♪ betty: from bloomberg world headquarters here in new york, good morning. i am betty liu. here is what we are watching this hour -- china tries to cushion the fall as central banks cut interest rates again to keep the slowdown from getting worse. it has been a wild week for the pharmaceutical industry with claims of everything from dangerous drugs to shady accounting. this cloud has a silver lining -- amazon sewers thanks to a fat -- sewers thanks to a trading unit. let's head to the markets desk, where julie hyman has more. we have been focused on what is going on in china. julie: with the rate cut, with the imf considering making the renminbi a world reserve currency, there is a lot of news coming out of that nation.

that is one of the things helping to contribute to gains today. earnings of the the other big piece. would be the other big piece. technology is conservative. stocks are coming off of their highs, but we still see the rallies in today's session. we're also taking a look at how broad a rally it is. take a look at my bloomberg terminal. we have technology far away -- far and away as the best format. technology up almost 3% as a group. from whate rebounding we saw yesterday i negative hospital earnings. the more defensive groups are the worst performers today as we see a rotation. the other thing i wanted to look at was the high/low ratio -- 52-week highs versus 52-week blows. we have been looking at underlying -- lowes. we have been looking at the inportion in the s&p particular, during the august

selloff, and even before that. you saw quite a number of lows versus highs, and of course during the selloff. now it is coming back. there is an underlying strength. that could be one indication of it. ok, julie. thank you so much, julie hyman. we have breaking news. vonnie quinn has more on the bush campaign. vonnie: yes, indeed, that he. jeb bush, once a front runner, and -- andme plummeting an across-the-board pay cut, illuminating some senior staff, and canceling some fundraiser -- eliminating some senior staff, and canceling some fundraisers. in other news we are following as well, we want to tell you about a potential hurricane that could be more powerful than the one that devastated new orleans a decade ago. it is now bearing down on mexico's central pacific coast.

hurricane patricia could come to coast as early as this afternoon. it is a category five storm. forecasters are warning the hurricane could cost -- cause coastal flooding, destructive waves, and flash floods. another democrat has ended his bid for the white house. former rhode island governor lincoln chafee quick today. chafee: i have been on atting -- campaigning campaign of prosperity through peace, but i have decided to end my campaign today. campaign never gained traction against hillary clinton or bernie sanders. former virginia senator jim webb also quit the race this week. a stunning turn of events on the republican side -- ben carson now leads the field in iowa according to the latest bloomberg politics demoing register iowa poll. he is up 10 percentage points since august. donald trump is at 19% now. he is followed by ted cruz.

carson getting most of the support in iowa from evangelical christians. a bus crash in france is the country's worst road accident in more than three decades. at least 40 people were killed when a truck collided with a bus near the city of or do -- bordeaux. the passengers were mostly elderly. is -- air quality is approaching the very unhealthy range. pollution has occasionally forced schools in the region to shut down and outdoor events have been canceled. wordis a look at our first news right now. you can always find the latest at bloomberg.com. betty: thank you. lots of breaking news. vonnie quinn at the newsbank -- desk -- news desk. the chinese yuan might soon be part of the basket of reserve

currencies by the imf. bloomberg reporting that the imf has given china strong signals the u.n. would join the dollar, -- u.n. will join the dollar, and other reserve currencies. the chinese are said to be so confident, they are preparing statements. i want to bring in princeton university professor and the former fed vice chairman alan blinder. this imf news, the possibility the chinese will be put into this special basket, how big of a deal is this, and what would that mean? mr. blinder: i do not think it is a very big deal -- i was about to say for us -- i do not think it is a very big deal for anyone except for china. the chinese have been wanting this as a kind of merit attached. betty: a seal of approval, right? seal of approval for a long time. i think for them it is more important, much more psychologically than economically. betty: it is not going to have a

huge impact on the renminbi? there is certainly going to be more demand for it, right? renminbi one of the reasons -- mr. blinder: one of the reasons i do not make demands on it --the renminbi is not floating in ways other currencies are. move a couple of months ago and under the right circumstances you can convert it from one currency to another, but it is nothing like the dollar, the euro, the japanese yen. so, to me, it is kind of premature, and it is much more of a political statement. the converse of that is let's see. i am not so sure, though i certainly do not know, that the chinese are about to open up the financial system the way the japanese did a generation ago. we will see. betty: but they want to, though, right? you have some doubts?

i have a lot of doubts. they want to get the merit edge for sure. betty: right. mr. blinder: but the chinese leadership is not exactly the believers in markets. they are moving in that direction slowly. i am of said slowly but surely. i do not know enough about chinese politics to say surely. at the top, there is not a really deep belief in letting market price things. an, let's talk about the interest rate cut again by the chinese this morning. is that a big deal for us? do you think i will have a big impact for us? no, but i think it is a big deal for china and it is the right thing to do, so i was happy to hear the news. the chinese economy is weakening. it could use a boost. the chinese are not used to that for the last 20 years, needing a boost to the economy, but it can use a boost now and it is good that it is happening. one of the things that seemed out of whack to me when the bad

news came from china in august was how much american markets reacted to that, as if this was really important to the health of the u.s. economy. it wasn't. it matters a little. it matters a little, but not a great deal. and, similarly, to the extent this boost mr. sununu: the chinese -- boosts the chinese economy, that matters a little to us, but not a great deal. betty: do you see any link to what happened with mario draghi yesterday, saying there marston was to come, possibly, the chinese lowering rates -- you see any connection here, and where does that put the fed? mr. blinder: i would be surprised if there was any connection except the obvious 1 -- both the chinese central bank eak the ecb are seeing w demand in their economies and both of them are reacting the way we think and hope central

banks react to weak demand. is that going to have an impact on the fed? withed looks out of step the rest, thinking about tightening, while all the others are thinking about or actually easing? i do not think so. i think -- it should have some implications for the dollar, which is negative for u.s. growth -- a higher dollar -- but, again, i think the effects are there, but not large. the bottom line, i do not think this will affect the fed's decision very much at all. betty: so, it won't hold back their plan, which is a plan to raise interest rates by the end of this year, alan, regardless of what is going on in china and europe. is that still the right plan by the fed? mr. blinder: the truth is i do not think it much matters if the beginning -- the liftoff, as it

is being called, the first interest rate hike comes in december, as you said, betty, or if it came last september, which the fed skipped, or if it comes next march. within a window of a few months, macro economically speaking, it really does not matter. of course, if you are a day trader in treasury securities, it it matters a lot to you. but, to the broad public and to us, economists, it is not really that important. the exact dating is not very important. betty: but, if, let's say, by the end of this year and we have at -- year we have not had great liftoff and we push it off into 2016, are we in big trouble? mr. blinder: no, we are not in big trouble. the reason i agree with you, my guess is it happens in december, and to me the overwhelming thing that pushes in that direction, which you also said, betty, they have been saying so. betty: yeah. mr. blinder: unless they start

retracting that saying so pretty soon -- i do not mean tomorrow -- pretty soon, that would make the less convinced that it is going to come in december. economically speaking, if it came in september, comes in december, or comes in march of next year, that is of minor comp -- importance compared to whether the tightening path is abrupt or slow, and i think everybody thinks it is going to be slow and i am sure janet yellen will tell us that 12 ways from sunday when they start or before they start raising interest rates. betty: and they have talked about that -- the trajectory being very important. good to see you. alan blinder, the princeton university professor. great to have you. let's move back to politics with the breaking news moments ago -- a big shakeup at the jet ocean camp -- jeb bush campaign headquarters. is this a big sign of trouble for jeb?

>> this is a problem of -- sign of a big something. the staff is downsizing. they will cut their budget by about 45% in the coming weeks. this is a big move. they say it will save about $1 million per month. the bush staff is saying unabashedly this is a course correction that needs to happen -- this is ok, we are just refocusing. binary focus more on the state and it is a course correction that needs to happen as the campaign evolves, but this is a narrative that is not great for jeb bush, who is seen as an establishment, front runner, inevitable candidate, maybe. betty: i thought he had a lot of cash on hand. steve: he does. he had a successful fundraising quarter. he did well. $13 million is nothing to sneeze at, but he is spending a lot of

more money than other candidates. or,burn rate is about 80%, 86%, i think. he is spending almost anything he takes in. there is pressure from donors. they are looking at the campaign saying your poll numbers are not going up, you are spending all this money, you are on tv a lot with advertising -- what is going on, and why should we keep giving you money if we're not seen any benefit? betty: if we're not seeing a result, yeah. steve: this is their way of saying we understand what is going on, we are raining things in, will be smart with your money. betty: where is he poling right now? steve: we have a new poll that came out today -- iowa, likely voters, he is at 5%. that is down 1% since the last time we polled. betty: he is going in the round direction -- wrong direction. steve: there was a time when he

was a lot higher. the big headline is dr. ben carson is actually leading in that first caucus state, but for this purpose, jeb bush is not near the top anymore, and trying to send signals that he knows there is a problem and there are trying to fix it. betty: steve, thanks a much. stay with politics, "with all due respect" will take a closer look at the republican race, hearing from ben carson and ted cruz. we will bring that to you this afternoon at 5:00 p.m. eastern time. ♪

good morning and welcome back to the bloomberg market day.

i want to the markets desk where julie hyman has more on the market movers. there are stocks losing ground today. pandora media -- let's start there. the company is losing 31% at the moment, a record drop for pandora since it went public in june, 2001. the company recorded $82 million in charges to settle disputes with music labels. third-quarter sales also missed analyst estimates. we are looking at the shoemaker skechers as well. the stock is plunging after third-quarter estimates missed estimates as well. even though the shares that rise by 27%. a lot of analysts say to buy the stock today. and, strategists -- the luminary ernest -- earnings. -- preliminary earnings. analysts were looking for profits of a percent share. -- eight cents per share. those shares are down $.12. betty: they compare julie hyman,

with some of the stocks losing ground. big media companies are looking beyond their shores. vice is planning to launch a dozen channels across europe. also, john malone's liberty global is in talks to expand its reach to panama. alex, let's talk about john malone first. why would he be interested? libertyhn malone's global has been in talks with vodafone to do some talks in europe. recently, they both said publicly the talks are over. it is time for john malone to move on. what is next? betty: latin america. alex: latin america might be next. 7% of current revenue comes from latin america.

john malone has looked to various different places in the world. obvious, he owns part of charter communications. he owns a huge swath of european cable assets. now he might think latin america is somewhat fragmented and there are a few large players that mike or might not be for sale. maybe we can build our own empire in a bunch of different countries in latin america, potentially. it will be interest in. cable and wireless, which sounds like a trade publication, but it is the name of a company that was spun off from vodafone a couple of years ago, talks are ongoing between those two companies. there might be a deal in a few weeks, bloomberg hears, for about 5.5 billion dollars. it would be a good start for a malone small empire. betty: yes. alex: the question that would be what would come after that to build it out? that is a little more unclear. one thing we have heard in latin america, that has been speculated for a while, perhaps

at&t is not interested in latin american assets of dish. vice, them malone to going after the european market, are there any assets to buy? alex: there is no evidence they're looking to buy anything. they want to start a channel in the united states. in vonnie:a stake --vice already, and they are looking to partner. they are more than just tv. they are already online. the idea would be to put together a media package and have our stuff and non-european channels, while simultaneously starting a u.s. channel, h2tnering with a any to turn , a current cable network, into a vice channel. a much.lex, think is

alex sherman of bloomberg news. much more ahead on the bloomberg market day. ♪

the 1% isng part of taking on new meaning. about free art. >> it is a little unusual, and it is getting more uncommon, but the beautiful paintings by roscoe, they hang on your wall, unless you sell them, you're not going to make money, and now are lending is becoming more popular because investors, hedge fund managers have figured out why not give this work of art as a collateral and get some money from it. usually, a person has an amount in mind, $100 million, 200, whatever it is, and they put together a group that is worth twice the value because banks and lender's usually round up 50% of an artwork.

vice >> i understand are some major players out there. one of them is steve went. can you tell me what he is doing? katya: he keeps the work. it has work from sylvester stallone, picasso, warhol. several works have sold. there is a double elvis that sold for $35 million at sotheby's. there is also a jackson pollock painting that sold in may for $18 million. the values differ. the bulk of the value of the collection is probably in 10, 12 works. >> why do the banks offer such low rates -- why can't they do something to percent, 3% -- well lender's --

they have a lot of other assets. they are using art as a collateral, but they're not going to confiscate art. they have stock portfolios, houses, private jets. it is really a courtesy loan to those people. >> relationship building. exactly, and more banks are focusing on that part of their business, and art -- because somebody collections have risen in volume -- value over the last 10 years, prices going up and up for these trophy pieces by top artists. about the're talking 1% getting 1% loans. these are the richest of the rich. why do they need more money, and cheap money at that? katya: they have debt. they can put it in their business. it is arbitrage -- they can put 10%, 50% in the business.

it has seen explosive growth over the last four years or so. how much money we talking about then, how big is it now, and how big will it get in the future? katya: this year, the art lending market is expected to reach $10 billion, and that is twice what it was in 2011. >> amazing. katya: big growth truly back by the appreciation and art value. ramin -- ramin in a sense year with katya kazakina, and we will be back in just a moment. ♪ .

♪ betty: live from bloomberg world headquarters you're watching the bloomberg market day. let start with the first word news. vonnie passmore from our news

desk. -- has more from our news desk bushin vonnie: jeb imposing a pay cut. canceling some fundraisers. he was once the front-runner but trails badly in the polls. a new poll on the republican campaign has donald trump in an unfamiliar situation. second-place. ben carson has stormed in front of donald trump to take a commanding lead in iowa according to a bloomberg politics and des moines register poll. carson is a 28% of likely gop caucus participants, up 10%. trump at 19% and they are followed by ted cruz. former rhode island governor lincoln chafee is ending his campaign for the democratic nomination. he is struggled to raise money and well behind hillary clinton and bernie sanders.

a monster hurricane taking aim at mexico's central pacific coast, hurricane patricia could come on shore as early as this afternoon, a category five storm. forecasters are warning the hurricane could cause coastal flooding and flash floods. rapidly evolving views on climate claims, three quarters accept the scientific consensus that it is happening, the highest level in four years. the biggest surprise is what is happening inside the republican party. it do not present of republicans say climate change is happening, up from six months ago. say9% of republicans climate change is happening, up from six months ago. betty: big names in the pharma -- pharmaceutical worlds fell off a cliff. people --nd that

was usingnc saying it supplements sold with the legal ingredients. valeant's shares limited this week after a report alleging that they had improperly recorded sales. denied the reports. they told bloomberg tv that the company has expanding to do. they are making websites for pharmacies and pharmacies are outsourcing their facilitator. none of it makes sense. take all the responses from all the sales side and include the responses from the companies, you will see three different stories. to be honest, the responses are amateurish. that is why the stock is reacting. anthony --ing us is

his firm has had the lone cell sale reading lone on their stock. anthony, you have had a sell rating for three years, the only one. is it based on what andrew pointed out? >> over time it was symptomatic of issues. we found issues with their accounting and disclosures and with transactions that were taking place that we -- what seem to happen was everything was almost too good to be true. it was not that we knew there was specialty pharma issues, but the issue first arose last year in q3 of 2014. we did something radical, we picked up the phone and called

them and asked if we could purchase drugs. we knew the drugs to ask for. it was interesting because when we asked for the product, all they carried was the valeant product, they do not carry generic or other manufacturers. it let us to believe that something seemed odd. what mushroomed everything andrew and everyone else caught onto was the fact that there were's -- there was lawsuits. that, the web is getting so tackled -- tangled, names that we have uncovered and because of that, someone got slighted in a deal and all the cockroaches are coming out. betty: valeant will hold a

conference call on monday. how will they explain this? is almost a short very, we have not heard from the country except in written statements all week while their stock has been on one of the most brutal ride i have ever seen. betty: it is up 6% today. drew: that is far from the racing the losses have had this ngek -- the racing -- erasi the losses they have had this week. we have not heard from the ceo, they have denied it but now will have a conference call on monday and are bringing everybody out. the ceo, the members of the executive team. -- it seems reading strange to a lot of people that it will take them until monday to address the issue. when you have at something this

dramatic. anthony: here is a company that used to be $100 million and small research shops are writing reports and the ceo cannot get out there right away within five minutes and say we will put a stop to this. here is what is going on and make it clear. betty: for me, who does not cover this on a daily basis, i am confused with the specialty pharmacies and what they are. are they commonly used by drugmakers? anthony: it is not illegal and uncommon. not to sell to them or for them to sell. what may or may not be above board is for them to sell in states where they do not have a license to do so by said state. that may be the issues that are coming to light given the tangled web that our analysts who deserve credit.

that they say. way the specialty pharmacies were, you are a drugmaker and you use them to push your drug or to make sure your drug is out there in patient's hands. it is better than going to a walgreens or cvs. valeant seems to have been more aggressive than best in using this practice -- more aggressive in using this practice. anthony: they are also giving co-pay discount coupons distributed to doctors that doctors will head over to the patients. the pharmacy bales in the prescription and gives the drug. -- males in the prescription and gets the drug. betty: i thought the issue was that they were booking sales

through these pharmacies that were not sold. anthony: this is not clear. betty: that is the enron situation? anthony: in part. it could be there are transactions taking place with entities that they may or may not have a control over that they are not booking or that they are booking. it is not clear. hearinge concern i am with people in the investment community is not so much that the allegations on the short seller are true. this idea of massive eu legality -- a legality. a lot of people are discounting those and saying valeant are showing that is not happening. when we talk about specialty pharmacies and aggressive business practices people are questioning whether they have gone so far in pushing this that they are going to be problem's. s.

someone could close a loophole. it is a very aggressive business practice in terms of driving revenue that could be much more at risk. betty: do other drugmakers do this? drew: to an extent but not at that level and they do not have the ownership agreements that valeant has. it is not clear why they had the ownership agreements. anthony: if you own the pharmacy or have influence you can assure that pharmacy sells your drugs at whatever price you want. and ships it wherever you say. irrespective of having proper licenses to do so. betty: isn't there some sort of regulatory rule that says -- that makes no sense that you could buy a pharmacy and sell it -- basically selling your own product? not, he used to

be how the industry work. the company's were everything to everybody. they had the register vision is mrs.. -- distribution businesses. where do you think vale ant is going, have a blasted past your chart? pastny: they have blasted our relative valuation and given the uncertainty i would be reluctant to give an actual price. we do not know what the revenues are. -- from theeresting last conference call, we got out for the first time they had ownership of a company and a right to purchase it, how many other ones exist and why was not that disclosed? betty: it might have been too small to be disclosed.

anything youe could hear on a conference call to think they are dealing with it? i would have a hard time at this point, i expected something right away. betty: a lot of drama on monday. you are finally getting vindicated in many ways. anthony: no stop in the entire firm -- stock in the entire firm that has caused more consternation than this one. betty: thank you anthony and drew. bezos'netahead, jeff worth getting a boost and what made steve ballmer invest in twitter? we continue to talk china and how the central banks are driving the global markets, all that and more coming up. ♪

betty: welcome back, i am betty liu. european markets just closing. let's head to london where ryan chilcote is standing by. ryan: great day for european equities. with the exception of ukraine, it is green everywhere. the dax doing good. companies, whys are they doing so well? you -- the maker of good gucci. it got a second kick after it be on sales, then we had the action from the pboc.

isis good news that the cboc working to help chinese growth. we saw the same thing with daimler and bmw. if we move over to that. 600, your benchmark, a two-day chart, yesterday we had mr. drawdy -- mario draghi speaking and the stock 600 rose 2%. action, pboc took its together between 1:00 p.m. yesterday and 1:00 p.m. today, european equities went up 4.5%. you could have gone to lunch yesterday and not come back and if you were long you would be very happy. a huge day for european equities with a lot of the exporters rejoicing. we saw the euro coming down.

andy: you could have bought held and you would have made money by today. thank you. for a look at the europe and u.s. markets, abigail has the latest from nasdaq starting with health care stocks. at the: big green day nasdaq with the composite index at 2%, big earnings and analysts upgrades in the health care space. nice to see concerning -- with all the drug price concerns. up 20% from a cloud-based services for medical group, they put up a great third quarter, beating bottom line estimates by more than 37%. --y upgraded shares to something worth noting, the short interest on the stock is big, 30% of float.

the upside action should be short coverings to the upside and investors possibly going long. another upgrade, from raymond ntgr shares up 30%. they upgraded from an on -- underperform setting a price target of $39 and another impressive quarter, something that stands out to me is you look at the stock, a few minutes before close, shares off 8% year to date, now up 12.5% year to date. that shows you the power of a great quarter and an analyst upgrade. betty: thank you abigail do letter at the nasdaq. shares of amazon jumping. millionse profit of $79 and from a conference call with the cfo it anticipates the fourth quarter will deliver strong results. >> we have 23 sort centers which allows us to control more of our

shipments for longer. we value our relationships with usps, and fedex and other global cap -- carriers and we look forward to a good holiday season. betty: what is behind amazon's positive third quarter results? for now, jeff bezos is the third richest person in the united states thanks to all american consumers. consumers.rnational interesting results from amazon. i probably should have seen it coming. i try to figure out what was going on. some of the basic things jump out at you, not least of which is the third quarter sales gains. ,f you look at the sales gains the third quarter is not always the strongest quarter but they are accelerating and it looks like sales will slow down but we

had $2.1 billion of's -- amazon web services. is web services business quietly -- only 8% of overall sales but a substantial portion of the profit, 52% of their profit and profitability of this division and growth of the sales is an amazing thing. we are getting a look back and can see the growth. the sequential growth, quarter over quarter, nearly 80%, amazing. alreadyabout a business $2.1 billion. the double-digit growth on a quarterly basis, shows they were up 14% in the quarter. that growth rate appears to be accelerated. impressive.ee, very what about reining in spending? --y: with the web services

even as they cut prices and a it cutszon web services off profit so the probability is iteresting in two parts, should say it is 25%, fantastic. the on that, it shows a different philosophy for amazon, they famously has always shunned profitability so they can grow revenues and they want to be a big global businesses and they have spent vast fortunes rebuilding their distribution efforts to be closer to the customer, rapidly growing their business and their today deliver and their prime business growing rapidly. what we see with amazon web services, a philosophy of probability that we have never seen in big amazon. that gives investors hope that this giant business might create some profits. .etty: thank you

cory johnson in san francisco. for our west coast wake up. much more ahead, presidential hopeful ben carson and ted cruz will be on bloomberg with all due respect at 5:00 p.m. eastern time, what they have to say about the shakeup in the polls and about jeb bush's campaign and that shakeup. ♪

♪ betty: it is time for today's options insight. there is julie hyman. julie: let's look at the major averages. a rally going on between the chinese news and earnings. a stocks rally across the board with take earnings important -- tech earnings important.

joining us is joe from equity armor investments in chicago. we are seeing an interesting move in volatility, setting up from the worst month ever for the dekes -- vix as stocks have recovered, is anyone nibbling at volatility or everyone shying away? high, market open on the new relative highs and edicts lower.wer -- vix open the market had been gradually pulling back and as we speak volatility up. seems like people forgot all the worries in the morning at our remembering right now. people might be repositioning at these cheap levels of volatility

. julie: what are the risk events? the reason to buy at this point? news on thena surface seems like good news for the market. however, maybe it is because the chinese economy is worse than expected. that is one potential. . -- one potential fear. domestically, the federal reserve, when will they raise rates? like --aid that, seems clearwater's are ahead of all the -- clearwater is ahead. i want to turn to your trade. suffering, then company came out with its earnings and restructuring, the stock was up and you are looking to buy now, why?

bullish on the market. i am -- we are in a higher end of the range, one area participating is biotech, my favorite biotech stock has been biogenetic, well advertised, in the doldrums, it will be the leader in that and looking for a short-term play down to 280 four .o 90 , $2.50 if it is right i can quadruple my money. julie: thank you. we will be right back. ♪ buddy- nice place, nice car what happened?

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betty: this is what happens on a friday without a teleprompter. welcome to "bloomberg market day." ♪ betty: from bloomberg world headquarters in new york, good afternoon. i am scarlet fu. >> steve ballmer thanks twitter tellswinning strategy, he us what he bought 4% of twitter stock. governmente chinese cutting interface again. back as itbounces faces lawsuits. we will hear from an analyst that is defending the