ready to add -- europe's central banks get ready to add stimulus. rent.s space is for the nba will experiment with putting advertisements on players' jerseys. stephanie: welcome to a very special halloween edition of "bloomberg ." i'm stephanie ruhle. david: i am david westin. i notice you are in orange. what a surprise. i was hoping you would be in costume. stephanie: i would like to, but the man sitting with us today, bloomberg editor in chief matt winkler would not be willing to sit here while i am in costume. matt: no comments. david: let's start with the first word, and for that we go

to vonnie quinn. vonnie: the senate worked through the night to avoid a potential debt default. the government's borrowing authority has been extended march. the bank of japan will not add stimulus for now. the bank of japan kept this monetary policy unchanged. core prices fell in september for the second straight month. in syria, opposition activists say a government rocket attack has killed more than 40 people. the rockets struck a suburb of damascus. says the talks are only to resolve the conflict. a russian official says it is up to the syrian people to decide the future of resident bashar al-assad, who is backed by russia. that is a check on the market --

now for a check on the market with matt miller. matt: take a look first off that futures. gain on the a 2.5% s&p. the dollar was interesting, losing ground against the yen and the yuan. the dollar spot index, you can see the dx why index, down a quarter of a percent. but it has lost its gains. take a look at the individual movers we will be talking about a lot. valley and -- valeant is cutting -- valeantiller door down 5.25% this morning. starbucks is also down after forecasting first quarter profit that was less than analysts had

estimated, so analysts were looking at $.47 in the first quarter ending in december. starbucks saying 44 to $.45 with higher labor costs and technology costs. finally, look at aig. we broke the news yesterday that get thehn was trying to company to spin off its mortgage insurance. the comedy says it was considering this for some time. they have been down free market but wait to see as it opens. the name alone has moved stocks. we have to stay on valley and. -- on valley and. the ceo says it has lost confidence in philicor.

guest from in our bloomberg intelligence, who joins us from london. what confuses me, like pearson is saying they are no longer comfortable with the practices of philidor. if it was not for the report we got last weekend, it would seem like business as usual. >> that is true. that report raises so many questions about valeant. the report today raises more questions. philidor was that engaging in these fraudulent practices? this is 6% of valeant's business. do we know if they have relations with other service organizations and how big they are? to my knowledge, philidor's

relationship with valeant is unique in the industry. this is something i am sure people will be asking of other drugmakers. stephanie: let's talk reputation for a moment. phil ackman has been so behind this company. we get a report last week, a report filled with typos. how does this even happened yet go a company like valeant has such a strong year. from an accountability standpoint, what does this mean to the industry, that we have a research firm coming out of nowhere that suddenly shapes up an industry -- shakes up and it straight? >> health care is arguably the most important and fastest

growing industry in america. because of that, you will see over and over again all kinds of mishaps that come about from it being essentially a bull market. this is a consequence of the bull market of health care. david: in the report of bloomberg news, people at solidor were doctoring up that they would have more expensive prescription drugs to fill. your point is important. that is where the money is in health care right now, and that sort of fraud, you have to think may be going on elsewhere. if you were recalling all of the excitement about so many technology companies, enron in particular, we are seeing another phase of this sort of activity. unfortunately, this is what happens when people get excited

about a new industry, an industry that is probably with no ceiling, like health care. stephanie: can mike peterson separate himself from -- can mike peterson separate himself from philidor? it is not like cvs, saying that we are not going to do with you. he is philidor. iko: valeant terminates its relationship with itself, because valley and does own philidor. that's because valley and -- does ownaleant philidor. david: we are going to turn now to another big drug story. pfizer and allergan confirmed yesterday they are in big talks for a deal. it would be one of the largest pharmaceutical mergers ever, $300 billion.

it would also make the largest tax inversion on record. joining us now is zach mitre from bloomberg news. this is in the middle of a major political battle. what is ahead for this deal? >> if pfizer continues to pursue , there is no question it will be a big issue in the presidential race going on right now. donald trump and jeb bush have started making noise about doing something to prevent inversions, and there is no question it will continue to be an issue. stephanie: we know you know a lot about inversions. carl icahn has also had a lot to be to say. carl icahn: our country is shooting itself in the foot. they are punishing the little guy again because if that money came back, it would make for jobs. that money does not go to the mattress, it is given to somebody who will invest in this

country and help to create more jobs. cannot blame the companies p you cannot blame pfizer for this. it is essentially billions of dollars a year. stephanie: hate the game, not the player. david: a lot of major pharmaceutical companies are headquartered offshore. you cannot blame the companies. matthew: you can blame the companies. stephanie: i totally disagree with you. matthew: this is a practice that is said to be deviant and is hurting the american economy. you can find another way. stephanie: in a professor's lounge at an ivy league university you can have that conversation, but if you are running a publicly traded company and you have clients and shareholders to answer to, how can you possibly take that route? matthew: businesses are not best because they --

other way is not to bring it on shore. >> that is the big problem, too. the second-best alternative is to leave their profits there. that really does cause long-term problems from the economy, beyond just losing the tax revenue. matt: it is not all about avoiding a tax regime that is more than double that they would get if they moved to a country with a more hospitable tax regime. it is about growth. the red line here is growth or 4%k thereof at pfizer, down over this five-year period. the purple line is allergan. its growth is up 75% over this five-year period. there are business reasons besides avoiding an incredibly

high tax rate. david: i am curious about your thoughts on this. you pointed out, zach, that the republicans do not like tax inversion. hillary clinton does not like it either. nobody likes it. so what is to be done? if you were in charge of all tax policy, what could be done? wayhew: there should be a to get this resolved. it has been written about by us -- and, in particular the sooner it gets addressed, the better we are all going to be. unfortunately, it will not be resolved until the next election. zach: if you do what carl icahn wants to do, which is lower rates overall, reduce the taxes that u.s. companies pay, you are putting all companies in a position of companies like pfizer, that are inverting. what you do is that you are

saying goodbye to corporate tax because overtime companies will find a way to push all of their profits out of the u.s. to avoid paying u.s. taxes. so it opens up a bigger can of worms that we have not figured out how to deal with. stephanie: we are going to close that can of worms right now. zachary mider, thank you so much. matt winkler, we are keeping him around. every friday on "bloomberg ," we like to get involved in an activity called the yearbook gain. this investor graduated from the in blairstown, new jersey, in 1947. i already know who it is. your guesses. next, the bank of japan as

governor is getting by with a little help from his friends. we had to tokyo for the latest on military policy -- on monetary policy on "bloomberg ." ♪

vonnie: welcome back to "bloomberg ." keycorp has agreed to by banning -- to buy first niagara. keycorp is ohio's second-largest bank. first niagara is based in buffalo. are up inlinkedin premarket. the career website is forecasting revenues as beating estimates. linkedin has revamped its sales force and expanded its education and business services. your drinkers appear to be buying the good stuff. revenue has raised its forecast, selling more premium beer than forecast. ab inbev makes budweiser and stella artois.

the company has extended talks with sab miller over a proposed takeover value that $1.6 billion. david: we are here with brendan greeley. our editor in chief emeritus matt winkler. and now we are going to global go. today we had to japan where the central bank declined to step up monetary stimulus. but the bank or postponed it's time for reaching a 2% inflation target until next year. we have been talking a lot in new york about what he did what he did or why it did not do what it did not do. stephanie: and then david is going to say did not do what it did not do 10 times fast. david: she is surprised. that is speculation first they thought oil was too much of a factor on oil and inflation, but speculation that they are waiting for the new york debt. what do you have to say? >> i think the message from the

governor today was the price of oil is being pushed back, the timeframe yet again for achieving a much bolder than 2% inflation target. they said they would get there eventually, but it depends on a rebound in oil prices. of course, it raises questions of credibility for the bank of japan's target to hit 2%. some of the comments are, will it reach that at all? but he is confident the tight labor market and rising labor will help them reach that target as long as the price of oil comes back a little bit. brendan: i just this morning poll numbers from the new york fed, looking at inflation expectations among consumers in the u.s. you see it going down down over the last several years. it does not seem that anyone has the machinery to reach 2%, so it

is odd to hear the governor of the bank of japan saying we will get there eventually, almost that the expectation is a simple version of the mean. it does not seem like that works anymore. enda: that is entirely right. oils not just the price of that is keeping the bank of japan here. the fed is giving them great cover because if the u.s. does not hike interest rates over the coming months, that will be a dollar-rally story. is there other big trading partner, and that is a positive in japan's story. and the ecb has talked about potential stimulus there. -- it may be that the juncker japan -- it may be that the bank of japan has to sit on the sidelines. matt: i broke out the economic workbench, an incredibly useful

function on the terminal. i grasped japanese inflation and broke it out -- i broke out food in blue and energy in green. energy drops down to almost -4%. that really explains the alarming drop in personal consumption. if you grab japanese gdp and personal consumption, uc personal consumption takes a couple steps down here. it is almost alone as you can see personal conception takes a couple of steps down here. brendan greeley, thank you as always. please stay with us. sorry? you always stay. you do not get a choice. stephanie: during the commercial break, david and i do a full evaluation to decide whether he can stay. we will let you know in about a minute. david: it is almost halloween,

as you can tell, and costumes for pets are a big business. if you have been stimulating the economy this way, send us your photos. up next, what you're reading on the bloomberg terminal at this hour. ♪

david: "bloomberg welcome back to." -- welcome back to "bloomberg ." matt winkler is still with us. we are talking about top trends. matt, you picked a story on the budget deal. matt: you know what that means? it means things are going to beginning better and better because we do not have to worry about congress getting in the way of the economy's performance. david: sort of the dog that did not bark. so you think it will be good news.

we had the former treasury secretary on. he called it a scam. any time the government can get out of the way of the economy doing what it is meant to do is a good thing, and that is what this represents. it is a removal of what people call uncertainty. stephanie: how do you mean? when people look at it from the outside, they are saying it is just more noise. matt: know, the government is a big part of the economy. as long as it is not disrupting the economy, that is a good thing, and that is what this is about. this is a two-your settlement, so better than what we have been getting used to. david: one of the reasons i love -- ng matt on with us he thinks companies should do the right thing. david: we have some fundamental problems like entitlement reform

and tax reform. that this does not begin to address. matt: i guess the way i would see it is that we are getting closer to being exhausted with these political disruptions, and we are going to at some point -- i cannot tell you when -- deal with this in an adult, mature, sensible way. stephanie: what makes you think that will happen? i watched the political debates where there was nothing adult and mature. matt: i think voters will be exhausted with the theatrical performances of the politicians. david: and there you have the half-full part of the glass. next we will take a look at china's economy and its change in the one-child policy on "bloomberg ." ♪ 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. david: there is our morning of dawn behind the capital. stephanie: that is beautiful. david: welcome back to

"bloomberg ." we are with matt winkler and tom keene his oppression from "surveillance." welcome. stephanie: that jacket is ok. tom: did i do ok? stephanie: yes. tom: i'm going as a panda. stephanie: as a panda? david: my son goes every year as a panda. stephanie: before we get into it, -- tom: this camera angle makes me feel like i am eight feet tall. david: it is accurate. stephanie: how about some news? vonnie: an attack in siri has underscored taking place in vienna. they say they have killed more than 40 people near damascus. diplomats met for a second day in vienna to try to end serious civil war. the kremlin says they will only resolve the conflict and a russian official says it is up to the syrian people to decide the future.

congress has perverted what could've been a catastrophic event. the senate gave final approval to the compromised spending and debt deal. amongs months of turmoil republicans. investigators are trying to be out why passenger jet caught fire as a prepared to take off from fort lauderdale, florida. out of the runway when an engine caught fire. passengers and crews were evacuated using emergency slides and one person was seriously hurt. david: thank you. tom keene joining us for his daily morning must-read. stephanie: i like his jacket. david: first, a correction on "bloomberg ," jonathan spence's book on china, i said it was 1400 pages and it is 867. tom: it is a great book. ofn he saw the importance

that announcement yesterday, explaining to people little bit younger, the mystery of china in the 1970's and 1980's. everybody has to read it. it has to do with china international relations. this is the back of the book and this is not the pretty part of the book. there are a lot of smart articles today on what we are doing in china. in 1982, 16 .4 million women underwent sterilization and every chinese man in woman was founded to a chain of command eached through the hierarchy into the leaders. that is where we were and that is why yesterday's announcement was so emotional. david: it was emotional for me and my wife because we have an adopted daughter from china 20 years ago because of the one child policy as a direct result. tom: you have led our leadership in opening up china for bloomberg news. when i say i go to china, ammatt says come you don't go

to china. i go to hong kong, go to the airport, and they say that is not china but there is a whole other china. matt: absolutely. this country, if it has one a drawback, it is the demographic one. that is what they are wrestling with now. it has been a time bomb. the singled suggest insight adjusting to their time bomb is linking it into the economics. that was the urgency coming out of this. stephanie: how long before we see real impact from the change? matt: it depends on who you ask, but according to people who have looked at this issue carefully, you cannot expect too much anytime soon. you cannot expect a dramatic change anytime soon. policy, but itd is perceived to be too little,

too late. david: i wonder if there is an immediate impact psychologically. matt: yes, it strikes me as president xi talks about reform, this signals concern bishopric -- liberalization. to go back to your quote, getting the central state out of the business -- tom: i would also say a generational move on. metropolitan museum shows that this year and now we have another set of leaders trying to find where that third leg from 1947 is. i don't know where it is. did you see that bloomberg headline come across, i thought, wow. david: huge story. stephanie: you just spent time in asia, so it we talk about with the economy really looks like, we get negative data. we have seen such a negative push but then they have major

businesses there saying things are going a-ok. earlier perspective, you have spent so much time, what do you think? china right now, as the story and the economy, is one of the most exciting in the world because what is happening, as we speak, is there is a transition. something that has been welcomed by the government and encouraged by the government to move from traditional manufacturing, which is no longer competitive for china, into services. stephanie: there are a lot of people to serve there. matt: there are a lot of consumers. it is the best consumer market in the world, perhaps. this is happening as we speak and i actually think, the late, great to roller of singapore, ruler of singapore who took the country from first world -- third world into first world in one generation, a lot of what he

did in singapore is happening in china. stephanie: you actually just wrote a bloomberg piece about this. matt: i did. as the stock market was in the summer long soon. you saw all kinds of investors shift out of the traditional manufacturing stocks and they were picking up services, health ite, financial services, and is one of the reasons why you see the market actually as bullbly cobalt -- a running through it. not just a bear. today, as china grapples with growth and less competitive industries, the widening gap into the performance of new economy firms and all the economy companies amounts to a back that jobs and personal income will gain from the increase in domestic consumption of services. as you just underscored, it is about services if you think about the size of that economy. matt, take us to the terminal. matt: i just took a 35,000 foot

view. view.ene in elegant chart from the bloomberg terminal. this is china's natural growth rate and it goes back to basically 1975. you can see it is stunningly high. 30% and it comes down to about 4.9% at the end of the check, but keep in mind the debt rate is also climbing in china over the last -- the death rate is climbing, so they have negative population growth. i thought it was an elegant chart that gives you perspective on the problems they were grappling with when they started the one child policy and what they are looking at now. tom: to bring it to today's news, they will set up a shanghai free-trade zone. they will put product and should not together and caught the free-trade zone, -- stephanie: i am not falling for that. tom: it is boxer rebellion to

set up a 3 -- a free trade zone in china. matt: there is not a major company anywhere in the world that does not want -- tom: to be in that's own. matt: -- tom: to be in that zone. matt: and to do their own business in china. stephanie: they said it is a company that masks itself as a country. in order to release successfully do business in china, you have to have chinese insiders because company after company goes there, does not understand the lay of the land, their money goes in and they appear to make any, but they cannot get it back out. tom: that was one of the important messages 30 years ago. everybody tried to go it alone. abc just did not wondering to china, you have lived this a bloomberg. relationships in china are done differently then they're done anywhere else.

david: there are some companies making a lot of money in china like apple. look at the apple growth in revenue out of china. stephanie: the amount of people they have on the ground there, working, the research they did before they stepped foot in it, it was not like, there are lots of people in china, do you think they want our stuff? it is a massive undertaking. you have to be company like apple with that kind of cash. tom: i think the governor of hong kong, ages ago, hong kong has basically been the free-trade zone for 30 years. they have had a free-trade zone. matt: absolutely. hong kong today is entirely an extension of the consumer binge coming from china. it is not going to abate anytime soon. you think about where we are today, and this is just going to orders of magnitude greater than where we are right now. last thought on

your peace. why don't the numbers come across as the growth in the service and high valuing new economy? actually, they do. everybody has a lighter step on things int because china are looking up and looking better. it is very interesting that as soon as he saw this shift in flow of funds over the summer, all of the anxiety that was gripping the u.s. market abated. david: thank you very much for joining us. stephanie: good luck with the panda costume. with: matt winkler, stay us. a check on the markets, stocks edging higher after falling for a third time this week yesterday. despite the recent slump, the s&p 500 remains on track for the best monthly advance into 2011. up next, we are talking the business of halloween. first, a peek into the world of halloween for tech.

the nrs 2015 halloween spending survey. stephanie: that is a dinosaur or dog. will: 20 way and people dress up their pets. that will translate into about $350 million. here are some of the pictures you have treated us. stephanie: the one prior was paddington the bear. cat, -- r, a pirate david: this is the yearbook game. ♪

vonnie: welcome back. i'm vonnie quinn. the startling turn of events for a pharmacy his business practices under scrutiny for the way the drugs are made. they have decided to terminate the relationship with them. ceaseay they will

operations as soon as possible. bloomberg news reports that philidor alters dr. prescriptions to bring more reimbursements out of insurance companies. the maker of the arthritis drug reported a third-quarter profit the beat estimates, and maker says they expect to deliver double the growth through the years 2020. target looking for a natural for walmart during the holidays, so offering free shipping to online customers and encouraging online people to pick up the items. shoppersffering online free shipping if they spend $50 or have items arranged to be shipped to stores. stephanie: thank you. piece,ng to a bloomberg buyers are shunning traditional pumpkins for ugly ones like the ones you see here. demand has surged for once with different colors, shapes, and deformities. pumpkin production of all types has surged. bloomberg can always find our

angle, 31% since back in 2000, and guess what else? halloween, the favorite holiday of the year, is tomorrow and we wanted to go inside the business of what has become a make a holiday. joining us to discuss halloween luke.uced president, let's start with the of. there are people -- let's start with you. there are people who were hobos for howling for 10 straight years and now we are in a situation where this has become a mega-billion-dollar holiday that everyone is involved in. luke: we're talking newly $7 billion that will be spent on it and nearly half of it on costumes but one third of it -- 1/3 of it on candy. when you think about that macroeconomic back top and how it affects how much was an unholy, the back to 2012 with hurricane sandy going on. that did crimp spending.

the next you, we had the debt dealing debate and the government shutdown that had an effect on consumers willing to spend. a beauty not buy the full candy bar and you hand out the bright, that does have an impact. we are seeing with gas savings, a better economy and halloween spending will pick up. stephanie: we are seeing more spending following the economy. richard, for you, in a normal time, how many stores either? richard: 28 stores. stephanie: but there are 10 profits dedicated to halloween -- pop-ups dedicated to halloween? richard: yes. stephanie: it has gone that big, /3 ofdd .3 of y -- 1 your total amount of stores. richard: yes, i kind of music track, such a busy time. it is a question of opportunity. what is available, what are the prices. stephanie: in terms of rent?

yes, what locations in the city are trenching, what kind of merchandise and human resources do i have. there are a lot of factors. it is not just you open more stores and make more money. david: do you do this for other holidays? richard: no. david: only halloween. richard: i do open other stores, concept stores. earlier this year, i opened a symbol, it is the hashtag symbol. people call it whatever they want, but it is a new concept store. ricky's as a business, i do engage in opening temporary stores. what does this, mean for all of us with little buckets of candy tomorrow? gum prices, we would see higher rates right now, so cocoa prices are up nearly double digit this year and more than double digits.

that speaks to a looming supply threat coming from el niño patterns that are developing, and that threatens to crimp production in south africa which is where the majority of production occurs. we are seeing chris christopher predicting that the over your rate of candy inflation, halloween inflation, as he calls it, will be about 1.2% this year. david: matt, i am guessing you think this is a good indicator on the american economy. matt: i do. not only is halloween in some ways an extension of hollywood and related to disney, it is a good indicator of how people are feeling right now. it is a coalition holiday in which people are doing great. stephanie: richard, what is the number one costume? really -- think it is if i had to say a category that was the most popular -- it is really about cosmetics and makeup. stephanie: everyone loves that

whole zombie thing. richard: zombies, day of the dead, it is something -- that is the best category because you can play with a lot of products. stephanie: we have got to go. give your hand. how about this? luke and richard, thank you for joining us on this halloween eve. stephanie: cabbage night in new jersey. what do you call it? david: halloween. stephanie: the night before. david: night of the witches. stephanie: what about you? richard: savage night. i will start calling savage -- cabbage night. stephanie: the night before is called cabbage night where you tp your home neighborhood. thank you and happy pre-halloween. our own boss, michael bloomberg, no stranger to the holiday.

he looks just like him. happy 60th birthday to his friend bill gates or halloween. best mr.mike doing his gates, asking bill, what do you think my halloween costume -- we are both 60 years young. michael is skinnier ties than that. why you will soon see advertisements on the jerseys of some of the biggest nba players. stick around on this cabbage night morning. you are watching "bloomberg ." ♪

david: welcome back to "bloomberg ." in newsish, then they planned to sell ad space on jerseys. they struck that you -- a deal with kia for the all-star games. will this the is successful in the revenue for the teams? one of the things that struck me is in europe, the soccer players -- stephanie: for years. david: nascar. stephanie: now you can't see

anything. matt: therefore the tour de france. david: and golfers. are only doing it for the all-star game and not regular games. stephanie: it is really not that much. david: it is a tiny little patch. stephanie: not that big of a deal. david: i suspect it will get bigger. stephanie: do take this as the mba is selling out? -- the mba is selling out? matt: i think they are ever prosperous. david: there is a clutter issue. when you put more and more as on, doesn't make it less valuable? what does this mean for nike and under armour? in 2018,: starting this is nike's foray, it was adidas and they said they were not making enough to meet and they would step out. nike is making their way and, what will it mean for them? at the end of the day, one might

say it has got to be the shoes. nike is one of the majority of basketball player's feet. her jordans are the 30th addition, so nike has been on the court for a long time. one would guess it is natural, but they are looking for new ways for the team to cash in and it is happening. they: part of the reason got that much is because they built it in and they had the right to make this deal with advertisers. stephanie: max winkler, the only reason we are letting him leave is because he and the guy from need to go get a costume. stephanie: max winkler, thank you. we take a look at retailer as holiday season kicks off with dottie madison. ♪

stephanie: are valiant cuts ties with that mail-order pharmacy. aig, will at

activists horse the institutions to break up? the holiday shopping season kicks off this weekend. we will see what stores plan to do to stand out in a make or break time for retail. welcome to our second hour on "bloomberg ." david: we are going to dig more into value or did stephanie: this is expected to be over two hours long. david: he has some explaining to do. stephanie: everything bill is involved with, herbalife, burger requiresry investment a massive grand a public

hesitation -- presentation. it makes you wonder about the things that he invest in. likes to be out there in the controversy. stephanie: i think you might like that. vonnie: they are trying to bridge a gap between rival powers. they are trying to wrap up the civil war in syria. on one side, syria and iran and the other side is the u.s. and western europe. it's too early to expect a resolution. congress has the the debt ceiling deadline. the senate gave final approval on a compromise spending and debt deal. it boosts spending on defense and domestic programs and gives a government authority to keep darling until march 2017. in china, angela merkel met with human rights activists.

they told her the situation has gotten worse in the last three is tryingthe meeting to strengthen it trade ties with the world's second-largest economy. now for the markets. dottie: we are getting breaking news from exxon. matt: that is better than the $.89 estimate. exxon mobil is coming out with much better earnings-per-share that the estimate. that is unusual for an oil producer in this earnings season. they are coming out with revenue of 67 point $3 billion. -- 627 $.3 billion. -- $67.3 billion. streetse beating the outlook area they are saying they are going to earn 428 a

share. it is narrowing its range for the whole year. lloyd away the street estimates for third-quarter profits. we were only looking for $.45. full-year twoits to 63. a lot of earnings are out and it's looking very positive today as far as the bottom line is concerned. david: a lot of green over there. thanks, matt. theant is cutting ties with pharmacy drug plotting insurance companies. bill ackman who is one of the largest shareholders will hold a call in about an hour to discuss the stake in the company. we are joined by erik schatzker. we're also joined. the to us about

significance for investors of the news today. >> what we found out late last night our reporter in san francisco who had a huge scoop, what internal documents and conversations with employees at this pharmacy showed was doctors auld send ace prescription -- prescription unaltered to make drugshat the brand name got dispensed and set of some cheaper generic medicine. they were altering doctors prescriptions. they were producing -- boosting sales. they are tied closely to this pharmacy. they have an ownership interest which allows them to buy it any time in the next 10 years. there were reports they shared employees. they consolidate their financials. this looks like widespread fraud. they are cutting ties. stephanie: how can we possibly

take this as a positive that they are doing to write in? -- right thing? >> this is a band-aid on a gaping wound. sure we will have subpoenas and criminal investigations. all of the pharmacy management customers like cvs have cut ties with them. this is going to be a lot of repair work. this is a huge scandal. i can't emphasize this enough. the allegations are extraordinary. i've been covering the industry were long time. i've never seen anything like this at a company the size. david: what else might there be

out there? people whoker: the bailed on them last week, they put out a note yesterday before valeant severed ties. we believe headline risk remains high. the business practices are's or denies. it will take time to rebuild investment confidence. we hope management will reevaluate some of its business practices and disclosure policies. we know what some of those are. we know the shenanigans. -- those were some. what don't we know? possibly a distribution scam, the irony because this is my the lachman has gone short herbalife. he says they are doing wrong by

people. isn't lying on prescriptions very similar? it blows my mind. stephanie: i work for a great ceo once. he talked about climbing up the drain pipe. that is the challenge here. how do you know there isn't more out there? how did you know as an investor? >> let's keep something in perspective. our reporter in san francisco did an amazing story. we are doing this very fast. it's only been a few days of learning. we don't have the investigative abilities the law-enforcement agent he may have. this is just what we found out in the last few days. investors are very concerned about what else is sitting out there. what the legal risks are. how effective is valeant?

they say these are separate there are allt these controls and relationships and financial consolidations. stephanie: this is the same thing herbalife says. bill says how can you possibly say that? schatzker: i can't wait for the acumen call. wall street did not do enough. i did a quick search on bloomberg and found that the existence of fillet or was known at least a year ago. and analysts asked about it. it's no surprise. it's clear that people were not asking heart of questions about him. what does bill ackman know? what have they learned? we are to find out presumably today. it does raise the question about

rats climbing up the drain pipe. who was smart enough to get out of the stock when there was time it? there were some people who reduced their positions. it's still very much in. sell 4.5manage to million shares in the second quarter. de shaw, discovery capital, we don't know if they have gotten back in. it does show you the there is some money and work. i'm not going to call bill ackman dumb. a lot of people got in. stephanie: a lot follow him. we don't know what the q&a portion will be. we have a viewer who wrote in

and said is it ok to send zero or almost zero on r&d and raise prices on purchased drugs that can be sold to a medicare system for a consumer who does not see the price? that is the question to ask the lachman. -- bill ackman. he compared it to work sure hathaway in the way they run their business. how are you going to answer this today? dottie emotionalave a very presentation about herbalife and it was very patriotic. that's not a good thing. closelyo point out how pershing square is tried to valeant.

we all know that the lachman has a huge stake in this. just look at how closely these two are tied as far as their decline over the past couple of weeks. stephanie: i cannot wait. he loves to say there are going to be big surprises. i have not heard that from him today. he has to meet leaning to do. we're going to see you back in just a few minutes. i want you to pay attention. it's time for your second yearbook clue. accomplished author. tweet us your guesses. next, the proposed breakup of aig. we will cover that an lot more on "bloomberg ." ♪

vonnie: welcome back. these are your business flashes. see corp. has agreed to buy first niagara. they are the second largest bank in ohio. first niagara is based in buffalo. be reunitedabout to with a former subsidiary in a deal valued at $20 billion. the largest payment that work will acquire these he europe. -- visa europe. another recall involving airbags, honda is recalling 300,000 accords. may deployirbags either the car is not in a crash.

that is your bloomberg business/. stephanie: thank you so much. i want to give a very special welcome. welcome to "bloomberg ." christine harper is here to walk through banks. we heard from carl icahn yesterday. he was taking aim at aig. he says the insurance giant should be broken up. up, whyhould be broken not bank of america? why not citigroup? i pose this question to you ladies. i want to point this out. three women on the set. this is my kind of is this team. david: her goal is all women.

dottie: he said citigroup should be broken up. the business model doesn't work anymore. you created this business. how can you be saying this? after the crisis while the regulation and a capital requirements, it does not work that is white carl icahn is saying about aig. still big and it's still under the system. it has to have a lot of capital. that is his point. the same point has been made by many investors over the year. they have not returned over 7%. it's just a matter of time. somebody may start raising this the way he does. see that then all age of the activist investor is here. they are creating value for their shareholders within their

port folios. this is not going to and. the age of managers going to deal with outside activists is here. christina: they would rather see a shareholder come in and make these changes than have the government come and do it. the government may feel these banks are too dangerous, but they are making them uneconomic with all of the capital requirements. it will be up to the carl icahn's to say what you doing? stephanie: some politicians would nearly for this signal. -- result. wonder, could there be real movement? you see bank after bank cutting back on the highly profitable lines of business. it must be painful. you no longer want to

be part of an organization where you can't control your own destiny. , itregulatory overhang could have nothing to do with your line of his. consider?ever you were a guggenheim. they benefited from shadow banking opportunities. you could make tons of investments. did you ever any point make i would love a job at big bank? dottie: i do take your point about the commercial environment. it is just what it is. doing business in this line of work which is very profitable for the individual and brings value to the investor, it's not going to be less in our lifetime. there is going to be more regulation overtime. what next day to look at is

where applying different levels of rules in different places can bring the most value to shareholders. stephanie: thank you for joining us. it's great to have you. stay with us. we need you. still to come, we are following earnings from big oil companies. we have already heard from exxon. ♪

stephanie: welcome back. you are watching "bloomberg ." financialar what key firms are watching. at late cycle investing. that's what we think may happen.

for the last few years, rates have been flat and loyal has been flat. we think that may be about to change. that's an important important application. stephanie: what benefits? >> first of all, when you think about financials, that is one of the beneficiaries when rates go up. there are other things we think will happen. we have seen in prices of oil, that may stabilize and start to go the other way. we think that can be beneficial we think they benefit as the oil goes up and. stephanie: amazon is another name. . see anwill start to increase in wages.

we start to see things go in that direction. we think amazon can benefit because that's good or the consumer and amazon does not have as many people in their warehouses. on the labor cost, we think one of those could be restaurants. have seen some restaurants weakness. you've had this big tailwind from the consumer. that is helpful. stephanie: we thought people

were going to send gas prices to restaurants and the mall. discretionary spending it did not really happen. >> it did not happen to the degree that we thought. saved a lot of that money. we did see a boost in the restaurants at the latter part of last year. it was not as great as people thought. we did see a boost. we are running up against that. stephanie: thanks for joining us. we heard you have a big halloween costume coming. he did so well. you have to come on it next time wearing the monkey suit. thank you for joining us. happy halloween. david: next, we will talk oil.

you are looking at beautiful new york city. the sun is back out. it is shining on "bloomberg

" this morning. she's held top positions at walmart and the gap. peter covers energy for bloomberg intelligence. i want to take a minute -- we were just talking about a .ossible rate hike, labor costs what is your perspective right now as you look at the specters who will benefit? >> i agree that retail will take a hit. i commend him for being in front -- the hotel industry, restaurant industry, that has not come home to roost yet. what ultimately will be great , from a g&a line, they will have to spend the money on the balance sheet. you have breaking numbers out of chevron right now. matt: i also have economic news out. consumer spending came out, personal spending rose .1%.

they were looking for a gain of .2%. this comes on the back of weaker gdp data yesterday. let's switch to the oil patch your. nine -- wee dollar an see exxon mobil beat with eps of a dollar one. chevron third-quarter revenue looks to be as well. we were looking for $25.4 billion. it looks like chevron has be both on the top and bottom line. both on the top and bottom line. in the premarket, chevron trading up almost 1%. david: while you were sorting through the chevron numbers, peter, you are our accident --

resident expert on all things energy. matt: we have chevron cutting jobs as well. 6000-7000 jobs. .t is $1.09 a share really beating by a lot on earnings and revenue. cutting 7000 jobs. go ahead and look at the job loss and see what chevron ha s announced lately. in 2010, they cut about 2000 jobs. a big announcement for chevron. david: we've had two big beats this morning. exxon and chevron. we've had quite a few oil reporting over the last week or so. take us through the winners and losers. peter: essentially, you are looking at companies with

refining businesses that are tending to do better. they are buffering their upstream businesses which are clearly feeling pain. at these smaller players, the real structure of the industry is in peril here. they're operating expenses and cap x are not covered by their cash flow. -- that ise leverage the framework going forward. what are those levers? they can cut back, cut back their operational expenses. the can also trim dividends. : they are serving a need and they have to fulfill that service and delivery. there is plenty of places to cut back to peter: absolutely. it makes you what they are doing with $100 oil. stephanie: what is your take? >> it's interesting to see the

refining earnings showing upstaging a bit the earnings from drilling. losstempered by the job announcement. it shows you a mixed picture that exists. even when you have a good day in the oil industry, it is still kind of a bad day. as many as 200,000 jobs have been lost since oil started falling across the world. , ifthing i would point out you want to contrast the earnings with shell, shell is a big and good company but they saw tremendous write-downs because the abandoned drilling in the arctic. a lot of strategic changes in direction. david: it doesn't strike me that you raised shell. shell is shutting down long lead exploration in canada and offshore drilling. in houston, how much of the ?utback is pretty volatile i

seeing the long life projects getting cut. those are projects that are difficult to ramp up quickly. reboundght be a small in the next year to 18 months. that will come in the shale industry. that's why you're seeing exxon another's forecast that they n drillingd money o that allows them to quickly ramp up production. take 6-10 years to get a big offshore drill running. peter: what will come online eric quickly -- very quickly is shale. this is like a light switch. these are half completed wells, wells that have been j-roll but not completed. as prices go up, the backlog

will be tapped and you will see production rise. drilled that have been but not completed. dottie: 7000 jobs across the united states or across the , 5000 in houston is another. peter: if you look at the job growth of the last five years, it has been to places. north dakota and texas. -- two places. job cuts seem to be inevitable. you describe this possibility of bringing back online production if the price goes up. it almost limits the price of oil. in a way we did not see 15 years ago. dottie: there is a demand issue. we don't have long-term projects, you are just harping on the oil pricing. peter: that's what opec is try

to do, trying to take people long-term out of the marketplace. if they can come back quickly as oil prices rise, dave failed. -- they have failed. matt: there's an interesting chart on bloomberg intelligence that looks at cap x for the big oil coanies versus cash flow. offe 2009, cap x has taken and cash flow while still rising is not keeping up. that is a problem for these businesses. david: this is getting adjusted pretty quickly. peter: absolutely. you see these massive readjustments. 2016, it's about oil patch darwinism. dottie: and the ability to compete globally is going to change if we don't keep these long-term things going. stephanie: your take away? brad: that is true.

survival of the fittest will be important. what matt brought up, it's important to recognize that that cash flow trend started back in 2009 when oil prices were $100. to look at the models for these companies and ask if it does not work at $100, what do you need to make it work? what has to change to bring this model and bring this company beed into something that can cash flow positive for investors? stephanie: thank you so much. is sticking around. the holiday shopping season unofficially -- she is loving it. what her consumers are looking for. talking big retail, next. you are watching "bloomberg ." ♪

vonnie: welcome back to "bloomberg ." consumer spending slowdown in september, posting the smallest gain in eight months. consumer spending accounts for 70% of economic activity. abvi raised its forecast for the year. they expect to deliver double-digit growth for the year 2020. the future of air traffic control prompting delta -- they ended their membership. they want to privatize control. the idea is being debated in congress. this weekend is not just following, it's the unofficial kickoff to the

holiday shopping season. retailers trying to get their acts together about what consumers want this season. they do not always agree. what is the priority, price or services? dottie is still with us. joins us, too. welcome, welcome again. three ladies on the set, one man. david: there is a trend here. stephanie: you have just acquired -- this is your first holiday season with the store, but not your first rodeo in terms of retail. what is your look ahead? dottie: we care about service. we are focused on customers wanting service. amazon says what they will do and does it. today shipping is two day shipping. it arrives by thursday, consumer

sentiment continues to rise. what we are focused on in the luxury sector and homes is all about service come out to be a gracious host and guest. we were just having a conversation about big-box. brian at target has other words for it. it's about consistent delivery for the customer. shannon: you are talking about luxury -- i was at targets holiday presentation. they are focused on home posting events. do you see them as a competitor? dottie: no, we see them as a great complement. we assume everyone's home is filled with terrific goods from target and hopefully gracious home. stephanie: what do you do about the fact that people can go in your store and see all your amazing presentations and say thank you very much for the

suggestion come i will buy elsewhere. david: or i have my cell phone and order it right here. dottie: that does compete with other more price oriented service providers. we match price. very high and things like lighting or accessible things like toasters, we match price. gracious home is not known for its price, but one of the reasons we continue to win is because we do match price with competitors. david: is the nature of your goods changing over time? be ablelbs -- i used to to buy lightbulbs from gracious homes. now come i can use amazon. dottie: we've shifted to more things -- if someone is yelling at you on saturday morning about why that light is still out in the closet -- stephanie: the consumer is

feeling focused on family, focused on home. the customer is saying they're willing to participate and engage. we have a high-frequency rate, high return rate. because customers walk in with more knowledge, it does collapse the time you spend with the customer and collapse the purchase cycle. we are all friends with technology. david: i'm interested in these two items. dottie: that's home goods. you are not starting from zero. shannon: the customer from walmart to gracious homes is different. the issue big-box retailers are having with our customer, their incomes are not growing. their incomes are not growing. there's more expenses pressuring them.

health care, cell phone bills. lower gas prices were supposed to benefit them. david: matt, do you have something -- they have taken over. i give up. stephanie: that returning customer is more crossover. low -- we want to share that. today's consumer is very conscious. if you look at the trends, they are saving much more. they are paying down their debt. we see them paying down their credit card balances all the time. they are still very cautious. you're not seeing the big surge in spending. we have to work every day to earn those dollars.

shannon: that's why holiday is so important. the consumer will go big on holiday. that's why these companies are really focusing doubling down on holiday. media --s a big getting their stores ready for months. making sure all the products ar there. when customers are ready to spend, they have the goods. what's the worst thing when you walk out empty-handed -- walmart is trying to do the same. more santas in their stores. they've been trying to improve customer service. stephanie: i own favorite elf, matt miller. -- our own favorite elf, matt miller. matt: it's different from what gracious home is selling. they have 17% of their sales in home furnishings.

lamps, for example. 25% household essentials. this is the lightbulbs. the toilet paper. i'm not sure this is food and pet supplies. is the gracious home customer really a crossover with target or walmart? it has park place and boardwalk real estate. dottie: it's on the internet, my friend. stephanie: look at any lifestyle consumer shops at both stores. i want to talk about a different brand, rei. they are closing, not open on black friday. all, they areof walking away from a top spending day. we will close on black friday. are they announced, they

paying their customers to go outside is beautifully on brand. hundreds of millions of dollars they pick up with the announcement -- shannon: how many people went to rei on black friday? dottie: it was a top 10 day for them. money.ll lose a little but i think it is brilliant. stephanie: i did not think about all that media coverage they got for free. david: i bet you did think about it. thank you, shannon and dottie. we will play the yearbook game. is madeestors company of 170 mutual funds whose current assets total more than $2 trillion. .weet us your guesses

stephanie: coming up, we are talking ponies. will he make racing history once again? ♪

david: welcome back to "bloomberg ." has been five months since stole theharoah hearts of fans who had not seen a triple crown winner since 1978. tomorrow at the breeders' cup classic, american pharoah will race for the last time. can the clear favorite when again? normally they don't race after they win the triple crown. dottie: no. his trainer who was a longtime winner really thinks he has one more race. david: he has lost one race

since the triple crown. you are from kentucky. dottie: i'm from louisiana. which makes kentucky look like paris, actually. i love horse racing. onbob is putting him back the track, there is a reason. stephanie: before we go, this is your newest project. excited foret gracious home, where will we find you? gracioushome.com and begracious.com. we tried to do it every day. stephanie: i'm trying. david: you are always gracious. stephanie: dottie, thank you so much. up next, set is the ceo of liquid net.

he is walking us through the opening bell. we have volatility. beginning his presentation, his investor presentation on valeant, defending his position he took earlier this year. this is a guy who goes big or goes home. david: we will be monitoring it. on the phone, listening in. what is your costume? stephanie: you will have to see. you are watching "bloomberg ." ♪

david: we are just 30 minutes from the opening bell in new york. welcome to "bloomberg ." david: we are joined now by erik schatzker.

erik: i was here for a few brief minutes earlier. who else is with us this morning? ,one other than seth merrin founder and ceo of liquidnet, and institutional online trading network. great to have you on this friday. matt miller is here with a market check. well, atping up pretty least today, we are seeing gains across the board about .2%. and earnings report coming out very strong. let's take a look through the futures and look at the oil prices here. the oil patch has been where we've seen the strongest earnings. crude right now up about .1%. $46.14 a barrel. chevron beat this morning.

phillips beat this morning. phillips up 3% right now. take a look at solar city, the other side of the energy play. they will forget about growth and focus on cash flow. there are always questions surrounding solar city. some of those were asked here by jim chanos on our set. i want to take a look at valeant, distancing itself from philidor. they will talk about it today. bill ackman will talk about it. the company is getting crushed again come already down by 50% year-to-date. julie hyman is on that conference call.

she is here with an update. julie: i'm out in the newsroom, listening to the call. it has not actually begun yet. indeed, bill ackman has been focused on it because valea nt is one of his top holdings. all these questions about philid or have surfaced. philidor is closing as a result. this raises questions about their relationship with it. philidor's only customer. sequoia fund just fired two of its managers. 5.7%.wn about

ackman has since bought more shares in the company. erik: i will pick it up from here. i know we will be coming back to you later. more headlines from the call that bill ackman is holding on valeant. --re are some headlines mcgraw-hill will explore options for its jd power unit. it estimates annual revenue for jd power and about $350 million for 2016. you might get a sense for how much money jd power is worth. move just breaking -- ohio's second-largest bank has agreed to buy the financial group for $4.1 million in cash and stock. it will create the 13th largest in the unites states.

nhis falls in line with a uptick in financial takeovers. when you see regional and community banks consolidating, what does it say to you? seth: the amounts of new regulation being applied to and the regulatory capital they have have, i don't think the smaller banks can stand alone anymore. erik: not to mention technology costs. seth: tremendous. we had a problem with the too the to fail banks prior to b great recession. now, they are too bigger to fail. the european banks are now claiming they don't have the skill to compete against our

national banks. story,the number two everything is a banking story. s corruptionto fifa' , credit suisse is being investigated. the first global bank to disclose it is being questioned. is this just inevitable? seth: exactly. these massive banks have such a broad client base and somebody businesses that they are always included in scandals. this is the latest scandal. credit suisse is the first one up. if there is something here -- erik: they are all processing payments for these guys. checks were cleared. know your customers. stephanie: without a doubt. david: they will just ask

questions. we don't know -- toh: if they are going target somebody and have an investigation, go for one of these big banks first. stephanie: they become a human punching back. trunk to ramppan up its stimulus program even again as it postpones its inflation target. what is your take? seth: shinzo abe is between a rock and a hard place. japan has one of the highest debt to gdp ratios in the western world -- developed world. more stimulus adds to more debt. ,f inflation rises to quickly japan could be bankrupt. they will not be able to pay back all the debt. it is a very tight line that he has to walk right now.

matt: the terminal shows something interesting. but of the bank of japan's balance sheet versus the ecb and the fed, the growth is aggressive. normalized in 2005, you can see the bank of japan's balance sheet shoots up. nowhere near the size of the u.s. federal reserve balance sheet. it is just amazing to look at the growth they're versus the u.s. and ecb. japan, red isof the fed and yellow is ecb. , congress hasfour passed a bipartisan budget plan that will prevent a catastrophic default on u.s. debt. the bill will raise the debt limit through march of 2017 including a two-year spending spike despite cuts to medicare. lawmakers must now work out details before current funds run

out on december 11. president obama is expected to sign the bill right away. is this just more of the same? we've seen this movie before. seth: we have. it's going better and smoother than we've seen. prior sessions, we've had to debate whether to shut the government down or not. we have a presidential election this year. the republicans are saying i don't want to hold up the government right now because it will make me look bad. all the cartoon characters up there on the stage will look bad. this will be good for the economy. thank god there is a reason for them to work together right now. stephanie: the conference call that is supposed to start right now is being delayed. david: they are cramming. stephanie: we've seen this before. they are having technical difficulties with the website. this is not the first time time we've seen this with mr. ackman before.

people cannot get enough of these presentations. seth: volatility is hot. never has bidding on a decrease been more popular. both long and short etf's have record outstanding positions and the rest to hedge has picked up. here is what interests me about this. etf's are growing increasingly popular. including etf's that invest in derivative product. which is just represent that of something, would not call it a derivative, were to increase or decrease quickly, there would be a lot of etf activity. managers will be forced to issue or retain new shares in the

etf's which will pressure the underlying instruments, the features. what will that mean for the stock market? seth: this is why you have tremendous volatility to begin with. so many of these transactions are linked. nothing stands by itself. people are not using the vix to hedge anymore. they use it as security. credit default swaps were all the rage. they were used for hedging. then they became used to trade securities. with similar risk? seth: hopefully not. erik: we continue in a few minutes. seth merrin of liquidnet. stephanie: i have to share a theme last night. my favorite function with you. nightckman was out last

with his family at the titans of industry event at the center for jewish history in new york city. he interviewed his father who has been in the real estate business. i met his dad. bill was up at a party last night. we will be getting those notes throughout the hour. for now, we will take a break. you are watching "bloomberg ." seth is sticking around. ♪

vonnie: welcome back to "bloomberg ." chevron reporting a job cutting plan.

as many as 7000 jobs will be cut as oil prices continue to slump. pharmacy will cease operations as soon as possible after valeant cut all ties with the company. a new sign that mobile is becoming king in consuming peer google is merging its phone operating system with laptops. that is your bloomberg business flash. at oil futuresok are up. goodll see a pretty october. expedia having a big game today.

coming out and saying it's synergies from its orbits acquisition will be greater than the $75 million originally forecast. efficiencies look good there. linkedin also doing very well today. third-quarter eps was $.78, we were looking for $.45. they raised their full-year target. shares trading up 12%. having much luck today as that company came out last night and said the focus would be more on cash flow and less on growth. jim chanos raised questions about the accounting practices or where the company is getting its money. is down 20% right now. exploring strategic options for jd power, the car unit. shares unchanged.

square's ipo is right around the corner. we will break down the mobile payments company and challenges it could face here on "bloomberg when we come back. ♪

erik: square is marching toward its ipo. you've seen its products in the small merchants processing electronic payments. square is about to enter an increasingly crowded market. it's financials raised some questions. jack dorsey also runs twitter. losses mounting as revenue grows. brett, welcome.

you've taken a look at squares financials. your company has crunched the numbers. what have you found? brett: there's all this talk about unicorn companies worth a billion dollars. what is a company worth when it has $1 billion in revenue? there adjusted revenue is lower because they have transaction processing costs. this is a big company. they have millions of customers. it will be adjusting to see how this private market valuation ports into the public market now that we have the daily training. stephanie: how much fundamental homework do those looking at ipo's really do? or do they look at that valuation and see enthusiasm around these tech companies and play the trade? rett: you could hire us. the disclosure is pretty robust and it's easy to understand what this company does.

how many customers they have, what the customer -- the homework is doable for the people inclined. what we think is interesting -- raise your hand if you are poor transaction fees. no one likes them. best for transaction fees. transaction fees should go away. what square does, they have all kinds of marketing services, a leading business they just launched. will take their millions of customers and become a business services wrapper. david: what is the motivation of a company like this to go public these days? ine money has been raised the private sector the public sector in the last 12 months.

onthis dumping the stock public investors? rett: they are talking about two if they fidelity -- come in with one fund, is that dumping on the public? it means the stock is liquid right now. they came in pre-ipo. stephanie: one could say they are getting envious, getting emotional when they see these valuations and say we have to get in. david: is it just that simple? rett: they want to get liquid on it. why not? erik: if you build a better mousetrap, it should show up in your financials. it is a young company. maybe it is find the square is losing money. one of the $31 million over five

months. -- $131 million over five months. their gross margins are skinny. that makes me wonder if they have a better mousetrap. square has a gross margin of 36%. other companies in that industry are looking at whole lot better. rett: square is a company that is really a cause more than a business. making payment processing available to small businesses. he did not say i will make a lot of money. he says i will move the power of transaction. investmentous --rett: the company is valued at $6 billion. , theymazon went public had a $400 million valuation.

$3 million in sales when it went public. we are in a different market now. david: thank you very much for being with us. about the talking majors next on "bloomberg ." the liquidity crunch in the fixed income market. ♪

david: welcome back to "bloomberg ." we have a big story with valeant today. stephanie: bill ackman talking right now. david: we are so eager to hear what he has to say. let's go to julie hyman in the newsroom who gets to listen in on that call. julie: that's exactly what i'm doing right now. bill ackman in one year and you guys in the other. indeed bill ackman is holding this call talking about valeant and his interest. he's been talking about the

history of his investment in the company, talking about building his position and it and the history of philidor. under invest in its public relations, having one person to handle and number of different roles. valoes seem to imply that eant is somewhat at fault for not being more transparent, perhaps. he is defending the idea of the specialty pharmacy model. you have drugmakers, you have these specialty pharmacies and pharmacy benefit managers, cvsanies like caremark, that have terminated their relationships with philidor. they are shutting down. he says these specialty pharmacies eliminate the

middleman between drugmakers and patients. and that they help to save money to get better prices and improve assets as well. we will listen in and let you know what else he has to say. i have to read the statement herbalife put out. bill ackman is targeting the company. says he is trying to do better not just to save the american people but people around the globe from such a predatory company. i have it here, i'm going to read it to you.

this is from alan hoffman, the head of government affairs, basically the pr guy over at herbalife. out those werent some losing trades. on the other side he had to have some monster wins. >> he's enjoying it. he's relishing it. we will keep listening and reporting in. let's turn back to oil. we heard from exxon mobil and chevron earlier, both eating the estimate. chevron posting its fourth straight quarterly decline. let's ring and andrew cosgrove -- let's bring in andrew cosgrove. we have been trying to get a sense of what has been going on in the oil industry.

see -- you are going to i think you are seeing a big readjustment on the cost structure. relayed that that to the companies that serve them, halliburton, baker hughes, they are the ones that are feeling the effects. they are going to deal with the second straight year of declines. >> if we compare against the we it feelsm chevron, like the more downstream you are -- more downstream you have the better off you are. both of those things better than chevron. , you do haverket the entire world --

>> one second. we want to hear everything you have to say and write now that mic is not cooperating. andrew: from a demand perspective you have the world shifting away from coal and gas. more recently because of the oil prices. massive declines off the coast of egypt and israel. what is that going to do? entry bank these companies are paring for a lower price environment. the oil cost curve is shifting downwards. the same thing happening

across the commodities landscape. >> lies chevron cutting its by 20%? companies like chevron, the oil majors with balance sheets, are supposed to be billed to survive low-priced environments. the ceo told me as much. and i'm a little surprised they seem to be as concerned as they are about short-term cash flow. >> i think some things split through the crack's in my high price environment. it is on them to have a really laserlike focus to make sure they are spending every dollar and keeping track of every dollar. nobody foresaw oil prices coming

down to levels that they are at right now. the focus is evermore enhanced. >> when oil drops below 50 it is going to go to 20. >> do i did detect a cynical note? stephanie: we are leaving lots of time. we have to talk about liquidity, what stock has done for the equity markets. we are having a tough run when it comes to liquidity, and it hasn't been much technology. you launched a dark poll for the fixed income market. there's no way good possibly make your way in. that give us

liquidity. a lot of investors and that concern. >> today's environment and technology -- i don't know if any other industry that has been so late to the party. the banks no longer have a capital. the entire marketplace is built and efficiency is built on the capital. you need technology to come in and supplement the committee. we have taken members from around the world and asked them to put there. the asset managers are 99.9% of all securities.

we are creating an institutional exchange. we are aggregating $5 billion per day. this is the first time corporate bond liquidity has been aggregated in the same place. >> one there were more banks involved they could buy bonds no one else want to buy. >> the reason markets are there -- if everyone was always going one way it wouldn't be as much of a marketplace. we have a diversified customer base. they don't have different views on the marketplace. when the liquidity crisis -- in thisppen country money continues to flow into bond fund.

and rates artificially low only going in one direction it is important for people to understand that as rates start rising the bond fund's will start losing money. that it so little yield doesn't take much of a price movement to wipe out or start seeing losses. are not going to be able to facilitate every bond, but we are creating liquidity. >> take us into bloomberg. matt: i have a look at the biggest bond funds in the world. pimco total return fund. net asset value has been declining over the past couple of years.

gone negative in 2014. americans are taking more and more money out of that. >> that may have more to do with the exit of bill gross. >> probably international investors there. not only americans taken money out, i'm sure people from every country in the world are invested. >> is there an inevitable with the disappearance of the dealer? is there an inevitable widening of spreads? >> there has to be. they would make more money. happen ism that could these on funds get redemption. there are lack of buyers on the other side. gaps lead to price

greater losses and greater redemptions. that is the problem we are trying to solve. >> nine minutes into trading. erica asked me how the markets are doing this month and i was only showing you the day. let me show you how the market is doing for the month. this is a heat map for every month for the past 10 years. october averages, 1.39%. we are up 8.9%. best month of the year so far and the second best october of the last 10 years after 2011. let's take a look at some of the companies that are moving today.

first solar is gaining on solar also reducingea its forecast for the fourth torter and switching focus cash flow. big problems if you are along this today. obviously a lot of earnings coming out there. mobil. a beat today and obviously refiners do better. is -- doolittle >> starting up with starbucks as they cut their profit yesterday.

the company now expects a tight range of 34 through $.45. the company is defending those costs as an investment for the long term. we know these investments are paying off. investors seem to agree. bell expects the to see greater than originally expected cost savings. they now expect their savings to be above the originally expected $75 million. that was mixed but investors seem to really like everything they see here. trading at a record high. david. >> next on today's value

proposition we are looking at a key problem facing wall street. maybe the problem is man versus machine.

bonnie: microsoft is topping the bond markets. its biggest sale ever. low borrowing costs while the fed is keeping interest rates on hold. only three nonfinancial companies with triple-a credit ratings. the smallest gain in eight months. accounts fording 70% of economic activity.

in-depth says sales appear better than forecast. brewer is anargest takeover with sb miller. >> it is time for the value proposition. today's topic is man versus machine in financial services. has wall street hit peak humanity? seth merrin is still with us. if you look at the employment. it peaked in 2011 and has been declining ever since. you just published a report.

the electrification or digitization of financial services, is this going to continue? >> i think one of the core pieces in our report is only a handful of banks will be fully digitized and should go all in. the rest should be very targeted in how we go in. having said that, the second learning, evenne simple technologies like workflow, which will affect places like the middle and back office. forhat does that mean humanity? wall street -- i'm talking about the six largest american banks. where will we be if what you're

about takes place? >> not all that will be realized in real job reductions. we think there is a substantial for these kind of technologies. >> is the winner going to be goldman sachs who spent more money on technology than other banks? is considered one of the most senior people in the organization. >> thank you so much for that. i appreciate that. wall street issues technology. wall street works on such enormous margins that they don't

necessarily want to insert technology. start the klein in, only when banks have enough capital, when you see the earnings of these banks go down today start implementing? where are those margins defensible in a digital world? >> your highly electronic today and will remain so in the future. businesses on the medium term. those will remain nonelectronic, nondigital, at least in the short to medium term. >> please stay with us, because next we are going to play the yearbook game.

time for some of this week's highlights as heard on go. >> the power has shifted much more to the creative and strategic agencies than the traditional powerhouses. it is just us. >> the more we show, the more people want. there are great contests going on in the world. >> the way facebook handles it? users are staying longer and engaging more? are running massive scale and yes it is working. have probably the best

advertising product in the world. >> truly mind-boggling. believe people are elected to represent the best interests of the american people no longer do their essential function. >> we get will we pay for. >> everyone talks about income inequality. they don't seem to send anything to -- don't seem to put anything together. progress. >> this is my kind of business. >> we are asking you to 1946,ipate with us --

launched the first index mutual fund. over 100 70'srs -- over 170 mutual funds. go to blair academy high school in new jersey, he went to college in new jersey. john vogel. person -- first the legendary jack vogel. seth merrin, what a way for you to end. what a winner. have a great holiday weekend. we will see you monday.

>> it is 2 p.m. in london and 10 p.m. in london and 10:00 p.m. at hong kong. welcome to bloomberg market day.

bloomberg world headquarters in new york. what a week we have had so far. here is what we are watching at this moment. after the truck maker struggles to fix it to drug problems. it is permanent aiding -- it is terminating its relationship with filler door. if they get together and that blockbuster deal, why pfizer is moving its legal address overseas. that horse out for redemption. they have a chance to make up for that shocking loss. the triple crown winner. and let's head straight to