alix: from bloomberg world headquarters in new york, good afternoon. i am alix steel. here is what we are watching at this hour. the market moves as janet yellen talks about a december rate hike and under the words live possibility. deke liquidity is the hot buzzword for investors and how will central-bank action change your portfolio. got a prescription for valeant damage control? of a philidor expansion before ties were severed. conducted a close witchhunt. a volkswagen emissions crisis could get worse as the automaker justls gas cars and not diesel had underreported co2 emissions. what it means for the brand and who knew what when. as we mentioned, fed chair janet

yellen speaking about a december rate hike. that has the markets on the move. as we look at the intraday chart of the s&p, you can see stocks declining once she started to speak, now trading around the lows of the session. the real action was really in the two-year bond yields. kind most sensitive to any of rate hike increase from the fed. you can see a huge surge that she started speaking. i should also point out that the two year yield is now at the september meeting when many people were expecting a rate hike. janet yellen speaking now at the house financial services committee. janet yellen: we have no intention given the economic outlook of expanding. we are maintaining our holdings acquiredties that we and we have nood intention of adding to those holdings. alix: with more now, we have

bloomberg editor michael mckee. we heard her talking a little bit about what she would do with the ballot expansion. what is the expansion? hot topic? mike: the hot topic was the word live possibility. she basically read their last statement to the committee. that was their last statement after the fed meeting couple weeks ago. she added the words that december is alive disability -- a live possibility because people want to know how serious the fed is about this. she went a little farther than i thought she would and suggested they are serious about december. alix: looking at the movement in two-year and the stocks, it seems a measured and calm response. would you agree? mike: this was a fairly rapid move higher for yields all across the curve.

no, would be the answer there. [laughter] clear that when get the next data, we get the jobs report on friday. follows that with adp today and significant job creation and it was the unemployment rate again and we see any kind of wage growth, the fed does not have to see inflation rise. we may see inflation moving up because the big drops in november and december last year will fall out of the inflation calculations. mathematically, it will move up in the conditions will be there. be a fed that janet yellen is saying wants to move if they are there. alix: things do not have to get better, just not get worse. mike: they have to be talked into it instead of talked out of it. alix: for more on this market moving action, we want to head over to julie hyman who has the latest. you just heard might tell me know, that was a very big move.

the treasuryms of market. we have to be very specific. there are certain assets where we saw the big reaction. legaw a little bit of a blower, but we are not seeing much movement on the stock side on the negative side. that would perhaps be thought of something healthy. just when we got the fed statement, stocks and then strengthen. that stock investors are ready for the fed to move and prepared for it. my bloomberg terminal and let us take the latest on w.a.r. p. we saw a significant bump up in the probability of a fed move in december. it is not 58%. it was at 52% earlier today. we should mention that this is on a 10 minute lag. let's get to that movement that we saw in the treasury market. on the shorter end, it was practically dramatic as we saw the search -- the surgeon yields. on the 10 year note, seeing the

yields move up around the six-week high as well. upward, dramatic move not magnitude but in terms of velocity to use a tom keene kind of work. the dollar also seeing an movement upward as janet yellen was speaking. not a huge move, but it is the sharpness of the move upward. finally, gold prices moving downward as all this is going on. not a big move either, but it looks like gold is going to have its fifth straight loss on a daily basis. alix: take a look of the two-year and it was already moving higher and already recouping all of its losses that it had since prete september meeting when the fed did not hike in many expected they would. we are already on that trajectory so to speak. julie: and then you just got another like upward. as you and micro talking about, the puzzling thing -- and this is certainly not the first time it happened -- but when the fed repeats itself in the market reacts. alix: now we are listening to what you are saying.

or do we believe you now one you say for the second time? it does not necessarily make sense, but it's not unusual. alix: thank you so much, julie hyman. we want to check in on the bloomberg first work news and ramy has news from the desk. ramy: we begin in new hampshire. democrat martin o'malley was the first major candidate to sign up for new hampshire's first in the nation presidential primaries. donald trump is expected to file later today. candidates have until november 20 to get into the ballot for february's race. a daunting task ahead for virginia's governor as the top two priorities could run into some more blocks. -- many republicans be back them a credit challenges. he said that his fellow democrats focused on seizing the state senate, but the gop was o, holding onere to

to its majority. one incumbent was a loser and one was victorious. secondelected only the gop governor in two decades. republicans have dominated federal elections in the bluegrass state. democrats have maintained control of state government. in mississippi governor phil maintained a second term. we are getting word that the u.k. is suspending flights over sinai saying that the russian jet that crashed over the weekend may have been brought down by an expose of device. the crew had no warning of trouble after crashing into the does. the black box shows no cause of mechanical problems. all 224 people on board were killed when the airbus crashed saturday.

today, grieving relatives now identified the bodies of 33 victims. at our first work news right now. you can also find the latest news on bloomberg.com. back to you. much.thank you so for regulators, valeant's woes have opened up a pandora's box as the u.s. senate is investigating drug pricing practices by the company. how is wall street culpable for valeant's meltdown? david is the former director at the office of management and he stopped by number go earlier today to answer that question. it's a bloomberg exclusive. david: this is nothing more than a giant mna machine right out of financial engineering central from wall street. over the last four or five years, the company that was barely on the radar screen and made 500 million in sales, they got to the point where it was going to be a $20 billion monster. they did like 150 deals. >> why are we going to blame

this on banks? this is a bad pharma company essentially. blaming it ont thanks. i am saying that there is nothing there but a constant series of acquisitions and then they slashed the r&d budget. bunch of people off. it is all a pro forma financials. you cannot see what is happening. here's the thing i want to say. you do not take a company from $50 million in market caps to $90 billion at the peak in august. you do not gain that much from and and thenup lose market cap to $44 billion in 90 days when people start to figure out that this is a giant speculation. it is also a cash burning machine. i would just point out that in the last year, they generated $2.5 billion of operating cash flow and spent $16 billion on deals in capex and other investments. since 2009, they spent $30 andion on deals in

generated only $7 billion of free cash flow. alix: that was david stockman on .berg bill ackman long on the stock and says the stock could go over $400. a huge rift in that community. coming up in the next 20 minutes ," janetmberg markets yellen has markets on the move after saying a december rate hike is a live possibility. the volkswagen scandal is becoming the gusher that cannot be cap. it sounds a lot like bp and we will have the latest. facebook set to report its latest quarter after the bell. what is concerning investors this time around. we will have the preview. ♪

welcome back. it is time now for the bloomberg business flash. companies added 182,000 workers in october. the latest report from adp research institute signals a steady improvement in the u.s. job market. $90,000 -- 90,000 rise by 37,000ls may climb workers last month. the u.s. trade gap shrieking in september to a seven envelope. the deficit decreasing 50% of 40.8 billion here the august number was revised from 48 billion as demand from petroleum produced abroad fell to its lowest level in more than a decade while exports climbed. count steve jobs among those curious about what an apple car

would look like. not too long after the apple cofounder introduced the iphone, jobs was considering the possibility of much bigger gadgets. that is according to the senior vice president at apple. that is from his interview with bloomberg's emily chang. you can see more that interview tonight at 9:00 p.m. eastern on the season three premiere of "studio 1.0," only on bloomberg. it's going to be great. do not miss it. you can always get more business news at bloomberg.com. we want to head to our markets desk where julie hyman has a check on company movers. you looking more in depth at health care. we were talking about valeant and the drama that will not go away. julie: there are also earnings to consider. there are different micro and macro events going on within health care. let us start off with cerner, not a drug maker. it provides health care information out there comes a services. it is down 7% today after the company's earnings missed analyst estimates and its forecast for 2016 is also below

analyst estimates. this is because of higher expenses and also hire professional services contributions. also today, we're looking at the general. the company's earnings were much stronger than had been anticipated. i was talking to analyst at bloomberg intelligence to separate the fact that congress is refocusing on drug pricing practices, companies that acquired competitors and then boost the price of the drugs may have acquired, that is putting pressure on many biotech specialty pharmaceutical makers today. despite those results, regeneron beating estimates is under pressure as a result. the maker ofat medical devices today, and that company is coming in ahead of estimates. it is one of the brighter spots within health care today with shares up by 2.5%. the company is also saying for the year, the revenue will rise 23%-23 .5%. , a bigally, allergan

focus within the drug making industry because of its talks with pfizer on a potential deal, is down today, even after its earnings overall be estimates. it seems the focus is on some of its block buster drugs. botox coming in below estimates in terms of its quarterly stills. -- quarterly sales. the overall number beating those individual drugs that are lagging. alix: those names live and die by approval. thank you so much, julie hyman. now more on the markets. we have the s&p limping from a free month high -- three month high. janet yellen reiterating that a december liftoff remains a live possibility. that was a new thing that she said today as she spoke to the house financial services committee. joining us now this christie heisey. cross with a live

possibility. are we fully baked in now for a december rate hike. ? >> nothing is fully baked in, but we are very close. that's in terms of people putting risk capital to work. if you go back before when the fed was on hold and there was a pause, it was good news. now, if the fed moves in december, the markets are warming up to the possibility that the data is actually consistent with a hike, which is usually very good news. and good newsod is good for the markets are pulling up close to their high that they sought earlier this year. alix: we sold off on this news that set shared janet yellen was speaking and now we are off the lows of the session and treading to a neutral landing there. when you take a look at some of the dynamics moving the markets, what about this is short covering? i'm china pollack the chart on my terminal and look at the sp y. it is basically the short

positions in the sp y, an etf for the s&p 500. it is that white line. the yellow line is shares outstanding. they are relatively flat, but we have seen a huge reduction in the short positions. is this just technical here? just technical and part the big rotation that occurred from the high-growth type of investments. when you look of the big shift from growth into the value segment. you see others outperforming. that is unwinding the big bet that was placed on growth through the year. year,ou get growth in the that's what a lot of the hedge funds did. when that started to correct, they immediately went to value. it is the perfect cross going on and it's the rich to better growth next year, which you are going to see another rotation back to growth again. that should play out in the headline indices. we may fast-track all of 2016 in the first couple months of next year. alix: it's interesting that you say you're going back to value

and growth. i was taking a look at a comparison chart. goldman sachs has good balance sheet stocks versus not so great balance sheet stocks. you can see just in the last few days that we have seen out of versions where -- and divergence where it's about stronger balance names holding up. does the trend continued? chris: it does for the near-term. old tech is receiving the risk capital again. their conference room in sleet overvalued 10, 15 years ago a valueey have become could if anything tells you when low rate world and defect is removing that 0% interest rate, you go from the balance sheet and growing earnings consistently and multiple slightly below and growing your dividends. those are the core part of a portfolio and they happen to be in the areas that are very attractive, even in the slow global growth environment. alix: they also happen to be in areas exposed to the dollar and large multinationals could what

kind of risk does that imply if we see the fed hike in december? chris: a great point. what's interesting is the cop roles get better. latest fourth quarter, versus the sharp acceleration, her earnings earlier. it is all about what have you done for me lately? the dollar strength where it was six month ago has slowed down and has been a little bit weaker and it should help earnings out in the fourth quarter. alix: quickly rounding out here, where does this leave the rest of the world in terms of where do you want to invest in terms of central bank divergence? chris: a huge twilight zone. you are going to a whole mother dimension. you have seen an extension of qe in europe and perpetual qe in japan. overall, it's going to be a lot of great volatility and another episode of currency volatility, most likely mid next year. while that is happening, first and second quarter earnings and united states should be the

engine of the globe. alix: thank you so much, chris, chief investment officer of the global wealth and investment division of bank of america. ahead, with qb in some countries starting to fade, that the question is are we at peak liquidity? will dissect the latest note coming up next. ♪

alix: welcome back to "bloomberg markets." i am alix steel. pushingpowerful force, bonds and equities down together good as markets become more accustomed to monetary policy, we are seeing a slow return of the risk on-risk off trade. it pushes bonds and equities in opposite directions. if you are stared -- scared, you will sell bonds. in this recent chart, we see how that risk on risk off trade is starting to reassert itself again as the u.s. qe effect begins to fade.

joining me now to understand this chart more is lisa abramowicz. againbring that chart of if we can. that sort of a compass is what we have seen in equities and bonds over the last few years. walk us through it. lisa: if you think of quantitative easing and the traditional risk on risk off relationship and we are talking about government bonds of developed nations, they are kind of acting as counter forces to one another. they are competing against each other because they are going in these opposite stretches. time of the tampa attention, you saw an amazing power of the quantitative easing trade from the opposite side, the suggestion of that pop up right there a challenge lines. that is the time when ben bernanke hinted at withdrawing the stock in the monthly asset purchases in the market freaked out. bondsns that government sold off and stocks sold off. everything did that together. now we are entering a time where there are some defaults coming

to the court and you are starting to see particular industries -- oil -- falling out of bed and you start to see more of the delineation between credit and delineation between markets. you are starting to see people get more concerned about the growing risk of recession. aople are starters -- seeing resume to be in bonds even at these low yields while avoiding stocks, which is the risk on risk off type of trade. alix: the other chart to know is now negative. it had actually boosted up almost near zero, but we are turning around levels that we have not seen since 2013. lisa: if you think about the negative correlation, that is going back to bonds gaining and stocks fell off and vice versa. it really is because there have been this growing feeling that this growing feeling that despite the trillions and trillions of dollars of active purchases and the negative rates in europe and zero inches rates policies since the end of 2008,

these policies are running out of steam. the has to be something else. alix: that is great segue to what we have race. we see this money pumped from central banks. are we topped out? lisa: the market seems to be implying that. you see the influence of the quantitative easing aspect of market forces, it is taking less time to fade out. the real fundamental issues really take over. are saying it is a. -- saying it is up. alix: thank you very much, lisa, for explaining it to us. emission crisis get so much worse. we will look at the details behind headlines. ♪ we live in a pick and choose world.

love or like? naughty or nice? calm or bright? but at bedtime ...why settle for this? enter sleep number. don't miss the semiannual sale going on now! sleepiq technology tells you how you slept and what adjustments you can make. she likes the bed soft. he's more hardcore. so your sleep goes from good to great to wow! gift the best sleep of your life to your whole family. only at a sleep number store. right now save $500 on the veteran's day special edition mattress with sleepiq technology. know better sleep with sleep number. you're looking at live picture of janet yellen get that is not janet yellen, but she is on capitol hill testifying and her comments have made the decemberove, saying at

rate hike is a "live possibility." we are now off the session highs of the yield as well as the s&p slid on the news off of the lows of the session. definitely a reversal in the markets. ecco aarks largely dig statement after a meeting last week that said be central-bank will act if the market and the economies continue to improve. it was that live december possibility that got market to shake out. scarlet fu is back. you can watch what janet yellen testified at her live event channel on bloomberg.com/live. it's a lifestream. alix: scarlet is back. i missed you for the first half hour. it's not the same without my book. scarlet: let's get things started with our bloomberg first word news. remy has more from our news desk. with the latest

with the downed russian passenger plane. and egyptian islamic state group affiliate claimed it down the plane, killing all 224 people on board. in an audio recording, the speaker said the crash coincided with the group's pledge of allegiance to the islamic state group. -- us of the first associated press cannot verify the recording, but it didn't resemble previous statements issued by the group you it woman is chart with killing four people after allegedly driving her car through an oklahoma state university homecoming parade. she is chart with four counts of first-degree murder and 46 counts of felony assault. she has been held on $1 million bond since the crash. her attorney says that she is ordered ill and a judge a psychological evaluation. nearly 50 people were also injured in the crash. in politics, the new hampshire primary election is fast approaching. 2016 kim it's expected to fly to for thee to file

primary ballot. martin o'malley was the first major candidate to sign up. republican donald trump is expected to file later today to get on the ballot for the february election. trip lady michelle obama's to jordan was delayed after a sandstorm clouded skies in the middle east. officials did not give out any official details. mrs. obama is on a two-day visit to the middle east to support an girlstive supporting education. she was set to fly from qatar where she did meet with u.s. troops. that is a look at our first were news right now. you can find the latest on bloomberg.com. there and just head on over to scarlet and al ix. alix: the volkswagen emission crisis is getting work. lower carbonorted dioxide emissions.

scarlet: it hurts the company that has been trying to clear this up since december. distinction to a be made between the carbon dioxide issues being revealed and the faulty emissions reading that prompted the problems to begin with. jamie: that is right. the real connection is that it was the epa and the california air resources board exposing the detail treating that led vw to do this thorough investigation of themselves and that is when carbonund the dioxide problems. carbon dioxide causes greenhouse thewhile nitrous oxide is problem with the diesel engines. carbon dioxide causes global warming. it is really about fuel economy and mileage and they may have to pay some fines and they have identified as 2 billion euros in costs related to these extra vehicles that they have found.

that is another costly blow. alix: the big question we had this new admission related to the v-6 diesel engine that the epa called out on monday? do we know the answer? jamie: yes, we know the answer and no, it isn't. there may be overlap with the initial 11 million vehicles, but these are not the v-6, three liter diesels. they are smaller engine vehicles. recalls?t about there are 11 million cars recalled. is that the cap? how much can this actually growth? ? jamie: supposedly they think they found it all and then they keep finding more. we will see. one thing i didn't want to mention about the three liter diesels is that vw still says that there was no cheating and there was no defeat device. the program to make it turn off the omissions when the emissions

system when it is not been tested. , they stopast night the sale of the vehicles that the epa called into question. all they are saying that they are innocent, they are holding back and trying to sort it out. scarlet: they stop the sales of porsche brand cars as well. there is a difference here and that the original cheating scandal involves only volkswagen diesel vehicles. now it has spread to porsche and potentially audi. jamie: it was mostly volkswagen brand, but also some of the smaller audis and their spanish brand not sold in the u.s.. in the more developing economies. the fact that this one hits a lot of the audi brand and also touches porsche, which is where fromew ceo volkswagen came , that does not help. it hurts a lot. it's part of why they are

pushing back. plus, they just think they are innocent. i hear aboutwhen volkswagen, i harken back to the bp spill in 2010 where it seemed like every analyst said they could control it and it's ok and the oil caps on flowing. videog as he sought the of oil flowing, the stock would go down. are there similarities to be drawn here or is volkswagen management doing the best they can to shut this down? jamie: they have had good moments. that's an interesting parallel. here in detroit, we think about gm's ignition switch and toyota's unintended acceleration. bp is a good one because it's really in the bimetal issue. as long as these cars are still on the road, the only difference is that you cannot see the nitrous ox ide that they are spewing. it is challenging looking at vw's management because they are all insiders and have not gone from outside the company. lingeringsuspicions that they are looking as hard as they can are going to be as firm as they should be on it. on the other hand, i look at yesterday's announcement of

800,000. they got out and found that themselves. they said they were going to investigate. they found that an announced it themselves. they did not try to wait for it to blow over or hope that it would go by and have a good forced out by the news media or regulators. is a mixed bag. alix: thank you so much, jamie butters in detroit. it is the conversation that won't die. scarlet: we will continue because the real cost of the emissions scandal could be higher than the company estimated. earlier, the head announced have the latest emission will add to the mounting problems. i think the u.s. issue is bigger because you have the regulators chasing porsche and audi and they are all denying it on the three liter engine. the additional $800,000 cars that vw has discovered themselves as something that you

can appreciate. they always so they could find more cars. it is painful today if you look at the share price. this is coming clean with yourself. they admit that they have been lying again. i think it is more serious what is going on in the u.s. still. >> more serious in the u.s.. do you think in terms of the scale -- the financial repercussions for the u.s. breaches are typically higher than europe. is that what you are concerned about or are you concerned about brand dilution and united states? porsche is one of their premium brands and this is critically important. vw is the mass product and portion of the premium. >> you are right. in the u.s., the economic damage from just being forced out of the market and consumers walking away from you all the time is very significant. in addition, you're facing penalties and lawsuits which might be very severe. i think the market's biggest

concern. in europe, the consumer is sticky with volkswagen and the different brands. i do appreciate that they are taking the extra mile and investigating everything that has been going on in the past. he came from porsche. do you think he is a worried man? the models that we are referring are 2015. >> he is obviously worried about everything going on within volkswagen. as of this last time, but i would be surprised if the board knew what has been going on. it's a different question of whether they should've known. >> i just cannot get my head around the fact that a board might not know what is going on. do you think that is not utterly beyond scandalous? >> i think the board should of known and going back to the culture that we discussed that

nothing has been reported in the questions have not been asked. on the three liter diesel engine, i think it is the devil in the details. during theey kick in test and when did they switch off again. i think that is the reason why they are denying any wrongdoing there. >> the fact about that immediately is quite interesting. they batted back against the epa. fighting against the biggest regulator in the world. you're fighting against the epa. this can get pretty ugly. that was the head of global automotive research for ella corporate coming up in the minutes, mario draghi's comments yesterday left the door open for further stimulus. how did european markets react? we will give you the insight from london. alix: the world's largest social media company reports as quarter after the bell. chair janet yellen

still testifying in front of house lawmakers. what did she say about the possibility of a rate increase in december? it moved the markets. ♪

scarlet: welcome back to "bloomberg markets." i'm scarlet fu. alix: i am alix steel. scarlet: time for a look at the bloomberg business flash. problems are proving to be far more costly than the multimillion dollar fines in the u.s.. honda says it will no longer use the airbags in its vehicles. honda was the biggest customer and owns a small stake in the company. they say they misrepresented test results. the chief is announcing today

that the company will implement a new chemical and its airbags. the fines could reach a record $200 million. alix: stan druckenmiller says he is short on the euro and bullish on stocks and the reason is divergence in monetary policy in the u.s. and d k. he has built up a great track record of of the decades and the capital management posted returns of 30% through 1986 and 2010. scarlet: to pull a mexican grill is hiring food safety consultants and testing ingredients for a health scare. is after they close restaurants after an e. coli outbreak could do have a no desk, but 12 people have been hospitalized. there has been no cause of the outbreak. you can always get more business news at bloomberg.com. alix: you go. scarlet: let's get a global look

at how markets are faring today. we're going to head over to the stocks rallied after mario draghi's comments yesterday that he will assess the need for stimulus in december. he did not change his tune here, but he drove it home. december is on the table. here is mark barton from london. mark: stocks gaining to the highest level from october 19 after mario draghi left the door open on tuesday. resource company's on the top of the leaderboard after china unveiled its five-year stimulus plan to bolster the economy. since the stoxx 600 hit its lowest since january at the end of september, and has rebounded 12%. the big report of the u.k. on this wednesday session is that britain services industry accelerated in the last month, bolstering speculation that the bank of england will boost interest rates in the not-too-distant future. we will know more on thursday

when the bank of england unveils its latest rate decision and of course unveils the quarterly inflation report as well. have a look at some of the big movers across european equity boards. volkswagen down by 9.5%. the preferred stock sinking the most since december 22. admitted that the emissions scandal has spread from diesel to gasoline cars. haveillion of market value been wiped from the start since the scandal appeared in september. glencore has had problems of its own, but shares of 5.3%. the company maintained its four-year forecast thanks to a rebound in trading commodities could it also sold the bolt of future silver output. the shares have climbed 80% since hitting a record low september 20, the biggest decline in europe. very kind of is the world's biggest maker of chocolate. is the lowest forecast for volume growth and set the

financial year will be challenging due to a difficult cocoa market. that is the latest from sunny london. back to you. glencore up 5%, of course it is sunny and london. let's get now to abigail doolittle, live from the nasdaq, looking at two notable movers, starting with cerner. abigail: shares of cerner are off today by more than 6% after the healthcare services company missed earnings and revenue estimates for its third quarter. the company also offered soft guidance for 2016. the company says it is going to see less than $5 billion in revenue. for $5.13 estimate is billion. they're looking now for a range of230-to 40 an estimate $2.53. the difference is higher non-cash expenses and professional services conservation. all this is enough to cause a number of tanks on the street to reduce their price targets today including goldman sachs.

.hat stock off more than 6% the general put up a great quarter this morning, surpassing estimates for the third quarter by 7%. they raise their full year 2015 south growth guidance to 55% from 2014 numbers, up from 45 percent to 50% if the numbers are really great outside of perhaps a small cap x cut. more than 4%.p this could be in the face of the drug price debate being back front and center with the affordable drug pricing task force press conference. when we take a look at the nasdaq biotechnology index barometer of that drug pricing debate, back in august, we saw a brief air market and it accelerated in september when the pricing debate came out with the index down 29%. it is now out of that bear market territory and just down 16%. it will be interesting to see if it takes a further toll. alix: thank you so much.

coming up on "bloomberg markets," -- scarlet: facebook shares trading higher than the markets could we will say what investors should look for in facebook number semi-. -- facebook numbers tonight. ♪

alixscarlet: welcome back to "bloomberg markets." facebook reports earnings after the close. the social network, which hit two thirds of sales from mobile, has been battling a slowdown from revenue growth in early 2014. even if that rate is still more than 40% year on year. the metrics that investors will focus on today is facebook's monthly active users.

that has boosted sequentially 3.5% in the second quarter. by contrast, twitter, you can see there and a lighter blue, it's results show growth slowing to 1% off of a much smaller basement facebook. facebook has positioned itself to capitalize on video advertisements. that is a market that may quadruple in value to $43 billion globally by the year 2019. let us look at facebook's revenue per user. it is up 23% year on year in the second quarter to $2.76. that's as a price per at surged more than 200%. you want to look for the growing video ad market to boost that further. the jewel in facebook's crown is potentially instagram. the photo sharing site mobile advertisement sales is projected to top $2.8 billion globally by 2017. that would represent 11% of facebook's ad revenue. as a grand ads made by time for facebook to monetize whatsapp. alix: on some stuff there. while we await those facebook

numbers, shares are trading higher today. for more on what we can expect to hear from the company, sarah joins us now as she covers facebook for us she joins us from san francisco. what is interesting about is that so many businesses now -- what is really going to be the driver. you have whatsapp instagram. andh: you have instagram internet.org. adis going to be the main product on the newsfeed, especially with video ads, as you guys mentioned. on instagram, which just all ofy get -- got facebook's advertising firepower behind it, they are using all the same tools you get on facebook itself and a few more to serve ads to instagram's user base, which is now bigger than twitters. scarlet: why do we get more of a breakout on how instagram is facing? everyone says how big the potential is on video ads, but we do not have a lot of members

to work with. sarah: we do not have a lot broken up this quarter. there is a theme with facebook where analysts want to know more and more how to fill out their models on the company's future performance. the company is waiting as long as possible to tell any more detail on what they're going to do with these other properties besides facebook itself. it is really the first quarter were instagram ads have been full steam. maybe we will get that sometime and maybe the fourth quarter or early next year. in thell this comes backdrop of a stock that went over $100. it is right around a record level. we had sort interest reduce a little bit. scarlet: it is something to keep in mind because marc andreessen, who owns one point three 7 million shares of facebook according to bloomberg data, reportedly sold 50% of the stake according to "the wall street journal pic." long-term investors perhaps pairing mistakes. alix: what does that say ahead

of earnings results? sarah: there's a lot about the potential growth in other categories. facebook, obviously the main product, has been maturing, but it still has almost 1.5 billion users. product is getting very close to the billion user marked that mark zuckerberg said would be interesting to start monetizing it that. they think the people buying facebook stock right now say that it's only a small portion of what facebook can monetize has been monetize. maybe down the line we will get more detail and we will get more growth than we have seen here. i do not know if growth is going to speed up. i think when you have this big debate, it is unlikely. you do have a lot more opportunity and they are growing the base of users on the internet, too. alix: when it comes to facebook, it is really hard to get a read on how they are doing versus

others in the industry. what is the best calm? an industry, who can really compare them to? sarah: when it comes to mobile is facebook,it twitter, and google really in that market. i think facebook is doing a similar thing that twitter is doing where they are trying to make their ads work on platforms outside of facebook itself like other ads and other websites. scarlet: thank you so much for joining us from san francisco. sarah covers facebook for us. next hourng up in the of "bloomberg markets," we are talking to a ceo front and center of the drug pricing debate and get her take. ♪

alix: welcome to "bloomberg markets." in new york.m. in and six clock p.m. in hong kong. scarlet: welcome to bloomberg

television and "bloomberg markets." ♪ scarlet: good afternoon. i'm scarlet fu. alix: here's what we are watching at this hour. janet yellen's talk about a december rate hike has the markets on the move. she is still speaking with the house financial services committee. she is talking about bank regulations and supervision. she did give some indications about a possibility of a december rate hike. she calls it a live possibility. scarlet: you saw the bond market react immediately. the two year yield is much more sensitive to interest rate policy. it's spiked and has now come down a little bit. stocks a leg lower. the two year yield at 80 basis points. alix: let's bring in carl record

on a. aside from this live possibility, what else is different from what she said? carl: there was some concern that the fed had shifted it to q1 for liftoff. i still think that is the baseline case however, she says that december is live. she is not made up her mind yet. there is some degree that reinforce the notion of december being a very real possibility. what we have to watch for is the follow-through. we hear from new york's fed president bill dudley this afternoon and hear from vice chair fisher this evening when he speaks to an economics club dinner. they will continue to reiterate this emphasis for december. scarlet: they are part of the crew that would agree with janet yellen on this. carl: they are very closely clustered in their viewpoints of the world. emphasize data dependency. she does not want to commit to a december just yet. she wants to see the jobs

numbers on friday. she says the economy is generally appearing decently could we need to see if it follows through. there has been some wobble and economic data recently and there are encouraging signals just thatmorning from the isn may the soft patch is starting to firm. alix: take a look at the market reaction with it two-year yield and we see the big spike up, but the two year yield has been trending higher and was around the highest levels since before that september meeting. do you feel like looking at the chart above the market is significantly pricing and a rate hike? carl: the market is buying in here and it feels like it did in advance of the september meeting where people were realistically pricing and that probability. you see that inside funds futures as well, which are now above 50%. the fed once it hovering in the 40%-60% range. it leaves in the option of either going or not going. that is certainly a lot easier to jumble the market and believe you are not ready to go than

and funds at a low rate trying to talk up the market, which we have seen toward the late summer episode. alix: thanks so much, carl. i love when we get market moves on the fed. finally, they move the market that. scarlet: let's head now to julie hyman, where she checked in on the markets. we talked about the two year yield and the stocks of falling today. julie: we are not seeing as much all but we at are not seen big declines for major averages. it is more in issue of commodities today and earnings related news. we have all three major averages trading lower. if you look in my bloomberg terminal at the groups moving, you see that it is really energy that is declining the most. it was rising the most yesterday and helping support stocks decline in the most today. if you look at my bloomberg terminal, we have energy stocks down 1.4%. consumer discretionary and health care also feeling the pinch. energy is down about 1.4%.

oil prices have something to do with that certainly. we had oil inventories this morning, showing the six straight weekly build in inventories. we also have the largest independent oil trading firm in the world coming out and saying $100 barrel oil is a memory and never going to happen again. negative sentiment on oil certainly. certainly looking at chesapeake energy and that come to me coming out with earnings. the third-quarter earnings came out better than estimated. here's what is astonishing can it had a right down on the value of oil assets. the market cap is $5.1 billion. that write-down larger than expected market cap. it is quite astonishing the chesapeake. bernstein says that chesapeake may be forced to sell assets at a discount. julie: they made that commentary yesterday. alix: what about media stocks? over we had that concern

cord cutting and we are seeing it again today. julie: that came after time when be estimates on the strength of hbo. it is the forecast leaving room to miss estimates and that is helping to cause sort of a ripple effect across these media stocks. funny first century fox is missing revenue estimates as well. find common disney, which have yet to report -- disney reports after the growth of trading -- they are also being dragged down by this. there's also the cbs. cbs was the standout, but take a look at what is happened with the trajectory of the start. ock. third quarter beating estimates come up the ad sales are lagging. the games deteriorating as the days go on here. alix: we will see how everything shakes out because disney will report earnings after the close tomorrow. julie: still trading near a record even with the declines that we have been seeing. scarlet: julie hyman, thank you so much. alix: we want to check in with a

bloomberg first word news. ramy has more from the news desk. ramy: we start with politics and the state of new hampshire with donald trump and martin o'malley being the first candidates to file for the state's first in the nation presidential primaries. as if a whole. are expected to fly to me after all week to sign up and they have until november 20 to get on the ballot for the february race. virginia's governor could hit roadblocks during the last two years of his term. republicans protected their narrow majority in the state senate in voting yesterday. them a crack stage an extensive campaign to try to win the chain are and help governor terry mcauliffe. a suspect who stabbed five people at a california college was fatally shot by police. his first woman for the university of california and percent said that two victims were taken by helicopter for treatment. the school remained on lockdown and the classes have been canceled. we have been getting word that

the u.k. is suspending flights over sinai, saying the russian jet that crashed over the weekend may have been brought down line expose the device. we still do not know what brought down that russian passenger plane, but egypt's islamic state group affiliate is again claimed responsibility. in an audio recording, a speaker set the crash coincided with the anniversary of the groups pledge of allegiance to the islamic state group. the associated press could not independently verify that recording, but said it resembled previous statements issued by the group. and russian foreign minister says that he hopes that international peace brokers will agree on a list of opposition groups that should be invited to syrian peace talks. he made those remarks after meeting with the syrian envoy to the united nations who was in moscow after a visit to damascus. wordis a look at our first news right now. you can also find the latest news on bloomberg.com. back to you. alix: the fed's big three are all addressing the public today. janet yellen is still testifying

before capitol hill and bill dudley is holding a press briefing in less than two hours. you have got vice-chairman stanley fischer speaking washington tonight. perspective onre what we have heard and could potentially here, we will bring in scott brown. he joins us from st. petersburg, florida with more. was a lot of criticism after the last said meeting with the press conference where they were not really clear. they seem to have gone more hawkish the last statement. now, today's discussion with december still being a live meeting. are we going to get more clarification or obfuscation from fisher and dudley today? scott: i think we really did not learn much new from yellen's brief comments today in the answers.and we do know that the december meeting is a live meeting and a possible rate hike is on the table. i do not think that should prize

-- surprise anybody. that was pretty clear from the word of the policy statement that we got last week. this has been a real soap opera for investors. remember back into late august and you had those that feist chairman fisher say a september rate hike was very, very likely? they backed off citing the downside risks to the global economy. between now and then, the downside risks are still there, but they really seem to be a lot less severe and a lot less worrisome than they appear to be a month or so ago. the fed is inching close to raising rates. i think the hawkish tone of last week statement suggests that they are really on the path where they are going to be raising rates in december. it is really up to the economic data between now and then to dispel them from that path. did get some economic data today that nonmanufacturing and pmi in the u.s. is totally killing it, above all other countries like the u.k. and japan. does something like that wind up helping the fed pull the trigger? scott: i think it does.

it suggests that the u.s. economy is doing very, very well. we had some hits exports because of the strong dollar and the soft global economy. if you look at the trade date of this morning, the downturn in exports over the last year do not appear to be too severe. it is nothing like what we saw during the economic crisis where veryts were falling very, sharply. it is a relatively moderate decline over the last year. anecdotally, we have heard a lot of evidence that exporters are seeing a proper time. it is not the disaster that a lot of people fear. the domestic economy is doing very well. the fed has the focus on the domestic economy. if they are worried about the rest the world, they're worried about the impact the rest of the world has on the u.s. economy. does not really appear to be serious enough to push us off the recovery path. we are still looking at a job market where the slack is being taken up. a year has to look at and half out.

the have to start moving at some point coul. scarlet: scott brown, thanks for joining us. alix: coming up in the next 20 minutes, companies seem to be checking into it investors quicker. scarlet: our real estate investors better than wall street? alix: the war on drug prices raises long -- rages on. should the cost of pharmaceuticals a link to their performance? ♪

alix: welcome back to "bloomberg markets." i am alix steel. scarlet: i am scarlet fu could let's check to julie hyman who has individual company names. julie: let's talk 3-d printing.

a little bit of the mysterious situation today because we have earnings from 3-d systems and stratus us. neither one of them did very well in terms of earnings. 3-d systems adjusted earnings per share is a penny and that is below what and was have an estimating. the results were negative because of challenging market conditions. stratasys also with negative reactions and they will adjust with operating costs and structure, but yet, both of the stocks are trading higher. the little bit of a head scratcher. another things that we notice is that both of these companies have unusually high short interest. it could have be an instance where you see a lot of short covering here could take a look at the bloomberg terminal. we have a short interest in percentage slowed for both of these companies for 3-d print systems. that is in yellow.

3-d systems is talking about 32% of sold short. for stratus, it is 26%. we have also got a little bit of a food theme today. let's take a look at some food and beverage related stocks on the move on earnings. wendy's coming out ahead of estimates. the shares are rising. comparable sales at 3.1%. papa john's down sharply. third-quarter sales missed estimates. seeing higher costs from some of the initiatives and with updating technology in its stores. so the stream is trading higher as well, even after revenue missed avenues -- estimates. it is still a wait-and-see story. scarlet: activist investing is bigger than ever. it is taking less time than ever than caving in to activist demands. it is taking 56 days to

cave in to activist demand and that was from 74 in 2013 and 67 last yoear. that is live in san francisco with more. what is the estimatio expiration here? managed tossets have double in over three years and they have please shareholders in many cases. on the company side, the advice of they are getting from bankers and lawyers have gone from activists defense to activist response. listen to the case being made by your shareholders and perhaps settle early and get behind closed doors. the more contentious discussions in the boardroom. scarlet: what is the verdict? is it smart for companies to compromise quickly and fight in the back and present a united front when they present all the information? beth: there's been a huge

high-profile fights for the companies have ended up not looking great. darden's case, the entire board was replaced. in ebay's case a couple of years ago, a phot carl icahn and then turned around and separated paypal like they were agitating for him to do. the next one was dupont where the ceo fought for partners and they won the proxy battle and kicked him off the board. they cannot deliver results and retired five months later. companies are certainly paying attention to these and they are seemingly taking the message that it is better to take things into the board behind closed doors and maybe get a better deal. alix: and also seems like on a macro level that we have never been here before. have had divergent central bank policies and companies are running out of ways to innovate and grow. they're turning to other resources. itthis macro backdrop making easier for investors to target

countries that do not have a top one defense at the end of the day? beth: certainly. most of the corporations have done the easy stuff already. theire cases, it is in cover to cut more deeply or do more strategic moves that if you have an action for these moves. that articles available on bloomberg.com. still ahead, real estate mogul ethan penders newest venture. we will discuss it coming up next. ♪

scarlet: welcome back to "bloomberg markets." i'm scarlet fu. alix: i am alex steele.

low risk in hirer word and that is what every market wants. they target a unique segment of the market to do just that. carol massar and cory johnson have more. ses.com. show you at on bloomberg tv to bloomberg radio. we want to talk about the real estate area. our guest is ethan penner and he is the founding managing director at the real estate and you are the father of the cmts market. i want to start there. what do you think of today's mortgage market. ? ethan: i'm not a grandfather yet. i may one day look forward to being a grandfather. carol: tell us about the evolution of it. : it was to provide liquidity to borrowers when traditional lenders had less in the marketplace. it grew to be quite big.

it now fell off a cliff in the crisis or post crisis and it has grown to be rather important again and sizable. i think it's a very important part of the mosaic, if you will, of real estate finance. it has it's great value .ropositions that it brings it is a study predictable stream of capital. regulated lenders come and go based upon a lot if they greece that relate to their health. the bond market is more omnipresent. that is a very important component of value for real estate community the always always relies on that capital to reinvest their business. i think cbs has an important part to play and always has and will continue to be. there are shortcomings to it. invented -- we saw it and i have to say as a guy who helped high the business, we pioneered it, i would say, in a

moment of crisis to solve crisis problems. it was not obviously perfected. we will call it version 1.0. -- i was hopeful as the guy who helped started that it would evolve to a certain extent pass some of its inherent shortcomings. i'm a little disappointed to say that in version 3.0 now, it looks a lot like version 1.0. the originations of a very different sort. i would call it five or 10 years ago and we had a lot higher rates in the market. to some degree because of that, you would see the different risks because the risks are so much higher they are now not high enough. originationterms of , so few in the subprime area, how much variety is the pay for the trade?

ethan: i think is important to make the distinction between commercial real estate finance and single-family financial and subprime falls into the single-family finance. the single-family finance mortgage market, which is kind of amazing to me that people do not notice her point this out -- it has been the source of the last two major u.s. financial crisis that have led to prolonged recessions. carol: take no, everybody. ethan: there is reason for that. the single family finance mortgage business is a public policy influence business. it is about housing. the commercial real estate has no public policy to it. carol: it's market forces at play. ethan: market forces to a certain extent are self-correcting. we have seen that in commercial real estate. industry, ininance my opinion, is an industry that

needs to be completely rethought. i think that one only needs to look at the last two major crises and say, why didn't we -- why hasn't any kind of iq effort been expended to ask the questions that need to be asked and come up with different answers? carol: nasa be depoliticized. we have about 40 seconds left. alternative toan other asset classes. was it something that you think investors should consider? ethan: today's major challenge for investors and the biggest challenge investors have faced in modern times is to replace what high-grade fixed income used to provide -- safety of principal, first and foremost, forgettable rate of return not based on fantasy. real estate is probably the only area in the investment world where that can be provided for. that is why i created the company i created.

i really believe that is the missing link. that is what people crave in need today. --ol: you talk about various various stature could come back and talk someone. , they could i need to toss it back over to television. hearing we have been from carol massar and cory johnson of bloomberg radio. alix: how to control the cost of drugs. we are going to talk to the ceo of a company that says prices should be linked to performance. scarlet: how do you do that? alix: how do you do that? ♪

alix: from bloomberg world headquarters in new york, welcome back to bloomberg markets. scarlet: let's start with the headlines on the bloomberg first would news -- first word news.

>> we start with the british government. evidence a russian jet that crashed over egypt may have been brought down by a bomb. the u.k. has suspended flights to and from the peninsula as a precaution. they are assessing security before british lights will be lovely. -- british flights will be allowed to leave. she is charged with four counts of second-degree murder and 46 counts of felony assault. she has been held on a $1 million bond since the crash. her attorney says she is mentally ill. a judge ordered a psychological evaluation. 50 people were injured in the crash. donald trump and democrat martin o'malley are the first major presidential candidates to file for new hampshire's first presidential primary.

they must meet basic requirements to be president, the lot a one-page form and pay $1000 filing fee. kentucky's governor elect says he will not take health insurance away from those who have it but plans to stop new enrollment. devin defeated jack conway in the election. the current governor expanded medicaid under obamacare. that extended health care to 10% of kentucky's population. phil bryant easily be two challengers to win a second term. based with a pair of marijuana proposals yesterday, ohio voters and said no. a plan for growing it also failed. that is a look at our first word news. you can find the latest news on

bloomberg.com. alix: public outcry and political scrutiny over the pricing policies of drug companies has amplified the national debate over just a much money these drugs should cost. scarlet: erik schatzker had a chance to sit down with the ceo of glaxosmithkline yesterday. they asked him what could be done about drug pricing. >> we have to get some sensible discussion about the facts, more transparency. sensible people from all sides of the conversation start to get together and think about how we involve this. what we all want is -- i want us to see great medicines being made to the people available -- being made available to the people who need them. we need to make sure the incentive for innovation remains. susan devore is the ceo of

premier, the company that helps hospitals make buying decisions. you wound up helping hospitals get equipment and get drugs. you helped negotiate that price. what are you seeing in the drug pricing world? susan: we wake up every day trying to figure out how we will help make health care safer, higher-quality and lower-cost. 98% of our ceos would say drug pricing and drug shortages are one of the biggest challenges that they face. we tried to bring friction, competitive friction to these markets to drive the price of the product down and link clinical data to the economic data to prove or disprove how effective the drugs are. >> it is not an issue we hear nearly about this -- nearly as much as the pricing issue. is this something that has escalated in recent months or recent years?

susan: in the last several months, we've seen a continuing 15% increase in the number of drugs on the drug shortage list and some of those are basic drugs used in surgery, used for oncology. if healthl challenge care systems cannot get those drugs because surgeries are delayed. 98% say it's a challenge. having said all that, with all this political pressure and all the attention in the media, will that lead to lower prices? >> there's two sides to this. drug pricing is a challenge. it is an effective way to take care of chronic patients. bring thoseto do is pharma companies onto contract so we can use the power of volume buying to drive the price down. we get our health systems to auto substitute

generics. , ahave two new bio similars generic biologic drug that has been approved. they will drive the price down. lastly, is connecting clinical data and utilization of drugs to determine the appropriate utilization. all of those things have to be happening together. >> there has been an extraordinary amount of consolidation. do you see this as creating further problems for hospitals down the road? >> i see consolidation ever appeared pharma companies are consolidating. all of them are doing that because the cost of r&d, the cost of i.t. infrastructure needs scale. how do you keep the market healthy by having more than one manufacture of a product? how do you create alternatives

to can create competitive friction and drive the price down? >> how should the world price drugs? >> a free market approach coming market competitive approach where you have clinical data and transparency, that will be the great equalizer to bring costs down. controlshink price long-term bring the price down. they might lead to less r&d and innovation. we want this innovation and we drive it for the rest of the world. if consumers and health systems and providers have real-world clinical data and competitive friction and an ability to have more manufacturers in the market for various drugs, that will drive the price down. system right now is very bifurcated and different players are negotiating different rates and that's the problem. cohesion? more had we get places them in which everyone is looking at these drugs and looking at the

efficacy and assessing them on the same page? that'sit's a copy what exactly what premier price of the. we have 120,000 providers find together. that's exactly what premier tries to do. we have 120,000 providers buying together. scarlet: what are the best practices we can adopt from around the world? how are drugs priced outside the u.s.? drugs are priced differently in different countries and a lot of countries have price controls and a way for the government to contract for drug pricing. that's why the u.s. is the innovation engine for pharmaceuticals. we need to continue to do that. scarlet: are there any examples of successful approaches? >> there are approaches where government or standards agencies look at the cost-benefit of new tions and make determina

about whether insurance will cover those drugs. as more knowledge gets connected, we will have more ability to assess the differences. scarlet: there's been a lot of noise in congress about what's going on with drug prices. do you think medicare and medicaid at some poi will be able to negotiate on drug pricing? >> i don't think that is the right answer. and theket competition continuing innovation in the pharmaceutical space is the right answer. we are in the middle of a political time. there will be a lot of discussion about this at the political level. free market forces will make this work. alix: the u.s. senate special committee on aging announced they will investigate drug pricing practices. one company is valeant, taking center stage in that way. >> we work with thousands of companies that provide supplies to health care systems. of thosemajority

companies are trying to deliver medicines that impact the care of patients and improve outcomes for patients. we will have situations where activities need to be investigated. >> do you think we are paying too much attention to just a handful of players and there is cost inflation, high-priced new drugs coming out flying under the radar at the moment? susan: when 90% of your health ceos say the increasing price is a challenge, and something we need to focus on. the pharmacy companies that are not on contract with mirror, their prices increase at double the rate of the companies that are on contract. competitive friction works. alix: do the drug companies agree with you? >> we have good relationships with drug companies because they view us as a way of testing how their drugs are working in the marketplace. they view us as a way to have

their health systems in bulk -- why in bulk. andave these conversations i think they would agree around the challenges and they would agree that there are things we both need to be working together on alix: thank you so much. susan devore, ceo of premier. clearly this is not going away. it will be in 2016 issue. we have much more coming up on bloomberg markets. the apple car, an idea discussed ipoden steve jobs and the cofounder -- volkswagen found irregularities and 800,000 additional cars. what does the automaker do next? ♪

scarlet: welcome back to bloomberg markets. time for the bloomberg business flash. the biggest business stories in the news right now. bnb fought off the ballot measure. it would have imposed a limit on air b&b rentals. the new chief financial officer of tesla motors in line for an initial equity award on

$15 million. receive a base salary of $500,000 according to regulatory filing data tuesday. musk says he will begin work at the end of this month. alix: bold swag and has been able to hold the flow of news -- volkswagen. they found faulty pollution readings in its gasoline powered cars. the problem so far has been limited to vehicles with diesel engines. the new findings affect 800,000 cars. testare tricked emissions to comply with air-quality rules. you can get more business news at bloomberg.com. scarlet: let's head to the markets desk where julie hyman has the latest. taking a look at groupon. julie: i have a social media internet team with earnings today. groupon is on top because it is bottom. it is down a lot today. groupon at one point was down

the most ever. now down only 27%. that is not a record drop for the company. weaker than estimated sales and earnings and replaced its ceo, the cofounder of the company. he is stepping down, becoming chairman. the new ceo is rich williams. he joined in 2011 from amazon and has been the chief operating officer for the past several years. investors are not happy about all these moves. there's a lot of concerns about groupon's fundamental proposition as an online coupon discount company. groupon has been having trouble for quite some time. this goes back to the ipo in early 2011. ever since 2012, the stock has been trading below its ipo price of $20. it keeps going lower and lower as we get these disappointing numbers. elsewhere in social media, take a look at zynga.

the chief financial officer stepping down, delaying two games until next year because they need additional work. shares holding up relatively well here. the company's earnings did come in ahead of analyst forecasts. etsy is down. revenue falling short of analyst estimates come even though the revenue was up 38%. the total value of merchandise sold, that rose as well by 22%. both of those were below analyst estimates and the gross merchandise sales, that represents a slowdown. etsy is not delivering as rapid growth as it once was. 7% after its outlook disappointed investors. curious about what an apple car might actually be like? so was steve jobs.

he and steve jobs used to kick around the idea of an apple car. alix: here's a preview of tonight's premiere of studio 1.0 with emily chang speaking with tony. >> you will see some dramatic changes in the way we think about these cars. accessibility in terms of the price point and stuff. we are still 7-10 years away from a mass switchover. emily: what can apple do for the car market? >> a car has batteries, a computer, motor and mechanical structure. if you look at an iphone, it has all the same things. it even has a motor in it. if you scale it up and go, oh my god, i can make a car with the same components, there is some truth to that. the hard stuff is on the conductivity and how cars can be self driving and those kinds of things. it is all software and services -- when you look at either google's self driving car program or the alleged apple

thing, it's all looking through that lens of software first. emily: did you talk to steve about building a car? >> i did. we had a couple of walks in 2008 -- if we were to bold a car, -- build a car, what would we build? what would a dashboard be? be? how wouldts you fuel it or power it? we are so busy, so constrained, it would be great to do it, but we can't. family: when steve was alive, was the something like, we are not doing this right now -- >> there's a lot of things we said no to. why wasn't the ipod turned into a really great video camera? tvs was another one. what had the biggest room at -- biggest dramatic impact on

the world? cell phones. we will focus our energy on that. let's focus on the big market that can have incredible impact eign as ceo.teve's r >> google is taking it on with self driving cars. >> regardless of whether it's a taxi or uber or lyft, most people who drive do not know how to drive. they are not professionals at it. >> how do they make these cars safe, drive well and well-designed and desirable? >> uber is a self driving car, but it happens to be a person is driving it. they've already made that choice. how do we make it even better and even more pleasurable experience? scarlet: you can see more of this interview tonight at 9:00 p.m. eastern on studio 1.0. alix: coming up, is bitcoin

back? it is. we will explore. ♪

alix: bitcoin appears to be back. the virtual currency has been on a massive winning streak come up or he percent in the last three days -- 40% in the last three days. alix: joining us with answers is an analyst with wedbush securities. part of this can be accredited to the european court adjusting bitcoin's classification as a currency instead of a commodity. >> there are several reasons. changes in regulation in europe and china. bitcoiner is

application, payment applications. tradinganced asset applications. that will drive the price of bitcoin, the value of bitcoin. short-term, changes in regulation, trading speculation will move the price of bitcoin. scarlet: we had the bankruptcy not too long ago come early 2014. how has the bitcoin economy evolved since then? >> tremendously. more than a billion dollars of venture capital invested in building real companies that can conduct transactions and bitcoin. really exchanges fully regulated come alongrthy providers, transaction processors. all the big banks and financial are investing in building around the technology that underlies bitcoin.

generating a lot of demand for the technology know-how which has a positive halo effect on the price of the coin. alix: part of that you can see in the wallet numbers, transactions per day. he staggering. can you talk a little bit about how quickly this has been adopted? >> unlike the price that goes up and down a lot, the number of transactions is growing very steadily, especially the real economic transactions. the companies operating on the ground in the philippines in kenya, those are grown sevenfold, tenfold year-over-year as people start to realize the value of conducting digital transactions without an intermediary for free. there is a huge growth in the actual usage of bitcoin and that will continue for many years to come. alix: when you see massive

bitcoin volatility, how does that wind up affecting the price? do i want to buy something that can swing 400% in a few weeks? >> you don't have to hold it for a long time. if you are sending money to a relative in kenya, you can send u.s. dollars and it will stay in bitcoin for a short amount of time. you or your relative will not know that. the only reason to hold bitcoin's for speculative purposes. bitcoin is actively using countries where hyperinflation is a big issue. what have we learned about the digital currency's impact on the real economy? what have we learned from argentina? >> and greece. the citizens of greece learned when they deposited money in a bank, they are not depositing, their lending money to a bank hoping the bank will pay the medicator date -- pay them at a

later date. with bitcoin, they can hold the currency and control it and not lend it out to somebody. the demand for bitcoin in the river he countries with high --lation are very high demand for bitcoin in those countries with high inflation are very high. alix: microsoft, dell, big names in this. scarlet: you wonder to what extent the central bank stimulus place and this. -- plays into this. alix: markets lift. we will talk to one of the world's largest mobile asset managers -- global asset managers. ♪

david: welcome to bloomberg markets.

from bloomberg headquarters in new york, i'm david gura. hike yellen says the rate continues to be a possibility in december. the next meeting is a life meeting. we will talk to the head of legg mason, joe sullivan are cheaper prescriptions around the corner? wall street is expecting facebook will have another strong quarter thanks to its mobile app business. they release quarterly earnings in a couple hours. let's head to the markets desk where julie hyman is looking at market response to what jerry allen had to say. yellen had to say. julie: when it comes to stocks enter comments, the december meeting his life. -- is live. the fed is data dependent, as always.