stimulus efforts are paying off. it stock market enters a bull market. jobs as iting focuses on a turnaround. we will speak with the company's ceo. welcome to bloomberg i'm stephanie ruhle. david: i'm david westin. a big morning for the central bank of england. stephanie: and moments we will get the news -- we got it right now. we are going to send you, hold on, to the birthday boy. 42 today. matt million. -- miller. matt: the bank of england is leaving the rate unchanged, 0.5% it is cutting its forecast of first half cpi. it says the pound is going to continue in its impact on

inflation, which is to say the pound continues to strengthen and inflation continues to come down. i have got a great chart i will show you later. but let me point out, if you take a look at wirp in the bloomberg, you can see that futures for the chances of -- put the chances of a rate increase not at more than 50% until may of 2016. you can see behind me, that is the first time we get even close to more than 502. n-- to 50.2 next year second half is when the market is betting the bank of england will raise rates. there are a lot of people who are not even betting it will happen that soon. leaving its key rate at half a percent. inflation is not moving in the united kingdom. let's go toore, mark barton. he is outside the bank of england in london. no big surprise in leaving the rate where it is. but were there other surprises? mark: good morning.

you said it. no change in rates. that is expected. the where head is been for better part of six years to the vote was interesting, 8-1. it has been 8-1 for three months. the sole dissenter has been voting for a rate hike. there were some saying that may be another bank of england policymaker would join him in voting for a rate hike. that could have been one of the big surprises today. that has not materialized. what is interesting is where the bank sees inflation in the near term and in the far term. in the near term, it has reduced its inflation forecast, but interestingly in the far time, to three year horizon, it sees inflation at 2.1% in the fourth quarter 2017. the fourth quarter of 2018. that is slightly more bullish than it was three months ago. what does that tell us?

i tell you what that tells us. the bank seems to be pushing back against market expectations. the market is pricing in for a rate hike in november next year. been pushing for a rate hike in the first quarter of next year. now, the bank has cut its forecast for inflation for the near-term. the bank ofll us england is saying we might raise rates in the second quarter of next year? so, it seems as though the bank of england is more dovish near-term and more hawkish in the far term. but no massive surprises. what we call now super thursday. stephanie: mark barton, thank you so much. from london. mostederal reserve's powerful trio was speaking yesterday saying a december rate hike is still on the table. take a look. . incominglen: if the

information supports that expectation, then our statement indicates that december would be a live possibility. >> a live possibility. let's see what the data shows. >> so, we are not that far from the 2% target. when the price of oil stops falling and when the dollar stops appreciated. stephanie: get ready, kids. just coming across the brooklyn bridge, bow tie on, jim grant, editor and founder of grant's interest rate observer is here. welcome. jim: morning. stephanie: should we go bank of and went first, fed first? let's go bank of england. jim: i was impressed by the fact that bank of it went has a view on inflation in the fourth quarter of the year 2018. i wonder if the bank knows if it is going to rain a week from thursday. this pretense of macro economics and of central bankers is remarkable.

i think what is just as remarkable is the world's acceptance of these impossibilities. to people wholl pretend they know the future. david, they have no clue just like the rest of us. david: just like corporations that have five-year plans. heretical an question. why does it matter? we have so many people saying it will not bother them if it goes up the quarter in the united states. on the other hand, doing what they have been doing does not seem to stimulate the economy. jim: it would be a mercy interestters because rates are critical prices. and we are in a regime of price administration or price control. price control is a policy that has failed for literally millennia. when prices are manipulated, manhandled, otherwise distorted, real decisions follow and real decisions are distorted if rates

of interest measure, they mea sure rates of investment and define risk. they calibrate risk. they discount future cash flow. delicate and sensitive prices are distorted, then decisions based upon those prices are themselves distorted. so, it is not just the newspaper that tells you the rate is o or 1/10 of 1%. there are human lives attached to these prices. stephanie: what does the terminal tell us? matt: i have a great chart that shows you what happens when the pound rises to u.k. inflation. you can see here in blue. ise is the pound and green purchasing power. rising ever more. the white is british cpi which continues to fall. now at -0.1%. as people's money becomes worth more and goods become worthless,

they put off purchasing decisions until later. if you want to buy a tv that is 2000 pounds and you think it is going to be worth 1500 pounds and a couple of weeks, then you're going to wait a couple of weeks before you buy that tb and maybe a couple of months and hope it drops. m my question fory jim is, is this always the case the relationship between a strengthening currency, does that force deflation? jim: not always. let's go back up a step or two. people do not postpone a decision to buy a new iphone. they do not postpone a decision to buy groceries or pay the rent. i think this business about deflation is rather a canard. don't we want money to go further? most americans spent most of their weekends looking for bargains. but monday through friday, so say central bankers, we should be terrified of the prospect and the fact of and has purchasing power. 1870's orrough the 1970's.

it is rather a blur. people prayed to the relevant god for a paycheck that would not be eviscerated the friday after they earned it i think it was propaganda about deflation. is so much noise. i think it is very wrong handed. stephanie: maybe he was not praying to them but yesterday roger altman was sitting right here and he was praising the fed. take a look. ther: thank god for federal reserve. it bothers me to see the federal reserve increasingly politicized respects, calls for auditing the federal reserve, all the criticism. it's fiar, criticism is fair, without the federal reserve this country would be in a much, much worse place. of course, given the events of 2008. stephanie: bah humbug? jim: fiddlesticks. iler was in the wall street journal on monday with an fed's monopolye

be shattered through a very clever device. anlish the tax on gold as investment asset. give gold a chance to compete in the marketplace with paper. see what people choose. stephanie: you must get real. that is not going to happen. when? how do you think that is -- jim: i was joking. i'm sure you were. one can't know. roger altman, who is a great establishment terrie says thank go-- an establishmentarian. the fed is an and akron is in that was created for a progressive era of american history in 1930. they are who we have got. that is what we live with. and if you are betting against what they are doing, it is does

not work -- it does not work from an investment standpoint. jim: that is a different question. one does not take one's highest principles to the brokerage house and implement them, right? if we are talking about what has be wend what ought to can at least perhaps propose that the fed ought to get out of the business of masterminding the american enterprise, what we call the u.s. economy. i mean, how do they know the funds rate ought to be 0? ofhave had 200 plus years monetary experience in this country only for the past half dozen or so have we been in the regime of what we call the phd standard. we are under the governance of ured economics faculty who think they know more than they can possibly know. what i say is let us at least revert if not to some perhaps utopian dream of a perfect

monetary standard, at least let us get out of the business of the suppression of interest rates, the administration of prices, and the government sponsorship of asset bull markets. it is distorting. from nowhere.ome it came in my opinion from the socialization of credit risk and from the manipulation of crises -- p rices. 1% funds rate was a wonderful spur to the excesses of the mortgage boom. david: jim grant, i am happy to say you're staying with us. jim: viewers might not like it. david: you might have some questions in response to his modest proposal. send us an instant bloomberg message with your questions for us or jim. to bloomberg you can always tweet us. up next, were global market fears in august overblown? the bulls on parade this morning and china. ♪

stephanie: welcome back to

bloomberg vonnie: the latest bloomberg business flash. we begin with japanese airbag maker toccata. -- takata. the company is preparing for more customer recalls. honda earlier said its ata'sntinuing use of tak inflator is. another big quarter for facebook. the world's largest soldier network -- social network reported a revenue of $4.5 billion. in extendedd trading, up 33% for the up. $500ir's ceo is almost million richer since the airline embarked on a charm offensive last year.

according to the bloomberg billionaires index, o'leary's fortune has jumped 26% in 2015. that is the latest bloomberg business flash. david: thanks very much. we are going to global . today we focus on china were stocks ended a bull market after state intervention seems to have halted a $5 trillion crash. enda curran in shanghai this morning. we have seen this rally up 20%. is this intervention on the government's part or are there fundamentals driving this? it's certainly quite a turnaround from where we were a few months ago. if you remember, the government had to intervene to put a curb on short-sellers. they banned share shoulders -- share holders from selling. a long way come since then. the market has stabilized somewhat. the question is how sustainable those gains are, because the

underlying economy, even though there is a disconnect with the stock market, the economy continues to grow at its slowest pace or is on track for its slowest pace in 25 years. the central bank has cut interest rates six times. to get traction, that would keep pressure on companies listed on the shanghai exchange. it would keep pressure on exporters, manufacturers and those parts of the economy that are exposed to the slowdown. so, whether or not these gains we are seeing in shanghai are sustained only time will tell. david: as you referred to in august, we believe we saw a government intervention, including having some of their state funds go to purchase shares. do we have reason to believe that is continuing, or was that a one time thing in august? was certainly to intervene in a significant fashion back in august. and a number of ways beyond just buying stocks directly. they continue by the way to pursue short-sellers. more risley, the intervention in

terms of direct buying of stocks reem to have eased - mo recently. there was a signal at one point where the stock market would rally late in the day. that was considered to be the chinese government ordering, buying up certain stocks to finish the day on a high note. that seems to have died off. there is some stability back in the market, but it remains to be seen whether it can hold on. some of it has driven by technology stocks. those reflected transitioning economy. but the stock market is also considered quite expensive. david: what about borrowing on margin? we have data about that? enda: well, there has been an improvement on that. that was considered to be one of the real problems. it was a government encouraged stockmarket rally, margins ballooned, and one of the reasons the selloff was exasperated was because of all those margin calls and people exited the market.

it is considered a lot of the people who needed to sell have sold and moved out of the market. there is a sense of fundamental buying going on. as i mentioned earlier, there is also a view that shares in shanghai are expensive. that may keep a break on further rallies. david: thanks very much for joining us from shanghai. staying global. yesterday pope francis came face-to-face with the clown. the pope met him at the end of his weekly general audience in st. peter's square the vatican. it may just be another sign a pope francis is a pope of the people. adidas ceo herbert haner about their third next on bloomberg ♪

stephanie: welcome back to bloomberg now we are talking sports. adidas is raising its full-year forecast and says it is cutting jobs as languages golf gear division. i am joined by herbert hainer who joins us from their

headquarters in germany. good morning. thank you for joining us. help us understand, what was the key metric this quarter? herbert: hello. aid already, we are very pleased with the growth in the third quarter. we accelerated the growth in the third quarter driving revenues 13%. the good thing is it comes from all over the world. western europe, north america, double-digit, china double-digit, emerging-market double-digit's. and it also comes from all the brands. the adidas brand and reebok and the hoker company. the growth is broad-based and this makes us quite optimistic going for. stephanie: the golf division is where your cutting jobs. why? herbert: good. as you have seen in the last two years, we could not keep the pace anymore in the golf

division which we had the last 10 years. therefore our revenues went down. we still, are the absolute market leader inthe golf industry. but still our revenues went down. and therefore, we have to make sure that we also our cost spaces in alignment. that we have enough money to invest in new innovative product which the consumer likes. we just launched the m.i. driver two weeks ago. this is one kind of product. within two weeks it was number one and the best-selling product in stores. this is exactly what we are doing. stephanie: we have not heard you talk about wearable or digital platforms where your competitor seem to be going big there. why is that? first and foremost, i think there is a big portion of business out there, especially

the young consumer base going more and more into the digital world. the social media. you might've heard we just acquired three months ago at digital company, which is definitely the market leader in europe in sport apps. and is growing fast in america with over 75 million users. and i'm absolutely convinced that the digital world will play a bigger part in the future in our business. stephanie: how big a part in the management of your company is -- the egyptian billionaire disclosed a 6% stake in adidas. we have seen in the past him pushing the companies he's invested in. could he be involved in having you leave your post sooner than planned? first and foremost, we are happy about every invested into our company because it shows that they have interest and we have constructive dialogue with all our investors.

and this we will also do with this group. we are listening, and wherever there are good proposals we definitely will listen and execute it to make our company better. stephanie: has he given you any feedback of a new direction you need to be headed in? herbert: no. stephanie: how about your ceo search? where are you on that? herbert: good. as we have said, that in march, 2014, when my contract was -- we will have enough time to search for the right guy intern and extern. the supervisory board is doing their job. as soon as we have found the right guy -- stephanie: we have to leave it there. i'm osorry. ♪

david: welcome back. we are here with jim grant. and tom crean -- and tom keene. tom: come on, david, where is

your bowtie? david: i missed the memo. let's start with the first word to vonnie quinn. vonnie: thank you. talks in tents when britain's prime minister discovered -- discussed the crash about egypt. they're suspending flights in the region where the airbus went on, speculate a bomb dropped down the airbus. egyptians officials called it an accident. militants claimed they brought down the plank but do not say how. surveyed of those disapproved of president obama's strategy for fighting the tents in iraq and syria. airstrikes that started last retake. trying to at least 18 people were killed, but officials fear that death tolls could rise.

some workers abused cell phones to call for help. you can get more on these and breaking stories 24 hours a day at bloomberg.com. david: tom is here with this morning's must read and i have not been so fortunate to be surrounded by you guys. when i read this, -- tom: it was greek. david: sans script. that is because they write in sand script. this is the english from the pros, they do not talk about interest rates like we do. forever, we would expect short break evens to they given the path through year mortgage costs. we expect that the front and of the inflation adjusted yield curve it also bear flatten. there is the sanskrit that pros use. ist jim grant is famous for turning that into common english with his dose of skepticism about where we are.

when you look at the inflation and yield term, it is not in any of the textbooks. a guy like michael ponder, or either jersey, they are not working in a normal environment. jim: to a degree, nobody is in the world of zero interest rates and forever dashed expectations on changes in interest rates. i want to remind you of the tune that has the mirror, it is only a paper wound, etc., etc. tom: does it migrate to balance sheets? are the tensions that used to be expressed in the financial world over now on the balance sheet world and about the world? why have we not seen the bubble burst? tom: -- jim: bubbles are like boiling water, you have to turn your back and be patient. as to balance sheets, when free money is available to many

it,le and do things with leverage, that is to say the burden of debt of investment-great american companies is historically high, junk bond yields have begun with the number four, encouraged many to borrow and some of those followers are in the fracking business and they plunged holes in the ground and produced the fatal extra unit of gas and oil that has given us the bear market. tom: the implosion. if you are about the timing where you see hydrocarbon balance sheets getting adjusted post double? -- post-bubble? jim: banks are pulling back on the credit they extended to energy and production companies. the nice thing about markets is they are ruthless and withholding capital from demonstrated uneconomic use in

projects. it takes a while sometimes, but you are seeing this happen in many branches of commodities where credit is being withdrawn rather than extended and production is being cut back, supplies are being diminished, and demand picks up -- tom: my bro type is not working. usually it does. stephanie: let's back it up. you are discussing bowties with me, why? tom: i am saying it is allergan and the free money that pfizer takes on allergan. the consequences of the fed having the policy that it is had, the uc places -- do you see places where there is over lending? in retrospect, we can see it but do you see it now in any sectors? jim: here is a specific example. office buildings in the west coast in the technology belt, a

lot of construction, hope, a lot of speculative building in the expectation that companies that are now hiring but not possible will that -- profitable will at length become profitable and higher more. that is more microeconomic siding with the consequences of 0% rate. reading this money, i would like to turn our attention to something you are focused on. havee last two weeks, we been talking about fortress. they ran their macro and they shut it down a couple weeks ago. concerning so many people in the market, not just torturous, what does it mean in terms of micro-investing as on of the best in class and shuts it down? was the least important of the components of fortress. it was the most visible. stephanie: ding, ding.

jim: fortress has many problems. they are the first to go public and falling flat on their face, it is counting as conduct as unnecessarily, but think of it is as a bag of cheap options. they have a lot of interesting permanent capital funds under management. fund.as a terrific credit they recently -- apparently stand to pick up no fewer than $500 billion on the sale of peter cooper village to blackstone. there is a special service name managementmansion and they will pick up half $1 billion for special services in some contractual court that is profitable. it seems to me that fortress is --rime example of a company

as psychologists say -- misunderstood. stephanie: with all that money that fortress is making, should they invest it? jim: they should not. stephanie: what do you think iant? valium -- on val jim: they are not an investment case. investor who good gave a terrific talk recently on valiant. he observed that valiant is a piece with a platform company that closely resembled conglomerates of the go-go years of the 1960's. stephanie: charlie said the same thing. quote you fromto something jim listened street said, he follows two

dozen of the companies, and he says -- these platform companies, valiant is one of them, they haven't aggregate of $800 billion and an aggregate book fight of -$272 billion. that is created the county. that is created accounting. he says it is like prostitution a multilevel marketing. you may think it is wrong but they have been around forever for reason. tom: within that, the wonderful effort in times, are we revisiting the history in accounting or is this a new flavor of revenue recognition? jim: i think it is part of a recurrent cycle of willful looking away from fax. -- from facts. ibm?do you bundle

jim: i do not know that but i have heard the case. tom: i am trying to make news. stephanie: we want to get to matt miller, but no one knows outside research more than you do, when you look at what has andened with valeant, before rob citroen, a guy who puts out the report is filled with typos, he puts out this report and the >> the stock wide-open. -- and it cracks the stock wide-open. 28 had as a buy, where the sleeping? a distinction of jim grant versus other. whether people agree or disagree with the hyper acute intelligent research opinion with no typos. stephanie: if you work at the bank, can you put something like that out? jim: we had long bearish announces and many -- analysis and we got the idea and we were 2000 words or so. the stock proceeded to double.

now we looked very good. i think the story was very good. side cannot douy isstick or choose not to do stick with a story in the face of adversity markets. by being -- not in a year from now -- tom: i would go to a gretchen said, this is the gradation of the use of creative recognition the focal point. everybody else does the same thing and valeant does it a lot. jim: it has become of light. -- but it it becomes goes to the heart. we do not know what the facts are. matt: where your world and my world dovetail is in this chart, tom. i have got the fed balance sheet in red and u.s. auto sales

totals in the green. he can see that it looks like from this chart that the fed's policies are doing something helpful to huge important industry and that is used in car sales. david: david -- jim: where is access? i think 18 million car and truck selling rates are certainly present but it is a sign of the consequences of free money, and there are visible fishers and autos in lower quality credit, so that is part of the story, too. back andwant to go talk about hedge funds with a genuine question. we talked about mismatches of liquidity. hedge funds are in it for the long term but they have to redeem. if you look at a hedge fund, if there is a mismatch of liquidity, don't you have a

problem? our new basically betting that the market will go up at the right time to cash out? is a little bit of that. when they have redemption, it is wrapped up in their own money invested in the hedge fund. it is important to understand that after jim grant makes the first $200 million, he puts a lot of the balance of his money into his own hedge fund, so it is a behavioral think of not only is your hedge fund challenged with redemption but you are walking your own value go down while you make those redemptions. there is a lot more of the dynamic. that is the way to the idea of 2% you sustain a two and 20, versus 20% of the game over the hurdle rate? can you sustain that with the nominal gdp? jim: tom's point is excellent. in the hedge fund, the people bearing the risk also bear the consequence of the risk.

so many departments of finance take risk but you do not bear it. tom: i have trouble tarring and feathering hedge funds who basically bake admirably in the trenches of 2007, 2008 versus the major institution [indiscernible] as jim alludes to. stephanie: jim, david mentioned earlier that we are encouraging viewers to send this tweets. i want to go back to something earlier, when you were being critical of the fed, this came in -- if the fed should get out of the business of sending prices, what is the appropriate role of the central bank, a regulator, a lender of last resort, or can the market perform the functions without a central bank at all? untile had a central bank 1914. stephanie: it was a much more simple world. jim: i think finances are forever different and the same in that there are calls on

money, maturity transformations, liquidity, and i'm much us are complexity -- and i'm not sure complexity is the new thing. he could get along without the central bank. i think it is important to keep the argument against the current simpleime simple, argument against is the fed has gotten into a new line of work which is the administration of a range of prices and values. we have frequently in this country and the world had low interest rates. as low as lewis between england and harry truman's america, but we have never had, until now, government administered and stimulated absent bull markets overlaid on 0% rates, that is new and i think dangerous. tom: does the fed risk the independence? if you go from j.p. morgan in 1907 to 1951, we go to a new regime, whatever the future that

is and i know you are in the running to be the next chairman, hat, is the idea that independence. has that been sacrificed? jim: i guess. i keep waiting for the world to register its disapproval of these truly radical policies. tom: and they don't. jim: the world seems happy. i am an outlier and well aware of it. roger altman speaks for wall street when he says god save the fed or god bless the fed. stephanie: in terms of investing, but if you talk to carl icahn or centric and miller, it does not mean that is how they invest. stan,f i may speak for stan is critical of the fed's mo but he distinctively, among is, asional investors,

he said, rufus and opportunism. -- is ruthless in opportunism. you feel: how fundamentally is an important point to make and how you invest and they can be two very different things. david: one final note about compromising, but one thing i know from spending years in washington, it is not good when congress talks about you all the time. congress did not used to talk about the fed. stephanie: that is a great point. david: thank you for being with us. we have dean kamen joining us soon. ib, bloomberg instant message. meets fast fashion, h&m's push to make designer close more affordable, next. ♪

vonnie: welcome back. here is our latest number business flash. toyota says profit increased 13% and is planning to buy back shares. results were listed by the weaker yen ahead of an overhaul by toyota of the product lineup. maintains theso full-year profit forecast. china's commerce regulator will investigate acquisitions against alibaba, a rival of the e-commerce giant and they claim alibaba is unfairly pressuring merchants to sean competing platforms. the complaint comes ahead of the crucial single day promotion with intensification of the competition between china's online -- two biggest online retailers. traders in the nearly $1.3 trillion a day euro market are

taking cues from mario draghi and not janet yellen, according to barclays is a, which says we have to respondents say ecb policy is the most important driver of the euro-dollar exchange, up from 30% in september. that is the bloomberg business flash. stephanie: thank you. the business of fashion but also a cultural movement. today in stores and online in nine minutes online. anxious shoppers have been camping out all night at the store just around the block from our office. this is the company's latest collaboration with a hot designer, select welcome h&m north american president. daniel, you have been with the company for 19 years and you started as a controller. when you came in today and saw the line around the block, looking like people were there for an iphone launch, what is so

special about this? daniel: i think it is the whole thing of h&m to always inspire customers. we have done this for the 11:00 p.m. with a big design" -- collaboration on picking off the holiday season. moment,is hot at the luxury designer from europe and we are seeing talented young guy and in social media is active. he is active with customers they day and that boosts whole thing. customers want to be interactive. stephanie: what is the business case for doing this? advertising impact, social media? the fact that everybody came into the office and said, what is going on downstairs? early meetingan and this consumed more time than anything else. stephanie: nine people to not know who the designer was

because it is for the ultra-passiony fashion. why do this? daniel: we want to excite customers at the best price. we want to get back to the consumers who have been loyal to us. they come in to find a good value and bargain and at the same time, we attract new customers who have never shopped at h&m before. it is a mix of how can we inspire our existing consumer base and attract new ones. they are standing in line and it is exciting. have ways of tracking whether somebody comes in for a designer or even more important, do they come back again? at abc, we knew if you watched one of our drops. daniel: of course. we have been tracking in-store and online. we want to keep track of consumers and to see them coming back and treat them in the best way. that is a sophisticated way to follow the customer. stephanie: what is perspective

volume? they want the product you sell in the store, you need to push out massive volumes of because your prices are low. if you are making -- i am wearing balmain today, if you make 100 of these tops, how many are you making of the regular stuff? is this ande, small how big of an impact on the line? daniel: we have every item from $17 up to $650. the small volume is $17, so we can adapt by learning from 11 years and knowing how much we do for each individual item. as you know, it is science. you never know how a consumer will react to an individual item. have too little and some we could have less. haveanie: seeing that you $400 leather pants and there is nothing else in the price point, are you trying to raise all your

prices around that? daniel: not at all, the $400 leather pants are for those who want to bite the luxury designer. david: if you are wildly successful on the sales, will make a material difference in your bottom line was in the matter of the ancillary effects with other products? both, we driveh traffic, topline, and we get healthy bottom line. the combination of everything and we are happy with collaborations. stephanie: what is the risk you run that you are going to far? this is outside your length of your core customer and what he or she buys. daniel: there is always a risk that you buy too much but you never know. if you want to be in the forefront, you have to take the risks. calculate the risk as much can, but we try to make the best decision possible. stephanie: who is downstairs?

the people lined up around the block, are they going to be wearing these items at the central park gala tonight or the reselling them on ebay? daniel: i think both. we had a pre-shopping event yesterday and we saw on mix of everything. they saw tonight and they wanted and also customers said they wanted to sell it on ebay. stephanie: the item i wanted a out last night, clear, the blades are not to be had. in four minutes, you can go online. the president of h&m north america. they day. -- big day. we will be back in just a few. you are watching "bloomberg ." ♪

david: facebook's streaming success, share price had to a new record. the conversation on global central-bank policy and how

significant china will be for apple. one tech watcher says been to net of things is the biggest opportunity for growth since the internet itself. david kirkpatrick is next. ♪ welcome to the second hour of "bloomberg ." i am david requested. stephanie: i am stephanie ruhle. hewitt this is david kirkpatrick at brian, and now list pivotal research. we never have you in person. moments ago, we were sitting with the h&m ceo talking about the collaboration, guess what? their website is crashing. crazy how these things work. it will get a first word news because i need to get on the website. test for the presence of

explosives will be at the center of the investigation of the russian plane crash. u.s. and british officials speculated upon me have brought down the airbus a saturday in the egyptian desert. british prime minister david theron says he will discuss crash today with egypt's president. a million more migrants are expected to reach europe for the end of next year. that is the projection. or than 700,000 refugees have found sanctuary there this year. germany report taking in 181 migrants -- 100 81,000 migrants last month. on radio, donald trump hasn't had that starts airing today in iowa, new hampshire, and south carolina. 300 thousand dollars, the first spending on ads since launching the presidential bid. you can get more on these and other breaking news stories at bloomberg.com. head over to matt miller

for a check of what is moving in the pre-markets. matt: thank you. take a look at futures, the s&p eight points,g dow jones mini cup 66. looks like a positive open. if you take a look at w.a.r. p it really tells you a lot about the market action today. you can see that future traders are betting a 56% chance of an interest rate hike coming in december, and that is the reason you see a selloff in bonds. take a look at the two year yield, it is at the highest it has been since february 2011. the highest in four years as people selloff treasuries because as i say, if you have old bonds and they pay bigger on the new bonds, sell the old and by the new. same thing in the 10 year, it is the fourth year of tenure treasury selloff -- of tenure some -- 10-year treasury

selloff. the pound, the worst day since september 23. they kept their rate unchanged, but they said that inflation does not look like it is going to get stronger. they lowered their estimation of inflation in 2017. jim grant points out that is don good forecasting to see that far, but the british pound trading at $1.52, a big drop. david: thank you. facebook shares surged, following earnings that beat expectations that show another quarter of growth. the company announced more than one billion daily users, one billion people a day and a staggering 78% of ad revenue coming from mobile. ryan reaser, i do not know what to start. when i started reading, every number jumped out. it was really good.

the margins compressed a little bit, but revenue growth is soaked substantial and the absolute growth margin is spectacular. there is nothing holding them back at this point and they barely got going on things like etc., and messenger, etc. david: they're spending more money, but they said that is because they don't think they are getting started yet. brian: the last time they did a reset from a product perspective was 2012. 2013-2014 were predicted years. david: we talk about stock buybacks, this company is investing in their own company. stephanie: david because they have a woman in a top leadership position. i like that shirt. >> i like to be colorful. stephanie: you would be colorful in a paper bag. >> thank you. you are not looking bad yourself. david: this is a lovefest.

david: i have believed in facebook for a long time. not only are they perfectly positioned for a digital media economy, better than any other company in any industry, but they are starting to see like possibly -- seem like possibly the best managed company in america. that is critical. stephanie: the best managed company in america? david: it's a possibility, the stock statement. stephanie: then you have to comment on twitter. an extraordinary product, but from a management standpoint, who are they? david: didn't mark zuckerberg said they are the clown car that fell into the goldmine? stephanie: clown car that fell into the goldmine? david: great quote but i will use it. i will give you credit. stephanie: i have never heard mark zuckerberg so clever. brian: twitter has great a company, but it is

that happens to be public. you have to give them more slack because if you look at the core product and platform, there are four years into commercial history. david: i have been fairly negative on twitter historically, but since jack took over and some of the changes they are making and talking about, i think they are promising. i am more optimistic about twitter then in a long time, but it is in a different stage than facebook. it is compared to them way too often. david: you say it is maybe the best managed company in america, how do you measure that? david: look at the consistency of earnings growth, the consistency of user growth, the consistency of almost everything they have done, the transition from not having a mobile advertising business to increase in the dominating google. they're keeping up quickly. stephanie: birthday boy? matt: i have a cold chart that brings in the china devaluation. this is normalized, the s&p 500

in green, facebook and white, far below. at the start of the check, it continues to climb, this after china's devaluation. the interesting thing and the reason i bring in china is because mark zuckerberg said china is now on a facebook in one of the biggest advertising markets. it is interesting because facebook is and in china. the key is the company's need to get the message out and the is facebook as a platform, regardless of whether or not the masses and access it. david: pretty extraordinary. brian: big opportunity, as with india. this is not a 2020 event. played out decades, sure, and that is another leg of the still, -- david: but they also say they have not begun to fight on other platforms. brian: no monetization to speech on messenger on instagram. david: and they think there are upsets.

what of the company would say, we do not monetize products until we have one billion users? they have 900 million with instagram, facebook messenger, and they are getting close. that is an incredible luxury to say something like that. stephanie: let's talk about advertising. when facebook comes out and says, advertisers, you don't have to pay us unless we prove to you that your ad has been clicked through, we talk about major threat that advertising is creating. how real is that, how big can their ad revenues that? on twitter, when i get anything promoted, i block it. hear more one thing i and more from people in the united states, my community, and teenagers i know, they do not like how many ads they see on facebook. they did say they showed more ads in the recent quarter than they had been, but i think there is a risk as they become the de facto platform of choice are most advertisers that they could

begin to offend their users. that is something they are conscious of and try to avoid, but it could affect growth. stephanie: it doesn't mean users. using it. david: good point. -- stephanie: it does not mean they will stop using it. david: good point. brian: it will evolve but the share of wallets, people only go. david: i think the number was 17.4% of mobile global advertising to facebook. ryan: overtime, i think it will -- depending on how to find the market -- i think 20% digital advertising over the next few years and they are not close to that. david: it is not necessarily so great if you are a media company with content and they become the only game in town. david: the word they are about to put out is a standalone use app. they had not confirmed it. on the issue of user

satisfaction versus how many ads they can show, i think it could be a crisis at some point because mark zuckerberg is obsessed with user satisfaction. if people start criticizing them for showing too many ads, that could change the culture and be slid up for them. i think it is way in the future. stephanie: at what point could facebook run the risk if they lose a plot. it seems everyone has facebook fever. is there anything facebook cannot do? brian: i think they are sufficiently well-managed, they have a portfolio of properties. to the extent that they might run into those problems on facebook, instagram monetizes and facebookvely, is a holding company. david: that is the difference from twitter. david: they are getting there. stephanie: the company is managed so well. in an industry, a sector that never existed before, but that

is what is interesting. david: they created the sector. stephanie: there you go, or great fashion sense. brian, great to have you in new york city and not in a little satellite space that we normally see you. thank you. david, you wore that shirt, so you are staying for the hour. we will have an inventor joining us soon. send us your instant bloomberg tweetons or treat as cash us. taking return, we are the torque of 2016. predictions in the year ahead. tour of 2016. our predictions in the year ahead. ♪

stephanie: --

vonnie: welcome back. here is our latest flash. s losing customers. at least eight deaths are blamed on explosions. heinz plans to cut jobs in two years. the layoffs follow 2500 job cuts . crafts and heinz completed their merger in july. expedia is expanding for travelers. worth nearly $40 billion. they want to offend out competition from airbnb. -- they want to send off competition from airbnb. stephanie: we are thrilled to introduce businessweek editor alan pollack. welcome to bloomberg go. a perfect time to have you. we are getting to the year ahead

for "business week" 2016. >> this is our third annual year ahead issue, and conjunction with the conference. it is always a frightening task to predict the future, so our aim is to give readers of the information to evaluate what they are doing as the year goes on. stephanie: interest rates -- i mean, all day, every day we talk that. half of our guest say, who cares? ellen: we make predictions based on a bloomberg survey of economists. some of it is predictable. the idea is that u.s. rates will go up to 1.25% by the end of next year. who knows when the fed will raise rates and people are beginning to think it might be march but nobody knows. and then we have countries like and india and russia

lowering rates as they try to stimulate the economy. i think the idea is china will probably go to 4.20%, not a huge they are trying to stimulate the economy. and the u.k. and eu will probably hold steady, not making many moves at all and probably go up a little bit. stephanie: the next topic matters to you. apple and the role in china. ellen: apple has a complicated role because like in the u.s., a lot of people have smartphones, so smart phone shipments are supposed to go up maybe 1%. that is down from 20% last year. tim cook still thinks it is a great market for them and he is investing there. they will continue to grow even at the market slows down. they are investing a lot in hiring engineers to create apps more focused on the chinese market. they are planning to open more

stores. i think they have 24 now and they hope to go to 40, so he is doubling down on china. david: they are big already, how they can they get in china? david: i think they can get a lot bigger. onna is kind of like balmain steroids, a higher fashion product been here. as the middle class throws, and they are luxury-oriented, i think it is surprising the wealth position despite the fact that there are hundreds of chinese clothes. people in china still prefer apple. david: there is a slowing in growth in china overall. is the cell phone and exception? david: in part because the focused onis consumption growth and they're doing everything they can to push people to buy stuff. i think the iphone is one of the things they want to buy. complicated situation is getting in with all the consumers and apple love.

david: apple has to keep executing at extraordinary scales with the hardware. stephanie: look at history, they are doing it. three? ellen kullman we will talk about exxon. exxon is incredibly -- exxon, exxon will announce who will retire in 2017. obviously, they are dealing with lower oil prices and the prospect that they will not go up a whole lot. they have a choice to make between focusing on someone who is in charge of pumping oil and focusing on someone in charge of refining. their big problem is there is not a whole lot more oil in the world develop right now. they have installed it in russia because sanctions and that is a challenge ahead. david: that is a big job for somebody. , thank you.k you can read the whole issue and this week's "business week" hits

the newsstands tomorrow. stephanie: you have to watch predictions for companies to watch, that is my favorite part. next, david kirkpatrick says he can show is the biggest opportunity for growth since the internet, next on "bloomberg ." ♪

welcome back to "bloomberg ." their expanding artificial intelligence into the weather spirit. they announced their upcoming acquisition of the weather company which includes weather.com and the weather channel. david, you say this is part of a bigger phenomenon. it is finally settling in as one of the biggest things that has happened. what the weather company has, among other things, and probably

the biggest asset is a network of sensors around the world, including the tips of airplane wings. a lot of airplanes have weather channel sensors to basically know what the weather is all over the world. ibm owns that but the sensors are part of the internet of things. we are essentially instrumenting data-anet, putting gathering equipment inside our bodies, all around us, and that process continues and it could be the biggest opportunity, certainly for the tech industry and for the economy over time. stephanie: do you think the company like ibm can monetize that? they talk about the grand idea of the internet of things and ibm and cisco, too old-school tech companies. david k.: has been talking about it for longer and he thinks it could create hundreds of billions of dollars of global growth. he thinks global growth could be

dramatically affected. salesforce.com announced that this is their big direction. it is really a big deal for a large number of companies are taking the internet outside of the human sphere. we are taking it into the sphere of everything and it is huge for verizon, at&t, ericsson, and it is also the driving force behind the next days of wireless which is 5g. something that these companies are big on, which will be a system that not only is faster and higher bandwidth for wireless will be able to detect what the nature of the system is. stephanie: my fear is conversations like this and the enthusiasm. they can do anything, the opportunity, and this is what creates bubbles. private money into the company is going, the magic, the future! look at the u.s.

presidential campaign, and neither party is there a presidential candidate talking about the digital economy, which i think all three of us would agree is probably the biggest single driver for growth in the world today. they don't seem to know it. it that they know it or people who care about it will not vote in the primaries? david k.: i think honest politicians should understand digital economy will help us growth. david: also a driver for some unemployment, i am afraid. -- upntor dean kamen next, inventor dean kamen. send us your questions on ib. ♪

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kirkpatrick -- david kirkpatrick. that does not do new york justice. much prettier. stephanie: ask tom keene says, a sity.picture of gorgeo -- inws that in travel scrabble. david kirkpatrick is here and h&m and their balmain collection and the website is broken. speaking of breaking news, matt miller turned 42 years old today. matt: thank you. initial jobless claims are out. we're looking at 276,000 versus 262,000 and the prior week. continuing claims dropped to 2.16 3 million and we were million, so2.1 4 initial jobless claims are

higher than we expected. there are two mandates for the fed, unemployment, which seems to get better although this flies in the face of that a little, and inflation, which seems to get lower. take a look at the 10 year yield . this is not necessarily to sign the fed will change their mind, but you do see it come down. the yield comes down which means people are buying into bonds. if you expect the fed to raise rates, you sell bonds just like we are looking at the seven great high. teachers higher across the board, and the initial jobless claims picture, if you look at the terminal, it is just getting better and better, regardless of the one wark number -- weak number. going all the way back before my birth, 1969, a big spike from the recession but we have made improvement. although today's numbers are worse than wall street

estimated, things look like they are getting better. david: thank you. let's get to the morning media, where we hear what key financial decisions are looking at today. we are joined by blackrock's cut of retirement and investment, ron. blackrock wants to alert baby boomers about to changes in the recently signed budget that could affect social security. i was not the money, what are the changes? ron: they have changed the have foreople collecting social security benefits. one removes one of the options from the menu and the other changes the way in option works. file anderred to as suspend and it has been removed when the process of being amoved and it is called restricted application. both were used that people once they reached their full retirement age to try to collect more money than they otherwise would have been able to do without the two strategies. david: these are for married

couples where one can forego benefits for a time and have more later on? generally speaking, with file and suspend, the benefit or strategy is you are allowed to collect the benefit off of somebody else's earning record once they filed. the technique would then have that -- the technique would have that person suspend, allowing their benefit to grow. the change requires that person to continue to collect. once they were to suspend, other benefits would stop. david: they are making the changes to try to save money for the u.s. treasury. ron: it is interesting. it was part of the budget process, so that is the argument. it will be interesting to see how much it does they carried we will find that out next year when the trusty releases their letter projecting the stability of the system. we will find out next year what the impact is. david: what are the estimates?

what they have said is if everyone what to take advantage of this option, they might be saving somewhere in the neighborhood of $9.5 billion a year. but they don't know is how many people are taking advantage of these options because they are unadvertised, not things covered in that statement that we periodically get in the mail or access online, so it will be unclear until they did the math next year and show us how the long-term system has been impacted. david: thank you. stephanie: now, we have got to get back to tech and welcome our special guest dean kamen, inventor, innovative, and founder of first and david kirkpatrick joining us. we want to start with education. in particular, robotics. over the last 10 years, there has been a push to encourage stem study, encourage kids to

study engineering, robotics, math, doing need to have this push at this point? popular, ie is so don't know when the kids who want to study latin. while it looks exciting, i think that is a relative number. it used to be zero and now it is being compared to 0.8 is still small. if you ask the average kids on the street about what models and superheroes, there from the nfl, nba, and hollywood. very few contain the name of a famous scientist, inventor, particularly women and minorities. last night, we had a big event, the first ever. our honoree was your michael bloomberg. stephanie: i am familiar with them. and: he was an engineer graduated as an electrical engineer and he used to represent the city as mayor down .hat the regional events we had last night, he was there as an honorary.

the woman from phoenix, as a result of being involved in -- a hispanic woman there with her mom and dad, never gone to college, studying engineering, computer science at nyu, but the data is really compelling. andne hand, women minorities are still to medically underrepresented, but it is dramatic. they are coming up and up. this yet, we have 43,000 schools in 83 countries, hundreds of thousands of kids that are passionate about studying math and science as they would be about other afterschool activities and sports. last night, one of our other and hes was will.i.am says it all to the kids, kerry few are going to make money in professional sports or hollywood, but there are jobs out there for all of you in tech. stephanie: is there money in education? when you see all the things that had been cut, not math that art,

gym, music, this is an amazing idea, where disclose get this money? dean: i am not sure it is about the money. was opportunity -- in this country, we think every problem you saw by throwing money at it. kids will seize the opportunity, if they want to learn math and science, they will learn it whether there is a big school budget or not. like basketball and football, they will learn how to play. matt: first, i want to show you something. is going to be at your extended event and has participated in this for some time. to stephanie's point, this is public spending on education as a percentage of gdp. back in the 1980's, we were in the 7.5 range. since the end of the reagan-era,

we have come down to 5% and plateau. in 2010 but it has not gotten better. we spend little on education relative to what we have done historically and very little is going to science, technology, engineering and laughed. how do you change that and deal need to change that? i am not an economist, but in america and any free country, you get the best of what you celebrate. if kids, particularly women and minorities, start getting passionate and celebrate science and technology, they will find a way to get involved. clearly, it would be great if more schools had the resources to put teams out there and it costs less to have robotics team that football or basketball, but in america, we now have 3500 corporations to supply all source of resources for these kids. we have over 200 organizations

hitting scholarships to these kids. last year, we gave out $25 million of scholarships for kids to create careers in technology. up withvery a, we come report cards and the u.s. falls farther behind, particularly in math and science. what can we learn from what other countries are doing? i was representing the u.s. in last month, the world academy, national academy in the u.s. and chinese academy of engineering got together to talk about the grand challenges of engineering. i spoke about the grandest of them all, the home and global network has to create the next generation of kids capable of solving technology problems. i suggested all countries form teams to compete the way they did in the olympics for the last hundred years. said, wese literally have 4000 schools with first teams and we intend to have first in every school in our country. i wish the u.s. could be that

organized. this is a global embarrassment that the u.s. expense so little on education, math and science. the thing i want to say about by creating a hands-on method for kids to engage, it has been a revolution in getting kids more excited. i think he has exactly the right idea that finding this robotics bank and giving them something tangible to use as a pathway into engineering and math and science is wonderful. i want to say that i have a conference called technology this weekend and our theme is values in the technology artist age. the thing about dean that i have always loved, he is a great person and inventor who has always kept the values in the right place. thinking about what really is needed as the city should to make the world a better place, so i want to applaud you and i am honored. stephanie: how nice is that? question from a

paul, what technology industry would be the biggest driver to employ more non-college-educated workers in the next several years? dean: sadly, not a happy answer. almost any job that can be done by a machine, especially now a smart machine with good senses, will be done by a machine, so the real answer is that kids ought to start focusing on developing on the skills to do the things we can predict in 10 tors, 30 years, still things human with passion can do better than a machine with the program. the number of jobs that will go away because machines do them well but continue to accelerate. i think that is a good thing because only look back at every job that went away because of machines, we decided those with the boring, dangerous jobs. nobody laments the fact that bulldozers were invented so we don't need ditch diggers with shovels.

it is way more efficient and easier on your back. we are going to, one by one, a lament the drudgery and dangerous jobs, but it does mean the skill sets to use their imagination, passion to work on the real problems that will still be the exciting challenges of the future. david: there is no question a lot of jobs will go away. david k.: it will take time and the number of jobs that will disappear soon is relatively small, but more and more portions of people's jobs will get automated and they will have two up their intellectual component. i think we have time as a country if we change the way we think about education agenda too optimistic to get people positioned for this new world. it is not an immediate crisis that it will become one. stephanie: when you complain about the lack of spending as it relates to technology, we are not living in the country where one roller decides, i will not spend money that way. this is how we vote.

america is making the decision. the americansink do not understand. like i said before about the presidential election, you may say it does not get votes in primaries, but if you don't have candidates trying to talk about what they need to hear, it is a crisis. david: we had a twitter question which i should have thought of, when i think of inventors, i think of dean came and elon musk, are you talking about any partnerships with elon musk? and i have it on very sports together. he works on the electric vehicles and i work on small. we are about to make our next generation want to help the disabled community. elon is the technology visionary. if i was working on something with them, i would not be able to tell you about it. that is the way the world is. what i'm hoping is that i will work most with elon on is creating a generation of kids

that see the future and opportunities of science and technology. stephanie: do you agree with david that the internet of things is boundless with opportunities? dean: the internet of things, by the way, including, they're coming outside of humans, which is true. i think one of the real exciting opportunities for the internet of things is going inside the human i started to monitor real-time people's health. stephanie: if there is one tech company would that on, who would it be? -- you would bet on, who would it be? dean: this week, we got a massive financial commitment from a little company called apple. stephanie: they do a pretty good job. dean, congratulations. thank you very much. , what is weighing on our needs this season -- up next, what is eighing this season?

ofl.i.am is such a promoter firsts, that he is promoting it with a song. there it is. ♪

stephanie: you are watching "bloomberg ," and we are talking bank of england, the government wrapping up a news conference on policy. tune in for a special exclusive interview with mark carney at 11:00 a.m. eastern. john nichols will sit down with him later this morning. david: it is great. stephanie: awesome. , we are told, the

worst u.s.-earnings season since 2009, with the biggest quarterly drop since the aftermath of the financial crisis. there is a story on bloomberg news and let's bring in mike regan. mike, how do you measure worst? mike: it is still weigh about 2009, probably in the neighborhood of double, but as far as growth, the negative growth -- actually, we had a growth last quarter so this is the first -- david: meaning it is not growing as fast? earnings arening shrinking. at about 5% this quarter. back in 2009, earnings were falling much faster. energy is the big story, shrinking by more than 50%. everyone hadion when we originally started seeing lower s&p 500 earnings predictions were just energy flurries, but now it is

spreading out throughout all the other sectors. really the only sectors growing earnings this quarter are consumer discretionary, hotels, retailers, restaurant chains, technology companies are growing isittle bit and health care growing. otherwise, you are seeing shrinkage in earnings and other sectors. you see growth in hotels and restaurants, isn't that a positive when you think about the u.s. economy and disposable income as they are starting to spend? mike: it is. of how more a matter important energy was to the earnings picture in this country previous or prior to the big drop in oil prices. while the consumer earnings are growing, it is not quite enough to compensate for the lost energy earnings. the other thing to look at, these are year-over-year comparisons, so the big their market in oil started in june of last year -- bear market in oil

market of last -- bear in oil started in june of last year and continue to fall, but if it stabilizes, the earnings sector will ship dramatically. function on a great the bloomberg that i am sure mike uses a lot. gives you a snapshot of earnings and this season, if you click on the growth have, you can see what companies are doing historically. downy is taking a big hit, 54%, but consumers are saving money because of that loss for the energy sector. if you look, consumer discretionary earnings are up 14%. health care, where you have to spend it, up 14%. ofecoms service earnings 22%, so there are winners in this worst earning season since the great recession. david: mike, you think you see

increased earnings because of lower energy costs -- mike: you see that in consumer discretionary. from the index level and macro level, it is not enough to compensate. david: they have more money to spend at the restaurant. mike: exactly. with investors, it is a surprise. which companies the estimates or missed by the most. financials are the story. earning is down about 8% for the group so far. training estimates, the only group with training estimates, and it ensures to having a tough time, aig, metlife, everyone posting pretty big drops in our needs and the banks are having problems with fixed income trading. stephanie: thank you. money on about bloomberg. whether we are talking about the average consumer with a little bit of cash to go to all of garden or our next topic, the

$377 million in art sold last night at sotheby's. what does that say about the health in the art market? we had back and much more coming on "bloomberg ," ♪ -- ondzhokhar tsarnae ."hokhar tsarnae "bloomberg ♪

stephanie: welcome back. last night in new york city, sotheby's auctioned off the art collection of the former owner, alfred. 77 works sold, bringing in $377 million which sounds like a big number but barely surpassing estimates. one piece stole the show, selling for more than $42 million. thain onoming up, john "bloomberg ." ♪

>> welcome to "bloomberg ." stephanie: welcoming erik schatzker.

we are pumped up. david: we have to welcome some of you and that is none other than the chairman and ceo of the cit group. makes for coming. we will continue in just a second but here's the first word. -- will be at the center of the investigation into the russian plane crash. u.s. and british officials speculated that he vomited brought down the airplane last saturday in the egyptian desert. david cameron now says that is not certain. another 3 million migrants are expected to leave before the end of 2016. that's the latest projections in the european union. more than 700,000 refugees are seeking sanctuary this year. germany taking in 181,000 migrants. carter secretary ashton symbolically underscores

america's territorial disputes with china. visiting a u.s. aircraft carrier in the south china sea. it station near artificial islands built by beijing. the u.s. does not recognize these islands as sovereign territory. china and the philippines are conceding claims in the area. he is in malaysia with talk with defense ministers. where you can get more on these and other breaking stories 20 hours a day, visit bloomberg.com . we are seeing gains across the board in futures. dow jones many contracts up 44 points right now. look at the bond market. that is really interesting movement is today. the two-year yield is that a four-year high. -- it has come down a little bit since jobless claims have been released. if jobless claims are worse, inflation and gdp are worse. that does not give janet yellen a lot of ammunition to act

although futures traders give her a 56% chance of raising in december. look at the 10 year yield. same thing here. there was a selloff and we are seeing a four-day selloff in a row for treasuries. it has come down a bit. dollar also interesting to look at as the bank of england comes out with its inflation forecast. also worse than previously forecasted. you see the dollar right now index trading just up and take but really -- a tick but really unchanged. facebook has got to be the standout. numbers that are shocking, even to the most successful people. more than one billion people log on every single day and facebook has boosted revenue per user 24% compared to the same quarter last year. massive quarter. good gains. qualcomm on the other hand, eps was $.91. investors are selling that an whole foods missed on both eps

and revenue. problems with sales growth. stephanie: i know who does not go on facebook everyday. this canadian. matt: you don't use facebook? erik: mark zuckerberg is not oped meo me and -- rl and. john is here. for the past five years he's been tournament in transforming the i.t. group. and for those that enough and following his impressive career free cit, he started at goldman sachs. rising to president and ceo. -- coo. emerged in your stock exchange with arca. and then suddenly two weeks ago he announced he will be retiring as ceo of cit in march at the tender age of 60. john? you and i have talked about this. you are the never to guide the most powerful firm on wall street at the time.

you have been ceo of three companies and are really going to become dual being a spectator? john: i hope so. i intend to take some time off. i want to play with my two-year-old granddaughter elizabeth west coast. i also have four kids who said i have been ignoring them and not mentioning them as well. i want to take some time off. stephanie: hold on. how old are your kids? john: they range from 22 to 32. stephanie: you affect forgets for 22 years. you got through the financial crisis, so much. why now? you could've said i want to spend time with them for the last 22 years. john: i have tried to spend time with them. it is hard. stephanie: is it something about the market of the job? john: it's two things. i was hired five years ago at cid right is a came out of bankruptcy.

all of the things i was hired to do are basically done. the debt structure has been fixed. the asset structure has been fixed. all the regulatory problems have been fixed. it's really a logical time to let someone else run and planned the strategy for the next five years of cit. stephanie: dropping the mic. i have been working for a long time and i would like to take some time off and look at doing something a little bit more relaxing. something not a 20 47 job. -- 20 47 job. 7 job. erik: if this really is your last tour of duty, can we get the rewind button? of all the things you have accomplished what are you most proud of and i think we often talk about your biggest disappointment or regret. john: i had a very fun career.

i've have spent almost 25 years a goldman sachs. that really molded me. i started when i was basically a kid. goldman sachs was and continues to be a great place. erik: as great as it was then? it's different now than it was then because most of time it was a private partnership and it was a very nice way to run a business. but it is also much bigger today and could not have been what it is today if it stayed private. stephanie: without the big financial payoffs it once had, is it fair to say that business is not that much fun? john: i don't think that is true. i think there was lots of opportunities. the regulatory environment is a bit of a constraint today but there are great opportunities in financial services. all four of my kids, even though i told him not to, albany to financial services. -- all went into financial services. david: that's a compliment. john: i take it that way. they find challenges there as well. erik: to stephanie's point, is

that period from 1998 after they dropped the glass-steagall restrictions up until the financial crisis, those 17 years -- a decade, was that an aberration? his wall street today more like the wall street you encountered as a young man a goldman sachs in 1979? john: it's very different. erik: in terms of compensation an opportunity? john: i have been in business for a long time in the financial world. i have seen the cycles go up and down. i was involved in the drexel bankruptcy, long-term capital, and most recently with bear stearns and lehmans and ultimately merrill. we are at one point in the cycle number the regulatory environment is more difficult. there is still going to be a need for financial innovation

and new york and wall street is still the leader in the world. we still need to provide capital to companies to grow. we still need to find opportunities for investors to invest. stephanie: financial innovation is not fitting inside banks these days. when you look at mary sammons -- larry summers, all involved in fin tech. that seems to be the future in their mind. you and your position know more about middle-market lending than any of these other individuals. is that really think the future is what you might do next? john: i think there is great opportunity there. we bought a company called direct capital. it is a version of electronic access to middle-market companies. the ability to provide capital and to access companies electronically through the internet is a great opportunity in the future. it's also a lot more economic.

david: i would like to erik's question. what you must proud of? john: it's hard to pick one thing. i joined the new york stock exchange which was a private, not-for-profit, only treated new york list stocks. and it was losing market share dramatically. it really is an icon of the american financial system. and the ability to turn it into a public for-profit, successful company, favors a fight across let itducts, and continue to be the leading marketplaces in the world, that was a great thing to do. i enjoyed being there a lot. they gave me a lot of time on tv. -- wereu'd disappointed you disappointed to see it that john: i think the combination of ice and the new york stock exchange makes sense.

it always made sense to have that be part of the business mix. the structure of the transaction purchased the new york stock exchange is unfortunate. look ate: many of us the stock exchange and say it's a museum, nothing happens there. what is the real value no airworthiness gone through? david: not all of the say that. john: the new york stock exchange had to have electronic trading because of the way the world was going and why it was losing market share. once in a while when something goes wrong or there's some problem, when some company has an unusual announcement, people still matter. it is true that an abnormal they were nothing special is going on, everything trade electronically. when something gets screwed up people do still matter. when you're pricing a new ipo, finding the right phrase --

price, you will see that the people on the floor still matter. erik: kathy became ceo of merrill lynch and for reasons that everyone now knows that happen for particularly long, there's some who wonder who what you would've done to end up as the ceo of bank of america. have you given that any thought? john: not release and that did not happen. merrill was a great franchise. i joined merrill when it was in a lot of trouble. it was suffering billions of dollars of losses. absenty believed that the lehman bankruptcy and all the things that happened afterwards, if i had had time, i couldn't fix the problems at merrill and that would've been a better outcome. the problem with the sale to bank of america is it really changed the overall nature of the company. bank of america is a much bigger company. and much, much more bureaucratic. stephanie: we're in 2008 and ben

bernanke put his book out. many people have applauded him and the work you did. yesterday we set out -- sat here with david stockman and said he must not read it. he gave a really bad title to it. "courage to print." erik: john had a front row seat. john: most of the books that are written is history as they would like it to be remembered. stephanie: isn't that the way history works? isn: elements of that book the history as they wanted to be remembered. i think there is no question that the single biggest mistake of the financial crisis was allowing lehman brothers to go bankrupt in an uncontrolled way. everyone who was part of that process has made of reasons why that happened. but the fact is it was a mistake. stephanie: i think there is no question that john is the next

30 -- an extra ordinary television guest. he has been ceo of the cit group. i know you're out to lunch across me. we have to take a break. hold on. send us a tweet. john, i know you have lots of questions and we will have a lot more when we return. you are watching "bloomberg ." ♪

♪ erik: welcome back. john is the ceo and chairman of cit. you have some five months or slightly less left in the role. fighte still waging the over the designation of cit as a systemically important financial -- itution because now

>> that past makes a german's medicines. a limiting the $50 billion which never made sense and going to the wrist-based test that looks at size, complexity, interconnectedness. that's the way the law should be written in the first place. there is no question that a $50 billion institution is not systemically important. bankrupt, wasent bigger than $50 billion and it did not cause any systemic problems. it's the best examples of why $50 billion is too low. erik: you favor a risk-based approach but janet yellen says the big banks, she criticized the largest u.s. banks for "substantial compliance and risk issues."t

people like you favor a risk-based approach and janet yellen clearly has problems with that. john: if you look of the problems that are come out of the biggest banks, they have been problems with the risk management system and other compliance systems. that is not good at the institutions that are $50 billion. erik: she did not get specific. i would like it if you were a little specific. what would you point to at the failing and compliance and risk management in the post crisis wall street? john: unfortunately there are too many to list them all. the idea that banks are rigging libel, they are stripping off the identifiers on wire transfers to get around the rules about where your sending money. although that is a failure of the risk management systems. stephanie: or the failure of

risk managers. john: i agree with that. it is both people and systems. there is a long list of those things. they give in to get fixed and corrected for that does not mean that the same rules that apply to those ten financial institutions that are the biggest ones should apply to those that are $50 billion. erik: cap -- where is the threshold? the wrist-based becomes for the likes of you and janet yellen too expensive? erikjohn: institutions that areo big to fail, there are probably ten. we can argue if it's eight or 12. that is the order of magnitude of institutions that are really too big to fail. at $100he set the level billion or $200 billion or some other number, dan cirillo mentioned $100 billion. that's a better level and $50 billion but the real way to deal with it is a risk-based test. erik: going back to janet

yellen's testimony, she said at the savior not been regulating yet. john: that's a fair interpretation. david: how do you regulate to get your people to not commit crimes? you can do that and local banks. you can collect the competitor and agree to what rate for going to charge. john: it's very hard to regulate and really how the institutions are run. it's the tone at the top of the institutions. it's how they enforce how their employees behave. i think it has to be a change in attitude at the biggest financial institutions that you can't do these kinds of things. it's detrimental to the whole financial system when people think that the financial system is rigged or corrupt. stephanie: hasn't dodd-frank already done that? there are no longer job functions and banks set to take big risks. john: i don't think that is true. there are still plenty of risks in financial institutions.

stephanie: buyer banks constantly crying and whining? only bring up rates trading they say all i do is act as the agent and there's not opportunity to have the pnl. are they lying? john: the one part of dodd-frank i think was the mistake was the volker rule. proprietary trading had nothing to do with the financial crisis. proprietary that trading is something do with the financial crisis is wrong. that part of the rule was unnecessary and does in fact restrict banks abilities to make markets and that is not a good thing. desks wereer, prompt a heads i win, tails you lose structure. you take the banks capital, roll the dice. if you lose, the shareholders suffer. stephanie: the ones that lose of the shareholders. it's not about systemic risk. if you're a shareholder of deutsche bank you had asked

yourself and i wanted to invest in this company. it doesn't have to do with why they failed. john: that particular model is because of poor management. you don't have to pay your traders just because they aren't x amount of dollars. example,oldman is a much better at paying people for the amount of money they made versus the amount of risk they took. not just because they made a lot of money and got paid. johnerik: what about merrill? john: merrill before i got there was not doing a good job of managing risk and paying people properly. stephanie: that is changed dramatically since then, don't you agree? erik: in part based to the volcker rule. i'm not defending the volcker rule. john: it does not of people are compensated and how people are managed. it's trying to -- erik: is there still an

incentive problem on wall street? are people doing things like rigging work because banks with giganticeforms and the legal departments have not yet figured out how to incentivize people to do the right things as opposed to the wrong things? john: i think they're much better at that now. i'm not sure they're perfect for the institutions are being managed better. and as compensation gets longer-term, as there are clawbacks and compensation -- stephanie: wheelies here about clawbacks. it's like meeting the others goldman harner ever. there are one zillion of those. has he went ever got net bonus? we were talking about the problem of the volcker rule is the problem is those regulating or this treating these rules don't understand the system. i think of paul volcker's casey energy is vertically well. he just believes that banks should not be proprietary trading.

the problem is the definition of preparing gary -- proprietary trading started figure out. stephanie: it took them forever to define market-making. these people and that the defiance of the so specific to get yourself into a problem. time,before we run out of between goldman, merrill, cip, looking at the financial system today, one of the biggest risks? john: it's in much better shape. there is no question that banks are better capitalized. there is less leverage of the system. i thinkad a look today, the place there is more risk is in the non-bank, the shadow bank system. the regulations have basically pushed the risk, the most risky things out of the banking system. the shadow banks, the hedge funds, that is where the biggest risk is being taken today. the riskiest loans are there because you can have them in a bank.

we will see how they do as we get into an economic downturn. john, thank you very much for joining us. be sure to traded for exclusive interview with mark carney today at 11:00 a.m. eastern time. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. ♪ volatility over the past few months since the u.s. market into a tailspin. mostly due to fit uncertainty and a slowdown over in china. as the bull market still intact? how long can it run? let's ask david lefkowitz. welcome to bloomberg . you think the market is a way to go? david l: i think it's really been earnings growth. earnings growth is more stagnant at a headline level because of the downdraft in energy and the strong dollar. we than the is out, yet mid to high single bernanke just growth. that will be more evident in

2016 and it will continue to power the bull market higher from here. stephanie: when you think about the downdraft in equity prices we saw in august and september, what do you attribute that to? : i think it was a concern about how much of a slowdown we were seeing in china. isare seeing a transition proving to be a bit company -- bit bumpy. was a going to spill to the u.s.? after the third quarter i think we are not seeing that anything fashion. some markets are uneven. but on the whole u.s. economy is doing fine. if the stock market continues to rally, what will drive it? i look at the earnings you seen this far in the third quarter. of course energy is a disaster but outside energy there is

negative revenue growth and materials, negative relative -- revenue growth and financials and utilities. and the picture for earnings growth is worse. there will have to be a massive multiple expansion to drive stock prices higher barring some turnarounds in revenue sales growth. david l.: i think this is why there is an opportunity. there is some concern we are seeing the end of the bull market in earnings. i think if you strip out the dollar, it's been a huge drag. the energy drag his blood over into parts of industrials. i think that headwind will start to abate. as we go to 2016i think it will be -- in the first quarter we will see headline earnings growth resume and it will be not only earnings but revenue growth. it will give people love our confidence. back by popular demand is the ea function. eric has asked me to switch over to growth. david l.: that's what i was

talking about. matt: earnings growth here in the energy column dropped 54-55%. that's not negative growth, that's a decline of half. udc gains. where people are not spending on gas maybe they are spending on new iphones or telecommunication services which are up 22%. consumer discretionary's, maybe more people are going to consumer discretionary switcher of 15%. erik: i'm talking about the lower left-hand corner. after the vertical redline is where economists and analysts are looking for. they are looking for a turnaround. david l.: i don't the guitar to get there. if you strip out some of these headwinds from the energy sector, it's knocked down effects as well as the dollar, you can definitely get there. stephanie: how do you strip of the headwinds? into l.: because if you go 2016, if the dollar stays where

it is, to headwind will not be an issue as we go to 2016. if oil prices don't have another 50% downdraft, that will not be had in 2016. it's basically easier comparisons. if you strip is out right now, we think revenue growth, excluding the headwinds, is about 5%-7%. that is not really being appreciated by the market. that's part of the reason the market has rebounded. people at taken solace in the fact that underlying earnings growth's are still ok. it's an uneven picture. erik: what about money flows? what we saw happen during the quantitative easing era here in the united states is money came in for the rest of the world, pumping of u.s. asset crisis while we saw europe and japanese equity prices decline. now that is reversed. all the same rules are true, shouldn't all the money be going to europe and all the money going to japan and out of the

u.s. market? we like: to be clear overseas markets better than we like the u.s. market. i think the overall equity bull market is still intact. i think there is some better upside in some of the overseas markets. erik: even with currency risks? david l.: currency is obviously a variable but the way i think about europe is it took them a long time to clean up the banking system. it is finally in a position where it can support the recovery. -- from a is for a guy they were serving they cleaned up. david l.: obviously that is a big deal now that the banking system is in better health. you are seeing it in the lending service in europe. the l.a. started supporting the recovery about 12 months ago. they guess meet some cover this will be a durable recovery everyone at the we had in the early parts of the recovery after the financial crisis. erik: represents the biggest risk in your view? david l.: i think policy is one of the biggest risks, and

politics. the structural issues in europe i don't think and been addressed and we've seen some political backlash there. as we go into a fed-tightening round, i think we have to careful that policymakers don't make a misstep. if they over tighten too much, that could be too much. erik: what about on the politics side? when he began weighing the ofefits and disadvantages the democrat versus a republican in the white house? david l.: at this point it is silly season in the campaign season. it is hard to take a lot of these proposals with any degree of confidence. at the end of the day all these proposals have to go through congress. the way i would think about it is if we have a democratic president, we will probably end up with the status quo. erik: and a republican-controlled congress? david l.: yes, my thinking is congress is us -- does not change much.

investors understand how to invest in the status quo. if there is a republican in the white house, we probably will see some attempts to make some policy changes that can make some volatility. some of those changes could be good or bad. we have to assess. stephanie: if you think policy and politics of the overhang, how do you manage the perverse effects of central bank intervention when they do it when the market likes it? but they are doing it because the economies are so bad? david l.: i think the market likes appropriate central-bank policies. what i mean by that -- stephanie: do they like central bank intervention or love the fact that a massive safety net hangs under the markets so whatever happens, we know mario draghi will do whatever it takes or janet yellen gets a baby falling out of the window? that's a nice way to invest knowing you have that. david l.: i don't have that perspective. i think what has been driving this is earnings. if you look over the last --

since 2009, is the primary driver of this. sometimes the economy needs more support from the central banks. sometimes it needs less. i think the market is beginning to rally on the notion that the fed actually will begin to tighten. the market thinks that is the appropriate policy. stephanie: you know what happens when you disagree with me? i in the segment. i'm just messing with you. david lefkowitz, thanks so much. matt miller, the market is open six minutes? matt: and we are of across the board. reserve plunge protection team. look at again. very slight across the board. i would call it unchanged. if you look at the two year yield, i think is the most important part of the market today, although we are still in a selloff mode and the yield is 0.83%, wer your high,

had a little bit of buying in bonds after the labor numbers. after the job numbers came out. first-time jobless claims were worse than the street was looking for a nymex people think that janet yellen will be dovish a little bit longer. and the 10 year yield the see the same thing. we have seen 40's in a row of a selloff and you still see the yield higher. there was a little bit of buying after the news came out. take a look at the pound across the pond. i hate it when people say "across the pond" but i just did. a big drop for the pound. it's been incredible he strongly the but down here. 1.52. it --lauren came out with and crushed it as far as revenue. they expand brands. whole foods missed on earnings in on revenue. by one ofngraded the most accurate analyst on the

stocks. says it's worth $44 and 12 months. let's head to abigail. she is taking look at some most notable movers on the nasdaq starting with the stock that everyone is talking about today. abigail: the big story over here the nasdaq is facebook. shares of the social media company are searching after opening at a record high after the company or did a stellar third order yesterday after the bell. they beat the street across the board and they also surpassed key metrics that investors are watching. the company says they have more than one billion users checking in daily. monthly users have grown by 14% to 1.5 5 billion. all this is being done by mobile advertising after the company stepped up efforts. the street is liking the results. price target seven race across the street with piper jaffray going to a street high of $155, suggesting it could be moved higher than 40% from these levels. turning to expedia. it's announcing its acquiring

palm away for $3.9 billion in cash and stock. this represents a 20% premium to wednesday's close. it beats up -- beats up home away. expedia's ceo says it's a problem -- product important to a certain group of people so were building up until products over time. investors are cheering the news. stephanie? david: kids actually david the thank you very much. we changed on you. after yesterday's announcement that expedia will buy homeaway, emily chang will speak to both ceos today on bloomberg television. can shake check keep it sizzle? the change reporting earnings after the bell today. ♪

♪ stephanie: welcome back. bonnie: japanese air back maker -- must assess its new cars were no look reviews its airbag inflator's which been linked to scores of injuries and seven deaths in the united states. they said they were discontinuing the inflator's in new models and mitsubishi is considering a similar move. -- then commission reasons. more challenging global conditions. lower oil prices and a weaker euro. -- thatxpected protection was made back in may. the recent recovery set it on a president stemless by the ecb. they will release fresh projections in december. another they quarter for

facebook repelled by mobile advertising. the world's largest social network recorded third-quarter revenue of $4.5 billion, beating estimates. surged in extended trading. up 33% so far for the year. --t is the latest on bigger bloomberg business class. stephanie: whole foods is feeling the heat from cosco and walmart. they reported fourth-quarter earnings yesterday afternoon. same-store sales fell .2%. analysts executive rise of .7%. this is the first drop in over six years. shares of whole foods are down nearly 40% this year. too bad the prices there are not. here now to gives a taste of shake shack earnings is cranky a mona -- craig giamona. let's start with craig.

one of the getting wrong? they think with more discretionary income they would be sending -- spending that are not? >> cosco and walmart caught up. a time to get was organic selection of whole foods but they lost differentiation. the whole paycheck thing really haunts them when you get the organic items at cheaper prices at other places. stephanie: what do they need to do? >> a lot of people think lower the prices. some people are saying lower the prices. -- people say their brand is upscale and chasing the bottom of help them. they are in a bit of a quandary and not sure which way to go. erik: i know shake shack is your thing. i want to throw this idea to both of you. five years ago who would've thought that the expansion, the indoctrination of america into organic and all-natural foods would've been a bad thing for whole foods?

five years ago you thought it over the holy grail of everybody turning onto organic and all-natural. it's whole foods'market to take on its own. stephanie: just because you are the first is not mean you are the best. hello netscape. >> they created the market and brodeur gimmick awareness to a lot of people that walmart said we can do this to. we have the distribution and they scale. people caught up with them and maybe past them at this point. -- passed them at this point. erik: they are talking about cutting $300 million in cost. investing in digital. sacrificing margins by giving up on prices or giving up on trying to maintain their price points. they will do a leveraged share buyback. stephanie: if you think about it publicly traded company, what does it need to do to succeed to grow/ given the whole foods price point is it is difficult for them to do that.

more and more people care about the kind of products they sell. retailersore broader like target, walmart start to sell this product at a lower price point, why wouldn't people go there? >> maybe there is a point in the lifecycle with air with a growth company and that is ok. they buy back shares and pay a dividend and attract a different type of investor. erik: analysts are talking about whole foods needed a more specialty. stephanie: like a luxury company? erik: like it wasn't. stephanie: maybe it's going to attract a different investor and maybe it should be a luxury bucket for investors. >> if you're on the high-end he'll be limited as to where you can go -- grow. you want necessarily built 30 stores in arkansas. he will be on the coast and areas where there are affluent consumers. stephanie: this walk to directly into shake shack where growth is the question. people love shake shack but it was the competition? given what their price point is,

where can they grow? >> they are targeting the coasts. they are only looking at 300 or 400 stores in the u.s. they want customers with money. they are taking picture -- customers from casual dining. previous guests talked about how strong consumer discretionary has been. a lot of the earnings growth is from share buybacks and stuff like that. casual dining has been suffering and they're losing customers to places like shake shack. customers are trading down to chipotle. it's a little less expensive. they still get great food. stephanie: you would take your family to dinner at shake shack. you would necessarily say girls, who was in the mcdonald's? >> they're coming up with a new burger to try to compete. you don't take your kids to dinner -- stephanie: i absolutely take make is to shake shack for dinner. matt: if you look at the fast casual dining companies, a lot

of them have done poorly. pollo loco is down here and potbelly. can they avoid the bust? for the second time of program i want to say "dovetail." the world of shake shack and whole foods dovetail. you can see the holders of shake shack. i have pulled it up here. because of the holder name and you-- search for "walter" can see that walter robb has recently sold his entire shake shack stake and he is the whole foods ceo. stephanie: weight. this is some special terminal knowledge. matt, you're mixing up ceos. walter robb of whole foods did what to whom? matt: he had a decent sized stake in shake shack any recently sold it off as of the

filing in august. i thought it was interesting to mention. it doesn't say anything because he's not the ceo of shake shack. you are talking about whole foods, i'm talking about shake shack and bringing them together. i'm dovetailing these things. >> as long as he doesn't say anything. david: thank you to greg and michael. the price of bitcoin has surged at the question is why. we will discuss the next on "bloomberg ." ♪

♪ now it's time for some of today's top moments as heard on go. factwas impressed by the that the bank of england had inflation of the fourth quarter the year 2018. i wonder that bank knows it's

going to rain week from thursday. their bricks, mortars, and human life attached as well and that is where the matter. the fed is a relic of the age of command-and-control. >> the one part of dodd-frank i thought was a mistake was the volcker rule. proprietary trading had nothing to do with the financial crisis. erik: were not defending the rule. does not official people are compensated in how people are managed. it's hard to regulate. itself institutions are run. there has to be a change in attitude at the biggest financial institutions that you can do these kind of things. of businessortions out, and it's going more and more into the digital world. into the social media. i'm convinced that the digital world will play a bigger and bigger part in the future. man is really very -- the luxury designer from europe. the creative director is very

talented. a young guy. he is also very active in social postingich means he is with the customer say every day. stephanie: we are not done. bitcoin on a roll today. they cannot be a better birthday gift for our partner, matt miller. he has lived off of bitcoin. if you remember the 12 days of bitcoin. he knows this currency very well. it's been on a tear. a massive winning streak come up nearly 40% in the last three days. this is a lot of noise but what is it about? matt: i bought a few bitcoins back in december of 2013, at the height for reporting purposes. not as an investment. i did live off of it for a couple of weeks and successful. that is not way bitcoin is rallying. look at the one-month chart. on somee almost doubled exchanges because we do the average of bloomberg on four or

six exchanges. it's come back down. the recent there was a chinese rule change. chinese people can now get direct deposits from bitcoin exchanges into their bank account. and a lot of wall street big-time names have gone into bitcoin businesses like life masters and others. i've been talking with barry silver. stephanie: when peter thiel spent $50 million -- when he put that in its chump change to him. happy birthday, matt miller. that will do it for "bloomberg ." a big lineup tomorrow and you don't want to miss it. ♪

10:00 a.m. in new york, 3 p.m. in london, and 11:00 p.m. in hong kong. welcome to "bloomberg markets

s." good morning. i'm betty liu. here is what we are watching at this hour. sayingk of england is interest rates will not rise anytime soon, perhaps not even until 2017. mark carney will explain today's decision to bloomberg's editor in chief, john micklethwait, in an exclusive interview following this morning's inflation report. facebook is surging and so is its stock. investors love the robust third-quarter sales, $4.5 billion, over a billion facebook users now. we are half hour into the trading session so far, up at this moment.