we will shortly. ♪ david: welcome to "bloomberg ," i'm david. stephanie: and i'm stephanie. did you watch the debate last night? david: i did, did you? stephanie: i watched it, and you know who did not win, the network. when donald trump is in a debate, you get entertained. last night's debate -- i was looking at e-mails. david: i also read some of his tweets which are pretty entertaining. stephanie: leave it to donald trump to still the show. it is the person who wants to be

the next president of the united states. david: today we would have cbs ceo les moonves on and bart chilton. stephanie: if you think that doesn't pack enough punch we are breaking news right now. manny pacquiao, and involves matt miller. matt: it is bank of america i will tell you but right now. they cannot with third-quarter aboutgs, total revenue of $4.5 billion. it is not clear if this compares with the survey we have. the adjusted gap number. .37$ looks like a strong number. that is the problem with these banks and dissolve the companies

with seen so far. 500 companies have reported so far. they are missing a great deal on revenue. i will dig in a little deeper, and i see you have a banking expert. david: we will be talking bank earnings all long -- all morning long. let's p.m. with the first word from bonnie. : democratic president to candidates squared off in the first debate in las vegas. as times it seemed it was four versus one against hillary clinton. at one point, clinton and bernie sanders disagreed. illegal behavior of wall street. we have fraud a business model -- as a business model and can

destroy this economy in the lives of millions. think oflinton: when i a capitalism, i think about the small businesses that were started because we have the opportunity for people to do that and to make a good living for themselves and their family. confusethink we should what we have to do every so often, which is save capitalism from itself. bonnie: he will have more on the debate later in the hour. in israel, the government is cracking down on a new wave of violence. plus, properties could of been confiscated and security guards had been the target of attacks. and the air traffic controllers union's warning there will be more flight delays. air say a shortage of

traffic controllers is the worst in 27 years. it is new york city's three commercial airports are in the worst shape. i don't think it will be a matter of hours though, stephanie. stephanie: we will get back to analyze these bank earnings with christine harper and our own buddy eric down in sharp -- charlotte. you are remote, so you don't get to go first. christine, let's kick in all. -- off. christine: it was disappointing, we're focusing today on some comments made during the whoerence call by the cfo said that if you look at what is happening in the first quarter, trading is not so great. there is not much activity so she thinks estimates are a little high. that with thening

caveat it is very early in the quarter. that caused some reactions, with the stock trading down. people will be interested in what they hear from the bank of america this morning. the focus again is on revenue, how it can hold up most of matt miller was right, there has been disappointment on the revenue. wells fargo is the only bank that they were expected to have some good news on revenue. stephanie: they are a bank not dependent, a different kind of organization. christine: that's right, the capital raising you are seeing some big deals this week. there will be a lot of interest in what is coming in the fourth quarter on that front. david: i read a summary, it wasn't just trading. people talk about trading a lot, but it was not just that. is that correct? issue, christine is

right. revenue is very hard for these banks to produce growth. that is the reason that investors are just as focused on cost. that is a problem for jpmorgan. the best way to analyze cost at the moment is the overhead efficiency ratio. the higher it gets, the worse you are doing. for jpmorgan, that has gone up two points. i just in the calculations on i see a similar trend in bank of america. about be asking the ceo that today, one of the things bank of america was able to do last quarter was reduced cost dramatically while raising revenue. this quarterly fee going down,

and costs going up. you know that if that is the case, investors will be concerned about that. david: when we talk about cost-cutting, are we talking about people? reported last week that 200 jobs are going at bank of america, there may be more. 10,000 jobs have gone from the start of the year. the whole business model of these companies where people are the biggest expense is that as revenue falls, competition and sometimes jobs -- stephanie: people are the biggest expense? sell tv sets, they need people to bring in dollars. christine: but if they don't see returns, they will not be in those seats. david: which people? how much they getting compensated? you have some highly compensated individuals. erik: these people have to be

productive. do they want to be heavy in fixed income? to they want to be heavy and equities? those turned out to be good businesses for jpmorgan last quarter. we will see if that is generating similar results were bank of america, or do they want to get back in the mortgage business? it really does come down to not just what peoplke you have, but what businesses you decide to be in. you're after gauge whether or not the economy is growing fast. stephanie: this is a moment when maybe -- is this one banks decide we will do away with publishing research? it is a massive expense, they're fed a hard time figuring out if they are monetizing it, and all it has done is given the more conflict of interest issues.

it is a legitimate question. let's just take a jpmorgan as an example because they reported last night. lessinvestment bank is way profitable than it needs to be. the answer is yes, or we should be raising the question, because these banks need to make tough decisions about what they are doing. investment banks the size of jpmorgan can't generate a return on equity of 8%, a single-digit return at a time when financing is so cheap, corporate america is doing all kinds. s&b miller deal, the ipo engine has slowed somewhat, but they should be doing better than this.

they need to make the investment bank more profitable. they can sit around and wait for better times to come. david: tough decisions ahead, what does bloomberg tell us? matt: i want to show you a measure profitability, how much money a bank can make. this is revenue growth, you can see that bank of america is way back here behind the zero. revenue is shrinking, and a return on assets is also going down to pegida competitors. bank, haso, a bigger a higher return on assets and almost no revenue growth. at least it is not negative. erikt to show you, what means by waiting around for better times. i have a five-year spread, although it has risen a little bit, if we can take my bloomberg up here, i can show you it has

come down substantially from the middle of the summer. even though it is not doing low for the year, it is still a tough time right now for banks to make money. aephanie: christine, and different environment, one might say this is really tough for big banks when volumes are down. is that the case right now? christine: you're seeing a lot but we've seen some of these deals relying heavily on debt financing. that is not something they can participate in. we are seeing a boutique in london playing a role, they will definitely -- they will not be part of the financing. it also costs bank of america, if you are lazard, all you have to do is pay to advise. jpmorgan has to put big dollars up.

someone comeey had into help because they were concerned about their cost a couple of years ago. they have had to address cost even of the boutiques. it is not like they have no issues, but not the huge infrastructure overhead. an important thing to overlook is the capital reform. not just the human capital, but financial capital. that amount of financial capital keeps rising, one of the things jpmorgan is learning is that the company shrank a last quarter and they will be able to, they think, to go to a lower level of capital requirement as they get smaller. we are seeing it very much in europe is the shrinking into where you can generate it will return. david: it is a good point. it is arithmetic. christine, please stay with us. he will come back for your

interview with brian monahan later. with dark but a feature of media with les moonves. what questions do you have? please let us know what their. later, we will talk presidential debates. here is secretary clinton from last five. hillary clinton: when i think about capitalism, i think about the small businesses that were started because we have the freedom to do that, and to make a good living for themselves and their families. i don't think we should confuse her be have to do every so often -- save capitalism from itself. ♪

david: let me give you an update on delta earnings. at ad earnings per share

dollar 74. that beats the estimates. at $11.7ad revenue billion. i want to show you the were delta's strength is. the operating expenses, the white line is specific. delta has really brought its expenses under control. of course, cheaper fuel prices help a lot as well. david: he delta ceo will be with us later on in the program. , every time we bring you stories from around the world. they we had to hong kong. i understand that our numbers -- there are numbers out of china. we had a more low inflation data out of china today demonstrating just how the policymakers are struggling to

gain traction to get the economy back on track. ppi indexlar, we had today which showed that factory prices are still in deflation territory for the record 43rd month. is fallingt commodity prices, or falling food prices, but there was also weaker demand at work as well. to the world's second-biggest economy remaining in a pretty soft spot as we head towards the end of the year. david: we all know it is slowing down. what are the chances some of that is being in million rated by increases in the service sector that would not be picked up by these numbers. dna: the service sector is doing reasonably well. what is driving the index is an increase in services. food is quite volatile.

that is one of the strongest components. they're trying to go away from just manufacturing more towards consumption and innovation. but not well enough to fill the gap being left by the slowdown in manufacturing. dataanie: we know this bad via been getting out of china is causing u.s. markets to really do less and less. it was one of the contributing factors to the last volume the banks are seeing. are down inarkets europe, and they should be done in the u.s.. all of these problems you have a demanding economy like china slowing down. commodity market and the emerging markets. that is been very bad for banks. probably, this is driving some of the m & a activity that we're seeing in the emerging markets.

ways theall kinds of corporate world is reacting to this, but it is not good. of hedge funds that are trying to make money have been shutting down because they cannot find a way. stephanie: the markets are more paralyzed may have been in the past because there are more hedge funds and more short-term investors. this roof five years ago, the majority of the market was insurance companies left much longer timelines, so they could ride this out. fund, youe a macro cannot withstand this volatility. david: if you are still in business. stephanie: the banks aren't there to cushion the blows at all. david: one last question, given the discouraging numbers coming out of china, what is the likelihood of further action by the central government?

edna: so, one thing that china has unlike the bank of japan or otgehr fiscal authorities is a lot of room to spend money and conventional firepower remaining. they can cut interest rate and it is quite likely they will. stepsan take otehr to get target lending out to the government borrowing to spend on them for structure. it is likely we will see more action as we head into year's and. stephanie: thank you. we have to make a pitstop in london where mark barton is there. we got this data out of china, talk to us about the european markets. of declines.ays the data highlighting the

fragility of the chinese economy. that is not good for the global economy. check out this company, it is woman talk but every day, the biggest decline her every day. this is one half of europe's sexiest story, it is germany's biggest residential -- it is tabled $11 billion offer to its rival conditional on their takeover of its rival leg. whatt the disparate parts, is happening is the rental property industry in germany is buzzing as the major players battle for size. the biggest gainer in london is the biggest in europe. one of the big brokers in the uk. and it said new business surged by 43%.

a big piece of data today came from the u.k. our jobless rate is falling to 5.4%, the lowest since 2008. the biggest rise against the dollar in four weeks. wages grew, but not as much as expected. wage growth, strip out inflation, that is the best since the financial crisis. someanie: mark barton, positive news. now let's give you some terminal trends. christine harper, you know you and your team are responsible for some of the best stories, but i will share with i am looking at today. it is the most read story at the terminal, they are shutting down, and they are not the only

one. we are seeing more nad more -- down.re funds closing oft will we see in terms broader hedge fund activity? christine: when times are tough in good funds, and you get more money, and then those aren't able to hold up and have to throw in the towel. are situations that have been going on for a while, they haven't been optimal, and they're finally pulling the trigger. stephanie: i question is more specifically who is shutting down? isn't the best of the best? is a $1e: that fund billion, it is not a medallion fund. david: when it went into the numbers,

stephanie: hold on, they had $2 billion now, back in the day they had significantly more. the three original partners, there was a time when he was the man. christine: look what happened the stock yesterday when he announced he was leaving, it rocketed up. people are glad is he the last of this because it has not been a good performance. now they will be much more focused on private equity. david: i had a different story that struck my fancy, which is f ollowing the big beer merger. you might be concerned about where things are going. the main point, the new ceo fired 1400 people the last time they did a big deal. he eliminated the entire top level of management.

the people that are buying have these fancy offices on park avenue. he likes to have no offices at all, he doesn't believe in offices. they have a culture clash coming up. stephanie: he is a brazilian executive a part of j of a guy at 3g who has done a lot of deals with buffett. this, theylot about just go in and start stripping out cost. the -- perks, all stephanie: thank you for being with us. coming up next on "bloomberg ," the supreme court is weighing several cases. that is next. ♪

live shot that is a of fortune 10, this morning.

is under construction, it means progress is happening. welcome back, you're watching "bloomberg ." david: a great start to the morning, let's got the first word with bonnie. contenders spent two hours debating things from syria two guns. most of them spend much of the time going after hillary clinton. respect what secretary clinton and her husband have done for our country, but they need new leadership to move forward. i'm not juston: running because i would be the first woman president, i am not campaigning to become president because my last name is clinton, i am campaigning because i they do have the right combination of what the country needs at this point and i think i can take the fight to the republicans. bonnie:

more on the debates on bloomberg politics. meanwhile, the breakout star of the last debate is bringing in the cash. carly fiorina's campaign says it ray $7 million in the third quarter, four times as much as he raised in the second -- she raised in the second. president obama is said to be rethinking his plan to hold american troops out of afghanistan. he is increasingly willing to search for al qaeda and islamic state militants. originally he wanted have only enough to protect the u.s. embassy. matt miller now with a check in the markets. matt: i will show you some of the stories behind what is moving these markets. some mixed trading right now. a very interesting story coming out yesterday after the bell on sandisk, saying it may be

looking to sell. some the possible buyers could include micron. we could see some movement there today. in the chip space, really the big mother is intel. intel coming out with earnings yesterday that did not miss expectations, but the company said that it is concerned about pressure on corporate spending. that could be the one bright spot in this industry that is the set by bad pc sales. you can see jpmorgan trading yesterday thesing earnings per share. stephanie: our own matt miller, thank you so much. jpmorgan down, but not out. we will take you to london where our colleague tom is waiting to join us.

tom, what you're reading today? a public i have is service, i know david westin has seen this. this is on the betting of draft kings of football that we've all during gamesd with with commercials. in other words, 99% of the participants in fantasy sports are the patsy at the table between the high-frequency outfits -- takes the fantasy sports model and brings it right over to some of the high-frequency trading. david come i don't know about you, but i am dazzled by these ads on tv. david: i see them constantly.

stephanie: they're everywhere. david: you're right, this hits close to home to me. i have a 13-year-old son who goes on to the sites. i have gone over the numbers of the people few actually make money. tom: people are worried about this -- this is that about stephanie just paid for two years of tuition for the fourth grade because she went with the patriots. i don't go to fantasy, but a sad thing here is that fantasy leagues have been great for kids in terms of statistics, and adding gambling to the mix? david: you just beautifully promoted the fact that we will of a tom brady interview later on in this program.

i believe you with this, the youers are horrific, if took a close look at state lotteries, i'm naturally numbers would look all that much better. i bet that the st. louis cardinals would win. stephanie: i would say this is probably more fun than playing the votto -- lotto. david: it is time now for power go, the second week, and there in classgame changer action lawsuits. billions of dollars could be at stake in a supreme court decision that is being argued today. us, who covers that for tell us about that. g: this is a huge case for the power industry. it is about a rule that

regulates something known as manned response. that is when a consumer is paid at not a peak time. power companies don't like it, because the rates they receive there are a lot of big-name companies involved in the case. as you said, it could be billions of dollars. stephanie: what this this mean for me as a consumer? reasons,: david: two one is power cost. the big companies that consume power, aluminum companies, things like that, they can make a deal with the grid that says we don't consume as much power during the times you will pay us as if we were generating power. you think wall street of the only derivative traders out there? have: it could potentially

real effect for the environment. it would allow you to have fewer power plants, and you could pollute less. that is a claim, right greg? is exactly it, there will be less energy consumption of we have demand response. this doesn't determine whether that happens or not, but it determines whether the federal government can dictate that the rates will be very high so that the power companies will have to for notry high rate consuming electricity. david: the big consumers are treating it as if it is a decision, that is why they wanted. take us through these, we have four class-action suits. that is really unusual, do have four suits the first two months of the term. unusual, on the

other hand, this is a theme of the court under john roberts. the justices are not the big fans of plaintiff's lawyers and what they see as abusive class action litigators. a number of cases, including the walmart case a few years ago. the don't have any blockbusters, but have three or four significant smaller cases that could make it easier for toinesses in particular knockout class-action lawsuits before they get started. if they really cut the back, it could save litigation costs for big companies. stephanie: those costs are just spiraling out of control. greg, thank you so much for joining us. do, wehat we have to will stay not in d.c., but in politics. democratic candidates facing off in the first debate.

we take a look at health hillary clinton chose to respond. -- how hillary clinton chose to respond. moment theto fix a best ethical standards as our next president.

david: we have a prettier shot of capitol hill. hunt, special guest, al joining us. stephanie: the sun rises with al hunt. al: it is so nice to be here. david: you are here because we had a debate last night, you might've watched a piece of it. al: i did, and i thought it was interesting, but not compelling. there was no donald trump. the audience was not huge, but hillary clinton did exactly what she had to do. david: one of the topics he

talked about was wall street, not in an attractive way. let's play just one bit about what was said. the americans: people are sick and tired of hearing about your damn e-mails. stephanie: guess who is joining us now, and other colic from vegas, hopefully -- another guest from vegas, hopefully he was not up to late. john heilemann it was an unintended full house in vegas last night. what really went on? up all night iwas gambling your money, just a giant pile of dough for you. it was an interesting night, sit ting at the win which is a very opulent hotel here in

vegas filled with democrats. there was a bit of ink under woody between the setting and the rhetoric -- bit of y between the setting and the rhetoric. was the only one has any experience as a presidential debater. her experience really showed. she put bernie sanders in his -- inand maturity strong his place and put him to the side. she talk about obama constantly which is a way to send a message to joe biden.

she was doing a lot of interesting things strategically, she was strong, she was relaxed, and commanding. stephanie: our wall street audience mine not -- might not have stayed up that late. let's take a look at that exchange. my plan has the potential of sending the executives to jail, nobody went to jail after $100 billion in fines were paid. it would give regulators the authority to go after the big banks. if only you look at the big banks you may be missing the forest for the trees. view -- iders: in my will tell her. congress does not regulate wall street, wall street regulates congress and we have to break off.

stephanie: what do you think? : no surprises there, she had come out with those poses before. they were people saying who is this guy? i think most americans are named mabel, either. al: it was a good performance for hillary clinton, let me just put it this way -- 20 years from now, you will not be telling the grandkids about that vegas debate. it was a forgettable night. this talk about fraud is not a business plan, that is red meat for bernie sanders, but with a resident in the general? al: i think so. they wereke said people who should've gone to jail. they think people let -- people think wall street made up like bandits. i think politically one could

argue, but i think it is a winner. canld trump, you will note, come up with a lot of private is rhetoric. stephanie: john, want to weigh in? can you hear us? david: can you hear us? john: what is the question? joe biden, the most interesting thing is whether or not what happened last night, does it affect at all joe biden's decision? we have done a lot of mind reading, and i contributed to that and try to report on that aggressively over the course of the last couple of months. i don't know what he is thinking, he is to make up his mind pretty soon. the president i think has been pretty restrained in trying to

give biden advice. it is my understanding the president is concerned about biden running at things of my not be a great idea because he would not he a good position to win. i wonder whether the combination of things that have happened on the benghazi hearings that are lack ofp this week, the the legitimacy of the hearing, and hillary strong performance, it is possible she is now turning the corner on what is been a bad stretch for her. that will make it more daunting for joe biden. thee is just looking at political landscape, i think the political landscape is more forbidding for him now than it was three or four weeks ago. it might be the kind of thing that might keep them out if he was inclined to get in. stephanie: does obama have that much influence? david: if i with the vice

president, and the president said to me a think you should not get in, it would weigh heavily for me. al: i don't think he will go quite that hard. i don't think biden was affected by last night. people knew clinton was a good debater and did better than expected. if benghazi disappears, which it might, i cannot see any pathway to the nomination for joe biden. the real issue that john referred to push legitimacy of the hearings was in own goal by the republicans. it was represented a mccarthy you undermined -- that is pretty ironic that the republicans did it themselves. my own issues that they made a mistake. the issue with libya, that was her signature issue and it was a colossal failure. he don't focus on what the real

issue is. john, let's get back to wall street. is a dangerous and anyway for hillary clinton to come out swinging when she has some major wall street donors behind her. mark joined us last week and is one of the biggest donors for her. standingd not like her at the podium saying some of them should've gone to jail. john: her basic posture seems to me that she thinks not frank was a step --dodd frank was a step in the right direction. sanders,t bernie breaking down the big banks, she has a posture that is the mainstream democratic edition. she had a lot of big donors on wall street, i think the result a lot of controversy about the notion that some degree of regulation was necessary after

the crash in 2008. that is a mainstream democratic moderate left position. i don't think she is in danger of alienating her donors. that has become a mainstream position, she is squarely where the democratic mainstream is. as does not want to be seen a captive of the wall street class, so she has to be pretty critical. there was a lot of daylight between her and bernie sanders and that is a good place for her to be. -- a: let's go back different kind of vulnerability. k is seen asd fran going back to the 90's. someone named clinton was president at the time. is there a vulnerability there? al: it also was the gop

congress, but there could be, and that it's a bernie sanders will try to make. i think her proposals have made that a hard case to make. she did talk to wall street togetherhey helped put that risk-free proposal, the sliding scale on capital gains. it was in that you just turned her back and when the populace route. david: that is interesting, i did not know that. get some sleep, john. stephanie: we will let you get back to the table. you have a whole other day there. john is upset because it hillary clinton coming out against recreational drugs. about that,ry upset but i decided your nickname you, go-gonie, you are now the s. stephanie: there you go.

david: thanks a lot, john. we will now go to the philippine politician. manny pacquiao. withnight, he was honored an award call the asian game changer award. it is in recognition to his philanthropy. we sat down with him and asked what motivates his charity work? nothing, ime from .lept in the street we did not have our own house. am successful in life.

i go back to where i am from, and build a house, and given to the family that doesn't have a house. with given almost 800 houses for families that don't have a house. david: you were injured when you fought your last fight. now, how you doing? my injury, the operation was successful. i am doing well, and i believe i can fight to next year. david: early next year, with mayweather? know, uber think about it. david: are you willing, if he is? manny: of course. david: notes to floyd mayweather. stephanie: note to floyd mayweather. people were disappointed

with the fight. manny: i know, i know, i know. stephanie: did you think you should deliver more? manny: i did my best in the ring, everybody knows that. what i will do is keep moving/ stephanie: was he the best fighter you never faced? ofny: no, there were a lot foughts that i hoya,, like de la and margarito. stephanie: do you want to run for president?

manny: that is not my mind right now. by step.p stephanie: it is so important to do the right thing, it seems. do you think you can take part in cleaning boxing up? manny: all the sports, boxing, i believe that they should pass a everybodyishment that is aware and scared. it, weie: there you have will be right back. ♪

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stephanie: profit is up even thoughstephanie: demand is slowing. we will be spinning with a delta ceo. them the hit maker -- how

do they stay on top of of the nielsen ratings? as.ill ask less moaned speaking of one and only, tom brady is having a season for the record books. you will hear from the patriots superstar, tom brady. david: welcome to the second hour of "bloomberg ." i am david weston. stephanie: i am stephanie ruhle. i could chitchat about tom brady all morning, but we have numbers out, wells fargo, matt. matt: wells fargo, one of the things i consider more interesting than tom brady. we see a net interest margin of

2.96. we see $5.8 billion in total net income. wells fargo, it looks like a slight beat here, and that could be a good thing because the banking sector needs it after j.p. morgan's miss yesterday, revenuerevenue -- we have seen today. vonnie: it did seem at times it was four versus one. the four challengers went after front-runner hillary clinton. at one point, clinton and bernie sanders disagreed about wall street and capitalism. sen. sanders: the greed of wall street, where fraud is a business model, helped to destroy this economy and the lives of millions of people.

mrs. clinton: when i think about capitalism, i think about the small businesses that were started because we have the opportunity and freedom in our country to do that, and to make a good living for themselves and their families. i do not think we should confuse what we have to do every so often in america, which is save capitalism from itself. vonnie: sanders try to score points over the e-mail controversy, saying people were sick and tired of hearing about "your dam e-mails." originally, mr. obama wanted to have only enough u.s. troops to protect the u.s. embassy. and, get ready for more flight delays. the air traffic controllers union says the shortage of controllers is the worst in 27 years. -- it says new york

city's three commercial airports are especially in bad shape. the faa says it is trying to speed up training. david: thank you very much. delta airlines was one of the first airlines to report earnings. the airline benefit from low fuel prices. delta ceo richard anderson joins us from atlanta. thank you for joining us, mr. anderson. why don't you tell us what are the one or two important things which you take away from your earnings announcement? mr. anderson: i think the eps acreased year on year, and year where we project to have over 4 billion in free cash flow, which puts us with the likes of 3m and honeywell are the distinguishing facts without performance. it is not just this quarter. in,ave consistently, year

here out, beat estimates and business plans for our owners. prices hadif fuel not been so low, how would things have fared for you? mr. anderson: obviously got a huge fuel benefit, the delta operates at a hundred 15% premium to the industry. if you look back even over a year ago, we set record earnings targets. so, the difference is the play off between fuel and revenue. flatevenue is basically year on year and that is a result of lower fuel, but we kept two thirds of the lower fuel and put into the bottom line. stephanie: and if fuel suddenly goes up at a time when demand and fares are going down, what will be your defense? what is the action plan? well, a couple of things. we are one notch away from investment-grade. we paid down 10 billion in debt. we have a flexible fleet.

if you look at what we are going to do in the fourth quarter of this year, our capacity in the fourth quarter of this year will be flat and fuel will be down 40% year on year. we are running the business to the business size go by -- cycle sheet.ycling the balance david: take us into how you operate your business day to day. when you go in to your office and you look at your dashboard, what are the key factors -- revenue per passenger mile -- what you look at, and how do those numbers look to you right now? the first thing, as an operator, i like to look at how the operation is running. if we are going to please our customers, our employees will be able to do a good job. i like to look at the metrics around how our operation is performing, and delta's operation, no competitor of ours touches the quality and

reliability of our system. in september we only canceled 13 flights out of 83,000. we have a big focus on that. the second thing is unit revenue. unit revenue is a very important measure for us. --, of course, fuel prices operations, unit revenues, and fuel prices on things you want to look at right away in the morning. david: do you get a report in the morning on flight delays? it anderson: yes, will i get throughout the day, so i pretty much track it 24/7, 365 the year. david: do you have a target? what is your goal? mr. anderson: our target is to not cancel a flight. 100% completion factor. except for weather, we have a hurricane on the east coast or a snowstorm in new york, we typically like to run plus 90% on-time performance, and we consistently produce that much better than competitors, which is why we run a 50% premium to

our competitors and have been taking quite a bit of market share. stephanie: let's go global for a moment. what is your outlook for international flying? with the dollar as strong as it is and more economies weakening, how do you see things? mr. anderson: that is actually the best question, and it is different around the world. i think the u.s. economy is really strong and continues to be strong. mexico is doing well. the caribbean, central america, is doing well for us. parts of south america r.o.k.. brazil, venezuela, are not doing so well. eastern europe is not doing so well, partially because of the sanctions in russia and political and social unrest. 20th year ofts economic status, if you will. its currency is weak and its economy is not doing well. china is holding its own. so, it is really a different

picture in every country. i think the important point you just made its currency, and the currency issue is an important issue for every consumer company in the u.s. that sells overseas. the strong dollar does create real currency headwinds, and, in fact, if you look at our unit revenue performance in the third quarter, much of our unit revenue decrement was the result of the rolloff of fuel surcharges internationally and the affects of currency. so, i think we will have currency headwinds, and, by the way, most multinational corporations in the u.s. will have currency headwinds for a pretty long time because it looks like the dollar will be the reserve currency of the world for quite a while. stephanie: richard, i would like to ask you before we go, we talk a lot about bloomberg culture -- corporate culture --what is it?

what is your secret, your mantra at delta? mr. anderson: you know, this is not just a slogan on politics -- on posters. people and ourur customers and the reason we have gone up on jd power rankings, and why we are the most admired in the world, are the people at delta. we have made a huge investment in our people and that has been the delta difference. stephanie: there you go. richard. richard anderson, the ceo of delta. mr. anderson: thank you for having us. -- thank you for having me. good questions. stephanie: thanks, richard. now we have to get back to those bank earnings. wells fargo out just a few minutes ago. a slight beat. we will bring in allison williams, a senior analyst for u.s. banks and our own bloomberg television, and erik schatzker is still with us from bank of

america in north carolina. allison, what is your take? allison: revenue came in better than expected, and that is what people are looking at, and then costs are telling the story, and that relates to rate increases being pushed out, continued revenue pressure, can you get cost cuts. jpmorgan costs were higher than expected. people were disappointed. bank of america continue to show good progress. the stock is up. wells fargo, basically, they are ready operating so efficiently, and things are coming in, it looks like, in line there. david: so, they did better, it looks like, then jpmorgan or bank of america, right? point, two stephanie's one of the key things people are talking about is the guidance jpmorgan gave for the fourth quarter, which is interesting, because times management will say give us a break, we are only

a week or two into the quarter. we'll talk about it later. normally, it is a seasonally weak quarter in the fourth quarter. for if you morgan, they will get the benefit of some tougher comparisons going away, but really setting the stage and lowering the bar. erik, do you want to weigh in? erik: i have been taken about the jpmorgan numbers and the make of america numbers, and i in thing in thing of america's f america's case, brian moynihan, jpmorgan, jamie dimon, that the era of cost cutting is over and these banks will maintain expenses more or less where they pointed out,lison why they picked up, expenses are pretty flat jpmorgan as well.

now it is a waiting game for market conditions to improve, for interest rates to rise, for the yield curve to be more positively sloped, and for these banks to make more money on lending. that is what sort of seems to be going on, and furthermore, the regulatory environment has stabilized for the u.s. banks. that is what i interpret from what i have seen this quarter and going back to last quarter, and i am dying to know what alison thinks. son williams, it is been great having you here, i you, and to hear from erik schatzker, we will be back to you. ♪

david: welcome back to "bloomberg ."

last nights debate was not expected to have the ratings that the republicans have had. stephen colbert took aim. gethen: how will they people excited about the democratic debate -- the answer is someone that will not be there. >> we have propped everything in case vice president joe biden decides to shop. there it is, the extra podium, just in case joe biden decides to show up. stephen: there it is. have a next her podium just in case -- they have an extra podium just in case joe biden decides to drop by. david: we are joined by stephen colbert's boss, les moonves. cvs -- cbs fort 20 years now. welcome. it is good to be

here. talking abouttart the business more broadly, and i will start with consolidation in the cable industry. we see various transactions be done, some of which you have opposed, some of which you have not. how does that affect your business? make your negotiations more difficult across the table? mr. moonves: not really. there has been more consolidation in the distributors -- at&t and direct, potentially time warner and charter -- we are the product company. we are the content companies. we have to negotiate. we have to sell our products to them. there is no great need for us to consolidate. i do not need to be bigger for us to negotiate with them. as long as i am doing what i am doing, providing the best content with four well -- football, stephen colbert, "blue doing," whatever i am

and i cannot think you will see the same with the content companies. david: you did a pose -- you did a pose -- comcast and time warner? we never officially oppose that. honestly, if they came together they would be a powerhouse. we never officially oppose that. it went away. when we saw it happening with charter, we were fine with that. stephanie: how expensive is it for you to get the great content? it seems content is everywhere. gone is the model where content creators would knock on cbs's door and take would you take my meeting. now they can pop up in every location. mr. moonves: you are right. i have to be more of a seller than a buyer. stephanie: really? mr. moonves: five years ago shows,ere 220 scripted and now there are over 520.

there are so many doing scripted shows, netflix, amazon. it is more competitive. it is not the facility more costly. david: now, why is that? you have more dollars in the marketplace, competing for, presumably, a fixed amount of talent --why does that not drive up price? mr. moonves: at the end of the day we say your chances of getting on cbs are much harder than just about anybody else, however, once you get on our schedule because we have fewer openings, your chances of success are better. so, we say to a producer you can go to xyz network and they might pay you $10,000 more. do you want to play for $10,000, or four $100 million? that is what your chances are with success for us. it is not a bidding war. it is who will give you the best chance of success. the back end, the sale of the

market -- the show in the marketplace. specific, when we have seen hbo, showtime provide content that is more provocative, more exciting, how hard is it for cbs to maintain the viewer when you are bound by more restricted content? a goodnves: it is question. fortunate, we have showtime, so i get to expense content of all anderent types of types -- sizes. affaire a show like "the "homeland," and then you go to cvs, -- cbs, and we are restricted, but we can still do a show like "the good wife," which has a certain sex appeal and is sexy, but you cannot show

what you show on showtime. you are dancing. mr. moonves: i was excited about julianna margulies. a lot of attractive women. do you have something, that? content was the king, but it does not seem that is the case anymore. , and theontent owners share price come down, and here you see distributors. i wonder if this is a trend -- a trendy trade over the last three months, or is this the new normal? mr. moonves: the last three months the content companies market,ten hit from the and somewhat unfairly. there is a lot of change going on in the marketplace, and by that i mean right now we are in a universe where there is a 500-channel universe that, basically, the average household

in america now gets 180 channels. you're getting into a place where it is getting more a la cart and smaller bundles, so there is an uncertainty in the marketplace on what is going on. i think these valuations are off to i think obviously distribution has it easier than the content companies. at the end of the day, the content companies will always win. david: i wonder how much of the plummet was tied into the disney earnings call where they want espn will not be growing as fast. mr. moonves: there is no question that our mutual friend bob eiger frightened the market a little bit because espn, it is the gold standard, there was a change in the armor that said maybe espn might have to go direct to consumers, and the floodgates, sort of, opened. clearly, the content providers -- everybody is worried about the world of digital content and digital advertising. number one, it is overrated. it is not a threat to us stephanie:. really --stephanie: threat to

us. us --ect to it is taking away from print number one and niche cable networks, no offense. cbs, abc,players, nbc, we not being hurt by the niche players. 23 million players watched "the big bang theory last week. you know how many hits on youtube it would take to re-create the engagement on that? if you get onaid, cbs, you are more likely to be successful. isn't it different -- people used to say what is on it 8:00, 8:30, but now there are so many programs available that you can watch when you want to. doesn't it make it more difficult to create those programs to get the mass media to come to them?

mr. moonves: it is tougher than it was before, and yes, people are not watching like they used to, but they are watching as much or more than they used to. so, interesting statistic -- what people are watching cbs content today then watched a decade ago. they are just watching it in different places. stephanie: well, we did not have smart or tablets 10 years ago. mr. moonves: you did not. the dvr was not as predominant. cbs.com did not exist. cbs all access the not exist. we are find it we are getting the viewership. it is happening in different ways and we have to be prepared for it. stephanie: you mentioned the dvr. i watch everything on dvr. i do not see advertisements anymore, but when i watch content on youtube, i actually have to watch those ads, so in terms of digital not being a strong, i feel like that is where they get me. mr. moonves: half the people who watch dvr zap the commercials, most of them watch -- half of

them watch. i do not zap the commercials. my wife does. i don't. we get 50% of that. it is a bargain you make with the american people. you say you have your choice -- you can pay its inception, or you watch our ads. stephanie: we have a question from twitter. this comes from jeremy. "will the future of live podcast tv be brought into our tablets, cell phones, and watches?" watch will on your be pretty nerdy. mr. moonves: number one, you can get live tv on your watch or your cell phone. you can through cbs all access, however, there is something called best available screening. if you are at home and you have an 80 inch-television -- 80-ish television screen, are you going to watch your nfl on that? taxicab, you a

will put it on your watch and be able to watch it there. mobility is important, but you want the best possible expense. weid: there was a time will cannot imagine watching on our cell phone, and now have many of us do? mr. moonves: it is happening all the time. stephanie: guess what we need to do -- pay homage to those advertisers. we will have more with les moonves on egg hits. he mentioned it, "the big bang theory." maybe we will talk more about the nfl. clark's i will have to drag you out. >> you can try, but you will never catch me. ♪

>> he got him. a strikeout. you know what you are

looking at -- the chicago cubs made history last night with a victory over the st. louis cardinals. the cubs are headed to the nlcs. know you're a big fan. sorry. david: i think is the first time they have ever won a final in wrigley field. as the first time they clinched. stephanie: are you a baseball fan? stephanie: who do you love? mr. moonves: i am a dodgers and a mets fan. i am torn. i'm glad it is between the two. david: and you approved or did not approve that slide? stephanie: hopefully the economic data we're getting did well. matt, what you have? matt: it depends on your view. food and energy -- we're not getting any inflation.

from the standpoint of janet yellen, it is a problem. on the standpoint of someone that pays money for stuff as a regular person, that is great. as good ass also not janet yellen would have liked to have seen. a gain of 1/10 of 1%. we were looking for 2/10 of 1%. so, half of what we are looking for. futures gained -- i will show you the producer price index x food and energy. this is not that inflation number the fed looks at closely, but this is the price producers are paying to make the stuff that you buy, and it is coming down. there is none of the inflation janet yellen needs to see to raise rates. maybe that is a positive for the market. david: old habits die hard. when i see numbers like that, i think about advertising and the broadcasting business. run aonves, you largely business that -- you run a business largest uploaded by advertising revenue. -- largely supported by

advertising revenue. what you think when you see numbers like that? 70%moonves: our business is advertising. -- 60% advertising. it used to be 70%. we brought that down. you see cycles. the market tends to overreact. in june andpfront july, which is where we sell all of our shows for the next year. 4e volume was down about said, though pricing was up about 5%. 4%, though pricing was up about 5%. the market reacted badly. "oh my gosh, the world is turning to digital advertising. network advertising is going down." that was the second quarter. are inrd quarter, we good shape. the season has begun. the numbers are up considerably. so, i've seen the same pattern for many, many years. there is no question we are in a shifting business where many

more people, as he said before, are watching shows in different places, so we're getting paid by advertising answered scratches. toid: you said you to get 70%, 60%. can you be 50% dependent on advertising, or are you looking to wrap up more? mr. moonves: we are satisfied with a 50/50 results. if it is slid further, that would be a different result. we are subject to the vagaries of the marketplace. china happens, and suddenly our stock goes down because people are worried about that. we are an advertising business. however, it is cyclical and our numbers are way back up in the third quarter. stephanie: how much time you spent thinking about the various streaming services out there and who do you want to sell 2 -- the you make the decision, heavy netflix, light on amazon -- how does that work? we have content

value meetings, which is where do we sell 2 -- how you slice and dice it? do you sell to netflix, what is the european strategy? do you put it on cbs all access, our own service, etc., etc., to maximize the value? right now, the business is great. as long as we continue producing content, we will be fine. stephanie: if i am cbs all access, run the business, do i not walk into your office and say do not sell the shows. keep them here. mr. moonves: the guy who runs all access is saying that every day. don't sell to netflix. now, i have another guy that says -- that sells to netflix. he says please, netflix has offered us a zillion dollars for these 12 shows. this is a great package. let's sell it there. employeess: if those were women, they would be working together. --stephanie: if those employees were women, there would be

working today -- together. mr. moonves: we have lots of women working for us. david: this is direct to consumer. a suspension fee. i've not heard much -- how my subscribers do you have, how large is it in your business portfolio? mr. moonves: we do not mention numbers yet heard it is less than a few months old. we are pleased with how it goes -- yet. it is less than a few months old. we are pleased with how it is going. this is how the linear model works -- we get paid advertising, transition fees for that. then, if people get tired of that -- people get tired of paying for channels they do not want. there is something called the skinny bundle, what you pay for the 12 to 15 channels that you watch every month, and the we get paid a higher amount. then you go to one channel, cbs all access, which is basically a la carte, where you check off the five channels you want to watch, and you pay us $5.99 a

month. not only do you get cbs live, but every episode of every show on the air. david: does it include sports? mr. moonves: no. it does not include the nfl. it does include other sports. stephanie: they have so much data -- when netflix knows it takes 3.5 episodes to hook me to watch 78 in a row, do they share that with you? mr. moonves: of course not. having the data is important to them. it is more important to them not to share. offlix is in the business producing their own content. as much as i love them as a buyer of my content, they are also a competitor. isn't that a problem because essentially they have the direct relationship with the customer that you give up? mr. moonves: they are a friend and a competitor, as most of our

competitors. comcast airs cbs, but owns nbc. you have to get along with competitors. apple -- it is not easy to partner with apple. mr. moonves: apple is having conversations with everyone about doing their own streaming services. we have had those conversations, as have the other networks. do i think something will happen? probably, but i do not know when. david: how is the season during? ratings are virtually impossible to tell. i will tell you why. david: it is live plus seven. stephanie: what does that mean? david: it is not just who watches it live, but who watches it over the next week on their dvr. advertisers are willing to pay for that. mr. moonves: they're are willing to pay up to three days. the numbers literally can add up to 5 million viewers.

so, overnights are virtually meaningless. you do not know what you have until three weeks in. overall, we are pleased with how the season has gone. we have a couple of new shows that have worked extremely well. too early to tell. people are having trouble putting the numbers together. stephanie: i know you hate to answer this, but i will ask you, what is your favorite show? mr. moonves: i will not answer that. stephanie: what is your favorite show of all time? blues"nves: "hill street had"the sopranos" and i nothing to do with either of those shows. david: you are a builder at heart. are you looking to buy, expand -- you have a small movie studio -- where would you like to take cbs, expand into if you had an opportunity, if the price were right? mr. moonves: at our core, i am a content guy.

i like having content. i like having the content from cbs, cw, showtime, syndication, talk shows, late-night shows, news programs -- i love that. i love building that. anything we would look at would have to be a content reduction company. we are dabbling in the movie business. we do three to four movies a year. not the greatest business in the world. i like television better as an economic model. david: what about a lions gate, or something like a lions gate -- a smaller studio? have a greatthey studio. the ceo is a good friend of mine. it is a terrific company. i do not know if it is something we would be in the marketplace for. i do not know if wall street would appreciate our buying a movie company. stephanie: why, because they would feel like you are buying the -- jumping the shark? mr. moonves: the movie business has lower margins, so to invest

would not be a benefit to us. talk about the natural succession -- succession is the part of every company. you have to plan for that. there are a couple of questions -- your chair, but even you -- and i'm not wishing you go anywhere, but the plan for that. you anticipate changes in the business as successions occur, as they inevitably will? mr. moonves: the good news about us is we have an extraordinarily deep bench. i am surrounded by a great group of executives, and with every change in the ceo and the ceo chair, by definition, the company changes -- a change of perspective. the new ceo will have different talents. i have an external very coo who is more financially oriented, while i am more creative oriented. it is a great partnership. the company would have a new look. it would be a different sort of company. stephanie: what is your leadership lesson? \ we spoke to the delta ceo.

there is named him one of the best in the world. you have tremendous loyalty. what is your mantra, your message? what,onves: you know character is destiny. it is a cliche, but i really believe in it. i surround myself with people who work hard, have great integrity, really like to win. all my guys are competitors. of team is- the idea actually nearly important. ultimately, you treat people -- i have been an employee longer than i have been an employer, and you treat people the way you wanted to be treated. you pay them out. you treat them with respect. you let them do their job and show them leadership. stephanie: as a creative guy, who do you answer to first -- your shareholders, wall street, or your viewers, because the balance has to be tricky? mr. moonves: i have reportrg.com -- two cards -- i look at the stock price and the ratings. they have extreme importance.

in a former life, i just looked at ratings, and the good news is we have won 13 of the last 14 seasons, so the ratings have been good, and we have had a great run in the stock market. stephanie: you have to take us on a tour. i am 39. i have yet to meet anyone with a nielsen >> ever. i never have either, and we wonder what those numbers come from. david: you went through the split with viacom. -- mr. moonves: 10 years ago. david: can you imagine a world where they are put back together? mr. moonves: i highly doubt it. the value having those two together no longer makes us -- makes sense. i think they are both better off on their separate paths. david: talk about a la cart -- five years of now, 10 years from now, will be -- will we be a la carte? that is why we have

cbs all access. i do not know if a la cart becomes where you check off box is -- ourt are goal goal is to be prepared for all a card, the skinny bundle, the world is going now. stephanie: we put too much emphasis on these millennial's, the way they watch, because i feel like when i was 26, nobody cared about how i live my life. our they truly living their lives in a way that is impacting your business? mr. moonves: with technology, it has to be different. when you go on a college campus, you do not see a television screen. they have computers. when they get to be 35 years old, as my head of research said, they will get a barker lounger and be watching a football game in the living room with two kids running around, just like we did. david: as you look out into the

future,les, what you think is the biggest surprise coming down the road, and by the way, are you talking to facebook? you talk to everybody. mr. moonves: we really do. david: what is the biggest surprise that people do not expecting your business? mr. moonves: that is a tough one. do you know why i cannot answer that question? fiveu look back, and said years -- i would not have any clue. david: what is the biggest surprise that has happened? mr. moonves: social media has been extraordinary -- the ability to be anywhere in antarctica and be able to watch ise big bang theory" live extruded in her. the advent of technology has been overwhelming. i cannot keep up with it every day. i have a bunch of brilliant, young guys tell me what is going on in the world and it is extremely extraordinary. it is exciting, as long as you can put your arms around it. stephanie: you did make a decision in the last two years -- let's get smart, smarter, in morning the

programming, putting someone like stephen colbert on, interviewing business leaders at night -- can you talk about the decision, how would this affecting advertising -- how it has affected advertising and how it has played out? mr. moonves: i will deal in two areas -- late night and news. we were changing our 11:30 guy and our 12:30 guy. i cannot tell you how pleased i am. stephen colbert has made news on 10 shows. he is a great interviewer. people said are you worried he will not be playing a character anymore. i said i never thought about that for a second. stephen colbert is a markedly intelligent. he is a great interviewer. he is funny. plus, our 12:30 guy, james cordon, has done picture nearly well. a lot of this was motivated by

social, digital -- you take the little clips that go on the air. clip withon did a justin bieber that was watched by 23 million people. 23 million people. now they know james cordon is. it has been great. i am really proud of colbert. if you want to see a real interview, that is where you go, our guy. in the morning, we have gone through a renaissance with our news division. we like to say it is the most serious news. if you want news in the morning, morning," ors this you come here, to your show. david: thank you. mr. moonves: daschle has been great. -- that show has been great. a former bloomberg employee. stephanie: and charlie rose. mr. moonves: and charlie rose has done great. it has been a great year for cbs. david: congratulations. nice to have you here. mr. moonves: great to be here.

ceo les moonves. stephanie: later, alan krueger joins us. what questions do you have for him? let us know. ♪

vonnie: time for a business/. i am vonnie quinn. wells fargo boosted profits and gains and interest and income from asset sales. it also made more loans. earlier today, bank of america also reported higher than expected profits. the banks involved in the big beer takeover will be tracking champagne when it is all over. they will split up $235 million in fees. the banks include jpmorgan, morgan stanley, and goldman sachs. there is also a tiny british boutique with fewer than a dozen employees.

biggest airline wants -- wantsut a deal to to scrap a deal to buy 787's. that is your bloomberg business flash. superstar tom brady the new face of a luxury watchmaker. i sat down with the patriots quarterback last night and asked him about this new partnership and his fantastic season. we did a little word association. yearlayingmy 16th professionally. i have had a lot of opportunities over my career d i have been a lot of different things. at this stage in my career i am focused on the things that are part of my belief system, companies that are really aligned with things that i enjoy, things that i believe in. so, my first watch was a tag. they came to me.

i thought it was a perfect fit. i am glad it worked out. stephanie: you are coming through tumultuous this. week" names you teflon tom. what does that mean? tom: what does that mean? i don't know. [laughter] hope it is a consummate. stephanie: yeah. sweat the small stuff and things i might deal with personally or professionally, to me, are small stuff. the success we have had is a team leads to a lot of things. you welcome those things. i'm glad we are relevant. i'm glad that people talk about it. talk about different things that happen in my life because it means we are doing something good. stephanie: you are definitely doing something good. you are winning. this week and you are headed to indianapolis, you're going to

play the colts. how do you feel about this? there are pats fans that want revenge. tom: i know they do. i know they do. for me, i am trying to be the best i can be every single week. when you look at things that you say, in your on-time, standing up or down trump, why? tom: he is a friend. that is why. friends are important in life. i've known him for a long time. friendships you and/or overlong periods of time. play golf with, though i would much rather be on team than play against him. stephanie: you are an important and iconic brand, but today we saw you make comments that might make you say hmm. to be negative about coca-cola and things like frosted flakes -- does it make you nervous

because tom brady is an all-american brand, and so are they. tom: everyone has their own belief system and opinions. as an athlete, i care very much about what i put in my body. i am 38 years old. i am not 22 anymore. stephanie: you look good. tom: you're very sweet. all of those things are important and they add up to be big things. when i am trying to a college things professionally, in a lot of ways i am in uncharted territory. i have to do things differently, evolve over time, and things that have not worked in the past, maybe do not work as you move forward. the lessons i have learned through trial and error, i'm important. i try to eat healthy, get the right amount of rest, do the right types of exercise so i can be on the field and be available to my team. i try to be productive this time my career as i was earlier. round.ie: speed i will give you a word and you could me the first thing that comes to mind. thursday night games. tom: love them. stephanie: transcendental

meditation. tom: love it. stephanie: me, too. stephanie: august. tom: love them. stephanie: jamie dimon? tom: great guy. stephanie: smart watches? tom: cool, but i have not figured them out. stephanie: toughest defense? tom: ed reed. eli?anie: peyton or tom: both. stephanie: michigan under jim harbaugh. tom: let's go. stephanie: even though it is a nike team? a thatthink they made decision there. i think the wolverines made a bad decision. stephanie: kevin plank. tom: one of my heroes.

stephanie: donald trump. tom: one of my friends. stephanie: jordan spieth. tom: a beast. stephanie: mike bloomberg. tom: did a great job in new york city. stephanie: we have some men's men on today. david: i learned something in the interview. stephanie: that i can tom brady is hot? david: i knew that. that he should be a diplomat. stephanie: there you go. and he can help donald trump with that. next, he is served more than 30 years in the government. former commissioner bart chilton on banks, regulation, and maybe a little hair care. you know i love this guy's hair. we will happen next. ♪

david: we are now 30 minutes from the opening bell here in

new york. welcome to "bloomberg ." i am david weston. stephanie: i am stephanie ruhle. erik schatzker is in north carolina. guess who is here -- brendan greeley. brendan: you get a better line when you leave it there. stephanie: he said a better body. you asked for that. brendan: that is my exit queue. stephanie: come back. things get crazy at 9:00 a.m.. brendan: what we going to talk about? with brianker moynihan, alan krueger. first, here is vonnie quinn, who will say nothing about my figure. vonnie: i know your figure very well. we did "bloomberg surveillance" together for a long time. $1.3 million was

raised for bernie sanders after the debate. says eightr ministry planes attacked 40 islamic state targets in syria. the report says command points, warehouses, and weapon building shops were bombed. it could not be independently confirmed. russia says most misuse officials says it targets anti--rebel targets. the union for air traffic controllers says the shortage of controllers is at a crisis stage and they blame the federal aviation administration. the faa promises to speed up hiring. the problem is you have to get qualified first. those are the top headlines. matt: i will pick it up here. just a half hour for -- from trading, futures contracts are trading down by a little bit. let's look at something

interesting -- after the economic data that we showed you earlier today, where retail sales were weak and inflation was weak, traders are rolling back bets even further for an increase in the interest rate. december is now very unlikely, and you can see march is less likely. all of the contracts are down. now, there is a 56% chance that the fed will raise rates in march of next year and almost a 60% chance they will raise rates in april of next year. interesting stuff this morning from the ego panel. as far as the banks are concerned, jpmorgan was a disappointing yesterday. actually, wells fargo and bank of america both beat on the top and bottom line. the jpmorgan miss seemed to be a black cloud over the market. you can see these are premarket trades right now. bank of america up 1.5%, wells fargo down 1%. intel out yesterday, and beating on the top and bottom line, but

the story was with what it said -- it's forecast. obviously, that is the glue what guides the trade the most because stocks are a bet on future earnings. intel says it is concerned about corporate spending, and at a time when pc sales are week to begin with, if corporate are not buying, it is really problematic. there you go. i like to cut you short when there is red on the screen. brendan: five stories that matter to the markets -- sovereign wealth funds. ubs has sovereign wealth funds will draw down by $1.2 billion, 7% by the end of the year. i will throw this one to alan krueger. these are the 501 pound gorillas. we thought they would be a presence forever, and it turns out they are countercyclical. : it is probably good for the world economy. we should see this as a

global stimulus? mr. krueger: to a small extent. to draw is it possible some others between norway and saudi arabia? mr. krueger: it is a much more democratic country, much more forward-looking, but it is a -- it is a similar set of forces causing them to draw down. david: a second story that matters to the market, producer negative and consumer prices slow, reflecting strength in areas including domestic policy. what are the numbers around china same. every, look around, another contradict the last one. mr. chilton: you never know to believe them. they are still saying 7% gdp, right, alan question like people that i talked to look at the

markets, what is going in and out of china, and they say it might be 4%, 4.5%. it is a jekyll and hyde economy. you have the service sector, the manufacturing sector in the tank and we know the problems with it to commodities, particularly impacting china. brendan: we had an analyst talking about this. enda curran did a nice job rounding these numbers up. he did a great job pointing out you have the service sector growing, and i do not know if that is the jekyll or hide. here is a we have -- "the service sector in china is booming, the manufacturing sector is in recession. you are looking at a two-speed economy." knowhilton: you cannot what will happen in china, but everything has a dampening. mr. krueger: i think directionally, the numbers are in the right direction, but grossly inflated. stephanie: number three.

the said doves are breaking with the hawks. governor dan tarullo argued he does not support janet yellen's view to raise rates in 2015, and that line him up with fellow governor lyle brainerd who made the case for patients. what is the contradiction of said leadership say about the path going forward? if i am janet yellen, i have to be looking at this and saying, "boy, can we get on the same page, get on the same line? " how much more difficult as the maker job? mr. krueger: she has a difficult job, and it is an important reminder that it is a committee, not a dictatorship. it is important day reach a consensus. stephanie: you came from the crtc where there were five chair people. it was hard enough to keep everyone on the same page. mr. chilton: it really is like herding wildcats. stephanie: those fed governors are wild. mr. chilton: certainly.

it seems the global economy impact central bank decisions more than it ever had. we need to look at what is going on in china. one thing we have not talked about, despite what mattered was saying earlier about the future -- matt was saying about the futures, to me i think we should be thinking about what is happening in congress. i know fiscal and monetary policy do not come together, the we will have a debt ceiling increase that will come up at the end of november. you will have the government with the risk of shutting down at the end of the year. thing that could boost the economy is a six-your transportation bill they cannot seem to pass that would be a stimulus. david: what always matters to markets is breaking news, and matt miller, we're going to you for that. twittereaking news on -- they are naming an executive chairman of the board. looking at his biography page, i can see that he went to san jose state for his investors -- bachelors, stanford for his

masters, which might explain why he was the chief is this officer at google. he will now be the executive chairman at twitter. this is a company that has been looking for leadership. it just named its former ceo, it's permanent ceo, and now it is going to have a little bit more adult supervision, it looks like, in omid kordestani. david: thanks, matt. let's go back to the stories have met or two markets -- number 4 -- analysts are warning us that it might be antitrust issues that are the biggest barrier for the purchase of .nbound i --nbev they might need to let go of the snow,elling beer, china's with six active to grow to $44

billion by 2019. another buyer could be heineken. this is not unusual. you have to sell things off to make the deal work. mr. krueger: no, and i was also not aware about china's beer. david: there anyone know that? matt miller did. mr. krueger: the interesting thing is whether the concentration is a good thing ----mr. chilton: the key thing is whether the concentration is a good thing. this and the largest your maker in the world. it is a huge deal. i am not passing judgment either way. it is something the experts need to look at. it is a normal course of business. brendan: i thought it was interesting that they got -- the man got a breakup fee. stephanie: number five. brendan: number five, goldman sachs -- we will talk about economics. alan krueger. the philips curve says there is

a relationship between wages and inflation -- sorry, unemployment and inflation. had thatrn the fed has we have also heard from lyle brainerd, that we talked about a second ago, the relationship has broken down, and goldman found at the local level, if you are just looking at cities, the relationship is alive and well -- and well, but we are not that -- there at the aggregate level. mr. krueger: i think is alive and well. i like to look at real wage growth. you'veyment below 5.5%, spent to see real wages growing. given how low price inflation has been, we see some real wage growth. i would like to see overall inflation up to 5% as well. i think they were right and i think they're also right that the phillips curve is flat. is not normal times, it that strong a relationship. if the unappointed rate drops by another percentage point, i would not expect to see inflation pickup by more than .5%. brendan: what we are hearing

from alan krueger is same as it ever was. barb shelton with us for the hour. what happens now? stephanie: those of the stories he can appear we have a lot more coming up next. princeton economist alan krueger is here with us. him,bart?nt to ask best way to do it, tweak us. let us know. plus, we will look at what is moving up and down in the premarket. ♪

vonnie: welcome back to "bloomberg ." i am vonnie quinn. results are out today from a pair of banking giants. wells fargo beat estimates held my income from as an asset purchases and net income rose 1.2%. wells fargo is the world's largest bank by market value. cost-cutting pays off for bank

of america, the nation's second largest lender. ceo brian moynihan has promised to trim expenses. low interest rates and volatility have made it tough for the bank to increase revenue. delta says low fuel costs helped andvercome weakening sales, the fuel cost is its lowest in years. $1.80 a gallon. they also moved past a series of one-way bets on fuel. that is the latest. matt miller with a look at the market and what is moving in the premarket. matt: i want to show you a couple of interesting stories i will report on in other -- trip advisor and priceline talking about working together more closely down -- closely. not a merger. advisor of almost a quarter. trip advisor -- priceline gaining 1%. delta, you heard about --

beating estimates. they will keep seats at the same level and try to increase passenger revenue per available seat mile. it is very important and they will try to uphold that. a gain their of 1.7%. you just heard richard anderson talking with david and stephanie. tockrock that income fell 8% five dollars a share, but that was better than the street expected. $4.58 was the content -- consensus. a gain in blackrock shares as well. i want to talk about twitter and google -- we talked about the fact that twitter is naming a new head of its board, executive chairman omid kordestani. he comes from google. julie hyman was messaging with me earlier, and she said it is interesting -- the possibility of a google-twitter combination.

it just brings it to mind. if you think about it, twitter is, right now, worth, its market cap, exactly how much facebook paid for whatsapp. democratic candidates sparring over wall street and go after the big banks. is there such a thing as too much regulation? stay with us for the political roundup on "bloomberg ." ♪

stephanie: welcome back to what feels like a really good morning here. we have to talk politics can democratic candidate clashing over regulating big banks at last night's big debate in vegas. my plan would have the potential of sending the executives to jail -- nobody went to jail after $100 billion and wouldere paid,

give regulators the authority to go after the big banks. sen. sanders: in my view, you do not, congress this not regulate congress. wall street regulates congress, and we have to break off -- break up these banks. stephanie: asking the question, is there such a thing as too much financial regulation. alan krueger, bart shilton, i would like you to weigh in. i want to talk about money. it is easy for candidates to say people should have gone to jail. there should have been harsher punishments, penalties. but take us back -- you are talking about banks that have -- and i'm going to go technical, a gazillion dollars to pay for fantastic lawyers. i have amazing structures. you have regulators that have tiny budgets and employees that get paid a fraction of what the bank can pay their talent. it is one thing to say you want more regulation, another to have the firepower, the tools, to go after people

that violate the law. stephanie: do we have the firepower? mr. chilton: certainly not. none of the regulars -- there are five different financial regulars in the government, and none of them have the funds they need. my old agency did derivatives -- regulated derivatives -- totally behind by hundreds of millions of dollars. at any one time they were 750 and-- at between 1000 violations of the law. these are investigations, and they have 200 people. it is crazy. stephanie: you have to hire regulators who understand derivatives. what are you going to pay a regulator who understand sophisticated products like that, where they can go work at a bank and make 10 to 20 times what a government could pay them? mr. chilton: it is a quintessential problem in government, and not just regulators -- i use the statistic that the folks on capitol hill, they make the policy, the average time is two years because they flip and become a lobbyist or consultant.

it is a revolving door, and you need to reward people that are in government. i know that is not a popular thing to say. things to say,d good oversight, you have to pay for it. brendan: could you imagine a budget that would be for up regulatory scrutiny? talk about budgets. imagine it. i could i cannot imagine this congress doing it, but i could imagine it happening. i think dodd frank was a step forward. i think we to make sure we have the tools to implement it, but we left on the table, however, the fractured regulatory system. they should be merged. i think we are less effective given that we are divided in that way. mr. chilton: you know, i have never said this publicly, but i think you might be right. i was against this in the past the. it was called for the bush administration. secretary paulson had a blueprint for doing what you are saying, alan, but at that time i was worried that the cftc, this

little agency with a small budget would be put into the sec and thethe derivatives market would not be regulated. david: we did that with intelligence after 9/11. we never did it after 2008. the other thing i wonder about having worked in washington for a long time as a lawyer, we never go back and look at the old regulations to see if we still need them. stephanie: that requires reading, david. david: we just build on top of it -- another layer on top of the last layer, and no one says do we need the ones that we had 30 years ago? president obama had they look -- a look back initiative, where he asked for consumers to write in and say we learned they are not cost-effective. some have been repealed as a result of that. mr. chilton: that is reassuring. david: thank you. princeton university's alan krueger.

you'll be back for jobs day. mr. krueger: you invite me, i come. david: next, how much money netflix is point into content -- the actual stuff they are selling. ♪

vonnie: welcome back. here are your headlines. the israeli military are planning a crawl across the , palestinians are blamed for a wave of deadly shootings. israel's security cabinet ordered companies into -- including arab neighborhoods in jerusalem. president obama is having second thoughts about putting troops in afghanistan. he plans to remove all troops before leaving office. the chicago cubs made history.

it was a first for the 145-year-old first, they had the series at wrigley field's. they will be playing the mets or the dodgers for the national league. brendan: the opening bell is just a couple of minutes away. it is time for three cut -- three's company. number one, netflix. 1000% in thee over last three years. their value is over $47 billion. it used to be just a network but now they are paying for their own stuff. -- the issue is, when they are looking at what they pay for, they have $10 billion in the second quarter. to say, young couldn't pay that even for a house of cards.

it is what other people are producing that they have to get access to. matt: bloomberg has a great chart showing brendan's point here. if you take a look at bloomberg intelligence which breaks down a whole bunch of corporate profitable data, you can see income growth was positive in 2013, 2014, and has now come down and is shrinking. as they have to pay for their content, it is taking away from it. brendan: what is driving that? david: they are really expensive, these series, but they are not that expensive. they're using that to get attention. when you go to netflix, you have to have content and other programs you need to watch. stephanie: i am a netflix user. i have only been a netflix user -- matt: i converted you.

that is for spotify as well. you need to have the catalog, you need to know that new login, it will have what you are looking for. number two, intel is feeding -- feeling the slump in sales. fell 15%,of chips notebooks were down 15%. here is the issue that we have. intel is switching from pc to servers. it is almost like a computer is just a terminal for the mainframe. everyone is moving to the cloud. david: it is the same with dell. they can't make money anymore or get growth out of pcs. volkswagen is shifting

gears -- that was nice. of then the middle scandal, it is cutting back on diesel vehicles. toyota is aiming to cut out gasoline cars by 2050. it will only use of electric cars. that is amazing. toyota is also predicting that hybrids reach 1.5 million. -- whoie: and author likes to call out that guys, what do you make of this? >> it is unfortunate. it seems to me that this is something that the government should have been ahead of. to find out that you put these emissions standards in place, and it comes through a whistleblower, somebody should have been thinking about this ahead of time. they should have been on it sooner. how, when you design

regulation, do you prevent that. >> that is why you need people who get paid or who are compensated. you need the smartest people in government. corporate people has the smartest people in the world. we did have a discussion about regulators earlier, i'm not sure that was the issue here. matt, you know about this. think is that they need to test these things in the real world. saying, bring your car to the laboratory, go to a volkswagen dealer and tested when it is on the lot. i know of a number of ways to treat regulations for my motorcycle so that it can be more loud been it is allowed to be. i wouldn't admit that on tv. stephanie: global tv.

we don't have any more time for matt and his motorcycle. david: we are going to bring you hugh son. specifically banks. and also, erik schatzker. you look better and better in every shot. you were just on the phone with bank of america for the break, what did you learn? >> it is becoming more and more apparent, bank of america is the most letter to the u.s. economy is starting to come true, it has only taken them six years to do that. stephanie: what does that mean? >> they are gathering more deposits. it is the nuts and bolts of thinking. has announcedgan

higher mortgages. stephanie: that is also why wells fargo did so well. boring. trading has done a pretty badly, the third has been pretty tumultuous. you have to be saying, amen. you have wanted banks to get boring. i don't know about boring, but more simple. if you look at since 2008, every quarter, the financial sector has made more money than any other sector. transportation, restaurants, health care -- they do ok. whether or not they are up and down, they are moving. boa isng i can say about that they are hot on financial technology.

they are being aggressive and going in and looking at how to be more aggressive and effective. hopefully, other banks are doing that. you need less humans when you are doing more mobile. the: that was against original criticism, i thought there would be jobs that would be created. one of the things they are doing is having smarter systems, systems that are using software to actually comply with the regulations so less people ultimately and more efficient effectively. aric -- erik schatzker, the u.s. economy is doing relatively better compared to the rest of the world, is it that simple? the european bank is a challenge, but that has more to do with the fact that they didn't get their balance sheet in order as quickly as the american banks did.

i would say yes, if you look at j.p. morgan and wells fargo, you do seem loan growth at all three of those banks, and wells fargo is growing even faster due to the fact that it has been who bring up all of these assets from general elective -- general electric, like what we saw yesterday. if we look at whether it is paying off with the banks, we should be seeing more revenue growth. at bank of america, we aren't seeing is yet. it is down over a year over year basis. wells fargothough aside, what these banks are doing is waiting for times to improve, for interest rates to come off the zero bound, for volatility to stabilize. if that happens, you won't see the year-over-year decline of 10%-11% of fixed income trading.

these banks should be making more money. they are not, though. brendan: it is a good story for bank of america, partly because for the first time, there is some stability. we have had two decent quarters in a row. that is why stock is up. one of the things i am curious about, we helped pass the rules that separates the commercial and investment banks, and we also try to ensure that proprietary trading would not continue, that the investment risk wouldn't be trading events, they could cover their edges, but they couldn't make risky bets. ,s that impacting their profit particularly goes commodities have taken a downturn? erik: it used to be a lot larger relative to total -- so yes, we have seen goldman sachs

dismantles some of the proprietary trading debt, the banks aren't making those that's the way they used to be. bank of america, merrill lynch, they did the same thing. what isn't clear is whether or not the banks are -- i hate to say cheating, but skirting the rules by taking the view in some of the positions that they hold in order to make markets. the banks are still making markets which is why securities are instruments, warehousing them for a certain amount of time and ultimately selling them of theone else. is part reason why fixed income is still a multibillion dollar business. degree do they do that internally? it is hard to tell. real quick, sorry, stephanie, so the question is

quickly, about whether it is speculative, that is the eye of the beholder. that may be one of the reasons it, noteferred to specifically, but why jpmorgan sold off the commodities. is the same -- one of the same reasons we sought the deutsche bank stock trading single name credit derivatives. because it is hard to live within the confines of what constitutes hedging versus proprietary trading, it became so onerous when you tied into the money they were making, they put their hands in the air and said, i am out. clear, one ofbe the reasons people like me had whatposition goes back to they talked about in the debate,

the difference between commercial and investment banking. we didn't want the investment banks urging their customers to get into a fund, perhaps they are fund, and actually, they took the opposite position. they said, get in here. you take thend opposite position. there were many cases on that. funds,ie: credit hedge they will say there is a drought in terms of liquidity, it is a gift when you look at -- because 5-6 years ago, there were one competition was not other investors out there, it was the street. was a training program to start your own fund. they would use this as their track record, they would say, here is what i have done. they can't do that anymore. bart: liquidity is one more reason why a financial

transaction tax would be bad for the economy. it would be bad for average investors. said peopleou also like you, there are no people like you. erik schatzker, we look forward to your interview with brian moynihan today. tomorrow, we are talking to the hedge fund manager, we want to hear from you. let us know. more "bloomberg " is coming up. ♪

vonnie: welcome back to "bloomberg " i am vonnie quinn. company will ask for the federal government to drop the designation as systemically important. yesterday was the latest in a

series of sales. there are leading the finance building -- finance industry to refocus on building. inron technology is conversations with sandisk. toshiba would have to sign off on any deal. russia's biggest airline wants theet out on the deal of boeing. they say it doesn't need the new long-haul planes. nearlyd planned to buy two dozen of the planes. that is the latest bloomberg business flash. stephanie: back to politics. hillary clinton is calling for more regulation. did you know that the chief financial officer of her campaign, gary and bart, what do you

make of this? gary is sitting right next to her. people --ind a lot of fined some of these investigations on foreign currency started when we were there. wouldn't take a backseat to anybody. but i think he is one of the smarter people in finance. our closed-door surveillance meetings and a certain number would come up, a figure, and gary would figure it out in his head. stephanie: that is why wall street hated him having that job. bart: he knew all the tricks. together, i think we were a good team. , 400l the regulations regulations, we did 90%, and we voted for 65 of them.

spoken ont, we have the policy positions that he had in the past, policy is not the same in a presidential campaign as it is in the job of a regulator. i'm sure he is doing a great job. bart chilton is here with us, so we will stay on the job -- on the topic of regulation. credit suisse are taking hits, because they bought their leverage will in line with the u.s. at 5%. the other news is that the banks are angry at the bank of england because they can't meet its demands for how it is defining capital. leverage should be 20%, the u.s. has 5%, what is the right level? bart: the right level -- they used to work with the senate -- the right level is where we can

all agree and the banks don't have to apply by capital margins, that does create a mess. also, migrate -- market migration. brendan: but we did that. and they basically said 3% for everybody, and some are saying that is not enough. bart: it does take leadership over there. i recently had a meeting with the leader of espoo over there. the thing that they want are the harmonized markets. the big one over there is called central counterparty clearing, it has to do with how much margin you put up for your that's. it is different between the u.s. and the eu. bank, if you're running a don't you just need to know the number? how do you run a bank? brendan: the problem is right

now, they are getting the number and they say ok, 5%. what is the capital? that is what is happening right now. we have moved on from what is the number, it now we are looking at what the definition is. right, it is all in the details. what can they count as capital? you have to come to some agreement. you don't want this regulatory arbitrage going on in the global financial sector, we have to figure that out. get into: how did you this position? at one point in your life, you worked in a steel mill. your father invented the self standing -- and here you are. and now you have a central clearance. bart: it is not starting like some of the candidates were talking about last night, but i went through and worked in campaigns, and watching the debates last night, i worked for

walter mondale. i look at these things and i'm glad i'm not doing these things now. but it is good experience in government, for 30 years. like to lookwould at a self standing artificial christmas. [laughter] i ran chicago whiteboards in illinois. david: with that, we will be right back on "bloomberg ." ♪

stephanie: i'm going to be bold and say it was another exciting day here on "bloomberg ." we are one notch away from investment grade, we have paid down $10 billion in debt. we have a flexible fleet and fuel will be down about 40% year

on year. the currency issue is an important issue for every company that sells overseas. most multinational corporations will have currency headwinds for a pretty long time. it looks like the dollar is going to be the reserve country -- currency of the world. >> there are so many places that are doing content. , so it is more competitive out there. that doesn't necessarily mean more costly. everyone is worried about the world of digital advertising. one, it is overrated and it is not a threat to us. andas taken away from print niche cable networks. we are not being heard by the niche players. do you know how many hits on youtube it would take to re-create the engagement on that? stephanie: bart, it was your

first experience on "bloomberg ," what is your take away? bart: the takeaway is that it is nice being on here with you. oil prices aren, great for the consumer and many sectors of the economy. on netflix, watch bloodline. it is great. [laughter] onid: that does it for today "bloomberg ," that does it for us. ♪

>> it is 10:00 in new york, 3:00 in london, welcome to the bloomberg market day.

from the bloomberg world headquarters he, i am betty liu. profits are rebounding as bank of america. a look at those latest numbers and what they say about the banking industry and of course, the economy. then the democratic presidential candidates squared off last night, we will talk about that. news from twitter following the talk about layoffs yesterday. the big-name that jack dorsey is bringing in from google. let's head over to julie hyman where she has the latest. julie: it is gaining again although it is not much of a gain and we have seen a lot of bouncing around.