scarlet: good afternoon. alix: here is what we're watching this hour. ms. clinton: my plan would have the potential to send executives to jail. street, should be worried? general motors falling the most in 15 years after it slashes is earnings are cast -- earnings forecast for next year. street arlyn going back under the microscope today as it delivers its third-quarter earnings report? -- report. how thestart with markets are digesting all the data. walmart's big announcement spirit we will stick -- we will

check in with julie hyman. walmart is the big mover. shares are down by 8%, the biggest one-day to climb in at least 6.5 years. really steep declines for walmart after saying its earnings share will fall in fiscal 2017. it is an unexpected decline. for a gainre looking in that year. you will hear much more about what was behind this news in a moment. i was looking at my terminal at predictions and you can see analysts had been looking for a for earnings per share in 2017 and this is quite unexpected news. $485 billion of revenue on an analyst -- annual basis. is it -- it does not change the

fact it is bringing down sentiment. alix: there is a matter, individually the stock brings down major averages and then there is the fact that brings down half of s&p 500 overall. you can see all the major averagesare lower. we were already going down before the walmart headline came out and took a leg lower. target is sharply lower after the news. hitco, all of them taking a walmart was taking in the headline. also worth than had been anticipated. the s&p 500 retail index, which was again already heading lower, i should mention walmart is not actually part of this particular index. it is part of the consumer

staples index. this is exclusively a function of the ripple effect from walmart. thank you so much with the latest on walmart and the effect on the overall market. >> let's check in. mark crumpton has more from the news desk. mark: 29 afghan police officers are dead after a three-day fighters.h taliban the officers checkpoints were overrun when no reinforcement arrived. --orts from washington state say president obama is thinking of keeping up to 5000 american troops in afghanistan through 2016. to with draw virtually all american forces before his term ends. the taliban and al qaeda both threaten security there. even as the israelis approve antiviolence measures, attacks continue. stabbed a short time

ago at the jerusalem central bus station. the attacker was shot and is in custody. attempted stabbing and the attacker was killed earlier. they now have government permission to close off arab neighborhoods of jerusalem and families of attackers may have property confiscated. european leaders to take firmer control of the refugee crisis p or for most of the year, the crisis has largely been mishandled by the european union. he meets with fellow eu leaders tomorrow in brussels for a summit to find solutions to the crisis. the associated press says the death toll from the stampede last month continues to outpace saudi arabia's official count. more than 1600 people died during the religious pilgrimage, more than double the official saudi death count.

the condition of a scottish nurse affected with ebola has worsened. pauline contracted the virus in december and doctors say she is critically ill. 58 people who came in contact identifiedve been and are now be monitored. there is evidence of continuing complications for survivors even after the virus goes into remission. look at our news right now. you could always find the latest news on bloomberg.com. back to you. breaking news concerning staples and the repose takeover of office depot. julie hyman has more. julie: these two companies have been working on getting antitrust approval for the deal. staples is exploring the sale of assets to help resolve the u.s. antitrust officials concern over takeover of office depot.

possibilities are under consideration in terms of the types of assets and staples apparently will only proceed if it sees the asset sales as necessary to win clearance for the merger. it has tried on for eight months , the antitrust review. you can see the shares have been spiking on the news, not just at staples but of awesomeness depot -- but of office depot as well. quite having to spin off quite a bit in order to satisfy regulators. .hank you so much back to the top story today, walmart is warning profits will fall sharply in the next fiscal year and plenty of reasons for it. we want to bring in shannon, who covers walmart. a total shocker. beone was expecting it to this bad. >> they wanted to know about a growth story.

and they tell them, we are not growing at all in fact, it will be a few years. it was really passed what expectations were. a lot worse than expected. scarlet: how can everyone get it so wrong? how can you expect growth and then walmart's trekking? an employee pay have been dragging on profits this year. is that carried over after mark -- over? >> higher costs. revenue is growing. they expect three to 4% annual revenue growth. revenue is growing. they feel they have to invest in the future of the company. spend $1.5 billion next year on wages. $1 billion this year on higher wages. they feel they have to do that to get better quality customer service and better performing stores.

and then online, they have got to compete online. it is not cheap. cheaptuff doesn't come obviously, they care about the investor community. if this company wants to take the time to invest in the company, it is a family-owned company. they have got the ability to do that. >> one of my first questions was, will they have to deal with the fact that there is -- they are too big to grow the end of death at the same kind of pace? -- grow at the same kind of pace? >> value and timing matter.

restartore than open to -- reshaping our folio but we are going to be smart about it. a food restaurant business in mexico they were in. that is the kind of portfolio reshaping he's talking about. investors have, said, maybe you could spin off sam's club. it does not seem to be on the table. there is no talk or mention of that now. but a lot of investors have given up hope. >> it is not a company they plan to target. is thefamily son-in-law chief of the board and very involved in what goes on in the -- the company. alix: they cannot see the impact of what rising wages will do for the business. it is not just that they want better business models, but in

theory, people who work at walmart will shop at walmart and have more money with which to do that. is that investment going to take to filter through? >> if you are spending $1 billion in stores and you get a ales increase of 1%, they get three or 4% profit margin p or one analyst was saying, you can spend $1 billion on sales and only get $2 million in profit on that. is an expensive proposition. the labor market is tightening. it is not just that walmart wants to get better police. they have to do this. a lot of help-wanted signs out of mcdonald's, target, walmart. the other day, there was a mcdonald's offered down the street from a walmart store. the labor market is tightening walmart. in a way, they have to do this and normally, the money would be filtering into the stores. scarlet: they are playing

catch-up with regard to the infrastructure line business. all the money is being sunken in the moment. thank you so much, shannon. shannon covers walmart for bloomberg news. go> tomorrow atg< 7:00 a.m. eastern time. you can bet, a lot of questions. up, what sort of impact will last night's's democratic debate have on a presidential race? we give you an outlook. alix: the big picture for netflix, reporting earnings at the closing bell today. they need to offset the soaring cost of original content. where will it find new customers? scarlet: not in the u.s. brian moynihan, chairman and ceo , in an of america exclusive interview coming up. ♪

alix: welcome back. scarlet: time for the bloomberg business flash. fell asme sale prices month for the most since the start of last year. the price indexed in september fell .1%. -- .5%. brokerage services in the last year, services had slipped more than 1%. scarlet: retail sales rose less than forecast in december. percent.ase was .1 keeping my money from lower fuel prices in their pockets. gas was $.50 per gallon cheaper than in june. alix: the bond market is growing more skeptical the fed will raise rates soon.

they dropped to a less than one and 30 chance. the probability has fallen to about 50%. even push back. scarlet: julie hyman has a check on more company news including the headline you just wrote for us earlier on staples. julie: exactly. acquire office depot. this has been it antitrust review dragging on for about eight months. this is according to people familiar with the matter that staple might indeed explore asset sales. maybe with officemax and closing distribution centers. either way, shares on the hope here that this is finally coming to a close and finally getting close to coming to a deal. it is coming back down a little bit on those high spirit office depot shares also spiking on those shares.

a spike there as well and coming down. seen a lot of news today. in dell, let's start there. they were trading lower for most of the morning. the company forecast fourth-quarter sales that may trail estimates and in particular, in the server group, they are seeing a little bit of weakness. that had been an area of strength for the company but shares have now turned higher. another potential deal in the chip industry as well. they hired a bank to explore a sale. shares have been strong on that news. potential suitors include micron in western digital. top of the sphere of politics, what impact will the democratic debate have on the presidential race? hillary clinton went into the event hoping to cement or roll

with a polished performance for the most part, she struck a when shetone, like squared off with bernie sanders on capitalism. ms. clinton: i think about all the small businesses that were started because we have the opportunity and freedom in the country for people 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. a great soundbite. phil mattingly has a morning after report on the debate and we know that clinton did well and we know that sanders was bernie sanders p look to the donors think of the debate last night? phil: any more questions, and unsolicited e-mail i got from a donor for hillary clinton. his point was that hillary clinton answered the questions left right and column the nerves

of many democrats with her performance and maybe even closed the door to joe biden, the vice president actually getting into the race. they were the issue plaguing her campaign and taking a major toll on her poll numbers. she found an unlikely ally. the american people are sick and tired of hearing e-mails.r damn enough of the e-mails. let's talk about the real issues facing america. music to hillary clinton's ears, supporters in old -- ears. -- supporters' she really provided contrast on key issues. guns, immigration and even wall street reform, they felt like hillary's and took the flight to -- the fight to bernie sanders but not in it -- it and

attack mode that would turn off his followers. when you talk to donors and campaign aides, everybody on hillary clinton's side was very happy. >> what about supporters of bernie sanders. did he gain any momentum or lose momentum or stay in place? look at online engagement on pretty much every platform, facebook or twitter, even divine, across the board, bernie sanders had the biggest night and was the most talked about candidate when it comes to democrats, particularly the base, that is bernie sanders support and he loves what they did last night. -- they love what he did last night. on.thing they can build i think it made hillary clinton look a little more like the favorite everyone thought she would be going into the campaign. alix: a bloomberg view columnist had a great note out this morning, writing that the democrats may have not boosted ratings like for pelicans did but they boosted confidence in our politics. the idea is that they were

actual adult on stage and what do you make of that? that is margaret's perspective and a valuable one. these debates, when you have got so many candidates, the debate takes a different tone like the republicans do. a lot more debates are to come and a lot more opportunities for republicans to do exactly that in their debates coming up. thank you so much. great analysis. still ahead, netflix pushed to go global, gaining some steam. theoduction to japan in third quarter and what you need to know that today's's earnings report. ♪

scarlet: welcome back. alix: netflix reports third-quarter earnings after the

closing bell today. bigcompany is counting on subscriber growth, especially in overseas markets. it expanded into japan in the last quarter. strugglingtflix is to keep costs under control, ballooning as they have more original programming. joining me is paul sweeney. when people look at netflix, you cannot use traditional metrics. if you did, it would be a screaming cell. -- sell. >> it is not earnings were revenue growth but subscriber growth. it is a subscriber momentum story for investors. looking at the number of subscribers they're are adding not only in the u.s. but also internationally. they entered japan and the international markets will be the growth markets going forward. they are still growing subscribers in the u.s. and still expect gross subscribers in the next couple of years.

the real growth in terms of subscribers and revenue and ultimately profits will be markets outside of the u.s. they are still in the build mode internationally. their domestic business is quite profitable and the international business is losing money as they continue to expand. they expected to be profitable late next year in 2015. scarlet: fire people extrapolating that international subscribers are worth just as much if the u.s. operations are profitable? >> they have got good experience . they have launched in canada and that is not profitable. they have a pretty good feel for what the programming costs will be on the programming basis. they oftentimes negotiate the right to get global rights. a look at what the costs are, rollout costs, and then it is a question of how fast can i grow my subscriber base? alix: once you become profitable

in the u.s., how much, $10 a month for streaming? >> they're making a 30% margin right now and they think that can go a little higher. the traditional big media companies are in that 30 or 40% margin business. netflix is getting there. the big issue you note is programming costs. they have $10 billion of all in programming liabilities in the next several years. a huge number for a company with a huge market cap. it is all predicated on growing subscribers on the small basis to cover those costs. for the bears out there, they fight a huge programming costs liability. scarlet: absolutely. they will say investors continue to overlook the increasing cash burn. net incomemodest gap that we see, the original programming continue to profit in a meaningful way.

>> this is either a virtuous circle, subscriber growth generates the ability to buy more, or this is a vicious circle if that subscriber growth slows and the prophets you're counting on over the next several years, the revenue to big programming obligation, are not there. it is a simple story. if you are bullish on long-term growth of the business, you look at the subscribers and you get comfortable with it and it gives you convert about the programming liability. alix: thank you so much. paul sweeney of bloomberg intelligence. scarlet: the ceo of delta airlines likes cheaper gas prices as well. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. alix: from bloomberg world headquarters in new york, welcome back to the bloomberg market day. alix: let's start with the headlines. mark crumpton has more.

mark: thank you so much. it is a done deal in iran. the country's highest legislative body has approved the nuclear agreement with the west. the parliament has already signed off on it. the deal will curb iran's nuclear program in return for the lifting of international sanctions. cyberspace has become a second front in russia's clash with the u.s. and the rest of the nato. a number of attacks being educated to russian hackers. among the targets, congress, the new york times and the german steel plant. the democratic presidential contenders back on the campaign trail. hillary clinton and bernie sanders captured the most attention. this exchange about capitalism and wall street. >> this greed and recklessness and illegal behavior of wall street where fraud is a business model helped to destroy this

economy and the lives of millions of people. when i think of capitalism come i think of all the small businesses started because we had the opportunity and freedom in our country for people to do that and to make a good living for themselves and their families. i don't think we should confuse what we have to do every so often in america, save capitalism from itself. a chanceders passed up to capitalize on the killer clinton e-mail controversy. -- hillary clinton n.l. controversy could the campaign said last night's debate brought a cash windfall. sanders raised $26 million in the last quarter, about $2 million less than mrs. clinton. twitter says senator sanders was the most read with the democratic candidate. he was the subject of 41% of

debate talk on the social media site. hillary clinton was second with 39%. that is a look at our first word news right now. can always find the latest on bloomberg.com. alix: thank you so much. perhaps no industry is reaping the benefits of cheap fuel prices as much as the airline business. delta airlines flew above expectations reporting a 36% rise in profits. scarlet: delta is facing some headwinds. the money that it makes per passenger has declined. it forecasts another decline in the fourth quarter. there are global issues as well. earlier, dealt as a ceo talked about them. -- delta's ceo talk about them. u.s. economy is really strong and continues to be strong. mexico is doing well. central america is doing well. parts of south america are ok,

but brazil, venezuela are not doing so well. eastern europe is not doing so well. russia, because of the sanctions, the middle east because of political and social unrest. in japan, their 20th year of economic status -- its currency is weak and its economy is not doing well. china is holding its own. it is a different picture in every country. the important point is currency. 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. if you look at our unit revenue performance in the third quarter, much of our unit revenue was the result of the of fuel surcharges internationally and the effects of currency. we will have currency headwinds.

will -- most multinational corporations will have currency headwinds for a pretty long time. the dollar is going to speed -- be the reserve currency of the world for a while. you heard what anderson said about the currency risks, headwinds out there. do we extrapolate that other airlines face the same challenges but delta is a better position to fend them off? >> they do. the currency situation also has one enormous benefit. the strong dollar is tied to cheap oil prices. for a us-based airline, even in airline like delta, as global as it is, it will take that trade-off. much cheaper fuel prices in exchange for some consumer spending issues abroad.

the degree of exposure to those markets abroad relative to domestic tells you where each airline is. southwest is nearly all domestic. it gets all the benefit of cheaper fuel without this currency issues abroad. delta is doing a good job being nimble and reallocating assets. factories, not a hotel in manhattan where you cannot move it if the market deteriorates. alix: lower fuel prices right benefit -- we will not see another 50% slide. how much better does growth have to be for it to make up for the loss and benefits of low fuel prices? >> delta has a bit of a tail because they were hedged at high fuel prices. american has already got all the benefits. they will not get much more

going for it. -- going forward. delta is seeing these revenue declines. they hoped to stabilize that by the end of the year. they conceded on the call today that that will not happen exactly like that. it is a race to the bottom between falling fuel prices and falling airfares. so far, falling fuel has been winning, but they will have to get their hands around these falling revenues at some point. scarlet: you recently published a list of the most profitable airlines. what were you surprised to learn? seth: a continuation of recent trends, the ultra low-cost spirit, yougion, see an airline like southwest in recent years struggled, lost its luster, they are in the top 10 in the world.

it shows there is more than one way to make money in the airline industry. american, very impressive that rather early in its post merger and completed a big part of integration this we can come already topped in the world. already top 10, in the world. alix: spirit was number two. frontier does have really good operating margins. do we expect any ipo in the future given the fact that it's killing at right now? that is the big question. a lot of people have not noticed frontier because they don't publish earnings. people don't notice. here is an airline that is right up there with the most profitable in the world. backed by the same investment spirit.

still early in the cycle to expect an ipo. there is investor appetite. who knows? they are doing really well. the disconnect between what people say and what they do, they say they hate these airlines but a lot of people like really low fares more than they hate the things they don't like about those airlines. thank you so much. seth joining us from fort lauderdale. alix: what is your most hated airline? scarlet: when i flew hawaiian airlines, it was a 10 hour flight. they charge for everything. you cannot watch a tv show without paying for it. is havingiggest fear to use a quarter to use the bathroom. that is coming. coming up in the next 20 minutes

, getting an education about student loan debt may fix the debt problem in this country. ended upinformed shouldering a much lighter load. torlet: first data scheduled price its ipo tonight in what will become the largest ipo of the year. there are couple of things that make you wonder. alix: coming up, an exclusive interview with brian moynihan. yes just survived a challenge to his chairmanship and the bank has reported a big profit growth and -- in the third quarter. ♪

scarlet: welcome back to the bloomberg market day. a beautiful day in san francisco. alix: i am alix steel time now for the bloomberg business slack. scarlet: wells fargo's latest earnings results eat analyst estimates -- a beat analyst estimates. the third partner income rose 1.2%. the world's biggest bank by market value. alix: cost cutting has paid off for bank of america. posting for profit that beat estimates. says low interest rates and volatility have made it hard for bank of america to improve revenue. -- the: carlyle group managing director agreed to pay a civil penalty of more than $300,000 to the monetary authority of singapore. lewis was working as the ubs head of indonesia.

carlisle was unaware that lewis was under probe. alix: you can always get more business news at bloomberg.com. china's september inflation data showed a moderation in consumer prices while producer prices extended their losing streak. bughe disinflation continuing in this part of the world. if you minutes before china released the data, they weekend -- inflation was indeed going to come in much more subdued. it slowed to 1.6%, well below the target. producer prices the bigger story here. when economists flagged overcapacity issues when analysts warned of industrial profit, producer prices falling at 5.9%, that is the best indicator. , bringing rates

down in china. scarlet: now for a look at the european market close, checking in with mark barton in london. mark: another decent chinese data highlighted the fragility of the world's second-largest economy. u.k. unemployment stood out. the rate holding 25.4%, the lowest since mid-2000. three big movers. -- the rate holding to 5.4%. the company forecasting sales below analyst estimates after customers delayed chip machine orders. germany's biggest residential landlord has tabled and $11 billion offer for its company. this german rental property industry is buzzing with them in a. .- with m&a

a british broker reported a 47% surge in net new business loans. that is it from london. alix: thank you so much good let's see what's moving here in u.s. markets. matt miller is standing by. matt: it is really fascinating turnedhat intel has around, now gaining 1.3%. the stock was down almost 4% earlier after saying corporate customers may squeeze their purchasing of computers. pcs are a tough market right now. if corporate buyers go away, you are in real trouble. profitssed estimates for and forecast a lower revenue then expecting because of the same reason, the pc market is in bad shape. it could be just short covering, but intel is back up for some reason.

sandisk has hired a bank to try to find buyers. micron may be one of the interested parties. sandisk up 12.5%. scarlet: that is always one possible explanation. in looking at twitter, the company named the exact of chairman as the company struggles to reverse a slowing growth. investors seem to like this news. the stock has been beaten down come off by 17% this year. matt: twitter has been in bad shape already. they hire this guy who was the chief business officer from google. analysts have come out and said we don't think twitter -- that google wants to buy twitter. two, the relationship with each other is getting stronger and stronger.

some analysts are saying they don't have to get taken out, google does not have to send $25 for theto buy twitter two do have a really good symbiotic relationship. hiring him as their exact of chairman is one good move in that direction. priceline --ention trip advisor shares. or can now book your spirit through trip advisor on to priceline's website and the two may collaborate even more closely in the future. trip has been boosted big-time. artistare not a starving , there is no reason to fly those airlines.

alix: we were talking a lot twitter,h stocks -- take a look into my bloomberg terminal, you can see how big of a short interest position there is in the stock come up by 102%. just from may, june, july of this year. forget any kind of news potential relationship with google, boom, massive short covering. matt: absolutely. a great function in the bloomberg terminal. i use it all the time. scarlet: matt miller, thank you so much. coming up, a new accidental study shows as there may be a way to tackle the huge problem of student debt. ♪

alix: welcome back to the bloomberg market day. scarlet: america student loan debt of $1.2 trillion is a huge economic problem. it was the topic in last night's democratic debate with martin o'malley calling and crushing, bernie sanders calling it a crisis. alix: one way to fix it, tell the borrowers. students given more information about their debt actually changed their borrowing and academic behavior. for more come i want to bring in brendan greeley. how did this happen and come about? staten: montana university was looking at the student debt problem and thought we should do something about it. before anybody thought about it, they sent a letter to students. at montana state university, we

are serious about your education. we want to be sure financial choices you make do not negatively impact your future. said thiseading, it is the amount you have outstanding a student debt. in order to continue receiving student debt, you have to past 57% of your classes. anything more than 12 credits is free. at the end, there were students who said if you go to a financial counselor, we will give you $20. a key understanding of -- what's amazing is what happened after this letter went out. the researchers compared the experience at montana state the interest of montana. similar populations. compared to the university of montana, the next semester, students took out a third less in debt. they usually take out their full award. they took out $1300 less.

their grades improved and they took more credits. what kind of role did the government play in terms of informing universities and the banks? or this was just voluntarily? >> there is a great quote in the paper where they say high school seniors generally have low exposure to the financial system. usually, the kind of counseling you get for debt, you apply for it and then four years later, they say this is how much you out. you are making lots of decisions when you're 18 years old. all of the academic advising you get doesn't actually have anything to do with the money. they are talking about your major, what you want to do. students who got this letter were more likely to pick a stem major in the next semester. they are thinking about what education is worth. when $30,000ar

seems like peanuts to me. who are the people taking advantage of this? there will be people who need the full deal, the average taking a little less out. >> tuitions are generally lower at state universities. the, ideally, behaviors will be different. -- duke, ivy league on the behaviors will be different. state aid has been going down. that is kind of the answer to that question. we usually talk about larger macro solutions. how will we get colleges to bring down costs? study is amazing because it just talked about the microeconomic behavior. off,u can shave just $1300

it will not solve the entire problem, but that is one piece of all these other things get to talk about. scarlet: it goes to show you how much control students have over their spending. people are choosing more stem majors. no more drama majors or history majors. >> german major. we are starting to see this on a larger level. antioch was closed for three years because the alumni had to figure out a way to open up the students are making these decisions. if you just give them a little bit of information, they will make that change the next semester. the biggest part was the $20 they got to go twice financial counselor -- to go to a financial counselor. alix: will that put the onus on schools to provide more free rides for people if they choose to reduce their debt?

>> it makes me wonder whether or not this was just a counselor. our schools all over the country going to start sending a letter? scarlet: even cheaper if you e-mail the letter. next coming up in the hour, an exclusive interview with brian moynihan. our special coverage will begin at 1:30 p.m. eastern. do not miss it. ♪

alix: it is one of pop p.m. in york, six clock p.m. in london. 1:00 p.m. in new york, six clock p.m. in london.

-- 6:00 p.m. in london. scarlet: welcome to the bloomberg market day. from bloomberg world headquarters in new york, good afternoon. here is what we are watching at this hour. walmart shares plunging. the company suffering its worst stock decline in 15 years. cutting its topic forecast in an effort to boost growth. scarlet: overall retail sales lackluster in september. how worried are you economists about consumer spending? alix: brian moynihan joins us for an exclusive interview. -- the bank ever excludes ever escape those legal costs tied to the financial crisis? scarlet: we want to head to the market desk where julie hyman has the latest. you want to tell us about the numbers. julie: another potential deal in

the semi conductors. sandisk was seeking a potential buyer. now, fairchild semiconductor. it has hired goldman sachs to help it find a buyer. on semiconductor and the german ship maker. -- chipmaker. fairchild is one of the oldest makers. chairslook at fairchild surging bythose are about 13% on these headlines. shares, theatching top that they could be potential buyers. the german company also trades here in the united states.

we've been watching the reaction in those shares as well today. this is coming on the heels of sandisk putting itself up for sale. year for semiconductors. a 12 year chart going back quarter by quarter. the green line, the number of deals, the blue lights are the volume of deals. tera. agreeing to buy all te getting to walmart, that is the big news of the day. out in any coming investor meeting saying that it's shares will fall 6-12%. analysts have been predicting a 4% gain.

walmart will be spending more on wages, spending more on e-commerce. it is buying back more stock there will be a $20 billion buyback. alix: a big shocker. scarlet: the volume is mammoth compared to what it's been all year long. 55.7 million shares. alix: that is huge. in on the check bloomberg first word news this afternoon. mark crumpton has the latest. mark: thank you so much. the israeli military is deploying hundreds of troops to help contain a wave of violence. they prevented another stabbing attack today. the jerusalem post says authorities shot and wounded an attacker after he stabbed a woman at a jewish but station. -- bus station. authorities have permission to close off arab neighborhoods

within jerusalem. the guardian council has approved a nuclear agreement with the west. iran's parliament had already signed off on it. the deal will curb the nuclear program in return for the lifting of international sections. in afghanistan, or officials report a slaughtered one of the country's borders. the taliban overran two checkpoints. killing at least 29 border police officers. 21 of the officers were killed in that attack. eight others were executed after they had been taken hostage. president obama is considering keeping up to 5000 u.s. troops in afghanistan through 2016. a plan to withdraw virtually all all american forces before his term ends.

the taliban and al qaeda both threaten security there. last night's democratic presidential debate was seen by more than 15 million viewers. the highest rated democratic primary debate ever. campaign teams for hillary clinton and bernie sanders are both declaring it a success. sanders's team pulled in dollars following the debate. he is leaving -- leading the pack in google searches. the best two hours of the campaign so far. out of sight, out of mind? the window may be narrowing for applying for a pleasant until run -- presidential run. none of the democratic mentioned the vice president by name. a strong showing by mrs. clinton and senator sanders could also be daunting. that is a look at our first word is right now. you can find the latest news on

bloomberg.com. more now on the economy in today's retail sales report. walmart slashing its forecast. overall retail sales not great last month. rising .1%. alix: raising concerns about the staying power of consumer spending. by. wholesale prices fell .5% incentive or, declining the most since the start of the year. joining us now is michelle --ard, chief u.s. economist i know you cannot talk about walmart specifically. does walmart mean anything about the health of the consumer? >> this is a reflection of what we may be seeing in terms of the labor market getting tight. companies are having to pay more for workers. the impact that might not -- might end up happening on company earnings.

earnings shortfall the guidance they are giving, reflection of a higher wage costs they have had to institute in order to attract and keep workers. walmart was one of the companies that visibly came out and talked about the need to have two ways -- to raise wages. the labor market is tight. i'm surprised we are not seeing more wage pressures because we know what is happening out there. the walmart story today is the example of the fact that it's not so much a story of weak demand as much as the pressure that companies may feel as the labor market gets by. scarlet: we have not seen it show up in inflation numbers. anecdotally, you see this playing out. --s that mean earnings paying your employees more will be much more -- much bigger drag them expected? >> that is something that has to be watched.

normally, the two should go hand-in-hand. to see waget expect pressures unless you continue to see strong demand. companies may have a bit more pricing power. it doesn't necessarily mean that the company profits come under pressure. the worst situation would be where companies don't have pricing power. in order to attract quality workers, which is getting harder to do, they are forced to raise wages. it's a question of how the economy holds up going for it. i'm pretty upbeat about the strength of the economy, particularly the u.s. consumer. i'm not worried about losing demand here. alix: that brings us to the big debate going on. is that phillips curve model that here in the u.s. -- dad here in the u.s. -- dead here in the u.s.? we are just not seeing it.

does walmart give you hope that it is not broken here? -- i was never a big subscriber to the phillips curve. there's been a lot of empirical studies that have so just in that relationship has not held historically, let alone in the current cycle. there are issues here in general with respect to wages and more importantly inflation. one of the things we talk a lot about here is the fact that while praise mandates absolutely sound appropriate for central banks, they just don't have the control over inflation they used to between global developments, technology, all sorts of reasons why inflation doesn't behave the way it used to. for central banks globally and the mystically, they are forced -- thatmonetary policy

may be out of their control. if they have no control over inflation, should they be targeting it at all? michelle: it is the case that inflation is something that the fed cannot necessarily target. are there other things? we are long way off from making any kind of normal changes on that front. increasingly, this will be a question that central bankers face broadly. even myself who thinks the fed is overstayed their welcome and is making a policy mistake, even i don't think inflation is going to have the kind of overshoot you would expect to see given how easy monetary policy has been. alix: thank you so much, michelle girard. scarlet: coming up, we have some blockbuster interviews in the next hour. doug macmillan joins us as

company shares plunge. alix: then come alive in charlotte for exclusive interview with brian moynihan. the bank posting a big gain and profit in the third quarter. -- nike mark parker expects $50 billion in revenue by 2020. all of that coming up on bloomberg television. ♪

scarlet: welcome back to the bloomberg market day. alix: time now for the bloomberg business slack. agreement in place ,o expand the review period

staples is said to be exploring asset sales. they will pull the trigger only if it's determined that asset sales will help the antitrust review. they have until december 8 to make that decision. they are looking at whether a national office supply retailer -- scarlet: more problems for vw. there was additional software that could affect commission status. -- emission status. alix: twitter has a new executive chairman. the former google advisor marks another big move by jack dorsey. the company will cut 300 jobs or 8% of its workforce. jack dorsey is trying to make twitter more focused after two years of slowing growth. let's head to our

markets desk where julie hyman has a check on individual company movers. we have to start with walmart. it is a huge decline. this is a big surprise when it came to what analysts were looking for. walmart says earnings per share will fall 6-12% in 2017. we are now in the fiscal 2016. you can see the big drop we've been seeing in the stock throughout the day. it is having a ripple effect throughout the other retailers. target also seeing a big hit on this walmart news. some of it appears to be company specific. --tco and dollar tree charles was out with a note. part of this is walmart specific. the company will be making investments in keeping its

prices low. the efforts will not begin in earnest until 2017. in the meantime, as the press can petition is not quite as hot, he favors these three retailers as they get better today. -- battered today. i want to come back to the semiconductor industry. a lot of deal speculation going on today. had hired a bank to explore a potential sale. fairchild, a much smaller semiconductor maker, it indeed is exploring his options as well. we've been watching stocks of the companies that may be the potential buyers here. in the case of sandisk, looking at micron, more of a direct content competitor. western digital is a hard drive maker.

both of these stocks trading higher on this talk. scarlet: thank you so much. great stuff. alix: get ready for the biggest ipo of the year. they hope to raise $3.2 billion in its offering. a returnit would mark to the public market for the payments processing company which was taken private by kkr in 2007. first data will use the proceeds to take down its debt load. joining us now is david ridder. privatepany was taken at the height of the last equity market, during the boom. have we come full circle? asis going public right these markets may have topped out. david: i think so. he real turning point for the company was when they hired frank from j.p. morgan chase

back in 2013. he brought over a lot of people from j.p. morgan. that's when they started to turn things around. it has been a long road back for the company. when we compared them to these peers, their margins are favorable. any work on the revenue growth side of things. it is the first step in a long process. alix: i'm reading through the information about it. why would an investor ever want to own this? huge debt of the money from the ipo will pay down the debt. it felt like a big payout to kkr. david: it is a hot space right now. digitalrce goes into channels, mobile, online, it is becoming complex and retailers looking for are

merchant payment processor that can help them do business across all channels. you have cap companies like square and paypal competing in this space. think of first data as one of their -- there is a lot of re.wth the those stocks are up 40-60% this year. the timing is really good for them during this ipo. there is money coming into this space. becausehot sector merchants need help differentiating themselves. scarlet: what does first data offer? what advantages do they have over square? >> just the scale. 4000 financial institutions. -- they are citi the company behind it.

it is first data. it is their scale and scope. a relationship. they need to get more international. right now, it is 75% domestic. they have been acquiring technology startup companies. posou have seen the ipad type things, they bought a company that does that. a card processing company. the capital is constrained by the debt. they are doing small acquisitions. their peers have been doing big ones to grow. it is still very fragmented. alix: where are they in this turnaround? unload this to debt, where are they on that skill? innings,in the early maybe second or third inning that process.

kkr will be well, doing -- a lot of the debt out there is callable for the next 12 months. as long as rates stay low, we at lowbig opportunity double-digit rates. that is the opportunity. the manager expense can be reinvested into the company. scarlet: going back to competition, is part of the value proposition is its competitors are privately held? first it is moving ahead of them by tapping the public market. david: that is part of it. it comes back to the large merchant relationships. they are weaker with the smaller merchants. that arethe big guys leaders in that business have left the small merchants to the squares of the world.

it is a lot harder to make that business profitable. i'm talking about they are doing it more for the big merchants. alix: thank you so much. great insight. the biggest ipo of the year. up, we've gotg huge ceo interviews coming up this hour. a who's who in corporate america. discussing what is going on with the world's largest retailer. shares plunging after walmart cut its profit forecast. alix: off to charlotte for exclusive interview with brian moynihan. can the bank escape those legal woes? scarlet: mark parker with nike hosting its investor day -- he sees growth coming from asia and women's wear. ♪

scarlet: welcome back to the bloomberg market day. we mentioned earlier the pillows curve with michelle girard. the curve is the center of debate on wall street. the fed weighed in as well. ,s the labor market tightens workers will start to get paid more because companies need to make sure they've attained employees. that will lead to inflation and will be addressed by higher interest rates. that has not always work out. alix: has not been working out in the u.s. the fed president weighing in saying that he'll skirt is not working. -- saying the phillips curve is not working. it is a global issue. -- chartt and from

from goldman sachs single skirt is not dead. the yellow line is the inflation target. -- saying the phillips curve is not that. that is our question. is the curve broken in the u.s.? scarlet: and u.k., it seems to be working better. alix: it does look like the phillips curve is picking up. it is working in certain parts of the world. it doesn't appear to be working here in the u.s. scarlet: we have much more coverage on economics, financials and the broader market overall. coming up, those life interviews with three ceos. walmart, bank of america and nike. ♪

alix: welcome back. scarlet: let's start with the headlines this afternoon.

we check in with mark crumpton. mark: the european union taking its member nations to task, saying they failed to produce experts to address the refugee crisis. the european commission says only three of 28 nations have pledged a total of $13.7 million to a fund to help african nations better manage their borders. a big shortage of officials to fingerprint rivals.n -- of the refugee crisis. the prime minister says for most of the year, the crisis has largely been mishandled by the eu he and other officials are scheduled to attend a summit tomorrow in brussels. a scottish nurse suffering from ebola is getting worse. -- in critical condition at a london hospital. contracted the virus in

december. 58 people who came in contact with her have been identified and are now being monitored. the associated press said the death toll from the stampede last month continues to outpace saudi arabia's's official counter new figures show more than 1600 people died during the religious pilgrimage, more than double the death count of seven 69. a surge of financial support through crowdfunding. 10 utero -- 10-year-old michael has cerebral palsy and his fan -- his parents need a new van. will $100,000 were raised. jj abrams pledged $50,000. that is a look at the news right now. you can always find the latest news on bloomberg.com. back to you. now get to julie

hyman again at the breaking news desk, covering walmart after the breaking headlines. julie: i was looking at how bad the drop this. is the biggest one-day drop at walmart since 1998. extraordinary year. really, the company caught investors offguard. that is why we are seeing a dramatic reaction. walmart came out today and set of fiscal 2017, bynings-per-share will fall 6.12%. it is then a more money on employees, buybacks, and dividends. on a newnews on that buyback authorization in the next couple of years. it talks about a dividend in the next couple of years as well. it all cost money and it also prices lowto keep and walmart said in the past it will sacrifice margins in order to keep that pricing disciplined. also, some of its competitors have gotten yet more competitive

on pricing. in comparison to walmart, all of that has been challenging for the company. if you look at the year to date performance of walmart, it is the worst performing single stock year to date. down nearly 30%. cribbed it will be from joe weisenthal. he tweeted earlier today amazon versus walmart over the past 10 years, normalized to account for percentage changes. walmart is down here as we see amazon climate climb. walmart itself will take amazon is one of its competitors. that is why it has invested in e-commerce so aggressively. walmart has flatlined over the past decade. alix: that is an unbelievable chart, and it tells you why amazon has had a difficult time growing. thank you so much. scarlet: coming up, we want to weind you that later on,

have got doug macmillan joining us, the ceo of walmart in addition to the ceo of bank of america, all coming up in the next few hours. alix: erik schatzker will be sitting down with the chairman and ceo brian moynihan for exclusive interview in a few moments. now withwe are joined a preview. he covers bank of america has a market perform reading on the stock. how was the earnings report overall? he did not really get anyone to excited in terms of where you see the company. classic was not a bad quarter or a noisy quarter. it is not bad news. now that they have gotten most of the litigation problems they are challenged with growing their portfolio. they are growing the core assets ok at nine or 10% year-over-year but they still have legacy assets, subprime mortgages still running off.

i think brian moynihan is looking forward the on that as long as he can keep things from getting too noisy in the next couple of quarters, the banks should do a little better and the stock should do a little better. right now, in a good environment, normalized earnings, $1.6 per share, i do not think we're there yet. still relatively low, about 2.23%. i think that needs to get up to 2.5% before we really see growth prospects. scarlet about to this before we came on air. really, what is the big deal, and she was like, it is really about organization and revenue growth and providing clarity to you look at growth for jpmorgan and america, it is like day and night. scarlet: breaking news over the last couple of corners, it was always a mess. you could not find it in the first war last column.

there are billion one-time items mixed in there, whereas jpmorgan, clean earnings report. you could always figure out what everything was. people have a problem getting through to see what is driving bank of america. you used the word noise. a lot of noise. is the bank just too big for an investor get -- investor to get its head around given the legacy issues? michael: i think part of it is because it is not just big and complex, but cobbled together from so many acquisitions over the years. where you come into some of the complexity. they are cleaning it up a little bit. this quarter was a little less noisy than the previous ones. they have accounting differences where they have market related adjustments and that makes it tougher to get a clean comparison with other banks here

you are starting to see that turn after years of legal expenses being the biggest thing you had to look through. >> you need to hear a concrete plan of how they will grow >> i think there is something in place you can achieve as long as you manage legacy portfolio. it has been managed down for the last several quarters. quality is very high. they are historically low. it will be more of the same. it has been replaced by high-quality loans. looking past 2016, the asset

quality trend has been improving since 2009. it will reverse and banks will have to put on revisions higher than losses. i would like to hear him talk about how he will combat that. question isther moynahan just arrived, his challenge to chairmanship. he is chairman and ceo and there is no question over that. he changed up his board to the executive ranks. improve that operational growth. bank as opposed to cleaning up. >> part of that is what comes first, credit quality and interest rates. they had their first call today, they had solidified some of the ranks.

one thing we will want to hear , they did not get a lot of color on the call about that. certainly, a lot of anticipation for, can bank of america basically get a clean bill of health and return the capital it wants to return? were $6gal costs billion. >> a much lower number, closer to 200 million. that is everything thrown into one year. they ended the year over 16 billion dollars. i think the large chunks are done. we are still seeing some little issues pop up. we saw jpmorgan was higher than some people expected, over i think $2 billion yesterday. every now and then, you will see

that. analysts have said this is the new normal. stuff isig mortgage done, there will be higher legal charges. we have seen you cannot really rely on capital markets and trading. it is uncertain and he do not know what will happen from one quarter to the next. it will come from wants. it has acquired assets from what iselectric care at bank of america's distinction when it comes to loans? >> they have been doing out there global wealth and loan out of corporate. i think they will be trying to grow that. once ryan went and took over, his first order of business was to get out of bed really on the core

business. focus on organic growth going forward. i guess i am still in a complacency attitude. thank you so much for joining us. alix: you guys are sticking around because we want your reaction after we speak with brian monahan. scarlet: he will be speaking with us shortly with. schatzker. the ceo of walmart is also after the company slashed its earnings forecast for next year. mark parker of nike will be joining us to give us his take on what lies ahead. ♪

from now, moments erik schatzker will interview brian moynihan. hi,.. a preview of what to expect. erik: he has been transforming the bank for more than five years already. no bank on wall street is knocking the lights out. bank of america had a second solid quarter. you see the stock trading up. a lot of questions on how it will keep the lid on expenses and whether those need to be cut further. i'm asking those questions and many more if you minister from now. alix: we will definitely be looking forward to that in a few minutes. before the results of

other big banks coming up, notably citigroup, goldman sachs, and morgan stanley in the coming days. time now for a look of some of the biggest stories scarlet: around the world now. scarlet: turned down the job. one of those considered to replace the ceo. instead of coming to the u.s., they leave altogether. alix: sales rose less than forecast, .1%. the ceo is still optimistic more ofnsumers spending the savings they accumulated from the drop in gas prices. here is john stumpf on the third quarter conference call this morning. low energy prices negatively impacting certain that this of the economy have provided a welcome boost consumers with many now beginning to redirect savings into purchasing goods and

services. the latest results beat estimates. consumer spending accounts are of scarlet: activity. scarlet:scarlet: the bond market is skeptical -- less than one in three chance. the probability for march has declined to about 50%. you can always get more business news at bloomberg.com. warning that profits will fall sharply in the next fiscal year. the surprise warning shocked investors and sent shares tumbling. stephanie ruhle and david are live right now as walmart'ceo at the new york stock exchange. stephanie, we will send it to you. stock is already down 9%. we have not seen a decline like this in seven years.

wall street is watching. >> we're here today to talk about the future of the company. a long meeting. investors --some investments in people and technology. the market reacted to news that has been in the market. we announced the big numbers and we wait -- raise our starting wage nine dollars and next year, to $10 and that is a big pressure point on top of the economic investment. we described how we will win in the future and we win by bringing it all together. classifying someone who invests and walmart today, while i want to do something that will take three years to really get a payoff? >> next year in particular is where the pressure point is. we have got to get the company positioned to serve the customers in the long term. we're building a technology company into walmart.

with investments we are making at store level, it creates short-term pressure. >> were you surprised by the reaction? >> not entirely. , this0 wage investment year, we put over a billion dollars in our stores. math in the was the multiple. time will tell but it was information that was out there. our strategy is to win with customers. our u.s. stores that have gone from being 17% more acceptable in february of this year to 67% now. making,stments we are the customers already see the benefit and by running great stores, it set the stage for price investments and other things to create the warmer that is at its best. that combined with digital, things like shopping and

commerce put us in a position to win. the year it is a pressure point. why would i buy your stock today ? why would my weight? >> we announced a $20 billion program.urchase to invest that in the next couple of years. we believe in the stock price. >> as you look forward into next year, where do you see gross potential and where dz challenges? >> we're really focused on the united states, north america, and china and particular. a lot of growth between those two markets. investments we are making help us be able to serve customers in a way that we can take advantage of the growth. the market next year will be at least as good as this year. stephanie: your margins are so small. will you rethink if this is the right strategy? you look at other stores that

say, we want to be aspirational and have higher end products. that has not been your mantra. do you want to change your strategy? >> we in the people business. what they will do and are already doing is to show that to our customers and create a better customer experience in the stores, which is what matters. you mentioned china. what you see in the data? real data, real-time. are you seeing consumer spending holding up in china? click there is pressure but not a complete tether to what you hear in the news and what you see in the stock market in china. we have supercenters in china. in shanghai earlier this year, we set the stage and china to seamless -- for customers. it delivered, picking up on the store depending on the circumstance so they can save time as well as money.

that will happen in china as well as here. you attributeld that to the cost structure and the changes you are making? >> it is a question of short-term versus long-term. is for thethis long-term and we will do what is necessary to win. a great asset and distribution points in stores. those together and we have a winning strateg the alternative would be to not invest. years ahead of time, walmart is so big, it is in jeopardy. if you grabbed the steering wheel and do what is necessary, we set ourselves up for a strong condition.

>> how do you think you will compete? is about leveraging the stores. we built the distribution another which was investment to create each for film and. will he put together with other distribution centers in the stores come we can allow the customer to order online and deliver to the house if it is not a food item, order online, we have got it going on in the country. you can pick it up in the parking lot in the store. it is about blending the channels together. the customer will not have to think about how that will choose to buy it. it is just there forever. or how do i want to take it up and deliver it? stephanie: do you need to rebrand yourself for us to think of these as a technology company? myn i think, where is

one-stop shop online, i go to amazon. not because i prefer it to walmart. it is just how consumers think. platform.to build the we have been known for a long time for price. we probably will make investment wantmmunicate that and we to make sure we had the right customer experience in place before we started to tell everyone about it. like i said with analysts today, if people in our stores clean up the house before they invite people over, that is what we have done. what i read on bloomberg news, the projections for profit or six to 12% range. down to four. if you took out your investments , apples to apples, where would you be?

of next year passes investment on top of the cause we have for business, $1.5 billion as our associates enjoy an increase of $10 minimum. we added department managers and did other things up to 75% of pressure. e-commerce, and some of it is in a price investment. stephanie: do you know who your customer is? we see a bigger push into organic groceries. we tried to go for a more diverse product line. >> we had the u.s. by income level. when you get a chance, come look at it. stephanie: if i do not know your customers, does the world? >> not everyone note -- lives in new york city. people know and love walmart. services,like the

yes. stephanie: you need shareholders to like it this week. >> we needed over time. if we do not win with customers and associates, you do not win shareholders. for me, and this is clear, i am excited and committed to what we're doing. so is the management team and the associates are buying them. we're doing the right thing. it will just take a little bit of time. >> thank you for being there. now back. alix: thank you very much. talking with the walmart ceo from the new york stock exchange. scarlet: let's go to erik schatzker live in charlotte, carolina with brian moynihan for an exclusive interview. sending it over to you now. erik: thank you. i'm here at bank of america headquarters.

good to see you. the thick of bank earnings season. quarters in a row, you had revenue north of $20 billion. you're averaging earnings of about $5 billion. over the past couple of years, more than a couple because you have debt -- had so much work to do. keep it up. >> you have to step back and think about what we were telling people. there was a core earnings power always there appeared to covered up by all the stuff. year, the quarters have continued to stack up. that does not mean they do not have market share to gain.

the markets keep moving around on everyone. what was there was there and now you are seeing in china through and the question is how can we the it shine through that. >> how much more money could the bank make in a better environment? >> a simple way to think about that is to think about, in the u.s., israel go up 100 basis points to fed funds rate and 3% 10 year treasury, a very low rate structure to make 4.6 billion pretax per year just for the first move. the incremental profit. and: a pretax basis over above what you are making out. brian: that is because, effectively, we have core franchises. we cannot charge customers so we pay five basis points across the franchise business and it cannot go down anymore. for almost six years, you

have been the ceo and you have been trying to get the company to a place. is it there yet? >> it is not where we want it. think about the last six years. share and quarter dollar share price today. we took $12 and charged on a per basis in the last five or six years to fix the mortgage prices in the hole left in all the different things. that is behind us now. capital ratios are where they should be. it has been fixed but the question is how good it could be and that is still ahead of us. i sit back and we go after and drive any see that every day and how we execute. we have eight businesses and six of them are the growth. two of the businesses have constraints on them.

in a general retail banking, we have to be careful to get the full relation of customers and markets. because we saw or we thought we we or maybe we saw more than should have seen, we thought there would be restrictions on capital and liquidity. but the other six businesses. that is why we are compliant already. that is why the buffers are lower to other people relative to the size. we serve investors well. a number one research platform in the u.s. just announced in the last few weeks. servingr six businesses iphone customers and wealthy consumers and middle market companies and small businesses, all of those just have to grow. that means more salespeople invested in those businesses. that is what you saw today. the headcount continues to work its way down. that is what we all talk about. the reality is in this quarter, we hired over 1000 new kids in from school.

1000 facing people. we let people out of the company. erik: if i compare bank of america to some of the other thes in the industry, comparison could still be more favorable. wells fargo has an efficiency ratio on interest expenses in a percentage in the order of six or 7% are you are in the order of 60. brian: there will be differences in business mixes. hours should be better and that will come. one of the issues is our income is compressed because of the thing we have to do a portfolio in the last few years. a second reason is we are still carrying 900 and a quarter of costs