it is 3:00 in new york. from bloomberg's world headquarters in new york, good afternoon. i am david gora. and the wells fargo ceo, find out what the ceo of the largest bank by market cap thinks about the state of the global economy, and sales of valeant are tanking. research says they are using phantom pharmacies to drum up sales. they were making a comeback report isng citron's wrong, and fiat chrysler sells part of its ownership stake. let's go over to the market desk, where julie hyman has the latest. seen stocks go higher, just as valeant went

higher, as well, and the latest is that bill ackman has confirmed that he has added 2 million shares of valeant shares, buying those shares as we saw them tumble, with him saying in an e-mail he has not sold one share of this company, and by the way, his top holding, 2 million share addition, would make him the second largest shareholder. as david just mentioned, the shares are tumbling after a report from citron compare the company to enron, saying they were essentially looking sales to an affiliate of themselves as says revenue, and valeant they are not booking those sales as final revenue, but coming back, earlier they were down as much as 40%, now down only on a relative basis 18%, it's still a very substantial decline. we just wanted to point out that the shares were halted in for the company came out and made

their own statement, and we kman headline.ac if you take a look, even though valeant is a specialty pharmaceutical company, we saw the i/o tech index climbing, and not only that, the s&p 500 going higher as we learned that ackman was buying shares. biotech index climbing. lot, general a motors among them, gm beating estimates in term of their numbers, and one of the largest i/o tech companies, while jen -- en saying they would have a cut of its workforce, and bowling coming out and beating estimates as they side increased in orders. on the downside, we saw chipotle missing estimates, saying it

margins were compressed, and yahoo! reporting its biggest sales declined 2000 nine, and st. jude medical, and medical devices maker, also below expected, so just as normally during earnings season, some good and some bad. david: thank you, and mark crumpton has more. good afternoon. joe biden has made it official. he will not be running for president. the death of his son earlier this year. he made the statement at the white house. vice president biden: as my family and i worked through the grieving process, i have said all along, and i have said time and again to others, that it may very well be that that process, by the time we get through it, closes the window on mounting a realistic campaign for president

, that it might close. i have concluded it has closed. biden's decision appears to have finalize the democratic a pass.nd sets them on senator bernie sanders is thinking the vice president or a lifetime of public service. he calls joe biden "a good holdingwho talks about a middle-class and working on income inequality, and that leaves hillary clinton as a major candidate along with bernie sanders. to paul ryan says he wants be the consensus candidate by the end of the week, or he will not seek the job of speaker. a new poll finds 2% of republicans surveyed say they would prefer a speaker who would stick to conservative principles, even if doing so means a government shutdown.

others want to compromise with democrats on a budget, and you are right, september was a scorcher. the national atmospheric and association says it was record hot. isy also say that 2015 shaping up to pass last year as the hottest on record. look at our news right now. you can always find the latest news on bloomberg.com. david, back over to you. david: thank you, mark. bought two aly large ge units, now financing deals for laxton, also a lead.ing erik schatzker is at the headquarters, standing by with the wells fargo ceo, and we will throw it over to you. erik: john, good to see you.

when i came out to see your predecessor, i had no idea that eight years later, we would be sitting here, and this be the biggest bank by market cap in the entire world. it is remarkable how far it has come. f: it has come a long way, and even a merger. as the economy has gotten better, of course, things have been going well here, and good to hear it. with the world economy and the role that wells fargo plays, it puts in people's minds what it stands for, and some of the things wells fargo has been view has challenged the has some people, you might say for you talk about some of the finance you are doing for blackstone. your expanding in credit cards beyond your existing base, and

then you talk about bringing over bankers. are you trading outside your comfort own a little more? mr. mpf: i think that is our comfort zone. making loans to real estate investors and developers, helping customers with credit cards, helping people with their assets, asset management, i think that is three much inside and not out. what wells fargo is doing lending money to the jackals of wall street. the image people have. : i think mainstreet has all kinds of companies and all kinds of people on main street, from large companies, large u.s. companies, to small investors, to farmers, to ranchers, and i think part of the secret is it is mostly

has aed, and it always customer on the other side, so we do not do business with and we areper se, not good at cornering -- we do not corner market. that is not who we are. we are very much about the real economy, so i think this fits in nicely, and 3% of our revenues are outside the u.s., but most of it is attached to the u.s. customer base that we have. they might be doing business in canada, or they might be doing business in england, for example, but most of it is u.s. centric. erik: if you're comfortable doing this for a firm like blackstone, are you as comfortable doing leveraged buyout's? : we are not doing that. that is not a big part of our business. in fact, there are some restrictions from the regulatory perspective, but we are not doing that. we passed on a lot of that

leverage activity ears ago when it was very popular in our industry, and a lot of people were doing it. we passed on a lot of that leveraged activity years ago. : the three businesses that you have occurred, commercial real estate assets, railcar leasing. how much do a choir in total? : billions. these were the same customers, people we knew. we love the business. the rail business is a bolt on. we had a similar sized business, and it makes us more effective and efficient. most recent finance, we had similar businesses, but here was ge, a well-respected company,

champions and leaders in these businesses. that and move forward on their legacy. they have been in that business for decades. we love those kinds of businesses. of the business is sold, what else did you take a hard look at, and what did you pass? f: we looked at things that fit and things that did not fit, and there might be other issues involved, either pricing and hope for, said the things we did, we like. the things we did not do, we are happy someone else got. erik: were some of those irrational? mr. stumpf: everyone has their idea. and that is what makes the world go round. people have different views of values. fargo generates about 3% of its value outside.

what kind of businesses overseas are you most interested in pursuing? you mentioned supporting u.s. companies, but where? if a u.s.-based company is sourcing product from overseas or vice versa, if a needs andent bank product or a service, like foreign exchange or a payment service, those are the kinds of things that we do, but i do not have a strong interest in having indigenous assets -- erik: why? stumpf: how are we going to compete to the wells fargo of china or england? what do we bring to the game? nothing. we tend to think of ourselves as u.s. centric. we love our 3%, but do not expect that to outgrow what we are doing here in the u.s.. erik: if you're logical true, what is jpmorgan doing or

citigroup? tumpf: they have their and strategies, and some of them are very successful, and it wells fargo, we tend to have a conservative view. we know what we are good at and what we are not good at, and there is so much opportunity in the u.s.. given the success you have cap, the largest by market cap, growing revenue, growing earnings, do you feel as though the time may come or perhaps may be here where you do not need to be as conservative? we think of not the next 1, 2, 3, or four orders. we think of the next 1, 2, or three decades, so conservative has always been a core part of our values, and i do not think you can out price your loan losses or risk anything. in fact, there is more risk than just things we used to think about. you have operational risk,

interest rate risk, lots of risk, and you make your best with hot markets, being the supplant, which gives you the ability to take advantage of a dislocated marketplace. if we had made bad decisions -- look at what kobe. in the 2008 timeframe, we would not -- look at what kobe up. -- wachovia. erik: you have put some of this to work with the ge assets, and what else are you going to do with it? have more assets under management, so it is more of the existing that we are doing today. doing bolt on things, and if we do not do another one,

that is great. if something else comes up, we would sure look at it. we want to do that really, really well. erik: besides what you're bringing over from credit squeeze, what else about retrenchment? they were involved with lending for the fortune 500 companies. void, and also on the capital market side, and more advising. we do today more activity in souing debt, equity, and forth, so that is an opportunity for us. is it possible to qualify how much of your business came from filling that void? : maybe 20%, 30%. in that part of it for the capital markets.

first of all, we got some great team members from wachovia, and with the retrenchment, a much more rational business. erik: wells fargo sets the benchmark for management, and i know you are proud of that. you have bought -- brought a line item down 25%. mr. stumpf: i think it was 27%. first of all, we said if we said we're going to travel, let's travel for customers, and maybe we can use telepresents. it is better for team members, and it helps us redirect some of those savings into things that customers are willing to pay for, like innovation on the side of payments and putting more money into cyber, security.

erik: how much more can you bring it down? there are not even doors on our offices. erik: really? is that new? : no.tumpf we do not like to waste money, that has been one of our hallmarks for decades. erik: you are down in square feet about 20 million. 20 million square feet is what in percentage terms? we start at 100 and 15 million square feet. erik: where can you go? mr. stumpf: south of that. erik: how aggressive can you be? we do not think it makes a lot of sense for us,

because our customers are telling us to get rid of our distribution, but we do not need to have 5000 square foot offices with a tenpenny sign. we are building tenpenny size with a 5000 square foot sign because it reminds the customers of the security and strength of where their money is, so that is how we're thinking about it. every time we redo a building or an office, we many times shrink the amount of space, and we do more business with less space. and technology plays a role in that. erik: ok, you told investors -- told back to cost -- you investors, let's hold steady, right, at least through the end of this year, and there is not a lot of revenue growth outside of what you are acquiring. why not cut deeper, because the money you save go straight to the shareholder? a very goodthat is question, but it is a short-term view.

we want to run this company for the long term, and we continue to make investments in things we believe will add to long-term shareholder value valuation, and you do not save your way into prosperity. now, we do not want to waste $1 around here. on the other hand, if we set five years ago, let's not invest in mobile, where would we be today? give you 10 examples like that. we need to be thoughtful on x and's is, and if there is a short-term and long-term conflict, always go with the long term. : let's talk about the technological disruption. clearly mogul has transformed not just banking but other things. what else have you seen that has the power to transform or change the history in the way of technological innovation? mr. stumpf: payments. inc. about our industry.

not a lot changed until the internet came. we were paper-based for second day batch processing. today, we are real time. and send cashs letters electronically. erik: that is here now pick what is next? f: there is biometric. i am a big believer. it lets us know that you are the person on the other end, because we are working with your money, and i think you will go to an atm machine in the future and not use a card. i think we will be the last generation to use the term "credit card." i think it would be embedded on a mobile device. but even with all of those changes, the human interaction is still critical, so distribution and offices are still enormously important.

erik: millennials still go to banks. stumpf: this is my 40th year in the industry. this is the strongest growth i have seen. the strongest growth i have ever seen in terms of deposits and loans and household acquisition because we have distribution, and we have when, where, and how customers want to deal with us, so you say millennials do not want physical distribution, i would say you are 95% right. they do not use it every day, but if you do not have it, they will not bank with area -- with you. right, data protection and guarding against cyber attacks. how much does that cost wells fargo every year? we have three lines

of defense, the first the customer, the second corporate activity, and then the audit group, and then there is risk mitigation built into all of that, but it is a boatload, and -- let's just call it big. it is big, and it is growing. fastest growthr items on the expense side. years ago, we would not have even thought about it. int is the cost of a company this industry to lose their trust with this? it is everything. so you have to spend all you can to make sure that customers' information is safe and that it is not compromised. $1 trillion or almost in loans, 6200 branches, maybe more

than that right now. what are you see? it is strong, but it is regional. take the bay area, for example. it is as strong here as i have seen in my 13 years, so housing is booming. technology is booming. commercial real estate is booming, but if you go 150 miles to the east or the south into the central valley, you would not see that they strength, because it is based on -- it is fragmented. we cannot argue with unemployment, consumer booming,e up, autos and the biggest risks to the u.s. economy is what is happening outside the u.s.. erik: and that is something we cannot control. where are we in the credit cycle is to mark esther stumpf: most of our credit -- where are we in

the credit cycle? : on the top on and through the cycle, we should not expect to do one third of 1%, which is where wells fargo has been. i think we cannot ever tell, but surely the energy area is more challenge today, but real estate is such a big driver for us that -- if real estate continues to grow -- tougher is it going to get? : i saw before coming here we are in the $45 per barrel range. some of our loans are energy, and about half of them are on the enp side.

some companies will be more challenged. great people and that and have been here a long time. erik: are your customers being as realistic as you are? i think they are, and this time around, the oil and gas industry, there are deeper players, better players. they react more quickly, and some of the risk that they put on from a credit perspective came out of equity or private equity or something other than banks. n, so much of the corporate borrowing has been things like buybacks and acquisitions, $50,000,000,000 ll is taking on. at least at what point do you begin to worry about some kind of balance sheet in this country?

that is always a big issue. mr. stumpf: when you think about lending money, you have to be right. erik: are you worried right now? no, it is company specific, and most company balance sheets are in the best case they have been in years, so i do not worry a lot about the people we are doing business with. you will always that people on the fringe that are doing things. : and on rates, you have said you believe it is going to be lower for longer. what do you mean by that? mr. stumpf: that is right. there is a lot of debate about the fed raising the rates. if you look at the rest of the world, the rest of the world has lower rates than we do, and in some places, negative rate, and weaker global a economy, what is going to be the

impetus to push long-term rates up? we just do not see it, at least in the near future, so i think wells fargo will be where we are. all right, john, thank you. appreciate the opportunity to from wellshn stumpt fargo. david, back to you. : complete analysis with stumpf.erview with john of our guest is skeptical this report, more ahead on the bloomberg "market day." ♪

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here. xi jinping acknowledges his country could do better on human rights at a joint rest conference in london with british prime minister david cameron. xi: china places great importance on the protection of human rights. we combine the universal value of human rights with china's aality, and we have found path of human rights development suited to china's conditions. with regard to protection of we know there is always room for improvement. xi also citedt ties with the british financial sector, and the two countries have become increasingly interdependent. israel he president benjamin netanyahu was trying to explain

what he believes to be the motivation behind the ongoing violence that has engulfed his country for a month, speaking at a joint news conference with german chancellor angela merkel. note minister netanyahu: because they are frustrated by a lack of process, because they care nothing for peace. the simple truth is that they and destroy jews the state of israel altogether. mr. netanyahu will remain in germany for a meeting tomorrow with u.s. secretary of state john carey, their second meeting in less than a month. u.n. secretary-general ban ki-moon is urging palestinians and is really's to end the recent wave of violence. israelis toans and end the recent wave of violence, and he was in talks with benjamin netanyahu. americans that fewer

are traveling to join the islamic state, though they are tore of six people who try join the group in the last six and a half months, in contrast to the nine or so officials say used to go every month. interior minister is increasing the police presence near the channel title. that is where thousands of people seeking refuge in britain are living in a camp without water or other basic amenities. 460 new police will be operational at the site beginning on thursday. ,65 officers are already there and that is a look at our first word news right now. you can always find the latest news on bloomberg.com. you., back over to david: markets close in less than 30 minutes, and let's head back over to the markets desk with julie hyman. helping to fuel some of the gains, and this chip deal getting done, western digital

agreeing to buy sandisk for about $19 billion, and you can still rallying, making hard disk drives, and that business has waned. in some extent, it is looking to get into a growth area like memory chips. also, there is a semi conductor deal that was announced, a $10.6 billion deal, again cash and 7.02 with lamat $6 research and kla-tencor. how the shares are trading today, and getting to the last one as well today, paul morris --this is not m&a -- polaris m&a, they are

leaving their outlook unchanged, and this may account for the drop in shares. hardly davidson, you may never, came out with disappointing numbers yesterday, falling for a second straight day, and they are telling bloomberg they are not considered -- considering rolling out any kind of value line, so perhaps some disappointment in that front either, david. david: we heard from the wells talking toohn stumpf my call, erik schatzker, and i want to bring in a guest, also a senior analyst at barclays capital. jason, i want to start with you. a distinction we have heard from others this week and last week remains onsed wells the u.s. market, and you heard jamie dimon saying the same thing on bloomberg tv, and talk a little bit about wells'

strategy. jason: they are much more focused on the consumer and do not have the k -- same kind of expertise as jpmorgan who are exporting, so a lot of opportunities. they continue to expand organically and with acquisitions, selling more products into the customer base. john: something that erik talking about the ge deal, and he took a very broadly defined definition of what main street is, saying this is what wells has done. n: these companies are over capitalized. there is not a lot of loan growth, so they have to do this capital to work in other places. i think the ge deal was a very good deal for them and put them at the top of the market, so i agree with what wells fargo and

stumpf are doing, and i consider them one of the better banks in the country because they do focus on the consumer, and they do focus on the u.s. market more than anything else. david: jason, let me ask you about this credit suisse deal, planning to get more into wealth management, despite a decline in the last quarter. how will that relationship work with wells fargo and credit ?queeze? -- credit suisse jason: becoming one of the top three retail brokers in the u.s., and they will bring a lot of those advisers on to their platform. have and able to add brokers at a nice clip, and it has been profitable, not as capital intensive. david: let me ask you, paul. talking about retrenchments,

joking about the carpeting in his office was new in 1971. there is no door to his office. this is a company that has been looking very actively for ways to save money. paul: the bottom line in banking right now is you have to costs really, really low, and it is a culture thing, and wells fargo has that culture, and wells fargo is there. the danger with cutting expenses issue cut revenue along with it. sometimes when they cut expenses, the revenue goes right out of the door with it. they are looking with all of the pennies and nickels that are being spent and trying to get those down, and wells has done a good job with that. david: in particular, john stumpf saying the greatest risk is everything outside the u.s. economy. let's talk about energy, in particular. oil,ve seen a decline in and we have seen a lot of news about commodity prices, as well. what about continuing to whether

this? eather this? credit quality is actually benign right now. on average, $600 put in family pockets this year, but putting some stress on some corporate customers. if you look at wells fargo, it is, what, 2% of their total loans? david: i want to get you both to react to the regulatory hurdles faced.lls has talking to the ceo of bank of america, talking to many executives, and one of the things he looked at is how they are managing dodd-frank. inwe are still not even done terms of that. i think the best answer is to stay the course. it has made it safer. it has made it simpler. you have got living wills and

everything. let's just let this operate. thereforeit of praise there forise their -- dodd frank. wells never had to pay the settlements at everybody else did. yes, they had to pay something, but they came out relatively unscathed, but dodd-frank -- it is over regulation they went way too far. some had nothing to do with what drove the crisis, and i think the administration have to back off some of this regulation and allow the banks to lend. nobody is lending to that marginal market. fico trying to house, good luck trying to

get a loan out there, and i think that is what is holding the economy back right now more than anything else. jason, you agree? jason: we went through a lot of it, we hope, and hopefully, it will get done in the latter part of this year, and then look to maybe bring back some of the curative effects of the regulation. david: jason, thank you, and thank you, paul, as well. barclays capital. up on the bloomberg "market day, and what we will tell you what valeant had to say about a report that has their shares tanking. ♪

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david: good afternoon, and welcome back to the bloomberg "market day." i am david gura. some health insurers are taking a hit after democratic presidential candidate hillary clinton said mergers in the industry should be looked at more closely, saying she is skeptical these deals would benefit consumers. shares of cigna and and some, which agreed to a deal in july, fell following her comments. comcast moving closer to wireless service. they plan to offer a hybrid cellular and wi-fi service, using the verizon network as deal,f a 2012 airwaves and dupont may be gearing up to break a more than 200-year-old tradition. the chemical company is said to be looking at external candidates to fill its ceo slot after the head unexpectedly

announced her leaving. the company will be led for the first time by someone who is not a family member or someone who has a long history with the firm, and you can always get more business news on bloomberg.com. we have been following this falling off valeant but regaining some after questions about the drug maker' his relationship with a specialty pharmacy. part, isfor its refuting the citron report, and elizabeth joins us in san francisco as well as drew. third -- halted this afternoon. for a little bit. we saw the shares down about 40% come which i think represents about $40 billion in market down you, and subsequently, valeant came out

with a report saying that the report is wrong, and let us explain how these relationships with these pharmacies work. they are saying that these are proper relationships. since then, the stock has recovered, but it is still down about 20%. it has been a roller coaster day. i do not think we have all figured out what is going on here. there have been a lot of accusations. and we are in the process of trying to sort it out right now. david: liz, let me ask you. what is that relationship supposed to look like? elizabeth: there are a few ways to report revenue if you are a drugmaker light valeant. you can -- like valeant. typically, it is reported when it is sold to the patient. so you are not reporting false revenue. if you are reporting every time it goes into inventory and the

scripts are being filled, it can make it look like artificial sales, and what they are doing is the latter. only reporting when it is filled and sent to patients. david: we had julie hyman showing us that chart when cnbc worst reported that the lachman theexpanding his stake in company, and he confirmed that himself. talk about the appetite among big hedge funds? kman is one of their biggest. at the worst today, several billion dollars down in terms of his position. he said he added 2 million more shares, and you are probably talking around $170 million. maybe that is a cheap price to get the stock back up, depending on how you want to look at it, but part of the reason is because the company essentially some cases has gone out, found drugs underpriced in the market, and then acquired the rights to sell

the drugs, boosted them there he substantially. now, that is only a portion of their business. they do do a lot of other things. they have also been doing tons and tons of deals, so all of that appetite out there for m&a by investors, they have been satisfying, and a combination of those factors, you have got a lot of folks looking for volatility. all of this scrutiny, has valeant talked about a shift in the strategy going forward? was it on track to do anything differently? elizabeth: not until this monday when they reported their third order earnings did they address a change in strategy. they suggested they will no longer have such aggressive price increases. they will no longer be looking for targets that have the potential for price increases, and they are going to turn their attention more terms rmb. that is definitely part of their attention more

in terms of research and development, and that is deftly part of their strategy. : this is probably the poster child in the pharma world for aggressive price increases. they have taken a new gem out of criticism and have been mentioned by presidential candidates. folks that have the power to affect them to get it together, and they have been the center of a lot of criticism, with puts them in not an insubstantial amount of risk. you see things peaking in the last couple of months, but the company right now is down to its lowest point since 2013, and a ton of value has been lost, not because of today but because of other concerns, the fundamentals of, hey, does this model still a second. now you're going to have to turn to r&d after totally issuing r&d, -- eschewing doing

and that becomes the execution risk. david: thank you very much, and thank you, liz. that is drew armstrong and elizabeth. we are minutes away from the close. we will have more in a minute on the bloomberg "market day." ♪

david: good afternoon, and welcome back to the bloomberg ,market day." i am david gura and julie hyman has more. julie? julie: it has been down, but remember it has been a tight day. there have been some fluctuations, but it looks like a negative tone. i know david was just talking about valeant, but this really is the stock story of the day, having its biggest one-day

dlunge ever, more than halve that pledge as, indeed, bill ackman said they -- he had bought more shares. still a huge decline on the citron research report, saying there was some stuff going on with an affiliate of the says thisnd valeant is untrue, still finishing down by more than 17%. also, wanted to look at some of the other lagging movers with the s&p 500 today. on a mix of different types of news, another company falling along with valeant and others lth solutions hea falling and saint jude medical, and range resources down. , but not so bad for all.

and there was a group acquired the makerearch, and of the da vinci surgical robot out with numbers that eat estimates, as well. -- that beat estimates, as well. save then ferrari estimates? data is trading down since the debut last week. joining us as we head into the trading, mike reagan. you noted wonderfully that because it was about ferrari, more people would read about it. ipo, and it is doing well. mike: it is doing well, and i looked at where the stock was, what the underwriters sold it

as, and if you bought the shares in the ipo from the underwriters, you could sell it in the market for a 50% gain. that is roughly average of what we have seen for ipo's this year. there were some ipo's that had some tremendous gaps. double, andmost they had trouble keeping and one is down something like 60%. ferrari, i think of i were the underwriters, i would kind of the ok with that it did not gap up into this kind of opening price that is way above the offering price, because it allows you some growth in the share price, and you do not necessarily have to live up to these giant expectations. also, it looks better by

comparison. if we can take a chart from my bloomberg terminal, there is a ipo's,index of recent and the last 12 months, and that versus the s&p 500 and percentage changes, the s&p is green. ipo's -- it ist not just the outliers like etsy. mike: it is certainly not a big, blooming time for ipo's. market range.the the ipo index is when you look at them in a market calculated way, like the bloomberg ipo index, and the big story there is alibaba. david: a year ago now. mike: right. alibaba is having a really rough weight it. equal it is up on average.

or 3% from that opening trade that i talked about, so not quite as bad. certainly, you expect ipo's -- growth andunway for good share performance at the beginning, so it is not necessarily as bad as it looks. julie: and i think that is it. ipo's. and juliee regan hyman as the markets prepared to close. that is it for bloomberg "market day." miss" is coming up next. ♪

>> we are moments away from the closing bell. i'm scarlet fu. alix: i am alix steel. joe: i'm joe weisenthal.

my conversation with columbia threadneedle investment today. ♪ alix: u.s. stocks closing lower after a yo-yo session. all the attention on valeant pharmaceuticals. the question is "what'd you miss?". joe: the earnings keep on coming. we will break it down within the hour. >> canada feels the pain of the oil bust. is canada an emerging market? the oil markets are in a dead dog bounce. we begin with the