from bloomberg world headquarters, good morning, i am a little. here is what we're watching this hour. aig is firing back. the insurance giant is rejecting the proposal from carl icahn to break up, saying that splitting off is not the right thing to do. ubs, the swiss bank reorganizes management and pushes back profit margins for the third time in two years. and the forward of the future? how much will the web it be a part of your car. we will ask the chairman. we have some breaking economic news this morning. want to head to julie hyman, she has those numbers. julie: that number has dropped more than has been estimated.

down 1%, they were looking at a decline of 0.9%. foruding transportation .6%.mber, it was down some negative news on the manufacturing front this morning. we have been seeing a decline in flirtingts the dow is with unchanged. we have seen stocks under pressure as a result of earnings. people have an eye on the fed as well, of course. let's take a look at my bloomberg terminal. i will pull up the map here of the various sectors on the move. we have energy mitigating the decline today. it is higher by about 1%. on the downside we have health care being held down in part by what is going on in earnings. when it comes to energy and why it is higher, it comes down to oil prices. move ineeing them

tandem. oil is bouncing back after falling to the lowest in about a week. we do have supply constraints in libya and was ill. that tends to call oil up higher. consumerrnings front, staples are the worst earning group. theand is falling after earnings report of missing estimates. the stronger door or -- stronger dollar is curbing exports. we have a look at adm, though shares have been falling. aig, also another stock that we have been watching, though shares are down as well. 4.7% after by about the company came out with results that miss estimates. the ceo, he says that they will not split up the company. will see know that, we

how long that holds. valuations are now starting to come back in. rocks yeah, this is black -- chief goal strategist picked up on. i have the ratio of the s&p 500. we did see this picking back up again, it is about 18.8 right now, the highest since 2010. we cannot see them keep going up as the fed raises rates. betty: thank you so much, let's check in on the first word news. we have what is going on in washington. david: we are waiting for paul ryan to start the first news conference, he has already been on the job for two days and he will be flanked by members of the gop leadership, including kevin mccarthy, who was expected to be a candidate for the job

that paul ryan has gotten. living on to egypt, the civil aviation investors as the joint investigation committee will start examining the data from the black boxes retreat -- black box's retrieval. representatives from ireland where the airbus was registered are there. killed,le on board were most of them russians. assuring, egypt is that the security situation in the sinai peninsula is under control. germany, the chancellor got some key support on her approach to the refugee crisis. says that theobby biggest economy can handle the influx if sacrifices are made. angela merkel refused to close the borders.

shot has treated pills.well as the the shot could be given every other month. this is a milestone in hiv treatment. one year from now, americans will choose the next president but today marijuana is a big issue on this election day. he must choose whether to legalize marijuana and if so, who should grow it. that has a look at the first word news, you can always find the latest news on bloomberg.com. betty: david, thank you so much. icons rebuffing coral breakup plan. peter hancock says it doesn't make sense. the insurance giant posted a quarterly loss this morning, the first since 2012.

it may cut as many as 400 senior management jobs. regan who hascarl been on the conference call this morning. coral: a lot of people were wondering how he would react. what he around it, save it for the questions? but right at the front of the call, peter hancock came out saying that it doesn't make sense. one big issue for him is deferred tax assets. assets you get from previous losses, about $15 billion worth of them on agi's book. they're also saying that a lot of what they are doing to cut costs would be undermined by this. if you break up, you need management teams for the three separate companies. so the cost-cutting path that they are on wouldn't make sense for this. he also says that it isn't the regulars that are putting a lid on the capital, it is the credit

agencies. he got ammunition to back that up yesterday. yesterday -- came out and said whatdoing what icon -- carl icahn wants would be negative. betty: at least he can hide behind that. this the moment, he has media spotlight on him, not just for calls like this but also donald trump. betty: has he responded this morning? i haven't seen any response since the call this morning. yesterday interviews about how he criticized aig. to me, this is setting up to be a classic 12 round bouts an activist and a big company. it will be in the news for a while to come. betty: before hundred management cuts,- the 400 management

is there any talk about that not happening without carl icahn pushing? question, i good haven't heard any speculation on that either way. what carl icahn really wants is a drastic change. he wants green businesses. wants life insurance, property and casualty be another and property be another. there is only a handful of insurers, metlife and aig who are classified like that. it brings them into the realm of too big to fail. they do have to keep more money idea fromk, so the coral i can't perspective is that it improves their ability to grow and pay off shareholders. is pushing back.

betty: we had heard that much from him. wasemember how outspoken -- but did hancock take a strong tone? >> i thought he was pretty strong. he addressed it right at the beginning of the call. usually at the beginning of the calls, they are meant to be going over the highlights of the quarter. not usually addressing an activist shareholder, head on. it is dramatic and i think it is setting the stage for a prolonged battle. it will depend on how much carl icahn wants to pursue this. obviously,ssue is, hancock referred to being in the government's cradle. carl icahn is targeting a company that hasn't quite gotten out from under the financial crisis. the reputation has not recovered. , aigeople's minds

is the poster child for the financial crisis. that said, if you look at the shareholders, the biggest are vanguard and lack rock. these are passive investigate -- passive investors who usually go along with the management's take on things. so he has john paulson on board and he really has to sell this to a lot of other shareholders. betty: thank you so much. in the nextead hour, shares are down and the swiss bank has shaken up approaching be profit target. what is going on with the banks in europe? and some advice for the fed. he says don't do the swiss, do the switch. is joining usd

later in the hour from dublin. much more coming up on bloomberg markets. ♪

betty: good morning and welcome back. it is time for the business flash. delivered the strongest sales since 2004. the automaker said that sales were up 16% compared with one year ago. what is behind the surge? a 30% jump by cadillac. jeep sales gave fiat chrysler

plenty of traction last quarter. sales rose 15%. jeep suvs led the sale search. inwas the best quarter years. a big month for toyota. the japanese automaker sold the colts in the u.s., 10% more than last month. it beat estimates. the best october ever from the wrath -- the rav 4. you can always get more business news on bloomberg.com. let's head back to julie hyman, she is a check on some of the company movers. julie: fitbit. onis a moving so much earnings as it is on the stock plan. it plans to sell more stock. it beat analyst estimates last quarter, and it continues to

gain customers but the shares said it 6% after it has is going to sell additional shares. up to 7 million additional shares. that, then to time ofs lock up expiration is happening on wednesday. instead of happening when the fourth quarter results were reported, as additionally -- as previously planned. talk about short interest, that is what this yellow line is. and unusually high 41% on this company. this is the stock price since ipo. we have seen the shares remain up almost doubled from the ipo in june. almost $20 per share. that is going higher on earnings is american eagle

outfitters. the company is reporting a rare strong quarter, earnings per share ahead of original estimates. they say they continue to experience full price selling, resulting in profit margin expansion. that has been unusual to find in retail. shares are rising more than 9%. bignt is reporting a loss or than what analysts expected. they have been adding more monthly customers which would be more profitable in theory. but the company has been expanding its retail operations and it is seeing its costs go higher. shares are down. betty: thank you so much. other news, ubs has reported earnings more then double, but the shares have dropped due to the profitability in the first time in two years.

for a closer look at the banks inllenges, i want to bring erik schatzker on this. over the past several weeks, we have seen more news about the european banks, they are struggling. they are being punished for being realists. the world is changing for banks. stricter have imposed they ares and compensating for the changing inquiry -- changing environment. there are effectively zero european bonds in the united states. and regulators around the world are raising the capital requirements for banks, which, by definition, makes them less profitable. to him talking

about the challenges ahead. >> the response will be to say that we are likely to beat, actually, i feel pretty confident that we will see our target of temper sent and it will be beaten. we will be closer to 15% this year. so we are not delaying, we're just adjusting. we are adjusting our return on equity targets. targets are very important. these adjustments are driven by external factors. namely, interest rates. ermotti is now saying that it will take time for him to hit the target. contrast, the new ceo of weekt suisse said last that he would be a fool to set targets because so much is out of his control.

and he is referring to be very same thing. regulation on one hand and interest rates on the other. betty: right, and i believe he pointed to the ubs. that was the justification for why he said that. but on it ubs, there are some parts that are working for them. wealth management? suisse would love to be ubs right now. ubs has been restructuring and refocusing. i will give you a startling statistic. ubs has fixed income business, it is now less than one quarter of the size it used to be back timeframe06 peaks when ubs, just like lehman brothers, was chasing goldman sachs and morgan stanley. so he has focused on equity business and it has been largely successful. premium overat a

credit suisse. it remains extremely competitive. equity,cond in underwriting in asia. relatively speaking, and i emphasize be relatively, it is in a pretty good space. betty: i like i you say they need to be realistic and as a mime it. erik schatzker, thank you so much. in washington, d.c., the new house speaker paul ryan is holding his first press conference. he says that he is stumbled -- he is humbled to be in this role. he says he will take an approach that is different than the previous speaker, john boehner. conservativese

who demanded that power in the house be centralized, he says the speaker's job is to facilitate census and not to be the dictator. we will keep an eye on the hill. thank you, we are excited. ♪

betty: welcome back to "bloomberg market day," i am betty liu. it has been a tough year for jeff grossman. we are worse than 63%. but that is not stopping the bond king from giving out advice to others. he advised that central banks should switch. he said that capitalism does not profit well. theays it is stunted and short-term yields near the zero

balance is low. on growth to weigh in is tom keene. is anyone listening to him? yes, everyone has respect for bill gross and the contributions he has made. he has had some challenging times and so have a lot of other people. through how we get from twists and shout to swiss and shout. the idea is that you sell the long-term stuff that you own, you take the money and you put it in the short-term space and there are new price up and yield down. when you do that, do you like how i am doing this? the short term paper goes up. have you got it? but nobody is doing that?

tom: nobody is doing it. the response was not skating, but it was respectful. but he was skeptical. the distinction is that bill gross's short is different. is to andterm paper five. betty: how can we make the switch when the fed is about to raise rates? well, we think they are about to raise rates. we have been so wrong for so , it has been a dose of humility in december. we are now up to 52%. -- those were the same odds the 49ers were up. the quarterback was benched. betty: was he?

tom: i think so. bill gross should by the 49ers and stop worrying about lawns. -- about bonds. betty: maybe you should bet on the nfl and not the feds. tom: i agree, they are going to go to draft kings. betty: it might actually be more accurate. to see you.ood thank you for stopping by. still ahead on bloomberg television, bill ford will be speaking live from the web summer -- from the web. ♪

betty: live from the world headquarters in midtown manhattan, you are watching bloomberg television. i am betty liu.

david has more from our news desk. david: we start with the keystone pipeline. trans has given president obama some breathing room. to suspend the assessment. president obama has been critical of the plan. the u.s. stop the flow of billions of dollars to iraq this summer because there were fans that the money -- there were fears that the money was ending up in iranian banks. the money is now flowing after iraqi officials agreed to put in tighter controls. it is election day across america. asls are open across texas voters consider amendment changes to the texan amendment. said whetherust he to legalize marijuana and if they do, who should grow it? colorado voters are deciding what to do with the tax windfall from selling marijuana in that state.

removed,stert has been the changing of dennis hastert has been removed from the capital. paul ryan ordered it be taken down. he pleaded guilty last week to evading and clause. the system of five star safety ratings is designed to look for the most important safety technologies in a car. that has a look at the first word news. you can always get more on bloomberg.com. betty: thank you. the web summit is one of the leading conferences for technology and ideas, it kicks off in dublin today. when it comes to technology and innovation, housetrained -- how strong is europe's offering? we sat down with forward's chairman for a closer look at

how they are taking advantage of european innovation. caroline? caroline: thank you. i am joined by bill ford, the executive chairman of lord cars. you have ireland in your blood and you also have tech in your blood. you were on the board of ebay. what is the future of the automobile look like when tech is involved? be very different. the whole world of city driving is changing and it will change to something unrecognizable today. so whether it is the way you own a car or don't own one. access to a vehicle, the economist driving, all of these things are going to come into play. it will change our business model and it will change the way people use vehicles in cities. caroline: where is the value? if you can no longer exponentially share and share --

exponentially sell and sell cars, where the value come from? bill: the traditional model was we soldhad hardware and hardware and made profit from that. -- thatl difficult that will disappear. city driving will be drastically different. we have experiments going on all over the world to try different things. fractionalis ownership, using the car to do social good, things like that. allon't precisely nowhere of these revenue streams are, but one thing we do know is that it will change and it will change rapidly. and we want to participate in that. tooline: have you got control the data to some extent? what do you think about google and apple coming into the automobile industry? think it is great. they are bringing really new information to the industry. forave had no revolutions

100 years or more and now we are at the doorstep of several revolutions happening all at also thehnology and way people use the technology, the way people use the cars. i think it is wonderful that we have all of these players coming startups, we have a lot of young players coming in. we as a company need to remain curious and open-minded. we have to recognize that a lot of people are doing very interesting things that we can partnership with. aroline: you talk about revolution and technology, it springs to mind the idea of technology being used apps -- being used perhaps not for good. with the volkswagen scandal, how is that changing the revolution? bill: i don't want to come but -- i don't want to comment on another company. the culture that we have at our company is something that i work

hard at maintaining, as do all of our employers and employees. one of accountability and dealing with reality. if you recover a problem, you deal with it and you deal with it transparently. that is the way i expect the ford culture to operate. there are always issues facing companies and governments, and individual human beings. toyou do need guideposts help you along the way. anyway, in some ways this new world of software that we are into, if we keep that in mind, i think we will be fine. which kind of tech startups are you looking at two involved in your business in a transparent manner?

+++ bill: that is what is so cool. you have ways of ownership that are changing. it is all happening now. it won't happen sequentially. and so we are working and the company -- we are working as a company that can stitch this together. i think that is important. we can fall in love with technology for its own sake. we can forget that this is about making people's lives better and easier. one thing that we don't want to do is introduce a whole fleet of technology in a way that the customer cannot understand it. understand that we have a wide range of people who are tech savvy, or not. we have to make all of this available to everyone. so that is an art and a science, going forward. caroline: who will win out?

the auto companies or the tech companies. bill: we have to work together. work together to get the integration of technology into automobiles. lot of bring a interesting aspects and we have to understand that we can't do it all ourselves. we shouldn't do it all ourselves. it is a different world. caroline: how are you embracing the startups? this is the biggest global gathering of startups. how does an on-chip in your access forward? ccess ford? ways we have a variety that they can make their way into the company and we will hold their way -- hold their hands all the way through the process. big companies can be inherently to the goal with. so we talk a lot about how we change that. we want to be a company that young companies love to work with. at your: if you look

company 5-10 years time, what do you look at? is it autonomous vehicles? is it sharing? it is all going to happen. it will happen more quickly than anyone can predict. whenever you get on a technology path, the time frames become very truncated. was goinght something to happen 20 years from now, it will probably happen 7-8 years. is so much development happening and there are so many smart people with so much money aing thrown at solutions that company like ours has to be open-minded and curious. is so much change happening at the world will look different in five years and in 10 years. our business models will start to look different. we will have different streams of revenue the end we do today. see ane: when you

revolution, quite often, one sees a consolidation move. do you see that within the auto sector? bill: people have been predicting that for almost 30 years. in the early 1980's, there was a study that said there would be twoamerican two european asian car companies. in fact, quite the opposite has happened. the list goes on and on. so i don't know. that is your answer. logically, it should happen but will it happen? i don't know. caroline: could you potentially work with chrysler or fiat? are: the future that we looking at today, it will require a lot of resources to so that is reality. what we really are focused on. it is not acquiring other companies but how we can use our resources to create a new future. caroline: organic?

bill: exactly. caroline: it has been wonderful speaking with you. bill ford at the technology web summit. back to you. betty: a lot of news is happening at that summit. caroline hyde there with the executive chairman of forward -- of ford. how much is the british secret agent worth to the box office worldwide? game maker has agreed to by king digital. you know that by candy crash. are you addicted? they bought it for almost $6 billion. plus, paul ryan says the congress is now unified. we will bring you remarks that are happening right now. ♪

betty: welcome back, we're just into one hour into the bloomberg markets and the trading session. it is time for the bloomberg business flash. about 1/5 ofcut the senior level workforce. they will cut close to 400 jobs. that came after a third-quarter loss. carl icahn is urging them to break up. however, heater hancock -- however, peter hancock is refusing. black rocks cash management unit will manage assets for bank of america clients. that deal will give separate in

town -- give separate accounts -- bring their business to of assets. terms of the deal were not disclosed. jpmorgan will pay to settle charges in california. the bank use illegal methods to collect debts from credit card holders. half of the fines will go back to customers. a bank says it will change practices that regulators say are legal in california. more business get news at bloomberg.com. now it is time to get you caught up on the action around the world. let's start in asia. was closed today but indexes around the region were up. -- indexee that the was up almost 1%. region isory of the that asian stocks had the first gain in six days.

asia-pacific equity industries got there first gain in six days following the gain overnight on the s&p 500. technet was closed for a national holiday and korean bonds fell. the bank of korea will not undertake rate cuts again this year. financial directives this year announced a -- of job cuts. the shares were lowered as much as 6% on the day. the asia index closed with a quarter of 1% decline. the stocks in sydney were up 1.4% on the melbourne cup race day. betty: ok, let's head to mark barton for the latest. we're trying to extend this rally. mark: we have spent the day fluctuating between late --

between gains and losses. we're focused on corporate earnings. region's biggest lenders, let's start with this one. the biggest decline are on the ftse today. , thes down by 11% earlier biggest drop in three years. it announced a $5.1 billion write-off. it is scrapping the dividends. jefferies international says it hasn't raised capital because the bank of england announced the latest stress test results next month and analyst say the capital hole will be $10 billion. let's get to the big mover. point -- 4.5%ur today. that news overshadowed better-than-expected earnings. this iss matter because

the world's biggest money manager for the rich. some analysts are worry -- are worried that a delay to the profit target doesn't bode well for earnings. that is why the shares are falling today. have a look at the euro. we talked yesterday about the euro against the dollar, rising for the third consecutive day. that winning streak has come to an end. spoke at a cultural event in frankfurt, investors will be hoping for a bit more .larity on the ecb intention there was a newspaper article in italy over the weekend where he's adjusted that a be there inldn't be further qe december. in rough oh bank, the pathway for the euro could depend on the u.s. jobs report on friday. a strong jobs report means a stronger dollar which means a weaker euro. that means that the ecb might

not have to print more bonds or money on friday. anyway, we are counting down to the jobs report already. betty: we are. i've heard more bizarre reasoning. [laughter] thank you, that was mark barton in london. now for a look at how we u.s. markets are trading, abigail doolittle has the latest from the nasdaq. muted trading here at the nasdaq. the composite index is about 1/10 the 1% off. is of the stocks moving russia's third-largest wireless carrier and the stock is off on the news that the company has set aside $900 million amid about thevestigations awarding of telecom contracts in you pakistan.

is being investigated as part of this probe. shares are off about 15% year to date. another stock that is off is -- pharmaceutical. it is down as much as 21% in premarket. efficacy in show hepatitis. it has dropped the most in five by theut -- says weakness. and lastly, gopro who was sued by -- shares are off mildly. betty: ok. thank you so much. bloomberg -- >> mexico city. what were you doing in there? i will get my popcorn out, double 07 is back in action and so is a play for the bond

franchise. that is next. ♪

betty: welcome back to "bloomberg market day," i am betty liu. james bond is back and he is back in a big way. tre is expected to open the biggest weekend in the spy series. one, we wanted to go somewhere else. we wanted to celebrate james bond. i think we have achieved that, myself. -- writes about the power

of bond today. how big is this movie going to be? anousha: analysts are forecasting that it will be the biggest one yet. sony started producing these films, they started with casino royale and introduced daniel craig, and it has done nothing but grow. some people are saying it could open with $100 million opening weekend. that is big. the last one broke records so that is what we are expecting. it has already opened in the u.k. where it has broken records already. betty: wow. so this franchise is not getting tired at all. what has it done for sony? so, it is kind of interesting, you would expect a really huge franchise like this that has been growing, that is hugely popular, to be very

profitable for the studio. the films are expensive. this film cost around $250 million, the most expensive on to yet. lasten sony was hacked november, e-mails were released. muchat, we could see how they made from bond. about $57 numbers was million. earned the oath the film over $1 billion, that was what sony took home. so it is not the easiest franchise to make profitable because it is so expensive to make. that said, the rights to the next on film will be up to grads -- up for grabs. so there are a bunch of studios that are interested in it. sony so wanted and warner bros.

also wanted. in the mix. if it clearly, even doesn't make a huge amount of money, it is a large franchise to have. new studios renegotiate terms or find terms that would make it more profitable? anousha: we understand that very management are focused on getting it out first and fourth being a success, and then sure. like any deal, it could be renegotiated. and therea franchise aren't that many franchises that have been growing. in hollywood, it is all about trying to bring more -- in. guys, can we bring up the chart of the top grossing bond films? goldfinger and sky fall -- is

there any reason for that? anousha: this is adjusted for inflation. so if you look at bp or dollar amount, sky fall is the biggest. but when you adjust for inflation, thunder fall is the biggest. they had a consistent vision for this and it has been reinvented and been kept interesting. when a new studio comes along and buys it, they could have the challenge of reviving it again. betty: thank you so much. live for us from away. much more relaxed -- much more next. ♪

price hit his 4:00 p.m. in london and minted hong kong. welcome to bloomberg market. ♪

from bloomberg world headquarters here in new york, good morning. i am betty liu and here is what we're watching at this hour. reallypany's first gain crushed it. a $5.9 billion debt that king digital could come up with another hit like candy crushed. reshaping the house, paul ryan promising it will not be business as usual p or leaf -- he held his press conference to we will talk about the ryan agenda. surviving a slowdown. retailers going to the same sort of pain as others? we are 90 minutes away into the trading session. i want to head back to the markets desk where julie hyman has the latest on the fluctuating day today. julie: it was like people are

focusing on fluctuating earnings. micro versus the macro. there is some macro as well. we hear from a number of fed speakers this week. janet yellen speaking before congress. speaking about financial regulation. it is always fair game that members of congress can ask her about whatever they want here the idea that she made something on rates. we hear from stanley fischer and bill dudley speaking tomorrow. it looks like investors are for that. ahead of that, if you look at what they are pricing in on my bloomberg terminal, you have got the probability pricing in at 2% december meeting. that is the likelihood any see the uptick on the chart in the probability at the bottom of the screen. with yields on the 10 year as to when20 sent

the fed may indeed raise rates. things also being felt in the dollar versus the euro here the euro which had been rising versus the dollar is now losing some ground. a combination of factors. the expectation of what the fed do but also some confusion about mario draghi. that is something we have been talking about. mario draghi talked to an italian news channel and maybe stimulus would not be on the card. very bizarre. >> mario draghi is expected to speak at a reception. maybe we could get a little more clarity. fedexsee all the expectations change.

the steepest four-day losing streak in about a year. >> no doubt, we are counting down to the jobs report. thank you, julie hyman. let's check in on the news this morning. more from the news desk. >> a new study found a long well as- has worked as a combination of three daily pills. johnson and johnson says the shots could be given every month. it is called a milestone in treatment. blackstone was also a part of the study. the u.s. is extending its fast citizens thatto allows them to pay a fee and .ndergo background checks it is aimed at frequent travelers to the u.s. and is already available to the german, the dutch, and the south koreans. severe weather linked to climate change is threatening access to food.

predicts the negative impact on climate change to agriculture could put millions of people in malnutrition. linked to other crashes. airbus 321ay the scraped its tail during a landing and needed to be repaired. the repair is- if not done properly, a could lead to a breakup that occurred on saturday. part of the tail section found away from the wreckage indicated he had broken off. gotermany, angela merkel some key support on her approach to the refugee crisis. ahead of germany's industry germany's biggest economy can handle the influx. merkel has refused to close germany's borders. that is your look at the news right now. betty? thank you so much.

jpmorgan and bank of america and citigroup are among eight large u.s. banks with potential credit rating cuts by suv. the news comes a week after the federal reserve approved a rule that would require the bank to hold a stock split -- stockpile of debt that could be converted to equity should the banks fail. the story was reported. tell us exactly the rationale by s&p given the warning to the banks? >> fairly straightforward and i know the picture sounds really bad. you talk about why it has not been impacting the markets much. with past crisis, uncle sam came in. enough structures that if this happened again, they do

not think the government would have to come in. notch, thebuilt in uplift of credits in all these banks. the federal reserve has done things that made it less likely for the government to pay them. they have more capital, they have something called a total loss capability which turns debt and equity in the case of a big failure. it is something that has been telegraphed for a while. in uplift for the government december. inty: why would that result the s&p giving a warning that the banks would be downgraded? >> if you believe, and everybody does, that the government would always rescue the firms in a crisis, that is worth something. it is worth something to the

credit ratings. they benefit from being too big to fail, which gets into the idea of a moral hazard. betty: you mentioned this earlier and kind of explained it, but why hasn't this affected the market and the stock prices? i sit you look at bonds, they barely budged. i talked to a bunch of participants and they gave me two or three reasons. one has been telegraphed for a while. it is not really a surprise. what came out last night was not a bit of a surprise but the market new about this for a while. it was not unexpected. the other thing, if you read the release, because of the ins and the actual operating companies of the businesses are in line for a credit up -- upgrade p or while the bank

holding companies are in line for a downgrade, because in a disaster scenario, the way it is supposed to work is he operating companies will survive because of the death they have. one down arrow with the credit downgrade in the up arrow with the credit upgrade of the operating companies. the operating company is more important if you look at the derivatives in the entities. betty: will that be confusing for investors? >> for the most part, it is kind of a shrug. it is something that has to be done, but i do not think anyone thinks this will be a disaster for the banks. specifically, the downgrade, it has nothing to do with the

fundamentals. thank you so much. i really vitiated. much more is ahead in the next half hour of bloomberg television. 5.9activision is saying billion dollars in total for the candy crush maker. plus, paul ryan holding his first news conference since being speaker of the house. to one inlk particular. plus the state of the luxury market, the ceo, how the company is handling a slowdown in a number of chinese visitors to places like hong kong. ♪

betty: welcome back. it is time for a look at some of the biggest stories in the news right now. sales forockbuster automakers. beat estimates. ford sales up 13%, just short of estimates. are on the best paste in decades -- best pace in decades. the commerce department says orders dropped by 1%. b 36% fall in commercial aircraft. weakness inespread other areas including machinery and computers. bill ackman's hedge fund dropped another 7% in october, bringing annual losses to 19%.

valeant plunged in the last few weeks after a short seller accused the company of generating fake sales. it owns more than 5% of valeant pharmaceuticals. know is get more business news at bloomberg.com. .et's head back company movies including a big one we have been watching, aig. >> earnings missed estimates by a widening margin. point 5%. down four to add to what houston pushing shares down, peter hancock on a conference call rebuffing carl icahn's efforts and suggestions that aig should split itself into three. he said aig has benefited from operating.

an insurer for life, mortgages, shares down 4.5%. he will have discussions with carl icahn, however. we are watching hospital operators rising. earnings beat estimates. re- announced a share of purchasing operations. the company announced a preliminary result in couple for weeks ago and cannot them basically said it was as bad as sears. one reason they are doing better today is hospital stocks have been under pressure recently. relief that it was not as bad as some of its peers. also one of the best-performing stocks in the s&p 500, they came out with earnings that beat

estimates. it was like some of the forecasts may also the above estimates here that is more of a mixed picture. for $765n acquisition million. a fish vaccine company, interestingly enough. i did not know there was such a thing. it helps farm salmon from getting sea life. $765 million. >> the biggest gaming company in the u.s. -- picked up games. companies out there, activision agreed to purchase king digital, the maker of candy crush. deal is valued at $6 billion. a great time to get into the mobile space. >> we think now is the right

time to enter mobile gaming in a meaningful way. widespread mobile access around the world has opened up significant demand from engaging fun content that players can enjoy anytime, anywhere. caroline joins us again. the web summit where the news and the deal came together, the price tag is pretty big, almost $6 billion. if you look at the price activision paid for king digital, it is below ipos. can they do another candy crush here? >> justin marks of two thousand 14, last year, we saw the ipo king digital. the $5.9% more than billion price tag. digital made king , phenomenally addictive game

candy crush. but that is just one. it is two days. games.mpany makes 200 why can we only name one? about -- the games have not kept on coming. the concern is that they are only a one trick pony and that is why there is a lower price tag. the ipo price tag in 2014 in march. it is a premium to whoever is trading yesterday, 16% higher and this is a big bet for mobile. betty: i have to say my kids are addicted to clash of clans right now. opportunity for activision? how do they leverage king digital? >> i think this is exactly it. they have got to take the art of

making franchises like world of warcraft and put that into how they can build on the mobile via digital. activist has had them get into mobile. ea gaming, they have been getting in and taking a few more risks. this is a growing segment. this is almost one third of the revenue of the entire gaming industry. mobile is 2020. will growe industry 50% over the next four years. it will get into the 50 billion dollars side of markets. they are realizing they have got to take a risk and make it that. they made one game on the mobile and it is done brilliantly. they therefore now want to and grow out geographically to get into the emerging markets. that king digital is already in. they can lay claims to half a billion users.

suddenly, they have more users than twitter and suddenly, the likes of facebook and youtube, platform could suddenly get , getting what they call the intellectual property portfolio that is second to none according to take -- according to king digital. betty: is this the deal everyone is talking about at the web summit? it kind of this. this is a european success story. yes, it slowed its revenue and we see -- we have seen it slowly little bit. ,t is headquartered right here making the most of that rather appetizing corporate tax rate, i'm sure. they are talking about once again, the u.s. while it, the usd pockets coming over and acquiring in europe it we want to see more money coming from

europe and investing in europe. i will talk to vp's tomorrow about success stories we're seeing here in europe. mobility companies, the coming unicorns, work more than $1 billion. but then to really scale, they have to go to the u.s. for that money. when will we start to see european companies acquire european companies? we still pale in comparison when you look at the money, 20 billion euros raised in the u.s. that is what everyone is talking about. back to you. thank you so much for you cannot have the companies without the money to fund them. thank you caroline hyde at the european -- the web summit in europe. still ahead, paul ryan holds his first news conference, and he is

not holding back, saying republicans are going on the offensive. ♪

>> that is the way we have got to do it. paul is talking like he wants to change the way we do things in washington. i am supportive of paul getting the opportunity to do that.

betty: what will you be looking for from the speaker question about changinged the committee which i think is very important and he said he would do it right away. i think that is a good start it we ultimately have a bill on the way, a highway bill that is pretty much regular order. over 200 amendments, possibly. i think those are the kinds of things that show paul will let the will of the house work its way and i think that is important. betty: you voted against the budget, why? there 4.5 years and my biggest issue with washington as we did at dawn monday and wednesday, we have to vote for it. there were a lot of gimmicks on the bill. i actually want to make sure our debt ceilings, that we increased it and we did not have defaults, but i would rather have voted for a clean debt ceiling then put so many of those gimmicks into a bill. no time to weas

running against the clock. >> a clean debt ceiling could have been done to it i'm not a big believer in all of that. there was plenty of time. why didn't we look at this months ago? making sure we look at these things months in advance. we knew the debt suing was coming and we should have been looking at it months ago. we cannot do things within a 48 hour span and expect the american people to say, these individuals in washington are working. betty: we have only got about a minute left. my understanding is you do want bipartisan support for an issue that is personal for you, identity theft. you had your identity stolen? >> actually. i had my tax return hijacked. i made a bipartisan bill that works on identity theft. georgia is my lead cosponsor from the democrats side. it is something we really have

to look at. betty: ok. before we go, you have not come out and endorsed any republican candidates so far? why? a presidential standpoint, i think the american people still need to get to know everybody. i'm still learning and getting to know everybody. there is pointed time in more debates and i think the governor in ohio would make a great presidential candidate. i think the same time, we need to let american people take a look at all the candidates and see who is best suited to take the job. we need to be able to move forward and an ex-president has to be able to lead us. betty: thank you so much. we have much more ahead. ♪

betty: you are watching

bloomberg television it i am betty liu. courtney donohoe has more from our news desk. courtney: angela merkel is getting closer to ending the legal fight over refugees. members of her coalition cannot decide what to do about the biggest influx of refugees since world war ii. merkel has refused to close germany's borders. today should gain the support of the key industry group, said a deal when possible. each of's president is insisting the security situation in the peninsula is under full control and he is dismissing as propaganda of the claims by the islamic state group that it shut down a russian passenger plane over about sinai. 22 people on board were killed, most of them russian, who were returning from vacation preview k's chancellor says the british do not want to be a part of the european union growing closer.

george osborne took his case for eu reform to germany today. thes taking a key role in attempt to reform its relationship with the eu. the british will vote in referendum on the organization by the end of 2015. the u.s. government is adding automatic ranking to its 5 -- five star safety automatic system. it will help identify the most important safety technology to look for in a car. automatic braking will look to be added starting with 2018 model cars. it is election day all across america. pulls across texas as voters consider proposed amendments to the constitution. residents of houston will decide whether to grant andiscrimination to gay transgendered people. voters must decide whether to legalize marijuana and if so, who should grow it. colorado voters are deciding what to do with the tax windfall for recreational marijuana. that is a look at the first

alert news right now. betty: thank you so much. donald trump is holding a news conference as i speak right now. you can see is talking about his new book, crippled america are he cites debt, military trade, as america's problems. trump is also saying he and ben carson are beating everybody by a lot. we will keep our eye on what else trump is saying as he is taking questions at the trump tower from reporters. ,arren buffett's oldest son howard, is a lot of things, a deputy sheriff and a philanthropist and also the cover star of the wealth issue of bloomberg markets magazine, where i discuss with him exactly

how he invests his billions. we saw -- to solve some of the world's's biggest problems and will ask him how he differs from bill gates. classic you look at what we give away per person, we give away of a little over three times the amount per person that they give away with a giveaway a lot more money. it is just, there are very different organizations. they are big and they have to have processes in place that we don't have to have the nice thing is we ride on our coat tails because we do not have all and we process in place do not have all the people to officersrything or the for that project in this project. it is great because we know they will do all of that. we have not done anything with him for a while but we support programs here and there that they helped establish or something that we think is good work it crossed paths once in a while.

betty: he is warren buffett's's best friend. for more, we are joined by joel the bloombergo billionaires editor who keeps track of all the billionaires that are trying to save the world. we worked on this article together but we never really talked about why you chose howard buffett as the cover star or why you put the issue together. >> we wanted to do a wealth issue and we thought one of the driving things is not about how to acquire wealth. you have wealth, what do you do with it now? who manages it for you? how do you involve your kids and how do you give it away? here is a great example of a guy who literally dedicated his life to giving away part of his father's fortune. that is how we ended up talking about that. he and his siblings have been given each an amount of money to do good in the world, told to do good and they were

rewarded with more money because they did do good. howard's share is $4.7 billion pair we do not know if a lot of people know about that. how, we werese of talking with howard before about his giving. investments, not charity. there are plenty of billionaires out there who just give away their money and let organizations care about it. about 4.1ntrol billion dollars, more than the gdp of all countries on the planet with the exception of the u.s. and china. we are talking about an enormous amount of wealth going into place p or how to sustain the wealth and pass it on and what could i do with the wealth? they have set the gold standard for the modern philanthropist. pledges 5% of berkshire hathaway every year.

they are functioning charitable businesses. uc strategies from all sorts of billionaires. and there are some who don't. some use the tax structures who are legal in place. giveawayot necessarily what gates or buffett is giving away. betty: he has done something with -- >> and he is right in the middle. betty: we talked about that with howard. how does he keep the tradition going. i want you guys to hear what he said. it is when you set a different expectation for your kids and when they think every time i travel, i'm getting into a private jet and every time i land somewhere, i will have a limousine. you set a different vacation.

if vacation is, you know, we will save some money and go to florida for a week, and we will go down to the local putt putt to play golf, versus, i will go you just set different expectations to it i'm not criticizing people who have a yacht. if you want your kids to grow up a certain way, then you as a parent have to set the standard. betty: he is much more comfortable being on the farm. thatou hear from others, this topic was a hot one from the other people you profiled in the magazine? yes, how to give and pass along is a huge topic and it has tax implications that everyone wants to help navigating. officers when they have the resources to do that. betty: it is a big issue. which isg pledge, warren buffett and bill gates, they have gone out to their

billionaire friends and said, giveaway on most all of your fortune. it is the right thing to do. it has gone under some criticism. >> they make it clear it is a moral pledge. it is something we pledged to do to give back some of the enormous wealth we have created. there is no legal binding. you cannot be sued for not doing it. some people say they just do it for publicity. many people are giving plenty of money away. but it sets the standard for, we have accumulated the wealth and we should give it away, whether you not -- whether or not you do that, it is kind of up to you. >> he really tried to pick one thing he feels he could make a difference. agriculture. there are so many ways he could support that, especially in africa. he is going to some of the most war-torn countries and saying agriculture could actually provide a stability element these countries otherwise lack and by teaching people how to farm and supporting that, always other things are raised because

of it. that he: you talk about how to be there for the long haul and you cannot just look at it as a project and then leave after a couple of years. , forow bill gates instance, has done amazing things. he eradicated malaria in certain parts of the world. who has been some of the most effective givers out there and made the biggest impact? >> it is hard to say. if you look in terms of numbers, zuckerberg has already given $1 billion away and pledged to give most if not all when he is gone. the americans are in a >> by themselves. betty: how about the chinese? is philanthropy starting to become -- >> it is not as public or out there? it is not as established. the wealth is quite new there if you can print -- compare it to american standards. in europe, you have a different scenario where you have structures in place and these are charitable structures that are tax exempt amma but the laws

are much looser around them so you can fund sports teams and political projects, etc.. a guy says he does not own ikea and it is owned by the charitable foundation and it existed for quite a while but has only given away a few hundred billion dollars. what exactly are the charities for? the questions come time and time again. betty: thank you so much and thank you, joe weber of bloomberg markets. great to work with you. you can read the full cover story on howard buffett in the december issue of bloomberg markets and bloomberg.com. be sure to check it out. much more is ahead on bloomberg television. we will go inside the luxury world speaking about the wealthy with the ceo of the company celebrating the 40th anniversary of its watches. chipotle shares are trying to make a comeback the day after the e. coli scare in the northwest. could this be a buying opportunity for the stocks? up.- plus, a big shake

we will hear exclusively from the ceo on bloomberg television. ♪

betty: welcome back. a look at the biggest business stories in the news right now. stretch ofo months auto sales in the united states since 2000. chrysler, toyota, nissan, all that beatales

estimates are all this comes after a big month in september as well. ford sales were up 13%, leaving it just short of estimates. auto sales were on pace for the best year in a decade or more. japan's corporation is facing a $70 million fine for the faulty airbags that can explode and spew metal fragments. this is according to the dow jones. the federal safety regulators will hold at 2:00 p.m. eastern could grow at $100 million if they violate the settlement. 50 million cars have already been recalled. you can always get more business news at bloomberg.com. another company we are following is the italian jeweler celebrating its egg anniversary. the iconic maker of watches and electronic goods celebrating 40 years making its timeless timepieces. ceo, john.now is the thank you for joining us today.

we are celebrating luxury at a time when people are worried about global growth. how are your sales doing? craft, it is we chance --, there is a people are going to buy the jewelry. are iconic,these one-of-a-kind pieces. you are celebrating 40 years. what will you do differently in the next 40 years? time, moree right mainstream watches you can wear in any occasion.

in the next 40 years, obviously, it is spent primarily on jewelry and luxury and a luxury watches. the factories, the workshops. ever, -- >> are you focusing on that segment? >> definitely. watches included. it is where we want to focus in the future. betty: what about regionally? i was born in hong kong and i have gone back there many times and they love their watches there. they love jewelry and high, expensive items. for what about the growth prospects in asia for you? look byld rather nationalization. who is buying us?

potential just because the purchasing power is improving in most countries and this is not only china. bennett -- many other spirit likewise, to the united states. this is the richest nation on earth, we can afford a luxury watch, rather than an individual piece of jewelry. they are as important as the chinese, just because we know the purchasing power is not only an expectation. are the sales rising as fast in the u.s. as they were a year ago? >> outgrowth, whether they buy here or in the united states, it is increasing. definitely whether it is jewelry we have shares with

americans. betty: we have a chart, you talk about nationalities. the chinese love to buy luxury goods. one thing we noticed is the number of chinese we see the red line here, the number has fallen going to hong kong and the numbers that have gone to japan given the weaker yen has increased dramatically. is this a pattern you're seeing as well? >> chinese as a group are very much, good value. they will try to buy it in the countries. a strongally, differential, we sign up, and [indiscernible] relatively less. they can go a lot to europe.

growth --se as eventually, more than other countries. betty: thank you so much. we appreciate you joining us. .et's stay in europe mark barton is looking at the close in london. mark? mark: european stocks extended a fluctuating between gains and losses but they finished the session higher for the second day. crude rose to a two-year high. very much ons was corporate earnings and in particular, the european banking sector. have a look at standard chartered. at one time, shares were down 11%, the most in three years. of its workforce, scrapping the dividend. jefferies international says the capital rate won't be enough, the bank of england releasing

results next month and many analysts say the company will need $10 billion to plug its capital hole. ups is down 5 -- down by 4%. it pushed back profitability targets for the first time in two years. the news overshadowed better-than-expected third-quarter earnings. managing money for the rich, that was important. the best performing in europe up by 17%. hass the explorer which some of africa's largest discoveries over the last decade , gaining after its partner in an offshore project in ghana, they remain on track for the first quarter of 2016. that is the latest from london. betty: thank you so much, mark barton in london. abigail zoo little joins us live from the nasdaq where she is looking at taser international. offhe shares are

significantly after the company missed its profit forecast significantly. three cents versus consensus at $.10. that is by more than 17% the company missed. the revenue is a slight eat and this caused the ceo to say our team delivered once again spending topline revenue in the third quarter, surpassing even internal expectations. stocke take a look at the , it is clear it is trading premium on the next 12 month basis. it is growing where as the group pet -- is not but it has run up over the last five years. this may help to explain the 26% shortage on a stock and why the stock is also after a less than stellar report. betty: thank you, abigail doolittle at the nasdaq we will be back. ♪

julie: welcome back. kevin kelly is joining me. a chief investment officer. 24 was indeedst the bottom for stocks. going out on a limb saying we will not drop low that again this year. >> exactly. for me, it was the bottom because it was my birthday. one of the telling signs that has come across in the options market is a lot of the hedging right now is being near the money strike on the s&p 500. people tailseeing risk and go further out. in the summertime, we saw a lot volatility picking up, so they were buying deep out of the money than they were going further out. we saw yesterday as well as today, keep in the world tight. a little bit of a pullback, it should be shallower. thing has been all of

the m&a activity. anticipatingre all is pfizer, which we know are in talks. like that has been so telegraphed, how do you trade it? way toons are great trade a stock during m&a. one reason you could do that is you mitigate your risk. you go out and buy your stock and the deal does not go through, it could crash significantly. you can sell deep out of the money, you could buy call options and have that appreciated, but what we're in the tradee deal out inell the 275 put january and by the 330 call. specifically for allergan because they are the ones and

deal chatter actually has around $350. they cancame out and see anywhere between 370 and $400 per share for allergan. the whole deal is predicated on the tax inversion. an important stat that comes from that is pfizer could save $2 billion per year on taxes. >> its more than viagra will be interesting to see. thank you so much, kevin kelly of recon capital. more is coming up. we live in a pick and choose world.

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scarlet: good afternoon. alix: here is what we're watching at this hour. it is looking more and more likely the fed will raise rates soon paired will u.s. be able to withstand the shock? scarlet: aaa making its reputation on healthy food but now it is cooking with a -- and e. coli disaster. is this a good buying opportunity for investors? news toering bad shareholders, big banks here in the u.s. we want to kick things off with a snapshot of the market activities. let's head over to julie hyman for the latest. a big upswing yesterday. we are not really giving any of that back today. scarlet: