alix: from bloomberg world headquarters in new york, good afternoon. i'm alix steel. scarlet: and i'm scarlet fu. alix: mark zuckerberg is sitting down with bloomberg news. he is an investment in new york public schools have been disappointing him, but that is not stopping them from making a bigger bet on a nether school district. and cisco and ericsson make a billion-dollar partnership. how do they expect to do that? alix: let's go to the markets desk. julie more. it seems like a delayed reaction -- it feels like a delayed reaction to friday. julie: it is really a strange day for sure.

we are seeing the breadth of -- the klein pretty broad. delayedsort of a reaction. only 30 stocks in the s&p 500 are higher at the moment. we did see as a result of the six-week rally the earnings ratio on the s&p 500 going to about 18.7, which is historically a relatively high level. perhaps that also sparked a reassessment of stocks. there is only one group that is higher today. that is utilities to rid it is not higher by much. of 1%.10 -- that is utilities. it is not higher by much. a pretty broad selloff. within consumer discretionary, there is fundamental news. priceline coming out with a -- missedhat lost

analyst estimates. nn declining along with other casinos and macy's suffering as citigroup cut its estimates. there is some fundamental news driving stocks lower. scarlet: how is the bond market reacting to the jobs report? julie: it is really interesting to come back to this idea that stocks seem to take it in stride ae idea that december was possibility, as janet yellen said last week. got local market reaction. we are seeing yields come down a little bit now. we are seeing the two year yield at the highest in five years. seen higher than we have in some time. on the 10-year, let's take a look. it is still holding up.

lower 2.34%. u.s. dollars the which has been rallying on this newfound possibility of a december rate increase. it is declining today. the last time we saw the dollar rallying, the fed came out and dumped cold water on that. is aid the higher dollar risk for u.s. companies. there seems to be speculation that that could happen again. but, guys, i have been looking at most of the strategists' knows today, and most are pretty positive. the pace of the rate increase -- is that what the market should be looking at? is that the issue? so, yeah. you go. scarlet: julie hyman, thanks so much. alix: mark crumpton has more

from our news desk. scarlet, thanks a much. the president of the university of missouri has resigned over the way he has handled racial issues. members of their football team said they would not play unless he quit. they have complained about the way that they are treated on the overwhelmingly white campus. thousands of tourists stranded in egypt are returning home today. halted after the destruction of that passenger plane. baggage is being returned on cargo jets. a meeting at the white house, trying to emphasize common ground. benjamin obama and netanyahu say they have not given up on the idea of a deal,

even if the prospect of a deal between israelis and palestinians appears more elusive. president obama: it is my strong toief israel has the right protect itself. i will also discuss with the prime minister his thoughts on how we can lower the temperature between israeli and palestinians, our we can get back on a cap toward peace, and how we can make sure a nationale palestinian relations are met through a political process, even as we make sure israel is able to secure itself. the first timeks the two leaders have spoken face to face and over year. cold overonship grew issues, notably the u.s. deal with iran. british prime minister david cameron said that he is not satisfied with the status quo.

the promised or says the u.k. could survive without being part of the eu. i hopeinister cameron: british business will back me in this negotiation, because rightly, the status quote is not good enough for britain. we need to fix these challenges. then we can throw ourselves headlong into keeping britain into a reformed europe. mark: mr. cameron is scheduled to lay out his demands to the european union in a letter tomorrow. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. the first word desk, i am mark crumpton. back to you. scarlet: october's strong jobs that the raten increase is near lift off. alix: joining us now with more

are the senior fixed income portfolio manager with morgan stanley and lisa abramowicz. explained today, what is today all about? pretty strange day. if you look at the treasury market, it seems like everything is just fine. if you look at the equity market, you get a very different take. you have to put it in perspective. equities led the way up. for treasuryd yields to eventually start to rise. it's a little bit of a timing mismatch here. -- it took a while for treasury yields to eventually start to rise. even though equities are down today, they are still up a lot over the past month or so, certainly off the lows we saw in august and september. credit spreads have narrowed. we have seen an influx into high-yield. those are good things. it is offsetting the dollar fell strength, which is usually a

negative for the economy in the u.s.. we aet net -- net-net, positive conditions. scarlet: so, the market is coming around to the idea that the fed rate hike is on the table and about five weeks. possibilityll the of change from one month ago. what could trip us up from a rate increase? jim: we have to look at the conditions.l i think u.s. data is very, very strong. i do not think we should be surprised if payroll or retail sales on friday comes in weaker -- other than that, i think the fed has said pretty much what they want to do. if economic conditions are better and financial conditions are easier, they will probably hike rates. question is, lisa, is

the market worried about a they areike than expecting? for that, i go to your favorite function. come inside the bloomberg terminal. it shows the implied policy curve right now, which is the green line, and the implied policy curve the day after the fed meeting, that yellow line. and that implies steeper tightening than we thought? lisa: this is based on derivatives interest rate swaps, put in with a formula by our bloomberg data geniuses. it is not just lift off. it is the rate of interest rate increases, and this comes at a time when, finally, over the next 3, 4, five years a growing number of speculative grade companies have debt coming due. there is about true trillion dollars -- $2 trillion of debt through 2023. that is mind-boggling at a time

when the fed, according to these indications, would be raising rates to a substantial level, where you can get paid to own a 10-year treasury bond. if you think about it, it is a basic line -- if the baseline overnight rate goes up to present by the end of 2018, why wouldn't people go into safer debt? why wouldn't people say, i want my money back. i am not going to go into these bunnies that are leveraged out that have debt insurance coming due? it's a problem. jim: lisa, i think you bring up a lot of valid concerns. one of the things the fed has to do is ensure the conditions are strong enough. sure yellen needs to make the economy is growing really really strong -- really, really strong. the way they do that is keep the interest rate low for an extended time -- even though they raise, but they raise at a slower pace.

i agree with you 100%. it is more about the pace of the rate rises. if the pace is slow in the beginning and slower than what economic conditions would otherwise ordinarily suggest, what she is try to do is boost inflation expectations, let the output gap close and maybe overshoot, so when you have those issues potentially in 2018, the economy is strong enough to take on that type of risk and higher rates, potentially. scarlet: what indications do you have she can achieve that? well, we don't. this is all theoretical. this is about the optimal control. she introduced two years ago. this is about the taylor rule and the offsetting role and optimization on that. we do not know. they will make adjustments along the way. if it doesn't look like she can achieve it, she will have to make adjustments and keep rates lower for longer and i think that is what we need to do. we enter this new

stage of monetary policy, can the market handle an adjustment of rates? as we enter this new stage of monetary policy, can the market handle an adjustment of rates? we have these blips. you know what, october 14 two the 24th, but nothing came of it. it was not a systemic problem. do you agree? out and fed has come said liquidity is not much of an issue. they have written that into their blog. the imf sees it differently. i see it more like the imf. i wrote a white paper on this. part of the change we think we are undergoing right now is we interestlow level of rates and liquidity. you just have the dealer inventories. look at any other measure of liquidity is really, really low. but yes, the potential supply of bonds are really, really high. how can you be agile in an environment where rate may rise -- rates may rise very quickly?

the larger bonds that are out there -- the ones with the highest aum will have the most difficult time managing risk. the ones with the right side for the opportunity set, those are the ones that can be more agile and take it of some dislocations in the market. is there a really good point? that consensusde is a risk. i do not agree with what the fed is saying. alix: thank you so much. our guest from morgan stanley and lisa abramowitz. scarlet: we have much more coming up. facebook's mark zuckerberg weighing in on what is next for the social network. check, andpeaking of anti-engineer movement breaking out in silicon valley. what computer programmers and software developers are on a crusade. andlet: plus, ericsson

cisco are joining forces to fend off rivals like nokia. ♪

alix: welcome back to bloomberg markets. i am alix steel. scarlet: in scarlet fu. i am scarletlet: fu. alix: time for the bloomberg business flash. single flyerdered jets. the terms of the deal is undisclosed. torlet: fitch cut vw's debt

triple b plus. alix: and sports subscribers toceled their subscriptions the fourth largest provider. scarlet: you can always get more business news at bloomberg.com. to the markets desk where julie hyman has a check on company movers. yeah, a little beverage, a little weight loss, mixing it up on the food chain. dean foods is where we will start. lowerbenefiting from the cost of milk. we saw 30% on average lower milk cost this past quarter to react also it is projecting $2.5 billion in sales for its dairy cure milk. contains no that

artificial growth hormones that went on sale in may. it had said it would be potentially $4 billion annually. former unit,any's white wave, which provides alsonative milk, nut milk, a solid line. those shares are up after they and thestimates earnings forecast. and let's look at the weight-loss companies. we of been watching the tale of two cities of weight watchers rising today -- we have been watching the tale of two cities of weight watchers rising today. you'll remember, oprah winfrey took a 10% stake that she revealed last month. those shares up 3.5%. nutrisystem, however -- no particular catalyst today, but the stock is underperforming its competitor, down 5%.

if you look at my terminal. i go back to when oprah revealed its stake in the company -- this is weight watchers, obviously. nutrisystem, just about flat. quickly, if i can switch it to your today, we have seen nutrisystem outperform. weight watchers is still down on the year, which i find incredible, given how much it has gained since oprah revealed her stake. scarlet: the oprah effect does not carry that far. julie: not yet. alix: does it have a dividend? it does not seem too. interesting. scarlet: no dividend. bye. julie, thank you so much. still ahead, mark zuckerberg things that we are coming into an aroldis gene-based medicine. will face they -- will facebook play a role? ♪

scarlet: welcome back to bloomberg markets. i'm scarlet fu. alix: i'm alix steel. mark million,with who recently sat down with facebook founder mark zuckerberg. what did you talk about? the: i actually edited and brad stoneh did, talking to him last friday. they talked about a range of topics, around this breakthrough prize. breakthroughs in science. he talked about this award he is giving to helen hobbs, who did some investigative work into new

genetic technology and the interview from their arranged -- from there ranged from a number of topics from his incoming first child and the way that that ships the way he shifts about future -- ahift the way he thinks about future generations. we asked if he was interested in giving political contributions to the 2016 class. that was something he was not fully comfortable talking about. they talked about a lot of things. scarlet: it sends like his interest in health tech and science is more personal and does not necessarily indicate facebook's direction? mark: yes. one thing we asked him was, because you are so intensely focused on health technology with the breakthrough prize in these other issues, should we expect a facebook style product

around health in the same way google has been doing this, and he said, no. it would look more like something he would do through his philanthropic efforts. so, i would not expect any sort of facebook health data tool coming anytime soon. alix: how did becoming a dad sort of change his thinking? i would think if that was going to do it, i wanted to get into facebook health, that would be it. mark: yeah, totally. zuckerberg is only 31 years old. he is kind of changing with the company. so, you would think that some of these live changes would have major impacts on the direction of facebook it's all. but -- direction of facebook itself. but he is doing more of that stuff through philanthropy. he says that having a child, and him and his wife, priscilla chan , are thinking more about future

generations and making investments there and donations there. but that will also be done more through his philanthropic work. scarlet: ah, of course. there is that distinction to be made. zuckerberg, 31 years old. worth billions of dollars. but you do not necessarily want to entangle single the company's mission with your personal mission. thanks for joining us, editor mark milian, who edited the work and brad stoner did. alix: intech circles it is common to use the term engineer to describe tech workers, but that could be anything from writing code to making robots. scarlet: some say that the term engineer has been cheapened by the tech industry. thesis.the topic of a

they say that engineers have apprenticeship and continuing education. claims and exquisite responsibly to public safety. they build bridges. they build roads. if you are a software engineer, what are you building? think of all of the things that have not worked. notlet: yeah, ok, you are building a bridge. but look at some any things that are integral. target, home depot. you upgrade your iphone. phonehone number -- your will not work. technology is so important. alix: it is a much -- scarlet: it is a must read in "the atlantic." much more on bloomberg markets. keep it right here. ♪

alix: from bloomberg world headquarters in new york, welcome back to bloomberg markets. i am alix steel.

scarlet: that's right. alix: happy monday. scarlet: mark crumpton has more. mark, how was your weekend? mark: yeah, it was fine. studying with a 12-year-old. ladies, think so much. the president of the university , afterouri has quit complaints over the way that he handles racism at the school. 30 african american football players refused to play until he resigned. for a month, black students troops have complained about racial slurs and others life at the school felt overwhelmingly white campus in columbia. am resigning as the president of the university of missouri system. mu, columbia, where i grew up, the state of missouri. the home gameg

could have caused the school and million dollars. one student is ending his hunger strike now that he has resigned. earlier today, a jordanian policeman opened fire on foreign trainers at a police compound. a u.s. official says two all of the americans killed were part of the state department police training program. the president says the u.s. will be working with jordan to conduct a full investigation. the last official visit regimen washington, heto was encouraging congress to defeat the u.s. led nuclear deal with iran. today he and mr. obama met again. mustbama said that they work together on mutual interests. it is the first time the two leaders have talked face to face in more than a year. egypt's air force may be getting is security upgrade in the wake of that russian plane crash.

higher levels of security may be one engineer said, which may lead to more cost and delays. you can get more on these and other breaking stories 24 hours a day at bloomberg.com. i am mark crumpton. back to you. thanks so much. erikson is working with cisco to develop telecommunications networks. --ericsson. scarlet: how did they sync up in the first place? we spoke with the ceo's this morning on bloomberg . >> if you go back to the history of this partnership, we started discussions about a year ago. i think we really focused on what is good for both companies

that is good for our customers that leveraged the strength. you see two market leaders coming together, number one in several markets, and bringing those assets together. we have developed a great deal of trust between our organizations. i think a lot of fault, a great deal of trust, and two market leaders bringing their assets to bear. in stockholm, you had or have had an agreement with a major carrier. a two-part question. does this mean the resale or -- reseller agreement is done? or did you consider just buying juniper instead of partnering with cisco? i think we have been on this journey for a while that we outlined in 2010. and of course, we are looking at .ll potential ways to execute

of course, acquisitions, doubling down on our own development in ip. we are on the fringes of the network. actually, we came up with the best solution. focus. together we can transform the network that is so badly needed. so, i think this is a win/win for both of us. that wase only choice right for our customers and financially for us which hangs together. we still will have partners that we work with, but of course, this is by far the largest partnership we have had, with cisco, so we will put a lot of emphasis to make that transformation network, in order to support our customer, deliver to the consumer, or enterprise solutions to their consumers?

what is driving all of the m&a in your universe right now? this deal is coming on the heels of nokia? chuck: stephanie, we have always said that there would be brutal consolidation, and we are seeing that as we speak. we frankly do not believe these large mergers work all that effectively, and we think the strength of our partnership will allow us to be in the market helping our customers move more quickly and effectively and we can do that next week. we believe in our case the partnership was the right choice and we are excited about our opportunities together with ericsson. jointre are frictions in ventures you do not have otherwise. will one of you lead? how do you avoid those frictions?h

are different ways, of course. there will be quarterly meetings with me and chuck. we have a service organization that will work a lot with rocks with cisco to install them with service providers. ,n the other hand [indiscernible] that will be another thing. it will be a different way of managing those targets, joint targets we want to achieve. sure and my role is making that we succeed. i think this is next-generation work in a world where things are moving so fast. partnership becomes very, very important, where you balance of your strengths for different companies. i think it is unparalleled. cisco is, of course, supporting us, and chuck sees the same thing for their side. you. chuck, back to

here is what im wondering. the rationale for a partnership like this has existed for at least 15 years. why now? if you look at what our customers are trying to do, seamlessrly in the mobility and enterprise and a what on i.t., we believe ericsson brings with her mobility and wireless and their management capabilities inside the operators, as well as the , we believeprint when you can buy that with our leadership and ip and data center and networking, we have a combination that will help our customers be more effective and what they are trying to a couple of today. -- reporter: following up on that -- scarlet: following

up on that. bloomberginto the terminal and look at acquisitions -- on october 20, cisco bought one mainstream for cash. bought one fory -- and before that they had scientific-atlanta in 2005. alix: and there is the possibility that they are on the sidelines. brian white, the senior research analyst over at drexel hamilton, said just that. he said that juniper would be a great acquisition target for ericsson. make such auncement transaction less likely. we have seen kind of the same thing in the oil community. you don't take on the debt.

you do not have as much risk to review have more control. but you still have control in day-to-day management. scarlet: how do you make the management work on this was so essential, which is why the partnership, the appeal of this is there. but it will be challenging. alix: with oil, you have any and either that needs the cash help or you need the operational assets. that is different than two huge guys getting together in terms of egos. scarlet: absolutely. if you missed anything, by the way, you can check out the rest of that interview on bloomberg.com. next hourng up on the of bloomberg markets risk appetite is leaving to overexposure. we will run down the risks. plus, u.s. banks need to raise a trillion dollars to avoid a lehman-like moment. alix: are companies like chevron

annex on adapting fast enough? -- and exxon adapting fast enough? ♪

scarlet: welcome back to bloomberg markets. i'm scarlet fu. alix: and i'm alix steel. china trade data out of adds to the call for more stimulus. exports falling for the fourth of straight months. our correspondent breaks it all down for us in hong kong. exports are falling twice as much as expected. imports also telling the story

of anemic chinese demand. that plunged 18%, all of this adding to the expectations of more easing. october paints a study picture. -- steady picture. this coming after efforts by the central bank to put a floor under the currency. when thetest will come fed begins to tighten. that divergence is expected to chinese capital to seek high yields overseas. and now here is bloomberg's manus cranny from london. we are retesting levels that we have not seen since the end of september. real estate, auto, utilities. all of those take the european equity markets much lower into the close. individual movers on the day -- the news flow is all around miners, volkswagen.

you have volkswagen down over one point 2%. a downgrade from fitch. a meeting with the board. offering $1000 to those suffering as a result of those suffering as a result of the in missions scandal. , down on the close. this stop trying to survive. a 94% discount. here is a u.k. minor up the most in seven years. their partner in africa bringing potentially a billion dollars of to the close of the year. keep an eye on the euro-dollar. we hadu have here -- speculation going into the ecb christmas meeting. and the fed, ms. yellen of the fed not completely off the idea

of a christmas rate hike for the fed. portuguese on the bond market. we see the yields wretched as the socialists do a deal. the 10-year, a real mood to the up -- move to the upside. portuguese government bonds rallying in terms of the yield on the day. that is the close. scarlet: and that was manus cranny in london. doolittles abigail have the latest from the nasdaq. we have been watching priceline very closely after earnings disappointment. offail: priceline has been all day, 8.9% at this time. the online travel company said its-- fourth-quarter profit forecast will fall sure of street estimates by about 7%. it could be competition in the overall space to blame. the fact thate

these shares trade for a significant discount on ap basis e basis. priceline is having its worst day in more than a year. it seems to be taking a toll on the entire space. you see expedia, home away, all of these are off. tripadvisor, those shares are off. this is in the context of wells fargo's cameron mcknight saying his estimated growth gaining 30% to 40%.ow down he checked through november 8. investors are taking this pretty seriously. the stock is at its lowest level since 2010. scarlet, alix. scarlet: thank you so much. abigail doolittle reporting from the nasdaq. alix: portugal's second-highest

lender is being evaluated for potential downgrade by moody's. scarlet: one reason is the bank is expanding rapidly into credit cards and car loans. what is next question mark let's turn to our bloomberg television canada anchor. pamela, great to see you. great to speak with you. this is canada's most internationally exposed bank. theyou tell us how much is narrative and how much is the cyclical downturn entering the picture? of nova scotia, exley called scotia bank -- they have a risk profile to rid they are in all four corners of the world. growing their

business in colombia, mexico, are, chile, areas that under risk -- higher risk, but underbanked. at record high levels of debt. average, debt -- on canadians oh $153. very, very high for canada. wouldbank signaled they be getting into credit card and auto loan businesses. peers.re behind their the concern is at a time of job losses, rising on employment, and concerns over a potential housing collapse in alberta, it rapidly was not the greatest time, according to moody's, to shift the risk profile. alix: what is the relationship andeen scotiabank

regulators? here you would see regulators all over them to have them raised the two or one ratio. what is it like in canada? have super high, high, high ratios of capital put away. this is an environment that generally is over capitalized, i think. most comparative banks would say canadian banks have been over capitalized for a long, long time. and that in large part is why they weather the recession so well. it's not a huge knock on that side of things. and the bonds are not in a major territory where banks are overly concerned about ramping that back up again. i think it is really the shift in risk profile that moody's has taken a look at in this. they are concerned that though we had all of the international risk into this bank exposure, marka's bank is a question

about how they will grow in the economy? great stuff. thank you so much. bloomberg tv's canada anchor. that launches next monday. we will be watching. credit cards and car loans are the scary part, where as here, it is consumer credit. yeah, it is taking off. scarlet: it is all relative. in canada, people are wondering, weight. an uncomfortable comparison to the u.s. -- in canada, people are wondering, wait. volga role andhe the real cost of bank regulation. that is next. ♪

alix: welcome back to bloomberg markets. i'm alix steel. m scarlet fu.i' a group of ministers released

its plan to rebuild the global bank. a large part of that is 20% ratio of the capital the bank is supposed to hold. alix: that is a big quickie bank -- that is a big piggy bank. our correspondent sat down with tom hoenig in chicago. tom: i think you can write down the bank is a convertible is to rent. this ise is, let's say a signal to the market. it's all sorts of things. you will do a great deal of effort to avoid that. one of the saying -- one of the things is japan is measured to move up service bonds and that puts restaurant subsidiaries, sometimes at the most in opera 10 times. it affects decision-making by -- sometimes at the most inopportune times. it affects decision-making by

management. once you figure things out, it does not matter if it is debt or equity. but that's a little bit late for the financial stability se. reporter: i want to talk about dodd-frank. tarullo saidniel he would make the volga role unnecessary for banks with less than $3 billion in assets -- ruleper rule -- volcker unnecessary for banks with less than $3 billion in assets? i have ag i --tom: proposal that says if you are an institution you should have far less regulatory burden. you can do some exchange and interest rate swaps. n interest rate swaps.

if you are a simple institution, then you should not have to do calculations. you are not required to do all around that.ations i think there is relief on the appraisal front. i do it by how complex or the absence of complexity -- reporter: you are not saying size? tom: i am not a threshold advocate. billion, 100 billion dollars, that is what it is. i do it by complexity. reporter: could you see it not being applicable to banks who pass at your -- pass your simplicity test? tom: i would not remove the volcker rule for anyone -- reporter: for community banks? to: it does not apply

community banks now. if you were to exempt them, you have a hedge fund or a hedge fund owner that hires community banks, guess what he is tempted to do? there is a nice pile of unsubsidized -- a source of liquidity, a source of cash. why not use it? so, no, i would not exempt. alix: that is brendan greeley, economics -- senior correspondent. it's interesting. equity capital is a simpler way and that is what he is a proponent off. scarlet: all right, the prospect of a fed rate increase. we will discuss the possibility of volatility ahead. ♪ we live in a pick and choose world.

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scarlet: from bloomberg world headquarters in new york for good afternoon. i'm scarlet fu. alix: and i'm alix steel. a rate hike is dragging down stocks today. aarlet: one college gets failing grade with the student loan program. that is bad news for a company getting ready to go public. anchorsd we asked 30 and reporters to give us their predictions for 2016. to the: first, over markets desk with julie hyman to we are seeing an outsized reaction in a greased through friday's jobs report. julie: it is really a delayed reaction, as we were talking about earlier, that the fed is likely, or likelier, to raise rates in december.

now we are seeing declines of more than 1% across the board. i want to consider the context also for today's moves, as measured by a couple of different things. the price-earnings ratio of the s&p 500, as we know it has been climbing, and is now around a five-year high, trading at about 18 times earnings. of the drop we are seeing today is within the context of a valuation that has been expanding. and the backdrop for this is that there is debate about whether those valuations can continue to expand as the fed raises rates. and the other thing i want to bring up is earnings season. ea is sort of a snapshot. we have had 47 companies in the earnings report. that means we are essentially at the end of earnings season and we don't have the earnings catalyst to drive things forward. sales fell 4% in the third quarter.

earnings fell about half of 1%. they tend to be better than average estimated. alix: what are some of the losers concerning this? scarlet: your microphone is not working properly. alix: oh, ok, great. julie: i will just tell you about the individual movers that are doing worse today. we have some individual items of news. priceline coming out with a forecast that missed analyst estimates. kohl's suffering from an analyst downgrade of its target. and millon crack coming out with coming out with study of its products. not very promising. every back online? we are back.

thank you, julie hyman. mark crumpton has more from the news desk. they haven't had a face to face meeting in over a year, but president obama and prime minister netanyahu held talks at the white house. talks between the two nations have been strained, most notably over the nuclear deal with iran. but today, the president chose to focus on agreement. president obama: it is no secret that the prime minister and i've had a disagreement on this narrow issue, but we've had no disagreement about making that iran does not get a nuclear weapon, and no disagreement about blunting destabilizing activities that iran might be taking part in. this even as the relationship between israelis and palestinians appears even more elusive. the president said the u.s. is taking very seriously and attack

in jordan that killed at least two americans. mr. obama said they will be working with the government of jordan to conduct a full investigation. in an -- in an official stated earlier today, the two that were killed were part of a police training program. of the university of missouri has resigned amid protests about the way he handles racial issues. black students have been complaining for months about the way they are treated on the overwhelmingly white campus. if religion coming today from the world bank month its researchers saying global warming will disrupt farming and spread diseases. a summit next month in paris will tackle the issue. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. i'm mark crumpton.

back to you. you so much.k as we mentioned, investors still adjusting to the idea of a december rising rate, especially following friday's jobs report. alix: does this mean we will see more volatility in the months joins us fromewan mountain view, california. also with us is bloomberg stock reporter, oliver bennett. thank you for joining us. dave, what do you make of the action today? the bigs was down on that and today is -- on the jobs report and today it is spiking. is not going to be an easy road here we have the fed teed up to make a rise in interest rates. it is really a question of the pace of increase and the ultimate level. the unemployment number dropping to 5%. the number of jobs being created clearly points to the fact that

they need to do something. and we are starting to see wages moving up somewhat, too, which is great here in -- which is great. clearly, the fed is going to put some weight on the market. it has implications for the dollar and emerging-market currencies as well. you talk tover, analysts and read all of the research. has the tone changed following the jobs report on friday? or was everyone expecting a fed rate increase anyway? oliver: there were certainly a lot of doubts about what would happen in december and that has taken a big ships. but when you look at -- a big shift. but when you look at what people want to see on the market's, most market recipients want to see that happen. along with a healthy economy and signs of strengthening where there has been weakness in the past six months or so. looks been clear when you

at divergence between what is happening with stocks now and what happenings of temper when they delayed, and the funny thing is we were on some of the trading floors in september when full for thinking there was half a chance. even though the fed was not a change for september, many were surprised. a lot of them actually wanted to and get it out of the way. alix: the broader implications as you look at the bloomberg terminal, i'm looking at the phrase talking about the rate differentials in the last two years. the u.s. is at .8% to the highest level since 2010. that is a big difference from germany and france, which are now in negative territory, as is japan here to dave, how do you redound the portfolio to deal with this difference in yield? is a the rate differential clear indication that the u.s.

economy is doing a lot better than europe and most of asia. that can keep continued pressure, upward pressure on u.s. stalling. how can they position the portfolio the best to benefit the increasing dollar? a lot of that is domestic type of businesses. large caps have been leading the way this year, but looking at small to mid cap type stocks where there are more domestically focused type products, earnings really derive from internal u.s. sources. ,he same with u.s. high-yield too. high-yield is a domestic market, too. it is not really impacted by a stronger dollar. it is time to see a slight shift in the portfolio. scarlet: i want to ask about volatility. chart, itk at this has stocks in blue, fx inbred,

and treasuries in green. and treasuries in green. you do see a pick up internally. which asset class as the for this to go? going to be the riskier asset classes. if you look at the volatility of increasing a lot lately and trending higher. quiet, likemes of with the chinese the violation in youngest, but it has been shooting up ever since. it is the riskier assets that will be impacted by that. high-yield, equities in general, emerging-market -- these are the types of securities that will be mostly impacted by rising volatility and rising risk. it is a wake-up call to investors. make sure when they are managing and overall portfolio and

looking at what the -- what volatility the portfolio is creating, realize that it is more than normal. long phasehrough a of suppressed volatility led by quantitative easing. that is behind us now. as we enter a more normal timeframe, the average in the mix is about 20. making sure investors have their risk and tolerances lined up withthe four portfolio -- the portfolio to withstand the stresses of the market, especially with the liquidity we are seeing in the bond market. and it seems that overall what investors have chosen to do is they like the buybacks and those dividend stocks. looking at the bloomberg terminal right now, goldman sachs has an index of tracking buyback stocks. that has actually rolled over. investors seem to be pricing in more risk. they want less balance sheet and more earnings.

oliver: that is definitely right. goldman also put out an interesting report this morning breaking down how companies use cash. but to address the buybacks falling off, america tracks what fund managers look for. they were clearly asking for shareholder activity in the spring of this year, and as recently as a couple of months ago, it seems that they were asking for. capex.ng for basically what they are looking at is the portion i goes for buybacks and the portion a goes for capital expenditures. it has declined from historical levels, but the dollar amount is so very large. and buybacks do take up a large part of that, but as we go forward we have to think about how interest rate of going to

come into play and borrowing costs. a quarter percent hike will not be a big deal. the down the road you have to think about diminishing returns on buyback shares. alix: right, because you will fund those through debt and any buyback changes and will create reverse investor sentiment. thank you both very much. much more coming up on bloomberg markets in the next 20 minutes. it is a college with the highest amount of federal loans the nation. how can walden university grads are having so much trouble paying them off? alix: and a target of an unsolicited takeover offer. is it a sign of the times for big oil? scarlet: and collect the trunk fund. while donald trump may not have delivered a million last -- a million laughs on saturday night live this past weekend, he definitely delivered on the ratings. ♪

alix: welcome back. i'm alix steel. scarlet: and scarlet fu. it's time to look at some of the biggest stories in the news right now. pricing following fourth-quarter earnings trailing analyst excellence -- analyst estimates. priceline is still facing competition from the likes of expedia and airbnb. priceline, which owns booking.com and kayak has made five acquisitions in the past year. trimming the global forecast for the second time in three months. the main reason, germany and japan are being effected by emerging markets. in 2016. 3.3%

the u.s. is holding up well. scarlet: shares of macy's and goals are holding up well today and this after sharing them the chains are in for a tough quarter. it is due to a sales slowdown and too much inventory. you can always get more business news at bloomberg.com. alix: we now head over to the markets desk where julie hyman has a look at some of the businesses. julie: being downgraded to equal atght from overweight over morgan stanley, saying that if , theook at u.s. steel dynamics are lower even know inre is an estimated uptick 2016.

calls over and mark mahaney and bank of america. mahaney says lending tree has a strong financial track record. consumer loans at over $12 trillion and lending tree could benefit from that. also, you were talking about kohl's and macy's. just to reiterate the steepness of the drop we see today, macy's is out with its earnings on wednesday, kohl's on thursday. an analyst at citigroup talks about ralph lorenz and course -- koo those indications are notrs, a positive indication here it and qualcomm, just to follow line the disappointing earnings from last week, downgrading it.

commentary made some about the licensing fees it gets, particularly in china. it has had trouble negotiating those fees. analysts think that issue will persist for qualcomm. much, julieyou so hyman, with the individual numbers. scarlet: mark manny is the analyst at rbc -- mark mahaney is the analyst at rbc capital. thank you so much, julie hyman. recently university filed for an ipo, but students are wondering if now is the time to go public. ♪

scarlet: welcome back. students and walden

university are seeing the second largest student declination, almost $10 billion. let's head over to carol massar. invesco powershares are leading the intelligent ecf revolution. alix and so much scarlet. with thank you everyone, bloomberg tv. welcome to bloomberg radio. this is carol massar along with cory johnson. we want to talk about students at laureate education. janet lauren out with a great story. tell us about what is going on with the students at laureate education, it's a specific school within the company, correct? correct. laureate education has announced it will be filing for an ipo. we looked at the largest schools that they had in the u.s. it is an online university and about 52,000 students are graduate. a couple new studies came out recently to look at the loan performance.

one study, which was done by the brookings institute, and also looked at federal data, and it showed that on average, 0% of thatwers had repaid loans were students in 2009. carol: zero percent? janet: on average. some of them did. had left school since 2009, 30% had a higher balance than before. that is- cory: horrible. jenna: they have an extremely high default rate, which is true. and then we have this ipo coming out, which may be good for shareholders. however it may not be so good for taxpayers. the reason you can have a low default rate and a low repayment rate is that you can do this

income-based repayment, which the obama administration is encouraging. they don't want it to default must -- to default, because that the can happen. after theyget these go through college or something and their ability to repay. so they are trying to work with the students so they don't default. janet: exactly. it can be devastating for your credit rating. carol: how long do they have? janet: they can repay within 20 to 25 years, and depending on how much is left, it can be forgiven. the cbo said these budget programs can cost at least 30 99 dollars more, because let's say, you are getting $59 a month as opposed to $800 a month. cory: back in my day, as the money now goes to for-profit education companies, they were really secretive about default

rates within cohorts of classes, or class sizes, or how many years out. this laureate data, i wonder what it says about the quality of the education also if the earnings capacity of their former students is so poor that they cannot actually pay off their loans. janet: the government did another's daddy -- another study where it did a college scorecard 10 years after, and their graduates did pretty well. and of the reason is walden, they are older, and may have had higher earnings to begin with. one thing about the default rate, as you mentioned, is that it is very interesting and it is measured three years after a student leaves school. what happens a couple of years later -- cory: they might push about three years and in five years and it is in the 50 year that the bankruptcy happens and the default. janet: right.

they had a special note about the default rate, and they said it could be subject to gaming, or if students use forbearance or if they defer, they don't show up. it was interesting because the education the apartment said a repayment rate -- said this is why a repayment rate is better. however, the metric that is used to determine aid eligibility, if you have a default rate of 30% or higher over several consecutive years, that is how you lose your aid access. but they were able to restricted to a three-year look back. whoever convinced congress to do that, that was to their benefit. because the default often takes more than 36 months. janet: right,- actually increased it from a few years ago where it was only two years. carol: a fascinating story.

janet lauren, our bloomberg education reporter. back over to you. scarlet: we have some breaking news. pimco and elian's has responded to the lawsuit by mohamed el-erian -- by bill gross. they have asked the court to toss out the bill gross lawsuit. alix: i will never when the story broke, wrongful termination, hundreds of millions of dollars. the lawsuit was a and violent, and totally personal behind pimco. it is interesting that it took allianz to respond. scarlet: we will be back with more detail. ♪

i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. alix: welcome back. scarlet: let's start with the headlines. we check in with mark crumpton at our news desk.

mark: thank you so much. president obama and israeli prime minister benjamin netanyahu held talks at the white house today, their first taste to face meeting in over a year. it comes amid israeli outrage over a u.s. backed we are deal with iran and renewed violence in the middle east. anduclear deal with iran renewed violence in the middle east. but both leaders say they will not give up on hopes for peace. we discussedma: how we can lower the temperature between israelis and palestinians, how we can get back on a path toward peace. --k: bloombergs justin think sink is with us today. let's begin with the tensions, not between the nations, but between the two men. did that seem to be tamped down at the white house? justin: i think there was an effort on the part of both

president obama and premise in -- prime minister netanyahu for that. both sent -- both sides said they wanted to find common ground and areas with a can work together. president obama acknowledged that the iran deal would be a point of contention between the two, but on security issues that they could try to work together. mark: and there is a new member ,f prime minister netanyahu's and some of his tweets and e-mails have caused tension between the white house and israel. talk about that. justin: his new secretary has caused some controversy. his facebook post recently suggested that both president were and secretary kerry anti-somatic. it has been the latest chapter in the war of the words between the white house and the israelis. but you know, the white house in this case said prime minister

netanyahu could select whoever he wanted to be his spokesman, trying to downplay the controversy, not something that the president or the press secretary brought up today. again come after a year of not meeting with each other, they are trying to write the waters and stretch a hand out to one another. mark: justin, thank you. president is also out today saying the u.s. is taking very seriously and attacking jordan that killed at least two americans. mr. obama said the u.s. will be working with jordan to conduct a full investigation. officials said earlier that the two americans were killed as part of a state department police training program. the president of the university of missouri has quit over a protest over the way he handled racial complaints at the school. this weekend, at least 30 american -- african-american football players said they would not play until he resigned. months, black students have complained about racial slurs and other events at the school

-- other incidents at the school. >> my motivation in making this decision comes from love. , colombia, where i grew up commend the state of missouri. mark: canceling this saturday's home game could have cost the school $1 million. in the meantime, one graduate student says he is ending his weeklong hunger strike now that wolf has resigned. ben carson and donald trump are almost tight in the -- almost tied in the latest polls. poll overlapsthe with recent reports of discrepancies in mr. carson's background. senator marco rubio is third with 11%. the rest of the republican field is in single digits. and you can get more of these breaking stories 20 for hours a day at the new bloomberg.com.

i mark crumpton. back to you. thank you so much, mark. big oil and a day is not here. after a 50% drop in the past year, and an day has been waiting in the wings, all about -- m&a has been waiting the wing, all about waiting for the right price. and now an unsolicited takeover offer. scarlet: joining us with more from san francisco is liam denning. timeould buy apache at a when every single big oil executive is stressing how much they are doing in terms of cutting costs? liam: the shortlist is probably pretty small. if you throw in debt and a takeover premium, probably 30 billion or so at least. there are some big oil companies out there that may be interested. some names that spring to mind would be exxon mobile, maybe bp.

they be some international players like statoil. feeding expectation -- feeding the expectation that apache is sort of a main course. -- is more of an appetizer rather than main course. alix: you think we will get to the main course? -- liam: i think we will probably be waiting until next year to see that. if you look at the exploration and production sector, they are suffering. but they have been able to keep going by trimming costs, arranging financing. i think it will be early next year before we see the real pain kick in. acquireanies looking to , and targets meet in the price. alix: in a recent article on

bloomberg, you pointed out that the prices of oil companies have been falling. longer spending is no enough. does that make the case for breaking up the oil and not making it bigger? idea comes up from time to time. : that idea comes up from time to time. conoco did it. i don't think they will be filling those assets. it's a down market for them to break up it. i'm not sure we will see them go down that path. scarlet: that is one option, to break up, or the other is to's consultant -- is to consolidate and get bigger. it out?they ride what is the risk to investors then? liam: they kind of lose the reason for investors to own

those companies. the whole idea behind owning big oil, you get return on capital. and as you said, that has been coming down. there are only a couple of things to do to change that. one is, cutting costs. the other is to acquire assets savings through financing. i think they will have to continue to go down that path -- ase they cannot avoid for the dividends that they have been paying. shareholders was simply back away. on a big would you major if you were not -- why would you own a big major if you were not for the dividend? how will they cover their capital expenses and the buyback from dividends?

liam: they really have to be the dividends for two reasons. one, for the shareholders to stick around. the other one, it helps to restore trust. they need to show they can restore capital in an efficient way. in the last five or six years, they haven't really done that. i kind of have to pay out in order to show shareholders they got the message on this. scarlet: what evidence do you see of the management company thinking strategically and creatively to ride this out? liam: if you look at exxon, exxon is doing what it always does, which is to wait around and hope to make of the acquisition when big -- when prices fall far enough. got a very obviously low debt ratio, so they can do that here at -- they can do that. one of my favorite names is occidental, because they are small enough that they can keep growing. they have very little debt, and they make it quite a nice --

make quite a nice acquisition target if prices fall far net. another company, partly because they have strength and are not exposed to the weakening market. alix: let's tied all in here. you mention exxon and there are only a few names that could by apache. what kind of leverage with exxon have to take on to do them a like you said, a $30 billion deal? -- to do, like you said, a $30 billion deal? liam: if we do see a big deal, it cannot really be done with stock. they cannot really afford to take on $30 billion in debt. the shareholders will not want the cash at this point because they will want to take on more

shares to benefit from any recovery in oil prices down the road here to i think if there is a deal, it will not -- it will be done with stock. scarlet: thank you for joining us. $30 billion, this is the kind of deal we have been waiting for to come down the pike. really fascinating to see that if that happens. scarlet: four we might be waiting a long time. alix: exactly. what is 2016 have in store? editors and anchors will give your predictions. scarlet: donald trump for the win. his appearance on saturday night live lifted the show to its best ratings in almost four years. we will talk about what it means for the candidate presidential bid. boardand a supervisory talking about the road ahead for the troubled automaker vw. ♪

scarlet: welcome back. alix: bloomberg is looking ahead at what to expect in the markets regarding presidential politics. scarlet: we asked editors and anchors to give their predictions. >> the most powerful modern rocket in the world will launch into space for the first time and will be filled by spacex. >> virtual reality assets will launch in great abundance and quickly moved to the world of video games. >> i think volkswagen will ditch diesels and go for electric engines. >> 2016 will be either the first or's reckoned hottest year on -- or second hottest year on record. than016 will be longer 2015. because it's a leap. . >> -- it is a leap year.

>> tilde pants will be ruling the world -- yoga pants will rule the world. men will be wearing pink. my friction is that people will stop making productions because they will realize they don't usually actually come true. when i can i do this don't even know what i'm going to have for lunch today? >> hell will freeze over. there will be songs all the way around the world, but the euro crisis will not be solved. >> the fed will raise rates. >> i don't think the fed will raise rates substantially in 2016. >> starbucks will introduce a new twist in their pumpkin spice latte that will drown out all talk about race or inflation. >> i don't think donald trump will win. >> donald trump will definitely

not be president. >> donald trump will admit it is a to pay. al gore will not be elected president. >> i think hillary clinton will win. >> i think hillary clinton will win. >> we keep predicting hilla clinton will be president, but then she keeps napping president. shei'm not going to say won't be because only a full would say she is not going to be president. >> i'm guessing 2016 will look a little better than this year. >> i feel optimistic. >> how can you not be optimistic, right? >> i would like to think it's going to be a good year. >> radiohead will put out a new album and it will be terrific here it -- terrific. >> i should've done some research. oh, the year of the monkey. that is going to be a little volatile, but relate. -- but friendly. yes, yes.

scarlet: volatile and friendly. that is a sample of predictions for 2016. i made a production about the drought not ending in california. alix: oil prices will -- will go lower. time now for a look at some of the biggest business stories in the news right now. and eric rosengren to the list of those saying rates will lift off next month. it will beaid appropriate for a rate hike your the fomc meets next month. isrlet: eclipse resources exploring a fail. they have been working with morgan stanley to solicit offers. the company, which is in the appalachian basin, has been reaching out formally to potential suitors.

it has a market value of about $500 million. alix: and dupont for the first time in its history will be led by someone who does not have a long history of the company. interim chairman at green has both jobs on -- ed green has both jobs on a permanent basis. you can always get more business news at bloomberg.com. scarlet: let's head to the markets desk where julie hyman has the latest. julie: car rental company hertz, the largest u.s. rental company numbers thatth beat analyst estimates. the company suffering from the strong dollar, as so many have been eared the ceo -- have been. the ceo says they have been making progress in what they have called a transition year. hertz has come back from some accounting missteps. they have had to restate a

number of financial statements. it looks like underlying earnings growth not enough to boost the stock today, down 11%. and sotheby's, the big auction house, those shares also down today by about 6%. overall revenue for sotheby's was higher because it sold a portion of its collection in its inventory, not the turnover from live sales. the company saying the main auction business dropped because sails.lackluster it also had a big auction last week and said those numbers have been disappointing eared all of this conjuring -- had been disappointing. all of this has been intruding to the dow numbers. and finally, looking at juniper networks along with a couple of other stocks, juniper is down by after a partnership was announced between cisco and ericsson. they will be developing telecom networks, and is tenderly --

leaves -- this kind of leaves juniper out of that trio, and that resulted in decline. scarlet: we talked about this last hour, how they were less interested in big acquisition, because ideally they could just hit the ground running. alix: but it leaves them out of the cold at the end of the day. scarlet: julie hyman, thank you. alix: coming up, in case you missed the highest-rated show this past week, here is a highlight. >> this is the best monologue in an s&l history. can you believe that? >> that is pretty good. scarlet: that was the donald and two impersonators. he brought in the numbers for nbc. what does it do for presidential poll clippers? alix: i heard it wasn't funny. ♪

scarlet: donald trump has one more accomplishment to brag about, his appearance as the host of 79 live -- of saturday night live lifted the show to its highest rating in years. >> this is the best monologue in history. can you believe that? >> that is pretty good. alix: it was like that for 90 minutes. you have trumped being trumped. will it be good for his presidential campaign? we want to bring in steven yaccino with bloomberg politics. was this a good thing? i read a lot of stuff that said it was not really that funny. steve: it really wasn't that funny. it was a little awkward. the jokes were not there and the cast was a little uncomfortable. donald trump seem to be doing a character of himself. he could have just been trumped and he would have been exactly

the way they wanted him to be. but he was kind of "playing and that meant he was a little awkward and reserved. trump" and that meant he was a little awkward and reserved. i don't see a downside to him getting high ratings, to him showing he's got a sense of humor and can be self-deprecating, that he doesn't take himself too seriously all the time. no one expects donald trump to be funny. they expect s&l to be funny. and -- snl to be funny. his voterse typically snl viewers? he's going for an everyman. i think yes probably a lot more snl viewers than other people in the race.

the idea being that he's saying that you are tired of seeing the same old people in washington and i'm different. a lot of those people probably do watch the nonstandard programs. alix: thank you so much. did you watch it, by the way? steve: i did. alix: ok, not so funny. steve: he did dance. that was really funny. is standing byan with more breaking news. inie: the second-biggest canada is taking over norfolk southern. we have seen a lot of consolidation in the rail industry. norfolk southern valley at -- valued at about $20 billion. a disclaimer, talks may not progress or lead to a deal.

look at the numbers of canadian pacific behind me surging eared actually, i'm not seeing canadian pacific surge on my bloomberg terminal, oddly. but i am seeing norfolk southern shares surging. oh, because i'm looking at the wrong stock. believe what you see up there. cnp, which wast centerpoint energy. alix: and i should point out that they are the largest holder of canadian pacific -- that pushing square is the largest holder of canadian pacific. it is definitely a boon for pershing square. and it has been a boon over the longer term. although canadian pacific is down this year so far, but in the longer term, activity in the railroads has worked out better

until now. scarlet: canadian pacific has not made a lot of acquisitions. steel care in for december -- in september of 2015. and prior to that, 2007 for minnesota and eastern rail for $1.5 billion in cash. not very inquisitive company. julie: is not a lot of deals out there. any out there will be large acquisitions. alix: the keystone xl pipeline is one of the only ways to get oil out -- other than the keystone pipeline, rail is one of the ways to get will out. thanks so much. we will be right back. ♪

>> welcome to bloomberg markets.

from bloomberg headquarters in new york and the good afternoon. investorsding is more speculate they will rise rates later this year. well i gift card be enough? cisco teaming up with ericsson in a deal that could net each company $1 billion a year. julie hyman has the latest. julie: some news just breaking in the past few months that involve the railroads. norfolk southern may be the target of an acquisition offer from canadian pacific. the two companies are in early stage talks. canadian pacific is trying to raise financing for this deal. the deal might not have been in the end.