i am ready league. here is what we're watching at this hour. america makes its maiden flight to hawaii. where will the discount airline go next? we will talk to richard branson in a few nuts. jeb bush needs a bestseller. the frontrunner -- the one time frontrunner is hope in the book will be a comeback on his campaign trail. and game of thrones. another area for drones. half an hour into the trading session for monday. desperate for matt miller -- desperate. matt miller has latest.

>> we wore this tied to -- i wore this type just to drive the train -- just to ride the train this morning. the dow gaining about half a percent as well as the nasdaq. , we are unchanged. it is a big move up from the last half-hour. you can see health care and financials and energy. have telecom down on change. take the -- take a look at my terminal.

gaming analysts think china is going to change its the same regulation. it will allow people to stay in macau for 14 days instead of seven. vegas is up asas well. hewlett-packard and hewlett-packard enterprises into separate trades today. gaining about 2.9%. really across the board. so much. a lot of deals. >> it is a busy monday with a lot of stories. we are going to go back to him

with some more. more from our news desk. foreveral new developments with the russian passenger plane, killing all 224 people on board. the plane was registered in ireland and regulators. the airbus was owned by wilmington trust. airline official said only an external impact could cause the plane to crash. a record number of refugees crossed the mediterranean sea last month. that is the number of refugees that typically cross the area in one entire year. a couple official says authorities will take back all afghan citizens being deported to germany, which is

accommodating hundreds of thousands of refugees. erdogan swept back into office in yesterday's parliamentary election. an election five months ago. turkey's best -- turkey's index rose 5%. the sport of china, he admitted of greenhouse gas -- the biggest emitter of greenhouse gases -- that is a look at our first word news. you can know is find the latest news on bloomberg.com. betty: thank you very much. this morning, another headline crossing the largest network.

visa will be acquiring visa europe. that will unify the brand globally. miller knows more details. matt: these shares moving down 3% by now. it doesn't have any meaningful contribution. european tanks are part of the ipo process. in preparation for its massive , it looks like regulators and european banks are willing to let it -- willing to take it back. then it is going to finish the deal.

>> this is certainly a big deal. in preparation for what is ahead. met pretty much expectations. >> they beat expectations. also a buyback, a $5 billion buyback, which investors like in the short term. it typically drives up the stock. investors have recalculated what they are going to get from that. you go to anp if you don't want to buy regular popsicle brands. store randythe in unit -- in-store rant unit --

in-store brand unit. betty: matt miller at the markets desk. virgin america is launching hawaii,nstop flights to with the inaugural flight taking off in just a few hours. you are going to be about to fly directly from here to hawaii on furniture and. it would not be a virgin event without some celebration. cory johnson is at san francisco international airport with richard branson and david cush. are listening to us on bloomberg radio. i am joined by david cush and richard branson. glad to have you both here. the first time we ever talk to was five years ago, we are here.

visit meeting your goals? what did you imagine this would be like? >> we couldn't be happier. eight years in a row. today what really matters and tomorrow. >> is importantly he has 4000 wonderful people. do it with a smile. when you are on a virgin plane you can feel this. >> i saw one of the people who

works for you walking by. corner of his smile. how important is that to the customer service experience? virgin america has another airlines. >> that is the most powerful nonverbal communication there is. we give them all. >> if the company also gives them to tool to do the job right , that is half the battle. a big airline, no name was mentioned. the food is dreadful.

it is very difficult to smile in those circumstances. the team got everything right, the lighting, the wi-fi. the crew don't get it complaining -- >> one could argue price comparison was easy. >> i would say we do good a premium. about 20% above the other low-cost areas. price is important. when people shopped on price only, now the airlines are differentiating themselves a little bit.

you can actually go out and get a small price premium. that's all it takes to make it profitable and very profitable in this industry. is the competitors don't get about that? they don't deliver. don't diminish the complexity of the companies trying to run. they have 1000 airplanes. their job is to move metal around. and then do what you can from there because they are big complex systems. of an advantage because we run the simpler system. i would say they have a lot of parts on their back.

i was in the middle of that. sometimes those wounds take a long time to heal. >> do you see that as an advantage? any reason we came into america there was a need for a different kind of airline? very flabby and offering great service. twa. all of whom have disappeared. coming in with a really fresh approach.

same conditions. have any of the big carriers not gone? it is an industry that is a lot of love. >> i was always curious why the airline industry has wanted to focus. here we are at silicon valley. ships, musicuise industry. a lot of information.

>> virgin innovates and conventional industries. if you walk on a virgin america and plane, you deal that this is special. >> people cheer. >> people are innovating all the time. the only way we can have a cruise ship company is to have the most innovative setting it apart from everyone else. now abandoned the cards. kind to shake up industry. you are going through a big change in terms of the offerings.

you are getting some new planes to go with. , the capex is onerous in terms of you don't think twice out of being great service. this is a continuation of the evolution we have been on. upgrade -- first first to upgrade. our challenge will be getting it on our airplanes as soon as possible, because the customers are expecting more out of wi-fi than they are used to. it used to be you get on an airplane and there is wide by and that is great, now -- there is wi-fi, and that is great. now you expect it to work. gogo has been a good partner.

we are looking for ways to continue working with them. is we just want the best technology in the air. >> what are your buying plans? >> we will continue being an airbus carrier. in 2016 and 2017, we are very interested. route change the kind of plane you are flying on? , hawaii willizer be flying area i think we mainly meat bigger airplanes to certainly going to a 20% improvement and fuel efficiency on a long flight.

i think it is either more, fewer, or what we have today. >> that is a big change on the selling price. >> it certainly works on new york. same flights we fly on short-haul. we are going through that analysis now. >> so many things we can talk about. i want to ask about the big fundraiser, what is it in particular about going to maori? what is it about raising about going to maui -- what is it about going to bow we desk going what is it in particular about going to maui? marineng to create more reserves to try to protect species in the notion that are change theo try to

fishing practices to make it more sustainable. i spend a lot of of time on the ocean. there is already a reserve. we are try to make it much bigger. we are talking to the american government about that. the great thing about marine touristsis it gives the ability to see these wonderful species, to come back again in large numbers. the areas do enormously well. seems to play a big part in your business efforts as well. talk about that. muchetty buddy -- pretty anybody comes to the stage.

uber ended up investing. airbnb. there is a wonderful new company that is exploding here in america. and saving lots of people from being broken into. then we do lots of charity work. withing people along conflict resolution issues. then we see what we can do to try to help. stupid --ly in the how early in the story was that? >> not massive. it is ridiculous how well it is done. i wouldn't have had the investment.

>> richard branson, thank you for your time. appreciate your time as well. congratulations on the new route. this is bloomberg tv. thank you. cory johnson with richard branson and david cush. marketsad back to the with a look at movers today, including the pharmaceutical world. >> shire buying pharmaceuticals. it will get access with that drugase to at least eight for a very difficult to read a terry disease. -- very difficult hereditary disease.

goldman sachs says it is worth $80 over 12 months. cardinal health, big on earnings. a eat as well. pfizer is a stock we are talking about because intelligence analysts says pfizer could save $4.7 billion. corporate ceos call this synergy. betty? >> on to politics. jeb bush is trying to revive his struggling campaign today. politics rights about this today and has been covering the trail for quite some time now from washington.

how can he fix it? >> kind of has a double meaning there. what he wants to see is that he can fix washington. he really set the template for the conservative governors that will m. in teachers unions years before scott walker. unfortunately it has a double meaning. pac have beener spending millions on television ads. performancedebate that even he was regretful of. betty: indeed.

always expect donald trump to have a word or two to say about any other candidates on the campaign trail. donald trump was talking about jeb bush. i never thought of jeb as a crook. he might be taking it to the extreme that aren't people saying the same thing? >> i enjoy his tweets as much as anyone. i have not heard anyone be confused. there is a problem in what people think jeb and needs to fix.

the bush campaign sees rubio as his biggest challenge to the establishment. the traditional pro-business john mccain,arty mitt romney. pushes teamseems -- sees rubio is the biggest threat. is a biggero problem for jeb bush then tromp. that is what got him in trouble when he tried to go after rubio. that is what people are talking about heading into this week. >> pretty much backfired on him. less a listen to jeb bush's about his campaign. >> people are underestimating your ability to fight back? >> i hope they are. you to be the first guy to write the comeback narrative. >> talk about your resilience.

people don't think you know how to fight. >> they don't know me. ability toes your fight back from adversity come back? >> i am a grinder. adversity thee more personal it will be. is he different on the campaign trail? maybe he is different there than what he is on stage? >> he is more of an administrator when it comes down to it. he is talking about a policy agenda. he took on teachers unions, republicans, and state for anture at the time

up-and-down conservative agenda. an antiabortion record. that is where he is at his test. best.tegic -- at his who can influence this to bring it to our side? ran her governor first time in 1990 or. better in office than on the trail. betty: thank you so much. an hour-long with all due respect.

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desk. david: a russian airliner says an external had that external impact -- an external impact caused the airbus to crash to the head of intelligence in the u.s. says it may have been a terrorist attack. don't have any direct evidence of any terrorist involvement yet. isil has claimed responsibility for it. a very aggressive chapter. don't know. i think once the black boxes have been analyzed, perhaps we will know more. says: a russian official teams have finished combing a seven mile area. they will not stop until all bodies have been recovered.

a palestinian woman says -- later in other palestinian stabbed several people, including an 80-year-old woman. this is the third attempted stabbing near the checkpoint. the supreme court will not hear an appeal from shareholders who made all statements about trading of a risky mortgage investment. with policet ruling pension fund against mcgraw-hill.

with the vacation rental companies as opposed to the end consumer who owns the product. a pretty short step from vacation rental companies to the consumer. we may end up doing some of the same things they are. betty: would you partner with them? steve: we would. i could see an environment where they do something. we love these new shared economies because they inc. they change the rules. betty: you love them even if airbnb says we can't make $20

billion with revenue? steve: we are very concerned -- very comfortable with our consumers and france. customers were not customers to begin with. customer's are going to share a room or a room down the hall. provided they are playing by the rules. the city was established for everyone else. my view is they try to get between us and our customer. they have done a good job spending billions of dollars per year trying to convince the customer that the lowest prices are on their channels. certainly in our case. from our perspective, while they are eight channel that can work for us, they are an expensive channel.

expensive tous and the hotels. especially to independent hotels. our collection was based on that model of we can help those independent hotels get lower prices with expedia. like them ifyou they are helping you sell excess inventory? , the issue isn't whether or not it was a channel we would use, it is the pricing we want. we think that is a nexus of the value we provide. betty: so what do you want? do you want to get rid of them? steve: what they provide is the ability to look at different hotel brands. what we found his consumers have a lot of different options for that. do are the first to

relationship with the online sites that does reviews. the combination of those we think makes sense. betty: don't you think the fact that they have grown up to $6 billion in revenue for expedia is because the hotel industry was asleep at the wheel? niche where they were conglomerate in different hotel brands. we actually think our business is better than ever. we made inroads to a lot of those consumers. they are not very much our business. we are fine with them as a channel provider. it was a roomns they were not going to get anyway. >> thank you for stopping by.

much more ahead on the bloomberg markets. turkey.in also in on the yields of the presidential election. some nfl teams have some high hopes for a new secret weapon. how drones can up their game. -- a look at what you need to watch in the week ahead.

welcome back, we are in our into the bloomberg markets, time for the business flash.

a look at the biggest stories in the news. index with the lowest in more than two years. and the stronger dollar are hurting manufacturing. one bright spot, the auto industry. car sales are best in a decade. clorox says first-quarter revenue of $1.39 billion beat wall street. shares are up 17% of this year. it was a scary weekend at the box office. it was the worst weekend of the entire year. releases were repeating at number one. -- new releases. repeating at number one, the martian. you can always get more business news at bloomberg.com. now time to get you caught up on all the action around the world. in asia, that nikkei -- the nikkei dropped.

composite in china off as well. one big story out of the region is chinese manufacturing. it came in higher in the previous months. still technically a contraction in china. stephen engle reports from hong kong. : from a six year low of 47.2 in september. that is still technically in contraction. chinese manufacturers have continued deflationary pressures and weak demand from abroad. the official manufacturing on sunday. the same as the previous month. it still was the third month in a row below 50. the official service is bmi that spanking -- that includes banking -- your. latest rally from mark? mark: that chinese data

initially called the stoxx 600 to open lower. at eurozone had its own manufacturing data which unexpectedly so -- which unexpectedly accelerated. it has been a while since we talked about greece. the benchmark share index rising. the best-performing european bench. banks that are the best-performing companies. we had the ecb over the weekend saying banks need to plug this 14 billion euro capital. head stocks are rallying today. i want to show you some of the other moving asset classes. rising for the third consecutive day after mario draghi, the ecb

president, signaled in an article in an italian newspaper may not buy more bonds in december. there would be further bond by. today in the u.k. we have the strongest manufacturing for 16 months. until next year before they were saying it wasn't going to happen until at least december. betty: let's get back to how u.s. markets are doing. abigail has the latest. abigail: stocks are trading higher. we have the nasdaq up 7/10 of 1%.

starting on a skyward solution, the stock is slightly higher on the news that sierra has committed to its bid. this comes in the face of a this comes in with a higher bid. this comes in with a record price as companies fight surging costs and shanking customer base. iphones,ng to phones, news that apple financing is helping some of these smaller and cheaper carriers. this out last week as t-mobile had its best iphone quarter ever. this is when customers by directly from apple on monthly installment plans. it allows carriers to compete with financing plans from the bigger carriers out there.

says it has been a benefit. we will have more information on how help latest tomorrow. betty: a lot of activity in the tech sector. still ahead on the bloomberg markets. the nfl regulators are coming together to make new rules for unmanned vehicles. we will go to d.c. for the full story next. ♪

we are to see how the markets trade. let's turn to sports. a team is finalizing regulations on regulating drones. companies want them for delivery. brian is the ceo of the association for unmanned vehicle systems, who is lobbying for more rules to fly drones being he joins us from washington. is a story about the nfl using drones. evan, why do they want to use drones? evan: it is an easier way to and awaycamera around that was a lot easier with the system. it is important to help coaches

get a different way of analyzing place. betty: what are you doing to try to push for more uses of drones in the other sport? this happens to be one that a lot of people can relate to. it is very good from that perspective. we are working really hard with the faa to try to get regulations in place. betty: the concern among the regulators and the american public is are we going to have so many drones in the airspace that we are going to interfere

with commercial flights? >> i can tell you that would be a good thing. this is the reason the faa would regulate these drones. there are commercial applications of the drones. we are waiting for those regulations to be finalized. operators from a commercial standpoint would be certificate operators. they would have to pass a knowledge-based test. the kind of flights that would be approved currently would be low risk. with is a bigger challenge anybody who walks into an apple store, gets age roan, and says let's see how high this will go. there are really two different things that are coming together. greathink brian makes a point. what did they have to go through to be able to be approved to use them?

>> they didn't know it was illegal. as brian says you need to have that exemption. the cowboys did that. going through the proper channels. itself a lot of people didn't fully understand the regulations. they thought you could use it and get the footage. now they are going through the exemption. brian, i'm curious from your perspective how much are companies waiting for the faa to put out its regulations. wondering what they should be when those regulations finally come down? >> we have been proactive to try to get those regulations when

they are finalized and while adding no additional risk to the airspace. i would think the faa gets it now. they need to move quicker. betty: what kind of timeline are we talking about? brian: the administrator basically said he the regulations would be finalized by the middle of next year. sometimes it takes a wild to actually implement the regulations and get everybody up to speed with that. there cannot be a moment lost here. things, nfl goes up on it. it is not going to add a lot of risk here.

i think that would give the additional information for the coaches with very little risk to them and the airspace. the first do you use the exemption. else to fly drones over empty stadiums. for throw beyond the next couple of years. behind -- fourth row beyond the next couple of years. betty: we are going to look at what is ahead for the week.

11:00 a.m. in new york. 4:00 p.m. in london. midnight in hong kong. welcome to the "bloomberg market ."

from bloomberg world headquarters here in new york, i am betty liu. here is what we are watching. does this rally have legs? the bestsing after october in four years. what about warren buffett and his baffling year? berkshire hathaway's ceo has had a number of bad bets. but the one that paid off got the company $9 billion. making up not so hard to do. shares of hewlett-packard rising on the first way of trade since the company split into two. we are about 90 minutes into the trading session. we go to matt miller. are looking at games after the best month we have seen since october of 2011. we are looking at the s&p.

2091. a gain of 12 points. 17,755.s at take a look at the bloomberg pay rip,you pick up wp -- w let me get rid of these pop-up alerts, which is great when you are not on live tv -- the chance of the fed moving in december now at 48%. we have seen that at 50% all day. think theore traders fed will raise rates in december. that has an effect on investors across asset classes. look at the 10 year. the yield declining. investor selling bonds. and change in december when you have that fed rates rise. when the dead raises rates, you do not want to be holding bonds. when the fed raises rates, you

may want to get in after about rise and buy bonds rather than gold. as a result, gold has fallen to $1133.70.k low at betty: thank you. matt miller at the markets desk. let's check in on bloomberg first news. courtney donohoe. >> american factories appeared to be stuck in neutral. the isn index the lowest in more than two years. the stronger dollar holding -- hurting any fracturing. car sales the best in a decade. the supreme court will not hear an appeal on mortgage rating. shareholders claim that standard and poor's rating firm made small -- made false statements about its rating of risky mortgage investments. the justices let stand the lower .ourt ruling

president obama ayers resume his push for a massive overhaul of the criminal justice system. the president visited a drug treatment center in new jersey. he is trying to focus his attention on what happens to drug abusers when they finished serving their time. here are the latest development on that russian plane crash in egypt. the plane was registered in ireland and regulators of their found the safety documentation in order earlier this year. plane0 24 people on the died when it crashed saturday. experts say the plane appeared to have broken apart in flight. a metrojet airline official said only an external impact could have caused the plane to dive into the egyptian desert. a record number of refugees crossed the mediterranean last month. officials put the number at more than 200,000, with the majority coming from syria.

that is a look at our first word news now. you can always find the latest news on bloomberg.com. betty: thank you. back on the markets, where do we go from here? investors may be asking themselves after last month's rally. stocks of the most since 2011, bouncing back since china-related jitters rocked the market in august. for a closer look at where the market is headed, i want to bring in oliver renick and michael regan. good to see you this morning. all, you are taking the retrospect it look. how did we get here? oliver: from a solid rally in companies that had not done very well in the year leading up to this. industrials had a nice rebound since the august lows. info tech did well. coming fromngs household names like google, amazon. kind of blew the doors off of company earnings.

betty: so a rotation back in ugly stocks. oliver: right. some say that is diverse occasion -- diversification, but others say there is still risk. maybe these holding companies are cheap and that it up and they do not want to take advantage. anybody want to buy who has already bought in october and are done for the year? cannotossibly, but you discount how good the fourth quarter tends to be for stocks. this is basic stock traders almanac. my favorite book. they look back to 1949. the average fourth-quarter gain is more than 1%. the second quarter is the second-best gain at 2.5%. of the cliche.se these are traditionally the two strongest quarters. that is not something you want

to go to the bank on, but it is hard to defy that history. there are certain things that make sense why that would be. portfolio manager is like to get good trades in before the end of the year. people trade on their bonuses. there are reasons to believe that there is money coming into the market in the fourth quarter and the first quarter. itld this time be different, could. the earnings picture is weak. we are looking at a fourth-quarter drop again, even excluding energy companies. yield asar treasury matt pointed out earlier is creeping up after the last that meeting. about 10 basis points higher the the dividend yield in s&p 500. not necessarily faster, but shows more competition for stocks in the bond market. if it goes up another 10 basis points or more like people expected to -- not that these

guys never get the year and yield forecasts right, but that is where the trend appears to be. that could be competition for stocks. betty: that could be ahead win. but things look different because you have everyone looking at the fed meeting and december. looking at the terminal now, it is basically even. 50-50 those traders who think the fed will raise rates. oliver: here is the answer -- to mike's point, it there is one thing we learn from the bowl rallies in 2009, when things are looking solid and you're going into the last two months of the year, it is not a train you want to miss. but you have these overhangs. there was relief that came with the fed saying we're not that concerned about global growth, but there is the possibility they will go in december. there is less certainty -- less uncertainty then going into the previous one. at this point, those kind of hangover the market.

are they going to go, are they not. and earnings are pretty weak. better than expectations, but nothing new there. when you talk to people looking at the internals of the market that are the most list, it goes back to the volatility measures. if you look at the vix, the curve is looking normal. does not happen. you have a clear path, to some extent. we have a menu here of all of the things that are happening this week. forget, the jobs report friday. how important and vital is this report? mark: very important. unemployment that to 5%. down jobs expected below 200,000 this month, which is the third or fourth month in a row. sort a slowdown in growth as we

approach the national rate of unemployment around 5%. it will be a huge report, as always, but people will pay attention especially this month. betty: what about the trends we have taught -- what about the ofnds we have thought of being bullish. like m&a activity. the pending on who you talk to, some say we are still in the thick of it and others say we are at the tail end of m&a. what about those factors? oliver: some of these pillars that have supported a bull but theyve not eroded, are showing less eagerness on the part of investors. bank of america does a survey way every month they find out to see investors want from companies. for a long time, they wanted to see by the ax. they want to see dividends. now they are asking for capital hiring.ures, building, buybacks have underperformed

since march. if there is less incentive, we may not have the same sort of strength than the market we had before. betty: thank you oliver renick and michael regan. thank you for joining us on the markets. much more ahead in the next half hour. a point and they are calling for a breakup now. and how a few losses stacked up multibillion win. citizens financial on its own. can it stand on its own as a regional inc. -- regional bank in the u.s.? ♪

betty: good morning. welcome back to "bloomberg

market." time for bloomberg business flash. eight years after their breakup, visa and visa europe getting back together. these are great so by its european subsidiaries for $23 billion. visa is the world's largest payment system. its earnings from europe had been seen as a weakness. another big transaction in biotech. the irish drugmaker shire will buy dyaks for at least five point billion -- i billion dollars in cash. dyax makes a promising treatment for a rare decided -- a rare genetic disorder. it willun research says not release new allegations against valeant. , did after citroen accused the company of recording fake sales. you can always get more business

news at bloomberg.com. to our markets desk, where matt miller has a check of other company movers. matt: i want to show a cool function on the bloomberg terminal. pn," you getin "bs the bloomberg social philosophy monitor. you get the stocks that are being tweeted about the most. i can show you bsvm. tweetedoffshore being about a lot. hp, we will talk about in a second. there you see chipotle. you can see the sentiment, market reaction in this bsvm exceptionality. look at chipotle. tumbling after six of its restaurants linked to an e. coli restaurant in the northwest of the u.s. 43 restaurants shut down. the stock down to .5%. i want to point out estee lauder

came out with earnings better than expected. a forecast that was in line with what the street was looking for. it is concerned about a slowdown in china, russia, and rizzo. watch for spending their and currency effects. hp -- hewlett-packard and hewlett-packard enterprise. big gains for hewlett-packard. enterprise's slipping down. a 5% drop out a 13% gain for hewlett-packard. betty: thank you. matt miller at the markets desk. bernstein thinks that carl icahn may be onto something. to split its life and mortgage insurance business. bernstein rings that could send shares up. joining us now is josh stirling, senior our most with bernstein, who just came out with a note. we thought it was interesting there was a storyline here. you saw this letter out from icahn. in your view, aig shares are

going up, whether or not he is in there. but a few days later, you said he might be right here. josh: thanks for having us on, betty. when an active his columns in and there was a battle for corporate control, you have an opportunity to look at a company strategy and imagine what is? if you step back and think about aig and the business they are in, it is not obvious the company deserves to exist in its current form. it is billed as a conglomerate, is run as a conglomerate. the obvious solution is to de-conglomerate is -- d e-conglomerize. ought to divest a lot of their businesses. the simple value unlock here that gets us excited is not just the financial engineering or the cost-cutting, which is key to any simplification campaign, but we witnessed the past year or

two is a building of a strong m&a market in a insurance. japanese, chinese insurance companies. hedge funds trying to get into the insurance business. globally under distress. in can sell lots and lots many of these operating divisions way below the level. i am trying to- understand this. how is this going further than what icahn and paulson are asking? josh: they have the right idea that the company is too big. my proposal is that we think, ultimately -- the breakup does not out as much of value as recognizing the end that it value of strategic inquirers who firms, cutp the

costs, and capture in market synergy. the real way to unlock value in higherrm and get to a value is to break up the firm entirely. that is easier to do. betty: to have no aig. josh: maybe there will be. 30% the size of today. were going what they to do in 2009, but the company was to broken and the markets to dislocated to realize the value they wanted to sell. betty: why did he not think of this before icon and -- icahn a nd paulson? josh: leaving the company is working either way. they are buying back stock. we think they are generally going in the right direction. but you have to admit, when there is a battle for corporate control and you start to go to first principles and say what should the company do? we think it is time for the offer shock

and awe and offer a strategic pivot. that we can unlock value. betty: aig would disagree. we are it he saw peter hancock's statement. there is an interesting bloomberg's been off index where it attracts the companies that have been broken up. companies that have been spun off. what the index shows is the 14 newly minted companies this year lost 8.6% since they were listed. the parent companies to client 2.4%. -- declined 2.4%. which may be indicated of staying on course. josh: it is hard to see what index means especially with a company like aig. but a really still is a

conglomerate. dozens of dozens of businesses all in insurance, yes, but there is no strategic rationale of why you need to have a travel insurance attached to a consumer insurance. the inedible -- of the inevitable cost-cutting that comes from shrinking it, whether you choose to set up these businesses free as independent companies or sell them to other competitors, that is a question of how to best realize the value. betty: we will see what aig has to say tomorrow and in there released today. josh stirling, analyst at bernstein. still ahead, while many of his egg investments may be slumping, warren buffett will show the power of his dealmaking with a record third-quarter profit expected. ♪

betty: welcome back to "bloomberg market."

reallybuffett having a tough year. his biggest investment struggling, like walmart. lagging in the markets -- in e-commerce at a time when this is the shifting online. seems a bit behind the times, just now trying to shift into cloud computing. his one bright spot is heinz. we write about how -- perspective on how much kraft heinz will offset the declines we have seen. quite a will really be significant factor in the upcoming quarter in two ways. one, from an earnings standpoint. he will have pretax gain of about $7 billion on kraft heinz.

the other, more significant thing for berkshire shareholders is how it will affect something called but the value. the number that a lot of investors in berkshire hathaway watch closely. buffett says it is a good proxy for how much is company is worth. that is going to help offset some of these declines you mentioned in amex, walmart, and ibm. betty: he also has trouble with geico, is that right? auto industry -- the auto insurance industry in the u.s. has had a tough year. gas prices fell, more people got on the road, the rate and severity of accidents have been climbing. that has eaten into underwriting profits. geico is a big business for warren buffett. it is frequently one of the bigger jupiters to earnings. but this kraft heinz gain will dwarf everything else in the third quarter.

betty: just to be clear, he has had smaller wins too, right? noah: definitely. he had a holding in munich three, which is a big insurer in europe. he sold that at what looks like a prophet. he also had another insurance investment in a life company called sumitra that looks like it will be a win for berkshire as well. the other thing that we have not intioned is that buffett, august, did one of his biggest deals. he bought this company called position cast parts, based in portland, oregon, and they are a large supplier to the aerospace industry. what berkshire shareholders that i spoke with like most about the deal is that it will add to the earnings power of buffett's comp any over the long haul. there is some dispute over whether he paid a good price for it, but over the long haul,

analysts and investors i spoke with thought it would probably turn out well. with his also spoke partner, charlie munger, who said -- he basically said he is holding his nose against v aleant? noah: exactly. charlie had been criticizing when i sawk in march him speak in los angeles. i got in touch with him over the weekend. he really reiterated those concerns again. say, significantly, that he did not think it was an enron type situation. betty: noah buhayar of bluebird news. tomorrow, staying tuned to my interview with buffett's son. ♪

littlelet's start the work first word news this

morning. courtney has more from our news desk. courtney: search teams in egypt's peninsula have finished combing the area where that jet crashed on saturday. it appears that an external impact brought the plane down. rejects the idea of pilot error or technical issue. all people on board were killed. u.s. safety investigators may have found the wreck of the cargo ship that disappears into the bahamas during hurricane joaquin on october 1. on board.were investigators using sonar on the ship 15,000 feet lodi ocean's surface. they are waiting for confirmation. areu.s. and south korea expressing grave concern over north korea's plan to conduct missile and nuclear tests. south korea says they have their

northan to destroy korea's missiles if they need to. to start hisoping campaign this week. he starts a three day tour around the release of a new book that talks about his eight years florida governor. and the supreme court has rejected an appeal over the use of the image of bob marley. the lower court ruled that merchandisers have used his image to sell clothing without getting permission from marley's children. that is a look at our first word news. you can always find the latest news on bloomberg.com. betty: thank you. economiste-winning josie kaluz out with a new book, earlier today he explained to

tom keene and mike mckee on bloomberg surveillance how inequality factors into u.s. economic wetlands. >> one of the important reasons why we have such a weak economy and so much inequality is that job creation has been so slow --t there is no pressure upward pressure on wages. let me put it another way. if we had had a normal expansion -- >> 5300, persistent. >> yeah. with we had not had this football of 2008, 2009, with the expansion of the labor force, the expansion of the economy, we would've created a lot new jobs for the labor force and we did not do that. our jobs cap is over 3 million. what i am saying is why we have created a lot of jobs, making up

for the lost jobs, we have not kept pace. tom: you are having a cup of coffee with nancy pelosi and paul ryan. what do you say to fill that gap? easily, is begin, infrastructure. anybody who comes into the united states, airport, roads, rad lower standard than in other advanced countries or even other emerging markets. this is important because it actually costs us a lot. the time you spend on the highway is not time that is bumps break our cars, and there's a real cost to this structure. classic joseph. others say you just push to

rewrite the rules. >> we now know from large numbers of these that reasonable increases in the minimum wage actually increase income in ways that increase demand and actually lead to more jobs. we seen this in seattle. seattle race the wages to $15 an hour. mike: will america do these things? is there a bias toward inequality, worth in a matter of incentives? >> i think it is a result of the way we have rewritten the rules beginning in the 1980's. i'm arguing that if we change our rules -- mike: companies will go a long? >> companies will go along. you see little bit of that. minimum wage today is basically

the level it was 45 years ago, adjusted for inflation. time, aa long half-century, to go without a pay raise. betty: that was noble prize-winning economist joe igltz. made their4 they debut under the wing of the royal bank of scotland. now citizens financial as an independent firm. ofy require them to dispose the shares by the end of 2016 which gave citizens bank read -- which gavethat citizens bank its independence. thank you for joining us. has finally sold off the left of it remaining shares, how does that change the outlook for the big? ank? >> rbs has been very supportive

of our strategy throughout turnaround plan. i do not expect major change in the strategy. we will continue to have an ongoing business relationship with rbs for cross referrals of business largely on the commercial lines. where we can continue to benefit each other's customers. we have been operating fairly independently. one of the things that is new is an exciting as we are able to attract top talent rate that has been part of this journey toward independence. betty: does this have to do certain things, perhaps acquire other smaller lenders or merge? as i recall, that maybe something you were looking at. this point, we have a lot of organic growth ahead of us. i just want to stay focused on that plan and try to achieve that growth. down the road i think there will be an opportunity to do acquisitions.

but right now, i think we are good where we are. betty: so for the next line do not look for any acquisitions. margins are so important regional banks such as yours. the fed what looks like going to raise interest rates in december. >> we have all been waiting anxiously for the fed to start the increase cycle. in our peter group of 10 banks, we're the most acid sensitive. it will have a nice benefit for us what the fed lifts rates. betty: 25 basis points. will that make a difference? >> it helps. -- it is certainly helpful. the question is how fast do they go after that? are likelyy go, they to cause i'd wait and see how it is digested before they go again. source toe, that

create some till wind. we're not waiting for the first we are plenty of letters to grow our business and to clinton -- continue to improve. certainly correct that tailwind would be nice. you mentioned organic growth. how will you make more money? >> we haven't been investing in our commercial business and in her product capabilities and capital markets as well as cash management. we see continued opportunity to take share. on the consumer side, we are acquiring household, so we are throwing again with a very robust product offering and we're investing health -- heavily in wealth. fee-basedbig business. cash management and capital markets on the commercial sides. betty: thank you very much.

much more ahead in the next half hour of bloomberg markets. to fully are tumbling on that e. coli outbreak linked to the west coast locations. in hewlett-packard enterprises trading on its own today. we will look at how they have done. ♪

betty: welcome back to bloomberg markets. it is time for the business flash.

rose, familytion homes up nearly 1%. treasuries are posed -- poised to see the biggest loss since june. and now the news that only a true tracking can appreciate. cbs is developing a new star trek series to debut in january of 2017. that is more than 10 years after star trek enterprise, the last tv series, was canceled in 2005. you can now have it back. you can always get more business news at bloomberg.com. well let's head to europe for mark barton has the latest from london.

october was the best month for six years. you can manufacturing rose the forcing16 months, investors to reform or their bets on whether the bank of england will first hike interest rates. november 2016 is the new favored month. to theio draghi spoke italian newspaper saying that the stimulus may not be necessary in the december meeting. but just two weeks ago mario signaled the ecb would increase qe in december. confusion reigns on the matter of further qe. check out the athens stock exchange, up by over 3%. they said the biggest lender's embrace had to raise 14 one 4 billion euros to plug a capital shortfall.

with an analyst expectations. that is why banks are surging to dad. how about a look at one bank surging today. third quarter profits beat estimates. electrolux down by 5.4% for the u.s. justice department rejecting a proposal to lawsuitthe government on the ge applied business. the order of istanbul, the biggest increase in two years. they brought to a close five months of political glenbrook -- gridlock. november has started brightly for european investors. betty: thank you pride and now have a gill has the latest from the nasdaq in midtown manhattan ,

. >> let's have a look at food stocks. when these are higher today after they were upgraded from outperform the market perform. the offering is helping to how wendy's ahead of its competitors and increase traffic. this upgrade comes a few days before the company's earnings report this week. of, heng to make note actually lowered his price target to $11 from $12 and below the consensus target of $11.43. turning now to an arab red. these shares are also up higher. , chipotleitable mexican grill. the e. coli break out at restaurants. there could be some investors that that will help boost traffic and sales at an arab red -- panera bread.

21% year to date on technological advancements. done asg to work bloomberg, the short interest are investors who are betting against the stock going higher. it isn't highest level in six years. some investors may think that papa john's is no longer going to be able to owns premium valuation british trades 25% higher. nonetheless, shares are higher today in line with other restaurant stocks. betty: thank you very much. , a giant inard silicon valley has officially split in two. hewlett-packard enterprises is now trading as his own and to own entity. so how did we get here, and what challenges lie ahead of both companies?

brad stone joins us now in san francisco. the split is done. where do we go? .> really a momentous day company's try to regain their innovation and. hp is a company that pretty much missed the web, missed the shift to mobile devices. printer,aditional pc a they are taking that cash that is thrown by the printer business and investment for next .ig thing they are trying to focus on big .usiness

can they become a stronger services business in the age of the cloud? -- is anna going to she going to focus on cost-cutting? >> of course. they laid off almost 80,000 employees. they announced the last ones next -- last week. hp enterprises still has about 250,000 employees. that is to the consternation of many that many layoffs are still to come. betty: hp enterprise on the move into the cloud, we have so many other players that are dominating the field. is there any room for hp? theeg whitman has raised white flag. they have gotten out of the public cloud. has created a guide for

companies in the hybrid clouds. that is selling them the servers and the services, but acknowledging that they might want to integrate the public cloud services like amazon. taping them to basically those online resources while continuing to sell the servers. betty: this is all happening as dell is buying emc. when will we know which tactic was right? are almost the same strategy, surprisingly. phone companies are making a bet on big business. it would not be a surprise to many observers it's dell says selloff that pc business. hp is doing that this week. there is probably room for both players. while the will be so fatally

distracted they will lose step. betty: thank you. had, that is still ahead of bloomberg markets, virgin america make since flight to hawaii. where will they go to next? ♪

betty: you are watching bloomberg markets. top ofas we approach the the hour let's look at all the major averages are of. we have a rally going on today .nd m&a activity people once again trying to assess odds of the fed moving in december. joining me is a derivatives mkmategist at

holdings. we're coming down the home stretch of the year. historically we tend to see these here and rallies more often than not. is that how you are seeing people position themselves? >> it has been quieter over the last few days even though we are in the midst of the earnings season. two things to point out. we are the back end of the shot, and that will dwell for the equity markets over the next few months. in thee of the decline vix vix has been unusually fast compared to the prior sharks of the last 20 years. that gives a little bit of reservation to rush in and buy at 11%. with two months left in the year, especially or institutional investors on a calendar year and it is a great time to think about synthetic exposure, using options tactically as opposed to rushing

in and buying stock. really managing capital risk in that way. julie: what would something like that look like? >> the trees you see today in the car rental names. at inside volatility in many single namespace can be simple as buying calls in january or february that gives you one directional exposure out to year end. riskless capital situation. julie: let's talk about the trade you mentioned on the car rental companies. they are both such report their earnings. not done very well going into this. how are you setting yourself up? both have trailed the s&p 500 by over 17 percentage points. hearst spent about a year where under financials. a dark clouds there. also the ceo that is just about anniversary his first year.

aansition there any -- in industry that has two players. underlying fundamentals look pretty solid. car planes means more rentals. pricing was better sequentially as well. the the report after close of the day. we do not have a hurt day yet, but they do have an investor day on the 17th of november. we want to express long directional exposure out to january. julie: you are talking about the synthetic types of trades. it's a specifically that you would only be looking at these stocks as examples? would you look at the broad market as well, or is it safer in this environment look at

individuals? >> it represents everything. if you want a long position in energy and could rally. we could look at some of the most liquid etf in those names will or the single names as well. it is really a broad expression of how to get tactically long on these names while managing some of that risk. the next trade we are talking about is out in january. in the case of this you have wrote this risk to about $1.30. julie: thank you so much. talking to us about the auto. president obama has signed a bipartisan budget bill suspending the debt limit. ♪

betty: look into "bloomberg markets." ♪

scarlet: good afternoon, i'm scarlet few -- scarlet fu. but everything is hanging on the fed's decision. resultising electoral since the stock soaring in turkey. richard branson explains what it means for the airline business. we want to get you started with today's market activity. let's checking with julie hyman. there is a lot of data to digest. julie: a mixed picture, and as even if the data came in worse than estimated, it is not exactly a blessing for markets. a