i am alix steel. joe: i'm joe weisenthal. ♪ >> u.s. stocks closing higher. the nasdaq at a record. joe: "what'd you miss?" >> we break down the latest earnings, including tesla and cbs. guest tell us while he -- why he is bullish on romania and kazakhstan. >> a very interesting time for the ferguson of -- pharmaceutical business. >> we begin with the markets. we extended gains. energy was the star sector, up on the.5 percent gain 100 biggest nonfinancial firms.

risk is back here. treasury markets are down. high-yield debt issuance is back as well. joe: the market closed a little below their highs for the days. it was a really solid run. we are not that far way from an all-time high for the s&p. something that is puzzling to me about the rally is the dow jones transportation average is down. , so goes transports the dow. is it due to energy prices rising? alix: i don't know. standby. scarlet: oil prices were higher and we saw energy stocks get that boost. joe: another thing or the media stocks. bloodbath inhuge the media stocks?

disney is almost at its high. >> and we are waiting for cbs earnings. alix: in terms of transportation, jetblue, avis are down, but it's not just the airlines. it is a broad-based transportation issue. for my deep dive, i wanted to take a look at what is going on beneath the rally. .his is a beautiful chart measures short interest as a percentage of outstanding shares for the sp why -- spy. the yellow line is the number of shares outstanding. of what we have been seeing is absolutely short covering. shortare a number of shares outstanding.

you can look at the technicals. tesla earnings are just out right now. i was looking through the numbers. scarlet: in terms of revenue, in line with what analysts were looking for, $1.24 billion, but still losing money on an adjusted basis, loss per share was whiter than white analysts anticipated. share,s the loss for analysts were looking for $.56 per share. the consensus estimate was for 24.5%, so profitability measure coming in higher. tesla shares have risen more than 7%, so the first blush is positive. orders road more -- rose more than 50%.

50,000ees deliveries at to 52,000. the plant is ahead of schedule as well. alix: they are downgrading their delivery forecasts. now it is down to 52,000. that number was significant to tesla. that is something to watch out for. let's bring in cory johnson in san francisco for his take on these numbers. reporting a loss, not a huge surprise, but everyone is fixated on the delivery numbers. what you sing? >> this is a slight upgrade. -- what are you seeing? >> this is a slight upgrade. they brought that down to 50,000. impossible to get there, but we will see. they preannounced that number.

we will dig into this a little bit more to find out what this means. what we don't have is production dates for the model x. have aomised they would few cars delivered in the third quarter, and they did just that. this could have been handmade cars. the full production and build up , so that's the thing people are going to be listening for in the conference call to figure out when the will be made using the machinery in the factory, so they get the production scale. scalea notion of what the might be for the coming year. we know they have orders, but often that is a number put out there to make is look good. see what theait to

cars are like and what their value might be as to whether the orders will be fulfilled. there is still a lot to be found out here in these numbers from tesla. >> thank you for going to those numbers. year capitals full expenditure higher at $1.7 billion. -- tesla seeing its full-year capital expenditure higher at $1.7 billion. profit for continuing operations, $.88 per share. the highest estimate among analysts was for $.84, so this is a beat. of 3.2 $6 billion, in line with what analysts had anticipated. if you break down the divisions, entertainment better than anticipated. the publishing side, the smallest part of the business, was slightly better than

anticipated, but local broadcasting missing the mark, $638 million compared with $660 million consensus estimate. some concerns about cable company, something you were talking about earlier with a lot of media companies getting hit over the summer with fears that court cunning is taking root. -- cord cutting is taking root here. financialrey's chief economist is here for a look at the markets. we saw some strong car sales number today, beats across the board of the major automakers, does that say anything about the economy in october? we are doing fine. the consumers continue to take the lead, that is important in our economy, where consumers account for 60% of gdp. there has been some pessimism because of weak manufacturing numbers, but i think it has been

overstated. i think the u.s. economy will continue to be the best globally. becauseprimarily it is when you look at payrolls, for example, manufacturing payrolls comprised 8.7% of total to bels, and also tending somewhat skewed. great in transportation, we make a lot of automobiles. we make a lot of airplanes. those sectors will continue to do well. the primary issue has been a drop in capital expenditure spending because of energy prices. that hurt the energy sectors and the manufacturing sectors, but on the other hand, the consumer sector has benefited. a good car sales number makes you feel good, but yesterday there was a report that the subcomponent of employment was rolling over a little bit. what was your take on that?

over for been rolling a well, and we have seen declines in manufacturing employment for at least a few months or, maybe even three. alix: that makes you word for friday? >> manufacturing is small. if you are optimistic, maybe you'll get 10,000. the biggest piece of the puzzle will be services, services comprise 85% of the economy, and ice expected that we will get 85% of our jobs growth in the service sector. you've noted in your reports that there are many cycles and cable, now in a bit of a downturn, so how does it compare with previous bouts of deceleration? been substantial, but part of the reason was that we are coming off a high based at one year ago, we were averaging 300,000 jobs per month in the fourth quarter of 2014. the labor market has slowed down in terms of job growth since that time.

when you look at a lot of the employment numbers that support the labor market, for example small firms continue to do better. the isn look at nonmanufacturing component, the labor index, and that is thereely strong, and also are near record job openings, so people want to hire, it is just a question of when they find the right people to higher. alix: thank you so much. up, we hear from the glaxosmithkline ceo, earnings and the changing pharmaceutical market. that is next. check on tesla shares , surging by 9% after tessa revenue coming in as analysts had anticipated. ♪

alix: i am alix steel. "what'd you miss?" onwe begin with the latest that russian plane that crashed saturday in egypt. jet slowed suddenly and then plunged to the earth at 300 miles per hour. the airbus fell from 31,000 feet to 26,000 feet in the final 26 seconds. all 224 people were killed. the cause is not been determined. a presidential spokesman says taiwan's president will meet with xi jinping in singapore on saturday. this will be the first such meeting of the leaders since the two side to split in 1949 in a civil war. the meeting will be aimed at strengthening piece, but no

agreement or joint declaration is expected. vw indicates an $800,000 car increase. the economic risk as of $2.2 billion. they may be liable for fines as high as $18 billion and faces additional cost from lawsuits in the united states and europe. orioles fans lined the streets of kansas city to celebrate the world series victory. it was the first series win since 1985. fans crowded the parade routes wearing royal blue. that is your first word news. alix: thank you. we have glaxosmithkline's ceo. here are pleased to be

with andrew witty. thank you. let's begin with the elephant in the room. you have been reluctant to talk about the takeover approach for pfizer. why? >> we never comment on rumors around mergers and acquisition. no comment. the question -- >> the question cuts to the heart of why shareholders are ,rustrated, displeased perhaps with glaxosmithkline, and that has to do with the stock price. if pfizer or another company were to come to you with an offer that represented a premium of 25%, how could you turn that down? >> again, i will not comment on the rumors. >> this is more hypothetical. onobviously we are focused delivering the best for our shareholders.

in a company like glaxosmithkline is that you have a lot of moving parts. generation of old , aicines go off patent significant headwind, but it has to happen. those things have to be replaced. focused on iseen building a platform for growth to take us forward for the next 10-15 years. we did the transaction with novartis to build the world leading consumer health care company and vaccine company. i believe we have an innovation portfolio that's going to drive our pharmaceuticals business over the next decade. that is what we are focused on executing. we think it can deliver real value. importantly, it allows us to grow organically, not to commit enormous amounts of capital to buy another business.

so, i understand that people focus on the share price, but they shouldn't forget the money that we paid back over the last seven years to shareholders. like pfizer say they are at a competitive disadvantage. if pfizer and allegan go ahead and foreign -- fisa becomes a formal neutral company -- >> we are a u.k. domicile company. we pay our taxes where we make our profits. we pay 20% tax in terms of our global business. first of all, that is pretty competitive. it has come down a bit. companies should pay some tax. part of the same society, so we think there is a balance point here.

in terms of competition, we tend we compete with the company in hiv, a different company and rare diseases. it is about who is the molecule competitor. finally, if we look at the last of veryars, the history big mergers in this business is next. some have been extremely successful. others have not led to sustain holding of long-term market share gains. it has grown a bit, then receded. some ofreminds me of the skepticism, perhaps even criticism, that you have brought to this notion of acquisitions as a survival strategy in your industry. what does valeant say about companies that rely heavily on mergers and acquisitions? into an't want to get

specific conversation about another company in the same sector. a pharmaceutical business is about innovation. if you are going to innovate, then you have to invest in it. if you want to have superior you need to take risks. if you're going to take risks, that means research and development. research and development is difficult. they are doing amazing things in thery few people world can conceptually understand what it is they are doing. they do that and they may or may not succeed, and you will not know it they are going to succeed for 10-20 years. you're going to spend $1 billion. that is a risky business. in return, we get pretty reasonable margins during we are allowed to earn those margins. want thele say i margin but i will not invest in the research risk that underpins that business model, that is not

sustainable. drug pricing has been a major issue in the u.s. in recent months and has even become a political issue. what hasus how you see been going on lately with drug pricing is potentially impacting your ability to price drugs going forward in the u.s.? been on the record pretty widely for the last few years saying that i think that we need to think hard about where this pricing debate is going. on the one hand, drugs remain a small fraction of total health care costs, only 10% is the pharmaceutical business, but everybody is talking about drug pricing. thee's no transparency tween the list price and what is actually being paid. there are enormous discounts. medicare gets a mandate of 23.8% discount. the government pays 76% of the list price before it starts.

my company, i'll price inflation at the net level over the last five years has averaged around 2%, so we've had a 2% increase of the net price level in the u.s.. the rest of the world has been 0% to a little down. we have to get some sensible discussion, more transparency. personally, i think it is time that people from all sides of the conversation start to get together and think about how we involve this. want us to see great medicines being made available to the people who need them, regardless of their income or insurance factors. we have to find a way to solve that. at the same time, we have to be sure that the incentive for innovation remains. there won't be a treatment if there is no incentive. if the new medicines are unaffordable for the average person, that's not a great outcome either, so we have to focus on innovation and access in the same conversation.

i think it is time for that kind of conversation and move forward. >> there is only one way to bring access. somebody has to pay for it. yes and no, somebody has to pay for, of course that is true. back a you have to step little bit and start to think about what is important to a company. what is important our returns. they are a function of not just price, but volume, and costs. when you think about the modern health care industry, it is thentially dominated by markets in the western european countries and america, about 700 million people in the world underpin what we all regard as the modern health care industry. there are 7 billion people in the world, so the opportunity for pointing dust now it is obvious that that lawyer cannot be at the same price as the developed world, but it can be

at some level. some margin which starts to build into the overall return mix. this conversation gets too fixated on one access -- axis, one price. , we havemithkline tried to strategically engage with that concept. what is that mean? building the world leading's vaccine business. billion -- one billion units of vaccine around the world, almost every country on the planet, some of our biggest boys go to the poorest countries in the world. they don't pay much, but they make some contribution. areaonsumer business, an where huge numbers, hundreds of millions of people, are accessing our medicines or consumer health care products at low prices, and then the pharmaceutical businesses if you add them together, you're seeing a whole series of contributions to the returns.

we start to take the pressure off the need to have the highest price. is a very tenable sustainable long-term strategy. ,t depends on innovation focusing on access, and it depends on access and abroad avoid them. this rolehave been in for seven years, how much longer do you see yourself at the home? it has been a terrific place to be. i've been in the company for 30 years, in fact. we have done a lot. a lot has changed in the company. today was one of the proudest days for me because we embarked in 2008 on a reinvention of our discovery organization, and we said at the time that discovery is going to take 7-8 years before we see if this works. it was incredibly good to stand up there with a two people who began the journey with me.

along with all of their lead scientists, showcasing all this innovation, 80% of the 40 drugs and vaccines we showed today were first in class, 80%. we are talking about curing diseases. we are talking about aspiring to give people lifetime protection against dangerous diseases. we still have a lot of work to get that done. i'm looking forward to seeing it finished. >> thank you very much. back to you. chief executive of glaxosmithkline with two messages for his shareholders on the world as well, innovation essential and long-term returns on investment. alix: thank you very much. want to get back to cory johnson him at digging deeper into tesla's earnings. shares rising.

let's start with sales. what are you seeing? alex is right. their guidance range went from 251,000ars for the year cars. they did 11,603 in the third quarter, but it is the slowest seenof increase they have in quite a while. havethe most cars they made, but that raid of increase is at a slower pace for tesla. again suggesting that they will have over 50,000 for the year. there were a lot of skeptics that thought they would not get that number. in the sequential growth number of vehicles they were able to sell in the quarter. only did we see that,

but we saw gross margins down by 19%. why is the stock up? >> i think that's really important. that they arek losing money on every sale, but as they make more of these cars, gross margins will start to get better, and that is not happening. if you look at the sequential stained -- change, you will see gross margins are getting worse every quarter, and that is -- weakness and currency. that is something to keep an eye on going forward. the fact that they are saying the model x is nearing production and the model three is on the horizon is seen is good news at this moment. >> thank you for that recap. tesla shares up by more than 7% in after-hours trade. why india's economy may be

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scarlet: i am scarlet fu. "what'd you miss?" >> a russian foreign ministry spokeswoman says moscow does not consider it a matter of principle that syrian president bashar al-assad stay in power. russia in september began carrying out airstrikes in syria because of bashar al-assad's request. in germany, chancellor angela merkel resolving refugee crisis. able to agreebeen on the biggest influx of refugees since world war ii.

chancellor angela merkel has refused to close germany's borders. the number of people sickened by the e. coli outbreak is up to 37 from 22. closed 43 west runs -- 43 restaurants in washington and oregon. hbo are teaming up. they have agreed to an exclusive for your production pact, including a first look option for films and tv ventures and includes short form digital content. that is your first word news. >> let's get a quick recap on u.s. markets. have extended gains with energy the star sector.

nasdaq 100 closing at a record high. risk is back because treasuries are down and emerging markets higher. tesla reporting results higher , even after-hours trade as its loss widened. the company did narrow its forecast for full-year sales point. herbalife shares falling more than 3% after its 2016 full-year forecast missed analyst estimates because of a stronger u.s. dollar. can makebe bill ackman back some of that cash that he lost on valeant. joe: we get regional manufacturing numbers from around the world. i want to look in brazil pmi, continuing to a collapse -- to collapse. markets have stabilized, economic data not so much, down to 44.1 from 46.9, this is a

three-year chart. fail,g lower without really ugly in brazil. alix: charlie robertson is chief global economist at renaissance capital. joe: welcome. thank you for joining us. is down,market index where do you see that going? >> it depends on where the dollar goes. year study on0 equity returns in emerging markets, but earnings-per-share growth for the next 10 years is a most impossible to forecast. second thing, currencies. if they are weakening, you will lose money. if you try to get currencies when they are cheap, that is the second-best chest to deliver a return. it depends on whether the dollar continues to rally. if the dollar sells off, and it is a much easier story for the yen. joe: you are really negative on brazil.

why is that? we've looked at 20 years worth of data on exchange rates. we have pointed out th the lows we saw in 2002 with the ofivalent of today's money -- it is cheap. i don't think it gets to 585 because reserves are so high, but it could go weaker next year. and tell you see proof the economy is turning around. >> it is a bit of a value trap at this point. you also talked about how south africans currency is the proxy. >> think to the u.s. dollar. ,outh africa since there alone very easy to short, and a lot of people do. it has room to weaken.

questionsre a lot of about whether south africa is the next brazil. he was looking at budget deficits. brazil will get worse, but south africa is improving. do you see that dynamic laying out? >> i think they are very similar. it's a very similar set of stories, yes. >> you think south africa could be the next brazil? >> i think there is a good chance of a downgrade over the next 12 months. theey is also potentially next brazil. it is connected to private sector debt to -- debt. joe: does the recent election changer outlook? >> not at all. that rise by 50 percentage points of gdp,

definitely in greece, brazil, and turkey. alix: why is that? why do the political considerations not factor into it? people say that is the biggest risk with emerging markets. will be difficult for whoever is in power to deal with the after effects of the credit boom. it will be tough for the next turkish government. joe: what about india? that is one country that people say they are bullish on. >> we did a book on africa, saying africa is just like india it with a 20 year lag. it was going to take off again. that has been modi coming to power. best performer, and

it will be a fast growth story. alix: does that mean there is more value? saying because of population growth you will see that. we find more value in pakistan next door, which is half the price. you can buy the same reform story, pro-business prime minister. some reforms are better in pakistan than india. what about mexico? a lot of people think the peso is undervalued or heading higher. .> it's cheap lowcan't help not like government debt, low private sector debt, all true.

just gets hit anyway. i think the locals themselves are not great fans of their own country. >> i want to broaden this out a little bit. the euro is the one that everyone borrows. they sell that and look for higher yielding currencies. realere an impact on the economy for these emerging markets when people are going long and currencies? >> very helpful for returns, foreign investors getting involved, but there has not been much of that. fore has been a bear trend the last four years, and we still have not finished yet. assuming the dollar continues to rally. if the dollar continues to rally, weakness in emerging-market currencies, how does that change economic fundamentals for the longer term if that trend continues? currencies-market

were overbite, now they are at fair value. brazil is actually cheap. currentyou will see accounts start to improve because imports will get crushed. give it one year. i think you will see the proof of current accounts turning around quicker than most economists have forecast. that will turn this into an export-lead story. be 2017, but it is not gone forever. alix: awesome stuff. charlie roberts is a staying with us. we will talk about the front tier market and what has the most value. ♪

scarlet: i am scarlet fu. "what'd you miss?" the biggest business stories in the news right now. the company says earnings came in at $1.61 billion. analysts were looking for $1.64 billion. cablevision has suspended its stock buyback program and does not see dividends on the horizon. emily: herbalife beating estimates. earnings per share, better than the average analyst estimate. full year earnings per share and range of 465.5 -- it is lowering its outlook for

2016, and shares are falling because of that. williams became coo of groupon in june. adjusted earnings per share beat estimates. revenue did ms. consensus. shares are halted from trading at this hour. businessour bloomberg flash. still with us is charlie robertson, local chief economist at renaissance capital. let's me you -- move beyond the emerging markets. what is the difference between frontier markets and emerging markets? markets moreler liquid, less transparent, harder to get access, and all of these little problems. , they close the

markets for six months. that was unacceptable. now they are back on track to be upgraded next year to emerging market status. one country you are bullish on his kazakh a stand. we were talking about kazakh a stand, what is the story there? >> this currency analysis we have done. currencies,rontier they are the cheapest. it has never been cheaper in 20 years, even in 1999 after the russian devaluation. it is something you should be looking at. they just did a big reaffirm -- reform program.

alix: do you need both economic and political reform? enough that you want to buy it. for you to dough well. you can throw in a reform program as well. in india, mexico, and indonesia, they are doing business reforms. >> let's talk about romania. you say there is modest currency risks. having said that, we have seen what happened with greece. it is a country like romania better off holding on to its currency? the see joining this and go currency as the best way to constrain politicians who otherwise get over excited before elections and start spending too much.

it has impose austerity? >> it has impose constraints. that's why there is an incentive to joining europe. that is some years away. romania is expected to grow 4% next year, the best in european union, credit growth picking up. currency is slightly overvalued come a but nothing significant. the country is picking itself up after 2008 when it spent too much. joe: another country you are watching is can you. what is the story there? is an interesting angle to the african story. has big current account deficit, budget deficit, and they are hoping they will continue to be funded to deliver

electricity supply in the next four years. vietnam, southeast asia, great development story, but they have to deliver the infrastructure. and a huge business reform story. that is the best in the world in the last 12 months. i want to take you inside the bloomberg terminal. when you talk about sub-saharan africa, china is the region's partner, 180 $4 billion, almost three times the amount traded with india. system has got to have an effect on africa? >> it does. nigeria, the oil price has had an obvious impact. your, and its tourism, which has been hit by terrorism issues. that is part of the problem.

china has not been a direct problem for them. benefited from commodity prices because of low oil prices are. they are still getting investment and funding. that is where our concerns lie. thank you so much. renaissance capital, joining us today in new york. to reportbook set earnings after the bell tomorrow. we will dig through those important numbers you cannot miss. ♪

scarlet: i am scarlet fu. "what'd you miss?" afterok reports earnings the close on wednesday. if facebook were a country, the third biggest after india and china. two thirds of sales for mobile, impressive, but the larger user base and currency challenges mean revenue growth has been declining, even if that ray is still more than 40%. investors will focus on monthly active users. to almoste grew 3.5% 1.5 billion in the second quarter. resultrast, twitter showed growth is slowing to just over 1% off a much smaller base. facebook has positioned itself

to capitalize on video ads. in july, it out you to as the most popular video website come on market that may quadruple and value to $43 billion by 2019. let's look at revenue per user, up 23% year on year in the second quarter to $2.76. price per ad surged more than 200%. look for video ads to push that further. online video advertising will grow 29% to $14.25 billion. the jewel and facebook's crown is instagram. projected to top $2.8 billion globally by 2017, representing almost 11% of facebook's ad revenue. it made by time for facebook to monetize what's at. -- app. alix: thank you very much.

now we turn to oil. have you ever wondered what it would take to buy a barrel of crude. we did just that. i'm so jealous that i did not think of the story. why did you want to buy physical crude? of ais story was born out multiyear effort. it started in 2008, when we had the spot market lower than the futures price for oil. you could buy oil on the cheap for immediate delivery, store it, sell a future contract for much more and pocket the difference. alix: now we are seeing something very similar. you buy now and sell four months later and make a profit. >> it's true. it's unfortunate that chart does not go back before so you can

see the big spike. a bigirst that led you to ship with oil and it? >> it is an industrial area in new jersey near a large garbage dump where oil is transported, stored, and refine. the first part of the process was that i happened to meet an oil broker and gas trader in a bar in a bar in new york. the broker specialized in oil and took me on a two or of thateries, with the idea we would get a barrel of oil. i learned very quickly that it is not a good idea. h2se is this thing called that if apparatus from the barrel and will suffocate you.

so we got a smaller amount of oil. $.24 on theabout spot market when we bought it. alix: how did you deal with fedex? >> did joe to you this. when i was on lot with fedex. phone you can send oil through the mail, but it has to be packaged correctly. it was a fantastic story. i encourage you to read it all on bloomberg news, an amazing adventure. tomorrow, we will be right back. ♪

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scarlet: don't miss this. 's$12 billion ipo of japan post office. the government hopes that by privatizing the personal service -- the postal service, that will prompt investors to put some of their money in it. >> i'm checking out chesapeake earnings tomorrow. natural gas prices have gotten so hammered, and burned in says the company might have to sell assets at a discount. looking at earnings down something like 136% year on year. joe: something else you want to watch tomorrow -- more economic data coming out tomorrow. pointinger guest was out we all pay attention to manufacturing, but non-manufacturing is such a bigger part of the economy. this has been running much stronger than the menu actually -- 56.5 is what economists are looking for. specifically, we want to look at pricing, to because we know service sector prices are

higher. >> good point. especially because manufacturing prices not so good when they came out on monday. that's all for us. thanks for watching. >> we will see y

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