scarlet: from bloomberg world headquarters, good morning. i am scarlet fu. i am alix steel. here's what we're watching of is watching at this hour. >> our goal is to destroy this barbarous organization. alix: putting grantors is not part of the strategy. scarlet: emerging markets the a selected -- is seeing a selloff. alix: marriott is becoming one of the world's largest chains, buying a selloff. scarlet: let's get a check of the markets with remy and it's a mixed breed so far with only one

data point on the economy. ramy: u.s. markets are mixed as happenedple with what in paris. the dow is up about a third of a percent, but the nasdaq is down by a 10th of a percent. head into my bloomberg terminal and the imac function is what i want to show you. most of the sectors right now are in positive territory. we are looking at some communications as well as utilities and consumer staples all up in the green. at&t and verizon are up 1%-one .5%. costco up similarly. energy was the biggest gainer, but has pared gains early this morning. it is up nearly 1%. let us take a look at the price of crude. in a word, it has definitely been volatile today here in new york after those paris attacks. it had been up by nearly 2.8%, but look at it now. it is down by 6/10 of a percent.

it has pared some of those losses. about 46% in the past year. we have been talking about the stockpiles of almost 3 million barrels. alix: how did france do after the terror attacks? how did it measure up there? ramy: it's interesting. you thought it would maybe be a bigger fall than what we are seeing. taking a look at what has been done, it might be a bit of a surprise her and appeared it has closed -- a surprise here. .8%.s closed energy rose the most to balance that out. while we are over on the continent looking at the euro, it is down by 6/10 of a percent. it has fallen the most in 10 days and at its lowest in nearly six months. the slide comes on top of a 5% drop in the past month. it has been speculation that the ecb could very well expand monetary stimulus in the next

month. scarlet: thank you so much. he will be back in about 10 minutes to talk us through that $12 billion hotel deal. alix: we're going to check in on bloomberg first word news. mark crumpton has more from our news desk a. leaders learn how to target the islamic state, there have been dozens of arrests from the terror attacks in paris. frenchthers in belgian authorities have identified a belgian man as the mastermind of the violence. the islamic state is claiming responsibility could francois ask parliament to extend the nation state of emergency. the move would extend police powers and limit public gatherings. lawmakersaddressed outline details of fred is assaulted -- friday's assault. friday isppened on something that was decided upon and was planned in syria.

it was something that was organized in belgium. it was something that was carried out on our territory with the complicity of french people and there is one objective, one aim to these attacks -- to spread fear and terror to make sure that we will be divided and also to exert oppression and forbid us on acting individually and our fight against terrorism. he also told lawmakers the united states, russia, and france must join forces to the islamic state and called on president obama and vladimir putin to unite efforts. on the sidelines of that g-20 summit in turkey, president obama called the attacks "a terrible and sickening setback against the islamic state." but he forcefully dismissed critics calling for the u.s. to expand its military campaign. the united arab emirates has

taken five you many prisoners held for more than 13 years at the u.s. military base at guantanamo bay. authorities in cuba determined they no longer posed a threat. the prison released drops but want, no inmate population to 107. the guantanamo inmate population to 107. that is the first word news now updatescan get news and 24 hours a day at bloomberg news.com. i mark crumpton. back over to you. alix: i want to bring in brendan fromey who joins us live paris. it is the end of the first official business days after the attacks. you have been on the streets talking to many people. what is it like for those who had to go to work in open their stores? brendan: people want to work this morning. i commuted out west of the city to see how people were doing and commute back in with them. a said there was a slightly

lower volume than normal for a mormon. they said what you expected to say like new yorkers after september 11. we are going back to work because we have to. shops are open. they were closed on saturday. he saw a little more traffic on sunday. now on monday, it feels like aside from the heavy security presence like a pretty busy day here. you can see behind me that people are gathering. there is a memorial that has been growing all day. last night, people were so on edge. there was a stampede briefly when people heard noises. people of come back and have been filtering in and out all day. i've been reading this all over where people are painting this on walls and on signs -- the official motto of paris in latin is taut, but not some. unk. scarlet: tell us about the reaction on the street from president along speech. -- along speech.

he will call on president obama putin to unite efforts to speak of a solution. what can you tell us? brendan: i think the more significant thing for the people in paris is the law and order he talked about at home. he talked about a constitutional change is what he suggested. it talked about changing police powers and when police are allowed to draw their weapons. he talked about even greater surveillance powers. this was an extraordinary move and very much aim for a domestic audience that is ready for tighter security measures and ready to trade in some civil liberties for increased security. i talked to some people this morning and a cafe on their way to commute and they were talking about exactly this. they heard these words yesterday and were not necessarily going , butte for marine le pen they wanted to hear them from francois hollande as well. they said this -- brewing down

security. that is exactly the speech that francois hollande gave. we will be checking with you in about an hour's time to get the latest from paris. scarlet: brendan greeley reporting live in paris. alix: for more on the attacks in paris, we want to go to patrick skinner, a former cia officer and at a group that provides security intelligence services to governments and multinational organizations. scarlet: he joins us now from savannah, georgia. thanks for joining us. extremist about how have one to of more attacks to come. how does french intelligence pursue real leads from noise? how do they go about doing that? patrick: that's always a problem even in lower threat environments. impossible to accurately cut the signals from the noise. now the chatter is through the roof. all the various ways that they are

communicating, they are probably on fire with all these talks. there's want to be a lot of talking and a lot of threats and boasting. hidden among those posts are some real threats. obviously this threat happen. it is devastating. they're going to be overwhelmed for a while. it's not just an issue of surveillance as it is understanding what you are surveilling could alix. alix: it seemed like the rhetoric was that this was indeed france's 9/11. they also pointed out that france's surveillance system is quite sophisticated after the charlie hebdo attacks last .inter what can france do within its country to prevent future attacks? patrick: surveillance is not the answer. it helps with the investigation after it happens, but it does not prevent stuff like that because you do not know what you are looking at because of the context of what happens. i think that present a long speech today was right. -- president francois hollande speech was right.

they have to change. it is not intelligent so much. they had already been on the radar. it was just a matter of will on enforcement. that got to relax some laws while maintaining civil liberties to disrupt plots earlier in this stage. scarlet: how does the islamic state want events to unfold? if they have a playbook, what is their desired outcome next week or next month? patrick: they want to create an us versus them narrative and make it between them and us. they are putting refugees right in the middle. this is why i call it a big problem with what is already a humanitarian nightmare. it is a security and political football. it's going to tara park some of the eu's unity. that is what they want. they want to create a really clear demarcation between us versus them. they want to define who us and them are. alix: thank you so much, patrick skinner. he is joining us there from savannah, georgia.

i should point out that the eurasia group had an interesting note today saying that there are 25 french intelligence agents to monitor one suspect could there are so many people and so much merriment -- manpower to monitor one people. scarlet: with all of the chatter coming in, how do you go about doing that with deconstructing night? friday alix: president obama rejecting calls for a major deployment of u.s. troops. how the u.s. government is responding to the terror attacks. scarlet: technology and social media came to center stage. will tell you how it's bringing alarming new security challenges to live. alix: financial markets around the world reacting to the terror attacks. why emerging markets saw the biggest selloff. ♪

alix: welcome back to "bloomberg markets." i'm alix steel. scarlet: i'm scarlet fu. time for a look at the business flash. marriott is creating the world's largest hotel company. they have agreed to by starwood hotels & resorts for $12.5 billion in cash and stock. the new company will have more than 5500 hotels. buffett'sarned berkshire hathaway has reduced its stake in goldman sachs by 13%. according to a regulatory filing, berkshire also cut its stake in walmart by 6%. that frees up cash for buffett purchases the aerospace maker. alix: long-term spending on private jets is starting to slow down for the first time since 2009. a study from honeywell says deliveries from now until 2025 will fall almost 4%. the reasoning is that solid big

commodity prices have hurt demand and emerging markets it -- her demand in emerging markets. you can always get news at bloomberg.com. scarlet: let us go to our market desk, starting with the hotel deal that alix steel is talking about. major news in the hotel industry indeed. marriott international says it is winter by starwood. the share price right now is down there by 6.2%. 6/10 of aown by percent here. that new hotel company will be the biggest in the world with 1.1 million rooms. one interesting thing to note is that usually the company that gets bought sees a jump in shares, but we are not seeing that right now this morning because this comes on the heels of those major paris attacks. ast hotel stock turns out well as travel stock for that matter is all getting hit today. over to retail now and urban outfitters has excellent decided that selling food may also be a

good partner to selling close. it seems that investors who are in it for the long game are not really happy about that. urban outfitters shares are now down 9.7%. we can see those losses accelerating from the open. the retail chain is buying the chain of italian restaurants and that will be added to its portfolio, which already includes free people as well as anthropology clothing stores. iscking to retail, dillards the latest store chain to pretty much tank after earnings. it is pretty much down by more a .3% after missing estimates on sales as well as profits. same-store sales fell by 4%. that was led by falls in men's clothing and accessories. investors are also alarmed that there is a 6% rise in inventory. this follows a trend across the board for big-box retailers as consumers really just aren't showing up. scarlet: a huge drop in

inventory in the first half of the year and that is causing a backlog there as well. thanks so much. at the g 20 summit in turkey this morning, president obama announced new initiatives to help combat terrorism and the wake of last week's deadly terror attacks. already a strong counterterrorism partner and today we are announcing a new agreement. we are streamlining the process by which we share intelligence and operational military information with france. this will allow our personnel to pass the information, including on isil, to our french partners more quickly and more often. alix: not surprisingly, the death of 130 people in the capital has pushed the fight against terrorism to the forefront of the g-20 talks. how to talk more about the the u.s. government is responding to the attacks is phil mattingly of bloomberg politics. about any shifts we may or may not of heard of

president obama on what is the on the table for s yria? clear that aaking sickening and terror setback occurred in paris, but there'll will be no major shift to the u.s. strategy. there are a couple of different elements on what the u.s. is doing in response and appeared there is a law enforcement element. the fbi sent a team over to help with the investigation. there is an intelligence collection aspect of it. the nsa and the cia are working with the french quarter -- counter parts. the war trying to end in syria there. military is where the biggest change has been so far. according to officials i've been speaking to, they gave their french -- the french their target list. that is what we saw last night lost theire and strikes. one thing that the president pointed to is that there's a lot of criticism coming his way about that strategy as it currently sounds. this is what you think of that. take a listen. obama: folks can pop

often have opinions about what they think they can do. present a specific plan. if they think somehow their advisors are better than the chairman of my joint chiefs of staff and the folks who are actually on the ground, i want to meet them. and we can have that debate. so as you hear there, the president making very clear that critics say,t they're not going to shift off of the current strategy at the white house and is willing to challenge them in some way. scarlet: what is the message of the u.s. administration to the french government and to europe? phil: that they are in there to help you there is a dual pronged effort here for one is on the ground and law enforcement side. u.s. resources are available to do what is needed to catch the perpetrators and to prevent something from happening again. i think broadly, and this is the message that you of

her from a number of leaders coming up from g-20 right now is that the push of the united states to have unity in the response to what the islamic state is bring to the table. that was the president's message today and the underlying message from the obama administration ,. alix: thank you so much, phil mattingly. hey, if you don't like it, take it up with my guys. scarlet: how encryption technology may have been used in friday's terror attacks. we are going to bring you that story next. ♪

scarlet: welcome back to "bloomberg markets." i am scarlet fu. alix: i'm alix steel. scarlet: technology and social media play a strong role in the islamic state's recruiting process. they also played a role in the terror attacks. alix: joining us is cory johnson from san francisco. what stood out to me is that france has some of the most sophisticated surveillance programs out there. it is by far in the western world. how did these terrorists do it?

how do they communicate on the radar -- under the radar? cory: it questions efficacy of the surveillance system run by france and the nsa and the terrorist to be able to have a tax could in beirut, the bombing ne that isisan pla is taking credit for and be horrible attacks in paris. there is a number of things. we know that isis has been very sophisticated in its use of social media as a recruiting tool . we were speaking on the air that twitter was full of congratulations among terrorist linkedand known accounts to terrorists on twitter, congratulating what happened in paris. let us see what president obama had to say specifically about that and how isis has used technology and indeed social media. president obama: these are killers.

glory who are of very savvy when it comes to social media and are able to infiltrate the minds of not just iraqis for syrians -- for syrians but disaffected of vigils -- individuals around the world. when activated as individuals, as individuals can do a lot of damage. cory: we know like countries in belgiumin denmark -- has more individuals joining isis than any other country in western europe. we have seen the efficacy that isis has been able to deliver using twitter. scarlet: social media playing a big role there. at the same time, you have tech firms and how they built encryption into smartphones and messaging apps to protect privacy. the that play into terrorist hands as well? cory: we do not know yet. one of the things picked up in one of the raids in belgium was a sony playstation for the

belgian home ministry minister said that the playstation 4 was being used by isis to communicate and that the encryption of the playstation 4 was even more difficult than anything whatsapp has come up with. that is why it has become a two of these terrorists and it's really fascinating in that regard. it might change the balance of the conversation. a lot of people who are very conservative about their notion of who has a right to privacy are using this incident to sort of say that the calls for privacy and the calls for tech companies that want to protect the privacy of their users might have a different context now in the wake of the paris attacks. alix: european governments have come down pretty hard on american companies and the worry that they will be spying for the u.s. if microsoft has a server in an area in the west. how does that change the conversation now? it is interesting because we have this attack now. i think the cost of that privacy might be an attack like this.

i'm not sure that is where the discussion is going to go. one could also make the same the of case that overreaching and spying on everyone let to companies increasing security, which made these things so private to communicate to it's an important discussion for us to have as free and open societies in this world. scarlet: good stuff. cory johnson from san francisco. alix: still ahead, stocks around the world showing pretty resilience following the terror attacks with the exception of emerging markets. we will tell you which sector saw the biggest losers. ♪ in the middle of paris, lots of people out now. ♪

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: from bloomberg world headquarters, welcome back to "rumored markets." i'i'm alix steel. scarlet: i'm scarlet fu could let's head to mark crumpton

with our news desk. president obama fighting inls to put ground troops syria to fight the islamic state. mark: he would say such a move would be a huge mistake. >> there are a few that suggest putting a large number of u.s. troops on the ground. that we have the finest military in the world and we had the finest military mines in the world. and i've been meeting with them in tense of blue for years now -- intensively for years now, discussing these various options , and it is not just my view but the view of my closest military and civilian advisers that that would be a mistake. mark: mr. obama called friday's attack a terrible and sickening setback, but said his

administration's current strategy will ultimately work . more victims of the attacks have been identified with the death toll rising to 129. the violence targeted "youth in all its diversity" and said the victims represented in 19 different nationalities. the u.s. department of defense says that france is officially off-limits for american troops and employees on their free time. that ban applies to all military personnel, civilian employees, contractors, and family members who are sponsored by a specific military command. theal spending to curb impact of climate change increased 18% last year. that is according to a new report from the climate policy initiative. spending surged 23 $91 billion with much of that being used for solar parks, wind farms, and other renewable energy projects. the debate over funding for planned parenthood intensifies, the u.s. supreme court has decided to stay out of it.

an appealave rejected by abortion opponents seeking access to internal documents from the women's health care provider it new hampshire right to life one and more information about a $1 million grant to a planned parenthood chapter in the state. and as a look at our first word news right now. you can get more on the is another breaking stories 24 hours a day at the new bloomberg.com. from the bloomberg first word desk, i mark crumpton. back to you. alix: the impact of the terror attacks have rippled across global markets. if history shows, reactions to past terror incidents have become increasingly short-lived. 20 terrorxamining attacks, it has taken the stock market 2.9 weeks to return to pre-attack levels and in most cases less than a week. from charlestment schwab in boston joins us now with more. jeff, you give us a number of

recovery time and markets. we are not getting much of a reaction at all. isf: the human toll immeasurable, but we have a long history to look at the terror attacks and impacts on the and they have been generally short-lived and that is what we are seeing today . you see some stocks, tourist and related to france, seeming to suffer. on the other hand, there is a thought that energy prices may be headed higher. by large, not a big reaction today and that is not very different from what we have seen in the past. alix: we did see every action and emerging markets, starting with dubai and trickled over to asia. why would emerging markets get hit harder than europe or the u.s.? jeff: there is the thought that rising dollars to put more pressure on them. as we get toward a interest rate

hike, it exacerbates the thought that an environment of terrorist attacks that the dollar may remain a safe even. the dollar is going to be a clear driver here. do the attacks change with the ecb does next or could mario draghi to play more stimulus than has been priced in so far? jeff: i think we will probably see the ecb move toward more stimulus, whether it is more than what is priced in is hard to say. in countries like france, the economic trajectory has been improving. manufacturing activity, consumer spending data, surveys of confidence, and the oecd leading indicators have been headed higher. it is run the issue of inflation or deflation that the eurozone is concerned. that will prompt more action by the ecb. alix: i was looking at the yield market and you can see that the 10 year yield is lower. there is more money moving to that asset. the two year yield inside of the bloomberg terminal had a really interesting day. it is up on the day.

is that the monetary divergence you are looking at? jeff: perhaps it is. the expanded qe program might be better for longer data fixed income and equity assets than it might be in terms of short-term fixed income. scarlet: i need to ask about japan because we have data showing the country has technically tipped into recession, the second time since abe has taken over. forsignificant is that investors positioning and japanese stocks? jeff: i do not think it is significant at all. it is something to be aware of when it relates to the global economy, but do not let japan's economic situation keep you from investing in japan. it is one of best performing stock markets this year. profits for japanese companies are improving. we saw companies in the nikkei exceed estimates by a large margin. companies that japan is most exposed to is doing quite well.

the fact that japan is suffering economically here probably just more on tap from the doj and a more positive for stocks in japan. scarlet: how would you be positioned in japan vis-a-vis the other markets? jeff: i think valuations there are tracked if you i will look at technology and financial companies as the most attractive in japan to overall, the country is well positioned from a secular earnings standpoint. alix: want to get your call from doug ramsey, cio, and he has been a bear of the past few months. he stands by the call but the s&p will between 5% lower from 2016 and its record high. ability ofthe companies to boost their earnings. what do you think about that call? jeff: that is not our view at charles schwab. we see volatility in the markets but i improving global economic metrics. maybe a halfill be

a percent, but that should drive better topline growth, and relate to better earnings, much better than we have seen in the past couple of quarters around the world. it is on the back of that army strike that we can expect to see better marginal performance in global markets next year could look for single digit gains for the stock market. scarlet: what you think if the market starts the press that in? we are looking at the peace margin worry and higher wages. that jeff: is more than rhetoric that i hear. certainly some concern as we see it rising labor costs in the u k and europe -- i'm sorry, the u.k. and u.s.. japanf europe and much of is a lot of room for margins to expand. they have experienced intermittent recessions. there is more pent-up demand and a lot more room for margins to improve. global: jeffrey, chief strategist at charles schwab joining us from boston. alix: coming up in the next hour, we are to take a look

across the board as european markets respond as businesses reopened after fighters attacked . scarlet: retail expected to take a negative term. we take a look at france's luxury retail. alix: urban outfitters posting earnings today. are there retro style offerings unfit for consumers? you can still listen to bloomberg radio around the world on the bloomberg radio at bloomberg radio.com. xm and stations in new york, boston, and san francisco. markets" next. ♪

scarlet: welcome back. i'm scarlet fu. alix: i'm out steel. scarlet: time for a look at the bloomberg business flash, a look of the business stories right now. energy partners are selling wholesale fuel for about $2.2 billion to sunoco. completes 5.7n billion dollars in retail business drop downs from energy transfer to sunoco in just over a year. a goes into effect january 1. energy transfer is a unit of the pipeline group, led by billionaire kelsey warraen. alix: the pentagon has told congress that the state department has approved the deal. it reflects the promise to bolster persian gulf allies to support the iran nuclear deal. wars" will have

an impact far beyond the box office. it is estimated that american toy imports will rise 11% this year. a lot of that is due to light sabers and action figures and toys from the latest installment of the franchise. the big winners are u.s. retailers and toymakers in china and vietnam. yes, i bought some. size matters not is what it says. [laughter] scarlet: i was going to say that my 10-year-old son, who just turned 10 on sunday, got a whole bunch of new star wars toys. and then you come in with, yes, i got some. [laughter] now for a look at the european overall, stock markets throughout the region are pretty resilient after the devastating attacks in paris. the cac 40. we have two mentions of the cac 40. the overall measure

of european stocks and it is higher by 3/10 of 1%. alix: volume was very light compared to its 10 day average. the euro stock was off 10% in the dax was off about 28%. scarlet: at the g 20 summit, present obama said that all nations need to step up their efforts to combat the islamic state. ryan chilcote spoke to betty liu and mark barton. ryan: some leaders would've hoped the president would have said more and been more ready to take more action in syria. what the president said was that there would be more airstrikes. there already are more airstrikes. there will be more intelligent sharing, and particular with france. he highlighted that and spent a lot of time talking about that, but there will not be ground troops in syria. to leavesent obama had early and he was under pressure because of the ukraine conflict. his vladimir putin back in the fuld? putin ifsked vladimir

there was a chance of a thaw in relations. a lot of people talking about that. he said he didn't get the sense that some countries in the west want to closer relations with russia and were prepared to deal with russia. that is understandable because there are some issues in a matter how powerful you are and how capable you are, you simply cannot decide on her own. cents that there was a readiness to work together, at least as he put it on the expert level. that means perhaps not present obama and him personally, but it was a very positive message from the russian president that he, too, and russia as well are ready to work with the west. alix: that was ryan chilcote in turkey. we want to head over to the nasdaq where abigail doolittle has the latest on travel and hotel stocks. are tradingcks higher at the nasdaq with a composite index of 2/10 of 1%. travel and hotel stocks are on the move in the wake of the parish tragedy.

this includes the online travel services expedia and priceline. shares of both stocks are trading lower as some investors feared that consumers may not want to travel to europe quite as much. the fundamentals of these two numbers made differ at these points. expedia recently said that efficiencies from the orbits acquisition will be greater than expected. it also acquired another one to bring in its portfolio. priceline on the other hand just last week said that its profit forecast for the fourth quarter is likely to be or is going to be lower than what industry is expecting by 7%. trade at a premium relative to sales metrics. it explains the discrepancy there and it will be interesting to see what happens as time goes on. , marriott announcing mabel by starwood hotels and 2.2 billion dollars in cash and stocks to great the largest hotel company in the world.

5500 hotels and 1.1 million rooms. it can help to explain why the stocks are gone -- down. marriott may have greater renegotiating power with both come which cuts into the priceline of priceline and expedia. marriott at this point has been fluctuating. scarlet: thank you so much, abigail doolittle, reporting from the nasdaq. hotel companies are part of the consumer specter. i was looking inside of the bloomberg terminal to see how consumer stocks have done. if you look at consumer discretionary companies, and this is a ratio of the index to the s&p 500, they have vastly underperformed the s&p 500 the last two sessions. how it leg lower is includes retailers and automakers and the like and how they have underperformed the broader market. alix: deutsche bank pointed out that discretionary names for spending -- let me try this again. deutsche bank has pointed out

that there is a gap between discretionary and nondiscretionary items. gap happens, that is not a great thing. it is the discretionary spending that actually is holding up the economy much better than nondiscretionary. scarlet: i wonder to what extent this chart will look like if you did not have the automakers in a good auto sales have been on fire whereas a a lot of the traditional retail items that people are accustomed to buying is not necessarily flying off the shelves anymore. alix: as part of the issue. we have minimal wage moving up and that is good for certain individuals, but not necessarily a boon for the economy because the lower income buying versus the big-ticket like a car and other discretionary items. scarlet: we will stay on the topic of free ticket coming up, the terrible events of paris will affect every retail. our next guest says terror attacks are one of the 10 risks to the luxury retail market. we will discuss.

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alix: welcome back. i am alix steel. scarlet: i am scarlet fu. alix: earlier today, we spoke with bill cohen on how the terror attacks are changing the security situation. he has been a former head of the security department and been inside the situation room. build: we have to decide what it is we want to do and what to congress. secondly, how do we do this? do we do this url the -- unilaterally or with the french or native? and then you do it in cooperation with the allies involved in this particular mission. then you combine that with what can we do to really hurt isis or isil? we can start attacking their source of revenue -- oil, by way of example. when we went after the serbian

, we eventuallyo degraded the industrial capability and that is what brought them to the table -- going after the sources of their industrial might brought them to the table. we finally had a settlement. there are combination of things that have to be done. we also have to formulate some kind of a military force that reflects the region. it cannot just be white europeans or u.s. going into and waging war inside of iraq and syria. we need to have arab countries on the ground. we need to have turks involved on the ground. we need to have the uae and others on the ground. it does not look like it is a holy war. it is not being constructed and carried out against the muslim faith. that will all be discussed in a situation room and formulate a policy that is not spasmodic and sibley responds to one terrible event that we saw in paris this

past weekend. but rather anticipating more coming. this is the shape of things to come. hitting soft targets, places that cannot be defended, weaknesses and our intelligence and immigration policies -- those being exploited. we can expect more will come in europe and even in the united states. it will be tougher here in the united states for them to penetrate it, but not impossible. we have to have a very long-range strategy and worked very closely with our allies. here i would add, russia. here's is an opportunity for us to really work with president putin. we have forgotten that almost 200 russians died in that aircraft. these are happening with such rapidity that we have become rather indifferent to the consequences. here is an opportunity for us to sit down, as president obama did with president putin, and say, how can we work together and 11 issue affecting all this? these are the kind of situations

and discussions that should take place in the situation room. scarlet: we are going to shift gears now to the luxury market and how it is being affected by friday's attacks in paris. one of the terror attacks can disrupt travel, which is travel spending specifically. alix: for more on the market and how it is going to deal with what is unfolding in paris is the second had at global goods and he joins us now from paris. that in yourng to note on this top 10 risks of global luxury goods that luxury class when people travel. what happens when a situation like this happens where a country closes its borders, but we also have people maybe being scared to travel? a clear negative. we have seen it in the past already whenever something disrupts travel and a significant matter. i think, for example, about 2003 with the sars epidemic or after

9/11 -- this caused quite a significant adverse pressure on luxury goods sales. the other thing we need to take into account is that luxury consumption is not widespread. it is lumpy and it happens and a handful of cities. paris is the number two most important city as far as luxury sales are concerned locally. paris is probably close to as bad as disruption in hong kong. scarlet: good point. after 9/11, people in the u.s. were urged to shop to keep the economy strong. spending was tied to patriotism. do you see that happening in europe and france specifically? wonder if it when it comes to luxury goods, we need to recognize that a lot of the support to luxury goods sales, especially by european sales in

europe, has come from to rest and emerging-market tourists and chinese tourists. be ank this is going to bit less relevant than in the case of the mass-market retailers that can be supported by domestic demand. it is important to ascertain what happens to emerging-market tourists and tourists in general creating aurope significant wave of demand for luxury good companies. one look at the statistics -- scarlet: go ahead. luca: when we look at the statistics going forward, we see there are a number of reasons and shanghai is one of them, but disruption in the equity market in china is probably another. towards the end of the year in november and december, airline reservations from china to europe were already sharply down. this is probably going to cause

further headwinds going into 2016i would expect. scarlet: the context there. thank you for joining us this afternoon. alix: coming up in the next hour of "bloomberg markets," we will take a look at syria and why stabilizing the conflict there will be key to fighting the islamic state. stay with us. we will be right back on the other side of this break. ♪ . .

alix: it is 1 p.m. in new york and 7 p.m. in paris. scarlet: welcome to bloomberg markets.

from bloomberg world headquarters in new york, good afternoon. what we ares watching this hour. the attacks in paris shift focus from migrants to security -- border control already has been tightened. the eiffel tower reopens to visitors, awash in red, white, blue lights tonight, commemorating the victims. scarlet: global markets remain quiet in the aftermath of the attacks. how does that fit together? alix: you need gluten-free pizza. scarlet: looks like we are off our lows and highs of the session.

amy: u.s. markets are off their session highs. we are talking about what happened in the aftermath of the paris terror attacks. the dow jones is up even more. the nasdaq nearing about the .2% gain. what might be a surprise is investor reaction in france. it did close pretty much as you can see, flat. consumer discretionary companies were the biggest laggards, but energy stocks rose the most. have been much worse, so we are seeing some resiliency. alix: earlier, you showed how markets reacted overall today. y: looking at some of the

things that happened in the past, let me take you to what happened in london, dred and mumbai over the past 15 years. back indices have bounced pretty fast. but head to madrid and you can see right after it happened on march 11 him a 2000 four, those train bombings, the s&p did not have too much of an impact overall. but if you want to look at the spain benchmark, we did see a reaction there and that did fall by more than 2%. rebounded atsee it the start of april a few weeks later. looking to the london subway 2005, bombsuly 7, there killing about 50 people. the s&p rose over the next month, unaffected by what happened. the pound had an impact and

weekend .7% against the euro and then continued its decline before recovering. so we do see this resiliency in the markets as well as currencies. now we want to check in on the bloomberg first word news with mark crumpton at the news desk. print president says he will meet with u.s. and russian leaders to discuss a unified strategy for defeating islamic state. the president addressed lawmakers today and called for the creation of a single coalition. hollande: we need more support in all fighters against isis and that is what we are doing in france, but we will need to have gathered together all the people who are able to fight against the terrorist army within a single, united coalition and we are working to

that end. and it is within that approach i'm going to meet president clinton and president obama to join forces. turkey, president obama said the u.s. had no intelligence information ahead which killedttacks 129 people. at a g-20 news conference, the president said the united states is constantly sharing information with its european allies about islamic state but had no useful information ahead of friday possible violence. there have been dozens of arrests today in paris -- 23 suspects were taken into custody in france. identified aities belgian man as the mastermind behind the violence. this symbol of paris eating relit in acer lash of red, white, and blue. splash of red, white and blue. it reopened to visitors today.

the united nations secretary-general will visit north korea this week and may meet with kim jong-un according to a south korean news agency. he's a former south korean foreign minister and said he is willing to ease tensions on the korean peninsula. 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. now on the attacks in paris. president obama stated the goal of the international community clearly today at the g-20 meeting. is the faceama:isil of evil. our goal is to degrade and ultimately destroy this barbaric terrorist organization. alix: our next guest says before islamic state can be destroyed, syria has to stabilized. our guest is a senior fellow

avenue for a relation that has decades of experience in this field. what do we need to see from the west and president putin of russia to help the cause in syria? going after isis and what the russians are doing, denying access to fuel and money, supply lines, all of those are good tactically, but the reality is there is an incredible breeding ground for this. their power is limited. i don't think they've got much more room to expand, but they have syria and to a certain extent, part of iraq as an area of a breeding ground for that. until you stabilize that, they will be able to plan these sorts of attacks. scarlet: how does the airstrikes

france's conducting helped or hurt the matter? guest: it helps that they tactically degrade the resources that help pay for the planning of attacks. deny them this incredible petri dish in syria and parts of iraq, it's going to be hard to just wipe them out is what has to happen. alix: how do you do it? way toyou have to find a find some stability inside syria. is that visiting from targeting al-assad to fighting isis? thet: i agree with administration on this one and i don't think they have a good policy, but i don't think you can have any sort of stability in syria with assad still there. i'm not advocating for invading. we looked at this after 9/11 and

said we would deny al qaeda and the taliban and safe haven. invading syria is not going to happen. we see it becomes a generational responsibility. some sort of negotiated settlement where you have many people with a somewhat common interest, you are probably going to get rid of assad but there will probably the some sort of ally running the place. scarlet: who needs to take the lead on this? guest: on the diplomatic side? scarlet: diplomatic side and military side? probably the is only country out for vengeance, but they have limited military. this is not something you can do unilaterally. to have the russians trying prop up assad, you have to have a deal worked out among the great powers to have some sort of negotiated settlement and you have to whack the resources they have. where is nato?

it seems like this was a call to nato to come to the table. guest: we have never invoked article five. after 9/11, the u.s. ambassador at nato wanted to invoke article five in the george w. bush administration said we don't want to fight a war by committee. i think declaring it a common attack would be good but nobody's going to invade the place. we have to have a diplomatic strategy coupled with a strong strategy to deny their resources. can i ask a dumb question? what happened to al qaeda? can we apply that same effort to isis? guest: al qaeda is still out there. these are not organizations like the rotary or liens.

these are people who switch sides. al qaeda one day, al qaeda in iraq, isis, it is a multi generational fight. term, it will expand. what was the trigger that enabled isis to move out with the planes coming over egypt we don'tut? guest: really know how their decision-making works and why they decided to lash out rather than just a heading their own people around them. ande they are frustrated are looking for some of you might be sympathetic. nobody wants to lean under them. and one might say whether it's coming from the russians, they are mainly focused on propping

up assad. what motivates people. they kill for the sake of killing, but why they have decided to take on a powerful coalition and bring more attention seems counterproductive. what is most likely to happen six months from now? i think it depends on whether you can bring a deal to bring a little less chaos to syria and a little less chaos to iraq. that would make it easier for coalition forces to go after the money and leadership, which is what they did with al qaeda. alix: thank you so much. moreet: we've got much coming up on bloomberg markets. in the next 20 minutes, a new move in retail -- urban

outfitters is putting its latest acquisition will satisfy consumers appetites. syrianhe welcoming of migrants has been called into question. our new border controls on the horizon? scarlet: our hotels feeling the pressure of airbnb? more bloomberg markets coming up after this. ♪

alix: welcome back to bloomberg markets. it time for the bloomberg business flash -- a look at them of the biggest business stories in the news right now.

marriott is creating the world's largest hotel company, agreeing to buy starwood hotels for $22 billion in cash and stocks. the new company will have more than 5500 hotels. scarlet: a federal judge has lawsuito toss out a vehicles claiming the could get 47 miles to the gallon. investigation sounds they only got about 40 miles per gallon. alix: raytheon and boeing will sell $100 million were the smart arms and parts to saudi arabia. the state department has approved the deal and reflects the u.s. possible promise to support allies that supported the iran nuclear deal. get more business news at bloomberg.com. scarlet: we haven't couple of company movers -- and you're looking at travel stocks in the

wake of what has happened in paris. speaking, stock markets have handled the paris attacks that are than the travel industry. priceline, trip advisor and expedia are sharply lower. priceline down by more than 4%. advisor, not doing so bad but expedia is down by 2.6%. priceline is trading at its lowest in more than a month. carriers from hawaiian airlines to delta are feeling the travel print -- the travel pinch. france was the most visited country in the world last year. he got about 84 million tourists , but travel fears are extending to airlines that don't service the country. also looking to travel on the

high seas, carnival and royal caribbean cruise lines also down. carnival extending losses and royal caribbean down by 1.4%. definitely travel stocks are doing worse than that paris cac. it was actually down nominally, by .8%. we have a good story on bloomberg.com about the growing resiliency of stocks to terror attacks. scarlet: thank you so much. want to touch on the general idea what we are seeing in the markets. we had the selloff at the end of last week. some key technical levels, breaking below the 100 and 200 day moving averages. i want to look at the damage done -- if you look at the title, this is new york stock exchange stocks closing above a 200 day moving average.

this decline here -- the decline we saw at the end of last week's -- last week means the stocks that are performing well. in terms of technical levels, we have fallen low the 200 day moving average and we have been bouncing around this 100 day moving average. that's the 50 day moving average that is currently the support line. a lot of people looking at 2010 levels. alix: still ahead, urban outfitters is getting hungry. its new purchase of a philadelphia restaurant group is a unique move. scarlet: a strange move, i think. ♪

scarlet: welcome back to bloomberg markets. i'm scarlet fu. i'm alix steel. traffic at brick-and-mortar

retailer hasn't posted positive growth since the first quarter of 2012. how can come election profits? scarlet: urban outfitters just announced and unconventional acquisition -- they are getting into the food business. you can bet there will be plenty of questions there. let's head over to carol massar and cory johnson for more. carol: i've heard you say it's an interesting and ought move on outurban outfitters are with earnings after the close ended by a restaurant chain. we want to welcome everybody on bloomberg tv to bloomberg radio. this is a strange move. what is urban outfitters up to? they make and sell clothes? they are going to make and sell pizza. is this part of their core business and investors seem to say no. but there's the counter

narrative that people are spending more on restaurants than apparel, so this might not be a terrible investment. cory: this seems bonkers. are good at doing anthropology, maybe you should stick with it. restoration hardware has a similarly that he planned to open up some cafes and restaurants in their big new megastores. this seems like it's going -- restaurants are hard enough. -- lindsey: it's a chance for retailers to provide more reason to go into their store. they are putting them in the alons and cafes, you do little shopping -- it has worked for restoration hardware. cory: maybe they can put some auto parts supplies and maybe

dog grooming. food, mayrew up the they lose the customer for the clothes. departmentest: stores have had restaurants for a long time. think about bloomingdale's. it's not so far out of less feels -- left field. they do report earnings after the closing bell and we have seen a bunch of retailers come out with really disappointing outlooks. is this a distraction play when the company reports? guest: people are not expect adding a lot because retail has been clobbered last couple of weeks. nobody is reporting great earnings. macy's and nordstrom's lead the way. if the traffic is bad and nordstrom, it's not going to be great at urban outfitters.

that remains to be seen after the bell. cory: here you have a retailer with pretty consistent growth, but the stock is down 50% in the last six months or so. which part of the urban outfitters brand are doing well? guest: for a while, anthropology was the guiding light. the urban brand needs to come back. it is their biggest brand it may have been struggling to get all three brands to fire on all cylinders at the same time. investors will be looking to see anthropology start growing again and urban to start improving as well. in and outve walked of anthropology in my 12-year-old daughter likes the brand a lot, but what is their chief competition? guest: urban outfitters goes up against the teen retailers.

but they are up against the whole mall. anthropology is adding more home goods, so that helps them diversify their assortment. clothing is a difficult thing to sell. your competitors are the entire internet. the fast fashion thing has to be a challenge, especially for those cheaper brands. guest: you have to have differentiated products and that's what they are trying to do with adding more home goods. that is maybe what they are trying to do with this pizza chain. carol: what do you ask on this call tonight? are wondering if you are opening them in the stores or if they are standalone pizza chains? how are you going to integrate this into your business and what is your vision? everybody had talked about urban

potentially doing some acquisitions and i don't think anyone expected this. are they still acquisitive and will it be more traditional things? carol: urban outfitters down about 9% right now. thank you so much for joining us . urban outfitters has their earnings after the closing bell. you come inside the bloomberg terminal, you can see urban outfitters doesn't make a lot of acquisitions. the last acquisition it made was in 2008 when it bought a nursery for garden supplies. alix: what was the assumption? we will be right back here on bloomberg markets. ♪ 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 bloomberg world

headquarters in new york, welcome back to bloomberg markets. thelet: let's start with first word news with mark crumpton at the news desk. mark: in belgium, prosecutors have charged two suspects in connection with the deadly assault in paris but said additional searches have failed to yield additional suspects. the identities of those accused of carrying out the attacks have not then revealed. one of three brothers linked to the attacks in paris said he and his family could never have believed one of our brothers was involved. he was released from detention in brussels today and is the brother of a 26-year-old fugitive, the subject of a manhunt. a third other died during a suicide attack. in france, the french president said hugh ask parliament to extend his country's state of emergency. it would extend police powers and limit public gatherings. today, he addressed lawmakers and outlined details of friday's

assault. : whatent hollande happened on friday is something that was decided upon and planned in syria. it is something organized in belgium and it was something carried out on our territory with the complicity of french people. there is one aim to these attacks -- to spread fear and terror, to make sure we will be divided and to exert pressure from acting in the middle east in our fight against terrorism. that he told parliament the u.s., russia and france must come together to defeat islamic state. in turkey, on the sidelines of the g-20 economic summit, mr. obama called the attacks a terrible and sickening step back

against -- setback against islamic state but called on critics to expand the military campaign. the united arab emirates has taken five yemeni prisoners held in guantanamo bay. authorities determined they'd no longer opposed a threat. the prisoner release drops the inmate published at guantanamo to 100 seven. harvard university is alerting students about an unconfirmed bomb threat. at least for buildings have been evacuated. all the buildings have been cleared and law enforcement officials are on the scene. it is the third bomb scare at the college today. 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. and: it is evening in paris a little more than an hour ago, the eiffel tower reopened to

visitors. ands awash in red, white blue lights as the nation continues to mourn victims. scarlet: there are many unfamiliar roads ahead on national policy. our economics: respondent, brendan greeley, joins us from paris. the french president talked a lot about civil liberties in his speech this morning. what did he layout? the speech was a real barnburner. he had to get one thing accomplished -- speak to two people off stage. one was nicolas sarkozy who may be running against him in 2017 and the other is marine le pen who will definitely be running against him in 2017. friends -- france has much more generous surveillance powers after what happened with said he hebdo" and he

was looking for a constitutional change, to change the way the president declares a state of emergency and looking to strip someone of his passport and looking to change the rules of engagement for police. these are sweeping powers and he does have a constituency, even his own on the left over that he needs to address. people are scared. alix: how long does he have? when is the next referendum on his ability to govern? now, there a time mutedidarity and you have responses from marine le pen and nicolas sarkozy. he does have regional elections, not for the presidency, but in the regions of france coming up in december. that's when we will see if the polls have budged. marine le pen is at 30% in terms of popular support and we will see whether these attacks have nudged these numbers up for the

right or far right. one of the paris attackers is thought to have snuck in to the eu through greece along with --lions of migrants thousands of migrants. scarlet: here for a look at some of those issues is the of european practice at eurasia group. 9/11, the u.s. stepped up anti-terror efforts with the patriot act, tightening borders with the help of mexico and canada. how does europe step up anti-terror efforts? it is difficult for europe to do anything akin to what the americans did post 9/11. i think you will see more cooperation across intelligence agencies, but that's only likely to have an impact at the margin. there is a lot of concern about

the integrity of eu free movement, but i don't believe for now that the treaty or the borders are at risk, because free movement of people demonstrates important symbolic value. fundamentally, this is what the european union is about. i think that we -- i think there will be pressure from germany keep thee to commitment for open borders. i think you will see more ad hoc spotchecks at the borders. the treaty allows for that to take place but it does violate the spirit of the treaty. but that is the world we are in following the attacks on friday. when you look at hungary and slovenia, they basically build fences. what do you think the escalation may be at the check points and how much worse could it actually get? guest: there is a risk regarding the eu's approach to the

migration problem. that consists of many elements. the most important is a redistribution scheme to relocate 160,000 migrants that have come across the border from throughhe sea route libya and across turkey, through greece. there's a lot of concern in central and eastern europe about absorbing these refugees and the fences are in response to what is essentially a german-driven holocene to relocate and redistribute these refugees in europe. harden in theto aftermath of paris and carries fundamental implications for angela merkel who has staked out a very little -- a very liberal position on this policy. stepet: what is the first european countries need to do to prevent the attacks from dividing them further? guest: very difficult.

one has to address the roots of the problem and that's taking germany and france to turkey as well as to syria. with turkey, there are 2 million refugees on their side of the border and a large amount of concern about what that would mean for europe were those 2 million to come across the border. syria remains very unstable and there's concern that a additional 3 an million migrants may come across the border, using turkey as a transit into europe. what can you do to address that problem? it's very difficult. there is a move to co-opt the president of turkey and get him to integrate syrian refugees. it doesn't look as though he's going to be particularly constructive. anda remains very volatile is more a function of what happens between the iranians of the russians and the saudi's than the europeans having serious agency over that question now.

this is not to associate refugees with terrorists, but that connection is being made. you saw the hungarian prime minister make that connection today. you brought up angela merkel and the position it places her in. the quota to bring in more refugees -- what do you rate her former ability as right now? right now, she is delivering her party around 35%. she had been delivering north of 30%, so the edge has come off a little bit. that said, the christian democrat party recognize their performance in state elections and federal elections in 2017 is fundamentally tied to merkel. they are somewhat tied to her.

loyalties are beginning to become much more divided and the parties hierarchy is beginning to challenge her a lot more over her policy and anything to what happened in paris, if that were to play out in germany, there's got to be a question regarding her political survivability and would call into question whether she could remain in power. scarlet: a lot of incumbents are having to look over their shoulder right now. group listedurasia the top risks for 2015. european politics was at the top of the list. was this how you envisioned it would play out? has been verys divisive. we saw that in greece where there was something of a nexus dental crisis that permeated the country in the euro area. an x essential crisis that permeated the country in the euro area.

in a very divisive conversation, regarding how these refugee flows should be managed, if you layer on top of that the risk the u.k. leaves the european union next year and there's going to be a vote on this country's membership next year and if you layer on the challenges and greece and what's happening in the south with portugal and the terrorist attacks, this is not a rosy picture for europe heading into 2016. you take the 2015 risk and we are layering on challenge after challenge which, frankly speaking, european leaders do not look equipped to be resolved. alix: thank you very much. a conversations that is just beginning. coming up in the next 20 minutes of bloomberg markets, is airbnb the hotel killer it was thought to be? morgan stanley says think again.

alix: we will look at how the paris attacks may have undermined confidence in europe and what the fed will think about that. scarlet: and we have an exclusive interview with the ceo of starwood capital. ♪

scarlet: welcome back. it's time for a look at some of the biggest business stories in the news right now. a maryland congressman wants to question for valiant employees about the company's relationship a mail order pharmacy and remained in with its operations.

transfer partners is selling fuel and retail marketing assets for $2.2 billion to its affiliate. it completes the retail business drop down and goes into effect on january 1. three -- energy -- microsoft will use minecraft to teach children programming. more than 100 million children have tied -- have tried out the popular coding tutorial. you can get more business news at bloomberg.com. attacks far, the paris have not had much adverse effects here. there was an

terrorting article about attacks having impacts on regional exchanges but the recovery has been fairly quick. after a nightclub bombing in jakarta in 2002, your -- indonesian stocks fell 10% but the losses were erased and the market ended the year up 8%. in madridas similar when bombings on commuter trains left hundreds dead and the index fell but were back to pre-bombing leaders jet -- pre-bombing levels just three weeks later. the about the impact on economy question mark that will matter to the european central bank and the fed. michael mckee has been looking at that and joins us now. we saw duringing 9/11 here as well. michael: the economic impact of terrorism and -- terrorism impact is about the same as market impact.

it's going to look a lot like what you were looking at -- this is consumer confidence. a sharp plunge after the 9/11 attacks but you can see the rapid rebound we saw. there wasn't much of an effect on the overall economy. it was barely measurable once everything was put together. goldman sachs has a comprehensive note on what to expect. they are saying tourism and tourism is likely to fall. they say the overall economic impact is likely to depend on whether there are any more attacks that will keep the psychology depressed. us a littleh earlier here, the ecb chief economist agrees. things can have a transitory effect on the economy. see the evolution of the european economy, it is true on the other hand that we have a

fragile recovery with downside risks and these events do not help. michael: given that and that france is the second largest economy in the eurozone, it takes it likely the ecb will ease in their december meeting. call it an insurance policy. scarlet: what about the fed? does it cite china this time? -- an economicd crisis round the world has become an almost annual event. this is a chart of ceo confidence and their willingness to invest and hire and what it might mean for policy. crisis and the government shutdown in august of this year, china blows up, almost all of those having an impact on the fed. each time confidence dropped,

the drop was smaller. that's because companies and investors have more and more confidence the fed will act to take care of the economy if necessary. happens, itlse probably doesn't affect their decision on whether to raise rates. one analyst noting yesterday that it doesn't change the fundamentals of the u.s. economy. higher lows as the technical analysts like to say. impact might be the trickle through in the currency markets. the euro has been a safe haven but it has not had the risk aversion team. a stronger dollar does the ecb's job for it. investmentcouple of houses are calling for the euro to be at parity with the dollar. we talked to a number of currency experts today who said the is going to happen is

euro is going to get weaker and the dollars going to get stronger, but that would have happened anyway. moving ahe fed is different way, it would have affected the timing and you get a much more effect is euro more quickly and it helps the european recovery. of next year, we could see the euro back up 120. scarlet: central banks a attention to the markets in the markets pay attention to headlines and headlines create uncertainty. you kind of have this virtuous circle or vicious cycle that creates an interesting situation for a lot of banks looking to ease, the ecb among them. michael: they all have their own separate albums. the bank of japan coming in worse than expected, but at point, it's going to take more than just his attacks to really affect what is going on.

where you could see an impact as if it has a political impact on the willingness of the europeans to take in the refugees. we saw that happened during the three issues when the eurozone seemed ready. to come in again, you would see markets react. as you pointed out earlier, they went down relatively quickly. there is an impact longer-term to the refugee crisis, in some ways, germany needs the refugees because they need the workers. are we going to see that in the euro area if that door is shut? michael: probably not because the reason you see the door shut is fear. the economic argument is not going to penetrate that. it is a tough job for angela merkel and those who would like

to see the refugees taken and on a humanitarian acis and because they need additional workers to replenish their workforce. scarlet: michael, our economics editor here at bloomberg news. killer? airbnb a hotel we have research that says not so much. ♪

alix: welcome back to bloomberg markets. scarlet: marriott is buying star word -- starwood hotels at a deal valued at $22 billion. it's been a tough time for the company with sales down 2% and

net income estimated to be down 20% alix:. the hotels compete with each other but what has also made their lives for gold is airbnb. morgan stanley conducted a survey to see how much airbnb is a drag on hotels. when they took a survey of what airbnb is replacing, half are replacing hotel space. 36% is replacing 30% is-breakfast and extended home state. only 4% said they would not travel if it wasn't for airbnb. scarlet: so clearly it is not as dad as many people bought. it, 12% of who uses leisure and business travelers use airbnb. we are looking at 18% over the next two months and a slower rate of adoption or business travelers, which is good news for the hotel companies. alix: why don't certain travelers like airbnb? part of it is privacy concerns and safety concerns.

59% have never heard of airbnb. awareness. scarlet: awareness is the biggest obstacle right now. here is how morgan stanley see this -- sees this playing out. they see growth in hotel occupancy stagnating. that is the blue line that trip soft. alix: they like hotels. airbnb not the kind of threat we thought. coming up, the ceo of starwood capital will be our guest stephanie ruhle. and we will have the ceo of marriott. lots more coming up on bloomberg markets. we will be right back. ♪

david: it is 2:00 in new york, 8:00 in paris, and 3:00 in hong kong. welcome to bloomberg markets.

from bloomberg's headquarters in new york, i am david gora. the u.s. and france vowing to eliminate the islamic state aspirations wonder how long it will take before their lives return to normal. marriott and by starwood hotels for $12 billion. starwood capital barry sternlicht joins us in a few minutes for an interview on the deal. and berkshire hathaway cutting a deal in walmart. why the company is backing up its cash. ramy inocencio has the latest on the markets. ramy: good afternoon, we are at session highs, looking at the markets, a bit of a surprise. the dow and s&p reaching toward gains of 1%. the nasdaq is up