scarlet: good afternoon. alix: housing starts posted big gains in september. activist investor already promoting change at yum! brands. alix: and the value of an mba. it turns out that for men, it is worth thousands of more dollars than it is for women. we want to headfirst to julie hyman who has got the latest on the markets. red arrows all around for now. julie: yes, but typical of what we have seen in recent days. there is not an enormous amount of movement on the macro side because everyone is what -- is focusing on earnings.

yes, they are red but they have been fluctuating in this narrow range. move of 1% inen a the last nine days. a mixed picture. imap shares are falling. on the health-care front, i want to bring up once again -- i know it is a broken record -- the biotech group. down again today. they are a bunch of individual small cap stocks that are falling. that is helping drag down the overall average. is the large-cap biotech doing poorly as well. scarlet: thank you so much. we need to keep an eye on those biotech's. alix: we have breaking news from mark crumpton. agricole wolf a 187

million dollars and install a monitor for new york banking law violations. it is in connection with transactions between 2003 and 2008 with countries who were subject to u.s. sanctions. credit agricole will also take against a-- action manager who continues to be employed at the bank. new pollsws, two has hillary clinton ahead. mrs. clinton leads the primary field with 49% support. that is compared with 29% for senator sanders at 15% for vice president joe biden. mrs. clinton leads with the support of 54% in a washington post-abc poll, compared to 40

pre--- compared to 42% in september. whether vice president biden will join the race is increasingly unclear. vice president biden: i thought i could help the more as chairman of the foreign relations committee. he said i need to know right away. i said, no, i don't want to do this. my was on a train. i spend 80% of my life on the train. [laughter] he said, how much time do you need? i said i don't need in a time. he said, go on home and talk it over with your family and get back to me. my family was right and made the best decision of my political career, to join the president. mark: the vice president will make an announcement by the end of the week. meanwhile, former virginia senator jim webb is reportedly

dropping out of the democratic presidential race. mr. webb is considering launching an independent it instead. he is expected to hold a news conference later today. wisconsin commerce men paul ryan is reportedly more open to becoming the next speaker of the house. -- wisconsin -- wisconsin congressman paul ryan is reportedly more open to becoming the next speaker of the house. risk -- willill reportedly start tomorrow. the house is back in session today. you can know is find the latest news on bloomberg.com. in eco-data, new home construction headed higher in september. housing starts climbed 6.5% last month, the second highest level in eight years and also beating

economists' estimates. alix: when you get data like this, huge numbers, do you believe it? karl: on further inspection, you see that multifamily starts and permits both song dramatically in opposite directions. you have one serious move one way by serious amounts. the core of this report is single family construction. that was more of a steady as she goes story, consistent with the has sector that is modeling along. it is playing a bit part in the economic cycle right now. not a major driver. and a janet yellen has acknowledged as much. scarlet: what does that mean for

the recovery? does that make it a more reliable metric in housing question mark their quality to the rebound? carl: there is efficiency of scale. it has to have a larger economic bang for your buck when there is construction in the single family sector. that is modeling along. the multi-has been swinging all over. heart of the story has been some tax provisions which were set to expire earlier this summer. they didn't expire. but that lead people to rush to was permits and then there a hangover afterwards. so it has been a yo-yo over that period. when you have rent rates soar, you look at the cpi. carl: when we look at the core consumer price index, we see out right to deflation. service costs outside of your rent payment showing very little upward trajectory as well. really, all of that momentum is

due to what you are seeing in the rental sector. werlet: the charge that showed, the fed has not raised rates when the inflation is that low. carl: the fed funds rate versus headline cpi -- the fed always talks about core inflation and they track that, to be sure. however, we look at headline inflation and it number of members have suggested that it is come but stated to justify a rebound in the inflation outlook with the headline so my -- so far off the mark. it is unusual to be a zero or negative territory. only 3% or 4% of the time over the last 30 years or so the fed has never raised rates with inflation at such a low level. so either they are focusing -- so where they are focusing on the core, it makes it difficult with the headline. scarlet: how long does it take to correct itself or adjust itself? carl: the big driver is energy

prices. we are not seeing it yet. gas prices remain below a year ago levels. we saw very cheap gasoline last winter. the year on your comparison should shrink. nevertheless, it is not moving into positive territory anytime soon. this slow headline number will continue to be a problem and complicate the fed's exit. we have a fed meeting next week, october, a dead meeting at this point. december becoming more and more dead. another difficult thing to reconcile is the decrease in employment. it has not dipped into retail sales yet when you strip out gasoline sales. when does it kind of do that? potentiale are some green shoots that it is filtering through a we saw a disappointing retail sales report last week.

forecasters looking at the economy, the fear is that, well, the energy sector is in bad shape, the export sector is benefiting from the strong seear, but we should international developments depending on consumer spending and domestic economic activity. scarlet: aloe grass prices. carl: the vulnerable point in that scenario is when the jobs engine gets hurt by the broader economic landscape. employment reports the last two months. i think we will see more the same october. what would but -- but what we see in that chart, employment gains actually declined for the first time since 2013 on month on month terms. that is leading the year on year rate to start to decelerate. if consumer income slows down, that could very well translate into slower consumer spending. suddenly, that one inch of economic growth that was posted be resilient could also show some signs of weakness.

they will spend on the holiday season if they have the income rolling in. that's getting squeezed ever so slightly. income prospects are still decent. so it's ok. so it is a case of good been out of -- good but not great. the curve of the vix is quite street. is that chart a reaction to the fed? carl: the fed will deny that they are knology that chart. but they will look at broader conditions in making their -- deny that they are acknowledging that chart. what they will look at a broader conditions in making their decisions. i think what we are facing now in the economy is employers are becoming increasingly cautious towards the outlook.

that means they are going to rein in spending on capital goods and investment, but also on labor. we saw evidence of that in the last two jobs reports. down toone is hunkering a more cautious, slower pace, we are certainly not going to be going at the rate that gives the fed confidence that now is a time to raise rates. yes, the fed does look at my vix curve chart. coming up, yum! brands taking action. the restaurant giant will spin off its china business into a separate company just days after keith meister joined the board. alix: a massive political shift in canada as justin trudeau is set to become prime minister. what does it mean for the canadian economy? scarlet: has diamonds lost the sparkle? there are conflicting views on where prices are headed for the sparkling gem. ♪

it is time now for the bloomberg is less flash. yum! brands is spinning off its chinese business after three decades. yum! brands is separating its china business from its u.s. operation. yum china will become exclusive rights to kfc, pizza hut, and taco bell. we will have more on this later. scarlet: amazon says it will hire 100,000 people for the holiday season. that is up 25% from last year. it says it will be looking for help across the country. companies say they expect

to hire the same amount of people as last year. alix: new york is settling a long-running dispute with big tobacco. the state's attorney general is releasing $550 million that has been in escrow for a decade tobaccooopholes companies used to avoid payments have now been closed. the money dates back to a deal reached back in 1998 to compensate for the cost of smoking. you can now is get more business news at bloomberg.com scarlet: we want -- at bloomberg.com. scarlet: we want to get to julie hyman. julie: looking at a trio of steelmakers. apparently the ceo of u.s. still gave an interview to an industry publication and said that the optimism that he expressed at the beginning of the year about the second half of the year was perhaps misplaced. "i was wrong," he is said in the magazine. expected those conditions to improve.

but within about 30 days of that statement, "we saw dramatic collapse of everything in the other direction." the company is out with its earnings on november 3. allocating technologies, the company coming out with a loss per share of $.29. it is also cutting its x punchers for the year. it sees no significant improvement until 2016. toomberg extent -- i want look at this chart, a four-year .hart of steel it tries to be a predictor of steel company profitability. here is the steel price. here's the profitability indicator. you can see a downward trajectory so far this year. that would have applications for those u.s. still makers. it is not a great market for international steelmakers.

posco has had a decline. alix: as we have been reporting, ! chinaill become -- yum kfc, andxclusive for taco bell. scarlet: is it to unlock value from the asian business or to the part of the business, the china business, which has been a little bit volatile and dragging down the results overall? i think it has been a little bit of both. it has taken longer than they

expected to get them back on track. now they are saying we will get rid of those restaurants. we will not on them. they will be in franchisees eventually hopefully get those sales coming back. taco bell has been a great success story in the u.s.. it is connected with millenial customers. they are serving beer and wine in some locations. they have digital payments and mobile stuff. this is a chance to get people a chance to invest in that. big elephant in the room is keith meister. he also now has a seat on the board. what part did he play in that? the coreis one of investors in the last two years. he is 42 years old. icahnhalf the age of carl himself. looking back over the last 10

years or so, he was ceo at icon enterprises in his mid-30's. right now, he is basically the newest director for yum. he was named that last thursday. shares shot up by about 6%. you can see the reflection in terms of investor sentiment. in terms of how cortex relates corvex relates to a 5% stake in yum and there is a lot of moving going on. craig, back to the chicken supplier for yum! brands in china. that is one reason why same-store sales in china have been lagging. but there is local competition coming to the four. craig: that's right. competition, maybe

some fatigue with some of those brands. a lot of excitement when they first showed up. so they have been around. is maybe with mcdonald's in the u.s., newer brands that young people are adjusted in. there are some macro economics in china. there is a confluence of factors that have caused them to struggle. alix: the increased growth that once keith meister came on board, there is short interest in part because of the china overhang, not necessarily fundamentals. in your research, what do analysts say? a little too early to tell, but some kind of restructuring was necessary in this company. it was the vestiges of pepsico wanting to get out of the restaurant business. there is no reason that this company is set up the way it was

set up. and it's more successful in the u.s. i think it was an attempt by them to clean that up into marriage with these two companies that both will have some appeal to investors in different ways. y, do we know what else keith meister is interested in? remy: not yet. he first said that there is clear and an obvious way to get more value out of shareholders. so this has been on his mind for some time. scarlet: yum was one of the early pioneers with fast food restaurants in china. maybe that fatigue is playing a role. alix: thank you very much. ahead, shortl coverings leading october rally? and jpmorgan is saying think again. alix: blue my mind.

scarlet: great note coming up. ♪

scarlet: welcome back to the bloomberg market day. we are in midtown manhattan, but that is a beautiful shot of san francisco. alix: is that the sunset coming up -- the sun coming up? scarlet: it is pretty picturesque. alix: there is a lot of skepticism surrounding the reversion rally in the stock. investors are unwinding trades. this is driving the advance we have seen in october. when you buy back the borrowed

shares, negative bets would be driving that recent gains. but short interest hasn't budged. if you look at the chart, short interest is about 3% of all shares outstanding, roughly the same of the bottom of the august selloff. measureorgan did was the utilization rate, the amount of stock that traders borrow, the first step in a short sale, with the amount of stock available at institutions for lending. it is a must 11%, nearly a three-year high. now you also have evidence that there is some buying power that people didn't really think was -- existed. alix: this was a big surprise to me. on little fundamentals, when the fed isn't going to move anytime soon -- scarlet: no more clarity than before. you would have thought that short covering was the case, but it wasn't. did loseraid, if you

loose the short trade, you would buy back $90 billion worth of stock. meaning that you could see a rally that is $90 billion into the market to unwind these trades. that could be a huge buzz factor for the market. scarlet: something that no one had anticipated. one of the reason that it was theing that rally is that shortest stocks had surged 9% in late september. people were saying that this is short covering driving this rally. but the group is only up 7% since then. alix: not that much. great note. we loved it and what's more coming up on bloomberg market day. ♪ 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. scarlet: let's start with the headlines.

we check in with mark crumpton. mark: thank you both so much. is making a surprise visit to israel and the palestinian territories. it is a high-profile gamble in an effort to bring an end to a month-long wave of violence. ki-moon: i- ban support all efforts to lower tensions and prevent the situation from spinning out of control. comes after at series of palestinian attacks, most of which have involved stabbings, that have caused panic across israel and raise fears of the region is on the edge of a round of new violence. in canada, justin trudeau's has construction and marijuana stocks rising. he will increase spending on infrastructure. he has promised to legalize and regulate marijuana. despite the u.s. decision to

keep thousands of troops in afghanistan, their government could be looking to local militias for backup against the taliban. seated press reports they tapped and notorious former warlord to help retake a -- the associated press reports they tapped a notorious former warlord to help retake an area. the inclusion of militias is raising serious questions about outsourcing security. newpentagon is selling four generation warships to saudi arabia. it may cost more than $11 billion. the saudis had asked for help improving the military after agreeing to back the new year deal with iran. ii is7 ferrari thomasina available on ebay for the starting price of $9 million. that's right, $9 million. this is the only thomasina actually available for a spin. only three of the cars were ever produced. destroyed in a

flood and thomasina iii is displayed in a museum in italy. you can always find the latest news on bloomberg.com. no truth to the rumor that matt miller has put a bid on that car. [laughter] scarlet: i was going to say, i don't see met anywhere in the newsroom. i'm sure he is salivating over it. trudeau's stunning election victory was pretty historic. his liberal party gained the most seats of any incoming government in the history of parliament. scarlet: joining us now from corey bolt, senior analyst at eurasia group. role thet about the economy played in trudeau's victory. the technical recession the canada had endured could not have helped stephen harper. but trudeau's policy positions entail deficit spending. corey: it turned out that the economy, whether it was in

technical recession or not, actually played little role in the selection. i think if it did, voters may to keep stephen harper in office. instead, they voted for change and set aside concerns they may have had about trudeau's vicious -- trudeau's ambitious spending plans. they voted for a new leader, a new generation. really, i don't think it economic woes turnout out to be that much of an issue in this election. alix: one of the biggest issues in canada is a lower oil prices. so much of canada's oil remains landlocked. part of the deal will be to get country.ut of the transportation pipelines, for example. what is the confidence in trudeau's government to do that? pretty low actually. trudeau has made it very clear that he is far more environmentally conscious than harper was. harper hailed from calgary, the

base of the canadian energy industry. trudeau is only one of the three major political party leaders who talked about a national climate change plan. such a thing that harper always suggested was the role of provinces and not the federal government. moreover, trudeau is fairly bearish towards pipeline construction. keystone, byr of keystone is in the hands of president obama down in washington. we don't think it is going to be approved anytime soon. scarlet: does that mean that these election results tell us something about the shift of economic power back to eastern provinces and away from the oil-producing provinces. especially with the week canadian dollar boosting canalis -- boosting canada's manufacturing? corey: i think there is real concerns about that. there is no real logistical mechanism to get the oil from alberta and saskatchewan to the coast or to u.s. refineries.

trudeau is not going to accelerate that process. energying said, the industry and natural resources more generally remain a significant part of the canadian economy. as for manufacturing, yes, it has rebounded somewhat but they're such underinvestment in the manufacturing sector after the 2008-2009 crisis that the simple notion that cheaper gas -- cheaperorry, fuel fuel prices would a judiciary bad has not materialized. alix: why hasn't the loony rebounded on this? why aren't we looking at a houston klein? instead, -- a huge decline? instead, the canadian dollar went up. corey: the canadian dollar has had a massive selloff towards the end of the year. it is at generational lows right now. as far as downward pressure, it is unclear how much lower a could go. i think when trudeau spells out

his details and starts moving forward with this quite ambitious spending plan, he is talking about spending another for -- another $145 billion in the next few years, you may see some downward pressure on the dollar. but i don't think that will be a prolonged downward pressure. scarlet: let's talk about trudeau himself. what expectations are placed on him and what will he have to live up to? corey: trudeau is not seen as onk or anolicy w intellectual heft. what he has done and managed to do is surround himself by a solid team of people, both public officials and his political staff. i think he has set out an ambitious platform. i would be shocked if trudeau himself wasn't pretty astonished at the result last night. as you said come in the opening, this is an historic result. to put that in context, 10 days ago, it looked almost certain

that none of the parties would get anything more than a minority government i.e., a plurality of seats, not an outright majority. that only did he do that, but managed to bring in one of the biggest majorities in the history of the country. i think trudeau is having a real moment of sinking in. not only is he promised mr., but he has a massive mandate. not only is he- prime minister, but he has a massive mandate. at 184.w, he is sitting you need 170 in canada to form a majority. scarlet: so it is a done deal for mr. trudeau. coming up in the next 20 minutes, it is getting real tough for the diamond business. demand has tanked in china due to the commodities slump. but is the worst over? do diamond prices have further to fall? scarlet: how much will an mba boost your earnings potential? an mba is worth far more to men than the fairer sex.

alix: i've got to be honest. i wasn't surprised about that. the first report on china currency manipulation since august. the treasury believes the u.n. is -- the yuan is below its value.

scarlet: welcome back. berm -- theor the bloomberg business flash. in health care, teen heat has rejected a proposal from amsurg. $2.5 million.

amsurg says team health rejected an offer last month. clearly, i can read. t-mobile netherlands could fetch as much as $6 million. global ise's melody interested in it would help the german carrier raise funds to reduce debt and buy wireless recurrences here the u.s.. scarlet: fedex agreeing to a six-year contract. fedex plans to partially offset the cost of the contract by adding more fuel-efficient planes to its fleet. you can always get more business news at bloomberg.com. alix: let's get a check in on the global markets. in asia, markets ended pretty mixed. stocks at their highest levels in too much after the service sector saw faster growth and margin debt. zeb eckert has more on one

corner the market the china bulls are revisiting. zeb: the gauges up 33% in mid-october from a september low. why are investors pouring cash into china's smallest, most volatile and most extensive stocks which now trade at 90 times profit? it comes down to an investor class suffering from "greed and short-term memory loss." includesk says it risque market debt were investment drives sentiment. now for a look at the european market close. ryan chilcote joins us now from london with more. ryan: we have some patches of green.

the cated, particularly for a -- the cared 40 down. the stoxx 600 fell today for the first time in four. the fall began at 9:00. the reason, at least one of them, is very report we got out from the ecb. the ecb said that banks lending to companies is going well effectively. good news for companies. prices, you share could say. this is one of those classic cases where good news might be bad news because it means perhaps there will be less qe down the road. one final thing to point out on the bright side of things is one company you may not have heard about, tnt express to courier company, shares up, best performer on the stoxx 600. up by more than 10% today. the reason for that is really simple.

today, we learned that the eu has no major objections, without any conditions, is repaired to accept federal express's purchase of tnt express. we learned fedex was interested in tnt express. scarlet: let's see what is moving in u.s. markets are now. for that, we will head over to the nasdaq. abigail: stocks are starting to turn a little bit more red at the nasdaq market site. we had a somewhat flat open. now the composite index is talking about -- is up about .6%. but we have two winners to look at. one of them is sandisk. this memory maker has been in the news quite a bit recently. today come on reports that it is in advanced talks to sell itself to western digital. sources are saying this could peren between $80 to $90 sandisk share and a deal could be announced this week.

if it is, it is the biggest ever and and eight year for semiconductors. -- biggest ever in a year for semiconductors. apple music is off to a solid start. apple music has 6.5 million paid users, 8.5 million in trial, and this beats expectations of 5 million paid subscribers by the end of october. ives sees apple music is a solid start. shares are up nearly 2%. scarlet: thank you so much. the economic slowdown in china has been rough on

commodities, from oil to iron ore as well as copper. and now the diamond market is feeling the pinch. scarlet: the long-term outlook may not be so graham. -- may not be so grim. guest: precious metals are reviled. metals are down. and yet you have companies like the dominion diamond corp., nearly 900 market cap with 300 million of net unrestricted free cash. and on a forward basis, you are looking at midteens, mid 20's free cash flow yield. those are opportunities out there that you don't get that often. stephanie: they have gone the clock cleaned, these diamond entities. right: yes. as de-stuffing goes through, the inventory chain, we will see prices going up. at these levels, these are stocks equitable. alix: our next guest says don't be so dazzled by the bling.

demand for diamonds may not pick up any time soon. at what point does the diamond industry clear the inventory overhang that it has in part due to the slowing demand from china? currenthe basis of the problems all started at the start of the year when expectations of chinese growth was far higher than what we have actually seen so far in 2015. if you look at the production data and how many diamonds are forally being kept behind the site holders of the beers and long-term contract holders, we are talking at an entry-level of 65% of global supply. that is a significant number. alix: it's a huge number. thatet: what happens to excess supply of diamonds? where is it held?

i imagine security would be a big expense. is one of thety largest exposes for the diamond companies, especially those that sell directly. the stones are either held in safes or on consignment or you will see a lot of the producers keeping the sounds -- the stones of the safest place, underground. alix: something we have seen another commodities is consumers -- is producers cut back production. what is the leadtime for the diamond industry? when does production get shut? kieron: the diamond industry has an unusually long investment cycle. from discovery through to production, you could see a time horizon of an excess of 15 to 20 years. taking production out of the cycle is so difficult. it actually would cost them more to cut production so therefore they continue to produce. scarlet: 15 to 20 years, how does that compare to other

commodities that you track? scarlet: alix: foil for shale, monster. deep sea, it is longer. but 15 to 20 is huge compared to other commodities. what does the diamond industry need to stabilize? and part, it is like gold. it is only worth what someone is willing to pay for it. : the industry itself has taken some strict measures. we have seen the diamond producers association come together. that is a collection of the major producers on a global basis. what they have tried to do is they are going to incentivize, look to increase marketing spend. we got debeers starting their marketing budget and looking for the chrisman and -- christmas and festival seasons. the only way to clear the backlog we are going to see is higher demand.

at the end of the day, retail is what is key here. retail, high demand -- if that doesn't come, do expect price to kleins? ifs -- price declines? price: we have seen declines depending how a kind of product you have look at. we're looking at 10% to 25%. the midstream cannot afford to acquire the goods from the producers. why would the retailers buy more goods if they have enough inventory? you are going to see more price declines in the absence of a retail pull. alix: thank you so much. scarlet: coming up, starting salaries for mba grads higher than ever. women, however, still earning less than men. surprise, surprise. we look at the numbers when we come back. ♪

alix: welcome back to the bloomberg market day. you are looking at a bit full day here in nursery. scarlet: -- in new york city. women mbas graduating at the top of the schools are still behind their male colleagues when he comes to salary. themberg businessweek found average starting salary for women with mbas was $90,000 compared to $105,000 for men. scarlet: that is a 7% a difference. but the gap widened even more six to eight years later, with women hauling and $35,000 less than men. here to talk of it is sheila. the pay gap is based on how these people get paid, right? then is a base salary and

there is discretionary pay. sheila: bloomberg has doing this survey for several years. this is the first on the survey looked at gender and asked men versus women and broke that the data in terms of how they are different. yes, six to eight years out of graduation, there is a 20% or more gap in their overall compensation. in fact, the largest portion of the gap comes from discretionary bonuses versus salary. versus 175, both very healthy numbers, the oak of the difference comes from bonuses. it suggests that managers, people that are deciding bonuses, our evaluating or finding the female employee less valuable. alix: does this have to do with family leave? you made the argument that the older women get and had kids, they bill less hours because i have childcare issues that some men may not have.

notve seen this kind of gap just in mbas, but pretty much all of the world you can make the argument to my 10 years after you graduate college, you get this wall. sheila: that is absolutely right. it has been shown in many studies that working mothers suffer on many levels in terms of compensation and career advancement. often, that is attributed to taking time off. this survey did not ask about parental status. however, the differences show up pretty quickly. before people are hitting that serious childcare age range, that was worth noting. another reason that jumped out of the data is women are less likely to be managers and in management positions and obviously compensation tends to go up. on average, women were managing three employees whereas men were overseeing five. so that is significant. energy is generally make market so that could be part of the reason. alsoet: women and bas are

less satisfied with their careers. i don't know if that links up to management. sheila: that they are paid less. [laughter] is held up as this golden degree that you are almost guaranteed to have a jump in your increase. and for women, it is less satisfying. one of the reasons may be that they see their male counterparts zooming ahead of them. scarlet: thank you so much. alix: coming up in the next hour, the u.s. changes its tune on china's currency. in its first reports as the country's devaluation of the yuan back in august, we will bring you all of the nitty-gritty details next. ♪ .

this is the bloomberg market day.

scarlet: good afternoon, i'm scarlet fu. alix: i am alix steel. the ecb governing council meets in malta this week, will dragving economic force hi to hold off on stimulus. the world's biggest private equity firm is buying manhattan's largest apartment complex. it is a big comeback for status in time, property that went bust in the housing collapse. scarlet: first, we will head over to julie hyman who has the latest. looking at the averages, the dow is holding a much better than the s&p and nasdaq. julie: it all has to do with

earnings. as is in the dow as well s&p, but being counterbalanced a bit. as you can see, the dow is the best performing of the three major averages. the only one also seeing an increase in volume versus the 10 day average, up about 4%. s&p and nasdaq have seen a decrease inviting. ibm is one of the biggest reports to talk about today, trying to make this transition to the cloud as a legacy technology company trying to make that push. thus far, been making some progress but still has a big legacy business. also feeling the pinch of currency fluctuations, as some in a companies have been. ibm's forecast is coming in below what analysts had been anticipating in the stock is down. a decrease another big cap tech stocks, not reporting earnings yet, but we are going to hear from google and amazon later in the week. microsoft and facebook,

actually, microsoft was earlier -- was up earlier. worst-performing and visual stock in the s&p also has to do with earnings, harley davidson. the largest u.s. motorcycle maker reporting numbers that missed estimates and cut its outlook for shipments, seeing lower demand for harley davidson bikes. you can see the shares down a disappointment. alix: what are some of the earnings of stocks that are not horrible? julie: they happen to be in the dow, a couple of them, at least, travelers and united technologies are both trading higher. utx in particular. travelers coming out with numbers better than estimated, sales growth accelerating. they improved underwriting margins. united technologies, the estimates as well as and also the company making some comments about how it will be using cash, not acquisitions, but for more buybacks. investors appear to like that strategy.

scarlet: julie hyman, thank you. word let's check first news from mark crumpton. mark: we begin in israel were a month-long weight of violence continues. a palestinian man rammed his car into a group of israelis today, injuring a soldier and a civilian. the assailant then allegedly jumped out of his car and began stabbing people before he was shot and killed. in the meantime, the yuan secretary men -- general ban ki-moon calling for cessation of the bloodshed. a warning from the opposition leader, saying the unrest is a glimpse of the future if palestinians don't receive a state of their own. two new polls show hillary clinton widening her primary lead after months of losing ground to vermont senator bernie sanders. poll, mrs.st clinton's support is a 49%

post-up senator sanders is second with 29%. ice president joe biden, who has not even officially announced a bid for the white house, has 15%. in the latest poll, mrs. clinton is a 54%, 31 points ahead of senator sanders. ice president biden presidential them -- admissions may be up in the air, but his stomach speech is taking shape. mondale,oring walter mr. biden recalled joining the democratic presidential ticket of then senator barack obama and how that nearly did not happen. >> i honest to god thought i could help him more as chairman of the foreign relations committee. and he said, i need to know right away. i said, well, i don't want to do this. i was on a train. i spent 80% of my life on the train. he said, how much time do you need? i said, i don't need any time. he said, go home and talk to your family and get back to me. my family was right and made the right decision, the best

decision of my political career was to join the president. mark: mr. biden is expected to announce by the in of the week whether he intends to make a third bid for the democratic presidential nomination. mr. biden is not the only politician who's next move is the subject of anticipation, "the washington post" reports paul ryan is open to the idea of becoming the next speaker of the house. but there is a catch. he wants assurances from republican hardliners that he will have their full support will stop talks will report would be held at the capitol on wednesday. former florida republican governor charlie crist is taking another shot of public office, running for congress as a democrat. he lost u.s. senate bid 2010 in the governor's race last year. he served as governor from 2000 seven until 2011, but decided to run for senate instead of a second term as governor. our first wordat

news. you can find the latest on bloomberg.com. scarlet: thank you. the u.s. has changed his tune on china's currency, saying the yuan is below its median violation and no longer "significant undervalued." alix: it is reflected in the semiannual currency report which is the first one since china devalued the currency back in august. joining us now from san francisco is axel merk. axel, always great to see you. do you agree with the treasury's assessment that it is not extremely undervalued anymore? >> china is bending over backwards to make it more market-based, and it is very difficult to say what a market price is right now because, honestly, the speculators are testing the bank of china. they want to weaken it right now. whether it is undervalued or overvalued, i think it is probably about right where it is right now. the real interest rates are higher in china than the u.s.

do have short-term issues. the one thing people always get wrong in my view is that they equate weak economic growth with weak currency. you don't need to have a weak currency just because you have weak economic growth. you don't need that when you have a current surplus. what chinese to figure out is how to prevent or the capital flight -- not capital controls, but making china more attractive. once they do that, i think there is a potential uptick in china. from part of what we saw the treasury report, a lot of capital outflows, about $280 billion for july and august. what happens when the yuan is included in the imf reserves basket? does that mean they will defend their fx reserves and capital flows the expense of the yuan and say, devalue all you want? i i think including, which believe will happen, in many ways symbolic, but in order to get there, china has greatly accelerated its pace opening its

market. the insurance of treasuries in london is just one example of that, allowing foreign central banks access to the bond market is another one. and the building of a much better infrastructure, regulatory side as well, is a huge step ahead and also the change in regime in august. i don't think that was a devaluation perse, but in embellishment to the market forces. the one thing that is to happen, they need to open up the capital account. in order to do that, they need to tell their own citizens what they want to do domestically some people are able to invest in projects. once they can do that, you can unleash entrepreneur growth that will turn this economy around. there's clearly work cut out for them, but i think it will be more important and it is going to be free-floating in the not-too-distant future. scarlet: we will see when that takes place. in the meantime, i want to shift gears to the ecb. i've a chart on my bloomberg

terminal that shows how the market has been pricing in 10 basis point cut by the ecb, even as mario draghi and others have said it is too early to talk about further stimulus. according to ubs, traders are pricing in more than 50% odds of 10 basis point cut which is aarti at negative 0.2%. 0.2%.ready at - you can still see the german two-year yield well below the deposit rate. >> it is a bit of wishful thinking that it will happen. the historyaghi is of threatening and and coming out with a big move. similar if you look at how the euro has been trading, it has been strong intermediate and then he comes in with a negative surprise. i don't think so. partially because of a that just came out that says the credit standards are using.

that is what is important in the eurozone. the actual part of the right doesn't make that big of a difference. -- parlor rate doesn't make a big of a difference. it is a distraction. the fact that credit centers are using is a huge leap ahead for the eurozone. isthe way, i don't think qe to credit for that. i would think the ecb meeting this week is going to be a surprise in different ways, more so that the euro is getting much stronger simply because betting on the weakening and the weakening we have seen out and i think that train has left. alix: if you take a look the european financial conditions index, which i had inside my bloomberg terminal, it actually has been rising pretty steeply this whole month in october. does that chart make any sort of --ng a relevant for the ecb using the relevant for the ecb? the four look at looking inflation expectations,

which the ecb is looking at, those look ok. remember, some of those fears or thoughts about additional using came in after volatility that we had after august and said, oh, my god, the ecb is going to do something, we've got to get away from central banks reacting to the market so quickly. course, do their homework on the structure reform. that is what needs to happen. i think the people might be betting here a little bit too much. scarlet: axel merk, thank you for joining us from san francisco. next 20ming up in the minutes, yahoo! opened up its books later today in the third quarter earnings report. is more is a meyer eating anymore progress a growing the comedy without alibaba? in other countries have created jobs but also taken away jobs. alix: multifamily construction projects. is this focus on apartments masking deeper problems within

the economy? ♪

alix: welcome back. scarlet: let's head to our markets desk were julie hyman has a check on individual names. oprah effect is long-lived, or least the last two days. yesterday we saw weight watchers more than double after opprah disclosed she was making a 10 percent investment and weight watchers. you can see it is up another 20%. , you can just oprah thank the short sellers also for the rally we're seen in the shares that we talked about yesterday. the short interest has a percentage of float on the stock

is unusually high from some of the gains where singh are undoubtedly a short squeeze. in terms of any news flow, movies is coming out and saying her investment, oprah's investment is that a positive for weight watchers. just in commentary. we have been watching the biotech stocks as we've been talking about and i want to point out the worst performing stock in the nasdaq biotech index. you can see horizon pharmaceuticals down 19%. "the new york times". does the yesterday said many do know what to pay for medications. and this is sort of embroiled in the whole concern over specialty pharmaceuticals and the pricing of them. a company that horizon is attempting to acquire is falling, down 15%. these are a couple of weights within the nasdaq biotech index. and one of the reasons why the nasdaq overall is the underperformer today because of biotech. scarlet: thank you. alix: yahoo! reporting

third-quarter numbers after the bell as a prepares to spin off its $27 billion stake in alibaba. scarlet: joining us now is cory johnson. is it really going to be about the operational part of yahoo!'s business or more about alibaba and whether the spinoff goes off as planned? ofthe operational impact what is going on at yahoo! is being completely ignored the cousin of this giant question about this giant spinoff. where are the taxes going to fall and are they going to fall on the investors who will get this one off asset? what is the iris owing to do with this? -- irs going to do with this? yahoo! has done all of the lobbying the possibly can with the irs and still have not issued anything distinct and clear enough. this is really their last chance. if they're going to spin off this year, this is the last conference call that will address this on a quarterly report. tonight is the day.

whatever investors are going to want to know, they're going to need to know tonight. it is so important because if this were a tax-free spinoff, which is their goal, that would essentially mean yahoo! itself is being valued at nothing, which would suggest yahoo! for all of its struggles has some value. quick growth, as you can see, has low down, but picked up a little. they're having some more success with things that required. there might be something there. there may be an asset there. about clarity, ibm did not give a lot last night. sales are down about 14% year on year. how does ibm grow profits when sales are falling? >> i would argue there's a lot of clarity when you look at ibm's numbers and not what they say. they talk about intentionally shrinking revenues while getting to be a more profitable company. they got the sales slide they wanted, 14% year-over-year cells decline, the lowest revenues in the third quarter they have had since 1997, but operating profits are declining and

profitability, the operating margins are declining. so profitability is inclining. they are in fewer businesses yes, but apparently, less profitable businesses and that is a big problem going forward for ibm with all of the debt they're sitting on, with all of the changes they say they want to make with their inability to do more acquisitions because they sent -- spent so much money. it is a problem for ibm bastad scarlet: cory johnson, thank you for the snapshot on ibm and a look at to the yahoo! alix: are we going to talk about his jacket? scarlet: it was something else. it took me by surprise. he is in the bay area am a so, the west coast. alix: coming up, the power of the uber economy. we will be right back. ♪

scarlet: welcome back, i'm scarlet fu. alix: i am alex deal. uber has put the evolving and ignore kforce, since legal battles erupted over drivers. should they be independent contractors or company employees. are they hurting our economy? cook's this is bloomberg radio. the journalist and author, he is a new book out called "raw deal."

us and whatise for you're talking about and why you wrote this book. >> the premise has to be what happen in 2008, the economic collapse we all experienced. in the aftermath of that, they're pretty weak recovery and a lot of new companies came online under the category of what we call sharing economy, companies like uber, task rabbit, and suddenly they were being put forward a something that could fill the cap in the economy with the economy still being so weak and not many workers, even if they're getting jobs, the jobs were not very good. lookst had a few years to at these companies to see what kind of impact they are having. the conclusion i came to, these are not good jobs. these are not going to anyway replace the really good jobs with decent wages, a bit of job security that we lost as a result of the --

>> a job, but not as good as a job prior to the collapse. example is uber. over half are 15 hours or fewer, drivers -- most last less than a platform.e basically, tempora, part-time jobs and drivers figure out, this is not working and they move on and try to find something else. >> there's a study done out of prince and about uber drivers and uber's happiness among the drivers and found different results, found most uber drivers stuck with it were pretty happy with it in a large majority of the drivers were happy. i presume you saw that study and i wonder what your take is? >> i talk about that study in my book. i was pretty disappointed with that study particularly with professor krueger's involvement in that because he is a very renowned economist. all of the numbers came from uber, first of all.

you can trust those about as much as you can trust chinese and greece numbers. that, i can go through detail after detail of what was wrong with that study, for example, they said they make $20 an hour. they did not account for the drivers expenses. drivers expenses, when using your own car and driving around new york city and gas, considerable. but the real big ticker, they collected that data in october 2014. they released the report in january 2015 at the time the conference of mayors trying to impress the mayors. he week later, uber cut the wages of the drivers 40% across-the-board, cut in 48 cities. this was the third in just a few years. the data was immediately out of date coming yet everyone is citing a study as if it is somehow authoritative. >> there isn't much in terms of data you can find. for example, hard-to-find revenue numbers you can trust.

that study said about $650 million paid to drivers in three months over the last year, but it does gives us this since it is a huge business. business, huge 163,000 drivers is what they're saying. their numbers. but those are part-time jobs. is what thisrn does to the american worker and also what it does to the overall economy. that is your concern. >> that's right. going forward, what is going to give us workers a degree of job security and even a safety net, i mean, the safety net is disappearing for various -- astonishing number of americans. i have proposals in my book for how to create a new safety net for this new economy that i think is doable, but we need the right regulations and laws and these companies don't want to be regulated at all. >> you're not anti-technology? >> not anti-technology or anti-capitalism, it is a matter

makew we harvest this to sure it works for all of us and not just a handful. wages declining or staying, you know, not going anywhere for the last two or three decades. we have to do something about this. >> steven hill. scarlet: thank you so much. cory johnson, have to point out the pink side jackson -- jacket. alix: we need a segment on that. still ahead, new home construction climbing more than expected in september. is the u.s. housing market finally on solid ground? ♪

alix: from bloomberg world and in new york, welcome back to the "bloomberg market day." scarlet: i'm scarlet fu.

let's get you the headlines from mark crumpton. mark: in afghanistan, the government may be looking to local militias for help fighting the taliban. that's despite u.s. plans to keep thousands of troops in the country. ae associated press reports former warlord has been enlisted to help retake the district captured by militants. you could be one of several x warlords assuming larger roles in the war. the follow continues following president obama's announcement last week that he plans to keep 9800 u.s. military personnel in afghanistan. that's for much of 2016. senate armed services committee chairman john mccain, a leading critic of the president's foreign policy, tells charlie rose those troop levels aren't enough. john mccain: i would have been comfortable with 10 to 15. that whats very clear you need to do is withdraw on

the base of conditions, non-calendar terms. ist just happened in kunduz indicative of a fundamental weakness that cannot be addressed unless we stay and give them the support they need. obama plans to keep 5500 troops there after 2017 to train and assist afghan forces and conduct counterterrorism operations. former virginia senator jim webb is dropping out of the democratic primary campaign for president. but that doesn't mean he is out of the race entirely. he says he is undecided on his next move, and will weigh his options in the coming weeks. earlier said he was wearing an independent bid. soccer's international governing body is about to name names. fifa is expected to publish a list of investigations. hasn'tpast, fifa

identified targets of the nature of inquires. society isn cancer issuing revised guidelines on mammograms to cut down on false alarms. they say women should start getting the annual breast x-rays at age 45 instead of age 40. the acs recommends women get screened every other year, beginning at age 55. adical experts caution is not blanket recommendation, and that women should speak with their doctors. that's a look at the first word news right now. you can always find the latest on bloomberg.com. back to you. betteromebuilders have a month than expected in september with u.s. housing starts rising by 6.5%, the second highest level in eight years. gainet: helping to fuel to his new multifamily homes or apartments, which rose 18%. for more perspective, we're joined by his song at each -- a hessam nadji. --

hessam: thanks for having me. scarlet: housing rising more than expected, at the same time, building permits unexpectedly declined 5%. how you reconcile the two? it's a good illustration and more confidence in the economy, on the consumer side of the economy recovering nicely over the past few years. you have to keep in mind the numbers we are seeing on housing construction in general, particularly single-family, are 60% below the prior peak. thee not even close to single-family side of the housing market, the demand is coming back with improved household formation, tied to job growth. on the multifamily side, the numbers are quite high, historically speaking. there are so much demand for multifamily rentals, whether it's the young adults that are now moving out and renting units, whether it's the older

baby boomers who are now beginning to move into apartments instead of owning an anti-mr. home -- anti--- empty home, occupancies are showing that strength. the kind of construction we are seeing is in lined with the demand on the single-family and multifamily side. scarlet: we pulled up a chart on single-family construction versus rising household growth. that goes to speak to the fact that we are getting wealthier, but we are not necessarily constructing the houses with which to go by. when does that flip? when we turn from renters to buyers? hessam: i'm not true there's going to be a big shift. there's a preference to rent that is generationally different this time around. of have the organization america, with a lot of multifamily construction being concentrated in urban areas. you have smaller homes being built, in a new pattern of consumer demand, it's very

different than 20 or 30 years ago. is the are seeing balancing act between the demand side on the household formation, as you mentioned, is looking very good with the supply side. the builders are not really getting ahead of themselves. that also reflects your comment about the apartment activity pulling back. we have headline issues in the third quarter with the stock market going down and so on. some anticipation of interest rate increases going into 2016. those things weigh on consumers and builders. the pullback is a reaction to that. scarlet: i want to go back to what you were saying about rentals and demand for rentals. is there a structural shift taking place? from becoming more like germany, a nation of renters as opposed to a nation of homeowners? hessam: there has been a structural tame. -- structural change. it was an unsustainable aberration. i do believe it is structural.

it doesn't mean there won't be times when it is just rates -- interest rates rise over the job growth improves, a number of young adults or people decide now is the best time to get into the housing market. we will see waves of homebuying. right now, home sales better accounted for by first-time buyers are averaging around 30%, versus a long-term average of 40%. we are going to have times where the number will spike. i do believe there has been a structural change towards preference of renting. scarlet: part of that has to do with millennials. zillow had a cool report that highlighted a region in california, riverside. they basically said there is so much more renting going on in riverside than actual buying, that you can see in the chart, 12.6% are the number of households meaning that you are renting so much at some point, you've got to buy. hessam: that is true. they goes back to my comment of waves of homebuying.

experience we had in the early to mid 2000 and the housing crisis, and the number of people they got burned from looking at their house as an investment, those memories are still fresh. i think the young generation coming through, the millennials, they want to be flexible. you want to be able to change jobs. the economy is turning, you have all different jobs formed in different metros. the flexibility of being able to move and change their jobs because more important. housing is being viewed as much less of an investment. the other things that's important from a broader economic perspective is that today, housing is contributing something like 3.1% to overall gdp growth. the long-term average is about 4.1%. we still have a long way to go for housing to do its usual contribution on a long-term average bassist economic outputs. that tells us there is still lags in this recovery. increase in output

saturation from housing both really well for the economic output. question.ne last you mentioned prices for multifamily apartments are 33% higher than in 2007. at what point do you worry about a bubble in rental markets? hessam: the apartment investment market has been white-hot. what is really important though is that fundamentals have also followed the pricing. if you look at the effective rent, basically, the net rent apartments are generating, they are up 25%. so prices didn't just go up without the accompanying french growth. growth. investors are still looking at the yield of apartments, being able to lock in their interest rate and really count on the fact that this renter demand is so strong it, you're probably not going to see major overbuilding going on. there are pockets of overbuilding going on. industry,hole, for an

the equation between yield and price and effective rent is still looking very favorable. scarlet: thank you. hessam nadji. thank you for joining us. alix: especially if interest rates remain where they are, the federal reserve is on any -- is not in any rush to raise interest rates. you get that extra yield somewhere else. scarlet: coming up in the next 20 minutes of the "bloomberg market day," manhattan's a sky town had a collapse in value. complex foruying more than $5 billion. alix: new figures on how much a hike in the minimum wage will hurt retailers. it could cost them millions. you look at walmart cutting its forecast last week. scarlet: and the ceo of merck joins us. here to talk about the latest in biotech and pharma. that's in the next hour. ♪

scarlet: welcome back to the "bloomberg market day." i'm scarlet fu. alix: alix steel. biggest a look at the business stories. expedia's online travel sites are introducing tools to reveal the true cost of flying. they will list fees for checking bags and canceling a reservation, in addition to the regular ticket fares. those fees to goodly -- typically remain hidden until you make your purchase. alix: subway plans to switch to meet raise without antibiotics area. they plan to petition subway's thursday, calling for the change. first on the agenda -- chicken, turkey, pork, and beef over a six-year timetable. scarlet: accommodation of monday night football on the force

crashed site + and smashed one-day sales records. traffic surged seven times higher than typical peak levels, and set a new first-day record, beating out "the hunger games." fandango, amc theaters, and a host of other sites had frequent crashes. launchestar wars movie december 18. you can get more on bloomberg.com. alix: last night, i'm on my phone, my husband is on the oure and the computer, and two friends that we are going to see it with the new jersey had three windows open each on each of their computers. and we could not get through. eventually my friend had to physically drive to the theater, stalk people to get into the theater because it was closed, got in, and it is give us the tickets. technology was of no help. fandango failed my life

yesterday. it was stressful. we were trying to find the trailer online. but we got the tickets. scarlet: he requested your day off months ago. alix: three months. i'm fine. we had to the markets desk where julie hyman has the latest looking at tesla. julie: i think there are still tickets available. i appreciate your urgency, but i went on this morning and appeared there were amber -- ample to get supplies. alix: for imax 3-d with the theater with a comfy lounge chairs? i don't think so. is like a live sporting events. if you don't go the first 48 hours and you were a fan, is totally going to miss you up because you know what happened. scarlet: that's true. you have to go with virgin ears. alix: your most. anyways, tesla. julie: it's not a laughing matter. we are seeing a tumble in the

shares because consumer reports, which had been giving such glowing reviews to tesla vehicles is now coming out and backpedaling a little bit. autois the annual reliability survey that consumer reports does. it says the model s sedan that came out in 2012 reported an array of detailed and complicated melodies that included adding features like a sunroof led to reliability issues. owners complained about having to replace the electric motor. this is a vehicle that is only three years old. this is proving to be problematic for the stock today. take a look at my bloomberg terminal. we have seen tesla shares bump up again to the 200 day moving average. this shows you the range. you can see yesterday we had it bump right up against the 200 day moving average, before coming back down again, and it's down very sharply today. i wanted to mention that toyotas

car got the top two spots in this consumer reports survey. i also wanted to get a quick look at general motors, which was in the middle of the pack. gm is out with its earnings tomorrow morning. investors looking for a rebound in those numbers. the consumer reports survey is not helping those toyota shares, which are still trading low. alix: julie hyman with the latest. apartments biggest complex is now in the hands of the world's largest private equity firm. purchased group has the building for $5.3 billion. scarlet: nine years ago it sold for $5.4 billion and didn't work out too well for the buyers, default and four years later. this time be different? here to help us with that is sarah mulholland. with and better for blackstone 2006, when things went the wrong way?

sara: presumably. one of the key differences here is that blackstone is working with the city to keep the affordability component in this complex. that is something the previous owners were not interested in. they came in to try and raise rents quickly, it didn't end well. they were sued. it seems like blackstone has given themselves in time to work on this. they don't have a short timeframe. they have more time to bring it up to whatever level. know anythingu about the relationship that blackstone has with the current temp -- current tenants? there are people with legacy of apartments, they lived in the apartment their grandmother or great grandmother had. sara: there was an event today, the head of blackstone's real estate group was there. he was there with the mayor and the tenants. it seems they have all -- they all worked on this deal together. so that blackstone will not be

able to just at will raise rates on any apartment they want to. it's all laid out in the greeme how it will be done. whoever they sell it to, the same terms will be in place. it seems like the tenants are on board, and everyone is happy. scarlet: that's important to six during -- securing the success. it's making a push for rentals around the u.s.. talk about the strategy of worth -- investing in real estate that evolved after the crisis. sarah: they have the biggest private equity real estate business in the world. they were one of the first to get into the business of buying single family homes to rent out to people who can no longer afford to buy. evolutione this as an heading into the multifamily section, at least in new york city. in new york city, this woul be

their second investment in multifamily residential. scarlet: where's the profit for blackstone? they're working with current residence, where is their potential upside? i can't speak for blackstone's thinking. have made the property and you can raise rents as time goes by. that's part of the market, you have to be able to raise rents to a certain extent. but they can't come in and kick people out and triple the rents. this complex is a really rich history. 1940's.eveloped in the it was a bastion of affordable housing. sarah: it's one of the only ones that left that's kept up quite well in a very nice part of town. it has a lot of history.

i know people who are living in their grandmother's apartment, and now they have two kids. it's a long-standing pass on property. scarlet: it's massive. sarah: yes, it's huge. sarah mulholland, thanks for joining us. scarlet: coming up on the "bloomberg market day." for walmart wages. we have the analysis. ♪

scarlet: will retailers want to follow walmart example when it comes to bumping up employee paychecks? it could cause retailers and extra $4 billion. alix: the increase in worker wages means lower profits for walmart. the stock lost 10% of its value

on a single day last week. it was the largest to climb for the company in over 25 years. here to talk more about the fallout is shannon pettypiece. that $4 billion price tag, is that more or less than many expected? shannon: people are just now getting used to the idea that retailers are going to have to start raising wages. thin marginsazor and the fact the retail sales are growing, the labor market is getting tighter. municipalities are increasing minimum wages, and we have a giant like walmart come on the scene raising their wages. it's becoming a fact of life, they're just going to have to raise wages more and more. scarlet: this time they raised it to $10. in the past they raised it to nine dollars and it wasn't as painful. walmart said it was raising his wages to nine dollars an hour. other retailers follow along, target and tj maxx said that we

will also raise to nine dollars and hour. the average retail wage was around nine dollars and $.50. they were already paying in the nine dollars range. does the minimum, not the average. when they go up to $10 for that minimum, there aren't that many retailers that are paying a minimum of $10 an hour. i would to the survey about 61 retailers at the glass door, the job search firm put together. 19 of them had an average wage of around $10. when walmart is to 10, that's a big shift. walmart did their homework in this regard, they knew they wanted to be competitive. that's why they raise wages. you need to attract better workers to their stores. they knew that by going to $10 an hour, that sets them apart. they are hoping. if everyone else to size they have to follow along, and states are passing minimum wage laws that increase the wage $10, that may not work for walmart. they may find their average. alix: at the end of the day,

walmart may have done its homework in comparison to why they have to raise wages. it took walmart by -- all street by surprise when they found it was going to hurt their profits. let have some trickle-down? -- will that have some trickle-down? shannon: i talked to an consultant, and he says every ceo, every board has been asking about wages. are we paying a competitive wage? are we doing what we need to do to recruit people? labor is really important as a driver, having quality labor is a important driver. going to cost them. for walmart is going to cost $1.5 billion. that is taking a cut out of their profits. if walmart sales were growing faster or its margins were that are, he wouldn't be doing that. but retailers and expanding -- aren't expanding, sales were flat. i might going to take a hit and

profit and take on this cost? for emma going to jeopardize losing some of my best workers? scarlet: especially when you're profit margins are unforgiving. shannon pettypiece, thank you. her article can be read on bloomberg.com. alix: coming up in the next hour of the "bloomberg market day," we talked much more about these markets and what's behind it. we will be right back. ♪

david: it's 2:00 a.m. in hong kong, welcome to the "bloomberg market day."

from bloomberg world headquarters in new york, good afternoon. i'm david gora. yum brands is splitting into. the fast food company is spinning off one of the most valuable parts of its business. starting salaries for nba graduates are higher than ever. after graduation, women are still earnss tn men. approval fast-track for a cancer drug it's working on with pfizer. the company's ceo joins us with a look at what else is in the pipeline. but first, let's head to the market desk with bloomberg julie hyman. stocks and now tolerated a little to the downside, averages and the rent a little more significantly, particularly the nasdaq.