2:00 a.m. in hong kong. welcome to "bloomberg market day." ♪ ♪ from bloomberg headquarters in new york, good afternoon. here is what we are watching this hour. a potential blockbuster deal. pfizer is in talks with botox maker allergan, which would lead -- be one of the biggest drug industry acquisitions ever. and, the man who did not even want the job is the new speaker of the house. tol ryan says he would want do away with business as usual in washington. where does he start? first, julie hyman is standing by. julie: we see a little decline in stocks today. part of that has to do with a fed hangover, people trying to assess what it means that the fed is opening the possibility of raising rates at the december

meeting. we had technology weighing on -- averagese as well. if you take a look at my bloomberg terminal, we have the map of groups doing best and worst today. utilities the worst performing group, followed by technology, though technology is a bigger weight in the average. health care one of the few bright spots, along with energy. what's going on with utility stocks, we tend to see them decline when rates go higher, and rates are going higher today. the 10-year note, the rate is climbing nearly 10 basis points versus where it was before the fed statement yesterday. it is now up to 2.17%. in fact, up 10 basis points on the perception we might see rates go higher sooner than anticipated. a one-year chart of the s&p utility index versus that healed. here is the yield in yellow, here is the utility index, and eyeballing it you see a clear inverse relationship between the

two. utilities carry high debt loads. they also have relatively high dividends, so they compete to some extent with treasuries as an investment. david: i mentioned that big pharma deal. what is the latest? julie: both companies, pfizer and allegan, have confirmed they are in culinary friendly talks. does not mean a deal will definitely happen. if you look how they are trading, pfizer has turned lower by 2% and allegan higher by 6.5%, opening a host of questions about how much scrutiny this tax inversion would, under, since allergan is domiciled in ireland and pfizer in the united states. there's political indications here. it also speaks to whether health care is offering value right now. that's the chart i was looking at, which comes from dave wilson here at bloomberg news, a stocks editor who talked to the chief

u.s. equity strategist at bank of america merrill lynch, who says the valuations for health care are getting more reasonable after the recent decline. so this is the forward p/e of health care versus technology as compared with the s&p 500. health care is in black, technology is in green. health care valuations have come down to such an extent that they are now more competitive with technology. in particular within the health care industry, pharma and life-sciences. biotech,. the thing she wants to get involved with right now. david: thank you very much. now we go to mark crumpton at the news desk. mark: thank you so much. there is a new speaker in the house. wisconsin republican paul ryan was sworn in today, and he wasted little time and minced no words describing the paralyzing partisan divide on capitol hill. ryan: let's be frank.

the house is broken. we are not solving problems. we are adding to them. and i am not interested in laying blame. scores.ot settling we are wiping the slate clean. mark: his words were preceded by a farewell address from retiring speaker john boehner, who said he leaves congress "with no regrets and no burden." a year after receiving huge sums of money to respond to superstorm sandy, the american red cross has suffered a 32% drop in donations. placelief agency' is among the best supported nonprofit strop from ninth to 21st. the ranking is the lowest for the red cross since the annual survey began in 1991. parts of the iraqi capital baghdad are paralyzed by flooding after a night of intense rain. residents are dealing with knee-deep floodwaters pouring into their homes. the storms are expected to

continue through saturday. china is lifting its one-child policy. the ban on larger families has been in place for three decades. china's commonest party will allow all couples not to have two children as part of a new growth plan -- now to have two children as part of a new growth plan. that is a look at news right now. you can find the latest on bloomberg.com. david, over to you. david: pfizer, the company that makes viagra, and allegan, the company that makes botox, are in talks. our health reporter joins us now. benefits, theving tax benefit of this deal. crossing the terminal now, a letter carl icahn wrote to senator and condors meant, bringing up this deal and saying "the imminent planned exit us of many of our best companies is very dangerous, as it will cause the loss of thousands of jobs as

well as hundreds of billions of dollars in future tax revenue and investment in the united states." that me ask you about why pfizer is pursuing the deal. there is the opportunity to acquire certain drugs under development, but taxes are a huge issue. >> speaking at a breakfast, he was very clear that taxes are a major problem, and they believe it is a competitive disadvantage to be u.s.-domiciled in this industry. he said, with less tax, we can spend more on r&d. his argument is not that we want to leave the u.s., they just don't want to be subject to the u.s. tax burden on so much overseas income. he has made no secret of it. we have all been waiting to see what his move will be. he has consistently said, this is something he wants to do. not really been he's looking at, but it certainly makes allegan really attractive for him. david: you mentioned the competitive disadvantage. when you look at big pharmaceutical companies, is pfizer a lone wolf, or are most

domiciled elsewhere? cynthia: a lot of them are. it has been a consistent theme. you look at the tax rates of u.s. companies, they are paying the 27% range, but where it gets tricky is all the cash they have overseas. what is it worth? for pfizer to do a big deal like this, they could use offshore cash to get the deal done and not necessarily be subject to the tax, so that's where they see it. they really don't feel as though they are playing on the same field as companies who do not have to pay that tax on overseas cash. david: did we learn anything about what would happen to tara pharmaceuticals? would this chains that? cynthia: i don't think so. i think allegan is what pfizer would want. i don't see pfizer being interested in the generics business. i think this deal will go ahead, if the deal goes ahead, they

would just buy the allegan business and would not by the generic stuff. david: talk a bit about consolidation in the industry, and a pfizer is trying to go after astrazeneca. that deal fell through. we have seen a huge amount of consolidation. this.a: ian talked about he said pharmaceutical companies are not necessarily merging to match merging in other sectors, for example walgreens buying right it, some consolidation with insurers buying each other, for pharmacy benefits manager's merging. but it's hard not to see how criticallye isn't important, because there are fewer buyers, fewer insurers, fewer pharmacies. they get bigger, they have a broader product portfolio, and when they negotiate they are --e to drive more value derive more value from the products they have. the other issue is finding new molecules, new blockbusters, and that's what they are looking

for. that's not quite what this deal gets pfizer, so that's the question. don't they want to do something that is more oriented towards new drugs and new science? but there is some development going on at allegan, and they might have other things up their sleeves. david: this letter from carl icahn -- there has been standing conversation about inversions, as they are called. we saw the obama admin assertion tweak the enforcement abilities. has that curbed the amount of dealmaking they are able to do? cynthia: it had a dent on inversion-type dealmaking. it is hard to say whether that was politically motivated, but it does seem as though there was a sense of, let's step back. after walgreens decided not to invert, people are going to wait and get more clarity. but pfizer has never been shy about this. they consistently said they are looking at this, looking for that opportunity.

they are going to start the conversation on capitol hill, and that's what needs to happen if there is any reform. if not, that has been a driving principle for dealmaking. david: appreciate it. withia kuntz with -- koons bloomberg news. coming up, how will be slowdown in the third-quarter affect the fed's decision on interest rates? and, why employees and investors for shell oil are in for tough times. and, can paul ryan fix a broken congress? ♪

david: welcome back to "bloomberg market day." julie hyman has a check on some of the movers. julie: mgm says it will put properties in a real estate investment trust. the stock has been gaining, although it has given up a little steam as the day has gone on. it will put real estate associated with 10 of its properties, 24,000 hotel rooms total, into a real estate investment trust, including mandalay bay and maras and luxor in las vegas, designed to cut

debt and increase stock price. the company has been under pressure by an activist shareholder, so this could be a response. earnings beating estimates today as they cut costs. other casino shares are going higher, along with mgm. gaining wynn resorts, ground. in addition, there was news out of china, that the country is now expanding on its one child policy, allowing couples to have two children, so maybe some feed through to these companies so reliant on macau. look at formula makers in today's session, baby formula makers. johnson rising though ans session, analyst from nomura says again could be a reaction, because there has been a gradual

loosening of this policy in china, so perhaps it is not as dramatic as the shares would indicate. david: thank you very much. many industries rely on chinese as producers of ingredients for pharmaceuticals, but fda investigators have made discoveries recently. talk a bit about what investors have found her your story begins seeing with somebody somebody abscond with a thumb drive. are we talking about loose regulation of intellectual property, or more than that? >> it is more than that. it is the integrity of the date of these drugmakers use. a lot of the drugmakers in the u.s. use these ingredients to make the pills we take. they say that they are hiding some of these tests when they

fail, so that data is not exactly what it appears to be. when it fails, they will sort of just delete those tests and run them again and again until they get the results they want. david: when you look at the scale of the global pharmaceutical industry, how important is this? are a lot of these big companies outsourcing this work? anna: absolutely. india and china are the two biggest makers of these ingredients we use in our drugs, the main ingredients that actually make them work. soget about 80% from there, most of the major u.s. drugmakers are buying a lot of their products from china and india as well. david: how is this product regulated? obviously there are fda inspectors on the ground. how many are there? are they working in concert with chinese authorities? how does it work? anna: there are fda inspectors

on the ground. they have been trying to build a better relationship with the chinese authorities there, china's fda. the u.s. fda is able to do their own inspections at some of these plants, though they don't have a ton of people. they have some trouble getting visas, so they don't have a lot of people on the ground, but they do send inspectors, and they are able to look and see how the factory is kept, whether they are meeting sanitation goals, but also whether they are manufacturing drugs the way we expect them to be manufactured here. they are finding that a lot of times, they are not meeting the protocol, they are not doing the right processes to ensure that the drugs we are getting from them are of a high enough quality. david: this is obviously worrisome. what are pharmaceutical manufacturers saying about these allegations?

anna: some of the companies that we noted had bought from these chinese drug makers, pfizer, novartis, merck, some have said they test those products when they get them in the u.s., and when they make the drugs with them, so they make sure they are up to snuff. they say there have not been any problems. some drugmakers like merck did not comment at all, but pfizer and novartis were able to tell us they are making sure the drugs are safe when they finally go out to americans. david: thank you very much. our bloomberg washington bureau. still ahead, the u.s. economy slows down in the third quarter. we look at what it could mean for janet yellen and the fed as they consider whether to raise interest rates.

♪ david: welcome back to "bloomberg market day." abigail doolittle has the latest from the nasdaq in midtown manhattan. abigail: we are looking at earnings, with many companies disappointing, starting out with nxp semi conductor, plunging the most in four years as the company unexpectedly forecast a decline in fourth-quarter revenues when the street was looking for an increase. the company talked about a slowing global economy, companies pulling back orders. the ceo said he does not see the matter turning in the near term. the street remains somewhat bullish, with many analysts talk a buyings as opportunity. buffalo wild wings reported a

disappointing third quarter, missing sales growth estimates year profitits full forecast. they talked about costs associated with acquiring 41 franchise restaurants and wage inflation as reasons for the new forecast. single-digit growth this year as opposed to the previously expected 13%. the company offered earnings growth guidance for 2016 of 20%, missing what the street was expecting, 27%, so shares are down. lastly, to end on a bright note, amazon is trading at a record high. one reason could be it's recently reported it might be starting its own shopping channel next year. this online retailer is up more than 1% at this time. david? david: thanks. now let's get to the big economic headline of the day,

the u.s. economy slowing down this summer, with gdp growth falling to 1.5% in the third quarter as companies sold off bloated inventories instead of creasing production. joining us is our chief economist at bloomberg intelligence. a lot of people say the headline number looks bad, but the fundamentals are still all right. what is your take? rich: it looks less bad when you go into the details and look at the inventory drag which subtracted 1.5% off of the headline number. even so, as you look through the details, consumer spending is good but not quite as good as the quarter before it. business investment, same story. exports, same story. government spending, same story. across the board, we see an economy moving more slowly. analysts say to watch final sales, and it paints a better picture. nonetheless, we see an economy slowing down. if you look at the cleaner read of underlying activity, we see

overall growth flipping from 2.7% to 2.2%, down to 2% in q3, cruising speed for the economy. get below 2%, and problems start to develop,, and the economy is more vulnerable moving at a slower pace. so tying it all into the fed outlook, the fat is concerned about asymmetric risks to the forecasts for inflation and production. a report like this does not make them feel any better about this. if anything, i think it kind of hollows out the rhetoric we saw in yesterday's said meeting that december -- fed meeting that december is in play. if the economy is at cruising stage, there's no reason to tighten policy. david: you mentioned inventories. why was there a slowdown? carl: we had a dramatic move in the currency. the strong dollar started last summer, a summer go, and persisted up to the present.

we started to see that impact in the first quarter of the year. suddenly, domestic producers saw a sharp drop in demand and there was a flood of cheap imports. production and demand were out of the lineup -- alignment, and we got a huge accumulation of inventory, so production had to be pulled back further to work inventory numbers down. that is the good news, they did have some progress working off inventory excesses, and that should bode positively for production. however, there's headwinds. the energy sector facing additional problems. the dollar is still strong, even stronger than it was before. global growth is slowing. domestic demand is softening. it is still a difficult environment, and not one where the fed will realistically have the confidence to move. david: so we are at cruising speed. all these headwinds you describe. in the last 30 seconds here, in

the fourth quarter any signs this will improve? carl: it will be a little better. we were 1.5% in q3. as things look now, it is realistic to get 2% to 2.5% in the fourth quarter. that said, latest factory data did not look good and retail sales were shot -- soft. the focus shifts to the next employment report. if we get another soft employment report, forecasters will start to reassess performance for the end of the year. david: carl riccadonna, chief u.s. economist at bloomberg intelligence. still ahead, the slump in oil prices claims another victim as royal dutch shell claims losses of up to $7 billion. ♪

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♪ david: from bloomberg world headquarters in new york, this is "bloomberg market day." i am david gora.

mark crumpton is standing by with news. mark: it is a job he did not want. paul ryan was content being chairman of the house ways and means committee and representing wisconsin's first congressional district. but today as newly elected speaker, he finds himself third in line to the presidency and first in line to stop the partisan chaos paralyzing the institution. speaker ryan: it is not until you hold this gavel, stand in this spot, look out and see all 435 members of this house, as it all of america is sitting right in front of you. it is not until then that you feel it. the weight of responsibility, the gravity of the moment. mark: his election to the post was preceded by a farewell address from retiring speaker john boehner, who said he leaves congress "with no regrets and no burdens."

a military judge says a guantanamo bay detainee charged in the 9/11 terrorist attacks cannot fire his lead defense attorney. the ruling was made at a pretrial hearing in cuba for one of five men it accused of planning and aiding the attacks. the judge said firing the attorney would have significantly delayed the trial. a federal appeals court in new york has denied efforts by the aclu to stop all collection of its phonerds -- records. data collection will continue until a new law takes effect. during a state visit, german chancellor angela merkel asked to for help in tackling europe's refugee crisis, prompting prejudice by -- pledges by the chinese premier to step up efforts to end the syrian civil war. chancellor merkel says china's expanding geographical presence makes it a force for resolving challenges.

it did not take long for don mattingly to find another job. he has been taken over to -- red to take over the florida marlins less than a week after leaving the los angeles dodgers. you can find the latest news on bloomberg.com. david: the commodity market is just closing. let's look at today's biggest movers. soybean futures. oil rallied today, extending the biggest rally in eight weeks. let's bring in andrew cosgrove. let's start with shell, a company with $7.14 billion in net loss. what happened? shell is not necessarily one of the companies in my coverage area, but it speaks to the broader trend throughout energy, that a lot of people are shedding non-core assets and focusing on quality versus quantity. seemingly, it looks like they are moving out of some of the

more non-core areas they were operating in and just moving forward and getting rid of some things that are not necessarily part of their portfolio at the moment. david: this industry, it has promised a dividend for a long investing in next duration how heavily have exchanged? integrateds,he focusing on quality, dividends and cash are important to investors, versus the independents that operate in the u.s., you see a challenge. companies focused on production growth and making sure they are delivering single, double-digit, even in 2012 almost tripling production over a multiyear period, now they are focusing on investing within cash flows and making sure you can survive the downturn and get through it to

make it to the other side. david: when you look downstream, at exploration, what has happened to smaller companies? andrew: some of the smaller companies that are little more leveraged are certainly struggling in this environment. anddon't have hedges on, that could not take you through the depths of the crisis into this year and even next year. if you don't have any hedges, you are really in a tough position. whereas the capital markets were open in the earlier part of 2015. as you come into redetermination season happening right now, you will probably uncover some of the losers that are really not going to make it into next year, not able to survive through 2016. david: tomorrow we are getting big earnings from chevron, axon, exxone, phillips.

itll says it is not worth right now. we are seeing people pulling out of that area. andrew: part of the argument or the battle people have, between the u.s. shale names and saudi arabia, has gotten lost in the longer projects you see in canada or offshore. that is where a lot of the supply rationalization is going to happen over the next 12 months as you start to eliminate the projects that were in the pipeline, that were prospectively supposed to get into the supply mix this year into next year and 2017. those are the projects you eliminate, and you make room for lower cost or shorter cycle north, whether it be america or more saudi arabia and iranian and libyan barrels coming next year. david: we talk a lot about expiration and development. what about acquisitions?

have we seen a real slowdown in the energy sector when it comes to acquiring companies? andrew: as of now, some companies, you are kind of exhausting your budgets. from what we heard so far, even the servicing companies, a lot of companies have exhausted capital budgets. some of the bid ask spreads have not come in enough. you see more asset sales than companywide transactions. that trend is going to continue. as you get more stress, they will turn to the market next year, and then you may see more companywide deals, but for now asset deals will proliferate to the market. david: that is andrew cosgrove, energy analyst with bloomberg intelligence. in the next 20 minutes of the "bloomberg market day," paul ryan officially takes the gavel. is he demands unite the republican party. ? du is set to report earnings.

can the chinese search engine pull off a surprise for investors? -- big blue is buying the weather channel's digital assets. ♪

david: welcome back to the "bloomberg market day." time for a look at the biggest stories in the news right now. the federal reserve may have good reason to put off any interest rate increases into at least december. a new report says the u.s. economy expanded at a slower pace in the third quarter, with gdp rising at less than half the rate of the second quarter.

companies had bloated stockpiles get smaller, and the paring down of inventory suggests weaker future demand. pending sales of previously owned homes unexpectedly fell the month, a drop of 2.3%, largest since the end of 2013. a limited number of houses on the market may be keeping would-be buyers from trading up. the new york times had its biggest increase in digital subscribers in three years. the gray lady added 51,000 in the third quarter, and now has more than one million who subscribe online. print sales of the paper continued to decline. you can always get more business news at bloomberg.com. stocks are in the red for the third time in the past for concessions, and chipmakers are one of the biggest drags today. julie hyman is standing by with more. julie: technology brought the and semiconductors specifically are doing quite poorly. one way to track this is to look at an etf tracking

semiconductors, xafd, down 2.5%. we heard from a number of semi nxp, a dutch company trading in the u.s., down 20%. they say they see struggles from the global economy and also a glut of chips. at the same time, they are trying to acquire freescale semiconductor and are waiting for regulatory approval. also with its outlook today, stmicroelectronics. that stock is down after the company reported a disappointing quarter and says it plans to scale back manufacturing as they see demand fall. on ceo also commented fairchild semi conductor, saying they have no plan to acquire the company. bloomberg reported fairchild was for sale, and st micro might be

one of the interested parties. texas instruments might be interested in analog devices. today, a summit research analyst said the deal would phase regulatory hurdles if indeed these two were to agree to an acquisition. remainscrest says t.i. unattractive. a lot of negativity being felt in the chip industry. i wanted to look at my bloomberg terminal for info perspective here. semi etfhat etf, the versus the s&p 500. year to date, we have seen the chips,, the white line, up 5% better than the s&p 500 performance, and that outperformance has lasted for quite some time, taking it back five years or so, you see them she and that here, but the semi

on balance have done better. aside, we seeoday our performance in the longer term. david: paul ryan is officially new speaker of the house. he was sworn in earlier today, valent to restore civility and make changes. vowing to restore civility and make changes. paul ryan getting 236 votes, telling people in the chamber afterwards that the house is broken but he is wiping the slate clean. are you optimistic? >> no. [laughter] every speaker comes in saying, we will sweep the place clean, regular order, everything is going to be fine, we will go back to the time of thomas jefferson or something. the place is not run that way. especially with the accommodations ryan will have to make two more conservative members who want more power. in order to get things done, at some point he will have to crack

the whip and do what john boehner did, cut a deal, work outside the committee structure, the same way newt gingrich did,. it is not just republicans. democrats would be doing the same thing. david: the relationship between congress and the white house has not been robust. josh earnest, the press secretary, was asked about how optimistic he is about the relationship getting better. josh earnest: the president is hopeful he will be able to work with congressman ryan to make progress. david: not a huge amount of enthusiasm. [laughter] what do we know about the relationship between paul ryan and the administration and president obama? stanley: ryan was involved in the marie-ryan deal a couple years ago. they obviously have some relationship. he was chairman of the ways and means committee, but he is now the republican speaker. there is a certain amount of standoffish mess. working with obama is considered

to be collaborating with the enemy on the republican side, so there is a limited amount ryan can do overtly with the white house, even going there would start to be questioned by his the conservative members, same to give john boehner a hard time. david: think of how we tend to perceive paul ryan, shaped in large part by his role as mitt romney's running mate. mitt romney was in the chamber today for the swearing-in. the speaker -- the picture was as somebody who is a real wonk, who likes to go through budgets, come up with budgets.we had a budget this week that will last two years, a long time in recent washington history. are you optimistic that that facet will changing, that we will have some return to regular order and the budgeting process will get back to the way it should be? stanley: absolutely not. the budget is the most political of all the procedures we do in washington. we are saying, there is not enough money to do what

everybody wants, and there's no way to objectively figure out what should be done or not be done. it is all politics. what is worse, ryan may have had a policy wonk background, and i would argue a little about that, she may have had that background but his new job is all political. very little substance. those things will be left to committees. he will have very little to do with it. instead, she will be playing traffic cop on the house floor trying to figure out which bills come up. just like what we do with an investment, the past may not be any indication of future performance. david: let me ask you about the two-year deal. it came about perhaps a bit quicker than the last few have. it was not down to the wire. we were not holding our breath to see if we would hit the debt ceiling or not. what was in such momentum? stanley: john boehner wanted out, and quickly.

if this deal did not get done before he left and he resigned this morning officially, if the deal did not get done before he left, it would not have gotten done at all. ryan would not have had the freedom boehner had, because boehner was leaving and there was nothing anyone could do to him. think about what had to happen. you have to have a speaker resign and effectively changing parties, decide to work with the other party to get the votes he needed. only 79 republicans voted for this in the house. i don't know whether ryan will have that freedom to do this in the future. the thing to keep in mind about this deal is that even if the senate passes it, they will take a vote on it very early this morning, 2:00 a.m. or something, there is still a chance of a shutdown, still a chance of policy riders, planned parenthood will come up. what they do tonight does not fund the government, it just sets an upper limit. david: let me ask you about the republican debate last night, which was supposed to be focused on the economy, something you

about. and wrote a bit something that came up time and time again was what each candidate wanted to do when they -- ben i will talk carson's 10% plan, he quibbled with it. mr. carson: i did not say the rate would be 10%. i used to the tithing analogy. the rate will be much closer to 15%. you also have to get rid of all the deductions and all the loopholes. david: one example. the kasich that that his, other candidates had to get real, that they were proposing plans that were not fleshed out. what did you make of the substance of last night's debate when it came to taxes? stanley: what substance? most of the numbers did not add up. donald trump talked about a $10 trillion tax cut using dynamic

scoring. he said, it will generate so much economic activity. other plans just did not add up. don't get, at 15% you the same amount of revenue you get now. he said he would want to illuminate all the deductions, allthe credits -- eliminate the deductions, all the credits. the mortgage seduction, some of the most effective things -- deduction may have, some of the most popular things. no way they will get rid of that. david: rand paul said he advocates using the debt limit as a bargaining chip, to get the other party to go around. i wonder what you make of that. stanley: on what basis does he think it will work? it has never worked so far. it is really nothing more than legislative terrorism. that is the phrase i use. you are threatening the united states government with a terrible event, not being able to pay its debts, if the

bow to youroes not pressure. it has never worked before, it is not going to work now, and it is a terrible idea to begin with. david: great to speak with you, stand. tonight, make sure to catch mark halperin's interview with chris christie on "with all due respect." coming up, baidu will report earnings. what can we expect from the company, and what do they have coming down the pipeline? ♪

david: china's largest search reports earnings after the bell.

last quarter, the company trailed earnings estimates. reed stevenson joins me now to talk more about it. let me ask you. i was in china a few months back and two things stood out to me. how big the company is, and how it is so much more than just a search engine. how do you characterize what the company does? reed: this will be a report card on the transition of going from a pure search engine into a company resembling amazon, uber, delivering services to people, taking on alibaba and tencent and becoming a center of people digital lives. that's what they are trying to do, and this earnings report is going to be one of those report cards on the path to that transition. david: i gather they are making a push towards online to off-line. why is that so important for this company? reed: at this point, they rely almost exclusively on

search-based advertising revenue, essentially a media goal in, and their trying to transform themselves is no different than what google is doing with google x. making a lot of bats in a lot of areas -- bets in a lot of areas, to prevent the inevitable slower growth that comes with maturity. david: is there a lot to differentiate this company from alibaba or tencent? reed: they do have a lot of money in the bag, at least -- banked, at least $12 million. -- $12 billion. they have dynamic founders. they are also pursuing a lot of inestment at this a.i. lab silicon valley that "bloomberg west" highlighted yesterday, so they know where to look, they know where to put their investments. what they are asking investors is a bit of patience while they

make this transition. david: you mentioned bloomberg had this exquisite look at the lab. what are they working on? reed: they have an app for halloween called face u. they are trying to experiment with a lot of new things. an a.i. lab, so we should expect machine learning, fairly sophisticated software coming out of there that will make interaction with services a little more human-like, and that is also something you see that google is trying to do with google now and apple's siri. david: i'm curious, what happened with gopro today? the stock is really down. what is behind that? reed: it is not pretty. gopro announced earnings yesterday, and it looks like they really missed the boat in terms of having a good product ready for the holidays. the sessionhey,

action camera was a little too expensive for folks, and the most popular models seemed to be last year's models. it is all about timing, and also managing investor expectations. they did not pre-announced any results, so it really came as a shock to the market, and market value has gone from something like $8.4 billion at the last earnings report to $3.4 billion today. david: that is read stephenson, tech editor for bloomberg in san francisco. coming up, the ceo of the weather company. acquired the company. he will be here on "bloomberg market day" next. ♪

betty: welcome to the bloomberg market day. good afternoon. i am betty liu. this is what we are watching this hour. markets are moving lower with signs that the fed may be looking to december. pfizer looking to acquire allergan. but the deal could become a key issue in the 2016 presidential campaign. ibm just brought it with a company with digital assets. why sell the digital assets only and why sell it to ibm? when you are about one hour away from the close of trade. this rally has been halted inequities. julie: