to a runoff. expect more market friendly policies. guru wouldertising rebrand troubled companies and presidential candidates. stephanie: welcome to bloomberg go. david: we have a big program. kershner.a, lewis stephanie: we will be talking about valiant. a pharmaceutical company that cannot get out of the news. they added a member of the board from the activist investor behind them. david: they had the department

of justice on their case. stephanie: halloween is less the week away. big news for this girl. david: a big day for stephanie. stephanie: i love halloween and the fourth of july. vonnie: a major earthquake has shaken afghanistan and it has been felt hundreds of miles away in india and pakistan. the quake struck the hindu kush region. it was a magnitude 7.5. reports said the quake caused buildings to collapse and killed two people. last april and earthquake in nepal killed more than 8000 people. europeanweekend, leaders struggled with how to handle hundreds of thousands of refugees. in brussels, german chancellor angela merkel and other leaders managed to come up with short-term fixes.

trying to reassure them he has a plan to win the nomination. the one time front runner order job cuts in his campaign and pay cuts for those who kept their jobs. now on a check on the markets. already across the board. many futures are down, futures down 19, nasdaq off eight and three quarters. take a look at some of the field news. travel agency in cunard, which is controlled by --. it is joining $15 million in market cap. total deal details are out

-- are not out yet. piedmontgy is buying for 4.9 billion dollars in cash. $60 a share for piedmont. a big premium over a free market trading price now. of $6.7 billion in enterprise value. down 12% this morning. the company will hold a car -- call later. it has been approved so it will be interesting what happens on the call today. down 12% right now. >> high drama. china, todayut in they will start with meetings in 370 touch ie than officials are gathering to revise a new five-year plan.

joined by oure expert on all things x -- economic. we woke up this morning to discover that the markets did not react too much. there was a big reaction here on friday, that today it did not seem like much of a reaction in beijing. could you please tell us how big a deal this really is as you see it from asia? >> track for their slowest pace of growth in 25 years. it is having a big impact on asia and the world. they are meeting this week to thresh out there next economic plan. lots of observers have been warming back their expectations. get a sense might to just how slow we have been growing.

we are looking at a target below seven percent. it is significant for the rest of the world. >> are the markets absorbing this? is china committed to the 7% number? i think there is a sense of the expected at this stage. it is understand -- understood that china's economy is slowing. we are in a. and a senseterm that the currency has remains stable since the devalue on august 7. and all is not quite there on the china story as well. it is all about managing expectations. going forward the pope will be -- going forward people

will be looking at them getting back on track with the economy. that is what investors are waiting for. >> is in a tough making a five-year plan? >> they have been easing policy, because they want faster growth. policy,hrough monetary the other is the fiscal lever. they spent aggressively in the aftermath of the financial crisis to support the economy. they have plenty of fire power possible and can continue this over the next five-15 years. >> they have plenty of fire power in the sense of reserves. -- in the aftermath of the

crisis they did a lot of infrastructure, which generated a lot of commodities business area is there a limit to how much you can really do? ? there is a limit. it can go past its natural expectation. we have a generally weak global economy. the u.s. limping along, china is toy depending on exporting those economies. intel those economies come back on track to a stronger degree, they will spend on the domestic economy whether they need it or not. cases ofobviously excess, but there are still real means for infrastructure development. that will be the plan in the near term until they can rely on their export model once again. that brought up a good point about shock and awe.

they don't want to have it a dramatic movement. 3.5 24% move in terms compared to other trading partners, moving 20% to 25%. they announced that a initial move on august 11 and they want to rightly follow that up by weakening their currency. see your brow is furloughed over there. >> david sent me a note this weekend. what traders were doing after the rate cut. people were buying up assets, equities. they were also betting on of fall. this is a history of all the mst,es that were done o the fear index. the contracts that this will rise above 30.

it rose by 42,000%. people are betting -- there will be a huge rise in the amount of people that are betting. this fear index will shoot up. that can mean that the markets are scared of a drop. it will bring equities crashing down. >> back to you in tokyo. should we be looking at cisco issues, is that the way you read it from asia? going to be one side of it for sure. we also need to see on the reform side of things. part of the story is trying to reform the economy away from the old growth. we need to look at what will they do with big state enterprises? will they make room for private competition, to shrink the size of the economy. what will they do to boost

services, boost consumption and innovation. all these areas are slowly growing but not enough to fill the holes left behind by the slowing of manufacturing. a -- what they do under under the reform side. >> thanks for joining us this morning. stay with us and the next hour. we will be speaking with former ambassador to china and jon huntsman, who will be joining us to talk about the region and the rate cut, still to come. advertising. superstar david branding,lking branding presidential candidates and a whole lot more. next, i storage election in argentina.

-- a historic election in argentina coming up.

>> welcome back to bloomberg. major deal in the energy industry, duke energy by piedmont natural gas, duke will also assume $1.8 billion in piedmont's debt. they serve business and .esidential customers agreement a tentative to provide races across the board. uaw members will vote on the deal later this week. the union wanted a richer deal with gm. jobsrsal pictures steve was a disappointment at the box office. little more than $7

million in north america. that is about one third of what analysts expected. >> it's time for global go. investor friendly argentina. the race for the next president moves to a historic run off. talk about these results. in your universe, a big weekend. >> very surprising. compared to talk about how nothing ever changes in latin america. there has never been a runoff in argentina. a big difference from what we saw in result. -- the frontdaniel probably end up winning. the fact that the opposition he came soacri, close to him, just two points behind him. in the middle of the night, he was ahead.

it's a big shock. it will definite waste buried big rally in the market today. is there any inkling that it's an angry protests>? >> it's true. he's been saying he's going to be a continuation of her policies and maybe a hind -- behind closed doors he's been having people tell investors and going to be a change, but out front, he's been saying i'm going to be a continuation. stephanie: at the end of today, if we have a run off and we do end up with status quo, why should there be a rally today? >> at the end of the day you need to have changed. it's a country that can go on the way it is. it has widening trade and fiscal deficit. the peso is severely overvalued. it's significantly weaker than it is. ,hey running out of reserves since the default they have been

out of international markets. the need to raise money if they are going to be implementing the things they need to do. david: investors are confident he understands that? >> investors are confident he is going to do something. he may do things quicker and much more to the market liking. he may do it slower, he may have to spin it more politically. it may not be so cut and dried. stephanie: when you say there's still ae rally, this is very distressed opportunity. we're not talking about bond trading. david: -- they are. we a lot of crude interest. bizarre, argentina is bizarro world. every thing is upside down. trading hardare now because of the past-due interest. these investors poured their money into it. we are talking about big shots, hedge funds. ones from 2001,

there are all these new ones, night head, harry that are owning the ones that fell into default last year. stephanie: these are distressed hedge funds. investors are not suddenly excited about argentina. >> they bought them at distressed rices. the bet better payoff. david: there is good news. thank you for joining us. he is a true," leader in marketing. david droge up will be joining us on "bloomberg go." ♪

stephanie: welcome back. time to welcome the founder of

an advertising agency. david is the single most awarded created. his clients range from spotify to under armour to president obama. david, welcome. david: i would like to be a creative. d: even get away with anything. people say they are creative. that's why i didn't shave today. being aus about creative. and the state of the advertising business right now. the advertising industry is blooming. it depends on which side of the fence you are looking at. it's more important now than it ever has been. but i think the power has shifted much more to the creative and strategic agencies. then sort of the traditional powerhouses. that: do you believe

advertising has kept up with digital? has it made the transition? david d: dependency u.s.. -- on who you ask. this bead that the digital age moves isn't necessarily in sync with how marketers think. exceptions, but digital has been a huge resolution -- revolution, and i don't feel like creative's are taking full advantage of digital. it's been transformational. it's made commercials. people can choose not to participate with brands. before it was the tax you pay, now it's much more intrusive if you watch advertising online. you still have more pop-ups and banners and things that drive people crazy. stephanie: can you deliver the same type of experience in a tv

commercial? you have 30 seconds to tell a story. nine have much shorter pop-ups, things on your phone. how do you get that same experience? create: you can still urgency, but there's no question that a beautiful film on television still has the three dimensions that you can really resonate -- the sound and the visuals and all that stuff. great films online, the beauty of that is they don't have the advantage of just being 30 seconds. you can tell a fantastic narrative that can be five minutes and it has components to it. when it's unwell online, the experience is much more valuable. give us an example of brand that does it right here in. i think hasrand done very well online is something like dove, the always

thing that was done recently. itwas an emotive film but had an ecosystem of ideas around it to rally people together. stephanie: going with social consciousness. david d: use the power of online to perpetuate it. do thismour, they ground movement that is just welling. when that's done well is exceptional. there's not enough exceptional out there. product?: doesn't sell -- does it sell product? roy. d: at the end of the day, if there's no roi, it's just art. if it's connected to the brand and there's a reason for it, absolutely. it's just a beautiful thing more funny thing, that's a piece of art. if there's some human connection

with the product and the message and, absolutely it sells. best brands are built by advertising and good products. david: what's the next thing? innovation? david d: we haven't perfected online. mobile is the one no one has worked out how to play a properly. there's no question, it's the most intimate canvas in the world. it's the one thing where people don't want to be bombarded with advertising. to doe to work out ways it without being intrusive. stephanie: what your favorite advertisement of all time? david d: i grew up in australia. , stickingid droga with as we talk corporate branding on "bloomberg go." ♪

i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. stephanie: you are looking at midtown manhattan, is a beautiful day in new york city. david: welcome back to

"bloomberg go." we are delighted to have david droga with us. stephanie: he is here with us for the hour. david: let's go to first word with vonnie. the quake hit the region and according to the u.s. geological survey, it was a magnitude 7.5. it caused landslides and flattened buildings. there are reports that at least 29 people were killed. in poland, voters rejected the -- theent that opposition party will have a majority in the lower chamber. the party's promise more government control over the economy. oklahoma, the woman accused of a deadly homecoming parade accident goes to court today. four people were killed and 47 others injured when a car struck the crowd.

police say the driver was drunk. stephanie: thank you. it's time for this morning's must-read. and in the house, and he has chosen a political article looking at the 2016 elections. we've taken a quote from the piece. americans, let me tell you, there's so much to love and so much to hate about your presidential elections in the era of easy travel unmasking medications. it makes the campaign way too long, even for a job as important as u.s. president. non-american, you want to come out us? david d: i've been here long enough that i feel like i have a legitimate opinion on it. he just went straight to the heart of the issue. to it withs authority from his experience in the cave. there is too much -- in the u.k.

there is too much. it's too drawn out. all of them at the moment are like pieces of tofu. personality ofe anything that will resonate with anybody. it's perpetuated by the media. it's an interesting observation that he looks at it. david: a little bit? david d: i'm aware of where i am right now. there are some things you can admire. e of the importance of what's going on. it's a three ring circus. david: do you think in england they have a better solution? david d: not at all. david: it's more that it takes a lot of time and money. david d: the bad is accentuated by the style here. stephanie: max? max: i was looking at advertising revenues. you can see that they jump during election years, or at least in the even years.

we spend $2.8 billion in dues and 16 -- 2016. we hear a lot about politicians in the presidential election right now. they are not spending that much on tv ads. do you make up for that in other ways? how do you get the message out when they're are not spending amazing amounts of money to do in even years? david: you get free coverage, the debates in the coverage in media and things like that that is free. david d: they're are getting a lot of free play at the moment. they are still doing a lot of grassroots stuff. the huge doubling down on television comes when you have narrowed it down to the few that are going to go. david: this gives you fits if you're running a local television station. your year-over-year comparisons are always off. the difference is enormous. stephanie: you want your first year running a station to be an election year. david: this is my morning must-read.

volkswagen, was shot you. -- we want to talk to you. it emerged that the eu's top environment official alerted his colleagues that motor manufacturers were gaming european emissions tests more than two years before u.s. authorities uncovered widespread cheating ibw. -- at vw. they communicated this with an internal memo. david d: it's going to get worse and worse. stephanie: from your perspective, you are a branding guy. said what advertising campaigns that he loved, you said volkswagen that can the 1960's. david d: they were one of the forefathers of great advertising. they are in a bad situation. awareness is something that all brands struggle with, but the trust factor, that's the one. that's unbelievable. david: take us behind the scenes.

are retained, it's much more than a marketing problem or branding problem. what would you advise them at this point? david d: for the record, we work with toyota. they just took them over. david: that was the lead in the article. david d: i think the thing is they have to continue advertising. it's more than just protect the revenue and keep spending. as much as what they are doing and what's happening in the industry as well, if they have to show and demonstrate the interactions that they're not just remorseful, but what they are going to do change their behavior -- it's not just spend, spend, spend. we've do you say we know lost her trust and we need to get it back? david d: i'm not a crisis specialist, but i think they can win by coming straight out. , theyy don't knowledge it

do have to acknowledge that. i think the public wants to trust them again. or if they want to be trusted they have to knowledge that. workinge: if you are with brands that want to become trusted, is there a column of famous people, actors, everybody wants to be a brand today. when you think about who is going to the face, the name, lincoln, matthew mcconaughey. -- how do youed decide who is going to be the right face? david d: celebrities have always been important. but it's very generic and somewhat a lazy thing. there has to be a reason for a brand to have a link with a celebrity. if you are selling makeup, than just a face is enough. if your competitor has just as much right to use that person, it's an arms race. said, from our side we talk about creative strategy.

the theory was of you had to use a celebrity, it was because you didn't have an idea or personality. that's a bit harsh to say. but as long as the personality and with the brand stands for is bigger and more important than just the face of it, you got something. stephanie: are there too many celebrity brands? david d: we live in a celebrity culture. it's crazy. people did our the stuff. strategy.rt-term you can link yourself to a celebrity and then something with that celebrity -- pick a certain fast food chain. stephanie: subway. david: let's go to an iconic brand, yahoo!. the original brand that's fallen on hard times. stephanie: they are a bunch of yahoos. david: what could yahoo! do? david d: what they did yesterday was very smart. of putn't just sort bells muscles on something and make themselves cool and relevant again just through

marketing campaign. show me what you can do for me? -- wage which demonstrate that to prove it. they stream something that people love. nfl,: it's streaming in and they paid $20 million. david d: that's a drop in the bucket. they could drop that on a celebrity campaign. first this is not their foray into programming. stephanie: but the nfl, people crawl through boxing go through tunnels. every brand of paid through the nose for that. but they realize for them to be who they want to be, they have to prove it. that's the difference where fundamentally advertising is changed in the last 20 years. it,ds didn't have to live they could just say something.

now they have to demonstrate. their bodily which has to match what comes out of their mouth. stephanie: how about the branding or media company that seems to do no long -- no wrong? it's an amazing thing where they just have to be inclined to be associated with the category that sounds interesting. stephanie: why? every cmo fears them, desires them. david d: i don't have a recipe or answer. grassroots,h more it seems to be youth associated with it. those thingsof that everybody knows, everybody wants to be around. i don't know that many people who are actually watching it. but clearly there are because it has a groundswell. david: how much of that is personality driven in shane smith? is he a version of martha stewart? stephanie: that is one sexy couple.

that's a couple of like to see paired. it's pushing against the slow-moving industry and category. people want to move towards the things that are racing towards the future. it just feels like it is at a pace. that's seductive. stephanie: we're going to need producers to create a shame it -- shane and martha mash-up. major averages closing up last week with a nice rally. the dow at its highest level since late july. we take a look at futures with less than an hour to go for the open. stocks ticking lower as investors pause ahead of the leaves batch of earnings and ,nother federal reserve meeting pfizer and apple are reporting this week. it feels like we're going to have a strong monday.

among shares moving, maleate pharmaceuticals sharply in the red yet again. they assigned a lead director to have an internal review of allegations into the business relationships. they will hold 8:00 a.m. conference call. politicians need to protect their brands. they'd authenticity. we get david's take next on "bloomberg go." al hunt may be chiming in as well. ♪

stephanie: --vonnie: welcome back to "bloomberg go." starwood capital is expanding into the home industry. they are buying thousands of apartments for $5.4 billion.

the residential rental market has expanded as young americans find it harder by a home. its workersrs and have avoided a strike. they reached tentative agreement on a four-year contract that covers all most 53,000 workers. it includes significant wage gains. owners vote on the deal later this week. larry ellison says oracle will keep pushing into cloud computing. leadership in the industry is still up for grabs. >> are two biggest competitors says -- the companies we watched most closely over the last two sap,es have been ibm and and we know longer pay any attention to either one of them. says they're most formidable competitors include microsoft and amazon. that's the news you need to know this hour.

wenie: we been -- stephanie: have been talking advertising all morning. as we get into the swing of the next presidential election, we are taking a look at how candidates brand themselves in the role of political ads in u.s. elections. david droga is still with us. hunt.joined with al david, let's start with you. branding. how important is it for these political leaders to brand themselves, and can they do it authentically? thed d: authentically is question. i have more people giving them advice and the need. they are all getting the same information, saying this is what americans like. they are all trying to fit into the same box and all turning into vanilla.

that's why no one is distinctive , you have a few ones you can talk about. i think that they have to find a way to stand out from the crowd. it's mores important important for them that it is for billion dollar companies. what are thed: people that stood out from the crowd recently has been ben carson. when you look at ben carson, he doesn't sound radically a typical political candidate at all. he is soft-spoken, somewhat cerebral. does it strike you as her mark what he is doing as well as he is, at least in iowa? al: it's more than iowa, but it's pronounced in iowa. it's what david mentioned a moment ago. it's authenticity. he comes across as the real deal. he can say some things that many people might think r looney, if only the germans had guns, the nazis wouldn't have taken over,

obamacare is the worst things that slavery. in such a calm, reassuring manner and people know that he was one of the great pediatric neurosurgeons of all time. unlike herman cain and others, he's not a phony. i'm not sure it's going to last, but it's quite real today. someoneet's start with who is not a pediatric neurosurgeon, which is donald trump. it couldn't feel more different than these two candidates. david d: it's as much about what they are not. he's all fireworks and i imagine it's going to peter off and let us wonder what happened? they are not afraid to say what they think, even though the substance of what they say will be judged. all the edges are shaved off for everyone else. everything else that comes out as paint by numbers. trump is like a cowboy shooting.

it has a flair to it right now. it's interesting. but i'm shocked that can sustain itself. stephanie: trump is all about brand. this over-the-top brand. if you are one of the other candidates, how can he make yourself stand out when right now, lunacy and fireworks is getting all the attention. david d: this is where the process of the time -- it has to get to some substance. it's more than just selling or borders. there has to be tangible elements there. i feel like just saying solutions to things that i'm going to resolve russia because i'm a likable guy -- it's funny a podium. but eventually people want to know that something is there. you have more experience in covering presidential campaigns than anyone i know. can trump stay the distance? al: three weeks ago i would've said no. two weeks ago i would have said

maybe because it really looks like he has a lot of durability. i think the fact that you cited earlier that bloomberg poll which showed that carson has surged -- once donald no longer becomes the front runner, i wonder if it all will start to fade. i would've thought it faded months ago. needs a second act now. i'm not quite sure what that second act might be. stephanie: let's talk of the other candidates. his big data hurting them? much information today that many candidates can't come out with their own view and their own authentic random because they have so much competing information and they don't know which road to take. true.at's but those who looked the most authentic, whether it's ben carson or donald trump, like it or not, or bernie sanders the ones who are doing the best. a great year in a great yearning for authenticity, but also they want to have leadership. if you want to look into republicans to keep an eye on.

they are not in the back of the back, the middle of the pack but could be coming on, look for marco rubio and ted cruz. stephanie: we have to talk about hillary clinton. isy people will say that she the opposite of authentic, she so cal deleting. david d: she's very measured and considered. it's weird or strange that she is penalized for having this long experience. i think the thing is, i'm pro-hillary. experience at our intellect is going to take her across the line. i think what she has to do with her brand is people need to get to know her personally. stephanie: don't they know her ready? david d: she's the best known least known person. just let that come through. stephanie: best known least known person? david: she thinks she is least known. thank you. later this morning we have

-- -- ibm ceo luger share ♪

david: welcome back to "bloomberg go." broder -- david droga is still a. set jet has created a 24-hour channel devoted to this. is it a hallmark of things to come? david d: i know that is always going to be that, but it's very smart brand. it's progressive and innovative. i think it's definitely going for you demographic. stephanie: i don't think of teenagers with snap chat with james bond. david d: if you want to sell this franchise that's 50 years old.

you have just begun language. stephanie: what is it about snap chat that six to them? david d: their parents aren't into it. it makes the things they like precious. she was gone, on the snap chat. david d: it's the fickle nature of the landscape. stephanie: with 20 seconds. if you had a big one, instagram, snap chat, facebook, twitter. david d: instagram. stephanie: david droga, thank you so much. in the next hour, governor jon huntsman and lou gerstner. ♪

david: china passes new normal. economic slowdown.

can learn today from earlier success stories. and valeant under fire. the drugmaker defends. the company talks to investors in this hour. ♪ david: welcome to the second hour of "bloomberg ." stephanie: we will give you life legends lessons. there with us and also the chairman of the institute of m.i.t. and harvard. welcome. before we get into it, --

david: let's go to first word with vonnie quinn. vonnie: thank you. earthquake rocked afghanistan. 40 people were killed. of miles away in pakistan and india fell the tremors. a magnitude 7.5, the strongest quake to hit afghanistan since 1949. in argentina, there has never been a presidential election like this. it is headed to a runoff for the first time. about 35% of the vote. wins, investors in argentina are betting on the shift toward more market friendly policies. obamacare fighting another challenge to the law. lower courts have her judge of the argument.

nothing for supreme court will take the case. now, here is matt miller. matt: i'm not seeing a lot of movement but it is negative as far sutures are concerned. dow futures are down. the credit card industry visa, usaa, which represents veterans and their families, will use visa cards now instead of mastercard's for all of the members. a $67 price target. also, there is caution handbags at least for michael, and significantly higher inventory. they're not moving at the door quick enough here they downgrade kors.el the also downgrade making -- macy's because it is a little

warmer and people are not rushing out to get coats that they were at the same time last year. in preparation for winter. chinese leaders will be gathering in beijing to map out a five-year plan. often pel to china review of met with many of china political leaders. glaxo think we have to separate this almost absurd focus on the 7%.th rate of china had $3 billion of gdp. the five years later, it is 11 trying dollars. they have grown for 10% compounded in 35 years.

the growth was going to slow anyway. what you have to understand is they are going through an incredible transition they are managing. they are managing away from exports and production to consumption and internal investment. is a tricky change their trying to make but my guess is they will probably pull it off. the growth from the chinese economy this year would be growth from 40% in 2007. you have got to focus on the >> to some extent, a victim of their own success. this is a much larger economy. how much confidence do you have the people managing it were able .o pull this off

last broade the .conomy the tangible industrial product in the world. they're one of the leaders. the biggest one is to -- what to do with all the state owned enterprises. that is tied up not just in the of the importance of the state, but it is tied up in the economics of all the provinces and all the cities where the state owned enterprises have served political and social purposes beyond economic ones. the chinese government does not

worry too much about what happens in the stock market in the last year. people are dealing with that what what the chinese government is doing with his jobs pay they need to create 50 million new jobs. brought 400 million people into the middle-class in the last years. or moret to do that time. that means creating jobs and it is potentially much more difficult when you move away to state owned enterprises. to privatizetrying it, it is harder. >> it is much harder in as they move from industrial production, which is easier for the state owned enterprises, they moved to consumption in services, a much diffused type of economic infrastructure, and then there

the latestrequired data suggests service businesses are growing 10% per year. they continue to grow services at 10, they can certainly continue to grow the whole economy at five. they are the largest consumer of luxury goods in the world today. they are building a consumer economy that is quite powerful. stephanie: you just mentioned to data. the short sell of to hate on china. they say never look at the data. how much do we trust the numbers we get from china? themdon't think we trust 100 percent, but over a long time, it is hard to hide. numbert know whether the for this year will be 6.9 or 6.5, but i know it will probably be better than five.

u.s.we could grow at the at 2.5. it is slowing down but i think it is slowing down with a purpose, with a strategy behind it. you: i want to help visualize this. does not matter what the number is. the importance is the trend. this is gdp over the last 10 years. if you look at the highest estimate in green, the red is the lowest estimate. china's'st is not the growth is slowing. everyone knows china passes growth is slowing down. the concern is, do we have a hard landing or if -- is there a soft and easy landing? you can see from estimates there is a big diversion there. stephanie: you mention if only the u.s. could grow that much.

what you think of the u.s. economy now? now we are talking about an $18 trillion economy. i think we can look at it in aggregate and the numbers say it is slowing. grow 2% in they third quarter and maybe it would be a little better for the year. that is not good enough to solve the economic and social problems we have in this country. one thing that struck me, i was reading a piece on commodities. there has effectively been a huge tax cut for aggregate consumers because of the reduction in gas prices. we're having trouble getting up to that level even after stimulus, it goes well beyond the credit. here it is here. 30% drop in gasoline prices is equivalent to a $100 billion tax cut, providing much-needed relief.

isn't it troubling you cannot get the economy going? able clearly have not been to get the total economy going but keep in mind there are various industries moving in different directions. the automobile industry has .enefited from this cut in oil the airline industry is doing well. people have lower mortgage payments and they feel better about their extensive so they are buying houses. we have parts of the economy doing well and other parts quite frankly are being penalized or heard why overcapacity. we have overcapacity in almost every industrial industry around the world. stephanie: what do you mean? >> more car manufacturing than we ever had before. more agricultural capacity.

productive -- driven a lot by chinese demand. now have a lot of overcapacity and we will work our way through that. the other thing hurting the u.s. economy is the dollar evaluation. the dollar is so strong that it not justating into less revenue but translating to the effect -- the fact that it is going to compete. david: let's take a look at some astronaut is taking out there in space. he has been documenting his time through a series of photos on his twitter and instagram account. he tweeted a picture of hurricane patricia. pictures of the sun rising above the earth. close-ups of u.s. mountain ranges. south africa at night.

withll be right back "bloomberg ." ♪

vonnie: welcome back. duke energy is adding a gas distribution company to its network. price, four point $9 billion in stock. shareholders will get a 40% premium. toyota regained its sales lead over bush wagon. through september, it had sold vehicles. tomorrow, the air force will award the bill and develop its next-generation long-range -- there are two bidders.

they are estimated to cost about $550 million each. businessour bloomberg flash. today's focus is chairman's corner. this is new for us. it is important the first one is the former chairman and ceo of ibm and the author of, who says elephants can't dance? as well as going back to mckinsey and american express. you took a company and ibm that have been very successful in iconic and had fallen on hard times and you brought it back. other companies today that we can look across the spectrum and veryhe companies have been successful but the businesses change around and the environment has changed. how did you do it and rethink how ibm was? >> i think the most important

thing of turning around a company is to understand how .omplex will the processes figuree successful so out inside what makes us great so they start incorporating all these processes of how to sell and build and evaluate and train. sun, the world changes in the future change in the world but they do not know how to change the company. why did four ceo's is not turnaround? it had to be sold to one of its former child? why did it not around? did they not see digital photography? they invented it. think they did not see mobile? they invented it. didn't they see that company created a few hundred miles away?

no. what happens is, ceo's say, we have to change. there is where we are going to a point somewhere else and no one turns a follows. -- turns and follow spear they do not understand that every ,ingle process in the company has all been built to gear against the old strategy. you have to go in and change processes ifthese you're going to get the company to turn somewhere else. it is like setting your hair on fire. it is not easy to change processes where they build up these beliefs that we know how to do it. it can take a lot of courage because you're sitting

that ifou'd are worried you move a transform, you'll actually lose your hat. it takes real courage. when i talk about the old processes being aware -- being in the way, all of the people who have been in successful divisions of the past want to hang onto their money and hang on to their people and protect their own world. one of the things i did when i went into ibm is said all of the orbit.ow belongs to we reallocated the cash you that is one of the processes you have to change to turn around a successful company. new companies, these disruptors, employees love it there and they love the sexy. that when deliver everyone cares about the structure of payment company?

i mean love. louis: i would call it passion. most importantly, it is all about focusing outside. stop thinking about what we do inside. stop looking at what the competitor is doing outside. that kind of drive and passion to me goes beyond romance. 62 passion and desire third we have a lot more to cover. when we return, we'll talk about advance medicine. he manages over $2 billion. china and the u.s. markets right now. ♪

matt: time for futures in focus. gold trying to snatch a losing streak after the biggest weekly lost. the precious metal trading near a two low as investors weigh the prospect of a higher borrowing costs. joining me to discuss is the chief options strategist. no one is really betting that the fed will actually raise rates at the meeting this week. but gold is still taking a hit. why. >> the dollar is the key component. seen, the dollar snapped back and it had support i-94. not only on goal but also commodities and oil as well. there is a tie between the movements in gold and oil. you see the support at 4400. gold is unwinding. anything positive

in the tea leaves. there is no inflation and there is no anxiety or less anxiety. 70%anxiety level comes down since the august low. what about actual demand for gold? china might buy a record amount this year as the one gets devalued pair people are going to buy and use it and it is not all about the fed. is true. gold is so emotional. we will look to step up a little bit and that may help. the risk reward is skewed on the upside. you can lean on the halfway point of the all-time highs to the breakout we saw in 2003. 1100 is an important level on a weekly basis. i do not think there is a lot of downside in gold. it is just a limited opportunity . you have got to be arguing the

dollar is done with his rally and i do not think that is the case. matt: thank you for joining us. more of "bloomberg " is next. ♪ stephanie: welcome back. lewis is still with us. -- lou is still with us. educationking about to start third where is your passion? louis: still with education. there is one thing causing income inequality in the country, if there is one thing holding back our economic growth and contributing to the divisiveness in the country, it is that we are not educating our

young people. the state of k through 12 education is truly and devastatingly bad. one in five americans read below the fifth grade level. stephanie: realistically, how does that get changed? we know what it takes. we need high standards, better teachers, more pay for the teachers, more pay for the better teachers and less for the poor teachers, better prepared teachers by getting rid of all these horrible schools. we need choice for parents. with veryt there courageous governors and mayors. the schools in the country are run by the states and we need to bring in competition with charter schools. one reason we have the best collegiate level school system

in the world is because we have competition, for students and faculty. we need to get the schools focused on the right things and we have got to get adults out of the way. i have a small charity i work with with public schools and the is nobody struck me is thinking about the kids. the adults are all fighting with each other, the teachers or the teachers unions. this is not like the ceo of ibm where they have got to march in that direction. how do you get the adults to focus on the kids? i don't know. common core was created by the wetes and it is essential have a standard for kids ought to learn when they graduate from high school. it is that simple or what should kids know when they graduate from high school? we have politicians in this

country trying to tear down common core. for their own political advantage. they are destroying the opportunities for these kids so they can appeal to people. we have to talk about medical research for a moment. i think about the fact that they have lost so much funding that it turns to private solutions to move things forward there you have done a lot of work. where do you stand right now? louis: we are in the most important scientific discovery in the history of humankind. we are starting to learn what makes life work and get extended and what causes diseases. vote toe: why don't we support that and put money toward it? louis: good question. the nih, the budget is down 25%

in real terms over the last 10 years. we are not investing in the important science and it is supported by incredible from -- and it is doing a lot of the heavy lifting. it is hard. we do not understand much. we promise people we will get a bit of your blood and it will cure your cancer. we're way ahead of ourselves. , itd: vice president biden was very compelling when he talked about cancer. he said this could be like deciding to land a man on the moon. is realistic? real's --we put the the resources behind it. we identified 127 genes out of 20,000 related to cancer. there are many more and we do not know how they work together.

we will figure it out. stephanie: what happens if we go after the pharmaceutical companies and regulate the drugs and big pharma says we will cut r&d? then what happens? we rely on a lot of these companies to do it for us. i am not a fan of regulating prices in any industry and i do not think it works. the pharma companies are important and they tend to work out on the far end of how we get clinical of applications into patients. focuses on the really hard and underlying questions. we create 400 billion cells in our body every day. 400 billion every day. 300 million die every minute. what is the process that leads andcells to die and to form how do we intervene in the

process because that process creates mutations that cause disease. there is a lot of work left to do and i'm delighted it is right at the center of it. david: how long have you been with them? louis: four years. we're making lots of progress. david: how do you measure the progress? louis: we can tell because we set out with it scientific targets. one thing we are working on his mental is, one of the big issues in this country front and center. one in eight people in the united states have some form of mental onus of throw in depression and so on. huge slots of the population do not acknowledge it much like they do not ignore knowledge climate change. the stanley center recently worked to find 100 genes associated with

schizophrenia. scientists just had a discovery of the mechanisms that go on in the brain that may lead us to a path for treating schizophrenia. schizophrenia, we believe, probably has a lot of things in common with autism and adhd. there is tremendous progress coming out for the scientists. this is harvard and m.i.t.. it is unique organization that has its resources with top scientists. it will do well. david: not hard to see why you are so passionate about it. thing leaders one have across-the-board, passion is the recurring theme. louis: if you do not have fashion, get out of the way. you, former chairman and ceo of ibm.

the sixth interest rate cut in a year, will it sparked the growth? we will ask investors in china, a two-time utah governor. stay here. ♪

stephanie: welcome back. an extraordinary 30 minutes. an iconic businessman. we have a special, maybe not iconic, but a special friends joining us. brendan greeley, also a superstar but maybe not an icon. extraordinary.

lady gaga is kind of an icon. coming up in a moment, the former ambassador to china jon huntsman will be joining us. let's first go to matt miller with breaking news on a deal. a deal that represents about a hundred $35 million in aggregate at what he value according to bridgestone, a 23% premium. friday as his closing price, we're at 22%. that is really booming in the country, not only automakers, but anyone who takes care of your auto or allows you to do it yourself. futures on the other hand are little bit down this morning. .e are down about two points the dow jones down about seven points. a little improvement from bigger losses earlier. i want to talk about two stocks quickly. pandora had a massive drop

friday. a little bit of a recovery right .ow and analyst says everyone overreacted severely to competitive pressures. she is raising it to an outperform from a neutral. goldman sachs raising paypal to a conviction by daredevil and wants to know what it is when it comes out. they think earnings forecasts are conservative. let's go down to first alert news with vonnie quinn. weddingin oklahoma, the -- the woman accused in that deadly print accident in court today. when the carured struck the crowd. the driver was drunk and is accused of second-degree murder. in texas, the storms in hurricane katrina have ended. a trade has derailed. still, no deaths or widespread

-- widespread -- -- s to convince them the front runner in the campaign. thank you. now it is time for a morning meeting where we learn what the tea banks are looking at today. joining us is an analyst at bank of america and merrill lynch. which retailers will be the winners this holiday season in which face and uphold battle. estimated -- estimation, who will make out? >> we're less than two months away from the holiday season with the forecast out this morning and we are looking at overall sales to grow this year. a is not a bad number but deceleration from last year's 3.7% for a few reasons. continue.deflation to

also some new lower-priced entrance. we expected to remain slow. there is no must-have item and a lot of competition from players. consumers are shifting spending out of lower-priced discretionary items into bigger ticket items like home and auto. as for winners and losers, we think anyone providing a differentiated experience, we like the off-price retailers. ,ne stock we are highlighting they are really trying to add some fashion by launching new products. item.anywide fashion >> we began to look at retailers, using your store as a warehouse for online delivery.

it has been a year. which company has done the best job of doing their homework? >> everyone has a strategy and macy's is doing a great job. a number of companies are driving 13% of the sales online including urban outfitters. those are standouts. there have been places where online has not hurt. theg a great job at treasure hunt and we have seen with jewelry especially engagements, people want customer interaction and they want to come in and speak about purchases. i think there are areas relatively defensible. the other thing we have seen his retailers try to use the stores as a competitive advantage. astead of having it be

negative, they're turning it into a way to differentiate themselves from a consumer. stephanie: thank you for joining us. you will deftly have to come up again. david: we were talking about china today. the leaders are meeting in fresh five-year plan. interest rate cut surprised markets on friday. we have been assuming this has been an economic matter. other items on the agenda? this is what they had to say. the central bank convinced leadership they need to take a step to get the imf to include the chinese one in reserve currencies. we're joined now by governor jon huntsman. he joins us now from washington. you live there and you are influenced mandarin speaker. you know the culture.

what do you believe went into the decision to cut the rates on friday? jon: the number had a six in front of it. that combined with a lot of recent economic data in different areas in china probably set off alarm bells. it is safe to say that china wants to have at some point in reserve currency. that is a long-term play as opposed to a short-term play and more immediately, we are concerned with performance, particularly going through this. important because it will be the lead into the 1920 congress. they have party congresses. my sense is they have got real concerns about the reforms of economy. i hate they know offering short-term capital, 25 basis is probably a, it

short-term good move. long-term, they are stuck with the idea that there has to be reforms taking place before you get companies located in china to do what needs to be done. that is earning money field fashioned way. in 2009, the people's bank of china suggested this reserve currencies replaced the dollar in the international trade. have they moved on from that? what are the politics that need to come? jon: the central bank is led by a very able man, one of the top central bankers in the world. the people's bank of china is hobbled by its china reporting lineup party. of would see eventually more a grant of independence given to the ceo it needs to make

decisions on interest rates and currency. i think longer-term, the aspiration is to have a go to currency, a reserve currency, short-term, i think they're more about not just the currency but more fundamentally where the economy is. that in the end will determine where the currency is, if it really is to flow freely from international marketplace. you said on friday and alarm was found, the economy was not as strong as maybe they hoped for. this is the sixth time we have seen them step in. what if not enough happens? do they really have more leverage? -- levers to pull? jon: the levers are the cost of capital in stimulus. if you look at how they are stimulating the economy through $100 billion worth of stimulus, his other things they will work the 18thw you have got

central committee, party congress. if you look at the agenda likely that will be announced this year, they will focus on pretty significant things. they will set a target for next year which probably will be in -- to 7% growth rate. beenlost several who have kicked out based on the anticorruption campaign. a couple of key party decisions. and the governorships there that are likely going to be looked at. then you have got a toy five-member body, a senior alicymaking body that has couple of vacancies. that will likely be covered. then you will focus on the real industries of tomorrow that they will want to build around and track investment around.

that includes health sciences, environmental-based industries, and probably internet-based industries as well. a lot will take place. thought, the final 13th five-year plan, which this all will play into, will likely the first quarter of 2016. this will likely be the last five-year plan because it will take you to about 2022. the final effort to really bring twot reforms he articulated years ago. this has got to work and it has got to stick. david: how much trouble is she reforms through if she cannot get the growth backup? they are related? jon: i think they are. let's say you have got two fundamental exercises under way, a put transition led by the

anticorruption campaign, and the re-staffing of the military in the party, and then you have got the economic evolution for transformations there. somewhere in the middle of the transmission. it is shaky on the political side. the second and last term, you will likely see some improved economic numbers. he will have completely .inalized his consolidation unlike any other leader we have seen in the five-year term, to really drive home the economic reforms. they will be really tough to get done. always an extremely difficult

thing to do because you have got people running state owned enterprises running the chinese political elite. no one has wanted to touch them. xi jinping is one of the people to tell them it is time to play by different robots. they have got to have the strength domestically with which to do that. thank you for joining us this morning. thank you so much. when you hear a massive to do list, it is sort of like they will get that done. when we come back, valeant is beating back allegations of improper accounting this morning there we will give you the details. just wrapping up now. stick with us. ♪

david: pharmaceuticals are down as the company continues to shave off allegations have in sobriety. moments ago, that it has no legal liability. shortselling research firm that valeantweek was working in property to inflate salespeople we're here with brendan greeley. our sidekick on all things. the call that just ended recently, tell us what the move was as far as you could tell? scriptedpretty much a call. they got as much to tell as they could legally provide. ist a big piece, it accounted for 7% of revenue in

the third quarter. that is a substantial piece of business pair they are still determining what may or may not , it is a pretty substantial piece of business, probably why investors are saying, this is something we need to figure out. they have an option to acquire it. maybe it is better to acquire it and clean it up. maybe that is the path they decide to take. it remains to be seen. you all know the function anr. the ratings are in green and how they fare at

certain points in time. the last column, and i will bring it out to six months so you can see it better. you have had more analysts this yellow line, bringing down the price target. the executives have not made them more bullish. it made them more bearish. it has to be a concern. stephanie: does that mean we can start looking at valeant as a takeout target? >> it is too soon. between 35 and $40 billion of deals. it is early to think of them as someone else will come along and buy. i would not be surprised if years from now, june of this year. spending.omised ship

about 500e talking million to 300, give or take. that could be one of the reasons analysts are not backing this. mike pearson uses it as a bag of honor. andhey quit spending on r&d helped the jug prices of the drugs they bought. that was the strategy and the repeated it over and over. they will if they say spend more on r&d, it undermines the key premise or the key strategy to exist. now others are competing. there are companies trying to do the same thing. now everyone else wants to do it. they used to spend money

on r&d. if you look at bloomberg intelligence, you can graft it as a percentage of revenue. the light is the him destroy the average. for a while, and the yellow, they were at 12 or 13% and now are back down to 3%. they do not spend any money doing it now. >> i understand the wall street journal has reported that their private counsel asked the sec to investigate. we got the government involved. >> i think what is going on is the government investigation will be a hangup for a while. aree a lot of analysts coming down on ratings, there is more bullishness on the stock because the stock has sold off

so much. it is pretty low compared to peers in the industry. they could sell assets. it isseems like analysts more just overall headline risk in the short term. they still seem to like the company. >> maybe they will not do the big $10 million press deals. stephanie: thank you so much. a lot is coming up on "bloomberg ." ♪

david: we are only 30 minutes from the opening bell here in new york.

erik: guess who else is here. the firm with $2.7 million in management. let's take you to vonnie quinn. earthquakeowerful centered in northwestern afghanistan. surveyth geological estimated 7.5. the first to hit the country in 66 years. thousands of people fled buildings in the capital. hundreds are injured throughout the region. a car that killed quencher

people saturday in oklahoma accelerating as it struck the crowd. fourriver will will face an account of murder today. she was drunk. as critical to republican voters, two candidates who have never help frontffice are the runners. seven in 10 think donald trump good win the white house. six in 10 think ben carson. now.miller is here matt: a couple of deals to talk about. autoestone will buy the diy chain and auto maintenance chain for $15 per share. it hundred $35 billion equity value their, a total equity value of a 20% premium.

about 20% on this monday morning. deal, achinese internet couple of internet travel sites in china will combine. it will own 25% after the deal. you can see big gains for all the players. then duke and piedmont. a gas distributor. a number of electricity companies have bought gas distributors. now do cool by a guest distributive. $4.9 million in cash. the trade is slowly climbing up to that level. we will begin with this. it did not take long. volkswagen lost its lead in auto sales. toyota selling 7.4 9 billion vehicles.

60,000 last. if there is anything surprising, it is not that toyota is beating volkswagen given all the trouble. it is how quickly it happened. full slag an admitted this in the middle of september. already, it is number two. >> that is the big surprise. it had a quick hit but it came back quickly as well. the idea is people are just turning away from diesel. if diesel is a concern, i think that is where the problem is. [indiscernible] come here, matt. matt: it is not surprising at

all. volkswagen was not in the league cars ahead of the auto. ofare talking about a couple thousand. neither one of them necessarily wants to the number one here they want to make money. it is not about the top line. it is about the bottom line. peach has said that before winter corn had taken over. that is the personality. what they want to do is make money for shareholders and then fairly so the most units. >> if you're at a commodity business, market share is the name of the game. you $3000 togive buy my truck. it does not make a lot of economic sense.

>> there is a little bit of a back-and-forth here as well. one camp says the problem with flag and was cynically related to what is going on here. toyota is on a roll here. i know you could go on all day, matt. confidence fell for the first time in four months in october, signaling a slowdown in global demand is taking its toll on the largest economy in europe. what you make of this, jack? jack: they're catching up. germany has held its own. things causing some elements around confidence as well. a whole immigration issue that i think is a big part of this issue. it is what else people see happening within the country. i was reading an editorial

and i have to go back to check the name of the guy who wrote it. the point was it is not just volkswagen. he makes the case all german industry is affected by arrogance and if the germans do not wake up, they're going to lose their lead not just in autos but other industries as well. >> the industrial side of almost every economy is shrinking. we can produce more with less. germany is at the forefront of using technology. i think this is a shrinking segment of the world economy. >> let's go to the third story, capital buying apartments from

for $5.4sidential billion, including more than 23,000 homes, the biggest non-hotel property acquisition. a growing force in the u.s. residential market expanding as young americans face hurdles buying homes. the equity resident says it plans to sell 4500 next year. had her in here last week. bullish one apartment properties. when used it is scary tell you why you i think he is more clever in real estate. value.ust understands it does not mean he is not leaving some money on the table but he says now is the time. if you can get off the stick and sale, why not?

he is talking about a big dividends to shareholders, which i think he has one. if sam is saying, i will free up some cash, where will he spend it? crexendo think they're talking about a big dividend of cash as the result of this sale. anothere: number four, big bank is shrinking, standard chartered is getting out of equity derivatives and convertible bonds. it is the sweetest business in the early 2000. the latest step in of a pullback , bill winters,eo the london-based but asian focused bank is already exiting institutional cap equities and equity derivatives would be a natural extension. they eliminated 1000 senior positions since taking over in june. what you make of this?

>> the standard thing happening with banks in general, either you are a trading entity or an actual bank and you're dealing with wealth management and deposits and loans. every bank is moving in that direction because they are under fire in part because of concerns about too big to fail. erik: what will it mean for customers like your form -- your firm where set of having a dozen or more banks in an individual businesslike equity derivatives or institutional cash equities in this case, there were only a handful. so much less competition. >> it means increased volatility. down 80%. that means you have got more volatility in the market. erik: they will have more pricing power surely. that are left. it simply means if you're going

into sell or buy something, this red will be sickness can. that is a part of transaction costs and a part of returns. erik: in poland, the bank bashing on track to take a majority of seats in the chamber of parliament and argentina. force support was one to the president, and in both cases, they did better than expected. about you know a lot argentina. [indiscernible] [laughter] it is a backlash against the incumbency. that is what is happening. candidate, theon party candidate who did get the larger share of the vote but just by a slim margin and argentina. and thed, incumbents

opposition for the first time in:'s modern history will control majorities. >> in poland, it is a different type of opposition. social dealing with issues there. i viewed poland as the equivalent of a southern state. they do not like immigrants. you have got a new party coming in there. in argentina, there is a crooks in office really do not do well for the country. stephanie: they did not do a good job. >> i am surprised he did as well as he did it with a third candidate in there who is much more centrist, i think this .ives him a good chance and that would just be a continuation of what is happened. would he as president make argentina by? -- buy?

>> yes. if you are an early investor and you are prepared to live with volatility, yes, i think argentina is a buy. >> those are the stories that matter to markets right now. come in next, we will go to mark farber -- marc faber. ♪

vonnie: two big names in the auto business are teaming up. $835 million. pet toys runs 800 shots in 35 states and puerto rico. energyakeover in the

sector. duke energy. the deal was worth $4.9 billion. residential customers in tennessee and carolinas. back.leant is fighting how they postned sales. valeant denies the claim and is performing a committee to investigate. are meetingeaders to formulate a new five-year plan and it cannot come soon enough. the country is finding a slowdown in manufacturing and struggling to shift economy to domestic consumption. china cut interest rates for the sixth time since november. is in mexico city and still with us in new york , mark, can central planning

fix what else the chinese economy? marc: can you repeat the question? erik: i was asking whether you think they can fix what ails the chinese economy? marc: i do not think it is helpful. china 40 and 30 there has been huge economic development pilot because the government has been efficient moving people and building roads. it is a mixed economy. you have heavy government interventions and on my view, the recent interest rate cuts

will not be particularly helpful for the economy because we have had a meaningful slowdown already at the time it cut interest rates six times since last november. jack: isn't it the case with china that they are in the transition being an industrial economy to more of a service economy? so it is not surprising was going on in the industrial side? of whether they could do the balance or we will see an accident coming out of it. do you think there is an accident waiting to happen here? what an depends accident is in terms of speculation. i would say we have had very heavy capital slides over the last eight or nine months coming

out of china. knowledge for some economy somewhere in the world something of china and how great it is, i would bet on the locals shifting money out of china at a record level at the present time. secondly, what the government are punish it -- publishing do not match reality. down, imports are down, industrial production is down. car sales were down. very of indicators are negative. down 17% year on year. you want to tell me the economy is growing at 6.9%. stephanie: is it fair to say the economy is barely growing at all

or it is just not growing at the rate and speed we are accustomed to? there is a big difference. marc: i think many people do not understand that china has a population twice as large as the u.s. and europe combined. it is not just the country. it is an entire empire paid you can have growth and sums as of the economy. i have no doubt some service sectors are growing. is notmportant sectors growing at the present time. recessione u.s. has a like the early 1990's, and other could were growing, you have in china some provinces growing and others contracting. to measure economic growth in a country this large with that many people it is very

difficult. it is nowhere growing at the same pace it was growing between 2000 and 2007. what we have in china and what they should realize is a credit bubble of effort proportions -- of epic proportions. i've never seen credit as 1% of the economy growing as fast in china as the last seven years. we have a cool function. it does not look like a huge bubble to me. it looks like what china has done is a soft landing. they opened up credit a little bit.

it acts as a stabilizer. >> i suspect you cannot see the graph? it is very difficult if you have the kind of public you have in china. a credit bubble to then engineer a soft landing. you could maybe cushion the but i don'tewhat, believe the economy is not growing at all. i have argued for the last 18 months that the economy was slowing down in the growth would roughly at three or 4%. jack: at the beginning of last year or the end of 2014, i said chinese real growth would be 5%.

marc is talking about something lower. what is happening on the service side of me you up for what is going on on the industrial side. industrial is down and services are up over 50%. in agriculture continues to grow. i am not so sure we will see three or 4%. at any rate, it is growing. here is what i want to know. what is the easiest way to make money in china right now? servicesinvest in the sector. that takes private equity and you cannot do it very well in the public market. you can do it derivatively by investing those companies in the u.s. that were engaged in the services sector in china. retailing and delivery of goods and financial services as well. erik: if the chinese are

committed to keeping the yuan --ek, -- weak, marc: i would like to address the service sector in china first. if you want to have a good view thehe service sector, ask theyfood chain in the u.s. will tell you about the chinese sales. we liveo the currency, in a world where there is action by the central banks to bring eu, inn the u.s., the japan, and the bank of england. they cordon eight monetary policies and that is how you know the yang has appreciated strongly against the u.s. dollar in the last three years. adjust the currency

down somewhat. stephanie: we have got to take you on a commercial break. thank you for helping us with that interview. jack is staying with us. ♪

erik: welcome back to you are watching "bloomberg ." canada's west coast, another fatal accident 17 years ago. authorities say five people are dead and one is missing. 21 people were rescued in the government is investigating. is quoted asal saying russian jets are not fairly -- not faring well. one third of russia passes were planes and half of the transports are usually grounded.

choosing a television comedian as their next leader in guatemala. he takes office in january. those are your top headlines. 80's president is a former vegas style singer and dancer. we did have an actor. i will not make a donald trump joke. xerox analysis morning it will review the business portfolio and capital spending options. the decision comes as xerox pares its annual forecast. we are joined by bloomberg intelligences. what is your going to do fundamentally? question 2009, we bought a company and he wanted to get into services.

the print business is going down. tracking the last couple of years, that has not gone well as well. i think now we will look at the entire portfolio figure out what they will get rid of. they sold off september and outsourced. they are looking at the entire portfolio to look at what will work for them. >> what is working now? what is working for them? >> nothing. troops, photocopy your face, your hand, let's a honest. all of the advertising, we are not just a copy company, we are much more. >> absolutely. they are trying to provide services. the problem is the service industry is contracting right

now as well. actually losing on some of the contracts in those areas. >> where is the comparative advantage? >> i do not think they have one. i think the services area is moving so fast, and xerox went into it with yesterday's technology as opposed to say we're going to begin the event actually be ahead of the crowd. it is a very difficult situation. styley have an iv of problem. they say they're going to look at capital allocation, translation, dividends or vivax. -- buybacks. >> what eventually remains after exercise, it goes very sticky. you're going to have it for many years. large portion of services industry is going through pricing pressure right now.

you are really not getting a higher margin or higher price and for what you're offering. >> a lot of the new technology offers the gate. you can read to by the month. you do not have to buy servers. a lot of that business is going to a much more flexible type. going to the names that you know already. it is going to the microsoft and the apple and the amazon where you're already doing something. the householdike name among people who are moving to the cloud. dierks cloud hear services as number one. but they do have a lot of these offerings. but they are not known for that. >> why would some of these legacy technology companies like ibm and xerox seemed to have such a knack for buying back their own stock at too high a price? >> we have had this discussion

for a wild. that concept works well in an coca-cola,th gillette, etc.. but you do not see that in technology has much in the long run. if you have a lot of cash, your federal buying it in consolidated its -- are better off buying it and consolidating it. >> to you a great? >> i absolutely agree. i think it is the silliest thing to do, to spend money buying back your own stock. you are not changing your business at all. all you are doing is increasing your earnings per share by reducing the shares. i do have to say that part of to thebullying investors. the investors once these up as ay numbers going composed to are we going to take money, and busted to something new, and it will take our art and down for a while? montreuxs activist

101. they are the ones demanding it. >> you are seeing a change among the activist will because they are fighting out that buying back your stock only worked but for a short time. it is a very activist approach to changing the mix of their business. baxter adds to their board, the ceo of austin scientific about who some might say is a competitor, but it is really not he was the ceo who changed the course of a business. they are talking about church of the course of a business as opposed to simply let's go by with ourstock extra cash. >> you have to think what is going to work for five years and 10 years down the road. they dropped so rapidly because they invested a lot in the clouds. now they are reaping the benefits of it.

>> the difference is right now for microsoft, microsoft and amazon both committed is the cloud that is carrying those companies. -- they started investing in it 16 years ago. and cost a lot of money for them to build a data center. now they are reaping the benefits. >> but is it too late? >> we will find out after the review. [laughter] too late for xerox, i'm not sure about ibm. >> we are about five minutes the opening of the markets. what is going on? let's take a look at the major indexes. s&p, ie down in the changed on the -- unchanged on the dow, and down on the nasdaq.

groups gaining, 4 or 5 groups losing. accused andrew of citroen of yelling fire in a crowded theater, and andrew said it is more like i wanted to theater, smelled smoke and said i think there could be a fire. it looks like investors agree right now. they're selling off the shares. an offer from bridgestone, $15 a share, 23% premium closing price. it looks like investors are bidding up to that level. i want to talk about paypal, adding to the conviction by let's at goldman sachs. goldman analysts say that paypal is the conservative with its year.st for the full

it maintains a price target of $45 added to where the stock trading closed on friday. >> is a little bit of red, as little bit of green. since the financial crisis that has been one moment of play after the other. you needed to be long and follow the trend. this is a moment where we are seeing a dick schaap. -- say it separate will separate the men from the boys. talk about the effects. this is the first time we've seen such a divide. >> quantitative easing is responsible for what we've seen over the last full years. 2012 12 videos from bloomberg i'm sure matthew j more of these numbers. but in 2012 you had 409 stocks up for the year. you have 90 down.

2013 from you have 472 of, 34 down. of 111 down. beginning to shift this year to date we have 245 stocks up, we have 258 stocks down. the ones that are up or up 15% with the ones that are down or down 16%. the market overall is up 1%. he could have bought the market, you would be up 1%. if you had bought the right active and that takes management, you would be doing pretty well in the market. >> i am completely with jack on this. my boss to show this to me about last week. massive see a difference between even the dow 30 stocks. >> i have a couple of indexes.

credit suisse does one. it into a look at my terminal, i have grabbed a weekly dispersion chart. jack is looking at full years, but even if you look at it over a weekly basis you can see that it is really rising. as we get hired higher there is --e of a list, letss rally.eaths to the >> i think what people are doing is the real investors are looking for those times like 1 and they know what stocks they want to buy, and they are buying the accident that time as opposed to buying the market. what does this mean for etf's? >> how long is it going to take them if this is a stock pickers market, will take before we see active managers outperform hasn't managers -- passive

managers? >> it was happening in the spring, and then it shifted again. for a moment,ack but the passive managers who owned ecs at the beginning of the euro 1%. the active managers who are doing long and short are actually doing much better this year than with the market is doing. to take a is going long time because everybody looks at past performance is an indicator of future results. despite all those warnings. i believe that is no true. past performance is not indicative of future results, so the world is changing. >> and makes it difficult to choose and manage your money. >> you have to find good managers. it is against this backdrop of lower growth globally. the tide going out. you see who's is wearing the suit, and who is not.

that won't be pretty. next in today's value proposition, how to millennials feel about banks? >♪

>> welcome back to bloomberg . let's head to bloomberg news. you have been following this story very closely. what did you learn from the call? >> i think we got a lot of answers and a lot more questions. there was a huge amount of detail from these flies the we received from valley of. valeant.

that they hadhip was even more complicated even there were some structures that they set up in order to try and limit some of the legal liability should they do anything illegal. there are still tons and tons of questions. a lot of this call is about trying to reassure investors that they have this under control. if you look at the stock price this morning i do not know if they did that. >> i want to talk about hedge fund hotels rate it is name that many investors piled into who did not necessarily do their homework. if we questioned why is not the stock rebounded, is there not a risk that they are fundamentally changing the way that stocks trade because they are in and out for a trade? we were talking about good investors versus a bad investor . a lot of people start to

pilate as they see an element of what they're doing as a business working. and it works until it does not. it just works until it does not. i hear all of this is going on eant and it reminds me of conversation 10 years ago. hearing the conversation about enron. they areot saying that in enron, but when you start getting issues about your , and what you are doing in a business command accounting gives the when you actually -- business, and accounting is actually the way you raised your business, you have to look at things are going on. >> you said there are a lot of questions raised. did you have a sense on the call that they were being only candidate -- fully candid? did it feel very scripted?

-- you talke things about the theater, let's look last week when it started on wednesday. it is taken to london wanted to get out with any kind of public setting and talk about what is going on? part of the reason that the stock has been in such a bad deal, they say we have been hammered in the press. but why were you not out there in the first place explaining to people effectually what is going on your business. again, i think there is a lot of stuff out there. there are questions about did who werehese employees using fake names and e-mail dresses, how far did that ownership structure joe. there still remains a shot of questions about this company. valley and has been explaining what they were doing. they were buying these and

raising the price. that is what they have been doing. maybe they have done something on the distribution side that is not quite on the up and up, but have explained what they were doing. in general, using fake names is no good. >> meeting people on dating sites, but beyond that -- [laughter] when you're depending on accounting to generate results, did they make any new commitments about how transparent they will be with their financials and provide additional disclosure to give investors the comfort they do not have now? extremelybeing transparent. in doing so would feels like they are working through the situation as well. they have this network where they have an ownership structure where they do not totally on this thing. they have such a close tie to it and it feels like things will

happen. will they be liable for those things? they spent $100 million to acquire this ownership interest. and they never told anything -- anybody about it. you have to wonder if there are things that are going to continue to come out. not we done with this by a long shot. >> this strikes me as absurd. ratew them a uy even today, while in freefall. >> but it may be a lagging indicator. are these regulations that are new, or have they always been a buy? understand the story, as i

think this is going to work out. i am sorry to even bring this up, but it is the same thing you heard was enron and some other companies as well. i understand the story, it is all going to work out. they need to get in front of this. way out ahead. >> these are not new calls. it takes some time. this is a time where they are case. their bill ackman was the number one performer and hedge funds last year. he is one of the largest shareholders. before with less them down the toilet, let's just take a beat. >> bill ackman does his work. he really does. but there are times with the company's stuff is going on, and to the not surface senior management, and if it does sometimes it does not get out there as quickly as it should. i don't know what else to

say. [laughter] thank you for taking time off from your reporting date you share with us some observations on the call in london. next up we will bring you highlights from today show. it is called as heard on go. ♪

>> welcome back. let's take a look at some highlights from today's show. booming,dustry is power has shifted much more to the creative and strategic agencies than the traditional powerhouses. ends of the day, and if it is not our ally, it is just are. aboutt important thing

turning around a company is to understand how complex the processes inside the company are. somebody once said transformation in a company is like sending her hair on fire and you get out with a hammer. we will probably grow 2%, if any third quarter command maybe we will be a little bit better than 2% for the year. .hat is not good enough china often, to what is your take on what is going on there? look at this absurd growth rate. they have grown it 10% compounded for 35 years. there's no way they could have maintained that growth, it would've consumed the world. >> in a shaky on the economic side and political side, but when we arrive at the 19th arty congress in 2017, which will be

the coronation of she's in pain -- xi jinping. >> we did not have mark halperin there. he thinks differently on china. >> i do not agree with what they did. for someone to back away with being involved in the consumer side, the services side of what is going on in china is very short-term as a process. they may have their own process and problems but it is very short-term. >> that doesn't for bloomberg . join us tomorrow 7:00 a.m.. ♪

>> is 10:00 a.m. in new york. welcome to the bloomberg market day.

from bloomberg world headquarters, i am betty liu and here is what we're watching this hour. hank greenberg joining us. joining me to talk about what really happened at aig, and what it is different from what ben bernanke has described in his latest memoir. he will be joined by david boyd. you do not want to miss that interview. and the drugmaker defending its accounting practices morning. the stock keeps heading south. preparing for a future where growth will be the slowest in decades. and we have some breaking economic news right now on the housing market and new home sales just out. julie hyman as the latest details. julie: