betty: good afternoon. here's what we're watching this hour. the federal reserve leaving interest rates unchanged, surprising practically nobody. what are the chance of a december rate hike? .arl icahn takes on aig the investor thinks the insurance giant should break up. we look at the numbers behind his claim. in an trump will be unfamiliar position in tonight has his third republican presidential debate. can the real estate local game momentum after slipping behind ben carson in iowa polling? we are about an hour from the close of the trade. has the latest on all the breaking news today. julie: we are an hour after the fed statement so we are seeing a lot of rejiggering in the market for expectations on when the

might raise rates. i have been looking through a lot of commentary here and most i have seen and a market analyst i have seen comment and say the fed is still data dependent, that it is opening the door or reminding market participants they will raise rates at the september meeting. it does not mean 100% that it will do so. kindly.ook this prices in the probability of the market for fed funds futures that we will see an increase at the various meetings coming up. a 46% chance is where it ends right now for the december meeting. that is more the low 30's going into the fed statement here the march meeting probability jumps to nearly 70% from about 60% before the statement. we're definitely seeing participants in the market increase the odds that we could see an increase in december. how is this being felt around asset classes? ink at what is being seen the stock markets.

we see stocks coming off of highs and they now are coming back again. that some commentary perhaps the fed would be content to see the market reaction or it in other words, initial negative reaction to some degree but still risk actions like stocks holding up relatively well. dow, alook at the similar trajectory and a similar movement in the index of about .4 percent after falling pretty sharply after this statement. we have seen an interesting move in rates as well. a similar sort of interpretation of the fed statement, an increase in rates going to .09%. we were around .67 before this came around on a two year. an increase in rates on the year-end of the curve. a little more dramatic. it has also been interesting to in the currency markets. particularly because here, you're looking at the fed going to the tightening or at least getting closer to tightening

versus other parts of the world getting more accommodated here at mario draghi saying last week that he is open to more combination. we saw a sharp drop in the euro following the fed statement. it is moving lower, not see much of a bounce like the other assets have in the end as well. we saw sharp movement and a sharp buying of the dollar. it looks like right now, it looks like here we are looking at the end instead of the dollar versus the yen. finally, gold prices we saw decline on the back of the fed is well. >> thank you. all the reaction after the said peerless check, headlines of the news. mark crumpton has more from the news desk. mark: thank you. good afternoon. ending weeks of uncertainty and disarray, house republicans nominated all ryan to succeed john boehner as eager. -- as speaker.

the entire house votes on ryan's nomination on thursday. in washington, the house is expected to vote on that budget will have 5:00 p.m. washington time. raise questions about whether spending increases will be offset by cuts in other revenue. presidential candidates will face off tonight. for the first time, there appears to be a new front runner. polls, and like the two previous debates, this will be 2%. stage in take the prime time at the university of colorado. earlier, four candidates who are lagging in the polls. we will bring you a one-hour preview live. this a special edition afternoon at 5:00 p.m. new york time. the atlantic storm season is entering its final month and it has been 10 years since a major

hurricane hit the u.s. since 2000 five, every category 3, 4, or five as in this the united states, the longest streak dating back to 1851. a storm that is basically the remnants of hurricane patricia is delivering heavy rain and wind to the east coast. maine and new hampshire could see 10 foot waves, causing minor flooding at high tide. that is a look at the first alert news right now are you can find the latest news at bloomberg.com. back to you. betty: thank you. on race today, the latest fed funds futures show the rate hike now up to 46% after that decision. joining us now with more reaction is carl riccadonna and frommckee who joins us,

washington. mike, first to you. you were there when the statement arrived. in terms of things that changed, at least the fed seems to be isognizing even more what going on overseas. they are keeping their eye closer on global development. mike: they dropped that part of the statements they had put in in september noting that oversees development might retard growth in the united states and put downward pressure on inflation, suggesting that maybe that is no longer a major concern. particularly business and consumer spending, that has been a problem lately. fed seems to be looking out lately and saying, we think the world as a know it is getting better. they will see a rate increase in december and they seem to be telling us they expect the data between now and then will improve.

karl: they dialed back international concerns are they dropped it from the inflation segment of the statement but they are still monitoring international, economic financial developments. you little bitck from where they were in september. the critical statement language the change in guidance, talking about whether it is appropriate to move that the next meeting, whether -- whereas before they were maintaining the low stance of effectively zero of rates. i think this is a somewhat halfhearted attempt at job market expectations. the fed wants the market to continue to think the rate hike is coming soon but not explicitly pointing toward the september meeting. they are waiting to see the evolution in the data. they have upgraded the assessment for consumer spending and business but they also downgraded the characterization of the labor market. is consumer spending hold up

all it takes is hiring growth has slowed. that is to be determined but one thing is for certain, this puts a lot more focus on the october jobs report, coming up a week from friday. that is a weak jobs report, which i suspect it will be. the shock from the events of and summer, august, september happened to close to .he september jobs report i think october will be worse. it is not impressive to be sure. in their statement, they wanted to reassure participants that it would not be a very fast ride -- rise in rates. i want to read a part of the statement, under mandate consistent levels, economics may warrant keeping the target federal funds rate low levels the committee views as normal in the longer run. what did you make of that?

mike: that is the language they have been using for some time. the markets do not appear to be listening to it here they keep referring back to what happened in 2004 in 1994 when the fed started raising rates and then continued here it janet yellen and company want people to believe they will not go very far very fast. the plot suggests they have farther to go than the market wants them to. everybody at this point is not paying a lot of attention to that language. if the market would buy into that, and be ok with the idea that the fed is going to not go very far once they start, then when they start might not make such a difference. betty: we will look toward the october report. could that delay pass december? absolutely. market expectations are not above 60% for the september meeting. shifted toward december. the fed was successful in job owning expectations to be a little more sensitive to the possibility.

we are still looking at the first quarter of next year for things to happen. we have a manufacturing sector not performing well all over the pmi surveys suggesting activities will get worse. labor report coming up, we are in a soft patch. it does not want to throw the liftoff complete at the window. iny want to keep the market a six-month time horizon. and they have the data dependency to fine-tune the forecast. betty: thank you so much, good to see you karl. bloomberg equities in washington. thanks. investor carl icon taking aim at aig and how it will unlock huge value for shareholders if the companies put into three. is carl icahn correct? we stick with the former chairman of aig, who wanted to break up aig.

trump is still leading in national polls. technology becoming more important in trading at what our wall street firms looking like in the coming decades? a new report is looking inside the wall street crystal ball. ♪

betty: bloomberg news have a texas instrument has been in talks to buy -- exim's management also received interest from the devices and reportedly may not be able to sell unless they get a high premium. talks are continuing and may not result in a transaction. value,imum of the market about 11 million dollars. third-quarter earnings beat wall street estimates. ,ou k's biggest drugmakers vaccines and consumer health care products. a new aids treatment helped offset slumping revenue. ♪ always get more business news at bloomberg.com. carl icahn is taking aim at aig. is billionaire investor

urging the insurance giant to split. despitencock, quote, thenitive -- to encourage company to become smaller, you ,ave shown no sign of urgency devoid of decisive leadership. the former chairman of the company is now the chairman who joins us now on the phone from his home in florida. glad to have you on. you have a long history with aig, from the financial crisis. you had urged the board to split the company before. what do you make of i conn's statement today? he may have a point. i never actually urged the board to split the company.

this is right after the crisis. we were trying to pay down the debt and restructure the company as best we could. at that point, i thought at some point, the company would be better off being split. synergy between the insurance business. built,e company was whether stated or unstated, his thesis was that he could use a to lower theng cost. i'm sure that still exists today . it is only been five years ago and it may well be that the .ompany might be better off --o not know about three,

>> to the extent that carl icahn is asking for an urging -- >> on the surface, it does. things may have changed. peter hancock is a very smart guy and a very good leader. i would not fault his leadership or intellect in any way. i think at this point, given he will have to articulate clearly for the why he thinks the shareholder would be better off dividing into two or three. carl icon quoted john in his letter but also had a where hef the letter

said, is aig to big to succeed? what do you make of that? harvey: that is not a good argument. size alone does not concern me. the structure of the company. you can have an enormously large and if the pieces fit together in a way that makes the total greater than the sum of its parts, than the size does not matter. what matters is complexity. betty: right. as you say, perhaps parts of the company don't, at least anymore. there has hancock, been a lot of talks. he has been an exciting's there that heblings outside is not from an insurance background. is he the right executive without that strong back down in and turned to lead aig to the

next level of growth? harvey: the things that he knows , he knows financial services inside and out. the technical aspects of the performers, ince would not put too much weight on those kinds of comments. momentsn the last few that we have, we brought you on to talk often about politics. i know your views on many issues. you and i were speaking quite a bit. what do you think of the plight of republican candidates now? harvey: [laughter] prefer to be a

little bit different from the way it is. i think it will all fall out and republicans will end up with a good candidate. betty: is there anyone you support now? he supported romney before. harvey: i think i will support whatever republican is ultimately nominated. each of them, i really like marco rubio and carly fiorina a lot. she is really excellent. john kasich has a number of strengths. jeb bush, the knowledge and the mind to be an effective president as welker i think there are a lot of great candidates. betty: but not the top two in your list there. harvey: i would not put them in

the same category. [laughter] ben carson is a marvelous individual and has got lovely instincts and i think he is probably a great person. running any large enterprise ands some skills experience. unfortunately, dr. carson does not have that, as nice a guy and intelligent as he is. betty: so good to talk with you. harvey, for joining us on the phone there from florida. still ahead, speaking about politics, a make or break night for jeb bush. to slack in the polls. ♪

focused on him tonight as opposed to some of the other targeting people.

targeted by moderators and other people. jeb bush and marco rubio, as they fight to try to be the establishment alternative. heck andch is mad as will not take it anymore as far as how he sees the race going. i do not know if ben carson will be the center of attention or seen as a new front runner. he will get a share of attention from the moderators. betty: trump is on an attack right now against cnbc and the moderators 30 also tweeted out, we have this as well, him quoting a new poll out by the economist and he says he is by over 30% against carson. what will he do? what is his tactic tonight? reagan library debate, the last republican debate lasted three hour.

criticism i thought the -- he was waiting for the contest to come to him. i think he will be fight gear tonight and he will engage with ben carson and try to get back with his message that is part of at least why he is popular with voters, talking about immigration and trade in the economy. this is an economy centered debate. this should be the wheelhouse for donald trump. he is a business guy and there are not many others with the business real estate and marketing experience he has. pattie: thank you so much mark halperin. do not miss the one hour debate preview show live from colorado. coming up at 5:00 p.m. eastern time. we will be back. ♪

betty: live here in midtown manhattan, you're watching the

bloomberg market day. let's check the headlines this afternoon. mark crumpton has more from the news desk. house republicans have nominated paul ryan to succeed john boehner as speaker. -- the vote inat a closed-door ballot. daniel webster of florida. have a house that looks the way it looked in the last few years. we are going to move forward and unify. our party has lost its vision and we will replace it with a vision. mark: the entire house of representatives will vote on thursday. another man who once held the state's position is facing six months behind bars. dennis entered a guilty plea today in a federal court in chicago. prosecutors claim he paid millions to hide decades-old charges of sexual misconduct. he admitted in court he knew he was evading federal banking laws when he with drew large sums of money.

he will be sentenced in stremme -- in february. a south carolina school officer caught on camera tossing and dragging a female student across -- floor has score been fired. the department concluded the maneuvers used by the officer were not acceptable. the officer has been the subject of racial bias and excessive force allegations. the justice department and the fbi are also investigating. the refugee crisis could spark a new round of defense building in southern europe. austrian officials are thinking of building a barrier on the border with slovenia. with aister says a fan fence will be billed if the surge is not stopped. newgees started seeking routes when hungry put a razor wire barrier on its line. that is a look at the news right now. you can find the latest news on timber.com. betty: -- bloomberg.com. betty: thank you.

want to get to julie hyman at the markets desk. julie: the company is saying it will be eliminating its dividends this year and next year in order to meet a strategic target, including a ratio at least 12.5% from the end of 2018. it must be european abbreviations. a tier one common equity ratio. release 12.5% from the end of 2018 to get there. if you look at how the shares are trading in the united dates, we are seeing them down to the ground a little bit but it looks like making it higher on the news that they're getting rid of the dividends in order to meet targets. if you look at stocks overall and the reaction we have been seeing to the fed statement, opening the door to some extent to a rate increase, we saw stocks initially go down but we

have come back and then some from those declines. stocks are now behaving well to the idea that there is at least a possibility of a rate increase coming. if you look at my bloomberg energy is leading the gains but financials are almost matching the group in terms of games as -- gains as well. we have a perception gains might be good for some banks profitability on the net index margin. the financial etf we used to track it, you can see it moving higher after we got the statement. butttle bit choppy eventually a slow and steady increase as we had closer to the close. some big banks are doing well. jpmorgan and bank of america are helping to lead the gains. up by 5% right now. deutsche bank right now in the news as well and gaining for other reasons. betty: thank you so much, julie

at the breaking news death. i want to bring in our bloomberg news reporter who covers a lot of the financials. we will get to your story, one of the top red, about how basically wall street will get automated. i can see why that would be a top red story. i want your perspective on the deutsche bank news. ison the one hand, it surprising whenever you hear a bank destroying dividends. a huge shock to investors. on the other hand, talk to the american bankers. say we did that stuff years ago in 2010 and 2011, conserved capital. it is not that surprising, you know, people who talk about deutsche talk about a company with a lot of problems. betty: they have been struggling. >> right. they have to do more drastic new death moves. you cannot do what they have been doing for years and get by.

they are big in businesses that are struggling and do not have the retail network to offer everything. is this to you a beginning or a continued result in europe of the restructuring going on? barclays is having issues and others. question it is not the end. is the endk this there they are in the fourth inning. as that is happening, there is a report out that sees the future of wall street. it is an automated trading and automated business. >> keep in mind what they want to thesesell mckinsey wall street firms. this report is getting buzz today and it basically says, what is the biggest expense on wall street? humans.

as we look forward, their vision of the future is a wall street that uses a lot fewer human beings. process, you trade have people in the back office doing trade reconciliations, settlements, there are a lot of people who might not necessarily have a job in their vision comes true. betty: is any of this starting to happen? >> yes. in some of the asset classes, easier to electronic communications, that has happened. we are seeing that. it is harder to electronic five asset classes and fixed income. a lot of them will take to that automation. on top of that, back off the main office, there will be advances with smart computers, machine learning algorithms that

will enable a lot of these people to be out of a job. betty: then yesterday we had that story from lisa abramowicz about how that voted well for human beings. >> i think computers will eventually win. that is just me. thank you for joining us. let's get back to the markets and the economy in particular are more on the fed decision not to raise rates today. expandingy is still at a moderate pace and they will consider tightening in december. joining us from new york, lauren mccarthy. in thenk they succeeded language of their statement? >> i thought the fed did a surprisingly good job. they are not ready to raise rates now, but do not you

surprised if they are ready to raise rates in december. the decisions will be made based on the data between now and then and also the new condition of global commodity markets and financial markets in general. but i think they wanted it to understand that the series of lifting off at the first credible opportunity. did your expectations for december rise? >> not at all. i have been expecting them to raise rates for quite some time now. the specificity of this particular policy statement made me feel more comfortable with that view. it is not a done deal and it will depend on the next couple of employment reports, which i think will satisfy them. but maybe even more so, some energy marketse or energy prices not falling further. our bloomberg intelligence economist a few moments ago said to us, watch

out for the october report, the jobs report, because he is expecting that will be quite weak and it may throw into doubt even the december rate hike. quite i do not see any reason why the next employment report will be weak. when you look at most of the , it is quite impressive and we have jobless claims at the lowest level since 1973. not 85% of the labor force is involved in the sector and the aroundent component is 57 and furthermore, most of the hiring happens at small firms and surveys show small firms continue to get more optimistic and expect to do more hiring. what we saw in the last couple of months was disappointing but i do not think it is the beginning of a new trend. betty: what did you make of the fed keeping that language, as we were talking about earlier, downgrading on the inflationary

and jobs outlook as well? classless the fed has been doing is lowerings doing forheight of the hurdles liftoff. they told us we do not really have to hit the 2% target. we just have to be reasonably confident we can hit the 2% target. means energyy prices and the prices of other commodities we report just have to stop falling. they do not even have to go up. side, the employment fed has been getting close to being satisfied for a while. based on comments by another -- a number of fed officials, they do not need to hundred thousand or maybe 150,000, one of the federal reserve president said even 70,000 per month will get the fed to full employment. the message is they want to do

this and they are going to do it in an opportunistic fashion and that is, when the coast is clear. yellen will be giving a testimony on capitol hill in front of congress, i believe on the third. a few weeks away. markets will be watching that. what does she need to do to continue the good work laid out in today'statement? >> i think her primary objective will just be to be credible. i think what she will do is link to the fact that the labor market has generated 13 million jobs since the end of the recession and also point to the fact that we are seeing some stability in commodity prices, deflation risks should somewhat recede. avoidk she will also making a commitment, but i think she will also make the effort to

reinforce what is in today'statement, specifically that december is very much on the table. quite frankly, i think the fed will act in september. betty: thank you so much, the chief financial economist at jefferies in new york. ahead on the bloomberg market day it we are following the breaking news at deutsche bank, basically eliminating their dividend for two years as they try to overhaul their struggling businesses. ♪

betty: good afternoon and welcome back. a look at some of the biggest business stories in the news right now. michael said income inequality is among the most important

challenges in the u.s. his bank is doing its part to help young people do their jobs. an address to the economic club of washington early today. wesley cannot be indifferent to the larger challenges facing the country and there are few issues more pressing than the widening wealth gap. unhealthy for society to fracture in this way. power -- ourour part to help young people find participate. betty: he is calling it a cautious recovery. johnset manager has hired as co-ceo. he has worked with the cofounder and current ceo. he was president and co-ceo all of goldman sachs. can always get more business news at bloomberg.com. for a look at how the bloomberg

market day's trading, we are 15 minutes away from the close. abigail has the latest. abigail: we have seen wild fluctuations at the nasdaq today. muted on the open, nicely up ahead of the fed and slightly down after the fed. we now have the composite index up more than 1%. let's look at some of the worst and best performers today starting with the worst performers, walgreens. are off sharply after the company trimmed the top side of its earning estimates range for 2015 to the mid part of the ranges $.14 below consensus at 454. investors do not like the news and the shares are off 10%. another stock we have been following all day is biotech giant reporting nice after the bell today. boosting its full-year revenue

and 30e range between 30 $1 billion. it fell short of estimates of $31.5 billion. those shares are off sharply as we go toward the close. up's take a look, apple put a very strong september quarter beating analyst estimates. apple said it is expecting another record holiday selling boosted by strong iphone demand. the company offered fiscal year q1 revenue guidance that straddled analyst estimates for , delay what some called concern over growing growth. investors seemed to like all of the news quite a bit and shares were up 4% at this time. betty: thank you so much. abigail at the nasdaq. deutsche bank is plenty to scrap its dividend for two years.

seeking to improve returns. for more, i want to get a erik schatzker who is on the phone with us and covers banks for us on this network. justwas on saying this was , we are in the middle of european banks restructuring and cutting expenses and doing a lot of what american bank had done years ago. this is more pain to come for the european bank? >> it is radical belt-tightening and you are right. respectsirror in many what american banks were forced to do in the wake of the financial crisis. in a most goes without saying that deutsche bank and its wieters at the time should have done the same thing. but let's talk about what they are doing. scrapping the dividend in an effort to build capital, remembering to group's dividends

in 2009. reinstated until march of 2011. a2-year time were citigroup did not pay any dividends either. it is a tough pill to swallow for deutsche bank shareholders. they are shrinking the balance sheet dramatic late. they have 416 billion euros in risk loaded assets right now and they are trying to take that down to 320 i the end of 2018. 310 billion euros by the end of 2020. as morgan stanley discovered, it is hard work to bring down risk-weighted assets aggressively. it is worth it if you look at morgan stanley stock. you can see the effort is worth it, but it will be very painful. they also plan to cut costs and they want to get to a run rate of 22 billion euros in adjusted cost on an annual basis by 2018. they are right now in the $30 billion neighborhood. betty: this is part of the plan becauselay out tomorrow

investors were not very satisfied with his plan that he laid out a few months ago. we're getting a few words on this but it sounds like there will be more to come when they lay out the future plan. he will explain how they get it done. right now, getting the numbers for it ultimately to the shareholder, it is the numbers that do matter. how you get there is important because it tells you how the bank will be running. we do not know on the basis of what kind oflone investment bank and has parity will remember they wanted onesche bank to be a number player in pretty much every single market. he had global ambitions and wanted to be deutsche bank to be a global universal bank the way citigroup and jpmorgan are.

it is clear deutsche bank has butto scrap those ambitions we do not know by what degree. we will probably find out from john tomorrow. what is this is deutsche bank thinks it can be strong. seen,s we -- as we have what business is it plans to get out of entirely. it will have to do that if it will meet the capital requirements. it is almost without a doubt. betty: thank you, erik schatzker, for joining us on the phone. much more on the markets. ♪

betty: welcome back. markets are closing at the top of the hour in a few minutes. julie hyman with more on your market check on said date. julie: we have seen a rally that has held on after the fed came out with a statement opening the door to late december.

it will still be data dependent. we're closing at the highs of the session, higher than where stocks were before the fed came out with a statement. take a look and you see the move pretty clearly. following after the statement. rates are indeed going up in december. , you have goting financials to leave the game -- the game, the fed willing to raise rates. solidly enough footing that he could do so. upwards inovement rates on the perception that the fed may come out and raise rates. he see the 10 year 2.90% and a big move on the two year as well. a movement in the currencies as well and a sharp movement in the euro and in particular downward. the dollar rising versus the japanese yen and the town

falling versus the dollar as well. gold rices are moving lower also, of a piece with the rest of what we are seeing. up moreould mention than eight weeks. thank you, julie. for more, leaving the interest rates unchanged and a broader impact on equity market, i want to bring in joe weisenthal, the cohost of what you missed. wehave got some time before worry about the rate hike. >> everything about this is surprising. we have gotten week issued data lately. the fed does not seem to a knowledge that. the fed at least seemed to squarely want a message to the for december possibility. there is definitely no guarantee that this will happen, but the fed definitely wants people to know it is a possibility in the language, it did not talk about

foreign risk as much. the last at the september meeting if you recall. think we willou get in more trouble the longer we delay the rate hike? if we do not buy the third quarter of next year, are you saying we're in trouble here? in septemberught meeting. but i think this is a remarkable reaction we're seeing in the market. investors into like the idea that a rate hike is still on the table. no one would have guessed this would be the reaction especially when dollars in rates are. betty: thank you. he will be on next. that is it for bloomberg market day. johnny us on the program, to buy a lack of it. ♪ -- ♪

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scarlett: we are moments away from the closing bell. joe: i'm joe weisenthal. alix: and i'm alix steel.

[closing bell ringing] alix: stocks closing higher after the fed hints it may move this year. treasuries tumbled and the dollar rallies. joe: but the question is "what'd you miss?" : we will take a closer look at the difficult choice the fed faces. joe: plus inside the heated debate over whether we need a rate hike this year, next year or not even at all. global m&a is up, the second highest in history, so will the m&a spirit collapse? scarlet: we begin with the markets. u.s. stocks took huge leg lower following the announcement from the federal reserve. it briefly turned negative before recovering. the dow ait