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. we were going down and

now we are coming up. at the highs of the session at the moment. all three major averages are up to a not much change earlier. the dow is leading. performing best group. got consumer staples. look at natural resources. this is the shale operator. a third quarter loss. that was smaller with -- than analysts had participated. in particular, seeing strong performance at one of its assets in texas. it gained yesterday after earnings after signing a new deal. upgraded on the back of that at

ever core and capital for those shares are gaining again. gaining even after it was downgraded over at bernstein. serious resiliency in oil today. earnings are also quite interesting. you said consumer space is lagging. we had earnings reports that were not so rosy. the used corn processor, or quarter earnings are missing analyst asked mitts. squeezed.ing it sees problems from the stronger dollar. kellogg's, of course the world's's biggest cereal maker, below analyst estimates, seeing breakfastales of foods, also seeing impacts of the stronger dollar. them trading lower after

a downgrade from rbc. thank you so much. i like that. of course. thanks very much. scarlet: let's check in now. we bring in remy. ramy: good afternoon. we start with the latest in the inestigation from the crash egypt on saturday. officials say the aircraft suffered damage back in 2001. it's great its tail during a landing and needed to be repaired. if the repair is not done properly, experts say could lead to the breakup that occurred. part of it was found away from the wreckage, indicating it had broken off. more remains arriving in saint petersburg and russia today were family members are gathering to identify loved ones. americans will choose the next president here today, marijuana

is a major issue on election day. ohio voters must decide whether to legalize pot and if so, who gets to vote -- and there, marijuana. a new study found a long acting as threeed as well daily kos p johnson & johnson said the shots could be given every other month. it was called a milestone in treatment. blacksmith also part of the study. a programming note, we will be talking to the ceo of blackstone smithkline at 4:00 p.m. today. teenagers spend a mind-boggling nine hours a day absorbing media . there is a bit of surprise. teens still like to listen to music and watch tv more than playing video games and watching online video. one concern is the number of youngsters who feel comfortable

multitasking while doing their homework. they really should not. look at the news right now. you can find the latest on bloomberg.com. alex and scarlet, over to you. where i have been times am watching scandal while doing something else. to raise rates or not, that is certainly the $1 billion question. traders are pricing it at a 52% chance of liftoff according to bloomberg's world interest rate function. 58.7% see a rate increase in january. bob, you expect the fed to raise rates in december. do you feel the economy and the markets are there right now? orders arefactory

quite low so the economic data does not give them the smoking. -- the smoking gun to lean in. it is more how anxious they are to get off lower bound to what we heard in the last couple of weeks, they are pretty a shoes i think the path to normalization will be very gradual and shallow. i think the markets and the economy ought to be able to's -- to absorb that. continues todated come in mixed. if everyone is the can't fed communication for guidance, we have a slew of fed speakers coming out this week. how critical is it for them to have this message. >> something new, i think this year, it has been a mess. heads out7 talking there and everyone is saying something different. for june,the market nothing. for september, nothing. for're prepping the market december. i will wait and see and i think

they should begin the process of normalization. in the the economy markets are ready. it would be nice to have some clarity coming from them. scarlet: we have not been given clarity on the bond markets. there seems to be confusion there. he will look at two-year yields all across the world. in the u.s., play 7%. in france and germany, they are negative. sweden and switzerland, negative. japan, negative. china is quite low significantly under 3%. does that reflect some stress in the global economy? >> it reflects that the central banks are still trying to the overhang which exists globally and is still very real. it is an enormous head went to economic growth. while the fed may have the luxury of being able to normalize rates, when you get into europe and japan, they are

still struggling. we expect you will see more accommodation from them. we heard from a people's bank of china that you will see more accommodation from them as well. you do in thedo meantime as we wait for the fed to go or not in december? >> he do not fight on's here. you know the ecb is willing to step up the amount of accommodation, why not look across europe and find bonds in the intermediate part of the curve? europe,d buy peripheral italy, and spain to one in three quarters, or you could look at the bank capital notes sector. thanks are being forced to raise more capital p they are effectively becoming bulletproof and i like what is going on in europe and i think bonds there look cheap and there is good value if you hunt around for it. scarlet: share sales are

grabbing all of the headlines from standard chartered for instance. what does that do for the appeal of their debt? raisingknow they are debt, and they will not lend it out or pay credit through the system, that makes sense to me. borrower other a than to raise the capital. from europeactive to the central bank in particular, it is frustrating because they would like to see the extension of credit to the system. that is one thing we are not seeing. look at the corporate bond index, it seems like investors are demanding a little to lend high companies money. this is the price.

is this reflecting some kind of stress? what kind of investment grade? we have been astonished at the $100 billion months we had over the summer. there is a lot supply to take down and absorb. necessarily concerned with balance sheets but there is a lot of financing going on for corporate finance activities. is beginning to leverage balance sheets. the overwhelming level of supply has made investors cautious about taking down investors now. scarlet: a lot of supply. what does that do to the quiddity concerns? >> it certainly imperative liquidity quite a bit.

at the amount of supply coming, new issues tend to come with a sort of concession to the supply in the market. the new bonds are pretty liquid for the next month or so. then the liquidity starts to evaporate. i think that is less a function ofsupply and more a function bounds she's being shrunken by the new capital requirements. you actually like high yields but that has been challenging when you look at the yield that has jumped to over 8% for the whole high-yield indexed and what do you like about it and when would it actually were you? >> the high yield index itself has come under a lot of pressure this year. at the start of the year, everyone was concerned about the amount of issuance in energy names. there were estimates it would be up to 20% and then default rates

or $70 an hour60 would be 60% on that 20%. men began to recover that sent shockwaves through the market and everyone began to realize the u.s. high-yield index actually had a lot of emerging-market issuers, countries like pitcher grass. hit with a lot of outflows, what you actually saw is fund managers could not sell the land -- the wings. effectively air liquide, the emerging-market corporate dollars, they ended up going in and selling the good u.s. industrial. those are the companies we like. bit have backed up quite a and they are focused on their balance sheet and i think there is good value there. let's put this all

together and talk about the rising popularity of hybrid funds and how they have become the biggest buyers of corporate debt as of late. if we have a low liquidity issue, what happens next? how does it all play out? i it will be a scramble and think the regulators are taking a close look at it. the fcc released a 400 page paper a couple of weeks ago, and that specifically looks at liquidity in the market. they were asking fund managers how they might deal with it. a lot of orchids being done. we recognized the supply of bonds now exceeds the traditional balance sheets that used to exist with broker-dealers. it may now simply reside in the supply side so we have to become a bit more effective in how we manage that. alix: we have on the screen a 10 year yield. about 2.2%. has a callout for the tenure that will be 1.5% at the

end of 2016. due to the fact we have this emerging policy with the ecb pumping money in, what do you think about that? let's i like it. , think it is a bit aggressive but, you know, there is a possibility that if the fed is actually normalizing policy because of frustration over the zero lower bound, and growth and inflation are not all that strong, they will be draining liquidity from an economy that needs it so you will rely a lot on what goes on overseas and you are relying a lot on china engineering a soft landing. i do not think 1.5% is out of the realm of possibility. alix: great to have your perspective. thank you. scarlet: coming up on bloomberg markets, we will talk about chipotle shares taking it on the chin after an e. coli outbreak. in the biggest u.s. banks may be

the next credit cut it we will tell you why. day in stocks ending the the green breaking a six-day losing streak. we will discuss. ♪

alix: welcome back. bloomberg now for the business flash, a look at the biggest business stories in news right now. another blockbuster sales month u.s..tomakers in the fiat chrysler, toyota, nissan, all reporting sales that be -- that meet estimates. up chrysler's big seller 33%. meanwhile, ford sales were left

just short of estimates. overall, auto sales were on pace for the best year in a decade or more. square holdings falling 7.3 percent in october. that brings annual losses to 19%. investment in value and pharmaceuticals tumble. valeant plunged last month after the company was accused of generating sales using a pharmacy. potato corp. is facing a 70 million dollar fine for airbag malfunctions that caused them to explode and you metal fragments according to dow jones. federal safety regulators will hold a news conference at 2:00 p.m. eastern to announce the finite could grow to 130 million if the company violet the settlement. -- violates the settlement. scarlet: let's head over were julie hyman has individual movers.

julie: industrials and earnings are coming out today. outegate makers are coming with earnings that missed estimates. the company's ceo is say there is graduate -- gradual demand parish has are down sharply, up 40% year to date. declines coming on the earnings-per-share numbers but also shares doing well this year. another maker of construction aggregates, though shares are down not quite as much, 3.5%. third-quarter earnings also below estimated. it cut the forecast for the full year. these shares up year to date. these are strong performers. for energytools materials industries, a wide range of industries, those after the down 4%

company's earnings-per-share forecast for the full year after a cut came in below estimates, first-quarter earnings below estimates as well. stock has also been a better performer for the year to date. atpite all these declines the s&p 500 materials index, it is up almost three quarters of 1%. we see a decent amount on the screen. rallying despite gold being lower today. the stock is higher and mosaic coming out ahead of estimates with its numbers. that is counterbalancing some of the declines in aggregates. overall now, cutting 100,000 tons per year. who knows if it is enough but that is the kind of idea. purpose, it has cut think on purpose.

there is a distinction there. thank you so much, julie hyman. talking about the rally, i wanted to look and see what is actually leading it. see a comparison chart of good stocks versus bad stocks. that white line are good balance sheets stocks. stocks thatne are have weaker balance sheets. what is interesting to me if you zoom in over the last couple of two, yesterday, we saw the moving line together. it was a broad-based gallery yesterday. we are seeing the good balance sheet stocks that are now taking the lead. >> as opposed to pushing everything up to buy risk. that is one point of consideration as the interest rate environment looks to change as early as december and possibly next year, with -- which kind of companies can withstand versus those that have a lot of room.

alix: totally. still ahead, chipotle shares are crumbling after e. coli contaminations sicken customers are what is next for the mexican chain restaurant? is this a good buying opportunity for investors? ♪

alix: chipotle mexican grill temporarily shutting down 43 restaurants in the seattle and portland area. all of this as investigators investigate e. coli outbreak that got customers sick. scarlet: this is the third outbreak linked to the mexican chain since august. chipotle prides itself on holistic and antibiotic free ingredients. craig, is there a comparison to be made between yelm and its food supplier, foodies -- food

safety issues with what chipotle is doing with here? hurt yumpplier has badly. what we are getting from analysts is that this is a short-term risk from aaa. this is a short-term sales but nothing long-term. their reputation. they serve better ingredients pitted harms that a little bit but everything i'm reading is that this is a short-term issue for them. >> piper jaffray had a note out saying it would be a 22% hit two fourth-quarter earnings. you guys live and die by how many stores they can open. >> they do. q4, same-store sales are last year, aaa sales were up 17% but it's slow down. they came in last quarter a 2.5. this company is reaching middle-age and slowing down a bit. the question is can they continue to grow.

this does not help. they would back, they cannot open more restaurants because of this specific issue. there was a note out saying panera was one that could benefit if there was a customer that would say i would like to lunch, an area is one, they are really the only chain that could match health claims on a national scale. then there are places that are also mexican that might see a boost. you, covering the fast casual industry for us. ahead, in danger of an s&p downgrade? we'll tell you why. ♪

i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. >> from the bloomberg world headquarters in new york time alix steel.

scarlet: i am scarlet fu. let's start with first word news. >> thank you. we start with the investigation into the fatal crash of the russian passenger plane over the weekend. the egyptian aviation and ministers says they will examine the data from the black boxes. in theplane crashed sinai peninsula. egyptian and russian experts, as well as representatives from ireland where the metro bus was registered. all on board were killed. most of them are russians returning from vacation. moscow will consider a serious ofn including the out president bashar al-assad. balked atd -- he has other suggestions that the syrian president should be moved. they do not think it is crucial for washer al-assad to stay in power and only the syrian people

can decide his fate. angela merkel coming closer to ending the political fight over refugees. they have not then able to decide what to do about the biggest influx of refugees since world war ii. a coalition partner signaled a deal was possible. paul ryan held his first press briefing earlier. he promised to offer the country a bold and alternative agenda and to take a different approach run that of former speaker john boehner, whose 10-year was rife with republican infighting. he will work together with republicans for a new vision. >> i told people we will do more of this. i am committed to a complete set of changes to the house rules to make it a more deliberative and participatory process. we will get this right for the american people.

>> ryan says the house will operate in a more inclusive and open fashion. former house speaker dennis hastert has been removed from his place in the capital. the painting was in the speakers lobby sce 2009. last week he pleaded guilty in a hush money scheme related to sexual misconduct. that is a look at the first were news. you can find the latest on bloomberg.com back to you. today, third-quarter net income more than doubled. the stocks fell in european trading as the bank pushed back probability charges and reshuffled its senior management team. wealth management fell 10% in the quarter, and it is dealing with stricter european capital regulations. nus cranny set down to discuss the challenges the bank was facing. i can do exactly the opposite.

into emerging markets. in china, the geopolitics of france. i am glad that not only have we manage the risk of the bank effectively, we have managed in the good times risks. that is the biggest success for the quarter. use,: the language you announced, leveraging, low client activity -- should we be concerned for 2016? >> the journey of growth and wealth creation is still intact. it is more volatile, but i feel confident that we will continue to have a substantial part of our growth coming from asia. of course, it will be more challenging going forward, but we are well prepared. manus: investment banks, revamped and restructured, to deliver a return equity. where did it would come and is it sustainable? >> it is very sustainable. looking back in the last 12

always beatenad our minimum of 15%. always above 20% in different market conditions, good and bad, very challenging conditions. we are focused. andresources serve clients, become a very successful and good business model. manus: let's talk about targets. you had 21%. you adjusted. today, the market would say you are delaying return on equity targets, 15% by 2018. what is the response? it is technically a delay. >> the response is that we are ourcally -- likely to beat target of 10%. maybe we'll get closer to the 15% this year. we have not delayed. our return onng

equity target, as you pointed out, for out of 21%. i think it is important. these are driven by external factors. macro economic consideration. curve on u.s., swiss, euro interest rates, it is 220 basis points lower than consensus, so that is the first adjustment. the second is new regulation internationally and in switzerland out to 23% on our return on equities. we are going to compensate, work on ways to improve those targets. they are normal adjustments. we are committed to our 15% return on tangible equity targets. that was the ubs ceo speaking to manus cranny. they have changed targets for the third time. it is not the only international

bank with lots of explaining to do. scarlet: standard chartered saw the biggest intraday drop in three days after bill winters announced third-quarter losses of $139 million and a drastic plan to reduce damage. he plans to scrap the second half dividends, raise capital with a rights offering to dilute shareholders, and cut jobs. 15,000 jobs, 17% of the workforce, to save billion dollars by 2018. this is one of the biggest problems for standard chartered. the is exposure to commodity business. their commodity portfolios exceed $43 billion split between traders and producers. they are a source of 43% of their corporate nonperforming loans. they are at great risk when it comes to their commodity exposure. you are seeing a revenue slowdown of quarter on quarter,

year on year. it was down 18%. the estimates are that great, either. they could be down 10% in the next half of the year. those the huge story for this company. scarlet: commodity exposure in asia. that is where they are concentrating. you can see where they get most of their revenue, greater china accounting for a big portion. is it too little, too late? standard chartered raised the same in 2010, then had to raise more. wait too long?s if you look at how the stock performed since june, it has dropped 39%. if he could have spared shareholders in the dissolution. alix: looking at oil companies, cupping their -- cutting their they're taking it

seriously. the stock was down on news that was supposed to be good for the come any. they are pivoting to the wealth management business. so as everybody else. scarlet: everyone is saying, we safer,ng to something private banking, wealth management in asia. alix: it might not be a bad thing. they may have connections, outreach, maybe long-term benefits. theof the biggest banks in u.s. is not rosy either. a statement was released that 8 take banks are on a negative credit watch wallowing the federal reserve ruling making it less likely they would receive a government bailout in the financial crisis. scarlet: we are joined by hugh. what is the s&p concerned about? what is the reason for the credit watch booms? >> it is straightforward. the chance that if there is a

future crisis that requires a huge bailout like in 2008 or two thousand nine, they have structures that allow those firms to be dissolved without huge government assistance. that is what people want. investors, the government, and regulators. that is already built into credit ratings. if you take that away, they are less credit worthy. what does that due to its debt? is it more expensive for them to borrow? hugh: theoretically. if you are not credit worthy, you go to the debt market. however, and we saw this in 2012, sometimes it does not have that impact. talking to people in the market, they say because everyone has cut on the same time, it is not based on fundamentals but a different methodology. there are so many factors in the deck market that determine how

much of the money pays. scarlet: relative value to security. why are u.s. bank so much further ahead then european banks like in capital raised. jpmorgan does not face that scrutiny on that level. hugh: what are they doing? they are slashing dividends, saving money, getting out of businesses where cost margins aren't great. it sounds like 2010 2011. they are in trouble across the pond. even these incremental moves are not going to be good enough. essentially, the u.s. banking regulators pushed these forms to do this earlier. european bank regulators could not afford to do it, because the leveraging at that rate would destroy the economy, so they waited until now. they have lost a lot of credibility in the last

financial crisis. alix: thank you. we have more coming up on bloomberg "market day." -- on bloomberg "markets." we'll give you the details. alix: and the inflation talk. tomorrow, we will hear from the fed's big three. what clues could we get about the december rate increase? ♪

scarlet: welcome back. i'm scarlet fu. alix: i am alix steel. scarlet: looking at the biggest

news stories. bill gross says there is a way for the federal reserve to fix the economy. they should sell longer-term treasuries and shorter-term notes. the difference has flattened because central banks must keep rates low. a factory order fell in september for the second straight month. orders dropped 1%. a 36% fall in the volatile category of commercial aircraft. there is weakness in other areas including primary metals, machinery, and computers. scarlet: l.l. bean has gone outside the country -- outside the company for the first time in its 103 year history for its ceo. before l.l. bean, smith was the chief merchandising officer for a chinese grocer. they had 1.6 billion dollars in sales last year. you need to wait if you want to get those. you get more business news at bloomberg.com. alix: did you have those

backpacks in your younger with your initials? i wanted them so bad. scarlet: i got them for my kids. alix: stocks in hong kong and in their six-day losing streak after a strong manufacturing data from europe and the u.s. overshadowed china's weakness. asia-pacific equity indices -- indices have their first again overnight on the s&p 500. it closed for a national holiday. in korea government bonds fell as a pickup in inflation as the bank of the korea will not undertake rate cuts this year. financials in hong kong on standard charters shock announcement of 15,000 job cuts and a $5 billion offering. shares lowered 6% on the day. in shanghai, the a share index closed with a one point 6% decline. australia's dollar will gain as interest rates held steady. the stocks in sydney up 1.4% on

the melbourne cup race day. now a look at the european market where stocks ended higher for the second day. here's mark barton from london. : fluctuating between gains and losses. they finished higher for a second day. oil companies led the advances with crude rising to a two-year high. the focus was on returning. the european banking sector. looking at standard chartered, at one time shares were down 11%, $5.1 billion sufferings. cutting 17% of its work. jefferies international says the capital raising won't be enough. the bank of england planning to release its latest stress tests next month. many say this will need $10 billion to plug its capital hole. ubs down 4%, sinking the most in

two months, pushing back the probability target for the third time in 2 years. scarlet: thank you. let's go to the nasdaq where abigail doolittle has the latest . plunging after earning reports today. stun gunshares of the maker are off significantly after they miss their third-quarter profit forecast by 72%. the company did beat a revenue topline slightly, causing them to say they passed their external i've -- external applications -- expectations. when you look at valuations, it is a significant premium, 70 3% to the cost group on the next 12 months pe basis. after a big run of over the last five years, draft a peak, more than 900% over the last five years, it may explain why there is a 26% interest on the stock and why it is off more than 10%

in the face of this week performance. this electricla, car company reports tonight after the bell, the consensus estimate is for non-gap sales of 1.2 billion dollars, or 4% sequential revenue growth. bloomberg analysts say to watch for production, will the company meet its target for 50,000 units in 2015? second, model execution. it is critical to meet guidance for positive cash flow in the first quarter of 2016. this is another stock with shortages, 27%, suggesting it is important the company gives strong updates on both metrics. scarlet: bloomberg's abigail doolittle from the nasdaq. coming up, what do companies think about the risk of an nation? why some incorporated america are saying it is not a biggie. and in greeley will explain. ♪

alix: welcome back to bloomberg markets i am alix steel. scarlet: brendan greeley joins us with his weekly big idea, focusing on companies attitudes toward inflation. brendan: at the ecb they're asking how do they deal with macroeconomic policy and a low-inflation environment. it is a paper they presented. in new zealand, why new zealand? since 19 90 they have had consistent expectations of inflation. they got it down between 2% and 4%. it works, before, after. companies do not see it this

way. we don't have good data, any central bank anywhere, on how companies think about inflation. we know what forecasters and central banks think, but not the actors in the economy. what we are looking about here is a study of 3000 companies in new zealand. they were asked, what do you think of inflation, what are your expectations? scarlet: we are having issues and cannot change the slide. companies, they pay attention to inflation and some that do not. half the companies surveyed have no understanding whatsoever of how inflation works. companies in trade, many factoring -- where the price of goods is important, understand expectations matches the forecast. others in financial services, their understanding of future in place in is that 10% or 15%,

inconsistent with the history of new zealand. when you ask the actors in an economy, companies, if you're trying to go forward what inflation will be, they are not paying attention. this is half of the economy. the university of michigan consumer confidence report, there is inflation expectation. i wondered, who answers these questions that you can give a number. i believe that inflation will be at 1.9% in a years time. brendan: what we learned in the study is that the managers of companies are more like consumers than professional forecasters. at actual consumer expectations of inflation, they look like managers expectations. they are making economic decisions. alix: does the landscape change if wages increase.

companies are looking at a deflationary environment, people do not care or notice when versus going down, they only notice when it is going up. brendan: we need more data. new zealand has had consistent inflation. i imagine that the picture is different in a place like -- argentina. maybe after in the economy pays attention, or india, they do not have a runaway inflation, but it is much more significant. the real trick now, this is a study. i think the result is shocking. i would've thought firms would have been more understanding in their expectation of future inflation. the data does not exist, we need an index for the u.s., new zealand, japan, and the u.k. to look at what companies think. if you have a central bank inflationhrough

expectation, they know what those are. alix: one more data point for the central bank to consider. scarlet: had you make a long-term is this investment as a company if you're unable to have clarity on what people may pay? brendan: the monetary policy works for manufacturing. you are making capital decisions. in the study it was manufacturers and importers who knew what an accurate perception of inflation. it matters to them. they have to pay attention. if everyone -- is you are shifting the economy from manufacturing to services, what then? when you are in financial professional services, in new zealand, they didn't pay attention. if your economy is driven by thinkies that do not about inflation because they're not making massive capital purchases, how do you use

monetary policy to drive their expectations? alix: the distinction between how manufacturing and service companies view inflation or are affected by them. they would not be affected by a bubble or inflation, that is also an interesting distinction. brendan: there is need for fiscal stimulus. that meant changing reserve ratios, what is that good for? manufacturing. what do they want to do? rebalance the wait for manufacturing. for theank you so much senior economic correspondent, brendan greeley with this week's big idea. ♪

alix: welcome to bloomberg markets.

♪ scarlet: from bloomberg world headquarters in new york, good afternoon. i'm scarlet fu. alix: i'm alix steel. with the december rate hike, change comes to the investment landscape. we tell you what the bond market is indicating. david: -- scarlet: what is driving consumer demand. alix: activision makes a deal worth nearly $6 billion. will it mean gaming gold? scarlet: first let's check on what's happening in the markets. julie hyman is looking at some of the action. we're off the highs the session. julie: off the highs this section, actually -- alix: we're going to come back to later. scarlet: your computer going. alix: we're going to check in on

the bloomberg first word news. next.nocencio has ramy: american satellites detected heat around the plane that went to ground. it could mean anything from a fire to a bomb blast. died.4 people aboard in texas, voters are considering seven proposed a moment to the state constitution. ohio voters must decide whether to legalize marijuana, and if so, who should grow it. areolorado, viewers deciding what to do with income from marijuana. suppress hiv or as well as three daily pills.

johnson & johnson calls it a milestone in hiv treatment. glaxosmithkline was also part of the study. a parade is getting underway at this hour in kansas city as the royal celebrate their second world series championship in franchise history. expected 200,000 people the pack into the parade route and the downtown kansas city. -- into downtown kansas city. you can find the latest news on bloomberg.com. scarlet: you know how mark is not here to talk about the parade? nursing his mets hangover. director is not looking at his screen. they are a better team, sorry, mets. let's go back to julie hyman where the computer is working again. that about the mets because he doesn't care about sports.

julie: i could say the same thing. let's look at stocks. my graphics are working again. we are seeing all three major averages training higher today. his energy that pushing the averages higher. group is up by 2.6%. helped in part by earnings reports, and it's also the lift in oil prices that's helping matters today. there are a couple of different things that are boosting the price of oil today, a bit of a setback from the lowest it's been in about a week. in addition, we had supply constraints from libya and brazil. that's been helping oil prices as well. we could take a look at where oil is trading. it is also speculation that the wiki -- the weekly inventory reports will show moderation of inventory build we've been seeing recently. and perhaps the third week of

increasing production in oil prices, at least that's the speculation. we are seeing oil gain on the day, and accelerate its games on the day. downside is the indicative perhaps of the declines we are seeing today on their spread is aig. the company reported earnings that missed estimates because of losses on investments. the ceos peter hancock spurning carl icahn's that aig split itself into three, offering a defense of the company as a combined entity on the conference call today. he says he will discuss the matter with icon and open discussions with shareholders. i found how to present aig. stock valuations have an higher. julie: they have. in fact, black rock flag to chart the david wilson noticed. you're looking at the price-earnings ratio of the s&p 500, a 10 year chart. we are looking at your highest

level since 2010. about 18.8 earnings. they are offering a word of caution saying we will not continue to see multiples expand at this pace, particularly as the fed does begin raising rates. he is getting a little cautious revaluations that these levels. it looks like that's not a widely shared, at least, not a few judgment the rally we've seen over the past couple of days. david: thank you -- scarlet: thank you, julie hyman. joining us from san francisco is russ cost ridge. tell us about how this is finally dovetailing with the caution you see in the bond market. russ: we've seen a lot of this rally off the october lows. it's driven by multiple

expansion. it has been a change in fundamentals. the good news is it can continue a while longer, as we see the european central bank adds to their own qe programs. if you are looking out six months, 12 month come a couple of years, you need to see earnings growth take the baton, otherwise this rally will start to folder. talk about started to falter, we've been seeing stocks via money on buybacks, the performance is now declining when it comes versus the s&p. buybacks, theyy would rather see balance sheets, where does that leave pe expansion? russ: if we see an environment where credit conditions deteriorate, that's a more challenging environment for equity multiples. connected to that is the question of growth. yes, multiples are generally higher when inflation is low in rates are low the way they are today.

multiples also correlate with growth. if investors are lowering their exultation for future growth and raising their expectation for default, that is generally not an environment in which you can expect multiple expansion to carry the market. scarlet: what's going to be a longer-term driver if we see a shift in central-bank action? going to put up or pressure on the dollar is a diverges. what does that do to expansion? russ: it tells you the marginal dollar you invest has a better place outside of the united states. likely to see diversions, japan, china, they're heading in a different direction from the fed. as we've seen in the u.s., you can support markets for quite some time if you have an aggressive qe program. in my mind, that favors markets like japan and potentially europe as well where you can enjoy that tail end of qe as well. julie was talking about

carl icahn and mistaken aig. if you look at how investors have been pushing for companies to unlock values by breaking up, spinning off parts of their assets -- it worked to their benefit for a while. but this quarter it hasn't paid off. the bloomberg u.s. spinoff index theactually underperformed broader s&p 500 this quarter after outperforming in the second and third quarters. what does that signal to you? great point and signals larger issue. companies have been very creative in getting around the slope of environment. we've seen financial engineering and buybacks, we've seen them gave -- shave every single dollar off of profit margins. that's harder to do. if you look at sales on the s&p 500, they are only running about 45%, which tells you companies are still struggling to grow that top line. they're looking to everything else in the absence of that. scarlet: at the same time, there

seems to be a little bit of signal of the loan market might be drying up just a bit. if you come inside the bloomberg terminal, take a look at some data we got from the fed senior loan officer opinion survey yesterday. the respondents reporting tightening standards for commercial and industrial loans to large and medium-sized businesses by 7.4%. i should point out, that's the highest if you max it out right now, the highest level we have seen since 2012. is this a blip or the southern company should be concerned somethingr is this companies should be concerned about? russ: one of the concerns a lot of investors have right now, the alum group is to let it is level. where is more challenged is the household level, which never really picked up dramatically after the financial crisis. scarlet: what is your take away from earning season so far? revenue growth remains challenged, we talked about how

companies use financial engineering through buybacks or self imposed on them in terms of ray, spinoffs, that kind of thing. a lot of companies are looking to m&a as the solution. what are you seeing on the bottom line and topline? russ: the timeline is challenged. we had less than half of companies beating on revenue numbers. they are beating on earnings, that has to do with squeezing the bottom line. and this is why you may have better opportunities outside of the u.s., is that it's harder to larger levels. this longer-term trend where companies were able to beat earnings by basically controlling margins, that's going to be more difficult to do, particularly if wages take up in 2016. scarlet: we are at the margins are ready? -- peak margins? russ: we've been there for a while. longer get the tailwind of expansion the way you have in years past. alix: we definitely tagteam on

peak dollar, big margins. you mentioned japan and europe offer more opportunities. if we take a look inside the bloomberg terminal, we brought this up earlier. take a look at two-year yields, in japan, they are pretty much flat. trending into negative territory. in europe, france, germany, switzerland, they are all the negative territory. does that give you cause for concern about investigating -- investing in areas like that? russ: they are areas challenged by slow growth. banksu also have central engaging in aggressive buyback programs, which are also influencing it. we were quite right. if you look at europe right now, there are numerous countries of the one to name where to your yields are negative. switzerland costs about 1%, you got to take this was government 1% to babysit your money for two years. if the next ordinary time. it violates all the financial textbooks that you can have negative rates. -- thankrisk ostrich

you, russ koesterich. alix: lots more to come on the "bloomberg market day." ♪

scarlet: breaking news involving volkswagens. close nichols is in berlin -- hans nichols is in berlin. volkswagen says 800 -- 8000 additional vehicles are impacted. we spent the better part of the day going back-and-forth between what volkswagens said and what the epa's that. the environment protection agency made its case that some 10,000 additional vehicles in the states were affected, and

the volkswagen had other devices that had software that was installed the volkswagen was an honest with. volkswagen pledged to clear up allegro areas -- irregularities. i read this as a backtrack from what they were saying earlier, and the important and significant thing about this is that the news that was out, we haven't totally made the the epaon between what was talking about yesterday is what volkswagen is admitting to today. brands,cts the portion the audi brands, and another volkswagen brand. this is indication that the portion brand could be affected. the new ceo came from porsche, this could be a big headache for volkswagen. the bad newslet: keeps on coming. i was looking at vw shares in the u.s., because honestly european trading has closed. inside the bloomberg terminal, these are u.s. shares trading right now, that big letdown came on the heels of those headlines

being released. the stock is down by .2%. it's not the most liquid stock obviously because it's u.s. traded shares. but 453,000, not insignificant either. big leg lower following these headlines that hans was just telling us about. jamie is joining us from detroit. what is your take on this headline? jamie: it's a really vague statement, very difficult to write headlines or read them on this. hans may be right, it may be an acknowledgment of what the epa was saying yesterday, but it might not be. with diesel, a lot of times with the issue is about nitrous oxide. it's the smog forming toxins. with this is identifying is problems with co2, which is carbon dioxide, which is what causes global warming. most emissions regulations, some ok at one of the other or both, in conjunction. i think the one number we really

can hang our hat on his they are identifying the potential to billion euro risk. they originally set aside 6.7 billion -- six point five originally or 6.3 and bumped it up to 6.7 couple weeks ago. a little more than $7 billion, $7.5 billion. now they are saying another 2 billion euros in potential .conomic impact area that's where you have to try and sort out with actually going on. it takes the shine off the vw sales that were posted today. vw also owns audi. sales have grown since the diesel scandal. jamie: sales were up a little, much better than expected. a had analysts predicting small gain, others producing more than 20% drop.

a good game for audi, better than average. the market is really growing rapidly for everything else. butcially on the vw brand, also on audi, they ramped up their prices, just to maintain their sales when they are at intermarket it's otherwise going great. scarlet: jamie joining us from detroit. this is another layer of uncertainty for the company of for germany. volkswagen is extremely important when it comes to germany and their manufacturing and export sector. alix: it's already seen the effect on the conference numbers -- consumer confidence numbers. germany is dealing with all this fallout from the gw -- vw cheating scandal. scarlet: much more ahead. stay with us. ♪

scarlet: welcome back to "bloomberg markets."

and scarlet fu. alix: economist brendan brown believes it caused a global monetary plague. carolns bloomberg radio's massar and cory johnson. carol: i'm carol massar in new york, cory johnson in san francisco. we want to take a deep dive into quantitative easing. it's the subject of a new book that's out called a global monetary plague, federal reserve quantitative easing and the author is the executive director at mitsubishi, he joins us in the bloomberg radio studio. brenton, good to have you with us. quantitative easing, we spend so much time and bloomberg talking about quantitative easing and fed policy. why did you decide to do this book? you look at what it has done to asset classes? brendan: according to my analysis, quantitative easing has strengthened irrational forces operating and financial

markets. it created a lot of distortions of pricing. yield off a search for and underestimation of risk in many asset classes. this has been a whole range of speculative stories which are common gone. -- has come and gone. the most recent of which is the emerging markets. here i am in silicon valley, and you talk about irrational speculation and i see more than 100 companies valued at $1 billion in the private market, some of them have no revenues. is this the kind of thing you found in your work? brendan: definitely. as a price inflation is not a new phenomenon. with us for 100 years or more, to a whole range of different cycles. but we know from previous experience with this is that asset price inflation through the cycle tends to move from one asset class to another.

in themes a mid phase cycle when speculative temperatures are falling sharply in some areas, but continue to rise and others. i think where we are now in the cycle is we are precisely at this midphase were even coming on toward the late phase. what we've seen since the summer has been that asset price inflation faded away in emerging markets and commodities. but of course, speculative temperatures since then have risen to the sky in silicon there, and the equities which we have seen basically set on fire. carol: what happens from here, based on your analysis? in games.here are two a possible one is that the cycle comes to an end without any significant rise in interest rates simply because of asset price inflation is so severe and so out of touch with reality. but you get some sort of big crash developing. and that brings on the next recession. the other possibility is the music continues, interest rates

begin to rise. that can go on for some time. it's very difficult to predict. -- this may be a cycle which is dynamics don't involve changing interest rates. it comes to an end before we get to crisis. cory: how does your work differ from the traditional austrian school of economics and looking ahead to the notion that qe inevitably leads to bubbles that pop ingloriously? brendan: is more nuanced than that. the traditional austrian analysis concentrates very much on ideas such as overinvestment. bework in this book tends to much more related to some of the behavioral finance work and ideas are rational expectations of professor shiller. what i would say also as i don't necessarily share the gloom and doom possibly of some of the

austrian analyses. one should never close one's eyes totally to possibility of economic surprise in a good way or economic miracle. we have been through these cycles before, and sometimes the bad monetary situation is reconciled by the arrival of some exceptionally good news, it happened in the 1990's where you had the i.t. boom coming along, which was a genuine rise in productivity. allow the sames, mistakes of the 1990's to go on for much longer time. done to mayben be eu's what could be a difficult outcome? is there nothing the policymakers can do or legislatures can do? brendan: we are very late in the story. the big question is what happens beyond this?

once this does move on to its asset price deflation phase, what happens next? we have to sink of -- think of serious monetary reform. brendan brown, executive director. back to you guys. scarlet: carol massar and cory johnson of bloomberg radio. alix: still ahead on "bloomberg markets," automakers reporting their best in years. scarlet: volkswagen doing well. alix: even though it hundred thousand cars could be plagued with that emissions scandal. we'll be right back. ♪

scarlet: from bloomberg world headquarters in new york, welcome back.

scarlet: ramy inocencio has more. --y: we begin with the brim the grim task of those killed in a russian jet crash. families are at the morgue, only 10 of the 224 victims have been identified. the jet was bringing vacationers back to russia from egypt. egypt's president is scoffing at islamic state claims that it brought down the airbus. officials are making conflicting claims about the cause, and the u.s. is telling diplomats in egypt to avoid the crash site until the investigation ends. assia says it will consider syrian peace plan that includes the ouster of president bashar al-assad. pressure is a strong backer of assad, and in the past has balked at suggestions that the u.s. president should be removed. a russian foreign minister spokesperson says it doesn't consider it crucial for assad to stay in power, and that only the syrian people can decide the

president's fate. paul ryan says republicans need to offer a new and bold agenda. ryan laid out some of his agenda during his first news briefing following a close conference meeting with republican lawmakers. he says the country is headed in the wrong direction. paul ryan: we are intergenerational defining moment, that is why we don't believe that the country is headed in the wrong direction, we don't think that it is, we think the president has been leading in the wrong direction. we think a hillary clinton presidency will continue leading the country in the wrong direction. that is why we feel we have an obligation to the hard-working citizens of this country to show them how we would do things differently, to tackle our countries problems before they tackle us, and to get things fixed. also says the house will operate in a more inclusive and open fashion. a u.n. next was a severe weather linked to climate change is driving people's access to food. food security experts and

predict food related changes could subject more people to malnutrition by 2080. that's a look at the first word news. you can find the latest news on bloomberg.com. back to you. scarlet: thank you, ramy inocencio. jon stewart has a new gig. bloomberg has learned that jon stewart as fine an exclusive for your production deal with hbo. we're talking short form digital content for other film and tv ventures. scarlet: quality television, highbrow television. he was enjoying his time off, not having to wake up and work. he was watching television with his kids. his only real big high-profile gig after leaving the daily show was to host a meeting master of ceremonies at debbie debbie's -- wwe's summer slam. scarlet: it's a testament to

short form videos. it's a commitment to those corn cutters like me. my only have apple tv. alix: i live on hbo. i don't have cable. the gators to people like me, it's the new form of entertainment at the end of the day. -- caters to people like me. scarlet: who needs cable when you can get jon stewart? world's leading conferences for technology and ideas kicked off in dublin today. in four years it's grown from 400 attendees to over 22000 and more than 110 countries. scarlet: earlier, we spoke to bill ford, and asked him how he is embracing start off, and how they can get access to ford. >> we now have access points in our companies where young entrepreneurs can find their way into the company, and then we will then not just open a door for them, we will hold their hand in the whole process. bigthing for sure is

companies can be inherently difficult to work with. so we talk a lot about how we change that and become a company that young companies really love to work with. >> if you are looking at your industry and five to 10 years, what do you see winning out? autonomous vehicles, sharing, do have a gut instinct? >> is going to happen much quicker than any of us for next. technologyone thing has shown me over the years, whenever you get on technology pass, the time frames become very truncated. if i thought that they was going to happen 20 years from now, it's probably going to happen in seven or 83 these time frames just decompressing because there's there is so much development happening. so many smart people, so much money being thrown at solutions. that's why company like ours has to be incredibly open-minded incurious. because there is such tremendous change going on. but the world is going to look

quite different in five years, and in 10 years, our business model will start to look different. we different streams of revenue than we do today. revolution,see a often one sees a consolidation move. do you see consolidation in the auto sector? >> people have been producing that for 30 years. i remember in the early 1980's, there was a study that that in five years there would be too american, to european, and to asian car companies. quite the opposite happened. we've had lots of new entrants. first the koreans and chinese, tesla, the list just goes on and on. i don't know. as the short answer. logically, should it happen? probably. will it happen, no idea. >> can we can you with fiat? >> when we think about the future that we haven't talking about today, that's going to require a lot of resources, both people and monetary to help make that future reality. that's really where we're at,

what we're focused on. it's not acquiring other companies, but really how we can use our resources to create a new future. for more on cars, auto makers post another blockbuster month in sales in the u.s. in october. more jobs growth, or credit availability and affordable fuel have encouraged car buyers to replace aging vehicles. scarlet: joining us from california is jessica caldwell, senior analyst and director of pricing at edmunds.com. carre we get to the overall sales numbers, i wanted to start off by asking you about volkswagen. they reported a first full month of sales increases, despite the emissions scandal. in the last 20 men we learned from volkswagen at an internal probe found that the company than see an effect on more 800,000 cars. volkswagen didn't identify which brands or which kind of engines would be affected.

my question to you is why hasn't this emissions scandal engulfed the vw brands like audi and porsche yet. ? a lot of consumers are seeing volkswagen, not necessarily seeing audi. that means a lot, a lot of people to make that connection. we've seen that in some of the other scandals of the past two years like general motors. their brands, especially ones no longer for sale, had an effect on the brands that currently work. they reported flat sales in the u.s. in october. audi is up. it seems like the like and has had to respond to this crisis with their company by the ticket price, basically offering really steep discounts to get people to buy their cars. when we see add-ons like we did

today, 800,000 more cars expected, does that mean deeper discounts in the future? jessica: potentially. 800,000 vehicles, we don't know where they are what they are. i imagine there's more to come in the story. the fact that incentives can grow, especially as we go into the holidays. all companies are going to be drawing on more incentives and more advertising. i imagine volkswagen will be doing the same. scarlet: who typically buys all clients? -- volkswagens? can you profile the buyer, and who they will switch over to it volkswagen continues to disappoint? a volkswagen diesel buyer may be different from the volkswagen mainstream buyer. the diesel buyer is someone who is a little bit, more of a car enthusiast. diesel is kind of a niche market. you have quirky folks who are interested in performance and fuel economy. not necessarily going hybrid route. that was a thing when the story

broke the people will be buying hybrids. i don't think necessarily there's a lot of cross over there. you could see an influx into other smaller brands like subaru. these people want something different than the mainstream. perhaps mazda as well. scarlet: i know we through this headline i do. in your opinion, what might this have to do with epa accusations yesterday that there is a larger three liter engines that also could have had the default devices and the router device -- the broader issue is how much worse can it get? jessica: it's hard to say how much worse they can get. it's not very typical with stories like this. you don't get the complete story on day one, usually comes weeks if not months, and with volkswagen scandal, we've seen it go for over a month without any concrete next steps in terms of the fix. newsuld be related to the we saw about porsche yesterday, it could be something different. from what i understand, something about irregularity,

something they're not entirely sure about. i think we have to get more information before we can come up with any conclusions. scarlet: one quick comment on the overall october sales numbers. obviously, auto sales continue to burn brightly. to some extent, people are worried we may be getting a peek. -- hitting a peak. jessica: sales and stronger and stronger. usually october we had a bit of a lull. thought the case. it looks like the adjusted rate will be more than $18 million for the second consecutive month with a huge -- which is huge. in november and december we don't see any slowdowns. as we get into 2016, that could really be a peak year. in terms of the short-term, don't see a lot of slowdowns. factors are in place, this cheap credit, low gas prices, a lot of lease returns coming back into the market. that really bugs car sales a lot.

small factors that lead us to these giant numbers that we are seeing reported today. scarlet: jessica caldwell, thank you. jessica is a senior analyst and director of pricing an industry analysis at edmunds.com joining us from santa monica california. coming up in the next 20 minutes of the "bloomberg market day," the tech ipo seeing the lowest numbers of six years. why is the public market unappealing to hot startups? call of duty needs can be crushed. all the details on the deal. alix: a hold on the review of the keystone pipeline. what is behind this request. scarlet: as we go to break, you're looking at live pictures of the kansas city royal celebration. the royals won the world series championship against the new york mets. it is the royals first win in 30 years. scarlet: that's enough. alix: it's not like they win every year. 30 years, they worked hard. scarlet: it was a painful world series to watch. alix: we'll be right back. ♪

scarlet: welcome back to bloomberg markets, i'm scarlet fu. alix: alix steel. we look at the business biggest -- biggest business stories. vice land will focus on gay culture, marijuana, and music. -- itannel previously will reach many homes. which co-owns a any reportedly invested $200 million in vice land. -- the u.k. bank will dump about 17% of its

workforce. it becomes the third european bank in two weeks to announce sweeping job cuts, bringing the total plan reduction to more inn 30,000 or almost one seven positions. it's also raising capital and suspending its dividend. bean is going outside the company for the first time in its 103 year history. stephen smith replaces chris mccormack. he was grievously the chief merchandising and marketing officer of a chinese online grocer. it has more than 5000 employees. you can always get more business news that bloomberg.com . julie hyman has been checking up on individual movers. julie: we are looking at the winners in today's session. let's take a look at the deal in the videogame industry. the maker of candy crash, king digital selling itself to activision and blizzard. both stocks are on the rise.

the take-up prices $18 a share. king digital is rising to nearly that level, $5.9 billion overall. it is a premium, but it is a discount to its ipo price. take a look at my bloomberg terminal. a 20% discount to the ipo from early 2014. that could be one of the reasons why we are seeing activision and blizzard on the rise. it's getting king digital at a much lower price than it was when it became public. this also illustrates how fickle the public is when it comes to gaming, in particular, some of these mobile games. you look at stops like zynga or blue mobile, the nacre -- the maker of the kim kardashian game. -- soan eagle outfitters when this coming out with earnings that beat estimates. there we go. coming out with earnings that beat estimates, the company is

buying for mac. it's a maker of vaccines for fish. to prevent farm salmon from getting sea lice. interesting there for the animal help company as shares gained ground. now let's look at american eagle outfitters. those shares of been gaining ground as well after the company came out with preliminary earnings that beat estimates are at comparable sales of 9%. it's a real turnaround for american eagle, which has been struggling recently. also, we talked about more merchandise being offered at full price. yes. that's a real switch from what we've been hearing from a lot of researchers. -- retailers. american eagle, abercrombie, aeropostale, have been struggling quite a bit. alix: thank you, julie hyman. scarlet: last year, venture $48 billion into u.s. startups, the most since 2000, right before the collapse of the tech bubble.

the tech ipo market is not so hot. thesector's ecstasy in lowest number of ipos in six years with only a total of $7 million since january. someonening, we asked who has been in the industry since the beginning. >> you have to have an ipo market, and the ipo market has been this year, very weak. midway down. they need ipos. after comes the ultimate test. how did they do the first quarter in the second quarter? that's the thing i'm waiting for. if that bubble breaks, it's one of her meet the way down the line to the private companies. scarlet: what else is defined in the tech sector? the growing number of unicorns, over $1nies valued at million. he had a solution. >> unicorns must go public. they don't have the alternative of selling a private deal,

evaluation has gotten too big. some of them can at the $1 billion or $2 billion level. we are in an environment where so far, they lived on the excitement and enthusiasm and a lot of private money. accessibleing to be to a public market, and all the things you were talking about for volkswagen, aig, is going to affect the unicorn. what happens next quarter. scarlet: he's talking about how to live -- that haven't been a lot of ipos. that bears out. in september, it was a pretty strong month. her relative to the previous september, it was an increase. october where there's a huge drop-off. there's something seasonal with ipos, as with other equity offerings. this is summoned to keep in mind, the deal count so far has really come down. could bet of that because of performance. you can take a look inside the bloomberg terminal, you can kind of see why. this might lend about some on the bottom is the u.s. ipo index. it hasn't done much this year.

that purple line is japan's ipo index to read the green line is europe's ipo index. normalized basis. you can really see how much the u.s. is underperformed in the ipo market. what i see when a look at that is qe. they are still adding stimulus, the u.s. is talking about tightening. it's right around the corner. alix: we're talking about where we see the rate hike in the market. you can see it perfectly in the ipo market. companies are not willing to take on that kind of risk, versus europe and japan, why not? scarlet: you could check out the rest of that interview on bloomberg.com. alix: what happens when call of duty needs candy crash saga? --will be like description destruction of candies. that's next. ♪

alix: welcome back to "bloomberg markets." scarlet: activision has agreed to by king digital, the company behind the candy crash saga. for $5.9 billion. alix: investors like the deal, stock prices shot up more than 80% since the start of the year when it comes to activision. chris paul mary covers the gaming industry for bloomberg news. he joins us from l.a.. we've seen the acquirers weren't getting a boost on the m&a. what's different about this? chris: cap whipsawed a little, it's a little risky but then people took another look and said this actually could pay off for activision. you see a big jump in the stock prices. of activisioneo

is looking out the mobile gaming space as a real entry point. listen to what he had to say. >> weaving now is the right time to enter mobile gaming in a meaningful way. widespread mobile access around the world has opened up significant demand for engaging content that players can enjoy anytime, anywhere. alix: why now? chris: it's funny, they were actually kind of slow. maybe it's a fad, people of had trouble after the initial success. he learned something from the merger with blizzard a few years ago, that if you bring in -- he was a leader in consular brought in pc games. he was able to get the financing in cash flow from that, and also learn something from that and expand the business. he sees the same opportunity, it's another platform and he's got a leadership position. there's a lot of cross-pollination that can happen.

scarlet: estimates are for revenue to fall over the next two quarters. activision look at that and say no big deal? we want that social networking and mobile presence instead? chris: that's exactly what he said. is going to see it as an opportunity to reach those .5 billion players of candy crushed with new product. saideo of king digital there's a lot of ip that activision has come a company the dates that -- dates back decades. candy crushes mostly female. is the potential for new games that could come there, rather than developing on your own. morgan stanley pointing out the top 10 games a capacitive industry revenues. company like zynga, they could be one new head away from them profitable. where does that leave a company

like zynga? chris: i just spoke to the ceo of zynga. he's very excited about this deal. he feels like it validates his business model. he says he doesn't need to do transactions like this because he already has a very broad base of customers and also diversified group of games. the king is pretty much just candy crushed. he says that companies will and they will have the number 102 position in a couple core businesses. scarlet: thank you, chris. alix: much more coming up in the next hour of the "bloomberg markets." one trade -- ♪

david: it's 2:00 p.m. in new york, and 3:00 a.m. in hong kong. welcome to "bloomberg markets."

from bloomberg world headquarters in new york, good morning. i'm david durant. -- david gura. -- emissionsions scandal is not over. the company had another 800,000 cars that showed in regularities. each be a one delivery and a new generation of tv viewers, and while climbing to a two-week high. is this a good time to buy? if it is, and warning what could happen if you actually buy a barrel of oil. first, let's head to the markets desk where julie hyman has the latest. here, thecks rally s&p 500 is less than 1% away from its record now. not huge gains across the board, but enough to inch closer