>> welcome to "bloomberg markets ," from new york, i am scarlet fu. alix: i am alix steel. join us torgan will talk about a deal with pfizer. we ask what would be the drug acquisitioniggest is more than a tax dodge. ceo with alergan mea culpa. of distress will talk about her battle with the sec. david: -- scarlet: we want to get a head start on the market day. let's check in with julie hyman.

seeing declines, not big runs across the board. take a pause and get close to the 200 day moving average for stocks. bloomberg terminal, it's the fifth down day for the s&p, a longest losing streak since september. this looks at the daily moves. even though we've had a five-day losing streak it has not been that steep. over that period, the index is down 1.6% as investors get used to the idea that rates could be going up. what was leading us lower? on the upside you had utilities and energy. you do not see them moving in tandem. julie: we've had volatility within groups. materials has been the worst performing.

if you look at the bloomberg terminal, materials down more than 1%. that has something to do with china, coming out with inflation down raising concerns about growth. we are seeing tech suffering, which we will get to in 10 minutes. call on apple.a if you look at the materials stocks, you will see what is , copper and gold falling along with metals. a couple more industrial metals appeared we had mcquarrie initiating coverage of both of those stocks as neutral. anding about the valuation that will bearn fruit eventually but is not there yet. if you look at copper prices, we are not seeing that they give a

drop on the day. it is only down .5%. copper is back to its lowest since july 2009. putting pressure on mining stocks. scarlet: julie hyman, thank you so much. alix: let's check in on the first word news. mark crumpton has more. mark: thank you. obamaarm will ask -- the administration will ask the supreme court to consider the shieldnt's plan to immigrants living illegally from deportation. a federal appeals program refused to let the program began while 26 states try to stop it. the states would probably end up winning the lawsuit. the senate is expected to pass a bill that would ban moving guantanamo bay prisoners to the u.s. in there 112 prisoners cuba lockup, most of them captured an anti-terror operations. congress would have to sign on on any new u.s. facility for

prisoners. teams of european, russian and middle eastern inspectors at cairo international airport in the wake of last month's crash. officials are examining the as they of passengers make their way to aircraft. security guards and carers are being inspected. the university of missouri is making changes following the resignation of president tim wolfe. the school will offer diversity training to students, faculty and staff beginning in january'' down yesterday following criticism over the way he handled complaints of racism. lineup tonight will be the smallest yet for the presidential debate. ben carson will lead a field of 8 onto the stage in milwaukee. a panel with 4 lower rated candidates will start at 7:00. wordis a look at our first

news. get more on these and other stories 24 hours a day at the bloomberg.com. back to you. scarlet: bloomberg is kicking off its year ahead summit in new york city. for business leaders to talk about trends and challenges ceos will face in 2016. alix: stephanie ruhle and cynthia kearns are on-site in manhattan with the head of alle rgan brent saunders. stephanie: we are here with brent saunders, allergan's ceo. let's start with pfizer, our talks exclusive? >> we issued a statement that we were in early discussion that may or may not lead to a deal. under the average code, that is the most i can respond. stephanie: pfizer aside, given

what we have seen in terms of valeant, why not look to acquire valeant. are tradinggue they at rock-bottom prices and they face reputational risk. if someone like you bought valeant, it wipes out the risk. they have great products, dermatology, bausch and lau mb. valeant ultimately may be for sale. we are not in the hostile deal business. the things we look to buy our first in class drugs, growth assets. there are a few of those in valeant but there are also a lot of older medicines. it does not fit perfectly with the business model and the types of things we've been buying. stephanie: nine months ago it was a different company.

>> it is hard to predict what will happen with valeant. despite the call they had this morning. and a lot of this has to play out and we will see where it settles. there are some quality assets like the bausch and laumb business. we would have to look at it carefully. cynthia: drug pricing has been an issue. it is a proportion of your cells growth. how do you see this playing out in your ability to push up prices on existing products and what does that mean for your growth? >> we not focused on taking price increases. most of our portfolio products are new products. it is really about volume. when you look at our top growing products, our price increases are single digits. some are more mature products, have more balance of price

and volume. i believe we have a social contract to make sure we invest our drug pricing responsively. i remember going to investor conferences two years ago and investors would say can't you be more aggressive like valeant and other companies? we have resisted that and will continue to resist that. stephanie: you have some competitors that are priced counters and could end up forcing regulation that could hurt your business. >> what we've seen so far is lot where we are seeing a of this is on the outside of the mainstream of the pharmaceutical industry. there are a few companies that were very aggressive and perhaps took it too far and deserve the attention they are getting. i think it is good, transparency helps solve some of these issues. stephanie: it could hurt you. beit could only have to

mindful of that but i think the pharmaceutical industry is a good investment. look at some things we've done this year, curing hepatitis and immuno oncology that is going to .ead to breakthroughs we need to keep it a balance. companies like volkswagen, you do not take down the entire auto industry -- that is a mainstream player. you have the fringes of the industry with loopholes. cynthia: you have a transaction pending with teva. has there been scrutiny in light of the issues in the news? >> the review is ongoing with the ftc. we will learn more about that in the coming weeks. the ftc looks at competition in the generic drug space is standardized. inre you have concentration

one therapeutic area, then they at investment. made an announcement about selling and they will work offs.h well-off's -- one stephanie: you are a deal guy. if pfizer does not go through, what do you want allergan to look like? >> icon on tv more for the deals but i spend 99% of my time operating the company and building a culture of performance. myself as an operator even though people think of me guy.buyer or m&a what we are trying to build at allergan is a growth oriented company. we do not care if innovation

comes from our labs or externally. we want the best ideas. are creating a special culture and a special type of company. the best ideas in the last years, the credit seems to be going to activists. you had bill icon -- bill ackman and carl icahn. how do you balance? are you giving credit to the activex? word, said the right balance. used to come to meetings and people would say we have to build business for the long term. you cannot argue have to balance the short, medium and long-term. they can live in harmony. what we are doing at argan is we are demanding that we return for our shareholders in the short-term but we are investing in innovation for the long-term. if you do both of those, carl

icahn or bill ackman does not have a problem for you. their intention generally is they pick aranted, company with an issue and then they push it to the extreme. they identify some real issues. they have made us sharper, they keep us on our toes and that is not bad. stephanie: thank you for joining us. brent saunders of allergan. back to you. we are live at the bloomberg senate. alix: thank you. we will be bringing you much more today. stephanie will be talking with lynn tilton, founder of patriarch partners, in a few minutes. scarlet: much more coming up on "bloomberg markets." making hisvaleant first public statement since the drugmaker cut ties with philidor . alix: consumers and retailers are gearing up for alibaba's

single stay, the largest shopping guy in the world. the event brings in more than black friday and cyber monday combined. what will happen this year? scarlet: 8 candidates will share the stage in the fourth republican debate in milwaukee. they will address business and the economy. what kind of economic glue points -- blueprints will we see? a preview coming up. ♪

alix: welcome back to "bloomberg markets," i am alix steel. >> i am scarlet fu. of the look at some biggest stories. j.p. morgan chase hit by a hack, called the largest bank

breach ever. prosecutors announcing criminal charges against 4 men and cute including wire fraud and identity theft. other financial institutions were also targeted. personal information from over 100 million customers was stolen. 2012 to midan from 2015. the fbi and u.s. attorney for the southern district of new york will be holding a live press or in about an hour and we will bring you the latest. scarlet: a new president of the minneapolis reserve, neil cash card -- neel kashkari, who ran m in 2008.rogran he replaces kocherlakota. inx: a 2% increase nondurable goods due to an

decrease in farm products. scarlet: we want to check in with julie hyman for a look at apple. and a call on credit suisse. julie: supply chain channel checks done by credit suisse and asia to figure out how demand and apple products is extrapolating. apple has lowered its component orders by as much as 10% according to the firm's asian team. apple shareshat are down by 3%, even though credit suisse is actually keeping its retention rates fournued and a potential inch iphone. splc, thelook at supply chain function on the bloomberg terminal to see who the suppliers are.

logic on there as well. theve got to look at largest apple supplier as well. alix: putin -- valeant's ceo is making its first public comments since cutting ties with philidor. drew armstrong joins us now. pearson you mike heard today versus a few weeks ago? drew: this was a different tone it soundednt and more conciliatory. he talked about how this has been a painful period for him. he says this has been painful for a lot of other people. say that we are going to listen to critics and be much more transparent.

which they have not done as much previously. -- they haveis was been aggressively defending the company in the past. scarlet: less defensive and he spent a lot of time answering questions. of questions?cope drew: everything. there were some things he did not answer and there were some questions, the analysts on the call asked some aggressive questions. others were more specific about aspects of the business. one of the things he did emphasize is the company is on to go through a rough patch in terms of sales. there are going to be problems with dermatology sales and some sales are likely to be down while they transition away from y pharmacy. is there another shoe to drop?

do you think you have solved most of the issues. talked about a relationship with the mail order pharmacy. saying we don't think they did anything wrong but they cut ties. alix: the stock is down. the mark is not buying it. cyberahead, more than monday. are they on track to hit the same numbers this year? we bring you that story. ♪

scarlet: welcome back to "bloomberg markets," i am scarlet fu. alix: i am alix steel. scarlet: consumers in china gearing up for single day. this holiday brought in over $9 billion in play for hours last year. julie hyman spoke with xi

aomi's director of operations. >> singles' day is one of the biggest days of the year for e-commerce and china. then e-commerce company, third-largest e-commerce company in china, we have to be ready. we prepared about 2 million smartphones so we can sell them in one day. scarlet: i -- alix: in today's west coast wake up we are joined from san francisco by reed stevenson. 9 billion dollars and 24 hours sounds enormous. what is the potential? reed: it is a big deal. singles' day has already started an hour and a half ago in beijing. to give you a sense of what is going on, one billion dollars worth of merchandise sold in the first eight minutes and then $3 billion in the first 30 minutes. this is really an invention but it is an excuse to shop, and

.xcuse to sell alibaba is owning it. that is part of the fact that they invented this day in 2009. scarlet: the numbers are incredible. just chinese companies, foreign companies are getting into this. the: this is against backdrop of china's shift to a consumer-oriented economy. even with slowing growth, chinese stoppers -- chinese shoppers are looking for goods overseas and they want brands like macy's, sainsbury's from the u.k., costco from seattle and we have another from the ,etherlands flocking into china moving as much merchandise as they can. alix: how does profit of that work? reed: alibaba is essentially

taking a commission. what we are talking about is the merchandise volume. it is one big shopping mall. that is online store moving as much merchandise as possible. jack ma said there were 1.7 million delivery men, 400,000 delivery vehicles and 200,000 airplanes. we are going to see $13.7 billion worth of sales during the single day, which is more than the u.s. cyber monday and black friday combined. scarlet: there is a lot of attention to the fact that jack ma would like to say singles' day go global. any indication other countries can join in? is stillhink this limited to chinese phenomenon. i could see it spreading to other parts of asia.

an established holiday shopping season that kicks off right after thanksgiving. i don't think you are going to see a change in that anytime soon. it does not take a lot to convince people to shop. scarlet: reed stevenson, joining us from san francisco. tomorrow, catch emily's interview with alibaba founder jack ma. an exclusive interview. scarlet: coming up on "what did you miss" tonight, speaking with t-mobile ceo john legere, 4:00 p.m. eastern on bloomberg news. the next gop debate night on fox. we will discuss. the only way to get better is to challenge yourself,

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

we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. alix: from new york, welcome back to "bloomberg markets," i am alix steel. scarlet: breaking news on apache. in a document -- anadarko

making a takeover bid. apache hadeported gotten a bid but did not know who it was from. it is anadarko petroleum, thanks to the reporting of our team. this would be the largest deal for an independent oil and gas producer in the u.s., according to people familiar with the matter. apache rejected a proposal from anadarko and is working with goldman sachs to advise on options. unclear whether talks will resume, whether anadarko will .ventually triumph in this apache shares spiking, the bulk when we reported. anadarko shares in the other direction. alix: yesterday when we heard nos news, many were saying

one could afford to buy apache. it you price in premium, is probably going to have to be pe. pe is going to break up a patch of these and disperse -- break up apache and disperse the crest. julie: it is interesting anadarko is coming in. i pulled up the market cap of the companies. apache market cap has gone down and anadarko's has increased mid-2014 and then trending down. this is a five-year chart. the anadarko market cap is around $33 billion-30 $4 billion days.the last few apache is a $20 billion company. once you factor in the premium. alix: what is happening? m&a in oil.

i am really excited. much.t: thanks so let's start with the headlines. aside from the apache-in a dark out news, mark crumpton has more. mark: thank you. russia part than on flights to egypt will last several months -- to egyptban on flights will last several months. russia suspended flights after a crash of the jetliner in the egyptian desert 10 days ago. speculation that a bomb may have brought down the aircraft pronk at russia to insist on changes. the plan was taking tourists back to russia. slovenia's prime minister says his country will start building a razor wire fence on the border with croatia to slow the flow of refugees. defense will be used to direct the refugee flow, not to close the border. estimated 100 70,000 people

have crossed into slovenia since mid-october when hungary closed its border with croatia. hisident obama is taking fight to keep more than 5 million undocumented immigrants from being deported to the supreme court.a federal appears andourt yesterday blocked mentation of the program, saying 26 states fighting to derail it would win the case. of missouri says diversity training will be offered to students and staff beginning in january. tom wolfe stepped down following criticism over the way he racism.complaints of fast food workers in 300 american cities are marching in the biggest protest it. demonstrators are demanding pay of at least $15 an hour, that would be more than double the federal minimum wage. that is a look at our first word

news. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. i am mark crumpton. back to you. alix: thank you. gop presidential contenders will be sharing the spotlight in a fourth debate tonight live from milwaukee. eight candidates will take the main stage, expected to focus on business and the economy. scarlet: what kind of economic blueprints can we expect? let's turn to mark halperin, live on-site in milwaukee. clearly there's a lot at stake. who has shown the most comprehensive economic blueprint ? mark: you would have to say that marco rubio and it is a pretty copperheads of plan on tax reform and paying for higher education. and talking about family tax credits. plansor bush has some tax , plans on deficit reduction.

there are a few health care plans. i think most of them are still pending. most of them share a philosophy. senator rubio's plan is different. most share a philosophy about talking aboutnd big economic ideas. alix: seems like the rhetoric of the last debate is where was jeb push and when does he bring his a game? how much does he have to lose? mark: there's a lot of pressure on him. primarily from donors. he has a problem with the voters. he needs to the donor community and political elites and his own supporters that he has the gravitas and the seriousness that would make him not just the best president but the most electable candidate. ready in he will be case someone comes after him to

show strength. given how relatively weak he's previous debates, a solid performance would be very welcome on the part of his supporters. he needs to show people he is in this has a serious person. the focus has been on the weakness of his candidacy, he has a lot of strengths he just has not been showing them. scarlet: a column in the p, saying view about tp it is a deal that will benefit working families. what will be the tone republican candidates take? mark: all of them are to a lesser or greater extent with the exception of donald trump supporters of free-trade. ted cruz and a few others have said they support trade deals expect them to strike them.

you will see efforts to expand .rade deals in the bloomberg article it seemed like president obama was selling the tpp pretty hard. he said companies that sell goods around the world tend to grow faster and hire more employees. export supported jobs pay up to more than other jobs. who is he talking to? mark: he's trying to build a broad coalition, not just labor and workers but also the business community. when there is more trade around the world, america wins. democratic presidents always feel a little more of a burden to talk about the prospect that wages will be lifted and not just that corporations will do

better. president obama sees this as part of his legacy and he wants it to have broad support around the country. scarlet: a final comment from you on the debate. there was a lot of attacking the media the last debate. do you expect that to be a contentious point tonight? mark: you cannot predict what the questions will be. the questions go and long way toward determining how much of a punching bag the press or moderators will be. is three fewer candidates on the stage than previous republican debates. you will see a slightly different dynamic. alix: ben carson and donald trump are leading the polls. what is the biggest thing they need to prove? -- let: mark: mr. trump will direct an attack at somebody, ben carson

is now even with him in a number of state and national polls. regardless of what he moderators ask, you might see some engagement. on paper, those are the two front runners. alix: thank you so much, mark halperin. respectto "with all due come copolymer ryan will be a special guest. last six minutes not talking about donald trump. in the nexting up hour, deflationary risk and china posts new consumer prices data. a market wrapup from around the world. alix: we talked to patriarch .artners founder lynn tilton how distressed debt looks to the turnaround clean. scarlet: charges brought against four-man and connection with a criminal hack that targeted j.p. morgan chase. we will have all the details. ♪\

scarlet: welcome back to "bloomberg markets." i am scarlet fu. alix: i am alix steel. scarlet: a look at some of the biggest stories. a court ruling could force general motors to pay more damages. be liable for problems that happened before it emerged from bankruptcy. the court said plaintiffs would have to prove the reorganized company knew of problems. alix: wage growth is poised to speed up at small businesses according to the latest survey by the national federation of small business. of managers say they plan to raise pay, the highest level since 2007. scarlet: beautifully residents

forced to close by an e. coli outbreak could reopen later this week. 40 people were sickened, the shutdown affected restaurants in washington and oregon. tests found no trace of the bacteria. get more business news at bloomberg.com. alix: let's take a look at markets. falling afters china reported weaker than estimated inflation data, giving investors a better sense of the depth of economic challenges. bloomberg's at eckerd brings us more from hong kong. risks toflationary asia's biggest economy. consumer prices in october rose 1.3%, slower than 1.5% estimated. data extended negative readings to 44 months. the price of goods at the factory gains fell 5.9%, in line with estimates.

the numbers reflect a slowdown across china and suggest the people's bank of china will respond with monetary easing intendant tandem with beijing's efforts to stoke the economy through fiscal measures. bloomberg, hong kong. scarlet: abigail doolittle has a latest from the nasdaq where she's looking at apple. abigail: apple is a big story at the nasdaq. shares up 2.9%. snote out of credit uisse. analyst says apple seems to have it lowered its component orders by around 10% and this is driven by weak demand for the iphone 6 s. in the long-term it could be a positive as it shows higher retention rates and growth in the install base. tremendous volatility, before today, apple had been closer to the top of that sideways range

or the middle of the top of the range. be interesting to see over the long-term whether or not this sort of old-fashioned research could be enough to push shares down. at this time, apples up 8% this year. thank you. abigail doolittle from the nasdaq. news we told you about earlier, anadarko petroleum approached apache about a combination that could create the largest independent oil and gas merger in the u.s. this year. loweranadarko's stock is as apache. how would this make any financial sense. apache's enterprise value is $30 billion, you have to factor in a premium. anadarko's market cap is $34 billion. they have $16 billion in debt.

how would you do it? scarlet: selling shares to raise money, it is not a great time. selling more debt to raise cash is not a great idea given the fact that the interest rate environment is about to change and energy companies has been ther scrutiny because of profligate lending the last couple years. alix: when you type in anadarko, in terms of cash and equivalents, about $2 billion. in terms of free cash float, that was down $7 billion. this is a great screen. anadarko, this gives you the readout, debt, cash, free cash flow. i am not an analyst. plays a role, maybe they help finance. coming up on "bloomberg markets fights back on

sec allegations she has defrauded investors. we hear from her live from the bloomberg summit. ♪

welcome back to "bloomberg markets," i am alix steel. scarlet: i am scarlet fu. bloomberg is kicking off its year ahead summit for business leaders to talk about challenges eu's will face next year. stephanie ruhle is at the park hyatt in midtown. hi, stephanie. stephanie: i am here with lynn tilton. lynn going toe to toe with the sec. it is some pretty serious deals. let's talk about your position. , onere being investigated of your vehicles is is maturing

and a few weeks and is going to go to default. lynn tilton: three and a half years i've been working on presenteding and i've -- i have prevented many. i bought two thirds of the notes and i own the equity. in the end, when you have someone on the other side, they have to want to do a deal. stephanie: who does not want to do a deal? lynn tilton: no, mbia. there are only two people in zohar, myself and mbia. i own the equity. i put it behind everything else to get it done. i feel misled that we are at this point. 1 will go into default on november 20 if a deal

involving two parties is not done by that date. stephanie: when we hear an answer like that, someone might say are you repackaging, smells like financial reengineering. that's not what you do. if it was financial engineering, it would be easier to refinance and pay people off. operate, rebuild, reignite old companies. stephanie: we buy companies left four dead and rebuild them. it was aboutted talent and new manufacturing and supply chains. now it is about replacing revenues with product innovation, creating products whether it is an aerospace, automotive, apparel or cosmetics. based on elegance and igniting

innovation. stephanie: what are you most excited about? lynn tilton: there are so many things i love when it comes to my operating companies. helicopters has always been my baby. when i walked into it, it was the first company i had to operate. it was left for dead, no revenues, supply chain or manufacturing lines. now we're in the u.s. army fleet. i just got another contract with congress to get aircraft to afghanistan. i am working for other major foreign militaries on supplying them the aircraft and weapons systems they need to protect their countries. so manye: it seems like people are gunning for you. you are so passionate about your and extraordinarily successful. why don't we talk more about this? lynn tilton: i would like to know that.

i think female success is always threatening. at what happened to marissa mayer, now no longer the golden girl. after sheullman fought off nelson peltz. all of a sudden her earnings were not where they needed to be. authentic and are different and you do not fit into a box, people look to attack you. i and imperfect, but not in integrity and intent, only in performance. stephanie: do you look at those women or yourself and think you get additional scrutiny? is hard to say. i do not spend a lot of time worrying about other people's scrutiny. i do not spend a lot of time scrutinizing others. i worry about myself. i spend a lot of time with self reflection and evolution, the most important part of

leadership. i feel under attack by many but this gives us the courage to fight on. i hope i'm going to set an example for other women that when you are attacked, you have to dig deep to what you don't like and continue to fight. order to ben successful, you have to have true passion. you have passion. but to get to the next level you have to separate passion from emotion. it is emotion that takes us down. ego.tilton: and and fear. fear i have learned to overcome. i think i and a worthy warrior to anyone comes at me, including the government. passion and emotion is the difference between loving and being attached. passion and emotion needs- to be separated. decisions from emotion, you make mistakes. but passion gives us strength to

fight forward. a motion has to be -- emotion -- s us stephanie: you are in a business where you need people to pull you up. you need people to like you to get to this level. how do you get to that level? lynn tilton: i think my team does like me. the people who work with me are proud of what we do and what i do. everyone who comes to work in our world stays because they feel good about what they do because we make a difference in peoples lives. i think the outside world shoots at me partly because they do not understand what we do and partly because they look at themselves. i always say those who stand in judgment disliked in others what they dislike the most in themselves. are standing in judgment showed it walks to the mirror and reflect and evolve.

. promise you on doing that stephanie: i do not believe you started this way. did something happened that changed you to become someone who looks for the light? i went on a spiritual journey in my 30's. i come from a long line of studied scholars and i with the mayan indians for a decade. i continue to evolve and sometimes i forget and i have to remember. stephanie: lynn tilton, she is a winner. i am going to send it back to you. was stephanie ruhle at the bloomberg era had conference. back with more after this. ♪

>> welcome to bloomberg markets.

alix: from bloomberg world headquarters in new york good afternoon. here is what we're watching at this hour. >> it is quite likely at the end of theperiod, a relatively dramatic event. a ceo warned of a dramatic event. what he said about rising interest rates. timothy will join us to tell us if new curves are coming. how he turned fanatics into the world posse largest retailer of licensed merchandise. scarlet: let's check in with julie hyman at the market desk for a look at what is going on. look at the ice for a

moment. some surprising numbers today, having a big effect on commodities. estimate forhis inventories. , 1.7 bushels by august 21. 1.7 3 billion this year, higher than what analysts had been anticipating. more corn would be in theory more practice lower prices. down 2.5%. it is not limited to corn. theeans as well as government also saying domestic production will also rise to an all-time high of soybeans. brazil, the other big producer of soybeans besides the u.s., the government there producing its forecast as well. record crops in brazil, not a good formula for soybeans. but it does not end there. domestict boosting

inventories of wheat. that is down 2.6%. it is really interesting here. thought it was good to take a pause. it raises the question about stocks. inferior, farmers have less money to buy thousands of dollars of equipment. scarlet: exactly. even not necessarily sustained effects, but definitely when the headlines start to come out. the company makes components for fertilizer here to alex's point, the farmers are making less money on crops and therefore less ammunition to buy what they need. looking ahead.m 1.3% here. see some of the other supply chain providers. another maker of components for fertilizer down 2.5%. ,he farmers may be less money

not quite as much. took a leg down and then recovered again, down .8%. bindrs are stuck in a because they have a lot of fixed cost. spendingsome built in for some of these economies. el niño has a huge impact of crops all around the world. a fun dynamic. they planned that out when putting together the forecast? >> no, absolutely not. the: let's check in on bloomberg first alert news this afternoon. mark: president obama is not taking no for an answer. he is asking the u.s. supreme court to weigh in on his plan to show that many as 5 million immigrants living in the country illegally from deportation. this comes after a federal appeals court yesterday refused to let the program commence

while 26 states tried to block it. congress passed a $26 billion entente bayband detainees from the united states. that is something president obama has been trying to do since he was sworn in. final legislative approval to the measure. the house overwhelmingly approved at last week. the white house has not threatened to veto the bill. european union governments have admitted policies on immigration are not working. they are planting new centers that would deal with refugees have slipped into greece without the register. meantime, david cameron wants to redefine the relationship with the eu. mr. cameron calls on the eu to make changes that would give britain more autonomy within a block. >> there would be those who say -- [indiscernible]

i do not deny seeking shaman -- changes [indiscernible] concerns in the big task. do notimpossible one, i believe so. mark: one of his central demands, more control over migration. he also wants to bar most refugees from welfare benefits for years. storm's massive sustained winds, 70 miles an hour. kate is forecast to become a hurricane by tonight. south of north carolina, it is moving northeast. you can get more on these and other raking stories 24 hours a day. i am mark crumpton. alex and scarlet, back to you.

alex: thank you so much. with michaeleck in reilly, who covers cyber hacking for us in washington. give us the set up and the context for what will be announced. michael: what he will unroll for us is a picture of a much bigger campaign of hacking against financial institutions should then we had any inkling of last year. there are at least nine ,ifferent ones, ameritrade fidelity, e*trade, a huge number of them. generated literally tens of millions and profit. they will talk about the investigation and also who the characters are. penalties kind of

will we begin to hear? michael: these are serious crimes. indictments that include a lot of hacking crimes that go back years and include not just a pump and dump securities fraud, but also hacking into the iran offshore gambling operations. they have to to competitors. they were doing the bitcoin thing. alix: hang on one second. the u.s. attorney for the senate district of new york is speaking. let's listen in. >> ever uncovered. overharges involved several years, targeting 12 different companies. two different financial news publications, two software development firms, and a market risk intelligence company. by any measure, the data breaches of the firms were breathtaking in scope and size. the defendants allegedly stole personal information for over 100 million customers, including 83 million customers from one

bank alone. the single largest theft of customer data from a u.s. institution ever. the bank was chase and it has disclosed itself. to hide their tracks, the defendants allegedly operated criminal schemes to over 75 shell companies and used close to 200 identification documents fraudulently, including 30 false passports from 17 different companies. in our view, the conduct alleged in this case showcases a brave new world of hacking for profit. longer hacking for a quick payout. it is hacking in support of a diversified criminal conglomerate, hacking to locate victims, to spy on the competition, to maximize profit, and in short, it is hacking as a business model. the conduct alleged in this case also may signal the next frontier in securities fraud.

sophisticated hacking to steal nonmaterial public information, something defendants allegedly discussed for the next stage of their sprawling criminal enterprise and you can see that in the indictment that was unsealed. that is the bad news. the good news is the fbi and the secret service have cracked the we aim to prove it in court. the indictment describes the defendants. gary was the alleged leader and the-described founder of enterprise. his principal deputy, opening bank accounts and creating shell payments and managing across cohorts, another participated in the hacking together, these defendants used cyber hacks into major global businesses there's to help advance several criminal schemes. first, as previously charged, so alone, aaron, and orenstein ran classic pump and dump stock

fraud schemes. a artificially inflated the price of penny stocks and then dumped the holdings before the rest of the market recognized the fraud. for the scheme to work, the defendants needed access to a lot of names and contact information. people to whom they could pump the stock before the defendants pump -- dumped the stock. they needed victims and that is where the defendants took classic stock fraud scheme and brought it into the cyber age. he and his co-conspirators allegedly hacked into the phones of two financial news companies to get personal information for tens of millions of customers, people most likely to be engaged in significant stock trade. they then used the stolen private information to blast spam e-mails, falsely touting the panty -- the penny stocks they later dumped.

them tens ofe for millions of dollars in proceeds. it was a security fraud on cyber steroids. many years, orenstein and co-conspirators also offering internet gambling experiences had hundreds millions of dollars in illegal procedure to protect this business, he allegedly sought to undermine private companies by hacking and stealing their customer information and by distributive denial of service cyber attacks on his rival networks. he allegedly even hacked into software development firms to spy on their employees e-mails to make sure they were not favoring his competitors. he also allegedly owned and operated payment processing businesses that processed hundreds of millions of dollars in credit card payments for all types of criminal activity, including the distribution of

illegal chemicals and malware, as well as their own online, gambling, and illegal bitcoin exchange businesses. he and his co-conspirators used cyber hacking skills to protect and advance criminal enterprises also. as alleged, he cleverly hacked into a market intelligence company that would work with credit card companies to detect criminal conduct. reviewed thatnd company's e-mails so he could stay one step ahead of their efforts to detect the very type of suspicious conduct that his payment processing businesses were engaged in. by theirged in a way cyber hacking activity, he and his cohorts, criminal businesses generated hundreds of billions of dollars in illicit proceeds that he concealed in bank accounts around the world. you can see that graphic depicted in the chart to my right, as i said.

he was hacking to enable securities fraud all in different ways including in examples engaged in newspapers,d, two -- just a status on the defendants on earlier indictment to charge them with money laundering and related crimes. -- an american citizen who has not appeared to face charges on an earlier indictment and he remains a fugitive. anthony is charged with offering the same business.

alix: announcing the indictments of three men -- we want to bring in our bloomberg cyber reporter michael in washington. this is fairly unusual, for prosecutors to be naming names in a cyber crime. michael: partly because it is fairly unusual to actually get your hands on who the guys involved in these kinds of crimes are. are not known hackers in eastern europe or russia. an interesting point, basically saying we think this is the future of crime because these guys were not the hackers themselves but they did employ a very sophisticated hackers to support a vast criminal organization that did all sorts of things, offshore gambling, hacking into your competitors for offshore

internet gambling. doing pump and dump schemes, looking at the possibility of insider trading for taking e-mails and other things from insider institutions. a huge indictment and an incredibly profitable one. he is basically saying we think this is where crime is going and it will all be about hacking. alix: it highlights how woefully unprepared companies are to do with it. tagging as a business model really stuck out to me. the next frontier of securities fraud. it is so widespread and it seems like companies are consistently still behind the curve. therel: that is right and are serious questions we have to ask ourselves and the financial institutions have to ask themselves about how so many companies were hacked over such a long time. the hackers were in some of these companies for years without being detected. they got into bank of america

and jpmorgan chase, which spends a billion dollars a year on its security infrastructure. it raises important questions. if this is the new frontier of crime, laquon resist titian's do to fight this on their end as opposed to the fbi and the u.s. attorney arresting these guys. scarlet: thank you so much for your perspective, joining us from washington. alix: breaking news, julie hyman has more looking at mcdonald's. julie: -- actually not yet it we will take you to the mcdonald's news and probably bring you those headlines for you, just pulling it up on my terminal. scarlet: mcdonald's giving an update to investors right now, the company says it is not pursuing a restructure as many investors had been pushing for, as a way to unlock value in its stock. julie, you have also looking at these headlines.

julie: i am here now are the company has been holding a meter with death meeting with investors and that is where the came from. investors said it would come because some investors had been pushing the company to do the real estate investment trust structure. company rejected the idea back in 2013. the shares are still halting pending news. this piece of news coming out, e shares are halted and we do not have a chance to see how they react or whether there is disapointme. it is not clear whether there is real expectation on the part of investors that this would really happen. it is something they are pushing for. seeing other headlines, the company says it is reducing some of its costs by $500 million and is committed to reducing expenses and is increasing its cost reduction goal from may.

look at other movers while i am here. i want to talk about other stocks in the news today. let's talk about valeant. that company held a conference call with the ceo for the first time since valeant said it is resolving its relationship with distributor philidor. he answered a lot of q&a. to be split sentiment as to whether he did reassure investors about the track the company has been on a you see the shares come off the lows of the session. andrew of sitcom research appeared on nbc and said he shrunk in short position on the economy to some extent what is interesting is the reaction to his comments. he haday, he tweeted some sort of revelations to make about this company as well. said he was an even worse offender than valeant.

thoset when he made comments about shorting the stock, it went up. it seems as though there is now skepticism being expressed in the market in terms of his allegations about this company. it did fall yesterday quite .harply it saw a big surge in volume one the stock went up. finally i want to talk about apple quickly. that's -- credit suisse notes, finding the company has reduced its components orders, then credit suisse extrapolating that it does not put well for demand for the iphone 6. we see its shares down 3% and apple suppliers falling sharply as well. , sky works,akers all down. xp has come back to some extent from earlier losses. for the hustle. all right. emerging market stocks falling,

due to deflation in china. the credits we ceo was on bloomberg this morning speaking with stephanie ruhle about his work in the developing economies. economies and rockefellers with j.p. morgan's. that is where we are in most emerging markets. 0.1%. serving them allows you to capture most of the wealth created. what you need to do as a bank is monetize it. you need the loan from us -- buildings, roads, plantations, and factories. we are turning that into liquid assets. tot is why it is important

have thalongsde banking business, a competitive banking business. very demanding buyer, will only buy very good investments. you need a really good investment. some commentators, well, just going to private banking. bank, did show investment in five to 10 years, we will not have a private business. >> a question from twitter, catherine asks, what are you your plans for a black swan event? how do you handle the possible overhang that the game may change? >> it is a great point. you always have to think about it. very harrowing experience.

part of why we are raising so much capital is to make sure we have a balance sheet for each event. financial services. we will worry your regulators and employees. in terms ofg .apital strength we have been de-risking our positions. frankly, it is quite likely they will be at the end of this relatively genetic event. we have had a long time of low interest rates. as the financial services

company, we have to position ourselves quite defensively. think a bigou do negative event is on the horizon? no, i think every time you see in markets come when you go from a high rates to lower, or from a low rate to a high rate, and number of people are not good and prepared. a number of people are unprepared. it is likely to happen again. dallas the ceo of credit squeeze this morning. turning back to the markets, a looming threat of a rate increase. dancing back in the selloff. >> our next guest says the selloff is missing the ball. the ceo of envision capital management joins us now from los angeles and we just heard you talk about the impact of the fed rate hike, that there could be a big threat in the market. do you see it like that? >> not quite that dramatically

but i will say missing the ball to me means everybody is missing loadedt that with balance sheets now, credit deterioration is here and it will get worse. are we in the default cycle? a lot of companies, at a time when interest rates are headed higher. >> that is the number one problem in another problem is something bloomberg did a wonderful article on. $1.5 trillion in corporate debt has been issued thus far this year. where has the money gone? share increased, buybacks, dividends, and it has not gone to the real economy. earning revenues, earnings ok so far this year, only because of the repurchases. individual investors who i talked to really need to watch credit college -- quality because that will be the big unknown. 25 basis points is already baked into the market.

alix: where you see the credit quality playing out? the investment-grade bonds versus the treasuries, that spread, it has come down since september and october but it is still quite high. where do you look? look at credit spreads just like you did in the widest credit spreads, the more impending problems we will have and we see more downgrade we had the wind are back for the last several years in which that would be paid down. do-it-yourself people need to be very careful. do not see any doom things happening in the bond market but that is always a real curveball that you have to be waiting for. >> see think a liquidity crunch we're always hearing about will become aces amick and lasting?

>> i think it is lasting because the banks and brokerage firms are so hampered because of capital constraints and you are seeing much more electronics trading and much more when you go to a bullish bracket firm, working on an order, they say, we do not have an inventory. usually, things we expect to as lakhs wants, do not happen. it will be business as usual with what we are seeing now. alice: thank you so much, joining us from los angeles. some breaking news for you. miller coors, according to dow jones. more on the other side of the break. ♪ the only way to get better is to challenge yourself,

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

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. alix: welcome back. i'm out steel. scarlet: i am scarlet fu. let's begin with headlines on bloomberg first alert news.

mark crumpton has those. mark: russia's ban on flights to severalll last at least months. vladimir putin's chief of staff says russia wants changes to egypt's air security system before resuming flights. the move comes following speculation a-bomb brought down a fault -- a passenger jet over egypt last month. the chancellor who guided for eight years during the cold war is dead. among the leaders who laid the groundwork for europe's currency, schmidt died today at 96. today,xclusive op-ed president obama defends the transpacific partnership as a deal great for working families that will open up new markets for made in america goods and services to he writes, companies that sell their goods around the world tend to grow faster and higher more employees and pay higher salaries than companies that do not. on average, ex was supported

jobs pay up to 18% more than other jobs. bloomberg's white house fromspondent joins me now washington. why is the president working so hard to sell the ttp? >> because he needs to. he knows he has a tough sales job to get congress to approve the partnership and he wants this to be a part of his legacy. the president focused on a pivot to asia and having the trade areement with the country has key part. he is selling it here at bloomberg news, businesses, and to politicians whose votes he needs. mark: you mentioned the president is selling this to others business. what is the business community's

reaction? how do they see a deal many criticized because they have not seen the fine print? angela: thousands of pages are posted online. as far as business reaction, it depends on what business you are. many agree with it and see it as a way to improve their bottom lines and sales and other countries, cheaper trade and cheaper statistics. especially agriculture and autos, are concerned. they do not see the advantages and they are definitely working to get road drop -- roadblocks along with environmental groups. mark: angela joins us from washington. thank you. for those of you who would like to read the op-ed on the transpacific partnership, you can do that on bloomberg.com or the bloomberg terminal. alix and scarlet, back to you.

alix: some of the heaviest hitters across the financial service industry are in washington today for the financial markets association annual meeting. scarlet: erik schatzker is live with the chairman of the commodities futures trading commission. we will send it over to you, eric. erik: thank you. good afternoon. a little over seven years since the beginning of the financial crisis and a great deal has been done by the sec and your commission. >> we have got a lot of basic reforms in place but the challenge is you are almost through wired to look back and address the failures of the past. we have got to make sure the regulatory framework works going forward.

you could call it optimization or simply looking at, has we -- have we created a framework that not only addresses the problems we have identified, but does it create a good foundation for the markets to continue growing and innovating? incredible innovation over the last 40 years. we want a regulatory framework that still allows that or even encourages it. we want to make sure there are not unintended consequences. we want to ensure that we fine-tune the rules so they really achieve their consequences in the most efficient way. it is things like that. there are still some big picture issues we're looking at. clear house resiliency is a significant one, making sure the areral leering houses strong and resilient because we placed greater importance on them. i think we're making great progress. .: the of society clearinghouses

is to avoid what we learned in the collapse of lehman brothers, the reliance on counterparties. >> yes, when you have, particularly with swaps and you have a, when system of simply bilateral transactions, you go transact with someone else, risk can build up. clearinghouse, we interposed somebody in the middle, a great way of monitoring and mitigating the risk aired it does not eliminate the risk. but it allows us to monitor and mitigate it. the health of clearinghouses is important. .: you may be aware of some firms that are trying to restart the single name credit default swap market by moving those traits into a clearing house. is that a good thing? >> i think leering of those types of transactions are generally a good thing.

single name are outside technically of our jurisdiction but we work very closely together with them. .: some of the challenges you're of ag to overcome are cross-border nature. for the most part, it involves american regulators and european regulators. talk to me about some of those challenges and the likelihood you will be able to bridge the gap. >> it is in poor have some perspective. what we're talking about with over-the-counter swaps is a market that grew to be global before it was regulated by anybody. went along20 leaders and agreed with the basic reforms and we're all in committing those. though we have global markets today, we still have regulations through nationstates. each of those has different political processes and different issues. we are all coming at it a little we madetly but i think

great progress in harmonizing and we will make further progress your part of it is timing. we asked before other jurisdictions did. easierhink it makes it for us to then take a look and figure out how we could harmonize better. .: one of the areas in which it may act, is automated trading, which includes high-frequency trading. what might the commission do? some have already taken actions here to ensure that there are some checks in the system to prevent problems. thing we'rekind of looking at it we are not looking to change the speed, but to make sure there are sufficient controls to prevent disruptions. what has not been tested before it is implemented, we have seen problems from this. doesn't sound to me as

though you have a problem or concern over the distance of computerized driven trading or automated trading or however you choose. >> we take the market as it is. i do not think we will be able to go back. i think we create a regulatory framework in which a market evolves. the markets are -- will always evolve and will always innovate. what we're focused on is making sure we control maximum mortar limits, execution throttles, kill switches. make sure you have those types of controls and requirements on testing, make sure you have those at the exchange level to prevent these types of problems we are seeing. have probably only got about nine months left before the political season gets so hot that there are certain things

you will not be able to do. in nine months? >> we can do a lot that we will continue working right up until the day i am out of office and the commission will go on area we have got a lot on the plate. trading, the things i already mentioned, -- >> thank you very much. back to you in new york. alice: thank you very much. scarlet: much more is coming up. how about turning the pacific ocean into an everyday source of drinking water area a look at a company doing just that. and we will talk to the largest retailer of licensed sports gear about what goes into make your favorite team translate into t-shirts. hoodies or jerseys. senator richard blumenthal is calling a thousand dollar peace offering insultingly inadequate. we will sit down with him in the next hour. ♪

alice: timeout for the bloomberg business flash, a look at some of the biggest stories in the news right now. the justice department is doing swapping of deals between united, delta, a new york city international airport here they are concerned the plans to acquire 20 landing spots at airports will result in fewer choices and higher fares for passengers. a new president of the minneapolis federal reserve, if former goldman sachs banker who ran the treasury department's in 2008 assets program and then later joined pimco. goldman sachs says the u.s.

economic expansion may have a few more years to run. a new report says there is a 60% chance the current pension will last 10 years. been onnomy has already an upswing for 76 months, nearly twice as long as the average recovery. get more business news at bloomberg.com. scarlet: let's head over to the markets desk were julie hyman has been tracking shares. they have resumed trading. julie: yes. they bounced around and then they recovered. we have seen a volatile reaction to the company's comments at its investors meeting. be sending off some real estate into real estate investment trust. coming from steve easterbrook, he said instead mcdonald's will focus on cutting costs. looking at some of the other headlines coming out, he said mcdonald's will open about 1000 new restaurants. about 93%y sees being franchised in terms of its

andtions on the end of 2018 wants to be 95% franchised in the long term. it looks like not owning as many of its own restaurants. the company says it is boosting its forecast for how much money it intends to return to shareholders by $10 billion over its prior forecast. those are just some of the headlines. shares are higher by half -- .5%. i want to turn to where we are not seeing much green on the screen. part of the selloff we are seeing today, this one in particular has been accelerating after the company posted a loss that was much wider than what analysts had been anticipating. and analysts said it is a little bit of a tail wagging the dog situation. if you look at the two companies , they were formed to buy the company's wind and solar. a lot of concerns about

structure. it is widely held by hedge fund. it is not just limited to selling on edison today. the solar etf is also trading lower. alice: thank you so much. this week, we are taking a look at the year ahead. the summit of business leaders and industry influencers. look at the challenges on the ever-changing climate and lack of clean water. plan on the western hemisphere is about to reopen. the solutions to california's drought. sam grobart investigates. sam: we are standing here at the site of the project, the largest seawater facility in the western

hemisphere. it will produce up to 64 million gallons per day. fill a enough to swimming pool every 18 minutes. it is a significant new water supply for the region. >> everyone knows california is going through a serious drought and has been since 2013. silliness to 187 quintillion gallons of water in the pacific ocean, this has never been an obvious solution. are commonhis scale in israel and saudi arabia. in the u.s., there has never been anything like it. fair to say southern california's facing some of the same kinds of challenges that places like the middle east were looking at? >> sure. the way southern california solves their water resource issues historically was to import water. that was available at the time and it is not as reliable now.

>> san diego gets 64% of its water from the colorado river, 11 out of the last 16 years on a colorado river have been drought years. we like to say that the low hanging fruit is gone. >> you know actually need to create new sources of water. >> that is correct. >> this is where we actually take it out of the water. >> this is how every one of these plants works. seawater,t through runneth a reverse osmosis, and you're left with 60% freshwater and 50% super salted wastewater that gets reported back into the ocean. also, the whole idea of converting seawater to drinking water star star run into trouble. >> the reverse osmosis process

requires a significant amount of pressure. that pressure requires energy. >> we consume between 33 and 38 megawatts of power. the largest power user in san diego county. money the power caused and this is why seawater has never really worked. we have had cheaper water sources available. plant haveers of the spent about $1 billion trying to make it as efficient as it possibly can be aired a key part of that is this room full of orange tubes. the plant and still a high pressure. we run them through our energy recovery devices and we are able to recover about 40% of the energy used. >> mitigating the considerable amount of energy a plan like this does require. >> in spite of all of this, decelerating water still costs about 30% more than importing it, which means the san diego water bills will go up when the

plan goes online. while generating 54 million gallons of water may;, is actually only 10% of the water needs. desalination the solution to california's water crisis, the answer is no, but it will probably be a part of the solution. as climate change makes dry places even drier, we will reach for whatever new water sources are available, even those that may seem impractical today. the future of california's drought is not certain but one thing is for sure. people will keep looking out at and thinking, that could work. was sam grobart. looking ahead into thousand 13. up, gearing up toward the holidays. sports gear will be a popular item.

how the company is moving forward with merchandise through new channels. ♪

alix: welcome back. scarlet: your favorite sports team has just won a championship game. they are celebrating in a players are putting on the official championship hats and t-shirts. alice: you say you want one. there is a good chance you will head to your computer and pull up your phone and place an order with the world's largest retailers of licensed sports merchandise. ceo joins us now. what happens when you have the mets in the world series question mark do people rush to buy stuff on your site? >> they do. cubs,ve the mets and the two large markets that had not been deep in the playoffs for a while and then kansas city and toronto and kansas city lost in seven games last year.

so excited and as you mentioned, they grabbed their phone. when a champion is crowned, it is an incredible form of activity. what we see in what we call hot market moments are up to two thirds of merchandise bought over a mobile device in championship moments, whether the women won the world cup this summer, -- >> what do you do with the excess mets jerseys or cubs jerseys? >> this is well-timed part of the year because we do over 50% of our revenues in the fourth holiday inause sports. the mets fans and the cubs fans and the blue jays fans did not get the ultimate prize, but those will be super excited for spring training. it will be active in holiday shipping. scarlet: it used to be his team had two jerseys, home and away. now you have the alternate jersey, the throwback jersey,

the fighting cancer at practice jersey. nevermind the variation of college football jerseys available. aboutbout how you go identifying the most in demand merchandise and stocking that one? >> a great thing about being additional retailer is it can be agile. fanatics is the flash -- flagship rant. we have over 300 partners. ultimately, we can expose the product digitally. we can manufacture on demand and start -- start with blank jerseys and customize them based on how hot the players rp or a quick turnaround. and replenish on the ones doing well. hi friends salute the service, a -- ly big trend, alice: do people just by sports stuff in a matter how much money they are making?

wesley are pretty correlated. revenue. dollars of ultimately, we are mainstream market product. consumers are excited about a handful of things, sports, politics and we are one of the things people are passionate around. in a good economy, we will do better. stillown economy, we will see fan bases of successful teams. the new you will open flagship store there. you are moving into physical stores. talk about the opportunity versus the risk. >> we are already one of the largest retailers now due to our partnership with league partners. the biggest thing we did this year was we launched the new nascar operation where in the old bottle buried used to be trailers or holders the fans would walk up to and they go one driver at a time and we turned that into a 64,000 square foot

and with automated service we have grown the business tremendously. the nba opened up a flagship store here which we are doing for the holiday. for us, what is super exciting is the future of retail has a lot of technology issues. customize in the store, large displays of customer information, that is why we are excited about the off-line business. alix: thank you so much. coming up in the next hour on bloomberg markets, we will take in back to the head summit new york city. the bank of america ceo brian moynihan will be our next guest. you do not want to miss that. ♪

anchor: welcome to "bloomberg markets."

♪ david: from bloomberg headquarters in new york, good afternoon. ra.m david gu what is atonomy, stake, and who has the most to lose? in an exclusive interview, brian moynihan joins us live from the season is inption full swing in new york. there are hundreds of millions of dollars that have already changed hands. we will look at who is blind what and for how much, but 'srst, let's go to bloomberg julie hyman. julie: we have a mixed picture.