food. i like china. i think it is a fascinating country. you just have to be served -- you have to be super careful. matt: i feel like the capital is definitely flowing out. if you look at a chart of the hot money, you can see that in 2010 and in 2011 it was going in , started to flow out in 2013 and 2014. now it is completely coming out. there is definitely a lot of capital coming out, and i can show you a million charts -- for example, people in search of yield. flows,look at high-yield it is all going in now. there is so much capital looking for yield, and i guess that must be benefiting you. what do you do? stephanie: go to europe.

barry: many investors' attitude is, anything is better than treasuries. ish-yield, property, it early for these firms. the capital outflow, some feet -- some people feel that they devalue their own. we talked at the top of the show about currency wars. do not forget, not only are they protecting exports -- stephanie: barry, we have to leave it there bank. next, tom keene joins us for the "morning must-read." ♪

david: we have a beautiful downtown hong kong. welcome back to "bloomberg ." here at this is the ceo of

starwood capital. -- here with us is the ceo of starwood capital. vonnie: there has never been a deal like it in the beer industry. almost $106 billion. had several offers. if the deal goes through, it means one of every three beers salt will come from one company. it they project the takeover, a be in that will have to be sab miller $3 million. hillary clinton faces off against the other democratic contenders tonight. it will be in las vegas posted by cnn. three other candidates will be searching for breakout moments, martin o'malley, jim webb, and lincoln chafee. a report on last year's airliner crash in ukraine has a quick

rebuttal from russia. investigators say a russian missile fired from rebel held territory hit the jet. the malaysia airlines plane killed all 298 people on board. take you to want to breaking news. johnson & johnson earnings out. great on theok earnings side but not so great on revenue. eps adjusted was $1.49 share, $1.45.ooking for that is upbeat by four cents. the problem is revenue was only $17.1 billion as opposed to $17.45 billion that we were looking for. if you come into my bloomberg, that pre-market. we take a look at johnson & johnson versus peers. this is johnson & johnson and this is sales growth, this is eps growth.

you can see that their sales growth, although better than peers, was already weak and the -- sales are down 7.1% compared to one year ago. it is a weak spot for the entire group. bristol-myers, square, big outlier but everybody else is almost at the zero access or behind in sales growth. as far as eps, great. profitability is great and johnson & johnson is doing better than groups. better than everybody except for bristol-myers. this was a disappointing, a real disappointment. you.: thank we will go to london to tom keene who is going to share with us in his morning must-read. you look at the morning must-read and you have to go to politics. i know you will touch on this. paul krugman writing a story in "the new york times" that it is no surprise vladimir putin go

after the gop, but in this case, a nuance toward paul ryan. the morning must-read. we will look at what he says fiscal policy and of mr. ryan. he has been good at producing documents that look sophisticated if you don't understand the issues, at creating the false impression that his plans have been vetted by budget experts. david, this was a huge deal the last go around. jivecy document that dr. with the cbo data. you wonder where we are going with this. david: the thing that struck me in reading this was what about the democrats? we had years or suck and i asked him about -- we had peers and i asked him about the tax plans and he said none of the candidates really have come up with a plan that makes a lot of sense with the details. tom: he has the authority of

being the former director of the congressional budget office, but krugman is saying that they need to talk to the experts and that is not going on. stephanie: steve, what do you think? steve: really? stephanie: yes, really. steve: i think -- you can see why everyone is tired of politics in washington. stephanie: we can't be, look where we are. thee: i say we need education reform, energy independence, ethics in washington, and we need entitlement reform. stephanie: education reform is making its way. steve: it is slow. it does not have the leadership it needs. they are soundbites and words that don't have much behind them. kid, they said there are lies, damn lies and

statistics. the numbers out of washington can be made up with any story that we are clearly wasting and spending too much money. ist resonates with america -- a lot of america -- is the government. i think you need regulation, you need boundaries on an economy with one as big as it is, but you don't need overregulation. where the line separates the parties. i think the fundamental difference, which will define the campaign, is how much the government does for you. and how well they can do it for you. david: david, your morning must-read also had politics. "nots from saturday -- since before watergate have so few people in businesses provided so much early money in the campaign. most of it to china's legalized for the citizens united decision fighters ago." if you read "new york times" piece on saturday, there are 120 million families,

157 of the families have educated half of the money thus far. by the way, they largely come from two sectors of industry, finance and energy. stephanie: two industries that are sensitive to regulation and need [indiscernible] david: hence the words. steve: they ought to give each can -- it's candidate half a billion dollars and how they use it and how they spend it is like running the country, you want to spend it up front? hold on to it? give them a budget, give them allocation and you do not have to go to a cocktail party every have newfound best buddies, it is a waste of everyone's time. they should be in washington fixing the country's problems rather than spending and raising money for four years. it is ridiculous. it is ridiculous! david: there is one problem with the plan.

the first amendment, you give them $500 million and they go out to raise more. steve: no fundraising adult or make the program with three months and call it a day -- no fundraising after that program or have one for three months and call it a day. tom: i think there is distrust between main street and wall street and at the end of the day, the idea is out there that this is some form of a new gilded age or plutocracy. all four of us live within the same zip code and it is a zip code not attached to america. as francine told me this morning in london, why is the campaign so long? part of it is not the corruption -- but thedistortion distortion in modern politics. people are fed up with it. steve: it is something today that i actually think it backfired. i think people turn off the tv arts. i think if you put $10 million

in the new hampshire on tv on sundays and saturdays, after i have seen that once or twice, i will turn it off. andoday's social media google you reach people, look at what has happened in u.s. politics this year. people who have no money are doing ok. ben carson is it showing up because he has this new channel which is the debate. donald has brought all these people in to politics. donald is a real estate guy like you are. we know what he presents, we know the showman he is. steve: he has much better hair. stephanie: he has pair. talk about donald. you know this guy. steve: what can i say? ? -- what can i say? he has a huge benefit and everyone knows it. stephanie: so is clinton and bush. steve: jeb is not that well known. moving in to the

political arena, donald has to come up with real positions which i think he is doing. he is making them up and doing his work and coming up with kelly thinks about issues. how he-- coming up with thinks about issues. donald is big, boisterous. we all would like the leader in the white house. stephanie: are you supporting him? steve: i will be agnostic. i am not supporting him now. i have not figured out what i will do. i know his family. donald is quite something. [laughter] stephanie: can't argue with that. david: i will come back to it tom was talking about with living in the same zip code. another part in the "new york times" piece was about communities. one in new york, houston, los point -- and to

your point, a handful of communities represent. to your point of the plutocracy, we seem to divide even the way we live between the rich and the not so rich. tom: did you see the new inequality and you wonder where that will be when we go to the process and get to the carolinas , but the donor map is absolutely stunning about this is a discussion of four or five zip codes. michael dell is one of the dots in texas. stephanie: it looks like it is your backyard, just your house. steve: phil make the leap that all the money is corrupt -- don't make the leap that all the money is corrupt. that is not the implication of "the our times" piece. i don't think fracking, personally, i think it is a good thing for the country. it is part of energy independence and getting away from carbon feels like coal.

some of this may be influencing or they could be true, good americans who like to see policies that they agree with like smaller government. money? they do with this you try to revive votes? you try to influence votes, americans have their own brands. and you meet these politicians, it is fascinating how different they are from how the media portrays them. in person they are different people. stephanie: i don't know if they believe in small government or they would put their dollars behind starting a libertarian party. steve: smaller government. that would be the republican side, not the democratic side. stephanie: tom keene, we will let you get back to radio in london. for all of you out there, joint us. what would you like to ask? up next, the next wave of genetic testing done right in your home. you are watching "bloomberg ." ♪

stephanie: you are watching " and it is time for your best self. it is changing the biotech industry playing with at-home genetic testing kits for rest and ovarian cancers. there he sternly like has put his money behind the side up. he is back with us along with ceo eli gale. welcome. you got gary's attention and he is a smart guy. eli: it is access to genetic testing but in a responsible way, so we provide a test that covers 19 genes that most impact the woman' is risk of breast and go bearing cancer. first, the test is affordable, so it is only 249 dollars. secondly, we use software to

reinvent the testing process, so you can order it online to make it easy and accessible for people to use. david: does this require fda approval or review? eli: most of industry uses lab developed tests which do not fall under review of that date as long as they are properly developed. david: this is different from 23 and me. you have to go to a doctor to prescribe it. eli: all of our tests are if theyn ordered and are supported by a board certified professional and terms of getting back genetic information and understanding what to do. stephanie: what you need to do to buy into this? d: we have a variety. one thing we are excited about this we parted with peace and 17 other companies who are providing this benefit to their entire employee base which is radical. this is the first widespread

genetic benefit in the enterprise market. stephanie: you study the doctor to order the test. elad: absolutely. it is mother the companies enable people to order it so they cover 50% or more of the price, but they do not encourage people to do it or forcing them to do it. it is much more around access and making it easier and more affordable. david: barry, take us to your thinking why he supported this. barry: i think it was a tenfold decrease in the cost of testing, tenfold, so it does democratize and take advantage of these new games of genomics really helping you guide your body for bad stuff happening. elad is a successful entrepreneur and i was introduced to him and this one felt right. you are on scene, their driving cost of health is getting -- it keeps help care cost him, more affordable, finding markers

earlier in the process so you can fix them, and i am on the board of estee lauder and mrs. potter's big deal was breast-cancer, -- and mrs. lauder's big deal was breast-cancer, so he asked me and other investors and we got a luminary list of investors to approach companies where they could take their employees and have them test early. i think it is great. everything is good about this and execution -- you are on oprah or what happened? you should be on oprah. [laughter] david: you got to be on oprah. any statistics on mortality or is it too soon to tell? it has existed for 20 years, so one of our scientific -- we are taking tests that have existed for 20 years but making them affordable and accessible. the impact understanding of

persons risk is dramatic because the lifetime risk of somebody normally for breast-cancer is one in 10. if you have a vacation, you end a with over 80% if you have higher risk coming up with 80% -- and i -- barry: there are other test you can use as markers. they are testing a cost of reticle of industries. stephanie: who is your biggest competition, other tech startups or the establishment? elad: i think we are a new type of company because we are the first company to apply software to genetic testing. i do not think that has been done before on any scale. there are variety of companies providing to end it testing but they cost thousands of dollars. i think there is a very for software companies because you have to have a lab, regulatory compliance, it is difficult. david: you have a model that can do this more cheaply.

you had a different way of doing this that is cost effective. look at financial filings of some of the traditional companies in the market, we believe it is a pretty radical shift. david: nice for an ocular. -- vernacular. stephanie: where are you in the process? what do you need to do? for investors who care about investing, do you have a business they can invest in? can they be a client, an investor? elad: so far on the investor side -- in line stephanie: -- stephanie: you got buried. elad: we are grateful. we are trying to grow the enterprise space and finding new ways to provide and democratize. big launch, they have revenues and growing fairly quickly. they launch, they have

revenues and growing fairly quickly. i'm sure they will wind up being with who can get their first but this is going to be a future. the future of medicine where -- i was at a speech and you will know everything. you will wear shirts that will tell you what to eat or if you are low on potassium. the shirt will send it to your watch. stephanie: i'm side, barry. i do not want to know that. that depressed me and bummed me out. i want tory, elad, move to a different start up. airbnb has been checking up the hotel industry. we sat down with airbnb ceo who had this to say about his business. hosts to ask all the fall and comply with local laws and regulations and be upfront

with what they are doing. we are piloting partnerships with landlords in cities around the country, so that is really what we are focused on. from a city perspective, it is making sure we collect on hotel tax and city by city, there is a legitimization of the city. we want to be regulated. to be regulated is to recognize airbnb. david: specifically airbnb, but the sharing economy, have you seen that affect your business? stephanie: sometimes i like to rent a spare couch. barry: no comment. undeniable that these businesses are changing the landscape in the lodging industry. i really don't think -- it is like retail. . mention lyons 25 malls -- i mention we own 25 malls. they can deliver exceptional experience and you can do things in the store you cannot do

online. survive and prosper. macto them -- you go to the store to buy estee lauder and you walk up beautiful but you can't do that as well online. i think experience -- like our new hotel -- we are killing it. it is a differentiated product, not a commodity. i think hotel companies are working hard to make their product not just a commodity or they will get this intermediated by airbnb. we want in the lodging industry is a fair playing field. we want them to pay the same taxes are hotels have to. that is required. that is one of the benefits that airbnb has glitches they do not pay the taxes and fees. a 20% load, it is and that is not there but the unions will take care of that because they will argue that it

will hurt a lot of union jobs all over the country with that model and it has to be taxed. i am good with either one but they have to be on a level playing field. stephanie: would you consider acquiring airbnb? barry: private market is higher than the entire thing. stephanie: for now? berry: i should buy every hotel company, like the beer companies. put the beer in the lodging company. matt: i will take all the beer but won't stay at and no bb, but this is revenue for available room going back 10 years. you can see it comes down here just recently. the same is true with this index , north american hotel operators chair prices. airbnb?the effect of i would not guess that is the case. barry: it is not at all. these are products that millennials are using much more than my generation.

matt: i am not a millennial so i will not stay on someone's couch. i want clean sheets. very: the bigger it gets, the more attention -- berry: the bigger it gets, the more attention and the more angry people will get and you hear about that experiences or somebody renting. there was an article about someone renting -- in line stephanie: the freak fest in chelsea? barry: he used it for entertainment purposes. i do not live in new york but i am buying a place in new york and if i had a lot of guys in my building network using that, i would not be happy. i do not want overnight guests in my apartment building. it is all not done yet but there is a lot of the commission about apartment owners doing that. you get fined for that in new york city and that is not fair. we will have to work this out. stephanie: less than a minute, where are you invested around the globe? give us europe for moment.

to get areike europe a lot of people, 300 million people. we have invested in england, ireland, doing really well. ireland is a fascinating case study of the country getting their act together and low cap drivingaxes are business. sweden, norway, poland, czech republic, we have been spain making structural reforms to their economy, so really good places to invest in and there are places we have chosen not to wander into yet. forhanie: thank you so much joining us. you can catch more of her interview with airbnb ceo in the next hour. you are watching "bloomberg ." ♪

>> a made a fortune on home depot. we will talk to him next. tobacco.no blues, no that is what one of the world

passes biggest asset managers is staying away from. leonardo dicaprio is backing a movie on the volkswagen scandal. ♪ welcome to the second hour of "bloomberg ." thisanie: here with us n, for cofounding home depot. david: welcome to bloomberg. stephanie: we will send you to vonnie quinn. bonnie: -- vonnie: investigators say russia built

missiles but the russian company that makes the rockets disputes. violence between israelis and palestinians is escalating. in jerusalem tom -- jerusalem, two men -- tito's people are killed and one of the attackers was killed. blowing across the region from burning rainforests in indonesia. keeping outiño is rains. here is matt miller. matt: futures this morning. have down across the city contracts here, the s&p, dow jones, and the nasdaq, as concerns over the chinese imports numbers make their way to the u.s. market. take a look at oil.

it had its biggest loss in six weeks. a tiny bit of a rebound. this is the overnight trade and a little bit of a rebound. forhas been fairly stable this morning at the perfect dress yesterday. if, you see what stocks have done. this is yesterday for you. energy has been the best rate for the month. though yesterday was rough for oil prices, it has been the recipient of a rotation. was the worst sector for the year but the best sector for the month. have investors change their ?inds as the rotation went over bullard saysmes the fed numbers have remained at

the lowest ever. so basically, rates need to stay where they are. do not mess with nature. to raise rates at this point. >> i think it is a lack of backbone. important that we understand money deserves rent. you get an apartment, you pay someone rent. when you give people something for nothing, expect unnatural things to happen. higher risk taking. because the punishment is not just losing money, the punishment is the cost of carrying the money that you have got to pay for the time you have got the money. david: do you see places where people are making rest --

reckless investments because money is essentially free? ken: yes. a lot of investments i have our private eye watching rounds and evaluations. when you are drinking it, it feels good. >> that is because someone else is willing to pay more than you pay. >> i understand that. always point, things turn it to what is expected. people turn in stocks because they get better return on their money. than zero. better we have got to a dress the issue of reality and we cannot keep doing this for what, nine years now? it is nuts. what will stop all of

this? we see a huge spike in volatility. things are not perfect anymore. but if we do not work our way out of it, we get pulled out of it, it will be violent and painful. let me make it clear. years america5 owns, we own it. we had years where we would wish things were better than they are. in a long-term, we are. we could get some things right, and i think these last seven or eight years of playing with socialism, will teach us a lesson. i think we will understand that the alternative is not very good. i am watching putin. it 1989, he could not afford to keep roots in ukraine appeared when you own something, you

occupied and it is yours and you take care of it. give satellite countries russia money they did not have. with loan prices where they are, russia is not in better shape than it was 25 years ago. playing with socialism is a strong expression. ken: that is what it is. david: give me an example. ken: obamacare. insurance companies are opting out of it. premiums are going up 40%. simple math. if you have a business and you bring 35 more just 35 million more people into the business, you must hire more people. you cannot accommodate that expansion of the market. to say we will bring 35 million more americans into health care and our costs will go down, it is not.

60% are opposed to it in polls. it is not working the way it was designed to work. all the things we've learned, nancy pelosi, you do not know what is in it until you read it. the translation, i have not read it. i am dealing with a liberal here. david: that is actually not true. i'm a centrist. this is the point i was going to make. it is not a new thing. under george w. bush, a republican, we made a huge decision of funding prescription drugs. in that statute, it specify the government could not negotiate a lower price. it was a huge wealth transfer into pharmaceutical companies. it is not unique to obamacare. spirit of candor, i

am a significant investor that was my first investment 37 years ago when i sold the company. i still have the stock. i think the innovation there is slight. but look. george bush did a lot of things i disagree with. the prosecution in the war in iraq could not have been worse. on cannot say what is going in the middle east today. of what george bush did or did not do. i'm not an apologist for george bush. look learn more in the direction of a socialistic state. stephanie: go back to pharmaceuticals. hillary clinton making it public about drug rices and how they should be standardized and come down. does it make you question the investment? i do not believe hillary clinton. i do not think she will get done what she says.

the failure of a drug was announced yesterday. it is hundreds of millions of dollars. think of what we have done for a scientific breakthrough in america. i could not swim for two reasons. i could not swim in the water was polluted. you could not go on the water. polio is gone. think of my grandparents, who both died at a young age of heart failure. i'm now 80. i pretty much have what they had, but i'm still going. it does not meet tomorrow the train might've stopped. the point is the quality of life has gone up dramatically through discovery, invention, and innovation and that costs money. stephanie: and nih has none. ken: if government has done one thing good, it is financing

discovery. these are fabulous institutions and they ought not screw with them. i agree. 7% gdp in health care in the country. it is more than twice the second developed countries in terms of portion of gdp. where will that stop? i agree with you obama care did not help. ken: i'm 80 years old. the wonderful thing about being 80 is i can do stupid things and they say, leave him alone. he is an old man. stephanie: you don't do stupid things. ken: talk to my wife. the fact is we are living better lives. we are more productive. thank god. what i would do. but the point is, go look at the .uality of life

we are getting something for our money. better, healthier, more productive lives. david: it is not efficient. we are not living longer than people in countries pay far less. sweden, you goy, down the list and they have longer life expectancies and a fraction of our per capita. ken: how much of their health care is a result of drugs affected in america? david: wonderful. ken: we will not put barrier up and say, you live in russia and you cannot get lipitor. you cannot get -- david: not charging full price to foreign countries? ken: hold it. david: oh really? of becauseinstrument the cost, gross margins in pharmaceuticals are as high as 90%. in other words, what it costs you to make the pill is five cents on the dollar of what you're getting. and the governments

say this is what you can charge. where did the polio discovery come from? drug foris a inflammatory problems. arthritis, joint issues. colitis. all inflammatory diseases where the body reacts against itself, it is an nyu drug. i'm happy to make the plug for nyu. but seriously, we are getting something for our money. we are living longer. talked to the guy who is on his deathbed. he is told he has got 30 minutes to live. say to him, you are worth $10 billion. if i give you five more years, -- bet you he will write the

check. a lot of people are working hard for all of us to live better lives. it is high risk. new drug int had a god knows when. you're how much they spend a year on r&d? $5 billion. 25% of its revenues. and it has been a long, dry spell. discovery in many cases is serendipitous to hospital the water over and all of a sudden something happens here. they say, oh my god, look at what i discovered. let's not kill the dog that protects us. we are living a great life and we are getting our money's worth. politicians love to make headlines with things that create headlines. david: the great news is we will continue talking politics with ken. we will find out who he would like to see run the country

stephanie: it will be ken. ♪

vonnie: $106 billion. they rejected several billion offers. responsible for one out of every three sold in the world. it looks like barclays will name another american investor at its -- as ceo.

david: let's go back to politics. particularly governor chris christie of new jersey. look at the polls. cbs has a new poll out. ken: i think trump is performing a fabulous service.

i think the numbers would be genetically different. the reason i love chris christie is because there is no nonsense between us. trump stole the thunder. trump was there and did it first. it is the first time in history someone said someone stole the thunder from chris christie. ken: you heard it here first on your show.

christie is not a bully. he is from new jersey. he see something and he wanted to be fixed. let me ask you a question and i will say something to you. nyu medical center was on its back. we took 15 million gallons of contaminated water and they said they would never open again. i never believed in a million years the way i feel about chuck schumer right now. this guy did wonders for us. the republicans. this was three years ago. worked his tail off, chuck schumer. night and day. there were a number of times he came up, i don't know. we were alive and i think you will see an ad for the third year in a row across all academic centers in america. we are number one in quality and safety. that is the most important thing

about being in the health care business. nothing else matters to make sure the people go out of their healthier than when he came in. new jersey was on its back. obama comes to jersey. christie is the governor. i am shocked he did not give him a wet kiss, forget about a hug. [laughter] thinking of his people. he was thinking of his constituents. he was saying, my god, this man can help us like no other man at this moment and he will express himself in a very human way. stephanie: a lot of republicans never forgave him. ken: they are dolts. centerthink our medical does not have a sense of obligation to chuck schumer for what he did? where the hell are your manners?

stephanie: new jersey's obligation to the new jersey question mark his approval rating has gone down. ken: i am explain to you why he did what he did. to say i don't like him for president because he hugged a guy i do not like it if it were dwight eisenhower, ronald reagan -- the point is he had a job to was yourybe it emotions with no sleep and then all the sudden this guy shows up, president of the united states, who has awesome power on emergency matters, and he expresses himself in a very sincere and honest way. there is nothing wrong with that. david: of course not. you are an honest man and a thoughtful man and a considerate man and a loyal man. looking at the polls now, it looks like a longshot that governor could be president.

let's talk about who should be president. i like christie, of course. .ohn kasich he has done a hell in ohio. an incredible job. how about jeb bush? ken: we are not a monarchy. three presidents from one family 25 years, call it what you want, i call it a monarchy. that theretelling me is a jean paul, that unless you're in that, you cannot be president of united states, there is something inherently wrong with the country. i love his brother and i think it's brother showed a lot of .ourage tragically, the people he had around him were the worst. prosecution -- look at what we got over there. we have got about 1000 of them.

we should have gone in there and gotten our guy. when he was in kuwait, he called up the white house in 1990. said to the president, give me 24 hours and i have got your guy. george eight w bush said, yountage from the u.n. -- -- for our kids. help me out on that one. where are the other nations in the united nations? we should have gotten them out then. that is beside the point. by the way, aside, i pay to god the u.n. moves to geneva or another place you one more week back in new york when i can walk around easily without whistles and silence. the medical center. can go up and buy that property. ok. so christie, case it, not trump. ken: ben carson. trump. david: as president? ken: trump gets things done.

i think a lot of things will prevent him from winning. let's talk about the polls. november 12. the pizza guy was in the lead. herman cain. every one of them was in a lead for a week. what does that tell you about the polls? if he keeps pushing, chris christie -- david: you think he can come back. ken: absolutely. stephanie: candidates every week with someone owes him a lead. as the gop not need a grant to buy to say, we are a full of ourselves. ken: as long as you have a primary system, you do not have the choice. when the bosses ran the selection, they went in the back room. if the bosses were still doing what they did when clinton --

the guy anointed people to run. all of the heavyweights, they would have looked and said, get out of here. we know all about you. you will not get that job. the process, we have got a democracy on her hands now. these are the results. george to cocky said he would run for president of united states. 10 years, he will go down canada for the president of the united states. next up, our morning meeting we will hear what morgan stanley is focused on next coming up on "bloomberg ." ♪

vonnie: two israelis and one attacker were killed. versus the clinton field tonight with democratic presidential hopefuls meeting for their first debate. four others will be on the stage . bernie sanders, martin o'malley, jim webb. now, to a check on the markets. matt: i want to break a little

bit of news. twitter coming out and saying it will cut 8% of jobs. it will cut 300 or up to 336 jobs. we saw a report yesterday which confirm twitter sees 10 to $20 million in costs for cutting 8% of its workforce. let's take a look at deals here in beer. what is interesting, david yesterday said, it has got to be 43 pounds. why we are not running a soundbite. deal, bush ishe going to tie up with miller. u.s.,orite kicker in the it will pick up the pieces of the cooperation joint venture that it does with s&p miller. it will be a winner on the deal and you see the shares up. jpmorgan downgrades to an

underweight peabody energy to an underweight. what i think, jetblue airways to a neutral, it makes sense as a neutral downgrade. a couple of downgrades down from jpmorgan this morning. in earnings news, we talked eps, j&j beating on missing on revenue. down on therading trade market this morning at 1%. also missing on the top line. missing on revenue. that theme can be worrying as these companies are able to ratchet up the earnings but they cannot ratchet up the top line of growth there. that to you. stephanie: thank you. are we ready? morgan stanley analyst jay joins us. jay: good morning.

athletic wear? stephanie: i cannot hear anything so i will hand this to david. you are bullish. jay: we have a bullish outlook on athletic footwear stocks. nike is our top pick. we are responding to a question we get all the time from investors. how can the strong athletic cycle continue from a stock perceptive -- perspective and revenue perspective. we did a global collaborative survey across morgan stanley reject -- it was not just the u.s. the u.s., europe, china, australia, korea, everywhere we have consumer analysts. willis at all the different countries in the home regions and we figured out what the opportunity is for athletic footwear and we aggregated all

those footwear to come up with a global athletic footwear forecast. the market is looking at three or 4% growth in the industry and we think it will be five or 6%. if that is true, stocks will continue outperforming. more and more people are wearing athletic wear. i saw jack with a pair of sneakers on. probably does not look that good. more wingtips today. is a huge right it trend. what people in the u.s. might not realize is is a global trend. aschina, the trend is just strong as it is here and it will probably get much better. i will give you reasons why. getting 500goal of million people exercising on a regular basis. it would be a huge increase from

where we are now. they are secondly mandating that all school-aged kids play soccer. they have goals of competing in the world cup. they are liberalizing a lot of sports loss. investate companies can in teams and leagues. lastly, they invest a lot in sports infrastructure. they want to increase it by 60% over the next three years and most interestingly, they are encouraging athletic companies like nike and under armour to help invest in the country to encourage sports participation. together,dd those up it makes for a bullish outlook on china. it is brazil and india and all over the world. david: this is good news. getting more exercise. that is great. thanks. good to have you with us. before the break, we were talking politics. term limits.

we need them desperately because we are proving professional politicians do not get it done. he gets night, reelected. up there in the states, the wife, the 16 kids, whatever. his first thought, getting reelected in two years. he is a senator. money.e out raising the american people, the most important reason the american , 80% want termm limits. 65% of all democrats want term levels -- term limits. they know on the house, mike basel will be six years on the senate. they have got to go home with -- to live with the laws of the past.

the problem with a lot of these guys is that they cannot get hired. , the way they have the seasons, go home and whytheir farms, that is they had recesses to go home and play their field and harvest and grow. are really against professional politicians, it narrows it down to tito's people in the republican field and none of the democrats. trump -- did not know trump served any years as president. david: no, candidates that are not professional politicians. ken: two they work good? david: it was a good idea. ken: your witness be an i have got to go. .tephanie: a viewer question a fan by the name of stanley druckenmiller writing in as

chairman nyu, health care institutions at an astonishing rate what is your secret? i'm not sure if he is home or working or watching. ken: an incredible love affair with each other. david: that is making news. ken: it is ok. let me tell you why. areoth share one thing we we share values. not political, but we share values. that is critical. he is one of the most honorable, decent, ethical men i've known. of carrie, stanley never took it as a tax. he paid the taxes. i know that. i'm an investor for more than 30 years. the first time i met him for i friend to smack him. true story. absolutely.

look. please. do not stop me on him and i could chew him so much. stephanie: ok. ken: my grandmother used to say that to make a i could bite your cheeks off. you treat your people with respect, and you believe that every single human being that is there can make a difference. it is like home depot. kid, theyevery single were more important and we were because they were closest to the customer. it is the same thing with the security guy, the patient care technician, the culinary staff guy. are at them know they critical part of the team. it is incredible how you motivate them and how you want to give them everything you have got. bright. very stephanie: i hope you enjoyed that answer. some analysis changing the world.

the pope. you got to introduce him at the cathedral. saw that the pope restoration of the cathedral was , they knew that a juno, not a catholic, gave all this money for catholic schools. 30% or more of the money i've , $200 million to we are not done. i'm getting there. between 30 and $40 million came from non-catholics. david: i did not know that. 85% of the people who go into the cathedral are not catholic. it is one of the greatest structures. he sawnt i am making is things he did not see, he came

out of a country that is crony capitalism. argentina. i wanted tois what ask about. do you believe the pope changed his view? he said things about capitalism that were not nice. i give him a pass. this man's sense of hurt for poor people, for sick people, when he wanted kids at the mass, and you could see the kids at the mass, kids from the ronald mcdonald house were fighting emoted.pe mode it -- he he says come we must remember what jesus'teachings rp or when you do for me. when you see someone in prison and you feed somebody, you're doing it for me.

he is fabulous. if i could get him in my economics classes, i think he would do better. anything that makes us more sensitive to people around us, god bless them. we will all be better off because of it. that is while of the pope. wrap it upi want to it up. we like john kasich, christie, big-time christie, we like the pope, stanley. ken: stanley i will kidnap. stephanie: he is a big guy. ken:jeff's a good man. in terms of his ability. there is no way he would ever run jpmorgan. so he leaves. and thisomething else

shows up and that is a great opportunity. david: you hope the regulators approve. yes to get past the regulators before. add up the money spent on that department. the more we spend, the lower we go. as a businessman, that is a terrible that. we desperately need to educate our kids. so you got me as a communist now? david: that was great. stephanie: so great. cofounder of home depot. we have got entertainment here.

this is tv. give us a minute. the ceo up next. no beer and no guns and no tobacco. stick with us. ♪

vonnie: another american investment banker as ceo. at j.p. morgan. barclays has been looking for a chief executive to boost revenue and strengthen the investment bank. three years ago, another american banker resigned under pressure. the big swiss banks do not have capital. u.s. has similar -- similar

capital requirements. it is the end of an era. leaderazine that was the of the sexual revolution in america self publishes pictures of naked women. it is now 800,000. that is your bloomberg business flash. david: thanks. stephanie: people just get it for the articles. who cares? pictures, i did not know i had them. david: i do not know what you are talking about about playboy. making money, today, we have the blackrock representative debra at blackrock. it will have good business at its very hard. describe for us what it is they're doing. number thatne of a asset launching across

classes. also social or environmental impact. it is the idea of having two objectives at the same time investors can a kabul. return targets depend on the product but it is a competitive return. 3000 as ourting benchmark. that will be or financial return. employeergeting findment, things that we are measurable that we can look at within a company. the fund that invests in equities of certain corporations, based in part on the environment and workplace diversity, how big is the fund? deborah: it is hard to predict but we find there is tremendous demand on institutional side.

offind there are a number factors that tried investors to investments able to deliver on both fronts. from a marketing standpoint, with the idea to target millennialist disenchanted with the financial industry who care a lot about social impact? you see a couple of things going on. there is a demographic shift with millennials and women investors as well as institutional investors looking for the broader return. i do not know if i would say disenchanted, but if you look at what millennial's value, they very much see the way they live and what matters to them. stephanie: why wouldn't anybody want, if you will get the same returns, investing in a good , why wouldn't i? deborah: i think that is what we

will start to see. over time, environmental impact, do they operate responsibly? traditional investors move more toward funds that can evaluate and deliver. stephanie: no additional costs. returns or management fees. deborah: we will see for the same targeted return, you can accomplish these other outcomes. david: it is not a brand-new thing. other large firms like goldman sachs and j.p. morgan have specific operations for some time. differs your approach from what j.p. morgan is doing? deborah: a lot of firms are looking at this, a tremendous thing for the market in general. that is where investment firms will start to focus. it is a great thing.

we have the broadest investment capability in the world. to put all those resources behind and innovation like this, we think that is something incredibly good for both the market and investors. stephanie: i think so much of what i bring to blackrock is the impact based approach. stephanie: thank you so much. we want to run part two of my exclusive interview. ryan told us what he thinks about funding and expanding around the world. >> at what point do you need more and where will you look? >> we have plenty of cash at this point.

dreams include expanding aggressively around the world including asia and china. no plans for an ipo. >> how is china going? >> it is growing 700% year-over-year. those people renting out their homes are not paying taxes. brian: we going city by city in the united states. san francisco, portland. stephanie: the same amount of taxes a hilton would pay. brian: exactly. we declare every host at 10 $.99.

-- $10.99. the bigger we get, that we know we get more attention from regulators. we have cities all over the country and all over the world. toy by city, we are starting see the number of senators educating about the business. we have to enrich and partner with them. stephanie: why are you fighting againstprop f? it is an do not think affordable housing idea. said,have come to me and 75 nights a year, i will no

longer be able to keep this home. they also say i can keep this home. unit, i longer have my cannot keep this home. i agree with the spirit. to regulate airbnb is to recognize airbnb. david: that is one confident, positive young ceo. he tells a good story. stephanie: it is hard not to be excited. and i amave a chart sure you have seen it before. tech evaluation and venture capital money raised. it continues to climb starting back here in 2010. was leavings as he and he said it is insane what valuations are demanding. probably the best guess we have ever had, is also saying

he is happy. it is like being drunk at this point. it is insane. as cool and cute as you think the kid is, he will get a lot of for that idea. does not mean he will not succeed at what he is doing. some will not. it is hard to know which one is which. matt: i do not even like staying with friends and family. stephanie: i think they do not like you staying with them. and what did you say, as cute and cool as he is? next hour, and environment -- american investor on "bloomberg ." ♪

david:david: welcome to the third hour of "bloomberg ." stephanie: we are joined now by

our coanchor. schatzker. erik: good morning, everybody. welcome, lee. we will begin with the first word. vonnie: airliner crash in ukraine prompts a quick -- the russian, but company disputes that. 298 people on board. two incidents in jerusalem. a pair of palestinian men. .he driver rammed a car two israel is an one attacker was killed.

tonight in las vegas, hillary clinton will debate bernie sanders and other presidential democratic rivals for the first time. airing on cnn. matt: let's look at futures trading down across the board, as is europe and asia still. losses here, because of the chart i am about to show you. take a look at bloomberg. a snapshot of the green line. we have got import numbers overnight worse than the estimates has suggested. i added in here should foreshadow some of the next chart. copper and white. gold is down, metal prices across the border. useriggest miner and

including a ton of metal. it had actually had a good run and copper futures down about 1% as well. i want to close out with a quick stock. johnson & johnson and earnings .hat beat estimates revenue is down pair looking for closer to 17.5. quarter, thelast same quarter last year. >> new analysis says the oil is not going away until 2017 per the global surplus will persist as the international energy agency and the reason why is not so much supply.

you have been paying attention to the market, i am sure. mean if you had to shrink demand. lee: the thing that impresses me positivelyre and has -- andract capital investment dividends, that number is -$100 billion a year cash flow, negative. theou do the same analysis, number is -$500 billion a year. growth, ieconomic would expect a supply demand would come into balance and the prices would be higher.

it may be a little pessimistic. on the basis of that, are you a buyer of oil stocks? we owned some oil stocks. resources, and there are things out there that can be done. we have been adding every time. trouble on the macro investing fund. it plans to liquidate those assets after two years of losses. the manager and cofounder plans to leave the firm by the end of the year. shares are down by more than 30%. it is the latest victim of the market turmoil that caused inlions of dollars in losses

hedge fund land. this has been a tough year. will this be the first of many? a legendary investor. you boost a legendary titles to people too easily. mike is a good man. setback and of success is determined by how you handle it. we have managed to work hard and come back and i'm sure michael will do fine in the future. we have setbacks. i would that along the term david: writing. david:is it a good thing to see a shakedown like this happening? lee: i do not know. it is a fact of life. stephanie: we have become accustomed to it. lee: since 2009.

their markets and recessions tend to have a recurring pattern. economic recovery in the next recession and every recession sows the seeds for the next recovery. are signshink they that that is ending. you have heard a lot about china including recently with the export numbers. it bolsters the pessimistic view. fell 17.7% ins september, extending the longest losing streak in 10 years. fell 1.1%. you see this as a negative. they did not devalue the yuan. what is going on? i think the focus on china is excessive.

analogy.is a data on a monday morning, i turn in the bloomberg terminal and world markets are down in value. greece, the entire economy is $45 billion. in value of an economy that is $45 billion. the: why doesn't that work other way around? the fact that it will drop that much shows people are not actually that confident overall. harley but i also think it

has to do with market structure. in 1938, a rule worked and served as well for many years. ofelieve in john -- in july 2007, for some unexplainable reason, they moved it. it gave rise to the quantitative trading systems dominating the market. in a world where if you like a stock at 10 you should like them and nine. these guys like them at 11 and 12 and 13 and at nine, they want to sell it. there is no economic reason. up or down. there is no economic rationale for the s&p to have 1500 point moves in 30 minutes. the fcc should wake up and understand there is something wrong and market structure. they should deal with this. a friday and on a monday, general motors and oreral electric opens up 20 30 or 40%. there is no economic rationale.

the market structure is broken. whether it is dodd-frank or the broker rule that encourages inventory, the commission structure that has no compensation to take risks, whatever the reason, there is a problem with market structure and the s&p should wake up and pay attention to this. the new york stock exchange, they allow high-frequency traders to colo k their computers. the public is leading the market. have beenn dollars taken out of equity funds by the public. the public is scared. i am a professional. only good news is i have more money than i need and i basically do not have any liability or loans and i can have a long-term horizon and right through the volatility. but it is not healthy for the system. it is raising the course -- the cost of capital. i am following him

with an amen. china is most relevant for commodities. global economy, like 1% of u.s. gdp or exports, two or 3% of european economic activity, it is not unimportant as people important make it out to be. the economy has been slowing every year for five years. he has been up 15% in the last five years. i have got to take you to europe. britain's inflation rates turned negative in september. they fell for the second time since 1960. in germany, investor confidence fell to the lowest level in over

a year. how does europe ever raise rates if there is no inflation in the german economic engine as -- is a slowing down. london friday and saturday and price declining is news to me. i wave had a mini peas and i had a hamburger and it was only $100 and a coke is five or six dollars a bottle. >> the cost of living in the u k it is going negative. energy pulled down the overall cpi, no question. the politicians will get ahead of this thing and in a few years, you will be worried about inflation, the upside and downside. whaticians will get they're looking for. same time, german confidence, i believe small business, confidence rose.

the economy is growing at a subpar two or 3% and is growing. about thiswill talk later. zero interest rates. rate byly adjusting the 20 million. putting 200,000 people to work per month. swiss banks, they will demand capital equal to 5% of total assets. this is the total leverage ratio. none other than the federal reserve. credit suisse will have to is nor capital and it surprise the shares of both banks are down today. any thought on swiss banks? lee: banks in general. the best way to get them to lend is $500 billion per

month. .ut in rules and regulations it is crazy. it is crazy. >> we will get back to banks. stephanie: get engaged. what would you like to ask? tweet us your questions. next, light barclays is looking to bring an american as its next ceo or they did not want bob diamond. you are watching "bloomberg ." ♪

vonnie: welcome back. businessour bloomberg flash.

engineering departments are being reorganized. jack dorsey took over as ceo last week. the deal bringing together two of the biggest names in beer. the company would produce one beer in every three sold worldwide. carry regulators do not the deal, they must pay $3 billion. , s burger king selling a 40% in -- 47% stake. the deal will boost its international expansion. it runs more than 3000 restaurants. that at the latest. matt miller is here with what is moving in the premarket. matt: let's look at some of the companies moving. thell kick it off with homebuilders here.

stanley.and morgan growth, morgan stanley analysts say is at the low end of the competitors range. as far as airlines, the companies moving there as well, jpmorgan cut its recommendation on jetblue and then ever core cut recommendations on american airlines group. will hear more going forward as well because on october 17, they will completely rearrange their computer system. there'll be a lot of canceled flights. they say they will staff the main control room to make sure there are not any glitches there. i want to mention under armour as well. down inwill be stepping february of 2016. he has been at the company since 2004. a management note, he will be

pursuing other personal endeavors over at under armour. stephanie: thank you. we have got a lot more to cover. david: let's talk about barclays. the hunt for a new ceo is almost over. an american for the job. during theoved aside london trading scandal. he is now managing partner at the credit hedge fund. we will speak with chris wheeler in just a minute. covered barclays and there is a great perspective to have from chris. jes staley, did you know him? he had a good job. a good reputation. his --iven the fact that

morgan stanley and prior to that of asset management, while it that make fit for a bank like our cleat, scaling back in investment banking? enougham not knowledge to comment on that. bob diamond is a good guy. >> he had a bad experience on his way out the door. lee: all of us. he did not rob or murder or kill everyone. there were mistakes made and he paid the price. but basically, i think institutions ought to have the best leadership the matter whether the is local or foreign. stephanie: how difficult is it for wall street to get top talent? look at all the people who left in the last years.

lee: basically, there are a lot of people looking to make a living. it has been a place where historically one has been able to make an above average living. plenty of people want to come to wall street investors capacities and i would not worry about it. do not wait any candles or worry about it. david: in the sector, how do you make money as a bank now? a lot of trading, very lucrative. lee: i am synthetic to the observation. i think dodd-frank was a mistake. i spent 25 years at goldman sachs. it was extremely profitable. by forcing them out of businesses that have been historically profitable is to weaken the enterprise by concentrating economic activities. they could be by being more diversified, risk-based capital, they require more capital.

whaletreet is on par with dung. wall street is on par with whale dung. lee: that is just an observation. at the candidates on the left fighting to be more or less disappeared bernie sanders wants to test people at a 90% marginal tax rate. you do not know if you are a bank ceo where the next regulation will come from. look is -- look at what is happening today. the leverage requirement. lee: it will lower the valuation. it makes me very cautious at making new loans, which is not good for the economy. i cannot be as articulate as jamie dimon. i think he calls a toy he sees it and he sees it correctly. citibank, jpmorgan, and we own barclays.

valuation. citibank, returns are rising. sometime in my lifetime, rates will start to rise and earnings will start to improve. matt: we have a great function on bloomberg and it shows you a number of different framers relative to your competitors. right -- inlays in the white. it is under the competitive group that lists the banks we have gotten. it has broken out in a last anths or so at least as being little more highly valued as competitors. i thought that was interesting. 16 times earnings. a big discount to the market.

superior yield, a discount multiple, and improving situation. looks fine to us. erik: it is not clear to me why they pushed the ceo out. it does not look that bad. stephanie: antony jenkins had a completely different mindset. deemphasizeng to capital-intensive business, the importance of doing good and being conscientious. and sadly, that is just not that that -- brand of banking. >> that is the price-earnings ratio. the bank was cheap, most recently under the new chairman who set a new strategic course. things have improved and that it appears to be what he will be executing.

>> next, we will talk to lee and he will provide his investment strategy. ♪

>> welcome back. you are watching "bloomberg ." vonnie: the e-mail server hillary clinton used as secretary of state was honorable to hackers. remote control access to software that allow direct internet connection. warnings from the government and tech companies. looking into whether messages were exchanged that were classified on that system. a deadly toll but doing little to retake territory. a senior pentagon official tells

that 25 -- 20,000 militants were killed since the bombing started. holds two major cities. the pentagon says recruits quickly replaced. passed thearliament nuclear deal with the west today. nearly two thirds of iran's lawmakers voted for it. elite counsel can still send it back for discussion. iran's supreme leader can leave the decision. they will scale back nuclear facilities. that is your first word. to we are joined by lee cooperman and we would be remiss if we cannot ask about equity markets. your approach to them and what your investment strategy is. i think the market is in his own a fair valuation. profits are going very slowly. your view of the market is very much a function of what you earnings profit price

per ratio is. a lot of debate on both sides but i think something between 15 and 17 times earnings will be reasonable for the s&p. decimal points to show they have a sense of humor. something between 2000 and 2200 is the target for the s&p. we're slightly in 2000. a lot of things to be done in the market. the arrayrelative to of financial assets available to us, that stocks make the most sense, to step back and think about it. are an individual. you can keep your money --. if you are lucky, you will make 50 vegas points. you can keep your money in bonds. that does not make any sense to me. the rates are too low. you can buy your favorite common stock. over 40% of the s&p 500 index yield more than bonds. within that 40 percent, you can

find companies that are growing, yielding up to 5%, for a much more attractive value. :teffi says -- stephanie what you like here? allergan, why? lee: allergan sold their , foress for multiple times you are buyingon around 15 times earnings. we think they could read the deploying the money intelligently. we see a price objective above where stock is trading at.

david: do you think there is upside in google? lee: we think the market is fairly valued. we try to find what is undervalued. you have to understand the market. if you look at the s&p 500 index, growing 5% a year, a dividend yield around 2.1%, about 36% debt to capital, less than three times book value. you pay about 16 times earnings. we will have more underlying asset value, have more yield than the market has. take google, probably approaching $100 billion in cash . it is not being properly used. they are growing about 18% a year.

we think it is going to result in improved valuation. do not think the balance sheet is excessive. -- everyone is crying for income. they cannot run money. chimeric,package -- it is anies credit company. those five companies yield between 12% and 14%. they are selling, on average, 80% of book value. here you get 12% to 14% dividend yields. you get a buyback working for you. namesany one of those

make a great deal of sense. 12% yield, the company is buying back stock. the dividend is covered by earnings. they are a mezzanine lender filling the void. david: there has to be a reason they are trading at an attractive yield. amount of a prudent leverage. the public is out of the market. i think that is part of what is going on. basically, i am comfortable with these names. stephanie: not comfortable with utilities. only: interest rates are going to rise. it has less appeal to me. we are meeting with management. andything i mention, navvy

used to be part of sallie mae. they continue to make lots of student loans. will return capital. if you look at them, the company, in the last 12 months, bought back $1 billion of stock roughly. trust the ceo. he is a good guy. why did we buy $1 billion stock that. we happen to agree with them. when anything is up, it is up for a reason. when it is down, it is down for a reason.

sears is largely gone. american motors is gone. stephanie: sears has not had a great day in some time. the company will deal with it. they will fix it there are a lot of things to be done. tribune has underlying assets between 60 and 70. the company has --

stephanie: matt, breaking news? matt: it looks like warren buffett is making some comments, saying the u.s. economy is growing not at a bad pace. u.s. not disappointed with economy. housing is picking up. is showingre market gains. he makes comments about activist investors, saying zero appetite it isn them and that futile, like trying to change her spouse, he says. he also says making a political comment -- hillary clinton is likely to succeed. hillaryhe supports clinton, i may be off on that. he was married to the buffett until he passed away. he tried, it would have been futile, active -- like activist investment.

and well.war -- i know warren well. of my to give away all money, but i disagree with him on activist investing. it has to be taken one at a time. i have seen the best of activism and the worst of activism from the same firm. a one by one situation. stephanie: can you give us examples. we talk about activists in the same way. >> let's talk about a good one. i value my friendship with, he is a terrific guy. that he went to was to getwith, that -- to sell forward the oil production to take the proceeds and buyback stock.

i saw the merits of the idea. he said no. they launched a proxy fight. halfway through, they saw they were going to lose, they did a major buyback. they came back to market as the second major buyback, saying the first buyback was the best idea they had ever gotten. sometime later, after the second buyback, they sold the company for an enormous price and said they could not have gotten the they hady got unless bought back all the stock. everybody one. -- everybody won. it was an intelligent idea. worst fromest and the saying -- same shop. basically, this was younger

days. he is much smarter now. he and dan loeb teamed up and sent a demand letter to massey energy to do a $2 million buyback. visitinge back from massey and he told me of the situation. he came across a tape. i called up barry and said -- i did notorry say that then. i am sorry now. i am happy as an investor. i was on the board of directors and the ceo supported your proposal buying $2 billion worth of stock at $55 a share, i would resign from the board. barry said -- why? i said i operate -- stocks have a memory.

it is trading at 50. you go from five dollars to $50. the stock is up tenfold. what are you complaining about? the company is booked net worth of $1 billion. in company is not succeeded getting coal out of the ground for two consecutive quarters on budget, on time. had badrned out, they quarters, the stock collapsed, the rest is history. i disagree with worn. i am more warren's style. we should reduce our operating costs, go into runoff, return money to shareholders. buyback.wn on i may change my mind, but i am not going to campaign. >> you leave it for others to do that. leon: you have to decide what

your style is. it is heavy lifting. it changes the reputation of the firm. i do not have a negative view, but i have a mixed view. the formula of getting on the board, buying back stock, it is not a formula i go for. we will continue the conversation. what would you like to ask him? tweet us your questions. we will look at whether an important trial can clear the way for criminal prosecutions. ♪

vonnie: welcome back. general electric taking a trip

back out of its finance business. the bank is buying the finance unit and other assets. ge is moving back to an emphasis on manufacturing. dell will take on about $50 billion of debt to buy a company. they will contribute about $3 billion to buy the data storage company. of dell will add $1 billion more. the deal is worth $67 billion. leonardo dicaprio's production company teaming with paramount to make a movie about the volkswagen cheating scandal. that is the latest. stephanie: check out the value proposition. we zero in on controversial issues. bank employeesy, are being charged with fraud as part of a scheme to -- libor.

could this case be the turning point to the department of justice in prosecuting individuals rather than companies they work for. let's bring in our colleague. >> this trial is important. it is in the backdrop of what is happening. two people charged, going to trial in federal court. one criticism is they have not had enough individual prosecutions in these large cases. off two setsleave of cases. new set ofseeing a cases, where it looks like individual prosecutions will be easier. riggingthe benchmark cases. liber rigging and foreign

exchange, which is foreign exchange rate rigging. 12 to 13 people are charged for liber rigging. the problem with the cases is they are very complicated. if it is just a question of did you fix the price or not, that is straightforward. one of the ways the department of justice has been able to get around it, because it is hard to ratesif they did fix is collusion of fixed rates. talking about moving rates a certain way. dinged on these antitrust violations. david: how long was the sentence in the london case? keri: 14 years. david: there was instant message

traffic that was pretty incriminating. i will give you some money if you fix the price. keri: these cases, juries do not buy e-mail traffic. you need someone that works with them saying yes, he told me to do this or she told me to do that. there are tough cases. i have not met a prosecutor or defense attorney that says the department of justice does not want these cases. they are tough to get. and says why has there been a shift in tone? prosecuting individuals would be more of a priority. it was not a priority beforehand. keri: the way it was laid out was to placate the public. yates memo. a gave prosecutors more tools

and procedures to drive those cases through with more ease. to say they reiterated this several times, that they had not already been doing that. it was a public service announcement. stephanie: what does it mean if they get convictions? are going for is convicting people who committed a crime and two, it is a deterrence. the signs on the banks are not a deterrent to wipe out and lead out this bad -- and weed out this. stephanie: 14 years in jail. >> that will get your attention. stephanie: lee cooperman is sticking with us. more "bloomberg " next. ♪

stephanie: lee cooperman, you are an optimist. ucb market has more up then down. why -- you see the market has more up than down. why? been eight said cycle since the mid-1950's. on average, the market went to point -- went up 2.5 years. markets comeear about for a reason. recession, overvaluation, hostile fed. the other three do not seem to be present. psychology. invest in the last several months, that happens at the bottom, not tops.

bull markets are born in pepto some of -- bull markets are born in pessimism. we have had a significant correction already. the average stock is 20% off of its high. what is the alternative? going to buy bonds at 2%? we talked about financial companies yielding 12% to 14%. emc, dell, enormous substitution taking place for debt for equity. is buffett said the economy ok. if you look at the cost of money versus the cost of equity, you will see corporations like j&j announcing a $10 million buyback.

the substitution of debt for equity. the valuation of the market is reasonable. the last 50 years, the multiple average was 15. it is currently 16. we are in line with historical norms. think about what happened in the last 15 years. statistician. say usthank you for being with this hour. tomorrow, joined by richard anderson and bart chilton. tune in tonight for a one-hour special. ♪

>> it is 10:00 a.m. in new york, 3:00 p.m. in london. welcome to bloomberg market day. ♪

betty: good morning. i am betty liu and here's what we are watching this hour. the largest corporate takeover in u.k. it history. great to by s&p miller for $106 billion, a deal that will put one company in control of 30%, one in three of the beer drank in this global market. hillary clinton debates her rival. for the first time tonight, she will take the stage with fresh questions about her tenure while secretary of date. will be able to read playboy only for the articles because the magazine will stop publishing nude photos of women. what that change means for the online publishing world.