hong kong. welcome to the bloomberg market day. from bloomberg world headquarters here in new york, good afternoon. i am betty liu. here is what we are watching this hour. walmart gets whacked as a surprised profit earning shot -- stuns investors. can the retail giant find new areas of growth? markets see red on the back of walmart and the poor retail sales numbers that came out this morning, however the lack -- the lackluster numbers are boosting bonds, and that's the fed will hold off interest rates raising. benefitingcandal other carmakers like general motors? we are one hour from the close of trading now. i want to head straight to the markets desk where bloomberg's julie hyman has the latest.

we felt we would see this rally on: crashed the party -- walmart crashed the party. worse, thats got better, now they are getting worse again. we are probably at the lows of the session across the major averages, especially for the dow, and that is due in part to walmart, coming out saying that earnings will fall by 6% to 12%, toding walmart shares down the worst one-day decline since 1998, at last check. really taking investors off guards with this news. the company spending more on buybacks, wages, e-commerce -- you will get details on that in a little bit. i've been looking at the charts for walmart versus amazon. amazon is the anti-story of walmart in some ways, although in others quite similar, in that both of them are investing in the business. here is the chart of amazon going back 10 years versus walmart.

this is a normalized basis, in other words accounting for percentage changes. see walmart has essentially flat lined amazon has climbed and client. there is another interest chart that a collar -- colleague of mine, peter, made for me. this is over the past 10 years as well. here is the zero line right here. as you can see, for the past 10 years, the bulk of the time walmart's market cap has been substantially larger than that of amazon until recently. now it is actually $50 billion smaller, even though sales still dwarfs that of amazon. the market cap, because of what has been happening with the stock rise, is now smaller. julie, the dow is the worst performer, but it is not just about walmart. julie: no. i am watching the deal to get out of jean minors.

-- dreamliner's. finally, a quick mention of apple -- apple is now 1.5%. lawsuit, two of all places, the university of wisconsin madison. the analyst at otr global says sales of the apple six s and success plus -- six as plus were moderate. betty: let's get a check of the headlines with mark crumpton. mark: betty, thank you very much. cnn says cnn presidential debate was seen by 15 million viewers, making it the highest rated ever. hillary clinton bernie sanders both declare it a success. political analysts say that window might be narrow and for a joe biden presidential run. none of the candidates mentioned the vice president by name. to announceexpected

his decision in the coming weeks. in a while, he says he is proud of fellow democrats who took the stage last night. bloomberg news asked him about the debate, the vice president said everyone of the candidates did well. in other news, the israeli government approved strict security measures following a surge of palestinian attacks, including giving local authorities permission to close off arab neighborhoods in jerusalem. seven israelis have been killed this month. the palestinian authority released a statement warning of what is called a deterioration of the security system. the associate -- the associated press says the death toll from the stampede during ahajj last than -- a hajj is higher the official saudi death count. wordis a look at first news right now are you can always watch the latest news on bloomberg.com. betty: thank you.

u.s. corporate earnings and made someinvestor day stock-movie news, as you just saw. as for how the markets are faring the rest of the quarter, can we draw conclusions thus far? i want to get to david joy, who joins us from boston. so, david, we all got shocked with the walmart news, but do you think earnings themselves are telling us anything about the markets and the quarter? going into the quarter, of course, expectations are it is a little bit early to draw sweeping conclusions other than to say that what we have heard so far entails a lot of revenue cost-cutting,t of and a lot of headwinds coming from the stronger dollar. those seem to be the three strong themes -- kind of a continuation of what we saw in the second quarter. i expect to see more of that as we work our way through this. indeedindeed, -- betty:

walmart warning about the stronger dollar, talking about that as a headwind, but also sales -- slowing sales -- the american consumer -- we have those numbers out from retail sales this morning, david. is that a warning sign that maybe the economy is not taking off the way we thought? asked thinkl, we the consumer is probably going to hang in there. quarter,in the third when numbers come out, we will see personal consumption somewhere in the 3.5% range, and probably a similar number in the fourth quarter. today's reset -- retail sales number was a little bit of a warning that maybe we could follow little bit short. betty: right. mr. joy: if it happens that would be a real ominous sign because that has been a bright spot in this recovery. betty: it absolutely has been. it is too early for you to call a bottom? mr. joy: yeah, no, i do not think so. i think a lot of this cyclical

bounce we have seen is more related to the dollar -- the dollar's weakness in the wake of the fed's decision to hold rates steady has made the dollar a little weaker, giving a boost to commodity prices, a boost to emerging market can -- currencies. that is a far cry from saying we see market acceleration anywhere. in fact, we see the opposite, things are slowing down. i think china is an important ingredient. we will see important numbers coming out of there in the coming days. betty: overnight we had important numbers as well. say you then, people see these retail numbers and producer prices, there is no way the fed will raise interest rates this year. what do you say? mr. joy: i agree with that. i think they cannot. in addition to concerns about china, the other item on their minds at the minutes the other day was slowing inflation. we may find out tomorrow that consumer prices year over year actually fell into negative territory. so, that is going to be a real

warning sign for the fed. i do not see them raising rates, maybe until march, at the earliest. betty: does that mean we reverted back to bad news is good news for the markets, then? maybe temporarily, but i do not think it is a sustainable condition. if the dollar continues to weaken with the fed on the sidelines for longer, maybe that lends support to the cyclical downs, but it will not be sustainable, in my view, for any duration, unless you start to see some economic followthrough, and we have not seen any signs of that. so, we could see a little bit of a continuation of this bounce, that i'm afraid it is probably going to be short lived. betty: so, are you still playing defensive? are you playing defensive? trimmed ourhave equity exposure back to neutral, feeling that unlike maybe three months ago, when we saw we would -- that we would see economic acceleration, we are just not getting it. we have trimmed exposure back to

neutral because we think the risks are now more balanced than they were back in june. are taking a wait-and-see approach. the other aspect is there is still a lot of bank stimulus, central bank stimulus, and prices are cheaper now. there are opportunities, but it is not compelling from a fundamental point of view right now. you.: david, thank david joy from a barrel price financial in boston on the markets. much more ahead on the bloomberg market day. back to walmart. one of the worst days ever for the shares after the retail giant stunning investors with a cut in the profit forecast. we will hear more from ceo doug mr. mcmillon: -- doug macmillan. why john thinks hillary clinton steamrolled over rivals. find out why gm is selling so many cars and trucks even though as we just saw broader retail sellers -- retail sales are

stagnating. ♪

good afternoon and welcome back to the bloomberg market day. it is time for the bloomberg business fl,ash stories in the news. facebook is said to be exploring asset trails. the company says it will pull the trigger only if it determines it will help the review process for the company's deal to buy office depot. our warren buffett's -- billionaire warren buffett's saw a plunge,away a one-to decline of more than $370 million. walmart's drop adds to other declines for warren buffett

42015. wells fargo, american express, and several other holdings are down for the year. eirs see a loss as well -- a paper loss. four members control more than half of the walmart shares. four shareholders are among the years worst-performing billionaires, holding their declined by a total of $39 billion since january -- totaling -- holding the declined by a total of $39 billion since january. you can get more business news and bloomberg.com. speaking of walmart, ceo doug put a positive 10 on his company and his stock when he spoke to david westin and stephanie ruhle. mr. mcmillon: part of what we announced with a $20 billion share repurchase program and it is our intent to invest that in the next couple of years. we believe in our stock price and you see it because we are putting our money where our mouth is. betty: gentleness with more is

our bloomberg news reporter who covers walmart, shannon pettypiece. shannon: it is interesting that you mention the walton family. they are the largest owners of walmart and they are suffering big losses. the walton family is on the board. the son-in-law is the chairman of the board. the family is very involved in what is going on here, and you can assume they have signed off on everything happening with the company right now. a lot of these declines and earnings that we are going to be seeing the year, and with stagnant growth over the next couple of years is because the company is investing in employees by raising wages. it was a $9 million minimum this year, a $10 million -- $10 minimum next year. the company line is you have to spend money to make money. i'm sure it would be great if sales are growing fast enough to offset those costs, but they say they think this is the right thing to do, this is what they

need to do to grow the company in the long-term, so they are going to do it. every other investor other than the walton's have to deal with it. betty: they have to eat the losses, then. why did this one have to -- why did this one take everyone by surprise and -- surprise, though? shannon: i was asking investors if they were surprised, and a lot of investors expected to see a return to growth, they were looking for the walmart growth story to come out of here. i think, maybe, they underestimated the labor cost that was going to be required, underestimated how much e-commerce -- that investment was going to be -- and also, sales are not going to be growing fast enough to offset spending that is going on. betty: but, where walmart's projections out of line from one analysts were projecting in terms of the economy, economic growth, sales growth? really had nott given -- this is the first time

they have given -- what they did today, a three-year outlook. most companies go quarter by quarter. this was the first time they, sort of, laid out, longer-term, what do things look like. that was, in their entirety, analysts could read into models and tweak things, but seeing the entirety, i think people thought there would be more growth sooner. you can look back, and hindsight is 20/20, but you can look back and say investors should not have thought cleaning up the problems walmart has worked when to be cheap and easy. betty: shannon: -- betty: right. shannon: it has been known for years there were problems with cleanliness in stores, poor customer service, lagging online. this was not an easy fix. betty: doug, who we showed earlier was at the next act exchange, talked a little bit more about that investment and i want you to listen to what he said about that. year'sillon: 75% of next

investment, on top of the cost we have in our business, is related to people. toy will enjoy an increase $10 minimum starting wage rate. the rest of it is in e-commerce. some of it is in a price investment that we intend to make next year. betty: what does that mean -- a price investment? shannon: lowering prices. i asked the same thing. betty: i hate that kind of corporate language. basically raising prices. they are losing their edge. he talked about this investment in people. they really believe if they pay their workers more, if they are able to attract higher quality workers, that will mean better stores and better sales. they really believe that. betty: better talent. shannon: they say they have early data to back that up. it is a little bit of a gamble, a lot of money, but they are

raising wages, and a lot of retailers are doing the same, so how competitive that will be is still a question. betty: shannon, thank you. shannon pettypiece, our bloomberg news u.s. consumer reporter, covering walmart. hillary clinton faced her rivals for the first time in vegas. why her debates with barack obama paid off last night. ♪

welcome back to the bloomberg market day. i am betty liu. last night, the democratic candidates duped it out on the debate stage -- did you watch that in vegas? they covered many issues, including the economy and capitalism. mrs. clinton: when i think about capitalism, i think about all of the small businesses that were started because we have the opportunity and the freedom in our country for people to do that and to make a good living for themselves and their

families, and i do not think we should confuse what we have to do every so often in america, which is save capitalism from itself. course, they took the opportunity to go after each other's political record. senator chafee: you are looking at someone made the poor decision to go into iraq when there was no evidence of weapons of mass destruction, and i know because i did my homework, but that is an indication of how someone will perform in the future, and that is important. betty: the real highlight came from bernie sanders. sen. sanders: the american people are sick and tired of hearing about your damn e-mails. mrs. clinton: thank you, me, too. sen. sanders: let's talk about the real issues facing americans. betty: no disagreement there. we are joined by john. i was reading your tweets. what was your overall impression

-- the anything change after last night? john: these debates are always defining moments so we could play roulette. i think you would be good look for me at the tables if you were here. betty: don't bet on that. on betty't go all in liu. it was a big night. it started relatively late compared to republicans. forcrats have been excited a while. the biggest question is how was really clinton going to do given that she is the front-runner, the most at stake. she has had a horrible year even though she is the front-runner. last night, she went out and she performed really, really, really well. all of her experience as a presidential debate or came through. i wrote, as you know, that she, sort of, ran the table on all of her rivals, and she was the front-runner coming in, but she is a stronger front-runner coming out. bernie sanders was a alternative

coming in, but a weaker alternative coming up. martin o'malley did ok. the other two were asterix when they walked in, and afterthoughts when they walked out. betty: well-point. i know you also mentioned, john, that her 2008 round of debates really helped her this time. you saw that evidence? john: i think so. i talked to hard -- martin o'malley, the morning after the debate, and he had done other debates, but he admitted he was nervous getting up in front of multimillions of television viewers having to master all of this material. hillary clinton, knowing how to do debate prep, having them as before, knowing how to study for this, knowing how to absorb facts, and then forget about them, and get into a natural rhythm, those are things you can do when you have experience and your done it before. much harder for someone who has done it -- who is doing it for

the first time, and you can see that in bernie sanders, looked exasperated, unprepared. obvious a, the other 3 -- they will all be better the second time around, but hillary clinton has the advantage of knowing what to do. she definitely looked confident compared to them. you cover the republican debates. how do you compare the two, john? john: the biggest comparison will be obvious -- the difference between 10 people on stage and five people on stage. the biggest problem with the republican debate substantively is they have to move so quickly, you do not get today given to any issue and have a substantial, lengthy exchange and any policy issue. last night, you saw a fair amount of that. these democrats spent a lot of time going pretty deep, for a television show, into their agreements and discriminate on issues of substance. republican debates so far,

because of a number of people on stage, have been a little more like a carnival, like a reality show. this was more like a traditional political, or presidential debate. isty: do you think anybody going to drop out after this debate, or is any news going to happen after this? you never know, but i have been confused and confounded by y lincoln chafee and jim webb are in the race at all. it is not because they're not serious people who have done rings of substance, but they do not seem to be campaigning very hard, they are not raising a lot of money. they are not doing much. most people who run for president, even if you think it is foolish, they are doing events every day, meeting with donors, doing stuff. those guys and i'm doing for a. i do not know why they are there. it is not clear why they are there. tomight make sense for them not be there in the future. i'm not telling them to drop out, but it is not clear exactly what they think they are getting out of this. one of the questions going forward is whether the democrats will continue to let all five of them be on stage, or whether

they will adjust the rules, as the republicans have, before the next debate, to try to whittle it down to the three more serious candidate who might, in some conceivable scenario, have the chance of being the nominee. betty: john, thank you. john heilemann, who covered the debate for us last night in vegas. still ahead on the bloomberg market day, carmakers are having a banner sales year despite americans being cautious with their money, but how exactly are they doing it? we will ask

♪ betty: more bad news in the hedge fund world, on the main merger partners saying that

september return sales were at 6%, cutting the 2015 gain to just there .6%. it has been on the rise, paulson rebounding from their second worst year ever. they have seen returns fall and overall returns cut to just under 1%. so, more bad news for hedge funds, earlier this week we heard another group closing down their macro fund. and mark has more from the news desk. mark: the white house says about 90 service members are heading to cameron to conduct airborne intelligence surveillance and reconnaissance. it is one of several african countries battling the insurgent groups from local iran. president obama notified

outgoing house acre -- speaker john boehner that troops will be sent. between russia and united states and -- are being attributed to russian hackers. the u.s. congress and new york .imes and a german steel plant reports from washington said that the president is again troopsending 5000 u.s. from afghanistan, he had planned to withdraw all servicemen from their before his term ends, but there are threats to security. theginny myers restaurants, hospitality group, including the union square cafe will illuminate the practice. this is a sweeping change in how employees are rewarded.

they are eliminating tipping. you can find more on bloomberg.com. betty: the market closes in less than 30 minutes, julie has more breaking news for us. hours intopast 24 the semiconductor industry, we have those seeking buyers. they are talking about a possible combination, giving more skill in an industry that is obviously consolidating. this is from people who have knowledge of the matter. headline,sed this maxim was working they have a market value of about $10 billion. you what has happened with their shares on this news, analog devices having a similar

reaction to this is the third we have seen in the last 24 hours. yesterday we learned that sandisk was looking or potential buyers, others also. earlier today, fairchild semiconductor was looking for a buyer, as well. ors is already a record year semiconductor -- for conductor deals. intel is already in the process of buying all terra. and let's get to some big earnings. running through them quickly. we have been watching the banks, jpmorgan falling after prior estimates. this quarter, it is already looking a little weak. and bank of america has the worst of the year, but it is the only one to rise today.

and finally, wells fargo, they are also looking relatively wrong, but it is selling off today. also have to mention intel, the earnings of horse came out earlier today, shares have been falling. now they are actually rising, perhaps there is there is continuing -- perhaps because there is this continuing interest in buying. they are looking at the mix, but again we are looking at shares rebounded into the close. betty: thank you so much. volkswagen in like someone looks , hasht into reconstruction already resigned. automakers are having a better sales year. how exactly are they doing it? how are they selling more cars?

executive vice president of gm, mark roy. >> to pleasure talking to you mark and having you here. this is in front of this car that has been blazing a trail or midsize pickups. sales are up, one could argue for the canyon. how are you doing so well? how is auto industry doing so well, does it seem like americans are buying? >> let's start with the truck, we have sort of sold-out with this. i wish i had a nickel for every buddy who said this was crazy for doing this. this has a lot of product in it, we're doing this segment. have a sure economy, second to none. readysel, we are getting

to launch another one. so we are excited. >> everyone who does not understand will say, aren't diesels over, but obviously there's a lot more torque and a lot cleaner diesel. >> it is compliant, we have certification in the economy and we are almost done. i think that the truck diesel is it different than the car diesel, especially in the united aids. we sold a lot of these. people want diesel. and by the way, this is the most refined diesel we have done in trucks, and we have clever engineering to do that, so we are excited to show everybody how to drive it and we are waiting on it. >> can you get it in a stick?

>> not the diesel, but a work truck. ceo already said that gm has not engaged in certain devices like volkswagen did, but how would you assure that this new gm will comply, because i am their ceo didn't know that will slide was doing this either? >> in the last five years we have had a board that looks at every certification that we do and looks at the software, how it is calibrated and how it is produced. we have that in place and that compliance board looks at it, it is not me, is the board that looks at how is -- how it is done. >> we will get back to the

products. a lot of people thought that you were crazy for bringing this midsize truck, but a lot of journalists have called for this, a lot of real car guys. i think that gm has been the int old in bringing -- bold bringing out things that people may not think will have success. a lot of models have been successful. where else can you go with that? vette?e or that -- cor i mean, a mid-engine. and you have said other things. sketches. theoretical all i can say is you have to wait and see. a lot of people thought that we withrazy with the encore, spark, those are things that didn't exist. but we have them based on what customer said, so we have a

solid market in those markets. we are going to keep doing that in places where people are asking for things that may not recognized. it is a great system. 18 -- thinking corvette because he can put a different engine in there. and about gas, how do you get there? >> we have great performance cars. and we have a great truck here too. oris great with gasoline diesel. if you look at what we're doing, this is a 200 mile plus range car, the battery costs are down hour, $145 per kilowatt we are first and lowest cost, because we invest in partners and we look at battery

chemistry. we have done that with this. ,f you look at the range, these case, so these are the things we are innovative in, we have the technology to do it. i don't know if you were watching, but on bloomberg the other day, a philanthropist said that he is planning on buying the new volt. you have customers already. >> we do and we have the most passionate customer base, number two in the industry. much people, they gave so back to us for the second round, so have a great customer base for these cars. it is exciting. >> mark, thank you so much. we look forward to these cars.

matt miller there in front of bloomberg headquarters. much more ahead in the next 20 minutes. where what walmart stock go? they are suffering one of the worst declines in 15 years. it is a forecast that has shocked investors. and today has been a mid- -- mixed bag. we will look at citigroup, netflix, goldman sachs. coming up. ♪

♪ betty: good afternoon, welcome back. it is time for the biggest

business stories here it is the question everyone is asking, will the fed raise rates before the end of the year. the bond market is more skeptical. .ates have fallen they believe there is a 50-50 chance for a rate hike by march. and more problems for volkswagen, they have told regulators that there is an additional software that is a fact -- affect. they are try to figure out if this is a second attempt by the company to cheat. and looking for a buyer for goldman sachs. they are already scouting recruiters on some i conviction i-conduction. shares are already down this year. in you can always get more business news at bloomberg.com. markets are down, they are

bouncing around. we will look at where walmart is. there was also a lackluster morning, investors are growing more confident that the fed will hold off on a raise of rates or it -- rates. joe, what's we read into this? joe: two interesting pieces of retail news this morning. it was weak, not terrible when you take out a bunch of numbers. i saw people arguing that gas prices, cheap gas prices blood -- bled through two other stuff. there were not that hot, but not that strong. then we have the walmart bombshell, they are cutting earnings by 2017. it does not seem to be macro related, this seems pacific to walmart -- specific to walmart.

costs are going up, they have talked about how they will pay people more. and the other thing is their lunch is getting eaten online, so they have to invest more in the stores, make them a better.. go digital. i think that walmart got him -- slammed, but we didn't see too much bleed into the market. i think that mostly people think the walmart thing is a walmart dory, and that is a much -- and not much with the rest of the economy. betty: i know we said yesterday, fedd signals about the raising rates. what do we expect to hear? numberd that week ppi this morning, this is not the best time to raise because of

inflation. lack of inflation pressure. the interesting story today that people are talking about is that fed governorsd -- said that they do not think a rate hike this year makes sense. still sounds like they are in time -- inclined to go this year, but it is interesting this the -- see, maybe they are wondering there is dissent. the interesting thing, the market moving away from the fed. numbers are implying closer to 3% of a hike this year. even by march. now april next year. so again you have fewer and fewer people believing them. betty: we will see in six months, why not?

thank you, joe. with thebe speaking ceo of wells fargo coming up on "what'd you miss?" much more ahead, the bloomberg market day, we are looking at the close of market and continuing to monitor how walmart loses. we will be right back. -- walmart closes. ♪

♪ betty: welcome back, the close is moments away, we have earnings coming out. julie has the market check. julie: it has been busy, all of it means that we are looking at the wind across -- declines across the board. it was like we will close near the lows. the groups in the s&p 500, even

shown stocksave today, it looks like staples was lost in theand shuffle, those retail numbers. worst man anticipated -- than anticipated. oil prices are lower, but energy stocks unbowed. in the this activity semi conductor industry, i was talking about it a few minutes ago. in this -- sandisk looking for a buyer. semi conductor also looking for a buyer, according to reports. and in the past 20 minutes, it looks like analog devices and maxi are inm talks. that is causing stocks to rise. and trip advisor on the move today, the best single performer

today in the s&p 500. it looks like they are rallying the most in eight months after they announced a deal, in which you can use booking.com on trip advisor. other sites trading lower. we'll have more, in just a few minutes. betty: julie, thank you. heading into the close, i will bring in another voice. art hogan joins us now from boston. what do you make of today? >> it is interesting, we have some headwinds we have to get through. those are coalescing around a changing economy, when does the fed list off? -- lift off? i certainly think we can move higher. we will just dance around the

stories. almart, we are tracking oil closely. and the last two weeks oil and energy have been top performers, a lot of that do with falling prices. and another story, looks like the democratic event last night really have people worried about health care stocks. so we are bouncing off the bottom there. in general, this will are stories -- smaller stories has taken over. betty: so you don't read i anything into walmart? >> they are thinking about their future, they have a big competitor with amazon, they were forced into jumping into the 21st century. so it is constructive, but it is in the longer run, not the short

run. we might see some damage with the stock. it is one of those things that you say, two years from now, they made some really good decisions. this: we are talking about with joe weisenthal, this could be a specific walmart thing, rather than a red or the economy -- flag for the economy. looking at prices, are you pushing back expectations for when the fed will raise rates? onconsensus is coalescing april of next year, march might be a lock. what they need to do, they have already done the westoff -- lift off, but i think the obvious time would have june. we had it global economic slowdown, china, you are never any place where this is a perfect time to do this. , they should've said we will

hit 25 basis points. this is a gradual liftoff after that. then it news have been gradual. importantly, that didn't happen. they were looking at cases at different points in time. i think that is overhang. betty: it does seem that way. is theback to bad news news for the market? >> i don't think so, if for the fact that the jobs number that came out on writing certainly react that way to area -- react ed that way. the market hold off and then we rallied and that rally like celebrating a new monetary policy change for a small amount of time. what really happened i think, that is all well and good, but we have done damage already.

valuations are looking more attractive. ,f you're looking at next here the fair market multiple on that, stocks are fairly attractive. think where we are at, we are in a tight race, sitting on endlevel with the upper being 2020. we will stay in that range until we get clear indications from the economy that it is ill -- still moving. betty: thank you, art. "what'd you miss?" is next. ♪

♪ scarlet: moments away from the closing bell. joe: i am joe weisenthal. alix: and i am alix steel.

scarlet: u.s. stocks closing lower, being dragged down by walmart. joe: the question is, "what'd you miss?" scarlet: we will start with the ugly. walmart falling the most in 25 years in it is a serious drag. and we will talk to the cfo of wells fargo. -- onend why the highest of the highest armies -- performing stocks ever, standing out from the pack. --walmart county 30% accounting for 30% of a decline. as a result, you see u.s. stocks with back-to-back losses. the sales data