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. i want to get to julie hyman with the latest in the countdown

to the jobs report. julie: as you said, at this moment. that is the key phrase. littleare opening very changed, dipping into the red, coming back into the green, now rising, all three major averages on the rise. facebook is a part of that story as people await the jobs report. the focus is on individual earnings and we are seeing facebook game by about 6%. this is a record price for the now, beating company estimates. the company saying the average revenue facebook earns from each user climbed by 24%. investors havet been looking at, they are happy with them across the board. to 1.5 users up 14% billion. you look at my bloomberg terminal -- take a look at the gain since the ipo. here is facebook. the orange line is the s&p 500,

the green line is the nasdaq 100. here is facebook all the way up here, gaining 186% since its ipo in may of 2012. the s&p up sister 1%. there are a couple of other tech records to mention today. they had just been on kind of a tear here. talking about out for that and amazon. they were at records yesterday, gaining once again today. that means those two tech giants are also at records once again. we have seen the strength in tech recently. betty: but not everything is great in tech right now. julie: know, qualcomm is a big disappointment. forecast quarterly sales is falling short of estimates. the company is seeing better than estimated demand from one of its larger customers for parts used for handsets. qualcomm get 60% of its

operating in licensing its mobile technology. compressing its numbers and the shares are down 11%. the smaller tech company, a damage -- a data management company is cutting its forecast for the year in terms of earnings per share. this is after third-quarter numbers for terra data -- for are down quite sharply. that is tipping the scales. betty: julie hyman at the markets desk. now let's check with first word news. vonnie quinn has more. vonnie: thank you so much. we start with the latest on the russian plane crash in egypt. area where to the the airliner crash are being grounded. speculation by

british and u.s. officials that a bomb brought down the plane. russian officials deny that. islamic state in the sinai peninsula claims it caused the crash but says the west must figure out how it was done. nato secretary-general is calling out rusher over its buildup of military forces from the baltic sea to the mediterranean. he is asking the u.s. alliance to come up with a response. he says the buildup could allow moscow to limit nato's access to certain regions. refugees aree expected to reach europe before the end of next year. that is the latest projection from the european union. one in 700,000 people have sought sanctuary in europe this year. germany reports taking in 181,000 refugees last month alone. a majority of americans have doubts about the u.s. plans to stop islamic state. of those surveyed by

the associated press disapprove of president obama's strategy islamic state in iraq and syria. for the first time, george w. bush's father is revealing what he thinks about the architects of the iraq war. w.mer president george h. bush talks about his son's vice president and defense secretary. he says dick cheney had his own empire and calls donald rumsfeld "arrogant." george w. bush says he never consulted with his father before going to war in iraq. first wordook at our news right now. you can get these and other stories at bloomberg.com. there at the quinn news desk. now to our top story, the bank of england announcing this morning it is keeping rates at .5% -- no change in rates. do not expect record low rates to rise much anytime soon thank

to mark carney signaling that going tos -- there are be slow moves as long as china is a drag on the global economy. >> the mpc is voted again by a majority of 8-1 to maintain the bank rate at half a percent and by 9-02 retain purchase assets at $975 billion. since it has in february last year, we reaffirmed our expectations that when bank rate rises occur, they can expected to be limited and gradual. betty: for more, i want to get to a dartmouth economist, former member of the boe monetary policy committee. we also have mark barton outside the bank of england on this. what would you expect, a rainy london afternoon. first to you because you saw the pound dip on the back of this news, the inflation outlook being cut. it seems like there was no other

hawk that joined in looking for a rate rise. mark: you said it. before we were talking yesterday about how possibly another join mr. was going to mccafferty, who has been voting for a rate hike for three consecutive months. ing was saying possibly martin we'll would join him. that did not happen. a more dovish bank of england today, the bank of england cutting inflation and its growth forecast for this year, and next year it says consumer crisis -- consumer prices will stay below 1% into the second half of next year. downside,hat, to the betting against the usual suspects -- blame a strong pound and weak energy prices. but also this is a new one. this inflation report -- blame

the deteriorating global environment. essentially it is a case of domestic strength and foreign weakness. behind me, by the way, betty, something very special is happening. our editor in chief, john micklethwait, is talking to the governor, mark carney himself. you will be able to watch that on bloomberg within the next hour. mr. carney onlly when the first rate hike is going to happen. as you suggested, rate expectations are actually being pushed out until the first quarter of 2017. betty: that is right. not until then. it sounds like it is back in the fed's court to be the sole central-bank mark that is going to be on a tightening path. that is interesting because many before this were saying there is no way the bank of england is going to go before the fed.

that is not going to happen in a million years now. before today, economists were saying the bank could go in february. the fact that the bank of england has cut its inflation forecast for this year and next year means february rate hikes are not going to happen. possibly in the second quarter. the markets were suggesting the first rate hike was going to happen in november. as we know, that has been pushed back into 2017. it is all about friday's jobs report. if we get a strong jobs report, that puts the fed in play this year. i want to hear what mr. blanchflower is going to say. does he think if the fed goes this year that puts the bank of england in play for the first half of 2016? there is no bigger dove than mr. blanchflower, betty. you know, mark, he is listening to you. our tell --

>> you should have listened to me before, mark. i have said all along on your program and to you many times that the danger in the u.k. does not sustain a rate rise. it was not going to happen for five years. i have changed that view. it has taken a while for the bank of england to recognize it. the discussion still has to relate to what happens to the housing market. we have this problem in london with house prices in england zooming upwards. it outside that they are not, and the problem with any rate rise in the u.k. is there are all these people on variable rate mortgages. rates inart to raise the u.k., in february you will have an impact on the pound, you will impact manufacturing, and you are going to hurt these people. so a rate rise in 2015 was always off the table. i said that every year of the last five. betty: it sounds like people are

coming around to your opinion, and they have. what about 2017? >> obviously it is hard to look forward and forecast very well as the bank of england has really come to realize. the questions in the press conference, they have been wrong every forecast for the last 20 could we have been overly optimistic about rove and inflation -- about growth and inflation. the government says interest rate rises would come in to focus at the end of the year and spent most of the press conference trying to wriggle out of that one. we have to watch the data. we still have negative shocks, dis-inflationary shocks, dis-inflationary shocks coming from the rest of the world. plus the ecb is loosening and is talking about further loosening, which would strengthen the pound further. if i was mickelson way, i would ask about the importance of the exchange rate and where -- and whether the currency was or the

currency was -- and where the currency was or the qe was and how it will impact his decision. betty: is there a number that is a trigger for you either on the inflation front or on the currency front? >> i quite like charlie evans-view, which is that 2% is meant to be an average target over a while. i would want to see inflation rising quite a lot, perhaps up at around 3%. the scale of this shock is so huge that any attempt to raise rates in the face of fiscal tightening -- and in the u.k. we do not know the scale of that, given the defeat of the government -- you have to sit and wait. the reality is there is no inflation. core inflation is disappointing. it is not just about oil. to believe that the bank of england will stop raising rates -- basically inflation says today it was cuckoo and we

cannot do anything that we said over the last 20 reports and we will have to sit and watch. sorry, should have listened to me. danny, you know what? i agree. this is proof we should not be ignoring what danny blanchflower says you could make some money here. danny blanchflower with dartmouth college, and mark barton outside the bank of england. -- asn for a very special you mentioned -- we are watching exclusivetwork, an interview with bank of england governor mark carney today at 11:00 a.m. eastern time. john micklethwait site that with him-- sat down with following today's inflation report. ♪

betty: good morning and welcome

back to "bloomberg markets." let's head back to the markets desk, rude julie hyman has a check on where the company movers are heading right now. it has been a volatile session so far. julie: i wanted to just bring your attention to valleeant. those shares have been tumbling as they have been recently. the latest is there is a story in "the wall street journal that says that bill ackman actually considered up in his stake in eant, and those shares are down 15% right now. there was an interesting story on bloomberg news. bill ackman had brought up that enough has not done lobbying in washington. looking at the company spending compared to its closest peers within the pharmacy industry. look at shire and end of international.

those companies spent 260000 and eant has come under fire by members of congress. they have been scrutinizing the company for its pricing practices. there is a lot of piling on in terms of the company. in terms of retail, let's get to crocs here. the company's revenue in the fourth quarter leaves room to meet estimates -- to miss estimates. about the talking china problem that the company has, that they have some questions about distributors in china. they have been trying to clear inventory. also, sticking with retail and shoes and accessories -- up by 8%.

company earnings topping estimates. the company sales are also doing better than estimated. also direct consumer sales rising 16% above what analysts had estimated. another way to say internet, e-commerce. i doubt there is very much of a catalog. betty: i still enjoy them. julie, thank you so much per julie hyman at the markets desk. let's go to facebook. facebook mobile advertising ramped up paid off big time, the company announcing third-quarter sales of $4.5 billion, handily beating wall street estimates. they have exceeded one billion users for the first time. joining us from san francisco is ron josie, the senior internet -- he is bullish on facebook. you have been outperformed, and you say the stock price would go

up to 1.3. what stood out to you from the monthly active users continue to grow. the thing that was most impressive to us is that online advertising growth reacts elevated at 57% sfx on a year on year basis or there are a variety of reasons for that, at instagram is a majority of that. there are a lot of good things between engagement and modernization. is this a zero-some game? ron: it is pretty wild. when you look at online advertising, there is a massive secular shift that is accelerating. the advertising bureau said that q2 advertising was at 20%, the fastest growth rate since 2011, and it is accelerating. .oogle had a great quarter

twitter had a great quarter with a 67% advertising growth, and facebook is benefiting as well. there is more than enough to go around. in the secular shift from off-line to online. betty: what is the dent in their story, ron? what is it? is it the fact that they are still banned from china? what is it? ron: it is hard to say what the dent is. you will always have users going to another platform, but that is were instagram comes into play. risk will launch in one q. we think that would be a minimal impact if at all. it is hard to find the issue here, unless all of a sudden advertising falls off completely. we find that hard to believe. noted sheryl sandberg had the importance of the election to facebook.

ron: i think she said every single candidate was using it, highlighted even ben carson is using it. that is the one thing that facebook does better. they're targeting technologies are better than these traditional advertisers. that is checking better advertisers. i think frankly, all of facebook , 2.5 million advertisers are spending more and spending more often and doing so on facebook and instagram and other properties. that is a real story here. frankly the court business is doing extremely well. betty: ron, thank you so much. ron josey. more "bloomberg markets" after this break. ♪

betty: peter hancock and activist investor carl icahn will go face-to-face over carl break up theto

insurance giant aig. i want to get to dan, a bloomberg editor covering insurance for us. the two are going to me. what you expect will come out of that? dan: there is the big divide. carl icahn has talked about splitting the company into thirds. hancock has directly oppose that. what carl icahn wants is a higher stock price. over: over one dollar -- $100, he says, right? dan: which assumes splitting of the company. they are reducing the terms below that. so the question is whether he can offer some sort of alternative that would satisfy carl icahn, that he could get the stock price up without the drastic split that the company does not want to do. betty: it is interesting.

he is trying to shrink the company. we saw the job cuts, up to 400 senior managers. carl icahn wrote in his letter that aig is choosing to succeed, but remember that before the financial crisis, aig was much debt was a much bigger company. it had hundreds of thousands of employees, versus i think 61,000 now. were a bigger company, and they were hugely profitable. is it really that they are too big to succeed, or is it some other issue here with aig? dan: they have become loaded. they focused on regulatory matters, on propping up and saving the company. and then on repaying the bailout . so in that time they have built up a lot of costs. they were probably higher than a lot of their peers, and on the underwriting side they had higher expenses. it can take longer time -- they

can take a longer time to fix that. betty: hancock has not been in the job that long at all. is anyone questioning whether he is the right person for aig? dan: we may hear more of that. the stock went down yesterday when hancock said i do not like the carl icahn plan. so the stock -- it has not done horribly. it is probably around the low 60's, so we will see how high it can go. betty: we will see how the stock price reacts to all of this. thank you so much, dan kraut, our bloomberg editor on insurance. and john micklethwait interviews mark carney, coming up. ♪ we live in a pick and choose world.

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so your sleep goes from good to great to wow! gift the best sleep only at a sleep number store. save $500 on the veteran's day special edition mattress with sleepiq technology, plus 36- month special financing. hurry, ends wednesday! know better sleep with sleep number. betty: live from bloomberg world headquarters in midtown manhattan, you are watching "bloomberg markets." i'm betty liu. vonnie quinn has more from the

news desk. vonnie: we start with details on the controversial trade deal. the trans-pacific partnership between the u.s. and 11 other countries runs to 30 chapters, and hundreds of pages. it lays out plans for the handling of trade from everything from railway sleepers eels.e deals -- to live visited a u.s. aircraft carrier in the south china sea. the carrier is stationed not far from the island built by china. the u.s. does not recognize it as sovereign territory. carter is in malaysia for talks with the asian defense ministers. more than 100 survivors were polled today from the rubble of a collapsed pakistan factory. at least 18 people were killed, but officials fear the death

toll could rise. some trapped workers used cell phones to call for help. trump. on radio, donald ads will start airing today in three early voting states -- iowa, new hampshire, and south carolina. they cost $300. the effects -- they cost $300,000. concerns fromlies milk to sugar in brazil to palm oils. food prices increased 3.9% in october, the biggest jump since july of 2012. that is a look at our first word news right now. you can get more on these and other breaking stories, always, at bloomberg.com. betty: vonnie quinn at the news desk or it john sain has had one --the morse story careers

john thayne has had one of the most storied careers on wall street. out of the blue two weeks ago, he announced he would be retiring as the ceo of cit in march. erik schatzker joins us now. you had the chance to exclusively speak with him this morning. i know he is staying on his -- he is staying on as chairman. erik: he will remain as chairman, but he is not going gently into that good night. he has a fight on his hands, and that has to do with the designation of cip as an -- as acally systemically important institution. it completed its purchase last quarter of indy mac and came across the $50 billion areshold, turning it into systemically important financial institution. there are a lot of people,

including john thain, who think that is ridiculous or too small. call it $100 billion. he has some allies, republicans in the house who have passed a bill or are advancing the bill that would eliminate the designation at $50 billion. but at the same time he faces some opposition. janet yellen said yesterday she might support raising that number by a modest amount, just not a lot. onty: so he has that fight his hands and will continue with it. just on that vein about overall regulation and dodd-frank -- erik: it is inevitable because he has a front row seat. goldman sachs, merrill lynch, now cit. john thain always has views on what is right and what is wrong with regulation. >> one part of dodd-frank that i

think was a mistake was evil or rule because proprietary -- was the folder rule. rule. volcker that part of the rule was unnecessary and does in fact restrict the bank possibility to make markets -- the bank's ability to make markets. that is not a good thing. erik: here is the thing -- he does not think it needed to be in dodd-frank. the problem is that in many institutions, including merrill lynch, which he took over as ceo , it was not properly managed. we could debate endlessly as to whether it did or did not cause the financial crisis or play a role. he does not think it did. betty: he does not believe it should be in the role of regulators -- it should be in

the role of regulators' hands. erik: right, exactly. it should be in the ceos'hands. .ohn thayne has some concerns as all encompassing as dodd-frank seems to be, with hundreds and hundreds of pages, there are things it does not do. i asked him what he sees as the biggest risk to the financial system today. here he is again. john: the financial system today is in much better shape. there is no question that banks are better capitalized and there is less leverage in the system. if you had to look today, the place that there is more risk is in the non-bank, the shadow banks. because the regulations have basically pushed the risk, the most risky things, out of the banking system. erik: and cit knows a few things about regulated banking because until the one west merger, it primarily was an asset-based lender to medium-sized u.s.

companies. it also did a bunch of leasing and saw what is going on in the aircraft industry, in the railroad industry, but it did a lot of lending to midsized companies. least aa group or at segment of the economy that is being targeted by these non-bank lenders+++ clubs, but there are others -- the on-deck, the funding circles, that are making loans, commercial loans, outside the banking industry. i have heard anecdotally there is a ton of capital flowing into this industry, and the risks that they are going to make, irresponsible loans to companies

as opposed mortgage borrowers, but the point is we might find ourselves in a situation not unlike what happened in the mortgage crisis. a bunch of loans that are going to go bad. betty: and you have heard other bank ceos, which would be opposed to these non-bank lenders because they view them as competition, that they are taking business away from them. but at the same time, isn't it true that they are not giving loans out as freely as they were before? ink: the non-bank lenders some cases have a much more stripped-down business model, partly because they do not have to submit to regulations, so they do not have a giant appliance department. they do not have hundreds of lawyers on staff. they do not have to meet the same money laundering regulations that banks do. in your -- you are absolutely right, it sounds like the ceo of the bank like john thayne is talking his own book when he said the biggest risks in the world were in the non-bank area. but there are definitely some points worth paying attention to , and it is always good to hear john thain on that and others. erik schatzker, thank you. still ahead on bloomberg television, in half an hour we will have our exclusive interview with bank of england governor mark carney, who sat down with our bloomberg editor

in chief, john micklethwait. ♪

betty: welcome back. we are just over an hour into the bloomberg markets. time for a bloomberg business flash, looking for some of the biggest stories in the news right now. worker productivity grew the third quarter. the measure of employee output per hour increased at 1.6% annualized rate. ralph lorenz -- ralph lauren said in september that former gap executive stephan larson

with 16 the company -- would succeed the company's founder as ceo. pfizer is going to allow patients to receive dozens of medications for free. it is doubling the allowable income level for people to receive national assistance. a single person earning a little more than $47,000 a year could receive some medicine for free. facedomes as drugmakers criticism over historic drug prices per you can get more bloomberg business news at bloomberg.com. now it is time to get reaction from all around the world. most asian stocks were up after janet yellen's comments boosted the dollar against the yen. one big story out of the region, takata shares have been falling with honda discontinuing their relationship, mitsubishi following suit possibly as well.

>> takata shares have been --lated, causing -- costing wednesday's lost was the biggest intraday plunge since it was listed on the tokyo stock exchange in 2006. a newspaper has reported mitsubishi may follow honda. the cotto has also been slapped with a fine due to its airbags. -- takata has also been slapped with a fine due to its airbags. betty: let's go to the nasdaq where abigail has a report on qualcomm. abigail? abigail: qualcomm is one of the bigger earnings stories over here today. .t was actually in line

what is disappointing investors today is guidance. the first quarter of the december quarter, their new fiscal year, is below what was expected. the company sees a range of adjusted earnings between $.80 and $.90, versus a street estimate of $1.08. behind this is the company's licensing, paying licensing fees, but the ceo says the company is preparing to take legal action to get fees and catch up payments could help in the future. that being said, it is a rough year for qualcomm with shares off 27% year to date. today the stock is having his worst day january of 2010. expedia, the online travel services company, announced it homeaway.ng it helps expedia put it into the

space of rentals, non-hotel lodging space that its users currently cannot access. the ceo of expedia said it is an important product for a certain group of people, so we will look to hold out our rental product over time. shares of both stocks are higher. betty: abigail doolittle at the nasdaq. and on that story, coming up on bloomberg television, emily chang will sit down with the ceo's of expedia and homeaway. watch out for that interview. ♪

betty: welcome back to "bloomberg markets." a ballothis week, measure was rejected that would have legalized both recreational and medical marijuana use.

have joined 23 other states and the district of columbia in legalizing marijuana in some form of another had it passed. is mexico supreme court opening it. the top court has been granted permission -- is granting growssion to people to cannabis for their own consumption. i want to bring in a reporter from bloomberg's partner in mexico. victor, what did the courts decide, and how is that going to impact the mexican drug industry? some are calling this mexico's green day plus one because the decision made yesterday by the mexican supreme , we are going to have a big discussion in this country about what we want to do with marijuana. we are talking but two corporate

lawyers come a businessman, and a social activist who will be allowed to grow and consume marijuana without facing medical chart -- without facing charges. what mexican law states is that if four people present similar suits before the supreme court and the supreme court rules in the same way as they did for people, we will be talking about a new federal law here in mexico. marijuana for recreational purposes would be legal in the whole country, so this is just the beginning. we could say that mexico started usn a road that might take into full-blown legalization in a year or so. this is something that would have been unthinkable a month ago. betty: victor, this would be a watershed moment if this does become the law of the land for mexico, so what kind of an impact could that have on the

drug gangs, on the violence in mexico? yes, the drug war has left this country to do a lot of soul-searching. we have to remember that originally about 70,000, maybe 100,000 people have been killed since the federal government launched this offensive against the drug cartels. remembering that the drug cartels make something like $1.5 billion per year by producing and commercializing marijuana, we have to remember that the mexican drug cartels have diversified. they are now looking into heroin, methamphetamine. they are looking into stolen gasoline. it will not be a massive impact into their incomes because their incomes have gone into other areas. that is where they are getting the money from at this point. mexico's president,

what is his stance on legalizing marijuana, victor? victor: yes, he has been very critical of the decision made yesterday by the federal supreme court in exit go. they went to a press conference minutes after the supreme court ruling. the chief advisor said, he tried to warn the mexican public that marijuana is not legal, only for the four people we were talking about. he was very emphatic that mexico advocatingnt is not for the legalization of marijuana. the federal government in mexico -- it has been following the guidelines set by the federal government in the u.s., basically being very critical of marijuana. most growershat, in the coming months will see more legal challenges. it is anybody's guess what might

happen, but one thing is for sure, the federal government in mexico is not happy about what was decided yesterday by the supreme court. betty: victor, thank you so much. now i want to switch gears and nt, because youa saw earlier the stock is down dramatically. i want to look at julie hyman for where it is trading. julie: it is still down dramatically. it is down by 17%, so the declines have been accelerating as the day has gone on. right now the stock is down 17%. you can take my bloomberg terminal because i have it up. there you go. it is down 17%. there is not necessarily any new element of news today. there are a number of little sort of things that may be contribute into the declines. first of all, "the wall street journal" saying that the lachman

dumped his vet -- that bill ackman dumped his valleeant stake after a pointed e-mail that the company was not transparent and answering investor concerns. bill is something that ackman talked about on his own conference call detailing something that was going on with the company, that valeant does not spend as much money lobbying as its competitors do. all of that appears at least to be contributing to the declines that we are seeing in the stock right now. at thejulie hyman there markets desk. i want to bring in drew armstrong, a report that has been following this valeant saga. to your knowledge, what is going on here? ofw: we are seeing a cascade bad news, one thing after another. julie mention a lot of these things. we have two groups in congress saying they want valeant to

appear. this wall street journal report detailing some of the things, the lack of a conference call last week, including getting rid of the ceo of the company. we still have not heard a ton from valley and's -- from valley t's ceo.rom valleean given where the shares keep declining, we are -- betty: one is saying they are selling out completely. shares were below $75, for the first time in more than two years. the company has had six days in the last six weeks where the shales have -- where the shares have dropped more than 10%. it feels like it is one thing after another, and you have to ander if this momentum incentive is taking over. betty: i am just looking right

now about our terminal function, short interests, and, boy, has that spiked in the last several days. it is at its highest level since earlier this year. it is piling up on valeant. from one thing i hear analysts is that discovery has always been a little bit of a black box. it might not be quite as much information as some established, steady companies. the company kind of changes quarter to quarter. it does so many deals that the company looks different every quarter. you have a new drug company. figuring exactly how to value this thing and what the company can look like in the future. when you do not have a past or present -- betty: i know you are going to eant story.val i want to head to london where

manus cranny has the latest on the bank of england super thursday and the reactions in the markets to the boe not doing anything. manny co. let me give you -- great let me give you a line by jonathan ferro before he headed out the door -- the market is moving before the mpc met. the market said it would be november rate hike, and this is euro-sterling, euro writing. have a look at cable because you have the sterling, dropping dollar. 1.5251 is where we are. march through december last year 's all about the story. it is the talk of a slowdown on a global basis, and no more arps.

i will be back in just under 35 minutes in europe. wety: in just a few moments, will have that exclusive interview with bank of england governor mark carney, sitting down with bloomberg's editor in chief, john micklethwait, after today positive inflation report and the impact on the markets that you just saw with manus cranny and here in the u.s.. stay with bloomberg television. ♪

betty: it is 11:00 a.m. in new york. welcome to bloomberg markets.

♪ bloomberg're watching television and listening to bloomberg radio. i'm betty liu. the bank of england kept rates on hold and trimmed its inflation forecast proving that the doves still rule the roost. mark carney explained to john micklethwait following this morning's report. john: you said in july the timing of the rate increase would be clear at the end of this year. has the end of this year morphed into sometime in the next 12 months? mark: thank you for having me on. what i said in july and repeated subsequently was that given our

forecast the decision about whether or not to begin the process of raising interest rates would come into sharper relief at the turn of the year. the year has not yet turned. it is coming closer. -- thereess has been has been progress but it has been mixed. growth has take down to growing on trend. domestic cost growth has picked up. some imported costs have been softer. the picture is mixed but we still have a situation where domestic demand is resilient and private domestic demand is robust. john: that is interesting. my reading was that you ought to be happy about what is happening at home. what is booking you is the emerging markets. coyly, theu were

prospect have weekend. -- have weakened. mark: what we did with us forecast, we took down our medium-term expectations for emerging markets. the u.k. is more exposed to so it and united states is slightly derivative exposure to emerging-market. we took down medium-term prospects to such an extent that it has an impact on our forecast. if you look at u.k. weighted growth, our forecast has gone fourths of a percentage point. principally because of emerging markets. we see the chinese economy and our best estimate the rate of growth slowing to about 6% at present. china is at the center of this

but this is not just a china story. john: when you say best estimate , the prospect of banks inside china, your head of the financial stability board. how much do you worry about how much bad stuff there is on the balance sheets of chinese banks? mark: anytime you have had a sharp increase in credit growth as you have in china and more broadly in non-japan asia, one can expect at some point there will be an uptick in nonperforming loans. we have not yet seen that. the increase in private credit -- aggregate credit in china has doubled to more than two times gdp in the last five years. --the economy slows in china chinese nominal growth was about 20% in the immediate aftermath of the crisis and has slowed to just above 6% at present. debt dynamics get more difficult so one would expect that there

would be an increase in nonperforming loans and banks would have to adjust. john: do you think they are measuring correctly? mark: i think the issue with nonperforming loans is they have to start not performing before you actually measure. it is more perspectives than actual. chinese banks have a strong capital position. i think chinese authorities are aware of these risks and would take appropriate actions. there is a process of adjustment and that process through the financial sector is one of the reasons we think growth is going to slow. john: any other emerging countries you're worried about? there are ahole series of issues across emerging markets. that in america notably. notably.america we know the commodity super cycle has come to an end so terms of trade shock for a number of economies has a direct result on slowing growth so that impacts are zillow, chile --

that impacts brazil, chile. the shift in capital flow has sustained flows back to the center enforced by monetary policy will see prospectively. that will also have an impact on growth. reforme of structural and productivity growth in these economies has slowed in the last two years. john: even with a country like brazil the level of structural reform has not happened. i would say as a whole adjustm.

john: many people look forward to rebalancing of the chinese economy and it moved towards services and consumers. that seems to be happening in some provinces yet it does not seem to be a good thing. mark: i think it is a good thing. .irectionally it is positive we are seeing a pickup and services. one of the reasons why there is a breakdown between historic relationships between industrial commodity prices and chinese growth. we are seeing more reform. the latest liberal lies asians ,- the latest liberalization's some of the flexibility introduced on the currency, pars of our best part is that it -- positive part of the process. it is the second biggest economy in the world. these processes are never perceived smoothly.

we will all have to deal with the bumping us the comes with it. john: the largest economy in the world. janet yellen said yesterday that there is a possibility the federal reserve will raise rates. what is your own personal guess about when they will raise rates? our expectations are that the fed will do what is necessary to achieve -- john: that is very brave. you must have some basic scenario about when you expect the fed to raise rates. mark: our expectation -- in the end, the way we look at it, they will pursue a path of interest rate adjustments that are consistent with keeping stability and the economy growing around full employment. the u.s. economy is performing well in a new normal sense. this is not the u.s. economy of precrisis years. that economy was unsustainable

so it is performing well. we see them growing in the high twos over the course of our forecast horizon. that is material for demand for the u.k. and one of the reasons why we see our economy continuing to progress. i'm confident they will make the right decision at the right time. i made a point in the press conference today. i think the fed has been as transparent as they can be about a decision but they have not yet taken. john: does that feel familiar? mark: it feels very familiar. it is familiar to all central bankers. john: janet yellen is not a bad girlfriend? mark: we are all as reliable as we can be. when i say i'm confident they will take the decisions that are necessary because i have an understanding of their so-called reaction function. how they will adjust monetary policy. john: in terms of your timing, does that play a role?

i know it is good to play the plucky englander. it must make difference to your timing. mark: what matters most to our timing is the reasons why u.s. monetary policy adjusts. we would expect monetary policy to adjust because that economy continues to grow above trend. it is appropriate to do so. i remind people of this but am going to remind you as well, all one can look at his past history. since we became an inflation target or, derek and five inflation cycles. there have been five inflation cycles. we are catching up. we are a point where we more or less at level i in terms of punitive growth. -- cumulative growth.

more people have stayed in the job market in the u.k. we will take our decisions. we are informed by what is happening in the u.s. but we will take our decisions based on what is right for achieving our target. john: inflation. can you say somebody about how you see inflation? all the way around the west people are struggling with the same thing, inflation is very low. is there something about the modern economy that is suppressing inflation in a way we did not expect? do we need to start rethinking the way those rules are done? mark: we have had a severe shock. once a global demand and that is multifaceted but the other has been in part because of the financial crisis and in part , these of broader factors equilibrium interest rates -- interest rates consistent with his cheating and inflation

target, have part -- achieving an inflation target, have fallen in the aftermath of the crisis. the ability of central banks to stimulate economies have been challenged. have been catching up to provide that stimulus. in both the u.s. and the u.k. what has happened in the last several years has been because of the prepare -- because of the repair of the financial system, because of some of the repair in the fiscal side in those economies, but those equilibrium rates have been increasing and we are getting more traction with monetary policy. small, ae relatively medium-sized open economy like the u.k., you face a bit more of a headwind from abroad because of global disciplinary pressure. in relative terms we promote global disinflation.

are weighing countervailing forces. robust private sector in the u.k. with foreign weakness. john: does core inflation matter much more to you? mark: i think it is important that we look at it because of this in ported -- this imported disinflation. relativelyes adjust quickly when the exchange rate goes up or prices go down. it takes a while to filter through to the end prices in the shop. we have to be conscious of the extent to which the calls -- those costs add up. one of the things we said today was that we have adjusted to bid over our horizon because we are recognizing a bit more that

there is persistence. we might not be able to get inflation back to target as quickly as we previously would've thought if it were just a one-time drop in the oil price . if that were the only factor hitting our economy. there is more persistence. that means we can take longer to get back to target. that means that monetary policy would be a little tighter than it otherwise would be in the first scenario. because that is where the pressure comes and what we want to avoid is to have cost pressures build up too much domestically to the extent that once these foreign factors ultimately passed through the economy we are overshooting that inflation target because of domestic strength. we need to balance those a bit better than some other economies. john: george osborne, doing a meaningful job in terms of restricting things. how much do you see your job to

balance that with monetary policy? mark: the way i put it is the job of a central bank, particularly the bank of england, we take fiscal policy has given. leaderay the stack oberg -- fiscal policy moves slowly. we all know what the plan is. it will have certain impact on the economy. we try to help our economy given that. only in extreme circumstances that a central bank should ever weigh in if you will on fiscal policy. that is only when the stance of fiscal policy actually threatens the ability of the central bank to achieve its objectives of financial stability which is not the case of the u.k. john: as you jog around listening to the pretenders, do you regret not buying a house? mark: i listened to your podcast

when i jog. i regret listening to that. --terms of house prices john: people are talking about london house prices in the same way as they used to talk about chinese share prices. this is the next big bubble. mark: one of the issues -- our responsibility is for the united kingdom and there are certain dynamics in prime central london that are unique to prime central london and those who invest in those properties have to deal with those. we will manage policy for london as a whole. one of these advantages to the new bank of england is that we have tools to address the financial stability risk that can come from excessive credit growth that can be driven by certain dynamics in the housing market. john: the macro prudential tools. mark: we use them about a year and a half ago to prevent a

slide from responsible underwriting standards, which is what they have been, into reckless standards which is the movie you have seen a few times in your life and threatened again. we have been able to get in front of that and put restrictions in terms of income mortgages. we will continue to monitor this and conditional steps if necessary. john: how can you cope with that? mark: something we are watching closely as the financial policy committee of the bank. the prospect of us having directive powers over this. , we decided aty this stage we are not acting. let, the with buy to issue standards are higher for owner-occupied. you put more money down and you

have me for example renting the house and ultimately you have the credit of the person who has purchased the house. moves,er house price potentially the relative credit worthiness flips because you have a potential of more properties coming on the market at the same time. we are conscious of the fact that i and let lending has gone 60% zero to 16% -- 0% to and respectively -- 0% to 16% to 20%. you have to be alert. we are alert. now's not the time to take action but if there's a need to take action. john: one other thing. -- when you look at it, what is the thing that worries you most about that?

what is the particular thing that you think would hurt the financial side of britain and what would you try to stop if that were to happen? mark: i think this is another case where we take the arrangements as given. the u.k. is a member of the european union. we have to do contingency planning for extreme risk. this is an example. we are on public record saying we are doing contingency planning. we never disclose contingency plans in advance. we'll is disclose plans once the issue has passed. john: which bit of it would worry you from a central banker's perspective? i think that is a realistic question for those who want to stay and those want to get out. what issue should both try to cover? mark: the issues around our relationship with the european just, we have detailed not

in speech but in an associated report. i think there is a general point from a macroeconomic perspective which is that the u.k. runs a large current account deficit that is natural given the economy is glowing -- growing more rapidly than other economies. it is financed with very solid, largely long-term investment flows. it's important that this economy continues to be an attractive destination for foreign capital. .hat's a product of many things our contribution to that is monetary and financial stability and we will continue to deliver that so all of your listeners can continue to invest, not just listeners, viewers. that they can invest in confidence. john: you were worried that the u.k. would not be able to resolve a big inc. failure -- a big bank failure.

is that still the case? that may not be an exact quote. -- we are diligently working on ensuring that we have majore tools to resolve banks. it is imperative for financial stability. we will announce next week an agreement on loss absorbing capacity. a global agreement. there was a global agreement which we have secured at the fsb which will be recommended to g 20 liters. this is the -- g 20 liters. eaders. this is the moment of unlocking too big to fail structures. ? through several years where banks reorganize their -- you have to go through several years

where banks have to reorganize. it is when you get to the end of that process that you are in a position where i can say, we think we can resolve one of these institutions. with respect to your specific question, we are conscious of the bank of england that we have a banking sector that is almost five times gdp. a financial sector on the road to being 10 to 15 times bigger than gdp as a whole and we need to have that organized in a way that it is resilient and so that institutions can fail in an orderly fashion. including thanks -- including .anks bigger than our own gdp we are putting in place the tools necessary for that to be the case. if i can flag something for you, next week we are having a public

event. it is relevant to this because one aspect of the so-called open recognition that the progress that has been made for institutions and markets so that this economy, this country, society i would bring it to that level, can confidently sustain financial sector of the size. john: on the question of public credibility, i wondered how much it came down to issues of liquidity. the open forum making capitalism work for people effectively. liquidity seems to be a big heart of it. people are angry about banks but the banks seem to be providing less liquidity. is that good news or bad news? mark: it is good news depending on how it is organized. we have seen these events over

the course since the taker tantrum of 2014. i have seen so many events i can keep track. you have the jump to illiquidity, a few difficult days in markets. we need to get to the bottom of why this is happening, the role of changes in market structure. if you step back and look at what is happening with alert -- with the world's largest financial institutions, the dog but has not barked has been any distress at any of these institutions. within a few days those institutions have come back into the markets. as opposed toened amplified volatility during the crisis. some of these reforms are having their intended impact. that is one of the issues we want to talk about next week, a

more bloomberg type issue. your core client base really cares about these markets being effective and how they function. the question we are putting on the table is, which of the reforms have worked, what is contradictory and is a coherent as a whole. there is a broader set of questions in the u.k. and beyond . how well our markets serving the real economy? a lot of this diversification that you mentioned, that actually will serve the real economy better. a more diversified system that will serve that are. best serve better. -- serve better. it is one thing for me to sit here and say we have all the technicalities worked out in these institutions, we can reliably havethese rkets in the u.k..

it i it is another question if people want a financial market of the size and also connected to that whether they view those markets as being fairly organized and accountable. john: how much progress do you think your made on the huge amount of anger at the banks? your relatively popular. -- you are relatively popular. it does not seem to have gotten through in terms of the way they look at banks. , the it is understandable skepticism people have given what they lived through. a lot of progress has been made on making the banks stronger. a lot of progress on paper has been made in terms of making them resolvable. the key issue is around conduct. i think what angers people and what is being tackled now is that individual responsibility has not been there. we've seen finds against

institutions but relatively few individuals -- i think it is not just the perp walk of an individual or two. it is the overall culture and codes and behavior of a broader set of people in the industry. we have made sweeping changes. i would underscore in conjunction with banks and market participants who were in the process of rewiring -- rewriting codes of conduct. regulators are connecting those codes and those behaviors to individual responsibility and accountability so if there institutions, if the people the se,ior managers supervi don't behave, that is going to make a bigger difference in my

view. it is more the spirit of the way london properly operates. it will make a bigger difference than having hard and fast regulations and enforcement around those regulations. john: the unreliable boyfriend. you put forward you tried to communicate to the reddish people about possible interest rate rises. all of these things. yet we are still here flirting with the idea of interest rates. do you think there was no alternative looking back? mark: forward guidance initially was about early stages of the recovery and what are the minimum conditions required before we begin to think of raging -- begin to think of raising interest rates. given the strength of the initial recovery 2013, the strength of purchasing managers indices and growth.

historically the bank of england whatever raised rates three times during that period. in terms of inflation that would not of been the right thing. it was partly binding the hands of the committee to see -- to say, let's see what the underlying inflation dynamics were. i think it did give people confidence to invest. we have given guidance about the path of interest rates limited and gradual. we have repeated it so many times, it is part of the furniture now. that is a good thing because that was a call we made in december 2013. call.ars ago he made that now it is accepted. it has been consistent. recently the challenge we have been facing, what is the right timing of starting the process of limited gradual rate increases.

this economy has been making some progress in the judgment of the committee, it has not made enough progress start that process. at some point that will be there. what i rather have the majority of the british people think rates are likely to go up in the next year? i would. that is reasonably prudent behavior given the progress this economy is making, the likely path of rates. and also want them businesses do think that when rates go up if not going to be the old rate cycle? yes. i would like to think that as well because they can plan accordingly. at some point rates are going to move. it is not today so this is not going to top your news. john: always trying. can i finish with two personal questions? do you have any ambition to see that through, to stay beyond five years?

do you have any reaction to the events in canada in the recent election? john: the two on -- mark: the two unrelated questions. on the second, i congratulate prime minister trudeau. . very strong cabinet i look forward to working with the new finance minister. and the fsb world we have a tangential role in the top 21 discussions. john: in paris. mark: it will potentially set up a very market-based rule on climate change with respect -- i'm not even halfway into my five years so it is too early to answer that. john: good luck. thank you for speaking to bloomberg. betty: that was bank of england governor mark carney speaking with bloomberg editor in chief

john micklethwait. i want to head to europe where manus cranny has been monitoring how the markets have been settling after these remarks by the bank of england governor. think what mark carney and john micklethwait encapsulated is this is a governor in control of the situation. he's not going to be cornered. we have lots of headlines from the interview. this is dollar sterling. it moved on the back of the actual announcement. just trending a little bit lower. i quite liked the concept that they came up with prudent. carney said he is prudent. he thinks the bank of england will raise rates in 2016. if you think mario draghi is on watch, you are very on janet

yellen. we have yellow live -- yellen live and mark carney, the global unreliable poor friend -- reliable -- global unreliable boyfriend. carneymicklethwait and also talked about the housing market. how is that going to play in the market? manus: the next time you are here we will walk around where mark carney lives. it is very expensive. we are talking about real prime london. i think with the concern is here, the bank of england has macro prudential tools. we have seen them use them before to take heat out of the market. , he wasonse to john prepared to use those again. 2017, thatuarter of

was days ago when the market assumed we would get a rate rise. lever forward with some good data and market took it all the way back to august. we are back in december. i want to finish with this. if sterling is one of the most triumphant currencies in the world, it's challenge only by the dollar and the yen, up 7%. the big issue for carney is the currency. it come out today and say inflation will be lower than i thought. that takes your currency lower and that is ultimately going to help the bank of england and the mpc on their prudent road to change. betty: thank you so much. manus cranny in london for us. i want to bring in mike mckee, our economics editor was looking at not just the doe policy but

boethat affects us -- the policy but how that affects us in the u.s.. comments that central-bank leaders have made. interesting things from the interview. he did the interview. there has been a theme on this side of the atlantic and that side about central banks being driven by market expectations. timesard him say several he is talking to the bloomberg audience, he is definitely trying to affect market perceptions of what the bank of england is going to do. it is opposite message from what janet yellen is sending now. she is saying we are ready to raise rates. markets should begin to price that in. the bank of england does not want the markets to get too far ahead of them in placing -- in

pricing rates and he is pushing back suggesting it will be to the 16. they are sending a similar message. betty: who was a more effective communicator? mike: it looks like both have had about the same success because we have seen the dollar and u.s. bonds repriced after the yellen, fisher, and dudley comments. the bank of england had a major impact on the currency today and that is one of their focuses. they said in their statement if the pound gets too strong it not only imports inflation but hurts growth prospects. they managed to knock it down significantly against the euro and major trading partners across the english channel. betty: what goes into their monetary policy decisions? mike: they are tied to a single mandate unlike the dual mandate with the fed. focused on prices. they have a target of 2%.

that is one of the things you can look at in terms of why they did what they did and where they did they are -- and why they think they are going to be. they're going to have to start raising rates in 2016 if you look at their forecast for where inflation is going to be. they're ending forecast for 2018, 2.3%. their policy rate is going to have to adjust but it will be a slow process. they are looking at the impact oil prices and stronger pound and sterling. they say it is not going to be immediate so we have more time the janet yellen does. betty: my understanding is yet a right -- he had to write a letter to the chancellor. there thinking on growth. to what extent is fiscal policy and politics, how much does it play in bank of england decisions? mike: a very strong indirect role. the bank of england does not have any control over fiscal policy but the conservative government has embarked on austerity in the last couple of

years. .he ecb faces the same problem there is no help from fiscal authorities so whatever growth there is is coming from central banks. they are unable to boosted further than we are seeing now. it is sleepwalking growth. ,t is not getting any faster not getting any slower. the premium is on them to move slowly and avoid policy errors in raising rates. betty: how much do you think carney and yellen are speaking to each other? mike: they are not on the phone every day talking about what they are going to do. the bank for international settlements in switzerland has meetings four to five times a year. representatives of the fed go there all the time and talk to their counterparts from central banks. i'm sure that they compare notes every once in a while at g7 in g 20 meetings on how they see the world.

betty: we have the jobs report tomorrow. we are looking at the fed funds futures which i know is not a perfect tool to gauge market expectations. fed will raise rates in december. mike: it is the idea that the majority of people think the fed will raise rates. you go back to what dudley and yellen said yesterday and carney said today, it is dependent on the data. when we get important data tomorrow on the jobs market and , if the in as forecast unemployment rate goes down they'll be a strong signal that the fed will be on track as they seem to want to raise rates so watch that percentage go higher if the numbers come in as expected. betty: thank you, mike. mike mckee are bloomberg economics editor. let's go to first word news. courtney donohoe has more.

courtney: the house approved a $325 billion bill that funds transportation projects for six years. we're looking at speaker ryan talking about the bill. 363-64 withroved wide bipartisan support. providing enough money for the first three years because lawmakers were unable to agree on how to pay for it. 3 million more refugees are expected to reach europe before the end of next year, the latest projection from the european union. more than 700,000 people have sought sanctuary there this year. germany reports taking in 181,000 refugees last year alone. the terms are outlined in a 30 chapter document released online today. the deal must be ratified by congress and 11 other countries. donald trump, his radio ads

started airing today in three early voting states, iowa, new hampshire, and south carolina. the spots cost $300,000. his first ad spending launching his presidential bid -- since launching his presidential bid. you can get more on these and other stories 24 hours a day at the new bloomberg.com. betty: thank you so much. we will have much more ahead on "bloomberg markets." ♪

betty: welcome to "bloomberg markets ar." pfizer is going to allow more patients to receive medication for free. doubling the allowable income level for people to receive financial assistance. a single person earning a little more than $47,000 a year could receive the medicine for free. the move comes as drugmakers fears -- face fierce criticism over drug prices. ralph lorenz says quarter profits beat estimates. auren said stephan larson would receive -- precede -- succeed the company's founder and ceo.

worker productivity grew unexpectedly in the third quarter. a slump in the number of hours worked by self-employed americans. the measure of employee output increased at a 1.6% annual rate. you can get more business news at bloomberg.com. for a look at u.s. markets i want to bring in abigail doolittle who is the latest from the nasdaq looking at biotech shares. abigail: stocks are sliding at the nasdaq. the composite index is off 6/10 of 1%. the nasdaq biotechnology index is off about 2% this morning. it's drag on the composite index, about a 60% weighting. when we look at a one-year chart of the nasdaq, we see volatility . it is up about 8.7% year to date but there are bear markets. one in august when the nbi was

off and again in september off about 29%. that influence on the composite index. acting as a drag on the nasdaq biotechnology index, one drag is and oh international. a great third quarter beating estimates and maintaining full-year guidance. bloomberg analysts say the best the stock is trading down is what she calls, the valeant effect. the ceo emphasized and emanate approach. -- and m and a approach. another stock down is bluebird bio. the company missed its third quarter by 24% in the bottom line, missing revenues by 77%. it was announced the company's gene therapy for inherited blood disorders failed to eliminate the need for transfusions in

some patients. about ones the drug third effective. doolittle at the nasdaq. time warner shares plummeted after the company reduced outlook for next year. the warning pulled shares down across the board with viacom, fox, and disney slipping. viewers are falling away from traditional tv, media companies are starting to bring their most important concepts to online services. digital, the new frontier. lucas shaw, who is covering the story for us. we are all going to be peeled on disney. in particular what espn is doing on the digital front. what are we expected to hear? lucas: disney made an announcement this morning that it had joined sony's internet delivered service, playstation

view. i think that as disney looking to get ahead of any negative news though people expect earnings to be pretty good. different media companies tried to show that they were doing something online and it did not really ease investor concerns. these generally speaking digital efforts, while interesting and headline grabbing, are still quite small areas of their business. lucas: most media companies are very reliant on the television bundle. disney, less so than others because of theme parks and resorts and all of that. time warner in fonts, these are companies -- time warner and fox , these are companies that have depended on cable television. are the going to get advertising revenue to grow when their viewership is not? betty: outside of the digital properties, what about his knee

's movies -- what about disney's movies? will we see a decline in their studios? sure how it will compare to last summer because they had "guardians of the galaxy," which was a big hit for them. has beeny movie studio a consistent performer over the past few years. in the next quarter they are gearing up for "star wars." betty: a lot of people waiting for that film. what about parks? lucas: parks has been a steady source of growth over the past couple of years for them as well. i expect it to continue. betty: back on the digital front with the other media companies. i know disney come a comcast and others are playing on these -- disney, comcast, and others are

playing on these others. is cbs a big holdout? lucas: cbs has it's all accessed service which it launched late last year. they made an announcement that a new star trek series was going exclusive which is their effort to bring in new customers . it has been a slow go so far because all accessed is not all that different from what you would get from regular cbs. there announcement with star trek is assignment wanted to build that out. betty: does that mean with all of these initiatives going on with these broadcast networks, is it all in reaction to the bundle and cord cutters and the rise of netflix? lucas: most of the ceos of this companies have -- these companies have said there is a group of people that do not pay

for cable and they want to reach them describing it as a growth area. they see people want to watch something over the internet on demand so they're are coming up with initiatives that can satisfy the desire and compete with netflix to some extent. betty: lucas shaw, our entertainment reporter in l.a. expedia is expanding its reach for travelers. a deal worth nearly $4 billion. we will hear from the ceos of expedia and home away in the next hour. ♪

julie: today's options inside. joining me is james, he is here from the cboe in chicago. we are looking at this market

today, sort of bouncing around. it seems that it is having a difficult time finding direction. it appears to be much more micro driven than macro driven. what are you seeing from the options perspective? james: we are not really seeing a lot of order flow that has conviction to the upside or downside. what we have seen happen, a rally from recent lows. it makes sense does he price action a little soft today, pulling back from this 2100 level. less than 50 handles off the all-time high. one thing that is concerning is how fast we have come off of those lows. i think we are seeing that vixx.sed in the it does look to me like some traders are nervous as we are touching off of these old resistance levels that we might see a pullback and they're

coming in and buying protection. julie: what about positioning ahead of tomorrow's jobs report? are you seeing bets that seem to be pegged to that? james: it does not appear so. said, a lot of the daily moves we have seen have been driven by more micro type data. individual earnings out of companies. a gap between large macro data releases. we have not had much action on the fed announcement. we have the jobs number tomorrow. your tray today has to do with earnings coming out from hertz. we heard from avis, those numbers sent that stock down. what do you think will happen with hertz? james: this is the type of trade datedoking for now. short and catalyst driven ahead of earnings on monday. the stock is historically weak on earnings day.

an average move around 3%. options market makers are implying that the stock will move around that historical average. i'm looking for a downside move in the neighborhood by next friday in hd easy. about $.40. 21% -- me one on five 1.5% to 1% risk. julie: on the flipside i'm looking at the stock, down about 27% year to date, if you look at the pe on forward basis, around 24. it hast has -- given declined so much already, what is your risk if the stock happens to pop? james: because it is down so much we could see that happen. i know that my losses are cap at $.40 whether the stock goes up a dollar or $10 on earnings, i

only lose $.40. i were well-designed -- a well-defined downside. julie: what is your read on earnings season? companies have beat estimates. it seems like since we have been able to rally through the season that the market read has been strong. were low sotations we had a lot of companies come in and beat earnings. expectations were so low. correlation is low as well so it is about sticking with stronger names. i'm looking at stocks that has historically strong performance from earnings day. julie: giving us an earnings to her. ur. we will be back. ♪

alisx: this is bloomberg markets.

good afternoon. here is what we are watching at this hour. been on a net position tear lately. its latest stop is home away. scarlet: another a decline for valiant. shares taking a double-digit decline. alix: mark carney telling the world that he is holding steady on rates. scarlet: we want to get started on today's market activity. julie: we have been bouncing around already in the session. i think people are waiting for