from the bloomberg headquarters in new york, i am scarlet fu. lix: i am alix steel. that the holiday shopping battles begin. target wanting to get the edge on walmart by offering free shipping. scarlet: what the days earning reports a about tomorrow's prospects. alix: let's get started with a wrapup of the activity. matt miller has the latest. it is so good to see you. matt: there's a lot of news. let's get to it. the indexes, not a lot of movement.

we have seen gains and losses swinging back and forth with small changes. it has been the best month, not only of the year, but in four years. we are up 9% in october. we have not had a game like that cents october of 2011. as far as individual movers, there is a lot of news. the health-care sector has a lot of news other than just valiant and bill ackman's call. abb -- ab of the -- abbvie shares up 11%. metcame out and third-quarter estimates with a disappointing forecast for 2016 as a result. -- as a result investors are selling the stock, down 4%. look at expedia. a lot of news in the internet

sector. expedia saying the tie up with than $75ll yield more million in synergies or inefficiencies, which was previously forecasted. doing better than previously forecasted. the cane is up 9%. getting boostlso after positive analysts' mentions. back to you, and i look for to watching the rest of the program. let's check in with the news. sendingesident obama is a small group of special operations forces to northern gordon 82 five islamic state militants. the president also authorize sending more warplanes to a base in turkey. the u.s. senate pulled an all nighter to avoid a potential debt default. lawmakers passed a compromised budget bill that extends the

government's borrowing authority into march of 2017. it also lists budget caps, leading to an $80 billion increase in spending. that now goes to president obama or his signature. torrential rain has forced the iraqi army to halt the defensive to take ramadi from the islamic state. an iraqi official says troops are order to hold their positions until the weather improves. an operation was launched to retake the city from the islamic extremists this month. one is dead and another injured after a building collapsed in new york city. it was undergoing demolition as part of a hotel opening. dozens of firefighters and emergency workers are on the scene at this hour. investigators are trying to figure out why passenger jet cop fire as it prepared to take off from fort lauderdale, florida. the 767 was taxiing out of the runway when an engine caught fire.

more than 20 people were injured, one seriously. that is a look at her first word news. you can find the latest on bloomberg.com. back over to you. fund titan bill ackman is defending valiant after questions were raised about their business practices. here's what he told stephanie ruhle earlier this month. >> it is a "platform company." it is a business where valiant has had an advantage in running one of the most efficient companies. pearson is very shareholder friendly. he is very focused on cost control and discipline to about investment capital. that gives him a competitive advantage. he is the high bidder for many

companies and products because he layers the product onto his operating model. more efficiently extracting profit from the product, leading to more profits for entrepreneurs and more space in investment leading to innovation. >> will it take to convince investors? here is the bloomberg markets reporter, julie hyman. you have been listening to the call. what did you learn that was different from what he told stephanie? julie: bill ackman is true to form. the call is entering the fourth hour. it started at 9:00 a.m. and is still going strong as he answers questions written in. he is sticking with valiant despite the drop in the stock. the stock is falling to the lows of the session. whatever case he is trying to work, it is not succeeding with

investors. he thinks the stock could reach $448 over the next three years and earnings per share could $8.40o $22 by 2020 from last year, doubling their shares. he thinks an investigation into the philidor practices could take two to four years, but valiant will survive and do well. he and his team spent time on the call coming up with different examples for other have beenmakers that sanctioned in various ways and have done fine they talked about a case against novartis that had to pay a fine. we have more information as to how important valeant is within his portfolio. it represents the high teens percentage of his portfolio. 180cost for shares averages

six dollars. considering shares are trading just north of $100, $186 is not so good. the whole business model of valeant has been acquisitions. there bought smaller companies. they have a very low research and development budget. they help out drugs. so far, that has worked well. if you don't have your stock as a currency that is the price has gone down, if you don't have debt that you can draw on -- we have seen yields on valeant urge, and that business model is drawn into question. bill ackman thinks they will get in investment grade status back for the dead and will be able to resume acquisitions. he said the worst-case scenario sellst valeant itself. one of the more entertaining

propositions that he made was maybe pfizer could make a bid for valeant. the call continues as he takes into all of the questions. dan: i also found that headline to be striking. our againt pfizer could be a buyer. here is a strong word for the pr company, bringing them -- blaming them why they weren't able to handle the crisis better. that. he did say he also, by the way represents our pro-life. the contrast teacher was saying that they have done a terrific job on herbalife, which he has famously shorted the stock of, but done a terrible job on valeant. he did also fault valeant himself. he said that michael pearson, the ceo of whom he still has a

lot of confidence, said that he has not been willing to spend a lot on pr. a single individual is in charge of public relations, government relations, and public relations, and that the company needs to do a better job of working on its image. as we can see, it has not done a terrifically good job so far. scarlet: with regards to the stock price, i thought it was interesting that though ackman quantified how much he thought valeant could go when people better understood the business practices. he says it is undervalued, but gave a number. julie: $440 is the three-year target, which is a significant upside from here. the lachman is famous for doing his homework and really taking in in a detailed way into the financials, he and his team, of the various companies.

he went through a detailed financial analysis on how he arrived at that valuation. at the same time, he was not aware of what was going on at the company. he said when the market became aware and valeant revealed that it had an option to buy philidor , that he also became aware. he was not aware before. he knew did that -- he knew that valeant use the specialty pharmacy channel, and there is a benefit to that model, but he wasn't aware of that option to buy. very interesting that he himself hadn't gotten that communication. of thisch a booster special model that he kept saying that maybe amazon should get into that specialty pharma business. well we are having this conversation with bill ackman himvaleant, you had

famously coming out with a damming paper two weeks ago. he tweeted that valeant has a better chance of going to zero then herbalife ever well, taking aim at bill ackman. i asked andrew, how does it feel to take on bill ackman, who famously sticks to his guns and commits? being his biggest position. it is interesting that wall street is siding with andrew. many analysts thought that valeant's decision to ditch philidor would be a boost for the stock, that is not happening. they're ending the relationship with the specialty pharmacies. julie: and you have bill ackman saying that an investigation could last two to four years, be that valeant might still implicated, that does not cause

a lot of relief for investors. on the andrew left front, bloomberg has a great live blog of this call, pliv on the bloomberg terminal. he is addressing citroen. he is saying he is a believer in short sellers. to do research. undisclosed facts. that person has done a disservice to the market -- has done a service to the market, which is healthy. it is harmful when they do not disclose positions, and he named examples. he is discussing that situation. in his conversation with you, he said you're going up against bill ackman. he said, i am not attacking his children, it is just business. . we'll check back with you for any updates on that call. to hedgewhen i talk funds, they say it is a broken stock.

longer-term you cannot look at and say yes, i will invest now. scarlet: as we have reported, bloomberg has found that workers altered patient prescriptions at philidor to boost valeant. the ceo michael pearson said we have a lot of confidence in philidor's- to ability to continue to operate in a manner that is acceptable and to the patients and doctors we serve. thank you, carolyn for bringing us this story. it seems odd that valeant we just learned about this and take drastic steps. can you walk us through what you learned? reported thiswe is based on conversations with a former employee.

in some cases philidor employees are modifying doctor's prescriptions to indicate a code that means that you would have to dispense the branded versions. typically, doctors will write on a prescription the branded name, if they don't say, dispense as written, that means pharmacist genericch to a brand if available. the question that remains is if valeant was aware of the practice within philidor. that philidor is was getting instructions on how to tell the prescriptions. >> that came from a separate document, a training manual for philidor employees. it is saying that when you are bellying insurance, use the

national provider identity for philidor first, and if not, use the pharmacy in call-up on you that -- in california that they have worked with. if not, here's a third npi to try. that seems odd that they would be billing insurance using multiple npi codes. scarlet: lots of suspicious questions raised by these disclosures. thank you for your reporting. she covers health care for us in california. alix: we will be following this story. scarlet: coming up,'tis the season for shipping. almost half of the holiday shopping done online come a free shipping is a huge, factor in where retailers shop for the best deals. alix: oil might be saying its worst markets in decades. we will have that conversation

after exxon and chevron reported earnings. scarlet: oil is one reason the bank of japan reduced the forecast. deeper into the monetary policy at what it means for japanese consumer spending. ♪

alix: welcome back to bloomberg "market day." i am alix steel. scarlet: i'm scarlet fu. let's look at the biggest business stories in the news. consumer sentiment went up in october, but less than projected . americans viewed buying conditions as less favorable than they did earlier. still, low borrowing costs could lead to more alix: consumer spending through the end of the year. salaries for u.s.

workers grew slightly, but are still sluggish. the employment cost index, which tracks wages, salaries, and businesses is stronger than the advance.arter,2/10 1/10.the smallest gain income grew by the smallest amount in four months. consumer sentiment is a little higher for not buying stuff. you can get more business news at bloomberg.com. scarlet: what to check in with matt miller to see what impact it had on stocks. the impact is nil. matt: very little on stocks. i will do a bloomberg tutorial. i've gotten questions, how do you use the heat map? you go into seag , and you click map.ehea -- of the heat

the new could make it 10 year and you can pull it out to see that october is the best longrming month if you are in four years. looking at the other asset classes that are moving, we had so much economic data. we will start with the 10-year. these are the indexes, can we pull up the 10-year. the yield is actually rolling. it was rising all morning. 2.16. a little more buying in treasuries after the economic data. still ahead, refuse to shop online because of shipping costs? you're not alone. big retailers are taking note, some would say finally taking note. ♪

scarlet: welcome back to bloomberg "market day." i'm scarlet fu. alix: i'm alix steel.

the holiday season has already begun and it is not even thanksgiving. atget is taking aim walmart by offering free shipping. we are joined with more. it is getting earlier and earlier. november 1 is when the stores switch from orange to green. to the stores on sunday you will notice the christmas stuff on display already. have two different strategies. everyone knows that online and mobile will be huge. half of the people will shop online of this year. whatill do free shipping, with the dob? target will do free shipping with no minimum. they did this last year when they were trying to regroup after the horrible credit card scandal when they lost customers to the data breach. walmart is not going to go that far.

they say you have to buy at least $50 or it can be shipped to a store where you can be picked up for free. it is clever because they want to get you in the stores. the whole dynamic of stores want to sell you stuff online it is convenient, but they want to you in the store. they found consumers spend more money in the store, even if it is only to pick up an online order. scarlet: free shipping is obviously important. i always look at the shipping, that is why people buy from amazon. what about free returns? do we know how companies are folding that into their strategies? >> target will also do free returns. that is something they're trying to play out. it is one of the things where you feel you have to try them on, clothing, shoes, -- but target is doing free returns as part of their marketing campaign

. i saw it in their holiday preview. expect to hear about that target. alix: consumer spending was a little soft, wages have not taken off. brian cornell, the ceo of target, talks about that. >> today's consumer is still cautious. if you look at the trends, they are saving more. they're paying down their debt. we see them paying down the credit card balances. they are occasionally treating themselves, but they are very cautious. you're not seeing the big surge in spending. we work every day to earn the dollars and footsteps. alix: morgan stanley had their outlook, their title was "the grinch could steal christmas." >> no one is talking about how this could be the best christmas ever. christmas spending will be up 3.7%. the feeling is that people might urging every day, but

they are saving up when they can treat their family. they help christmas is one where they may be more cautious every other day, but will go big on christmas. scarlet: they're betting on it by starting now. >> 24 months. -- 2 full months. alix: baidu 95% of my shopping is my phone. that the number of people shopping on smartphones isn't higher. scarlet: the worst oil market slump in decades. how can companies lessen the blow? ♪

alix: from bloomberg world headquarters in new york, welcome back to bloomberg markets. scarlet: mark crumpton has the first word news. american commandos will

soon be on the ground in syria. authorizingama is fewer than 50 special forces to deploy to the north of the country. their mission, to work with local grand forces -- ground forces in the fight against islamic state. german chancellor angela merkel continues her visit to china. she met with humans right that human rights activists. the meeting came not long after chancellor merkel had .alked with xi jinping one person is dead and another seriously injured after a building collapsed in new york city. the building was undergoing demolition work as part of a hotel opening. dozens of firefighters and other emergency workers remain at the scene. president obama says he is eager to sign the new budget deal.

it extends the borrowing authority until march of 2017. eric lawson joins me now with the latest. what more do we know about it? eric: the deal was done surprisingly with a few days left before the deadline. week, markets should feel no pressure from the debt ceiling issue. going forward, there is still the risk of a government shutdown. on november 11, the government's funding bill runs out and there are hundreds of differences between republicans and democrats that need to be resolved. of a special interest to wall street are at times by republicans to change the dodd and to dealial law with the dozens of environmental protection agency regulations affecting clean water and air.

these fights will have to be resolved for congress to keep the government opened. mark: the new speaker of the house my paul ryan, it seems everyone is understanding his plate would be clean when he took over the speakership. now, he's in the middle of another fight. eric: the biggest problems are offered we have two years of budget getting us through the election, the debt ceiling off the table. there is still the possibility of a government shutdown. there are tax breaks that need to be extended retroactively by the end of the year. there is a highway bill that needs to be negotiated. congressional action on that next week and there is the export import bank. businesses between and tea party conservatives who want to see the bank remain shuttered. mark: thank you so much. that's a look at our first word is right now. can find the latest on bloomberg.com. chevron and i saw both

reported third-quarter losses today. the results still came in above analyst estimates. scarlet: the two companies are being buoyed by declining margins. we are joined by dan, the author of the shale boom, she'll bust. -- shale bust. protected byds are refining margins. at what point do the dividends get cut? >> even for some of the majors what's been considered entirely sacrosanct has been the dividends of the super majors. now, people are starting to look chevron, if oil prices stay this low for another year, those dividends may not be sector sank and that is what is driving some of the stock back.

if they start cutting dividends come at you expect a mass exodus out of those shares? >> the relative drop you've seen in conoco and chevron as opposed to exxon is exactly that. exxon has a special kind of valve, special relief because they been doing serious stock buyback. have begun to cut those buybacks a bit. chevron in conoco do not have that luxury. i think what you've seen in the relative values of these super majors has been exactly that reaction from investors. it is not anytime soon, but a year down the road, it's possible. alix: do we have oil prices and staying around $45 for the next year or two? what kind of industry are we looking at in five years?

n: what has amazed me is the resilience of the marginal players out there. to maintain their production and be able to get more credit and put up more bonds. defined the marginal players for us. dan: the once trading a single digits right now that used to be trading in the 20's and 30's. or help on --o with a normal market base and determinations where they cut up the credit lines for these, i , il a lot more bankruptcies have not seen that yet. it has to come. scarlet: they have access to that credit for now. big oil is the link big projects. the big projects.

they are thinking smaller. the production that will come this?, will that reflect -- delaying projects. the shortfallbe in production that will create the boom cycle that we've never seen before in the past. that is hard to believe right now. there is a long-term play out there that has to go on where creativea lot of disruption of oil companies. what we have is a production shortfall because of these very expensive projects in deepwater, arctic, other areas that don't happen until we go 3-4 hours down the road. -- years down the road. that,he spoke just to what pricing we might see. confidence, to be people are not going to snap back into a high investment round and $60. you will need to see $80 and

above before we see people making major decisions and they will make sure that $80 will last for a while. alix: do you agree? are we looking at $85 in the next few years? >> i'm on way above that number. we will see a spike above $150 a barrel because there is a real problem with production going down the pipe. there is an increase in demand that goes on. you can see it now. ex come alls in cap of these have to play out at a certain point. two or three years total, you will not have the production you need to meet the demand that is out there. scarlet: i wonder how natural gas fits into all of this. it is below two dollars this week. -- whatthat they would does that do in terms of production? alix: northeast natural gas is $.98. >> it is a local market.

whereas oil has a global outreach. gas,we talk about natural we have to keep it specified to whether we are talking about asia, europe or the united states. alix: unless you can export. then it gets different. >> i feel another conversation coming on for another time. alix: we will deftly talk about natural gas another time. take you so much. scarlet: coming up in the next 20 minutes, the bank of japan holds off on more stimulus despite worries about inflation. what is the biggest concern right now? alix: the bull market has had a good run, but is it coming to an end? cbs shares falling after the biggest prescription drug provider provided earnings provider showed earnings that missed estimates. ♪

scarlet: welcome back to bloomberg markets. alix: let's check on market activity from around the globe. we had to asia where the bank of japan declined to increase its monetary easing. japanese and stocks rising after reports the government is considering additional fiscal stimulus. japan blamed oil for missing its 2% inflation target. the central bank delayed its goal by another six months. expect prices to reach its target around march 2017. they will not hesitate to adjust policy if necessary. talk about a close call. economists remain split on the decision given a mixed bag of

economic data recently. .1%, anflation fell second straight month of decline. thegovernment will boost budget if the recorder gdp disappoints. alix: we will have more coverage later on with brendan greeley. indexes are mixed at the moment. here is mark barton from london. mark: european stocks fell for could let's focus on the big picture, the stoxx 600 with its biggest weekly gain since july of 2009. the best-performing industry groups this month were the worst performing in the third quarter -- auto's and basic materials companies.

the best-performing european benchmark in the october month rising by 12%. what a coincidence comment fell by 12% in the third quarter, hurt by the vw emissions a scandal. their preferred stock rebounded 12% this month after sinking 53% last what appeared encouraging news from the ecb today in the form of consumer price data. inflation actually rose to zero in the month of september from 0.1% the previous month. a far cry from the ecb's target of just below 2%. let's have a look at the big moving -- the biggest percentage gainer in europe today up by 16.2%. the norwegian biggest carmaker.

the biggest gain for the stock in seven years. 4.6%.l down by third-quarter sales missing estimates. this is a spain's and second-biggest bank, 3.5% lower. it wrote down its stake in a turkish lender. that is it for me. scarlet: have a great weekend, mark barton. i always get the time change confused. 15 mins markets closed ago. alix: we want to head over to abigail at the nasdaq. nasdaq: today, the taking a look at jobs, solar panels and travel. linkedin boosted its full-year revenue guidance on its earnings call to $2.9 billion versus

consensus at $2.5 billion. the company now expecting adjusted earnings -- all of this seems to be doing a turnaround around investor concerns of growth. yesterday, the stock closed down 5%, now up nearly 7% on the year. this company posted a nearly fourfold increase in its profits driven largely by an asset sale. this might not just the a one-off performance. the ceo said in a statement we remain confident in our long-term strategy and ability to execute successfully. shares up nicely. it's important to consider an 8% short interest here. some of today's action is short covering. expedia now expects cost savings from the orbitz acquisition to

exceed $75 million. the stock up 62% year to date. even as it trades at a significant discount. scarlet: thank you so much. , the bank ofup japan is not stepping up its monetary policy. y?at is next for the countr ♪

alix: welcome back to bloomberg markets. scarlet: it is time for the bloomberg business flash. we have not been outside in hours. alix: looks so amazing in new

york. for everyone else, it's a beautiful day in new york. exxon mobil posting higher-than-expected profits for the third quarter. soaring margins on processing into fuel. a year ago declined but profit has doubled to $2 billion. eps beat estimates by $.13. profit fell again at chevron, the company will cut thousands of jobs. the net income of just over $2 billion is for billion dollars less than one year ago. it will cut as many as 7000 jobs. billion less than one year ago. scarlet: this deal creates the 13th biggest commercial bank in the u.s. it will pay with stock and cash.

you can always get more business news at bloomberg.com. today, the bank of japan announced it will not step up its monetary stimulus. governor defended his decision to keep the policy unchanged saying the actions are having the intended effect. >> prices are on an upward trend. once the influence from cheap energy subsides, the pace of inflation will accelerate with corporate profits on the rise, i'm quite sure we will see some significant pay increases. alix: it has been a year since the bank of japan began its second-round opponent of using. -- second really not round of quantitative easing. there is no clear trend since one year ago.

that is a big issue. absolutely. this was a political decision, central banks are supposed to be nonpolitical but all of them are. you see asset prices rise. if you do not have an asset, you will not see any gains from that, but that is supposed to pass through. so that everybody gets higher wages come everybody gets a little inflation. we are not seeing that in japan. two things are putting political pressure on the central bank. look at trade flows, you have a weaker yen, that helps them sell more toyotas in america. that is really good news. this is the ecb function. china is the biggest trade partner. this function.

i use it all the time. if you just isolate the u.s., we have widely diverging policies -- they have a trade surplus. they've got $73 billion coming in. that is not nothing. toyota is selling more cars in the u.s. that is working. you are also seeing things become more expensive for midsized companies and consumers. of trade, that is one issue. when we look at wages, the dynamics are not happening the way we expect them to. you just heard it in that soundbite, we expect higher wages in the spring negotiation. that is not really happening. some of the larger companies have given token wages increases. jobs --ysts look at the

nonregular work. they don't have the same benefits, they don't have the same bargaining power. you are getting a new group of workers, new class of workers who don't have the same rights. and are not seeing the same wage increases. freelancers. we talk about the three arrows. fiscal andlicy, structural reform is incredibly important. if you do not get it right come all you are doing with qe cannot pass through. alix: you can make an argument that we have a lot of qe that has not passed on to wage growth but we have a lot of slack in the labor market. labor slack in japan is really

tight. the tightest in the last 25 years. >> you can read what he just said. to a japanese business persons as asian dinner and says we gave you qe, please give us wage increases. persons dinner and says we gave you qe, please give us wage increases. ex is leaving and going to other places. >> there was a rise earlier this year in japanese capital buying european debt. alix: everyone is looking for returns. >> the other thing that's going on, there's all these things -- go back and read the imf report from last year, it's the same

thing they've been asking for and not really don't. bringing women in the workforce. japan has pointed to some rises. most of the jobs they are getting are these nonregular jobs. they have less bargaining power, lower wages. you are not seeing the pastor. this is something we are learning again and again. -- seeing the pass through. it's not creating the inflation we are waiting for. is monetary policy oo tight rightight righ now? it has not been able to filter 100% all over the place. qe does achieve its first order goal. asset prices rose. yields went down. we do see these things in japan.

in europe and the u.s. what happens after that? the goal is not to make equities more valuable. the goal is to create wage increases. scarlet: transmission mechanism problem. >> the name of my new garageband. bill ackman said valeant shares could -- scarlet: he says the stock is underpriced by 89% right now. he's doubling down major. alix: we will discuss it when we come back. ♪

alix: it is 1:00 p.m. in new york, 5:00 p.m. in london. scarlet: welcome to bloomberg markets.

from bloomberg world headquarters in new york, good friday afternoon. alix: here is what we are watching at this hour. our u.s. stocks about to hit a ceiling? we will bring you the chart and talk it over. scarlet: bill ackman sees a flight in valeant, but the company stock keeps going down. why investors might be worried that the mets are in the world series. mark crumpton, are you listening? let's check in on the first word news this afternoon. mark crumpton has more from our news desk. mark: i am listening. thank you very much. has passed a compromise spending bill to president

obama's desk. it ensures the west will not default on its debt next week. the debt ceiling issue will not come up again until march of 2017. it also lists spending caps. israeli police have shot and killed two more palestinians who were assailants in separate stabbing attacks. victim, a left the u.s. citizen, injured. the other attack happened in the west bank. two men carrying knives ran toward an israeli checkpoint. a wave of violence has plagued the region over the past six weeks. president obama sending a small group of special operations troops to northern syria. to correlate with local forces to fight islamic state militants. fewer than 50 americans will be involved. the president authorized sending more warplanes to a base in turkey. about the timing of

this, why now when syria's civil war is in your number five -- year number five? >> the president is looking to make a major impact and shift the battle. gains and been setbacks, the president is seeing this as a place where he will be able to make an impact and make a difference on the ground and shift the debate and the fight toward the opposition forces. mark: the opposition forces have been undermanned, that has been part of the criticism on capitol hill. the white house officials -- and that spending sending 50 special ops troops to syria will make a difference? >> yes. the goal here is to organize the opposition forces. this is not an official army.

this is a group of very different and disparate fighters and the need to be organized and be equipped and trained. that's what the u.s. forces are going to be doing. the president believes these forces will be able to organize these forces and get them together in a way that would actually changed the battlefield. mark: thank you so much. that's a look at first word is pretty can find the latest news on bloomberg.com. -- that's a look at our first word news. matt: it is starting to pick up we are up about 9% for the month of october. the indexes are starting to rise a bit. a mixed trade for most of the morning. as we enter the afternoon, starting to see a pronounced gain. the dow jones up 35 points.

points.up three take a look at my terminal, you can see the reason we are gaining, health care stocks starting to move up, industrials as well. energy, consumer discretionary gaining as well. if you look at the oil price right now, that will be an interesting asset class to look at because oil companies have come out with earnings across the board and oil is up 1% right now. exxon came out with earnings that beat estimates. chevron came out with earnings that beat estimates. philip 66 came out with earnings that beat estimates and all of these companies are showing gains. they will make more refining than e&p. take a look at gold.

low.at a three-week off about half a percent. we saw employment cost index rise .6% today. that concerns gold investors because it means the fed may increase interest rates. alix: thank you so much, matt miller. scarlet: one question is, are out --tocks typing topping out? he says a lot of people point out the feverish pace of m&a. ,e have pfizer-allegan walgreens-writrite aid. a lot of companies are teaming up.

aol-time warner in 2000. other reasons we could be in this maturing bull market. volatility cycles. a caat the 1990's, you see lm and then the storm and that has preceded -- we look like we are in a storm. extended rallies tend to take place when the fed is raising rates. scarlet: a bit of an uncomfortable pattern here. debt -- buying equities on that is a sign of speculative -- we've seen how , how things can fall apart quickly. peaks in 2000 and 2007, we are still in that vicinity. flows, we're not

seeing that rush of money into stocks that we had in the past. usually tend to buy right at the top. we are not seeing that. always: recessions accompany bear markets. you can have a correction, but not recession. alix: joining us for moore is -- how would you categorize the bull market? >> i have not seen that whole note. i think the economic cycle for this country and many other developed markets is being stretched out. it does not go down that much or up that much. some of those historical periods are earlier a bit apples and oranges. global macros hold

together, i think e&p's continue to expand for some time. 500 is not as&p constraining -- we could go well beyond that. maybe we are in the fifth or sixth inning of this bull run. scarlet: can we pull up the chart of the volatility? that is something you look at. this idea that we are in a stormy period right now. a cyclically volatile. michael: if you look at the vix over the last several years, overlay the aggregate central bank balance sheet on top of that and you can see that it moves with that. as central banks are adding to their balance sheets, the vix

tends to go down. having to go with a pork and 20 range is not a sign of complacency. -- 14-20 range is not a sign of complacency. 10 or nine, that is very different. the bar needs to be reset. alix: bloomberg news had an interesting article talking about the demand for long and short volatility products. both at record highs. the idea that if there is some huge spike, that could distort the entire market. what do you think about that? michael: the volatility framework i'm working with is so this inflationary forces will continue to motivate central banks in your sing this more and more -- you are seeing this more and more from the ecb , more and more interlocked with each other as these currency dynamics play out , volatility will ultimately --

the central banks are too powerful in most cases. china is the wildcard here. what is happening there is you are starting to see them behave as you've proactively seen in the united states. that will be one of the interesting evolutions there. the european central bank when it does do something, that is enough to make up for the eventual tightening by the fed and bank of england? >> it goes a long way. you can see that when you have ,egative yields in the eurozone that helps to press our interest rates over here. does the dynamic is dollar get too strong in the process. the fed is increasingly sensitive to that. so far, the dollar has

strengthened, but not too fast. alix: thank you so much. scarlet: we have much more coming up on bloomberg markets. shares of cvs falling after the nation's biggest prescription drug provider reported earnings that missed analyst estimates. what does the merger of its rivals mean for cvs? alix: donald trump has a new book coming out next week. he will lay out his tax plan. scarlet: bill ackman defense is .aken -- his stake in valeant ♪

alix: welcome back to bloomberg

markets. scarlet: it is time for the bloomberg business flash. exxon mobil posting higher-than-expected profits in the third quarter. behind a result, soaring margins on processing oil into fuels. net income fell to $4.2 billion. profit of the company's refineries doubled to $2 billion. earnings per share of $1.01 beat estimates by $.13. wages and salaries for u.s. workers slipped slightly in the third quarter. rosemplement cost index 0.2%. employment cost index rose .2%. dupont has open the world's biggest ethanol plant and plans to make the fuel additive instead of the grain

itself. the refinery plans to make 30 million gallons of ethanol each year. the facility arrives at a tough time for the ethanol industry because it's battling petroleum companies over how much ethanol the u.s. government will require for the nation's gasoline supply. you can always get more headlines at bloomberg.com. alix: we want to hd to our markets desk where matt miller has a check on the company movers. matt: relatively quiet. there are some big losers and big winners. the gainers here, first solar had his third quarter profit almost quadruple on a day when missedval solarcity estimates, has a disappointing outlook and will change its entire business model. went intoin solarcity first solar. abbvie will grow double digits

into 2020. expedia will save more than $75 million due to its merger with orbitz. more than it initially said and that's why it's up 9%. a bunch of losers today as well. mostly in financial stocks. cvs disappointing with that's outlook as well -- it's outlook as well. down 5%. scarlet: cvs on the move. the forecast for 2016 was disappointing. the stock has plunged. alix: this comes as a potential merger between walgreens and rite aid and it cuts ties with philidor. jonathan joins us now for more. when it comes to cvs, can it compete with a merged walgreens and rite aid? >> absolutely.

cvs has already been the largest pharmacy in the country. they've been doing some deals on sale,own to expand their they bought a company called omnicare earlier this year. they have been announced deal pending with target to buy their pharmacies. he can compete on skill going forward. scarlet: they've been very active on the m&a front. does that create unrealistic expectations going forward? >> you are making a great point here because cvs has been a victim of their own success from a strategic perspective and on the numbers. as we look to next year, the guidance came in at $5.78. the street was expecting six dollars. that differential was creating the stock plunged today. scarlet: the ftc has not said when it will begin to review the transaction. what is involved? >> they will look at each market

where there is concentration of pharmacies and determine whether there is too much overlap between the two parties. we saw this in the past when rite aid but a couple of chains a couple years ago. but a it when walgreens chain in 2010. it will get wrapped up in the next year or so. it remains to be seen what they will actually look at. alix: thank you so much, health-care analyst jonathan breaking down the challenges for cvs and m&a in the space. scarlet: how much will you be keeping in taxes under plan?lant? -- trump's ♪

scarlet: welcome back to bloomberg markets and scarlet fu. tax plan willp

cost the government $10 trillion over the next 10 years. is this what the country needs? cory johnson joins us with more. >> we welcome everybody on bloomberg tv to bloomberg radio. to peggy collins come are bloomberg personal finance reporter. she got a glimpse at donald trump's new book and she dug into the chapter on his tax plan. what did he say? give us some perspective on that. >> his new book is called crippled america. a lot of it echoes what we've heard from trump on the campaign trail. some great one-liners like the current code is crazy or my goal is to put hr block out of business. real easy way to follow him as he does his speaking out there come in touch with the american people. what he boils down to in his chapter on taxes, the current

tax code as he writes takes too much money from the people who need it most while allowing others to find ways to reduce their tax burden. trump like several of the republican candidates, their main goal is they say the tax code is to complicated. let's shrink the number of tax brackets, lower the rate on and cut these crazy deductions and credits. that is their main thrust. interest seems to be sink sink -- sacrosanct for most. >> trump tries to be the political outsider. i talked to a tax accountant who says his plan is one of the ones that is the most politically palpable. 's strategic saying i will not take away mortgage -- hest rate reduction

would leave mortgage interest deduction alone, which includes second homes. what it leaves come although there's not a lot of details beyond that, the other two big he's out there are local and state taxes that people deduct and what people deduct for real estate property taxes they pay. gapsu talk about the -- what really matters for lower income earners? >> most of the people i talked , they said any of these plans which are saying they will drop the tax rate on the highest , we are at 39.6% at the top right now, if you drop that down to 28 or 25%, that would be a bigger boon to people who are higher earners than all the deductions and credits combined.

of lower income earners, he would not make people who earn less than $50,000 as a couple, they would not pay any taxes. he is planning to leave the earned income tax credit in place. something that lower income households rely on. like a tax refund. income peoplewer will end up paying more? >> they won't end up paying more. the people at the top -- it's hard to see how they would pay more. the lower of the rate -- most republicans would take away the state taxes well. -- as well. if you are combining a lower rate on your income and taking away this tax, that will likely mean that you will pay less in taxes even if you have to lose the deductions and credits you are used to. the conversation has been

around for a few years already. carly fiorina addressed it in a recent round of debates. what is the likelihood that any of this really happens? >> i was surprised when i heard carly fiorina say that she was going to get the tax code down to three pages. that will be a feat of nature. pages now just in terms of the regular rate. i've been following this for years now. people always say they would love to change the tax code and simplify it. you need congress to pass any of these laws. they have not been successful with that. did it read like he's running for president? >> it absolutely did. there are lines that are reiterating what he said on the campaign trail. it's about 143 pages and it crosses over foreign policy, domestic policy, his view on taxes and he talks a lot about

his personal history as well. >> interesting stuff. thank you so much. peggy collins with the latest on taxes and mr. trump. alix: still ahead, we are sticking with politics. which presidential candidates have found success in their investment. scarlet: some savvy, some not so much. i wonder where trump is? ♪

scarlet: from --

: from bloomberg world headquarters, welcome back to bloomberg news. : we have for it today that american commanders will soon be on the ground in syria. president obama has ordered special forces deployed to the north of the country. their mission is to work with local ground forces in the fight against islamic state militants. the deployment marks the first time u.s. troops will be working openly on the ground in syria. the united states, russia, and other world powers are considering a new plan to set up a cease-fire in syria within 4-6 months. would include a transitional government including bashar al-assad and members.n

how long president assad could remain in power under a transition is still unclear. diplomats are wrapping up the most ambitious attempt yet to end syria's four-year civil war. secretary of state john kerry is among those trying to broker an end to the fighting. for the first time, saudi arabia and iran sat at the same table to attempt to find a political solution since russia intervened militarily. the senate gave final approval to a bill that gives the government authority to keep borrowing until march of 2017. that means an extra $80 billion in spending. the last british resident detained at guantanamo bay, cuba, returned home today after almost 14 years. he arrived in the u.k. aboard a

private plane. he was never charged with a crime. is dead and another injured after the collapse of the building here in new york city. both victims are believed to be construction workers. the ceiling reportedly collapsed inside the ceiling and fell through several floors. dozens of firefighters and emergency workers remain at the scene. chairman of the republican national committee, reince previews, has suspended its partnership with nbc for a gop in february.ston this comes after this week's heavily criticized debate on cnbc. donald trump and ben carson called for a change in format. pre-bus said that the debate bad faith" andin " did not focus on economic issues as promised. that is the look at our news. you can always find the latest at bloomberg.com.

alix: the presidential election is just over a year away and we are getting to know the candidates, their strengths and weaknesses, but one thing we don't know about is how good they are in -- at investing in etf's. scarlet: you went through all of their financial disclosures and found some interesting investments. >> i did. not all of them are whole etf's. they have a lot of mutual funds and other things. but i did look at their selections and which ones they picked. high marks go to ben carson. he is thoughtful but a bit boring. that's good if you are going long-term. they actually do fit their personalities. it's interesting. he is in a schwab large pack etf that charges .04% and gives you exposure to 750 stocks. it's a great buy and hold. schwab's etf's are cheaper than vanguards, so it said in

interesting choice. aix: trump though, you graded c. that was surprising. click sure, trump is all over the place. to 81 pages that took a long time to go through. etf, a japan etf. given his rantings about japan, it's kind of a shocker. this one, it's 50 basis point and i don't really know the purpose of it. it's kind of a random etf to have in there. ishares has core etf's, which their popularf ones but cheaper. jeb bush has a 10 of these core etf's. he is a little more thoughtful and saving money. he also has a high-yield bond. is jeb bush's grade? b. i give him a

because he is diversified. the most interesting one is mike huckabee. he has the blue star israel etf. that's so specific. with his middle east talk, it makes sense he would choose that. this is possibly a better design. it tracks is really companies listed in new york and london because a lot of cyber security experts don't list in ireland. this is an evolution on the israel play, and he owns it. d.x: you gave rand paul a i have to assume that has to do with gold. >> he has a lot of gold. he has an inverse long bond etf. you don't want to buy and hold etf atrse or leveraged all because those returns can corrode over time. i don't know what he is doing with it, but as a long-term investor, not a good idea.

fees areand those extraordinarily high. >> they can crush you. alix: it is the friday before halloween, so we are going to be a little cheeky and talk about the scariest etf's out there. scarlet: this -- leverage, it's three times ball natural gas. that chart should freak you out. it has basically lost all of its value. down 91%.t is >> it is probably going to have a reverse split tamara to make up for it. and then there is the coal etf to recall has been brutalized for the last few years, but this year as well. the ishares brazil small cap, also feeling the pain. on thee both down 45% year. scary stuff. mean, brazil and call,

all right, i can see why that would be down, but nobody expected natural gas to be down that much. three times ball really hurts. scarlet: thank you so much for that analysis. alix: coming up, billionaire bill ackman to questions for over three hours on his bold valiant stand. we will bring you the highlights and low lights. and investors could have reason to worry. ♪

scarlet: welcome back to

bloomberg markets. alix: time now to look at some of the biggest business stories in the news right now. ?'s inability war with -- micro semi is in a bidding war. it is trying to top and upgraded offer by sky works. it has been a record year for mergers and acquisitions in the semi industry. chrysler is recalling suvs worldwide. the reason? problems with anti-lack breaks and airbags. with thether automaker recall. recalling 2008 and 2000 models because the airbags might apply even if the car is not involved in a crash. -- deploy even if the car is not

involved in a crash. you can always get more bloomberg news at bloomberg.com. scarlet: julie hyman was listening to bill ackman's call. alix: four hours, right? four hours. the only reason he stopped was because he had three hungry people looking at him. apparently, he could have gone even longer. this is not that out of character for ackman. this is something he excels or revels in doing, rolling out them a new details of whatever casey is making. test case he is making. today, the case was supportive of valiant. a specialty pharmacy has come under so much scrutiny of late. are lower by 12%. and ackman is saying that yes,

perhaps there was some fraud at phil door and it could he problematic for valiant, but in the long term, the company will survive and thrive. he says there may be an investigation that could last as long as 2-4 years. just want to get a little perspective on how the stock has done. it is down year to date. ackman said a bold target of where he thinks it is going. at $448 over the next three years. in part because he things earnings per share could reach is looking, and he at what he still says are strong fundamentals and a strong underlying business for the company. i wanted to remind folks, what is, the business.

valiant has become notorious for buying and raising prices of the drugs they make. this is the function we are looking at. you can see this has accelerated over the past five years or so. valiante is acquisitions. the green line is the number of acquisitions. the growth it has had has been from these acquisitions and not from research and development internally. this is r&d spending as a percentage of sales at valiant versus its peers. at valiant, we are talking at a around 3%. its peers, 13 percent. ackman warned investors and said we are not getting anywhere near at 10%-15% range you see other drugmakers. however, the question is how is it going to make the

acquisitions it has made in the past? you are talking about a bond yields that have soared, that is going to make it more difficult to borrow money to get back to investment grade. well, worst case scenario, if they cannot buy, maybe they can sell. if you look at a pe chart, you are seeing a big decline in that. allegan, maybeby it would come in and buy it. that was one possibility he playfully floated during the call today. he is not seeking active board management, right? but you never know. very clear he it has communicated regularly with the company and the ceo. he says he still has confidence. he says he has pushed for some changes, for example, to devote

more resources to public relations, but it doesn't seem like he is doing a classic activist scenario where he wants to change, fundamentally, how valiant does business. scarlet: julie hyman, thank you for a great series of charts. as we have been reporting, bill ackman just ended a call that lasted nearly four hours. scarlet: he is the only investor after a sharp -- confident after a sharp drop in the stock. >> this is what i would like to call smart money-dumb money. a fund is still the biggest valiant holder. they have sprung to the company's defense. that is one important fund in the mix.

the president just returned to the board days ago in the midst of this scrutiny. on the one hand, pricing. valiant -- and i know you have a good statistic here, isn't as much of a hedge fund hotel as ame others, but it is reasonably popular hedge fund holding. scarlet: goldman sachs put thether numbers that showed shares. 5% of these funds own it as a top 10 perception -- position. it's not insignificant. eric: i am going to show you two tables. one shows you the funds that got out in the second quarter. shows those that got in. here is who got out.

value act is still a big holder. they have been a holder since 2007. they sold some shares when it became a 20% position. that is for technical reasons. it's a good time to get out because the average price is $221 per share. discovery capital really scored here. they made, according to our rough calculation, about $110 million selling down their position. theirfunds all liquidated valiant positions in the second quarter. now let's look at who piled in. you may recognize the name at the top of the list because you have seen him before. john paulson tripled his in the second quarter.

they are reminder, busy in the health-care hedge funds. another couple hedge funds there are fundamental hedge funds, viking and brahman. know if those holdings are current because we the third quarter yet. i for 1 am looking for to that because it will be fun to see who loaded up on down and in the third quarter. for these things, so we cannot make definitive , but this gives you a good idea as to who might be performing better and who might be suffering major losses. you made the distinction that the hedge funds who bought the stocks are more fundamental based.

scarlet: maverick, for example, and discovery. they had a huge position that they have been selling down gradually. here is the thing. bill ackman. i didn't see pershing square on the list you showed us. he is obviously invested. >> between 21,000,000-22,000,000 shares. scarlet: when did he first build a stake in valiant? was it when he was trying to get involved in the whole allegan acquisition? >> i believe that was when he tried to take his position -- if i am not mistaken, it was largely an options based position. he disclosed today and average of 100 $86 for his entire $186 for his entire

his initial stake was acquired at an average price of $194. so he has done more than 50% on downcounts and approximately 50%. alix: what kind of herd mentality is there? paulson soldd that a bunch, does that snowball into other people saying we've got to get out of here. carlet: if you're in -- >> if your investors are skittish and 10 to react if your fund performs poorly, those investors -- tend to react if your fund performs poorly, those investors might've been getting out. if they hold the positions, they

run the risk of losing a lot of money. bill ackman has a very dedicated investors who have written it out in years like this and had massive gains like last year. scarlet: thank you so much, erik schatzker. fox, the, why television network, is rooting for a mets world series come back. and why investors might not like it at all. ♪

scarlet: the world series continues tonight in new york. the mets are down to-one, but they are hoping the home crowd will help lift them to a victory. fox's hoping for the same thing.

the longer the series goes, the better it is on the revenue side. this series could end in four games. obviously, fox wants seven. what, financially, is in it for them? is more-game series compelling. more people are going to watch. game seven is a highest-rated. its winner take all. more importantly, it's the ad revenue. it's a $20 million plus difference between a four-game series and a seven-game series. so, if you are fox or a fox executive, you are really hoping game -- that the series does not end in a couple of nights. typically in the industry, -- they carebout less about what city the teams

are from and more about the length of the series. ratings were down a bit last year, and that was a product of having kansas city, a pretty small market team, but again, fox will take a seven-game series with kansas city over a four-game series with the yankees and dodgers any day. and ito was a blowout competed with the republican debate and the tip off of the nba season. so, there has been some competition, but so far, the ratings are good. a lot of that has to do with the new york market. scarlet: when you compare it to other sports, the super bowl, the nba final, the ncaa. they've all is not as -- baseball is not as much of a draw as other sports.

is theuper bowl standard, but if you think of the world series and a potential seven-game series and multiply 500,000 out by five, it becomes pretty competitive. the mets we might like to win, but wall street might not. time the mets have appeared in the world months werenext 15 the most epic to klein of the stock market -- epic decline of the stock market in history. not so amazing. alix: obviously, there is no causation, but it's a fun correlation. scarlet: about correlation. alix: -- a bad correlation. ♪

>> welcome to bloomberg markets.

from bloomberg headquarters in new york, good afternoon. here is what we are watching this hour. defenseman comes to the of valiant. he says wall street is overreacting to problems at the -- at the company. economyce to double its by 2020, so it is letting families grow. solar stocks are dimming. is the company at risk of turning out? at the markets desk, julie hyman has the latest. julie: stocks rising, although there is volatility. we are not seeing that big of games across the board. at my take a look bloomberg terminal, we have a