child policy. in colorado. republican candidates came out swinging in the debate. what did we really learn? welcome to "bloomberg ," i am david westin. stephanie: i am stephanie ruhle. our authority on banking christine harper. i'm tired. did you watch the debate? david: part of it. stephanie: if i wanted to the in a disrespectful fight, i would call my sister. we are going to go to vonnie quinn. republican presidential candidates try to break out of a crowded pack in colorado. on dollars anded

cents. jeb bush went after marco rubio after a four to newspaper called after noto resign showing up for a senate vote. this,n you signed up for this was a six-year term. you should be showing up to work. the senate is like a french work week you get three days where you show up or just resign and let someone else take the job. 2000 four, john kerry ran for president and missed 60%-70% of votes. in 2008, barack obama missed votes. the same newspaper endorsed him. this is a double standard between the mainstream media and the conservative media. said hisonald trump for casino bankruptcies taught him how to restructure debt. the house has passed a budget compromise that avert the debt default. borrowingxtends

authority through march 2017. it includes a two year deal on defense and nondefense spending. the senate is expected to approve the measure. iran is taking part in international talks on syria for the first time. in discussions began today vienna. around is a supporter of syria's president shot al-assad. syrian rebels say iran's inclusion will make matters worse. thers taking part, russia, u.s. and allies in europe and the persian gulf. not: -- matt: drops in futures. s&p many contracts down 8 points. points.s down 65 a lot of dealnews that could drive stocks higher. allergan and pfizer. 220zer the acquirer, a $ billion market cap. a high market cap,

it is not going to be cheap. ander wants to get botox moved to a has to about -- a hospital tax regime. premarket off 1.3%, marathon oil on what youidends would expect to be a loss because of the drop in oil prices. it is unchanged in the premarket, cutting disc five cents from $.21. deutsche bank and barclays out. 26,000e bank cutting jobs by 2018. john cryan saying he's going to do what his predecessors could not and that is implement strategy. david: i want to pick up on deutsche bank's turnaround strategy. from joined by dirk frankfurt. he has a buy rating on the stock. i read mr. cryan's statement and

he goes into detail about what he is not going to do. they are going to lay off employees and cut branches. lower risk profile. i understand in a sense what deutsche bank is not going to be doing. what is it going to be? what is the high ground that deutsche bank is going to occupy? stephanie: it is going to be empty. david: what is the message? message?t is the deutsche bank will still be one of the biggest banks in europe. they still looking at 1.2 billion, trillion, sorry leverage. consist of something. the business they still want to be in is investment banking. they will be the biggest investment bank in europe. one of the largest asset and wealth managers in the world. they have almost as much as credit squeeze under management. there are still the leading bank in german retail and one of the four top global transaction banks in the world.

is a lot of business they can do. they talked more about what they did not want to do. stephanie: there's a lot of business they have lost. let's talk about deutsche bank's market share. leag i'm looking at the tables on the bloomberg terminal. you can see deutsche bank is still number three but they have come down two positions. if i click market share difference, deutsche bank is the of market share. down below hsbc and barclays. christine, i'm curious about the message to the employees of deutsche bank and the customers. when they wake up and read this, what do they get excited about? christine: this is really a message for investors. , as we pointed out, has been the worst performing european banks stock. it is valued at half of book value or something close to

that. investors have gotten impatient. you see that in other banks. that is why credit suisse is doing what it is doing. barclays is naming a new ceo. investors have had it with low returns. the message is to investors that we are taking action. carl icahn is taking after aig saying you got to boost your returns and should split up. the same dynamic is going on with the banks that have been muddling along and not able to produce decent returns. employees, itd means fewer. deutsche bank is saying they will focus on 30% of customers to produce 80% of revenue. stephanie: from an investor standpoint, you are calling it a going tog, they are clean house. i've spoken to six deutsche bank employees this morning who have likeget me out of here yesterday. if they don't have the possibility of being in a major

business and getting paid top dollar, why would they want to work there? i guess the u.s. part of the deutsche bank investment bank will not be one of the top layers in the market anymore. i think deutsche bank will focus most of its business activities and investment banking on europe . that is where they are strong and do not have the regulatory disadvantage. for investors we have two years of no dividends but we do not have a capital increase. that is important for shareholders of deutsche bank that we do not get more dilution. stephanie: if you are going to be a niche player and focus on europe, why would you work for a global bank and have overhead? why not work or your paid a real dollars? of then some parts business, deutsche bank will be competitive in the u.s. in the trading part, leveraged finance, cme's, this is where

deutsche bank will be strong. in the rates business they've never been a top-five player in the u.s. with other regulatory non-us that come from banks it does not pay and it is deficient to get out. the employees can go. wanttine: in fact, they them to. the shares have reacted very strongly to this news, even though a lot of this has been telegraphed, including the dividend cut and that they were going to cut jobs and businesses. why do you think the shares are reacting so badly today. was there a surprise that people did not expect anything negative in the results? thought the results were pretty positive. the capital ratio was better than we thought. the only real negative was the dividend a mission for next year , which was not really expected. the press conference this morning, the new ceo is a pretty

downbeat person and he probably presented it in a way where everyone probably thought the world was ending. he put a focus on the fact that funny 16 and 2017 will be bad years. the shares opened positive and turned negative during the press conference. stephanie: dirk becker of kepler cheuvreux and christine harper from bloomberg news. staying in germany, batons at reported third-quarter earnings this morning, beating estimates -- wisconsin -- lufthansa reported third-quarter earnings this morning, beating estimates. we are joined by carsten spohr. a very good quarter for you. you are looking ahead to the fourth quarter, how are you going to keep this pace? this has been a very good year, businesswise.

the main reason is something that makes me optimistic. it is strong positive feedback from customers about our investments into quality and turning lufthansa into the premium airline in europe. my optimism also carries me in the remaining quarter. much of the uptick was because of fuel costs? surely fuel has created a tailwind for us and any other airline. besides that we see two very important elements. the positive customer reaction to our quality investment and secondly, for the first time ever, turnaround into the black for our secondary brand germanwings, serving .2 point traffic in europe. it is an important part of our strategy. stephanie: ryanair is targeting germany. could you end up in a price war? they are very good. carsten: the low-cost

penetration into the german market is much lower than the other markets in europe. this is part of the strong position of lufthansa, which has shown we are willing to defend our market. with germanwings we have the marketool to defend our with profit. this is why it is important that for the first time we are showing black figures on germanwings. stephanie: what happens to your market went deutsche bank is firing tens of thousands of employees. that is a lot of business travelers who pay full fare. what could happen to your prices? carsten: the dependence of the single customer is limited due to the size of our network. big german blue-chip companies are premium customers and we are they're told to connect to the world. germany being the second-biggest

export nation has huge international links, which lufthansa is part of. this is not good news but i'm sure we will compensate with others in case there's a drop in the individual customer segment. chairman andnsa ceo carsten spohr. lufthansa was an important client for me in europe. i spent a lot of hours in your headquarters. nice to have you with us on a very good day for you. , details emerging from an important meeting in china regarding the future of its economy. we head to asia on "bloomberg ." ♪

stephanie: welcome back -- vonnie: welcome back to "bloomberg ." 6% ins of allergan up 1 premarket trading. pfizer and allergan

considering a merger. allergan has a market value of $112 billion. talks are at an early stage. time warner cable posted third-quarter earnings that beat estimates, the company gained residential internet customers. regulators are deciding whether to allow charter communications to buy time warner cable in a $65 billion deal. for pershing square holdings, the publicly traded security of bill ackman's hedge fund. pershing square is down 16% for the year. ackman's bet on valeant hasmaceuticals, valeant plunged over claims of wrongdoing. david: we focus on china as leaders wrap up an important meeting discussing economic targets and policy changes for the next five years. more details have emerged over the last hour or so. tokyourran is in

following the story. as we woke up this morning in new york, a couple things jumped out. 6.5% growth targets, it appears. also the moving away from the one child policy. what struck you about what we have learned so far? the one child policy mood is very significant on so many levels. china has a declining working age population. they need to counter that. they have a demographic problem because it is about keeping the economy growing. even by moving on the one child policy, that will not change things overnight. it takes a while to change the demographics of a country. it is a step towards countering problems down the road as we see in japan and other asian countries. you mentioned the growth figure. premier li floated the idea that %hina needs to be heading 6.53 growth over the coming years.

that is a long way from double-digit figures china grew at in previous decades. still a positive in some respects. stephanie: chinese stocks have posted the biggest three-day loss in some time. do we think an announcement like that could cause a turnaround? there are different factors driving the chinese stock market. some people say it is disconnected from what is happening in the real economy and he may. -- anyway. chinese stocks are driven by soe reforms, state enterprises dominate so much of china. prater detail on how china wants to continue to transform the economy for consumptions and services, that would flow to stocks. it is a little too early for stocks to take a significant direction out of the economic blueprint because we have to wait for all of the details.

matt: i thought the same thing, it is going to take dinner and drinks and nine months before this comes to fruition. stephanie: more like 10. stocks that look at make baby formula, as soon as we got the headline that china was one childnd the policy we had a shot up. that wille products benefit from this, investors are already starting to think in that mindset, how can we make money? david: it is on the horizon, at least. thank you very much, enda curran in tokyo on the update of the plenum. preet bharara will -- stephanie: will washington agree to a budget deal? the former white house chief of staff will be joining us. tweet us and join the conversation. you are watching "bloomberg ." ♪

stephanie: you are watching "bloomberg ." we've like to welcome president of the american action forum and former director of the congressional budget office. yesterday the house passed a two-year budget deal that needs to be approved by the senate. welcome. i am going to deliver our early-morning cynicism. is this something to be excited about? do we ever see these budgets turn into anything? this one is a deep sigh of relief. i don't think you should get excited. we are going to raise the debt ceiling and fund the government. we are not going to have the dysfunction that is harmful. to get that done, the deal is preempted in the -- pretty empty in the end. david: it is kicking the can. doug: large entitlement programs

are growing rapidly. this deal does not really touch that. it spends more money on defense and other things people want and promises this time it will be different, we will cut it at the end. stephanie: until we attack entitlement reform it is a waste of time? doug: it is the number one problem. about want to be serious the budget, you reform social security so it does not blow up on people and eu fix medicare so it does not run a $300 billion deficit. if you do not do that, you are playing at the edges. david: is there any political leader on the national stage that you see who is trying to address this seriously? paul ryan has had a series of proposals. we saw paul krugman go after ryan about the validity of his plans. is anybody doing anything serious? ryan did withl medicare was say i've looked around the world and what we've seen is going from a defined

benefit plan to a defined contribution plan, why don't we do that with medicare? that is a serious policy effort. mr. krugman might not like it but it is an effort to take on the numbers and substance of health care. attracts what united states corporations have done. doug: let's take what you got in your job and make it portable to take to medicare. nothanie: paul krugman is saying he does not like paul ryan's approach. he's saying the numbers do not add up. doug: i beg to differ. the whole point is to make them add up. a lot of points come to balance it one thing i thought we learned from last night was there is a great resonance to getting the budget to balance. when john kasich about balancing the budget, people pay attention. david: nobody wants their own ox to be gored. doug: that is what paul ryan is a smart guy. he has always wanted to solve these problems. go to washington to

become the speaker. without presidential leadership, none of this gets done. stephanie: that is not how the american people vote. when it comes to how people vote, they simply say do not touch my entitlement. doug: they always have. i think this is going to change. when you look at the numbers in the last year of the second term of whoever we elect out of the are going to have a $1 trillion deficit. 800 billion dollars of it is going to the interest. we are borrowing to pay off borrowing and that is driven by entitlement. stephanie: misery. david: you got an economist. stay with us on "bloomberg ," tom keene and his morning must-read. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment,

we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. stephanie: look at that. our nation's capitol on this thursday morning. you are watching "bloomberg

," and we have a full house. and just in from the district of daley.a, bill bill, welcome. and last but not least, of course tweeting as he is sitting here,0 >> i just tweeted out the classic book. "the search for modern china. i remember reading it and it was chilling. > for those of> you who may not have read it, it is about 1300 pages. >> and it is just chilling, this moment. stephanie: tom is going to recited over the course of the next -- [laughter] let's start with the first word -- david: let's start with the first word. >> the german chancellor has begun her state visit to china. a number of business deals are

expected to be announced. today, the chinese said they would buy airbus planes for $13 billion. families haveger been in place for three decades. china's communist party will now allow all couples to have 2 children as part of the new growth plan. and some dramatic moments, the greek coast guard pulled 200 40 migrants -- 240 migrants out of the water after their boat sank. more than half a million refugees have reached greece this year. matt: we are taking a look, first of all, at futures that are off. the fed funds is futures. not the index futures. you can see we now expect the probability of a move in december after yesterday's meeting and it took out the line

about worrying about what is going on elsewhere in the globe to 48%. if you blow up this chart, you can see the dramatic move for expectations of a rate hike in december coming here at the end of october. i also want to take a look at right now the dollar because the dollar has hit a two-month high. but it has come off, as we wait for not only gdp numbers today, but job numbers today and tomorrow. and gold has started to increase because of the fed -- lack of the fed move yesterday. stephanie: thank you, matt. i mentioned tom is with us. >> let's go to alan musk. this after the fed meeting yesterday. this is big. he meant no words about it. the october meeting became big. the perils bar, we are going to 150,000 typeple

numbers. and they will likely pull the trigger in december. it was a domestic analysis. i don't bite. to me, the international analysis is still in play. >> it is the international impact on the domestic economy. and the big when there is going to be impact on tape. we are going to see a week gdp number -- weak gdp number. 1.5% laterve 1.2%, this morning. i think if that happens, it scares people, and they don't move. >> i know they wanted to reassert their authority over the markets. that is not in the textbooks. >> this is the most confusing fed i have seen in a long time. and i think they are going to run for everybody. >> it is good for us. >> bill is making a lot of money. [laughter] >> but tell me, what has changed in a month?

say, there is no problem in the rest of the world. i think they put themselves in the box quite a while ago and haven't been able to get out of it. and they are still struggling. stephanie: has the later closed on the box and now they can't get out? >> no, not at all. >> i have a question for you -- >> -- it is going to happen. >> the box they put themselves in was the end of your thing, and that was just crazy. i think in the end, they will not pull the trigger. they will wait to next year, and everyone will be confused. >> at what point does this confusion -- i mean, it is crazy. >> you were also secretary of the comments, so you looked at these numbers all the time. i wonder if the box isn't a bigger box. we are spending more time and more effort looking at the central banks than i ever remember in history. political that is our system seems to be dysfunctional.

they haven't on tax reform, and therefore the fed is left as the only sort of adult in the room. one can question whether they are acting -- >> the reality is the fed normalizes as rest -- whether theyonder preserve the option now would as it were, for the fed. >> they are right on the edge. it is a really nice way of putting it that they are back to 50-50. they have options to go either way. but i would suggest that the options for the american people aren't there. and that these policies clearly approved to the halves -- haves. that is good benefits. >> right, and everyone, including the republicans at the debate last night, talk about helping the middle class, talk about income equality, but no one -- congress, specifically -- put anything together to help them.

>> it actually feels like to go down, come back. maybe it will get into the working class. >> it is an unbelievable indicator of these times that we are now monitoring monetary policy on its -- >> that is the point. stephanie: here we are. this is the situation we are in. what should be done today? >> today? tax reform. today? pedal reform. but as you well know, that is not going to happen today. the question is, will we get a definitive leadership out of the white house and functionality out of the congress? >> which suggests, tom, this is not a business problem, it is a political problem. >> at the base, it is always a political problem. you always see over the last number of months in the microanalysis we do, and the distribution -- which is this

idea of people like you aggregate the numbers. daley dozen aggregate. he is just trying to get votes here or there. america's -- is your economics coming more like daley's politics? >> i think we are because we have more information. the arrival of all this data means you can try to target more things. >> the lesson is you need as many policies as you have targets. and we don't have many policies moving right now. >> al, of course, front and center. david: final thoughts? >> i would hope, and i think it is very difficult and expectations for any real substantive action next are by congress is probably pretty slim, but what we have to see his presidential candidates who live out specific plans to implement. >> can i have a final thought?

the chicago blackhawks need duncan keith. [laughter] that is the final thought. >> they will be fine. they will be fine. david: on that note, thank you very much, tom, for joining us. the republican candidate, as we have been referring to, got aggressive on the first debate focusing on economic policy. that is next on "bloomberg ." ♪

stephanie: welcome back to "bloomberg -- vonnie: welcome back to "bloomberg ." germany's largest company posted a third-quarter loss, the biggest in at least a decade. deutsche bank put aside more money. onnwhile, the bank plans adding jobs. -- cutting jobs.

barclays said third-quarter profits fell 10%, missing estimates. the second-biggest bank and the u.k. has been restructuring and cutting costs. they named a new ceo yesterday, aiming to complete what he calls a necessary transformation of the investment bank. cheaperzon will offer ways to connect gadgets like smoke detectors to the internet. starting in the first quarter, verizon will offer options that use less overheads so that devices can connect to the web for less. and that is the news you need to know at this hour. david: thank you. establishment candidates raised their voice last night in the third republican presidential debate. the first debate of the season supposedly focused on the economy. mark halperin joins us from colorado, where i expect he has been up all night. mark, while compared you want to start out with your report card

-- mark, welcome. you want to start out with your report card? mark: sure. i did sleep for about three hours, but i did dream about the debate. the top three people in my grades, a minuses for the two young senators, rubio and cruz, both of whom now have a chance to reshape the campaign. they showed what they got last night. they showed what their strengths are. governor christie did quite well. the two current national front-runners, carson and trump, i have them next. i thought they did fine. the person who made the most news last night made the news by doing poorly. jeb bush did poorly overall. he had a horrible face-off with marco rubio. and in a financial world, you are already seeing the rubio high command reaching out to the bush people saying, onboard with us. that will be one of the critical things to watch in the next few days.

they are very, very panicky now about his performance. stephanie: the finance team, you're talking about fundraising. let's talk about the economy and who laid out their plan. last night was supposed to be about the economy. >> you may have had it as good as you can have it with 10 people on the stage all trying to interrupt each other. they have all laid out plans, whether any of them explain their plans and had an opportunity to engage with each other over the pros and cons of their plans is questionable. and i think some people -- >> if you just sort of look at areas, tax policy, regulation reform, medicare reform, social security reform, jeb bush has plan after plan after plan. you don't get that out of that debate last night. stephanie: where is jeb bush's mojo? this is why wall street got behind him. policy one to

[laughter] get you elected president. [laughter] >> you also have to remember we are in october. people have to go and vote. and i think we love these events and there are lots of fun to watch, but the fact of the matter is people at home overtime will make a decision. and when they go to vote for president, they take this process very seriously. >> i agree with that. one of the things that happened last night as we saw the insider thecruz's --bio's, the cruz's, take on the outsider types. and if you look at the policy specifics on the outside, there is not much there. >> i agree with doug. i think the outside is lost. david: and there is a certain amount of theater in all of this. but there is bit.ly supposed to be some substance as well. if you get kind of that report card and come back to the basic

question, for example, john kasich talked about that a fair amount. how would your report card look different if you are just grated on the substance of your economic statements last night? mark: look, secretary daley is right. 10 people on the stage with that format, you are not going to hear detailed policy plans. a lot of the candidates do have plans, but part of the job of president he is not can you explain your plan in a minute? or can you inspire people to sense that you have a broadvision and you are making a party trying to fix our entitlement system. so i think governor christie probably did the best on that yesterday. and, by the way, he has some of the most detailed plans. stephanie: but in terms of performing, it feels as though chris christie has had his thunder stolen from donald trump in terms of being the straight talking, tough guy. doesn't that turn chris christie into a secondary character here? mark: well, to some extent,

donald trump has turned everybody into a second character. but governor christie's bed is that in the end, people will want a fighter, but also someone with a governing record. there is not a perfect candidate in the race. this is like a combination of roller derby and single elimination death match. and if you look at the brawl -- part of politics -- chris christie is as good as anybody in this race at trapping and fighting. if it ends up being christie versus trump, they are trump. but i think governor christie could hold his own in that fight , particularly in the republican party going back to reagan that has always nominated such a candidate. >> we tend to think of these debates as being appealing to the voters. but there is another issue, people voting with their money. what is the story behind rubio

going after jeb bush's money? >> obviously, they are from the same state. the bush family has deep ties nationwide with funders. i think they will stay with him a little longer than mark thinks. david: will stay with bush? >> will stay with bush a little longer. but there is so much money out there. and they can move so quickly that i think rubio is going to take advantage of a very good performance. even though there -- they are only established because trump, carson, and fiorina are not establishment. it is a whole new definition going on. stephanie: john kasich has been doing sort of a money tour in new york over the past month. he excellent made some comments last night really saying i am the only one who has actually done this. >> i am the only person on the stage that was actually involved in the chief architect of balancing the federal budget.

you can't do it with empty promises. stephanie: is that fair? you might say it has never been done. >> i think there are two things there. number one, all the governors run on their record. that is how they play this game. but he talked about balancing the budget. that is a really important thing to the american people. people want to see the budget balanced. they think it will help the economy. he has been involved in that process. david: mark, a one-word answer if you can. what is the deal with john kasich? we have had a number of wealthy people on the set saying he -- they like john kasich, if he doesn't seem to get traction. mark: he needs to get better known and he needs to drive a consistent message. he didn't pull it off effectively. david: ok. thanks very much. stephanie: bill, if you had one take away that you would like to see in the next debate -- i mean, yes, all of us would say there was too much fighting.

we didn't really get to hear what we needed to. how can we in the next debate? bill: i think there has to be a little more discipline by the moderators, to be honest you. everyone was interrupting each other. if you are watching on television, it was kind of hard to follow the whole thing. and it became more of an event than a discussion. and chris christie lay that out, as did cruz. you have to get more control of the moderator. >> i am going to agree with that, but here is the example. towards the end, there was a moment where there was a serious question about rick adelman form. rand paul saying wait, that is not going to work. jeb bush chimed in. so have some questions about retirement -- entitlement reform. don't do this person-to-person question. stephanie: i forgot he was there. [laughter] >> rand paul was out on the end, too. >> the one thing i took away --

when in doubt, attack the media. >> absolutely. no question. that is a no-brainer on either side of the aisle. , it isie: mark halperin time for you at least to continue to sleep. [laughter] thanks for joining us. and either getting up really early or staying up super late. mark halperin and doug holtz-eakin, good to have you. bill, we are not done with you. we will return. next on "bloomberg ," we will take a look at the penalties getting goldman sachs. ♪

stephanie: welcome back. you are watching "bloomberg ." a steak dinner at the brooklyn steakhouse, that would lead to a $50 million fine for goldman sachs. i am not making this up. a former goldman sachs employee

is in court this week after pleading guilty for obtaining and sharing private information from a buddy at the new york fed. another reminder of the revolving door relationships at banks. this is a wow. $2 million, $3me million, $5 million a year. some people saying, you know, it is not his fault. it is the way the business is set up. i personally say baloney, you know the rules. they know -- bill: they know the rules, and that is what it is an expensive dinner. but it is unfortunate, obviously. but people do really stupid things, and there are consequences. the $50 million is a good find for goldman sachs, and it is hopefully a message. people continue in spite of fines. stephanie: but that is also human nature. these are people who are put in situations where they can make an extruded in a amount of money

. i am not saying it is the right or the wrong thing to do, but it is human nature. bill: but it is the wrong thing to do. stephanie: and you should be punished for it. bill: absolutely. everybody tries to build a culture that everybody understands the rules and follows the rules, and you have outliners who should be punished. david: the person who got the documents should it with his boss. it is not just one person at goldman. bill: which is a frightening thought that somebody with such insight from a government agency -- stephanie: this guy who was fired was then fired from jefferies. david: sadly, we have to say goodbye to bill daley. thank you so much for being here today, bill. still ahead, pfizer and -- are expected for a merger. ♪

stephanie: we will see how america did in the third quarter. a blockbuster deal in the making. pfizer is in talks about

allergen. germany's biggest lender plans to burst -- boost returns by cutting jobs and scaling back overseas. welcome to the second hour of "bloomberg go." david: we will build on the second hour. stephanie: indeed we are. let's take you to some news. vonnie: china is taking steps to defuse a time bomb. china'sng child pug -- one child policy. all couples will be allowed to have two children. china wants to boost the number of births by 2 million per year.

indiana -- in vienna, discussions will include the u.s.'s key european allies along with russia and iran. russia backed bashar al-assad but is set to recognize that he could be a roadblock to peace plans. died.refugees the smugglers would not ship this wooden ship capsized. more than half a million refugees have reached greece this year. futures down across the board. s&p futures up 10 points -- down 10 points. as investors sell off treasuries , we are looking at increased probability that the fed will raise rates in december. investors are selling off. you can see the 10 year with the yield rising to 2.11%.

that china news has investors scrabbling for investments that may benefit from chinese policy changing. danone, big maker of baby formula. they have a 7% exposure to china. johnson in the u.s. has a 31% exposure. mead johnson is up $4.22 in the premarket. off itsoing to spin real estate into a reit. it has been pushed by activist investors to do that and now it will. mgm resorts up 8% in the premarket. stephanie: it would be the biggest deal ever in pharma. allergan are considering a merger. in them drew bring

armstrong joining us from london to discuss the deal? this deal puts me in confusion because i feel like just yesterday we were sitting here talking allegan valiant. end. it never seems to we had one deal after another. we were talking about as val -- as valiant try to take over. pfizer wants that irish tax address along with a bunch of other things as well. the biggest deal in drug industry history if it happens. we are all following this is hard as we can. a massive story. david: does this fit in with a larger strategy pfizer has laid out in terms of how their line?t the does this line up with what they have already at pfizer? drew: pfizer said -- the ceo says he wants three things. cost

overlaps that are a big function of these corporate mergers we see in the drug industry. lower the company's tax rate by getting out of the u.s. he is also looking for innovation. new drugs, existing brand-name drugs that could help out the company. there is some products may or interested in. botox is a moneymaker. allegan has a number of other things but nothing really huge like a cancer drug. in a lot of ways this is about tax, getting out of the u.s. and finding synergies. stephanie: when a megamerger like this come is it the opposite of regulators what they want to see? drew: the drug industry does not necessarily get the same ftc scrutiny on antitrust. when you talk about brand-name drugs,

they're all different from each other so there is not the competitive aspect you have seen with generic drugmakers were remake be -- where we may be going from three suppliers of a certain medicine down to two. they already had one choice talking about a unique brand-name drug. those types of concerns are not as big of a deal. there may be some questions about pricing power in the market. resulting in higher prices for customers and insurers. mayrust requirements not be as huge a deal as we think they might be. david: why now? is the price right now that it was not before? drew: it is price and it is tax. allergan shares are down from their peak. the company has gotten more affordable for somebody to go after. there is a tax issue. we will have presidential elections, a new congress.

said he sees 12 to 18 months where there is a window for action before we might see some sort of significant tax change. who knows what a new congress and president might do with this? donald trump and hillary clinton have been outspoken. texancritical of versions. hillary clinton has said critical things about drug companies and pricing practices so it may be that this the time to do this from a political standpoint, even if it does become an issue potentially in the 2016 campaign for the president. matt: looking at the sales growth of these huge companies, pfizer is 200 $20 billion company. allergan is $115 billion company . this is allergan sales growth. you can see the rise compared to the drop pfizer has seen. with a drug like botox, you're not going to get many complaints

out of presidential candidates about the pricing. they will pay as much as they can to get that botox. david: that is pretty cynical. matt: did you watch the debate yesterday? stephanie: that is not appropriate. we sat here with a doctor a few months ago who said one of the reasons botox is so valuable is because people don't ever ask for discount botox. they will use a generic drug but in terms of getting breast implants come up botox --,, botox they will not get discount. david: please ask for discounts. stephanie: you want the name brand. david: thanksgiving for joining us from london. we want to return to want of our top stories. deutsche bank reported results hours ago after announcing last night that it would suspend dividend payments. it declared a loss last quarter and another 26,000 layoffs. martinuzzi.elisa

one of the things we have been talking about this morning, what is deutsche bank going to look like as they get through all of this cost-cutting and closing of branches around the world? out, it isou point going to look a lot smaller. what they are outlining today -- giving more details along the lines of what previous management authorities laid out which is to shrink the investment bank. to get out of consumer businesses that are dragging on makingd to focus the most money. they are looking at trading clients, advisor clients, telling us they will cut half of those in focus on the 30% that generate 80% of the revenue. stephanie: are they going to be able to create that kind of revenue having cut off so many

clients on a corporate side and sales and trading side? you need all of the ingredients to make the soup. elisa: quite. it is interesting you mention that. that is one area investors will look to focus on this afternoon. how they're going to be offsetting the revenue they will be writing off with the shrinkage plan. as he was presenting this outlook during the presentation to reporters, you will see the shares were declining. he sees a difficult 2016 and 2017 as well. david: who are the big winners in this? not the 26,000 people who will be leaving deutsche bank. there are a lot of people who will be looking at this thing i can go after those clients, that business. who are the big winners? that many ofnks

europe hospital are going to reorganization. barclays is reorganizing, credit suisse is reorganizing. that leaves potential for greater market share gains by the banks that have been gaining market. u.s. firms. david: what did we learn from the press conference? it was going on we came on the air. learned the capital demands that are being asked of deutsche bank are somewhat surprised it's -- surprising to management. that 2016 in 2017 will be tough years. we learned more about where the job cuts were fall. we know about 4000 will go in germany. we don't really know where that -- what that divisional breakdown will look like. stephanie: employees who are

saying they are disappointed today, there is silver lining. this is a buying opportunity and the -- if the stock does go tophey will be among shareholders. when we come back we are taking a look at rudderless cars. -- at driverless cars. ♪

stephanie: welcome back. posted mastercard third-quarter estimates -- third-quarter earnings that beat estimates. mastercard said stronger u.s. dollar would hurt business over the net few years. time warner cable beat investments in the third quarter. the company gained more residential high-speed internet

customers. regulators are deciding whether $55 deal.harges -- .ony returned to profitability sales of playstation for game hoteles sword and transylvania 2 set box office records. that is your bloomberg business flash. stephanie: we will take a look at the future of the car. companies from tesla to gm to google jump into the race for automation. business week went inside gm's self driving cars. keith naughton joins us with more. take us inside. keith: it was fascinating. i was able to go along for a ride in a driverless car on gm's proving grounds in michigan. the driver took his hands off the wheel, put them on his lap, took his feet off the pedals and off we went.

it was very fascinating. david: i read your piece. it worked but it did not work perfectly. keith: exactly. gm is still getting the bugs out of the system they call super crews. they let me go on an engineering drive where they are still trying to get it to work right. one of the things that foiled it was, it was a bright autumn day in the sunshine would sometimes cause glare for the camera which helps see what is in front. the system would turn off. you have to put your hands on the wheel like you used to. stephanie: what is more likely? to see google as a competitor to traditional car companies or a comp -- or a partner? keith: a lot of companies see google as a competitor. gm has said they want to team up with google and perhaps provide the powertrain for a google car. i would say what google is doing

has a lot of people on edge in detroit. matt: google gives the analogy ist what gm is trying to do jump so high you can fly. i think it is more like walking before you run. i have driven in the cadillac at milford. david: been driven. matt: been driven. i've driven in audis and none of them work flawlessly. what is more interesting is going to be who takes the hardware side of this revenue when. when they finally complete systems, if you looked at a breakdown of the companies competing, you have some names stephanie and i remember from our iran please in new jersey. -- pioneer has a 31% share. it is harmon that is focused on the systems. byron systems companies like

mercedes, audi, and bmw are using to get halfway to autonomous driving. david: that is the audio and video. matt: they also make components that allow cars to drive themselves. systems,ms, navigation sensors. they make sensors that autonomous driving systems use. it's not just about the stereo and cd player. they still use cd players? david: i have one in my car. the difference between the google approach and this is whether it is all of your driving as opposed to getting on the highway and going in the same direction fast. is that right? keith: what google would like to .o, this moonshot the google car they have developed has no steering wheel or petals. there is no turning back. there is no driver. all the utter mark -- all the other automakers are doing one

step at a time. autonomousll offer driving on the highway. add, big names matt could like mobile eye. david: the early years of the space program they had air force pilots who were going to be astronauts and they said you don't need controls because it is all automated. in because stick they said they were just going along for the ride. you can read the whole story in this week's addition of business week on newsstands friday. still to come, big data coming up. we have your reaction to third-quarter gdp ahead on "bloomberg go." ♪

david: let's take a look at dramatic pictures from a nasa spacecraft flyby of saturn's icy moon. 30 miles above the surface to collect samples of waterjets spring from the south pole. scientists say there is an ocean below the surface and it could support microorganisms. life on saturn's moon. a hot deal this morning in real estate. stephanie: not living on the moon. david: they could buy their own moon, probably. kkr is buying the top 10 floors of office space in hudson yards. jason kelly is here to discuss this. jeff blau it here with you guys a couple weeks ago. he was talking that big names moving into the $20 billion

development that is meant to reinvent manhattan and manhattan real estate. kkr is moving in and buying the space. stephanie: this is massive. --have never seen anyone this is west chelsea. basically behind penn station. a no man's land. david: i had an office for a time overlooking, there was nothing there. stephanie: don't you wish you bought that? jason: what is notable about this, kkr is not just paying rent, they are buying the 10 floors. this is a deal. these are deal guys. this was led by the most senior people at kkr. this is a deal. this was not just they called her and said we are looking for new office space. david: i am from michigan. what strikes me about new york

city is it rejuvenates itself. there are areas that are gone and they come back. this is the latest. jason: what is also interesting is where they are moving. if you read barbarians at the gate, pivotal scenes in the entire history of private equity played out in that building and now they are moving to the seventh train. a project as large as hudson yards, we will go through cycles between the beginning and the end and you have to set yourself up for that. whether it is financial structure, capital structure, leasing. i'm sure karl is right and we will go through downturn between now and the time you're finished with hudson yards. we have built in the flexibility to stay through that. stephanie: he is not feeling any struggle now. what does this mean for nine west 57th? this was the premier location. we see more companies move out of that very expensive, difficult building everyone

wanted to be in for the view of central park. now a perfect view of new jersey. that is what hudson yards gives you. jason: we will see what happens to that office space that is frankly old. you have coach coming into this building. i believe in equinox hotel. stephanie: a building where you are not allowed to use a cell phone in any of the public spaces. luck of the 2015, cell phones matter -- welcome to 2015, cell phones matter. side.oving to the west third-quarter gdp numbers will be out in a few moments. we are breaking it down on "bloomberg oh." ♪

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i suspect if you watch it isberg ," you know new york. we expect gdp numbers any second now. oick reader, welcome "bloomberg ." also, mark zandi. what are you expecting, mark? march oh gdp? one percent and 1.5%. a soft corner. : -- stephanie: let's start again. metco we have 1.5% for gdp. this is the quarter over quarter figure. we have an inflation figure that is very important to the federal reserve. that is the core pce quarter over quarter. it is lower than we were looking for and we were looking for a low number.

was the survey. we actually got 1.3%. the fed is trying to get us that 2% level and having real trouble getting there. we have initial jobless claims that came in lower than expected, which is a good thing for the country. 260,000. we were looking for 265,000. i know that mark, more important, will look at the four-week moving average. if you take a look at this trend of initial jobless claims, you see it down, down, down. fedreally here, this is why rate hike expectations will be rising. on the other hand, inflation is not coming, and that is why they will be falling. david co so, mark, not being a economist, my reaction is sort of meh. likely, thehan weakness is due to less inventory indication.

the underlying rate of growth in the economy distracting from inventory and other data is probably about 2.5% to 3%, which is not too bad. in q4, the current quarter, we probably get a growth rate closer to three. the best number to look at is consumer spending, housing, investment. i have not seen the data, but my guess is it came in around three. stephanie: mr. rick? rick: i think that is right. there is focus on a couple of hints of gdp data. we are coming off pretty strong quarter before that. i think the number -- by the way, showing at a global economy, that is drifting a bit in terms of growth, but i would not say this is a disappointing number at all. mark: the number that matters for the set is that initial run

from insurance. 260 is about as low as it ever gets. that suggests the job market is creating 150,000, 200,000 per month. that is the bar set for the first rate hike. --phanie co so you think : so you think there could be action? mark: i think that she could raise rates. for personal 3.2% consumption. you can see that we are at a relatively high level. this chart goes back 15 years. we are at a level that basically is consistent with the early part of the last decade, and that was strong growth. david: i think you have strong growth about -- strong views about what measurement we should be looking at. mark: we are changing the

technology being used in the world today. we are going through this extraordinary change. think about the greatest technology change arguably in the last 20 or 30 years. if oil prices were three times higher than where they are today, you would see gdp growth would be up to 2% higher than where it is today. technology is changing. ofs focus on a lower rate growth, i do not think it is measured right. a construct of the economy -- we talk about consumption. why does consumption continue to be strong? what technology is doing -- mark: if you just took the price withel and if you take that transportation and the multiplier, you would have a significantly higher rate of gdp. the point being, we are not

capturing, when you look at gdp, output in the world, it is lower because so much is less expensive than it used to be. want to talk inflation for a moment. what constitutes good inflation versus bad inflation? it amazing. you see economist in the world with this discussion of two, that there is some magic around the two number. when you break down things particularly when you think about the lower and middle income, where do you want to have inflation but you do not necessarily want higher inflation? we break things down like food, energy, which you would want prices to be lower. you would want a lower level of inflation. then you want the housing market to trend higher. that what iswed happening to bad inflation, think about how efficiently are in terms of food consistency. int is happening to energy

the good inflation, i.e., houses and use cars, which are helpful to consumption, they are moving nicely in a gradually higher pace. we break it down. has ishe target the fed 2%, and that is about as low as they want to go. that is appropriate because when you get into a troubled economy or recession, you want to get real interest rates going down. that is difficult to do if inflation is too low. think about japan. japan has a difficult problem because inflation is as low as it is. mark: inflation is a combination of the good inflation and bad inflation. you say they good inflation may be higher than we think it is and the bad inflation lower. the one number and they say two is magic. there is an incredible impact on the economy and consumption when you dissect the good versus the bat. is a differentt

dynamic when you think about an economy that is levered or in economy that has delivered. ered.at has delev leverage,where your your gearing is higher, they completely valid point. in places in the economy, when you think about the financial delever theu economy. when the bad inflation is down, i would argue -- rick: the average person on the fed would say their target of 2% is probably too low, that they would prefer a higher target at 2.5%, 3%. i would not be surprised if at some point down the road, depending on how the economy performs, that they may raise the inflation target. matt: we talk about tce is the most important data point. concerning inflation and the fed. five-year, at the

breakeven rates, this is an outlook as to where inflation is going to be. the red line obviously is the 2% level. right now we're at about 1.84%. i wonder -- is that a place where you feel comfortable right now? mark: it is one thing the witness that articulates. inflation expectations are incredibly important. two,e spot rate is under there is a dynamic that drives capex. if your expectations is that the economy is improving and that there is pricing power, it is more important than if we are sitting at a spot level inflation that is lower. rick: that is too low, too. at 1.8%, if you took your chart that, that is a -- if you took your chart back, that is a low expectation. you can see that obviously we are at a low point we have not

seen since that matt: you can see that obviously we are at a low point we have not seen since 1999. rick: these data are skewed by liquidity issues and measurement issues. regardless, this is another reason why they want to get inflation higher. in terms ofut measurement and the way we look at data, we live our lives in a completely different way at this point. rick is smiling. we talk about disruption, but the role technology plays in our lives is so drastically different from 1999 until today. so do we need to be using different measures to evaluate the economy, our behavior? 100%. you think about how you order cars, how you book in the system. stephanie: i call a travel agent. mark: there is a discussion about productivity. we are not seeing productivity growth like it is an indictment

on the human race. the fact of the matter is technology today is geared the way we used to at a lower price, more efficiently. you think about self-driving cars, how everything in our lives today is done at a lower cost point. it creates and improves the standard of living and it means you can operate higher growth with a lower rate of inflation. evidencere is a lot of that you are right. i am sympathetic that we are not ,easuring what is going on particularly on the services side of the economy well. but research that is available suggests that measured properly, it would be .2%, maybe .3% pram to gdp growth. that is academic research. mark: there is a tremendous amount of academic research that does not calculate multiplier facts. here is the number when you drop

oil prices, what it does. however, what happens is it gets in the chemicals and transportation and plastics and you create this tremendous multiplier. what is it when you move the price of oil around or gas? it does not take the multiplier effect. rick: i have not run across a person that is more bullish than i am. and he is a fixed income guy. it is bizarre. do they even listen to you in your world? i talked to a lot of fixed income people and they are very negative. that is unusual. i have to listen to you more. you soie: mark, thank much. mark zandi, chief economist at moody's. , thank you so much. the. frank act getting its first test in court. ♪

david: welcome back to "bloomberg ." in a vocabulary lesson, at least for me, there is a new world called spoofing, and it is getting a big test. a jury is hearing arguments in chicago in the first ever criminal trial related to this high frequency trading act, deemed a legal by dodd frank. ger is with us. kerry, set this up. explain it to us. kerry: basically this case is looking to see if the chicago-based trader spoofed the market. what is spoofing? you put out a whole bunch of orders into the market and then you cancel them, and the illegal part of that is the intent to cancel. so if you can cancel an order,

no problem. but if you put the order out with plans to cancel it, that is considered illegal. spoofing became a legal -- although it has always been a regulatory infraction under the futures regulator cftc -- it became illegal under dodd frank in 2010-2011. since then we have seen a couple high profile cases. , is the in chicago first one to go to trial. tois going to set the stage see how prosecutors and regulators go after spoofing in the future. david: set up the size of this particular case. how many of these trades did he try to make? keri: at one point there were 14,000 trades. 14,000 trades and 96% of those during a one month time frame he actually canceled. he setindictment it says

up an algorithm to trade in the market, and he made the intent to cancel all those orders. that was all part of his computer program that he set up, and that is what is being presented to a jury in chicago. we will go back and talk about the fed strategy on this. technically, that is illegal under dodd frank. that is what we call spoofing. if he never intended to complete the trade, that is what makes it illegal. not intend tod cancel it and canceled it, he would not be on trial. >> is there an intent to cancel when you place the trade, before it is executed? there are a lot of legitimate user -- a legitimate reasons why the order would be placed or canceled. there has to be reasonable doubt that there was intent to cancel before the trade was executed. the very high standard -- because this statute has a

specific, precise type of intent that has to be shown. david: what is the evidence of that intent? this is not libor with their e-mails saying let's fix libor. keri: if you hire someone to do your out a rhythm and it is set up so that it cancels orders at to set up your out a rhythm -- your outdoor rhythm -- you are going to have computer evidence by the way these trades are programs. : it is built into the cancelsm and then it 96% of them. we are talking fast, milliseconds. so the jury is going to be asked to infer -- if you are canceling orders, thousands of them in milliseconds, did you ever go through with those

trades? matt: the reason you would do this, you could manipulate the price of things to go up or manipulate the price down. that is just the basics. if you take a look at trading, trading of oil futures. the green is electronic trading. you can see what happens here, 07-08,3, as we get into this does not happen. spoofing, you would probably get your lights knocked out if you did this a couple of times. it strikes me. you deal with these cases. this is the one where you may have to put the defendant on the stand. ithm says they are going to cancel, the jury would say, why would you do that unless your intent was to spoof?

andrew: i actually did intend to fill these orders and i filled some of them, i think is going to be the answer. some of them actually got filled. some of these transactions occurred. while they were open, they were legitimate orders. time, almost long attorney in a high-frequency trading world. the defense will have to convince the jury that even though it is only a second or a millisecond, computer program was intending to trade at least during that period of time. keri: part of the defense strategy is that this law is too vague to understand what it means. stephanie: remember how easy it was to write dodd frank? geiger and andrew finch, thanks. stay with us. you are watching "bloomberg ♪."

stephanie: swiss watchmaker constantine has made the world's

most constant -- complicated watch. we found out how they designed it is very special kind of watch. has 46watchmaker already cup location in mind. project,ginning of the came back with an additional it ist, which is the -- something that has never been made in watchmaking before. the watchmaker already has 46 in mind. this brought us to 57 complications. but the biggest challenge is to put all of those complications together in one watch. and at the end, to have something that is still elegant and very readable. >> i have to ask -- eight years, 57 complications -- what is their price tag on something like this? variation ranging

between $8 million u.s. and $20 million u.s. stephanie: stephen joins us now with more. the watch enthusiasts, the aficionado -- talk to us about it. >> a watch like this is not so much a watch as it is a trophy and an achievement. innovations that eventually make their way into wristwatches, and it is a way for a collector to something nobody else is going to have. david: as much as it is complicated -- --a complication is a term anything other than the hours, the minutes, the seconds. this has a stopwatch mechanism. that is a complication. for the hebrew calendar that he was talking about, the day is one, the date is another. each of these things adds up, and in the end, there are 57 complications. david: why is it a watch and

said of a clock? you cannot carry around that you cannot carry it around with you. >> even holding it in two hands is a little much. it is something you would leave on a desk or it stephanie: and what does it cost-ish? >> they are saying $8 million to $20 million. even within that window, that probably makes it the most expensive watch eversole. there was a watch made in the -- most expensive watch ever sold. stephanie: thank you. when we return, we will have buffalo wild wings. ♪

david: we are 30 minutes from the opening bell in new york. welcome back to "bloomberg ." stephanie: our co-anchor, erik

schatzker is here. erik: good morning, david zervos. outonly is david turning it dancing a bit of a victory lap these days. david: trying. erik: we will start this hour with vonnie quinnvon. world leadersnie: meeting in ie: toxin been a bring together russia, iran and in vienna.a -- talks theidea is rejected by syrian national coalition. they say a sod it should not assad should not have a

role. refugees rescued by the greek coast guard. the migrants were pulled from the aegean sea. seven people were killed. ship capsized after leaving turkey. china says couples may have to children come ending the one child rule ordered 35 years ago. the government is concerned about potential labor shortages. david: i want to take a look at futures, down across the board. dow jones features down 55 points. a couple of earnings winners in mastercard now moving down even though they

beat revenue expectations. an estimate of $.88. ltria gaining in the premarket. , americansgas prices use that spare change to buy smokes at the gas station. their profit was up more than 9%. -- trading down more than 1%. erik: time for the five stories that matter -- big of elements out of china's new five-year economic plan. populist's most popula

countries scrapping its one child policy. couples will be allowed to have two kids. it's part of the plan to ship the economy to a more balanced but slower growth. -- to children instead of one. to what degree does that help china's economy complete this transition? david: i'm sure it is something that is going to be a very long periof id in which we have to analyze. they will not come until the into the market until -- they will not come into the market until 20 or 30 years from now. you will have more people competing for jobs, so it will continuedally a problem in the lower end of the job market. erik: and a strain on china's

resources. , overcapacityow is more of an issue in china than under capacity. i don't think that is as big a deal. people moved away from the agrarian and into the cities, that is a different world. the reason you had 10 kids is because you were working on a farm. now, you are in the city coming to close them and feed them -- you are in the city, you have to close them and feed them. stephanie: deutsche bank firing people, shrinking its workforce by 26,000 by 2018. a new strategy announced by the co-ceo today. they will slow operations in 10 countries as pressure mounts to lower costs come up with capital and reverse a sure slump that has made db the worst valued stock among global lenders. five years ago, banks wanted to be the universal one bank for all things around the world.

-- whata different tune is this going to do for liquidity which is already strained? david: i was thinking back to 1995. stephanie: what did you wear back then? david: not a suit like this. i was only recently out of the federal reserve. ben bernanke he come only younger. and no beard. ben bernanke e, onl, only younger. they would put bid offers on things you couldn't believe. how can they make money? that was the business model. these guys cannot trade anymore. rule come everything else. rule, everything else. forget about market share.

it was knowing what your customer is doing and taking advantage of that. from 95 the brink forward. out are saying i'm stephanie:. do they have the workforce to change their strategy? you hire people based on your strategy. david: you will not be there providing prop traders to trade that liquidity. it will go to hedge funds. the table, deutsche bank ng a l of market share in bond trading. this is another function you can use on your bloomberg terminal. loss, you can see the areas where they fired people circle. a lot of firings going on at deutsche bank. we will put a giant red circle here. david: we are not going back to

1995. we move on to number three. pfizer has made a perlman area --roach to acquire elegant has made a preliminary approach , moving to alergan low tax legal address a broad. it could make pfizer big enough to split up into two new companies. we've talked about a lot of these deals now. it seems like people cannot get organic growth and they are growth david:. financial engineering as opposed to actual innovation driving a solution to the human genome or whatever we hope these big pharma companies do. the tax code incentivizes a much effort to find ways around paying a reasonable share. i find it annoying. stephanie: and you come from the financial industry. what do you think the job function is of the structure? david: we are supposed to go

around and heart the tax code and regulations. simplicity would free up a lot of resources. the tax code and regulations. erik: it's the shareholders demanding more profits next quarter, the quarter after that, the quarter after that. are not thinking five years down the road and thinking the investments you made today, can't wait to see the profits happier from now. -- half a year from now. stephanie: yet in the lab and find a new drug. how about the fundamental research and decide what company want to back -- you want to back? david: i'm in. i like it. stephanie: number four. feeling the pain

nt, extending losses over the past week after a short eant ofaccused val wrongdoing, bringing its decline to 50.9%. they own 5% of the company and added more than 2 million shares during the recent route. what do you make of this, david? david: i'm not the next bird on this specific company. i started to read a lot about the pharma business line just because of my friend, kyle bass. -- i'm not an expert on this specific company. he is on to something. there is some real nasty stuff the goes on behind sidelines with the patent process. people are uncovering more and more problems. i will be surprised if there's two or three or four more of these. to take the

regulatory structure, which is the patent structure, and find out a way to continue to get --essive a lot of effort being placed on gaining on the system instead of innovating and crating advances. five.number mark december 16 on your calendars. the federal reserve hinted that is the day they will consider a long-awaited move on interest rates. moderate growth will continue to push unemployment lower and lead to higher inflation overtime. the central bank has missed its 2% inflation goal for three years. 1.5% in thegrew third quarter. your thoughts? david: i think it was very interesting the market reaction. erik: the schizophrenic market alive and well.

david: they took out the apocalyptic view of emerging markets, which they had inserted in september that sent the fear of god into a lot of people. and was the cause for a very large selloff in risk assets. they gave us an upbeat message, told us they will raise rates in december. isch come in my opinion probably the right thing to do now. i think the market took it really well. it went down, unchanged on the day and right back up over a percent on the close. the market is responsive to a fed that fear mongers. to the is responsive success it has achieved. it's time to check the box and say we did it. erik: i have a strong feeling we will come back to the question of policy divergence later in the hour.

those are the five stories that matter to the markets now. stephanie: tweet us your question for david. we have him for the next 15 minutes. right now, we will be speaking to buffalo wild wings's ceo sally smith. whether chicken is too expensive. mexicositting down with secretary of foreign relations. ♪

julie: welcome back to "bloomberg ." time warner cable says new internet customers boosted the bottom line in the third court. seven cents better than targets. they are waiting for regulators to ok a takeover by charter communications. ricin will offer -- verizon will salineew gadgets, using

their technology instead of wi-fi or bluetooth connections. -- cellular technology. goldman sachs must pay $50 million to settle charges in new york state. --k employees and schemed that is the latest bloomberg business/. -- bloomberg business flash. paypal, that company missing third-quarter operating profit coming out at $330 million. we were looking for $109 million more. shares down 5% in the premarket. the ceo defending his try juicing the company is -- defending his strategy. go pro missing its fourth-quarter outlook by a mile

saying it will make as much as were lookinghey for $.82 from go pro. shares down 17%. a huge drop for nick woodman and i global camera make. casinos doing well across the board. chineseto do with the to child policy. new gamblers will be there in 18 years. -- two child policy. lvs and wynn resorts gaining as well. buffalo wild wings shares trading down in the premarket after yesterday's earnings report. we will talk to the restaurant chain ceo sally smith when we come back on "bloomberg ."

david: welcome back to

"bloomberg ." buffalo wild wings says sales growth fell short of what analysts had estimated and it cut its forecast this profit forecasts. shares are down in the premarket now. sally smith is buffalo wild and ceo.resident thank you for joining us to can you take us and your business here? why is what you reported less than what people at hope for? sally: thank you for having me. we had a challenging third quarter. we executed very well. a shift in some of the sporting events happening in september, view,aper view -- pay per ships and cost resulting in a -- shifts in cost resulting in a loss in earnings. david: how do you compare same-store sales? sally: we had a nice third

quarter, september was a little weaker because of that shift in the calendar. october fell at bit weaker than what we expected. very close to what we had taken in price. the shift in the calendar has affected us a bit more than we expected. stephanie: are you having problems with minimum-wage legislation? sally: minimum-wage certainly affects our labor line. we had seen labor climbed throughout the year. we've seen some wage pressure. it has moderated now as we are going into the last half. we saw some increases in our health care benefits and workers compensation. we are anticipating increased labor costs on and never get basis. we face that into our forecast for 2016. erik: one of the ways you lots

of those labor costs is by raising prices. there are other chains out there that have figured out that you have a good idea. they are doing wings, doing beer, doing televised sports. it's putting some pricing pressure on buffalo wild wings. in atou be able to put this pricing increases over time or will you have to hold or cut them to get to where you want to go? sally: we have a new menu rolling out next weekend it does include a price increase. we think if we can continue to offer a compelling guest experience, continue to upgrade our restaurants and provide some of the greatest viewing that we give the guest a reason to come back to buffalo wild wings. stephanie: what about the stores in the oil patch? people are struggling, they may go to buffalo wild wings but you will raise prices when jobs there are suffering. sally: we just acquired 41 restaurants from a franchisee in

texas and new mexico. ofle we have some patches just a couple stores, texas has held up pretty well for us. from a sales standpoint. we are certainly cognizant of it. we have to be very careful when we take a look at pricing. it -- we took some price and august. -- in august. the higher wage states have not seen a drop off in traffic. we will approach any price increases cautiously as we go to 2016. erik: you were having trouble driving the same-store sales growth as you want. what makes you confident you can reverse that trend with the restaurant you will by next year? sally: the restaurants that we did acquire had some discounting in the bars. as we transition those two company-owned, we take a look at

that and bring it up to company standards. we think we have great guest feedback and the guest loyalty scores are very strong in those acquisitions. erik: thank you so much. sally smith is the ceo and president of buffalo wild wings. "bloomberg " returns in a moment. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.

stephanie: welcome back to "bloomberg ." david is still here with us. you just returned from asia. tomorrow, japan's central bank will be meeting and big question is, is more stimulus needed? david: i think more stimulus is needed. they have done an incredible job. if you go back to end of 2012, the dollar yen was at 80, the nikkei at 8000. today, the nikkei is nearly 20,000. reflaave briefly did -- ted the risk assets base. they have a lot more to get to

-- a lot more to go to get to 2%. it centers on the same problems we have with qe. it affects different people in a different way. the large corporations love qe. yen and selleak more of every expert. the small and medium-size businesses are suffering. as theroval rating drop dollar rises. only one aspect of his strategy. david: it's like asking what did congress do for us. is he moving forward? i think he is. there's a lot of constitutional change she is looking for, let a japanese ride and more nationalistic type agenda.

-- a lot of japanese pride. is really the monetary policy. that will get you the big moves in the short term. the structural change happens over 5-20 years. erik: i'm looking at the economic forecast. stephanie: i'm looking at aladdin ringing the bell. that is amazing right there. david: that would be a disney thing. stephanie: that doesn't happen every day. sorry. erik: i'm looking at economic forecasts. for japanese gdp. economists expected to grow 1.2% in 2016. just 0.6% in 2017. if this monetary policy boost is working, shouldn't it be delivering better growth numbers? david: people are ratcheting down their potential growth forecasts for japan. largely on the demographic

issues. that will continue. japan is a very wealthy, very slow growing nation. it still requires the right monetary policy makes to get a higher growth and that requires 1-2% inflation. we should not be expecting japan to grow at 3% or 4%. that's what you get in a country that is much lower per capita gdp. i'm not that upset about their growth. i am upset about their long-term history of suppressing risk-taking by running the incorrect monetary policy which they did for 20 years and driving real rates higher. that's what we've argued for a long time. we are positive on japan. this meeting is a tricky one because it will be complicated to keep pushing dollar yen higher. they come with a fiscal monetary package sometime in the next 3-6 months so they can deliver

through fiscal policy some stimulus to those not getting the benefits for monetary policy. i gather mr. miller has breaking news. matt: i'm looking at markets right now. take a look at where the -- allergan confirms they are talking with pfizer. matt: bloomberg has that story. allergan shares halted right now. we will see a gain when they are unlocked. here are the markets right now. down across the board. almost every single industry group is a loser right now. look at my bloomberg terminal, you can see an imap function which is a heat map of the industrial sectors here. the only gainer, health care of right now.

biogen gaining. we will look deeper into allerg an and pfizer. erik: a few other headlines. not only are they confirming , theypreliminary talks are also saying that allergan remains committed to a decision to divest one of its businesses and they will complete the deal. the most important part, talking tod pfizer create a drug industry colossus with market cap north of $300 billion. this is big news. stephanie: this is huge news.

it was less than six months ago, we were talking allergan-val eant. we are about to see quite a big pop in allergan. pointsthese three data we have just discussed in the past five minutes fit together. valeant, allergan and the whole theory, and acquisition-based pricess model raising when delivering profits that way. another m&a-based business model, the one we just discussed with sally smith. by franchisees with expectation to boost sales. grow organically. stephanie: with companies having

as much money as they do on their balance sheet, it's easier to buy growth david:. i don't think there is a problem with buying growth or expanding a good idea. there is nothing wrong with that. stephanie: unless you create a monopoly. david: yes, then you have that to fight. the story line of pharma or retail is create a good product and try to sell it. quit spending so much time engineering a better quarterly report that comes from being able to obfuscate what is really happening through a merger. david: i wonder if janet yellen gets an assist -- cost of capital is reasonably cheap. erik: that is exactly right. david: you might want to do it now before the rate goes up. erik: you have to wonder if that is not the back-and-forth front

of michael dell's mind. david: you can borrow money for pretty low rates. david: it has been the case for five or six years. the end of it is the new thing. ,tephanie: in the early stages you had ceos coming out of the financial crisis and all they wanted to do was sit on their cash. now that they feared that the window is closing, they are desperately tried to jump through it. david: that's what the qe was meant to do. it was meant to get people out of their cash and taking risk. we saw those who did it early more and others trying to play catch-up. we took an earlier market check. att: we still see stocks down across the board and still

health care is one of the only gainers for obvious reasons. , we saw ar yield selloff and it is now accelerating. the% as the market expects fed to be closer and closer to actually pulling the trigger and raising into states -- interest rate at the december meeting. chinese birth rule change, you can now we are seeings, moves in the companies that make baby formula. me johnson has a 31% exposure to china. you can see it adding three dollars a share. -- mead johnson. take a look at allergan and pfizer, shares halted. i showed this sales growth chart earlier.

it is pretty amazing how much stronger allergan sales are growing that pfizer's sales. pfizer has sales dropping here where is our again -- out again has seen big gains in sales growth. -- whereas allergan hasn't seen seen big gains in sales growth. abigail: we have a couple of key earnings reports to tell you about this morning. paypal, the company reported its first quarter standalone from .bay yesterday and it was mixed they beat earnings by 7%, missed revenue slightly. some concern is to take rate or the amount of money they take from these payments, down year-over-year. the company did reiterate guidance for 2015. other banks saying it should be

bought on weakness. , this video camera maker put up a disappointing quarter yesterday. missing estimates on the top line and bottom line. cutting down the fourth quarter. box for aa penalty quarter. he took down his estimates and to his price target from 75 55. go pro is off significantly. next, we will sit down with mexico's secretary of foreign relations, claudia ruiz massieu. stay tuned. ♪

erik: welcome back to "bloomberg ." how does mexico get its mojo back?

corruption remains a plague and incidents like the kidnapping studentsr of 43 last year and the escape of el chapo continues to affect the administration. we thank you for paying us a visit here in new york city. welcome. claudia: thank you for having me. erik: you've described doldrums comments about mexico as racist and a great. comments abouts -- if youracist and listen to what the hopefuls have to say, you have to ask yourself come how does mexico prepare for a reality that the next president may build a wall on the border, the port undocumented mexicans or even -- , it'sa: for politicians

hard to understand the reality is even more strong than what we want to do. mexico-u.s. relations are strong and productive. we have a very good relationship. we train $1 million every minute, every day. million --r one millions of jobs in the u.s. depend on doing business with mexico. mexican americans and the mexican community in the unites states contribute a lot to job creation, prosperity, cultural advancement. erik: are you saying it is fantasy? claudia: any president will see that. you have some good examples of what happens when we ignore the reality. implemented the , theirsolution

convention visitors and markets came down $150 million. because two years mexicans and international business stopped coming. integration is a reality. the joint prosperity we build every day is the reality. stephanie: how would your reality change if we had all of trump or another candidate with his views in the oval office? trump or another candidate with his views in the oval office? claudia: we continue to underscore our shared values in terms of cooperation, mutual growth, understanding. we will continue to defend our interests. stephanie: will you try to see him when you are in new york? claudia: i'm here just for a day to see you. stephanie: i like that. nafta has been--

a success. what is the next step? what would you like to do next? claudia: i think the three countries agreed that nafta has been a success. we've become more integrated and competitive and we have furthermore to go -- we are working try laterally -- try moreally to become productive and competitive. we are making the most of integration mechanisms around today. such as the tpp. mexico has negotiated along with the u.s. and 11 other countries these agreements that will change the outlook of the world economy and trade for the next years to come and we see that as

complementry nafta and what we've done for the past 20 years. i wonder your thoughts on the very aggressive strengthening of the u.s. dollar relative to the mexican peso. the history of having problems with borrowing and dollars by mexican companies and some mexican government are links as well. do you feel well-prepared? -- some mexican government borrowings as well. if somebody borrowed a lot of dollars in mexico, it's a messy situation right now. claudia: we are doing all right right now considering the global context and the economy worldwide. mexico has been doing fine. our economy is stable. we have implemented tax reform

that has helped us overcome this time better than other countries. we've been growing over 2.4%, we've expanded our taxpayer base. we've been growing in different sectors, construction is growing. --ve been getting more mexico is good. we have a resilient economy come stable economy. responsibility and we are betting on sectors that are strategic for us. to face what is coming next. set of keep with this views regarding what we have to do on a fiscal basis. matt: we have a really cool function on the bloomberg terminal. and you can see

trade between any number of countries. the u.s. is your biggest trade partner come about $508 billion. i would have thought canada is your second-biggest, but it's actually china with $84 billion. how important is your relationship with china and how closely do you watch the currency devaluation going on there? claudia: the president's leadership, we have grown closer together than ever before. we have a strategic partnership agreement. we have worked together to solve some of the barriers to exporting some of the goods, suggesting he let. pork ands tequila, some dairy. we are working to become closer. we have a joint national investment fund that we are looking to as a mechanism for

andeasing cooperation increasing our trade, commerce and investments with china. the u.s. is our first partner, of course. china is now the second because of this fluctuation in what we are going with them. forwardcontinue to look to new collaboration and closer ties in trade and commerce. erik: thank you very much. claudia ruiz massieu, mexico's secretary of foreign affairs. coming up, a look at today's best moments on "bloomberg ." ♪

david: welcome back to

"bloomberg ." let's look at today's highlights. >> the low cost penetration in the german market is much lower than all the other markets in europe. the -- we are willing to defend our market. they are all trying to interrupt each other. they've all laid out plans. whether any of them actually explain their plans and had an opportunity to engage with each other over the pros and cons of their plans is questionable. talked about income inequality, talked about helping the middle class. congress does not seem to put anything together to help them. >> minimum wage certainly affects our labor line. we've seen labor climb throw the year. we've seen some ways pressure. we are anticipating increased labor costs on an aggregate

basis. -- we have seen some wage pressure. stephanie: i love them all. we are bringing you a special zment directly from david ervos himself. david: you and i talked about an campaignour no-hitter er campaign. over the last three years -- i said, why don't we have a lover of the week and hater of the week. the first person i picked for lover of the week was mario draghi.

he came out and delivered such a wonderful message on the efficacy of qe and the power of lowering interest rates into negative territory, something that is a very controversial academic and market philosophy. ardo came out and talked about why qe is on effective and is something that will backfire and not produce the desired results. we love david zervos. david: tomorrow, we will be -- on "bloomberg ." join us. ♪ buddy- nice place, nice car what happened?

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one of the biggest drug industry acquisitions ever. diffusing a demographic time bomb in china. the one childs policy after the working age population tricks. is it enough to boost slowing growth? forte is underway right now paul ryan to replace john boehner is because the house. -- as speaker of the house. breaking news on u.s. pending home sales. julie: