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. 11.5%.falling

this slump in september was a 10 month low. it also breaks with the trend we've seen more recently of a grouping housing numbers. sales make up a smaller portion --the martian then existing stock then existing sales. let's see if there's any reaction to the new home sales. a new mixeddy seen picture, and averages are many slightly in the red at this point in time to in terms of what is pushing us there, take a look at my bloomberg terminal. is the biggestgy

drag. pretty substantially all the major averages. that individual group down one point 25%. -- 1.25%. we are seeing a decline in oil prices. no a pretty negative outlook in terms of inventories and global supplies, not just here but in the united states. all of this is leading hedge fund managers to cut long positions. going backet longs about a year from hedge funds. in most recent oil, we saw shorts on crude going up by 18% last week. that is that the surge we have seen since july. this longer downturn we have had over the past few weeks. >> valley shares are still falling. julie: they are bouncing around

in this session. they have been under fire for relationship with the specialty pharmacy. you can see already the volatility in this stock even for a moment going positive. but right now it is down by 4%. toing the first direct reply allegations. calling intoer question its relationship which is a specialty pharmacy. to itspany also pointing board, saying it has an option to buy as well. we will be hearing more about this conference call in a few moments and a little bit later .oday thank you.

we want to check in on the first word news. thank you. we start with a deadly earthquake that rocked southern asia. at least 129 people are dead centered ine quake northwestern afghanistan. hundreds were believed to be injury. it is the most powerful quake to hit the country and 66 years. most of the casualties were reported in pakistan. the quake was also felt in new delhi, india. in a search for survivors is underway. secretary of state john kerry says israel and jordan have agreed to a land -- to a plan of video monitoring of a holy site. benjamin netanyahu is on board, but they think israel is trying to track and arrest palestinians. in texas jeb bush is trying to reassure his fundraisers.

he has meeting with his donors today hoping to convince them that he has a plan to religion the republican presidential nomination. last week the one-time font staff and cutome the pay. -- they face off for debate in colorado. donald trump is in the lead among presidential candidates. the billionaire businessman can win if you get the republican nomination. six in 10 believe ben carson is the most electable. in stillwater, oklahoma. the woman accused of following her car into a crowd of people at a homecoming rate will be in court today. two more people were killed, more than 40 others injured. police say she drove her car into the crowd made she faces charges of second-degree murder.

there is a look at our first word is right now you can always find the latest news of bloomberg.com. betty: thank you. turning now back to business it has been a big month for former chair ben bernanke who has been on a whirlwind look to her -- book tour. it chronicles what he and others did to tackle the great recession. two men who read his book and differ in late -- vehemently with what he says is the former ceo of aig, and his counsel boyd, attorney david l . thank you for joining me this morning. thanks, let me start with you. you read the memoir and you called me up and said there are thatinly different things .ou do not agree with him on

he greenberg was evidently on ueli maurer unable to curtail the financial product with the activity. must of the credit default that brought aig financial products to grief were originated between 2003 and 2005. when, when he applies, hey greenberg was running the company. how did you feel when you read that? >> it is totally wrong. nine months after i left the did more than we did in the whole seven years or that. betty: more credit default? >> yes. it is totally wrong. we back that up of course. i sent him a copy of the book i wrote with larry cunningham. that outlines at all. a bibliography that supports everything in the book.

i did not find that in his book. betty: he did not quote your book? >> he did not have the facts. betty: why would he say this? >> you have to ask him. i've no idea. betty: you wrote him. did you get any response? >> not one. betty: did you expect any? >> no. betty: david, i see you smiling. withbviously also differ these details that bernanke road. what do you think of those remarks? are not details, particularly when you're talking about whether these transactions chairman tradeking calls insurance transactions were out risk it. they held that aig had stopped writing these swaps.

two years before bernanke himself recognized there was a problem. 2007, almost two years after aig had totally stopped engaging in what chairman bernanke he swaps,nsurance on these bernanke was still giving speeches saying there was no problem with these mortgages. one of the things that the judge says very explicitly, and it reflects the evidence, is that was not in any way because of the financial crisis in it was a victim of the financial crisis at it wrote this insurance based on misrepresentation. it stopped at the end of 2005. it is exactly true, as hank says, that aig wrote more in the ne months, then they have the entire time they were there, but he stopped at the end of

2005. years before the regulators, including chairman bernanke recognized there was any problem. if there was a problem here failing to recognize risk that was being taken, it was only part of the regulators more than it was on the part of aig. application was that hank already knew there was problems that could arise from the. se. bernanke,nk that ben and others, do you feel like you're being targeted by them with some of their remarks? that they are not listening to what you say is evident? >> i do not think they are listening because they made their mind up what they wanted to say and do. overreach, that they way overreached on behalf of the government. that is what this is all about. >> and it is more than that they

just overreached. and theymade aig, admitted to set the -- this at the trial. they made aig the scapegoat. own demonized aig for their political purposes. they admitted that a trial. what you're seeing now is an attempt to support what they felt they had to do for political reasons during the crisis. title thatbernanke chapter aig makes me angry. >> that is what made me angry. bernanke also wrote about the lawsuit that you filed against the u.s. government on the bailout, which i know he describes as a takeover. and he called the lawsuit, and you both have a lot of chutzpah. is,he said that this despite you're doing this will ♪

lawsuit, and despite the fact that the aig board voluntarily accepted the federals terms, they left the shareholders with nothing. found that the financial crisis that aig was suffering from was not aig's fault, but had been brought about by the government, by toomer bernanke and tim geithner and the treasury department. , at the time that they engaged in these transactions, it had no more reason to believe that they were risking that had a buddy. they were in fact misled by the --ple mark hitting these marketing the securities. as this is critically important,

there was no dispute about whether the fed to give a bart company a loan -- could give aig alone. belmont was appropriate. no one has ever challenged that. what has been challenged is that the fed without any congressional operation, contrary to what congress had , confiscated 80% of the shareholders equity. they had no power to do that. a court has ruled that. the court has will this is an illegal act. in when the executive branch our democratic society takes , not investment given to it by congress, there's simply no limit to that power. it is a very dangerous thing to do. i think the thing that is very important here is that people understand what this case is about is not about aig or even bailouts. it is about whether government agencies can take power that

democratically elected legislation is not given them, and simply do whatever they want. take people's property without any authorization. betty: again that goes to the overreach of the government. but for mac he would say, to justify those actions, he would say to give that much of a loan american taxpayer needs the insurance to guarantee that they will get paid back. he said also that aig had plenty of collateral, enough collateral to cover the loan. so there was no reason whatsoever to violate the law taking percent of the equity. --s was against everything all of it was clear, you cannot take equity preview can lead , but never in 75 years have the ever taken equity. >> even if he thought it was a good idea, it was not up to him.

it is up to congress to decide what power the executive branch has. i think he was wrong, i think it was a very bad idea. but even if you were right that it was a good idea, it is not up to him. it is up to congress and the democratically elected representatives. betty: both of you are appealing the judge's decision. remember, the government made $23 billion on this transaction. betty: they did. but her neck look and then say that the fed made the right decision by bailing out aig. >> just the opposite. if there was that much equity and aig, the loan was very secure. why did they take equity? pimm: betty: they could've gotten taken -- paid back without the equity. >> absolutely. betty: the lawsuit will be heard

by a panel. ,nd i believe that given that there is a possibility that the panel. rule for damages, but they could also rule for no damages and reversed judge wheeler's decision. do you want to risk that? appeal,me you go up on the appellate judges could disagree. we feel the law is very clear and as jeff wheeler ruled, the statute is very clear, the legislative history is very clear, the 75 years of interpretation is very clear. it all goes one way. everybody recognized, even the fed internally recognized that they did not have the power to confiscate equity. that is what this is about. we feel very comfortable the appeal. we think the court will look at

this fairly carefully. we think that not only will they affirm what judge wheeler found onterms of illegality confiscation of equity, but hope that they will award damages as well. that judgeis it that wheeler decision is not enough? >> we have an obligation to all the shareholders who lost their life savings in many cases. this lawsuit is not for me, it is for all the shareholders. betty: we're talking tens of thousands. >> absolutely. betty: what do you make of aig now? >> when jamie? -- what do you mean? on their low,re five dollars, $.60 at the lowest point.

it has barely gone back up to the heyday when you were there is no. but it is now trading at about $61. geithner bernanke and and others might say this is a job well done. >> there was a reverse split. and if you just for the reverse split and has not moved very much. betty: ok. >> it itself. -- it speaks for itself betty:. . betty: why did you take this case on? because ofartly hate. but it also was partly and unfortunately -- and partly because i think this is a very urgent case to weigh on government operating. we give our government tremendous power and discretion to the executive bridge can use that discretion to leverage is there noower,

beginning or no end to that power. that is very troubling for citizens. means is the government can one way or another property without any congressional authorization. our government is a government of limited powers executive been power has constitution and congress give it. if you allow the executive branch to begin doing things because they think it is a good idea, even though they have not been authorized to do that, our projections of individual property, our protections for individual liberty go away. i think this is a critically important case to the way our government operates and the kind of rights and preservation of rights that are citizens need to have. betty: before we go, just changing subjects here, because

you talk a lot about china. there's going to be some big news this week with the chinese leaders meeting. they have the next five-year plan they are putting together. what should be included in the five year plan? certainly, more private sector then government control in industry. i think in china it would be to their interest to begin breaking away from that. they have to increase the consumer part of the market. 30%, it is 7% in the united states. when china gets up to about 50% they weaken number one economy in the world. you can see how far they have come in so short a time. these changes will make a big difference. betty: you are not worried about subpar 7% growth? >> which country would not die

for 7% growth? [laughter] betty: thank you for dropping by. thank you very much for joining me in florida. it looks nicer down there than it does appear. >> it is beautiful down here. ahead in theore next half hour of the bloomberg market day. leant are va falling. we will also look at what china's leaders are doing to stimulate their second-largest economy and what are we going to do to get growth of about 7%. defensest showdown over spending in washington. live on bbg television and streaming on your phone, tablet, and at bloomberg.com, now on apple tv and amazon fire tv. ♪

betty: welcome back to the

bloomberg market. there is a lot of m&a activity y. i want to get to julie hyman. boys, the auto parts chain is being acquired by a number ofis centers here in the united eights. and is a 23%n cash growth that friday. 800 autoes pep boys parts locations in the u.s. with rich those 2200 cairo and auto centers here. chains of them doing well. a lot of people upgrading their cars rather than getting new ones. we also have a deal in china and it is less a straight

acquisition than a partnership. china's biggest online travel service, it controls q an hour. as you can see, all the stocks are rising. get it was going on with utilities rated duke energy agreeing to acquire piedmont natural gas for four $9 million in cash piedmont is a distributor of cheap shale gas. we have seen larger companies making these kinds of moves as a result of this. pipelines will be increased as well. , $5.4arwood capital

billion. they have been increasing company stake in multifamily housing and just real estate home rental in general. more than 23,000 homes that are included in this deal. equity residential will have a special dividend of nine note dollars to $11 a share. for this reason, there is a lot of questions. we are nearing full value in the home rental market? >betty: thank you. we will be back with the bloomberg market day. ♪ ♪

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pressure. the drugmakers are counting on a conference call to expand the conversation. an analystondon, and with over is also on the phone with us. and gotart with you through the most important point that they made this morning which is they up pointed -- reappointed a director to their board. he also mentioned an ad hoc committee they are putting together to look into this relationship with that specialty pharmacy. they are doing the kinds of nallytigative work inter that people outside have been poking around and trying to find it it does seem from the reaction this morning that there is a little bit of rebuilding they have done. they still have a lot to do. the stock is down. the fact that they are having to

investigate inside their company and some of these pharmacies that they have these relationships with, they say they havebelieve what is fully compliant and legal, but it does not how they are totally sure. we'll stop this question of exactly what the relationship is with these specialty pharmacies. we're still learning about them at this point. betty: did you feel you got most of your questions answered? >> i would echo his point. i feel they did a very good job in addressing the situation. answer veryhe confidently came that they were setting up the committee to look into certain accusations i think they are very confident in their position that they have not done anything. this is something they have said a few times. said, and you will see this in the stock reside -- we action.

they really need to understand that investors want to be able to trust management. it should not take reports like this to have them question. they should be preempting a lot of this. the reports were not based on .act the stock reacted, and that is just not acceptable.

there's been a lot of m&a. investors cannot keep on top of everything and what we are seeing right now is not so much that investors do not trust management, it is more that they are seeing the stock reaction every time it there puts out a report. the biggest thing is not reacting and to these reports. betty: they are working with the ftc on probing the farm. one of the details on that? now, what we have seen

the entire processes that allegations have not necessarily been borne out. they have caused a lot of other questions to be raised. he claims he has been sued plenty of times over similar words like this. they will be joining us later today to discuss the call and his continued examination of the stock. the question that we have had here, is they have been built entirely by dell's -- by deals. of rolling up companies. they had huge tail something issue, the issue with these pharmacies comes with an acquisition they did a number of years ago. they have been rolling so much so fast that we have to be absolute year they know everything they have the dolphins and operate exactly the way investors assumed before this that they said they did

betty:. thank you so much. much more to this story to come. let's continue with our first wird news -- first four ord news. brussels, angela merkel and 10 other leaders came up with some short-term fixes, including emergency shelter for 100,000. they have been inundated with refugees, and they warn that could be a devastating impact on the european union if the solutions not found soon. rejected voters have the government that oversaw the fastest-growing economy in the eu. that is the first time that has happened since the reduction of democracy since 1989.

on the health care legislation, they're going back to the supreme court. they say it is unconstitutional because tax raising bills must originate in the house of representatives. no courts have protected the argument, and regional think the supreme court have -- will take the case. at our first work day is he could always find the latest on bloomberg.com. betty: thank you. of the, a key meeting communist party leaders kicking off today. they are gathering to map out a five-year plan 2016-2020. we have our report from hong kong. thehe blueprints for 2016-2020 plan will focus on the structural change needed. it is expected to outline the dismantling of currency controls, lower barriers to foreign non-bank financial farce, and emphasize

technologies. this is the first time since china open its doors to the world in the late 18 1970's that policymakers have been tasked and a nation facing 7% lower growth rate a more fix has already been delivered by yet another rate hike to them. for a closer look at the state of the economy, we want to bring in the president of china's state broke international. how do they get past this subpar 7% growth? >> what they want to do is restore confidence that they know what they are doing a 7% growth, we're never going back up. betty: we're done with the? >at? >> whether they slowly healthy where, or in an unhealthy way, it is up to the reforms they are doing over the next year or two.

this is china's opportunity to say we have a game plan for this. we are going to reform an open up. we understand the challenges ahead. we're going to confront them. they going to do that is different from what they have tried to last year's? >> the state of enterprise. do you advertise the, how do you handle the? em? they are the weak point of chinese economy, but they are also important. they are not as big a chunk of employment overall, but they are at airport art of the economy nevertheless. they have to figure out how their way to deal with them. rollover loans forever, the cannot do that anymore. they have two of a game plan for the and what they're doing with the currency in the capital account. it will be a lot less genetic than what people think. this is not a full on acceleration. betty: why do you disagree with that? >> liberalizing race does not

mean liberalization in china . when they eliminated the deposit cap, but what happens is that what beijing ones can be directed. it is being seen, they will direct capital that way regardless of if you have four will caps on not. as long as you have that type of mechanical control of the economy, reforms mean a lot less. betty: where is growth in china right now? ? i've just started with a disclaimer that we do not believe the gdp growth rate it is a good barometer, but we have to play the game. 4.5%. you are looking more directionality. china does not have a hard landing coming. betty: 4.5% is not a hard landing. unrecognized and

nonperforming loans behind the curtain, that will be problematic. it will be about how the islamist down and have healthier growth over time even though that means is slowing down radically overall. peter: are we looking at china 4.5%, that is the new normal for chinese growth? >> everyone out there has become real popular to say they are growing at 4%. not know that for sure, but i feel it in my gut. there is another reaction by analysts, because they do not have data. we are tracking trends and we see the directionality of the 3%, 5%.l is 4%, with the actual level is less important than how they are attacking the debt problem going forward. under the create future growth? betty: we all got a closer look at present issue thinking right -- xi jinping here. like he has the

backing to put some of those really hard reforms that you are talking about in place? >> he is a fair call for leader -- a very our full leader. people imagine he would come in and exert his controls. you will see more personnel changes as they put people into poor positions. he has the ability as a leader to make these changes, but you're not talking about just playing around with the elite can make are significant structural changes that will be last --ne over the next few years. they have a social unrest component. we diddoes anybody say this right, we did that, how does that work? >> they create these five-year lists economics have something to talk about. betty: thank you so much. much more ahead on the bloomberg market day. military spending taking center

stage in a budget battle in washington. we'll have the latest on that. annual report from the world health organization. s,ying attention to thi meat may cause cancer . and coming up, find out what janet yellen might say about jobs and inflation. ♪

betty: welcome back. we're just over an hour into the bloomberg market day. for a look at how markets are trading, we want to go live to the nasdaq. the nasdaq is only in the green right now, but not that much. >> a mixed over here at the

nasdaq and consolidating some of last week's big gains. -- really some flat trading, perhaps better as the day goes on. analyst upgrades we want to talk about. a $22 price target. investors may be pricing in a revenue decline for next year. you could actually see revenues increase next year based on potential spending out of intel. valuation is reflecting fully investor concerns. shares are trading at a discount. when we look at the next 12 versuse is 12.7 times 15.2 times. that is a 60% discount. sales of 14%.easy , ahead of the

group of 21% versus a group of 14%. we try to another upgrade from a. this is moving in the right direction with the upgrade goldman sachs has moved up to a conviction by two and by ahead of wednesday's earnings report. scherzery notes that off 14% from july. he thinks that trends over at raintree should just that guidance may actually prove to be a little bit conservative over the total payment volume. he maintains a $45 price target with a return of 29%. betty: thank you so much. and presidential veto of a pay raise for american troops could politicala huge mistake. has bigger john boehner saying this is just wrong. this is a vital tool for our

troops. largerll part of a strategy game, one with major ramifications for everybody from the countries largest military contractors to grant programs. phil mattingly has more from washington. this is not popular and did not go over well with republicans. what was the reaction? >> president obama's rationale was a dual reason why he did this. first off, if relied on gimmick funding to fund the defense department. it also tied his hands on efforts to close guantanamo bay prison. week long and two throwing back -- this is an end to a week of throwing back and forth. the real reason it did not happen was because of this broader white house strategy. according to analysts, there

have been ongoing negotiations on the broader budget deal. what they're trying to do is find a way to release the 76 billion dollars in cuts that will be coming because of the sequestration imposed in 2011. according to one person, these agotiations have included phone call for more than three hours on a sunday that was hastily arranged. the reason he was to push the defense funding debate into those negotiations. betty: there was a lot of theater with this. he invited reporters in to watch him sign the gate out. it is only the fifth at his presidency. >> and nearly seven years in office, only the fifth veto they do a lot of things behind closed doors. the reporters complain a lot about their lack of access to the president. they made it very clear that not only was he going to be told the

spell that they wanted reporters in the room watching him veto the bill. vetoed a lothe not of things, but he does not do a lot of this stuff in public. this underscored that this is being done for a reason. not because they disagree with what it actually lays out. hat johne heard w boehner had to say, other republicans have chided the president. what do democrats say? >> the difficulty here is that democrats will probably need to vote to sustain this veto. this is a devastating clinical outcome november 2016. you voted against the pay raise for the troops. it looks like in the house the president will be able to hold democrats together for the rationale that this is leading to broader negotiations on a budget that will give the white house the leverage to not just of defense spending but also domestic programs you mentioned. thinky here is that they

they can keep house democrats in line so long as you keep the promise to them on the negotiations. the big wildcard is what everybody has been paying attention to. house republicans are about having you read leader -- or about having a leader and have a series of deadlines they have to be before the budget issue. all display and game is all for can all getse they short-circuited in just a couple of weeks with paul ryan likely takes over as speaker of the house. and told much turmoil in washington. thank you very much. still ahead of the bloomberg market day, why are the world health organization says you should not eat your bacon and ham and other processed meats. ♪

betty: welcome back to the bloomberg market.

a new report from the world health organization is warning people not to eat processed meat, saying it can cause cancer. we have been covering this story. one of the most read on the bloomberg terminal. us are ready heaters. -- say do not see that\ that people should not eat red meat or processed meats. global scientists and experts in aeir field can do determination that said processed meat is a carcinogen. it does elevate your risk of certain types of cancers. and red meat as they judged as a part will carson is that -- as a probable carcinogen. ham?: bacon,

>> anything that is shelfstable. that sort of thing. betty: it is -- is it as bad as smoking cigarettes or working alcohol? >> no. that is not with the who is saying. what they are saying is it is in the same category of hazards which is like saying how well do we know whether or not this substance is a carcinogen? they have the same certainty now above process reads as we do about tobacco. it does not mean consuming those .roducts at the same risk tobacco has higher risk. there is an elevated risk, even if it is smaller than other things we have heard about. betty: the north american meat havetute, one of many

called this a dramatic an alarmist overreach. no correlation between meat and cancer. what research on a showing? >> the meat industry is understandably pushing back. but it is important to understand that the who finding is not based on one study. it is based on the related scientific evidence on how risky these substances are. this is the process they have done for hundreds of chemicals and other things like occupational exposures for people like her dresses or painters. there are studies that have been showing correlations, but when they look at the accumulated evidence, the judgment of these experts who are vented for conflicts of interests, they are simply nonbiased independent scientific as first, this is their conclusion.

betty: did they say what kind of cancer? cancer, bowel cancer. it is the second leading cause of cancer death in the united states. about 50,000 mortality in the u.s. according to the cdc. there are other types of cancer that are being looked pat light stomach cancer and patriotic cancer. betty: thank you. much more ahead on the bloomberg markets. today, the global head of commodities research will talk commodities and his call on oil prices that interview at 4:00 p.m. eastern. ♪♪

betty: it 11:00 a.m. in new york, 3:00 p.m. in london, and 11:00 p.m. in hong kong. welcome to the bloomberg market day.

from bloomberg world headquarters in new york, good morning, i am betty liu. valiant investors just are not buying it. shares of the drugmaker buying, even after the ceo defends his counting and ethics. double down on the gas. it is every republican's nightmare, why mark halperin says hillary clinton is likely to be the next president of the united states. the gop he says is still in denial. that is a great article by him. we are 90 minutes into the trading session. julie hyman has the latest. we are seeing a mixed

picture in the market as we get underway, an hour and a half into the session. andnasdaq is slightly down overall there is not a lot of decided direction. take a look at my bloomberg terminal. we are seeing health care rebound, led by rep core. -- lab core. energy in particular a notable one with a one and a half percent decline. utilities also showing a big lag today. a pretty broad-based selling within the utilities. betty: why is energy lagging? down, but prices are notable is the movement in natural gas. steeper of a decline of more than 6%. we are seeing near record inventories for natural gas and mild weather, at least relative to what we typically see this

time of year so that is weighing on the natural gas drillers and various companies that have to do with natural gas. energyes like chesapeake , all of them are trading lower with that big tumble we are seeing for natural gas. betty mentioned valiant, just want to get a check on that stock. the stock hadt made a couple runs at turning positive. has not quite been able to keep it there. all of this action as day -- investors judge us -- digest the call. adding a new board member from value act. i know you will dig more into it with corey and we will hear what from andrew lust of cincom. betty: thank you so much, julie hyman on the markets. let's check in on the bloomberg first news. courtney donohoe has more from our news desk.

courtney: a killer earthquake in afghanistan, rocking the areas to the northern part of the country. it had a magnitude of 7.5. reports say more than 100 people were killed, and the death toll is expected to rise. in europe, another warning about the impact of the refugee crisis. italy's foreman -- foreign minister says the eu may have to stop the free movement of people. leaders met over the weekend but did not come up with a long-term solution. more than one million migrants are expected to reach the eu this year. opponents of obamacare are headed to supreme court, filing another challenge claiming the affordable care act is unconstitutional as bills must arise in the house of representatives.

legal experts do not think the supreme court will take the case. in houston, date two of deb bush meeting with his funders. the one-time front runner order job cuts in his campaign last week and a cuts for those who kept their jobs. emblemwith a confederate is no longer flying at the university of mississippi. whether the rebel flag should be displayed -- displayed has been contested issue when nine churchgoers were murdered in south carolina. that is a look at our first word news. you can always find the latest news on bloomberg.com. betty: courtney donohoe at the news desk. we learned the housing market slumped in september to a 10 month low. sales dropped 11 and a half percent to 468,000 annualized

paste. limited availability on homes was to blame. cio of global credit has been bullish on housing. he has seen opportunities in that sector and joins us now from their offices in newport beach, california. mark, what do you say you not only have these numbers, but last week we had lessening home sales. all of the numbers seem to be looking down. mark: it is true that some of the monthly data is a little volatile but if you look at the big picture, we are basically adding 2.6 million private sector jobs. if you look at that have-year-old cohort, you 1.5 million household formations in the last year. or not, under it building relative to long-term demand.

housing starts are up double digits at one point. we are under building still at this point so we are still positive despite this morning's news betty:. betty:how do you explain the new home sales in september? mark: i think it is volatile. if you look at the trend, existing new homes are selling in the double digits. land availability has become an issue and one of the things that has come out most recently is wages are going up 8-10% in this unit. there is a lot of demand and i think there is a supply response. what: i also thought that we have seen in this trend of the housing market is that more people are still preferring, even if they are creating households, preferring to rent versus buy. --t is true mark: that is true.

single-family unit sales are still up 12% and a lot of that move into rent has been credit availability. people want to buy that the credit has been tight. what you have noticed in the most recent quarterly earnings is that banks are starting to slowly ease credit. over time you she see more of these renters -- you should see more of these renters turned to buyers. you see that in all the quarterly earnings. banks feel confident about lending, particularly as housing prices have been rising for three years. there is pent up demand and also pent up demand for remodel. up, banks ares go willing to make loans to consumers who want to buy houses. betty: what changes when the fed raises rates? mark: i think higher rates will not really impact the housing market that much his demand is still very strong. we think rates are trended

moderately higher in the united states, but overall you saw last week with the ecb and people's bank of china, they are lowering rates because of dis-inflationary trends overseas. there is a limit to how high u.s. rates can go. i would not expect a big housing market. betty: what are you betting on the fed? mark: we think the fed will not do anything this week because of international developments, tighter financial conditions, and lower inflation. we think they could go in december and the reason is that flak continues to fall. you will see a weak third-quarter gdp number and a lot of that is due to inventory d stocking. reality is that final demand in the united states is growing 3%. in that environment, flack is coming down. we think the fed should likely go in december. all it is going to take as a couple more strong payroll reports.

betty: are you saying in more than 50% chance likely? pricing inarket is at about a 30 to 35% chance for december. pimco is around 40 to 50%. it is still kind of a coin flip and that is why the data between now and december will matter a lot. friday's eci data will be very important as well as the payroll numbers next week on friday. betty: we will look to see about wages. thank you, mark. .ood to see you much more ahead in the next half hour of the bloomberg market day. the very latest on the plunging shares of valiant, even as the ceo defends the company. duke energy agrees to buy piedmont natural gas for more than $5 million in cash. hillary clinton is celebrating her 68th birthday.

us whylperin will tell he thinks she is the most likely candidate to become the next president of the united states. ♪

betty: it is time for the bloomberg business flash, some of the biggest stories in the news. of u.s. homes has fallen to the lowest level since

last november, nothing more than 11% in september. the northeast was especially hard hit, down a record 62%. fedex will hire about 55,000 temporary workers to make sure holiday packages get delivered, about 10% more than last year. they say they are adjusting to an anticipated increase in online buying. yahoo! cents more than 15 million online viewers to the first online nfl game. they could $17 million for those games. you can always get more business news at bloomberg.com. let's head back to the market desk where julie has a check. julie: we are looking at a ripple effect for apple suppliers. the dialog semiconductor, a german chipmaker out with its

sales. earnings are also below analyst estimates. it is also worse than how it has been estimated, and there is concern for what this means for other apple suppliers and apple by extension. look at some of the other suppliers. also the company that dialogue is in the company of acquiring. cirrus logic also seeing big declines and if you look at apple itself, it is also down. it is out with its earnings this week so concern being sparked going into this earnings report. , the supply at splc chain for apple. you have its customers on the right, it suppliers on the left. dialogue semiconductors is the most dependent on apple for a

single company. 78% of their revenue comes from apple. serous, 60% of its revenue comes from apple. these companies that are so reliant on apple, if apple is seeing some kind of slow down definitely the fear is that it is going to affect them disproportionately. betty: thank you so much, julie hyman. nalley out is going on the off -- offense. -- valley and is going on the offense. >> sensational claims made by the short seller andrew left through his entity citroen are entirely untrue. his motivation is the same as someone that runs into a crowded theater to falsely yell fire. he wanted people to run. betty: joining us is cory johnson. price target has been $300

for the past year. andrew left responded right away to bloomberg and said, going into a theater and yelling fire is irresponsible but going into a theater and smelling smoke and saying i think there may be a fire is a responsible thing to do, and he said that is what i did. >> let's also go back into the sequence of events that played out. like i said on friday, credit to andrew for doing his work. he came out with a report basically showing there is a specialtyen two pharmacies valiant uses to distribute. one is suing valiant, saying this is the first time we got a bill for mail. we found court documents that were not unearthed at that point in time, showing this california-based pharmacy was in possession of information and there were clear invoices. the stock has reacted to that as well.

if we take a step back and think about it, there are two things happening. question mark,e or valiant inflating their numbers? surpriset of supply -- , and i think to the extent that elliott management came on the call and clarified some of that, i think it answered questions. betty: cory, you are also listening in. what stuck out to you? like there is a convoluted structure here. the purpose of which is unclear. we know that now, and we did not know this until a few weeks ago, there is this thing that valley t had a role in creating filler door. it would not admit to the

satisfaction of california regulators who owned it. t, a company not shy about --ing companies betty: it is weird. what is wrong there? cory: turn to your right. ask the analyst about how many specialty companies valiant has admitted to. we do not know how many companies they use. other companies in the business say they do not have ownership or options to own them. there is another company they , which up called isalon neither the washington post nor andrew left from citroen had uncovered. iadore owned -- was

selling drugs, why is that held in such a strange way with secret options held against the company? why wouldn't they just hold that? betty: cory is making a great point. where there is smoke, there is fire, so why go through all these really strange and convoluted ways to have a relationship with the specialty pharmacies? there has got to be something there. cory, this is not to go against you but i think some of the things he said were factually not accurate. betty: like what? filadore was known prior to last week. specialty pharma companies do own specialty pharmacies. it is legal to own them. valean has a competitive

edge on using specialty pharmacies. we do not know to what extent they haven't. betty: why have such a convoluted structure? it does smell like, what are you trying to hide? , number one, the traditional distribution model is through walgreens and traditional pharmacies. they also have very similar services. 's case, everything is a much lowerl and cost of distribution. that was the motivation to get started. to the extent the traditional pharmacies help refill prescriptions and provide patient assistance, they do that eant wanted to do that at a lower price. betty: cory, do you want to add

anything? that 82% ofaid their specialty pharma revenues were all going to fill a door. the question is raised, why not just fully owned that thing? they said some of the margins are lower but the ebit and revenue for filler door are about the same. that raises the question of how really -- how different really where the margins? differentundamentally business for them, a competitive advantage and i could not tell everyone, but everyone else already knew about this kind of arrangement. the questions are raised as much as they are answered. betty: cory johnson, thank you in san francisco. there is going to the story i'm sure. citroen research founder and executive editor andrew left is going to be joining us again as we continue to parse through the conference call. we are going to get his take on

some of the comments made by michael pearson. ♪

betty: duke energy has agreed to by people on national gas for $14.5 billion in gas. injure --managing and editor tina davis following the story. this follows moves by utilities to buy gas asset. tina: a lot of these electricity utilities are realizing that it is not really a big rogue business anymore and trying to find other ways to build on demand. betty: what do you make of the price that duke has paid? tina: a 40% premium is pretty hefty and it has been a stock performing rather well in a down market.

they are one of the companies that helps supply gas to folks so they are also involved in building some of the big infrastructures to move gas around the country, which is needed regardless of where gas prices are. betty: will there be some regulatory push back? tina: it will be interesting to see what north carolina does. duke had some issues with regulators in their state during the last tech over. -- take over. it is going to be interesting to see when they come back to the regulators for the first time. betty: utilities are very familiar with being regulated. piedmont and duke, they have had a partnership before. tina: they are partners in a $5 billion project to bring gas from west virginia to virginia and north carolina. they plan to invest more in the conduits to bring gas. betty: i am told you have a new book out?

week.it comes out next it is a biography of leon hess, the only one ever written, and it is also about the has corporation. how one man took a small secondhand used truck and turned it into a multibillion-dollar, multinational oil corporation. betty: thank you so much. the republic -- are the republicans handing hillary clinton the presidency? headline grabbing news on that. we are not just talking hillary but jeb bush, what he is doing to try to revive his campaign. we will be right back. ♪

betty: live from bloomberg's world headquarters in midtown manhattan, you are watching the bloomberg market day. i am betty liu.

courtney donohoe has more from our news desk. courtney: we start with that earthquake in afghanistan. it had a magnitude of 7.5 and rocked the area in the northern part of the country. tremors were felt hundreds of miles away. or than 150 people were killed and the death toll is likely to rise. strongest earthquake to hit afghanistan in more than 60 years. oklahoma, the woman accused of the deadly homecoming accident goes to court. a car struck a crowd on saturday. police say she was drunk but her lawyer said she was mentally ill . she has been accused of second-degree murder. ,ating too much ham, sausage and processed meat items can come back to hot you. the world health organization says eating meats -- processed meat can cause cancer.

the meat industry rejects the findings, calling them "simplistic." one of jeb bush's rivals is giving money that he was giving to rick perry who quit last month. that is look at our first word news. you can always find the latest on bloomberg.com. betty: courtney donohoe at the news desk. a provocative headline this thening on bloomberg news, " most likely next president is hillary clinton." a solid turn during the benghazi hearing have improved clinton's odds of taking back the white house. mark halperin joins us now with more. mark, those are your words, not mine. was this last 10 days a big turning point? mark: they are a reality which

honest republicans will tell you is true. the last 10 days have certainly increased her chances of being president, it also teases a lot of structural and built in advantages hillary clinton has to win this. she is the most likely today, knowing that with the clintons thing happens in a linear fashion, but as i told up the advantages she has, she is the most likely. betty: what did the last 10 days show? mark: not having joe biden in the race makes a big difference. much more unpredictable, that is a help. her debate performance showed that she is prepared. shows thatin iowa sanders is not quite ready to play at the level she is playing at to try to change the dynamic of the race. as she goats momentum and becomes more confident, -- gets

-- gains momentum and becomes -- betty: what about her likability? mark: is she everybody's cup of tea, no. it is not just likability and relate ability but her ability to talk about issues that are important to other people. i think she has improved over the last 10 days. the level of approval she has had over the last signature three events is enough. betty: we were showing her and bill at the dinner. katy perry was there. mark: it was the first time bill clinton came out on the campaign trail. it was a show of force. whether they were trying to send a message to joe biden, since bill clinton's and katy perry's appearances were announced before joe biden.

a long conversation with him about the selfies and how that changes campaigning. he said if there had been selfies when he was governor of arkansas he may never have been president because he would spend selfies.aking when he is on his game, he is an asset to her. were times when he hurt her chances of winning. he is more involved in the campaign that he was eight years ago. she is surrounded with people who are not afraid of utilizing bill clinton. if you can you be used as an asset that if he can be used as an asset. betty: joe biden was on "60 minutes" last night. >> i will be blunt. if i thought we could put together the campaign that our supporters deserve, i would have

gone ahead and done it. betty: what do you think went into that decision? mark: i think the vice president said what he meant, he is dealing with grief over his son and by the time they got around to feeling comfortable with the notion that the family would do ok under a run, that it was too late to put together the kind of operation that would be required three months to go before the iowa caucuses to take on hillary clinton. betty: what is she going to do about bernie sanders? mark: bernie sanders' campaign team is honest. the poll suggests he is a little bit behind in iowa and a little more ahead in new hampshire. hillary clinton is trying to win those states and if she does, she could become the democratic nominee in early february. that could give her a big advantage. she is in position to do well in the states and maybe win them. if she loses them, whole thing

is turned on its head. the thing for bernie sanders, can he organize in iowa and change the game in those two first voting states. betty: you guys broke the news that jeb bush is restructuring his campaign and laying off several staffers. another report out that he is meeting with donors. mark: that is right. betty: what is he going to do? mark: the good news for him, no can't --ablishment candidate has really taken off. there is a lot of room for an establishment candidate. jeb bush knots -- needs to figure out not just the reorganization, but what is his message? can he speak in a way to make the republicans say, this is our choice? he does have to forge a comeback. betty: is the republican debate

that week, is that the red line? mark: i never say it is the last chance but his team would tell you he needs to have a great debate. he needs to show he is fighting for the nomination and has something to say to the american people. i think you will see him come out trying to change the race with the debate. he does need to turn things around, and the debate is the best opportunity to do it. if he fails, i am not sure when the next opportunity is. betty: mark halperin, bloomberg politics' managing editor. newill tell you about the artificial intelligence system google is using to improve your search results. we will have much more on v aleant. zeroing in on the auto parts industry. how much bridgestone is paying for pep boys. ♪

betty: welcome back to the bloomberg market day. in betty liu, and it is time for the bloomberg business flash. southern capital is expanding in the home rental industry. they will buy thousands of apartments from equity residential. , $5.4 billion. they are expanding as americans

find it harder to buy homes. the air force will award the contract for the most expensive bomber ever built. two bidders are lockheed martin and northrop grumman. they are estimated to cost $500 million. bomb atobs" was a big the movie theaters this weekend, taking in a little more than $7 million. that is about a third of what analysts expected. you can always get more business news at bloomberg.com. let's turnover to european markets where they are just closing for this monday. for a look at all of today's action, mary chambers has more. stocks taking a bit of a breather today, coming off a three-week rally. the biggest two game -- gains since july, also falling from a two-month high.

they were trading flat earlier. we saw china central bank at the end of last week has cut interest rates for the sixth time since november, announced that cut, but a lot of people questioning what that says about the fundamentals of the world's second-biggest economy. we are not seeing euphoria carry mario offter the super the ecb showed they were ready to step up stimulus. the risk aversion really setting in. it was looking a little more mixed earlier. now we are seeing the ftse down. the dax was one of the best-performing western markets and it is now inching into the red as well. we did get german business confidence dropping, although not as economists had expected, but not enough to keep the dax moving higher. i want to show you 10 year bond yields, these tell an interesting story because the spread between u.k. in germany

has actually been widening. this is because of speculation that the bank of england is going to raise rates despite the fact the ecb has taken a more dovish stance, and despite the fact they have said it is a possibility and not a certainty. the spread between 10 year yields for italy and germany, that has been narrowing, hitting its narrowest since march. that is because of mario draghi's words, the reassurance of the ecb stepping up stimulus. back to you. betty: thank you so much. for a look at how u.s. markets are trading, abigail doolittle has the latest live from the nasdaq. abigail: stocks are pretty much flat over here with the composite index literally even. we do have a few china-related travel spots -- stocks that are surging. they are teaming up to make

china's biggest online travel services company. are and theyjune rip. but all of ct three stocks as i mentioned are up big time. ctrip is one of the top 10 curve order -- performers. ,hen we take a look at alibaba the stock is ticking higher. it did announce that it is expanding alley trip, but the big story is its monthly gain. it is on track for its biggest monthly gain ever, up 27%, and this comes less than a month after its record low of $57.20 hit september 29.

betty: thank you, abigail doolittle at the nasdaq. google is stepping up its artificial intelligence game. they have started using the technology for searches. i want to get to bloomberg's jack clark who wrote that story this morning. describe to us, what is ranked brain and how does this fit into google? jack: ranked brain is one of the things google uses to get you your search results. based on experiments they do, whereas ranked brain is a learning system, artificial intelligence that interprets language, interprets your queries in a way that has some of the gut feeling and guess ability of people. betty: townley in practical use, how does that make mice -- tell

me in practical use, how does that make my searches more efficient? google sortou ask of an ambiguous search or you say something using colloquial terms, talking to it like it was a person, that is where computers traditionally will break down because they cannot understand it or have not seen the phrase. this thing can generalize and say, that phrase seems like something i have seen in the past so i am going to assume that you meant this. much like a person hearing you talk to them in a crowded bar. i cannot hear everything you are saying but i can still guess at your meeting. betty: how much of our google searches are using rank rain? jack: what we know is it is a very large fraction of the millions of queries google deals with every second, being ranked by the system.

it is the third most important signal of the hundreds of signals in the search engine. that was something that surprised them. they did not know it would be that effective. betty: are they going to be deploying this on a much larger basis? how big of a potential will this be for google? jack: this is worldwide are ready. i have hundreds of people working on projects for ai. it hooks in with some more research they have about creating computers that can think for themselves because the technology that goes into rank rain and helps them understand language may help them understand logical questions or do basic puzzles. it is going to get weird. betty: it is going to get weird and maybe scary as well. jack, thank you so much. jack clark in san francisco. leadersg gears, china's meeting in beijing to formulate

a new five-year plan. china.e on >> if you look at china 40 years , of 30 years ago, and today course there has been huge economic development, partly because the government has been relatively efficient at removing people and building roads and building the infrastructure up. .o it is a mixed economy on the one hand, you have very free capitalism and on the other hand you have heavy government interventions. in 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 they cut interest rates six times since last november. is it the case where --

with china that they are in this transition from being an industrial economy to being more of a service economy, so it is not surprising that we are seeing what is going on, or take early with lowell -- lower global growth. it is a question of whether they can do this balance or we are going to see an accident coming out of this. do you think there is an accident waiting to happen? jack: it depends what an accident is in terms of definition. i would say this -- we have had very heavy capital flight over the last eight to nine months coming out of china. if i had to bet on someone, the local knowledge or some economy somewhere in the world talking up china and how great it is, i would bet on the locals who are

shifting money out of china at the record level at the present time. secondly, the gross figures that the government is publishing do not match the reality. exports are down, imports are down. industrial production is down. car sales were down. they beat a stabilized for a while, but a lot of indicators are very negative. railway freight traffic is down 17% year on year. do you want to tell me the economy is growing at 6.9%? it does not rhyme. stephanie: is it fair to say the economy is barely growing at all or just not growing at the rate and speed we have grown accustomed to? 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 a country, it is an entire empire. you can have growth in some sectors of the economy. i have no doubt that some service sectors are growing, but other very important sectors like industrial production is not growing at the present time. had sometimes a recession in california like the early 1990's, and other states were growing, you can have in china some provinces growing and others contracting. and so to measure economic growth in a country this large with that many people is very difficult. the evidence shows that it is nowhere growing at the same pace it was growing say, between 2000 and 2007. china,t we have had in

and this they should realize, is a credit bubble of epic proportions. . have read economic history i have never seen credit as a percent of the economy growing as fast as in china in the last seven years. betty: that was the always opinionated mark farber, the publisher of the gloom, doom, and bloom report. ted leonsis of monumental sports and entertainment and gary vaynerchuk, the ceo of made -- vader media, and more. tomorrow. ♪

betty: welcome back to -- julie: welcome back to bloomberg market day. joining me is jim stricker, of m and k holdings. we have some new chairs that are a little twisty.

jim, thank you so much for joining me. of course it is the busiest week this earnings season, and i know you are looking particularly to the lodging companies. what are your expectations? jim: the two favorite names of chris agnew short-term and longer-term our hilton and marriott, specifically focused on marriott here. it looks like rev par, revenue per available room is up almost 60% in the quarter that scale. the economy segments are what benefited. that fits right with marriott's mixed exposure. we like marriott. it does not move a 10 on earnings. this is not an earnings trade per se but we do want to take advantage of the implied volatility on marriott ahead of its report. julie: what would the trade be? jim: what we want to do is go

out to november. obviously that embeds earnings. you want to sell a 70 straight put. you go to january and by 80 and a half strike call. you are taken advantage by almost implied -- 10 implied volatility points spread between the two. with that, the direction is long. marriott will grind higher and implied volatility come out of those options. and you are left holding that call out there in january for long directional exposure. julie: thank you so much, jim stricker of m km. we will be back with more bloomberg market day coming up. ♪

>> it is noon in new york and midnight and hong kong. betty: welcome to "bloomberg market day." ♪

>> good monday afternoon. i am scarlet fu. valeant telling its story, but investors not buying it. it's the equivalent of yelling fire. scarlet: duke energy's and piedmont gas. what is fueling this deal. alix: hank greenberg taking aim at ben bernanke. they refuse his claims and his .ew book about the aig bailout scarlet: first we want to head to the oo