betty: good morning. here is what we are watching. stocks fluctuating after the retreat in energy shares offset positive energy -- positive earnings reports from home depot and walmart. and the navy working with french warships on targeting the islamic state in syria up it we will hear from tb in pickens about the future of what we are all watching, which is oil, after the genetic price decline over the past year. we are about a half an hour into the trading session. i want to go to the markets desk. julie hyman has the latest. julie: things are fluctuating. between gains and losses. we saw a big gain in stocks yesterday for her not much change as we are seeing it today

. we had better than estimated economic data this morning. largely, inflation getting closer to the fed's target of 2% . with saw industrial production overall falling, that manufacturing zynga first gain in three months. overall, the economic data was a little bit better. we have the sectors on the move and this sort of push off and pull with utilities dragging things down. health care and consumer discretionary helping to support gain spirit, not it is our of the story. the weight from energy and copper worth mentioning. copper prices at a six-year low. gold is trading lower today. crude oil falling by 1.5% after gaining yesterday and ahead of tomorrow's inventory report. that is the drag we are seeing on the markets. betty: but retailers are holding

off, aren't they? julie: yeah, and that is why consumer discretionary is one of the better performing groups. walmart is a big part of that. betty is going to talk with shannon pettypiece in a moment about those walmart numbers. shares are rising almost 3%. third-quarter profit topping estimates. the company raising the lower end of its annual forecast. the ceo has been trying to turn around the business, particularly the u.s. business. he appears to be making progress. home depot, there was all this concern last week about department store earnings -- were people going to department stores? the home improvement side has been holding up pretty well. people doing work on their homes here and that continues with home depot. shares of 3% after profit topped estimates. same-store sales of 5.1%. that is ahead of what analysts estimated. home depot is not really opening

new stores them as a that number is good for them. retailer doingce very well. as they build inventory, when they tried to some of the discounters at a better negotiated price. with numbers that topped estimates and providing a forecast that is relatively optimistic. betty: thank you so much, julie hyman. i want to check in with vonnie quinn -- with vonnie quinn. vonnie: thank you. we certainly russia to the said if planes fire crude missiles at islamic state targets in syria -- there will be a briefing for president vladimir putin, who is ordering russia's maybe to work with france to fight the militants. areu.s. and france targeting islamic states after the paris attack. secretary of state john kerry met with president françois hologic paris to john kerry is even and the tragic aftermath of

the attacks, progress is being made against the militants. secretary kerry: we have taken our leaders. we have of liberated -- we have liberated some communities. [inaudible] working with turkey to close the last portion. there is a clear strategy in place. i'm confident the momentum will take up. tense: paris is still after the attack last friday. 16 people have been arrested in paris since sunday. two suspects are still on the run. president hollande will meet president obama one week from today and with vladimir pugin two days later. france is asking the eu for security help. cameronemised or david wants to use the islamic state in syria. france bombed militant targets

there last night. britaine minister of says that they only need nato's ok. once again, the eiffel tower has closed. no word why the landmark is shut down. it reopened yesterday following friday night's terror attacks. it was lit in the colors of the french flag last night. russia is offering $50 million to find out who brought down one of its airlines. a homemade bomb broke the plane apart over the egyptian desert two weeks ago. all 224 people on board were killed. that is the first world news right now. you can get more on these and other breaking stories 24 hours today at the new bloomberg.com. betty: thank you. vonnie quinn at the news desks. we are weeks today from an expected fed rate hike. some market advisors suggest the nation is in pretty good shape. >> the u.s. is in really strong

shape. the u.s. consumer continues to show us just a little bit more strength everyday. do not think you can bet against the united states of america. betty: bearish investor doug ramsey feels the opposite. 25%ow predicts a 20% to drop in 2016 from our may peak. the chief investment officer of leuthold joins us from them it -- for many apple is good use of the same thing in august, but then the us of the rallied about 13% from their. why this time around? carriedrally certainly a little further than we expected. first of all, as far as the debate on fed policy, we would contend that all of the tapering aves from 2014 -- it has been

year since those in did, but there were seven of them. they constituted tightening. you got traditional reactions to those moves in terms of emerging markets underperforming and small-cap stocks on performing -- underperforming. some of those tapering moves are working through the economy, and you are seeing the impact in terms of the greater disparity in stock market action. betty: you are seeing more volatility. say thatyou rightly since the taper tantrum, we have seen shining in the credit markets here the equity markets have still rallied from there? why are you calling a correction human what is going on right now? >> it has certainly gotten more narrow. the dollar and the s&p looks solid. the average stock has lagged behind. i would argue that the internal peak of this market was probably around year end 2014. when you look at transportation

stocks and deep cyclical groups in late 2014 popping out. most of your equally weighted measures and market measures topping out in march or april. i think we are working on a topping process, and we're closing of to a height now in ie s&p, 4% away or so, and think we can make a new cyclical high in the us of the. the issue is that a lot of things when i joined the s&p at a new high. betty: what is peaking in your view? peaking process -- i would argue it has been underway for many markets -- many months. i have not brought up high-yield bonds, the high-yield bond market, which was more accurate than the equity market and 2007, that peaked out in the summer of 2014. we have seen cyclical stocks, small-cap stocks, the average

work foliar to the extent that you probably do not own exxon mobil are these big tech stocks. the average portfolio is lagging behind very badly. that is a typical narrowing process and to the final bull market peak. it is a process that could carry on a number of months before you get that final narrow high in the blue-chip stocks. an average portfolio is lagging behind those blue-chip averages. that eco-you say -- betty: you say we will see another cyclical i perhaps in the equity market. but next year, easy as falling 20% to 25%, right? >> yes. the notion of the s&p breaking out to a new nominal high, it is certainly possible. i'm just at allowing for that because we are so close to it. message is ag

topping process is underway. whether you want to play a final leg up comes down to your risk tolerance. i have mainly talked about -- butaction, but let's what set the table again was some of the tightening that was already in place. timesp 500 is at 1.8 sales. it is the second highest valuation peak in history outside of -- 12 months either side of the tech bubble peak of march 2000. betty: why do you market price to sell versus price to earnings? they were not that highly valued. i agree -- ati agree, but we look several factors. i am not trying to cherry pick

something. the issue is profit margins are incredibly high read so you get p/e ratios that understate the degree of overvaluation in the marketplace. and we are at 5% unemployment. wage pressures are picking up. ratios.inly look at p/e but as it pulled away from the bottom line, price to cash flow, price to sales, things look much more pricey than on a he she basis. betty: why are we going to fall 20% to 25%? why? valuations are higher than any other time. 24 months surrounding the tech bubble peak. we have already had some tightening in place. we have profit margins that are likely to go nowhere but down. we have certainly had very disappointing earnings this year. i think we started out with a

forecast of 103. now we are 106. profit pressures are already underway. it is the message of the market, the fracturing of the market, the weakness in the cyclical groups, the small caps, overseas. those tell is that economic conditions are going to be week or next year. we are not going to wait for slogan -- for a slowdown in the economy to get defensive. we are defensive now. betty: thank you so much for joining us. doug ramsey making his case on a bear market here in 2016. much more ahead. ofmart reporting a beat profits. a sign of progress of the ceo's oil strategy. will be sitting down with the spirit and we are month injured -- monitoring two events. francois hollande in paris.

russian president vladimir putin is ordering the russian navy to work with france to fight islamic militants. in washington, paul brian is holding his weekly news conference. he may talk about a task force .n syrian refugee legislation those headlines and more smart coming up. ♪

betty: good morning. welcome back. i going to head to our markets desk and julie hyman. julie: i was talking a few minutes ago about some gains in retail today. talk about the negative side of the equation. urban outfitters is falling for the second straight day, now down 13% tiered and fell

yesterday after announcing it was buying a piece of chain, and unorthodox move that was not greeted favorably by investors. after the close of trading, it reported numbers be revenue hello what was anticipated. same-store sales of 1%. it was short of what analysts anticipated here with today's losses on it is a pretty ugly chart over the past week. big declines of more than 30% as if the last week on those weak department store sales. and it is the weather conundrum sportingn for dick's goods. we have heard that the warmer than seasonal weather has manned people were not shopping for the same kind of items and with the same volume in stores. the stock is down 17% after its numbers missed. we are seeing other sporting goods, athletic apparel, a lot of declines across the industry today. all sing, under armour

big declines as a result of this. betty: thank you so much. julie hyman at the markets desk. let's stay on retail. withl giant walmart stronger than expected earnings. look at how the market is responding. good news for a brand that has seen shares clients. it is up about 3% now. it plunged about 40% this year. the ceo pushed to improve the u.s. stores and revenue at walmart. >> we will grow the company faster. we will add between $45 billion and 60 going dollars of revenue to the company and the next three years. that is a lot of growth that happens to be on a big base. betty: joining us is shannon pettypiece, who covers walmart and retail for bloomberg. what was behind these better numbers? -- non cope for one,

shannon: for one, nothing bad happened. we have seen disappointing results and expectations coming out of walmart. so maybe it was a sigh of released -- relief from investors. they beat by a penny. same-store comps were of more than expected. it is not great. but when you look of the other retailers, which julie was talking about, and as we have seen with macy's and nordstrom, there are ugly numbers coming out of retailers. so it is better than expected with some growth, and i think that was enough to give investors a little bit of confidence. betty: how does it set walmart up for black friday and the holiday quarter, the most important quarter? shannon: going into the holiday, of course people wanted to know about this. they have put a lot of emphasis on improving the quality of their stores this year. putting more people on the checkout, cleaning the stores, better customer service, more

associates here they have bought real big for black friday. they are offering some big discounts. they're doubling down on the idea that black friday is still an event. they expect a lot from that. what is interesting is they said one of the weakest areas in the store, one thing that was down, was electronics and entertainment, which is typically on the holiday christmas list it's a maybe people will come out and buy a tv or a new tablet. there is a said there has been a dearth of new technology, new gadgets. nothing like a new ipad or new iphone or a new technology for your tv that makes you really want to upgrade. with that going into the holidays, we will see how that goes. betty: are people saying that maybe the worst is over? now it is just more about execution. it is a possibility. last month, they laid out their

strategy for the next three years. a lot more guidance. it was not pretty at all. --t year, they said earning they thought earnings would drop as much as 12%. at the cut of got that out. now it will be a little while before you can really tell whether they are on the right track. past $1big company trillion in sales, as this company does every year, 4600 stores -- it is a big company, so it will take a lot to turn around. now maybe the turnaround can begin. betty: i am sure a lot of walmart investors want to know. thank you so much, shannon pettypiece. still ahead, we're going back to the streets of paris to talk about the sweeping security changes proposed in the region and what it means for the refugee crisis there and here in the u.s. ♪

betty: earlier today, neil ferguson from harvard and mohamed el-erian discussed whether the middle east and other gulf states can join together. >> where is the leadership? everybody looks to the u.s. for the leadership. if you're going to coordinate a broad-based response, you are also going to need a conductor of that. tom: you can see him words there was in the distance. >> the uae is not the problem. let's talk about wholesale terrorism, not just retail terrorism. let's talk about the years over which the saudi's, to public and private funding, have supported ism throughout the

world. tom: how do we change that? >> leverage. the saudi's have a very weak position policy. the war is failing. the economy is in deep trouble put pressure on them. tom: do you have any optimism? >> if you want to continue to govern the world's largest gas station, we need to tell them to stop financing extreme jihadism. , the wholesale terrorism is the real problem. betty: for perspective on the ground in paris, i want to go to brendan greeley. hollande just wrapped up his talks inside unesco. heard fromat we just neil ferguson was the extent to mixh this -- it is a unique of both foreign terror and

domestic terror, elements from belgium and syria, elements that grew up right here. what we heard yesterday from francois hollande, which got a lot of support here in france, was to make a constitutional change to the way they handle emergencies. he wants to combine estate of urgency with a state of siege am elements of military control and civil law that requires a constitutional change to how they approach things. this is what he said yesterday. it has gotten a good reception. even the far right did not say much more than, well, this is an acceptable change that you have made, mr. president. what you have seen is that the entire country has shifted just a little bit to the right. that francois hollande proposed yesterday was a plant -- i think i am losing you. i will throw it back to you. betty: ok. i know that it is quite noisy there where you are at the

square. we will check back with you in a little bit when things quiet down. that was brendan greeley, who has been live in paris over the last several days in the aftermath of the attacks on paris. we have got much more head still on bloomberg television. would end 2015 around $70 a barrel. that, a long way off of still struggling around $40 spirit what are his latest predictions? we're going to hear from oil tycoon t. boone pickens, the founder of bp capital. that is coming up next. ♪ , .

betty: live from bloomberg's world headquarters in midtown manhattan, you are watching bloomberg television. good morning. i am betty liu. let's start with first word

news. vonnie quinn. for thebuilding support crackdown on the islamic state. francois hollande confirmed today in paris with secretary of state john kerry. john kerry says the current strategy targeting the militant's behind the paris attacks is working. we have gained: more territory. we have taken out leaders. ,e liberated communities tikrit, communities in syria -- three quarters of the border in northern syria is now under the control. we will be working with turkey to close the last portion. jets attacked islamic state targets, and russia says it launched cruise missiles at militant targets.

a cease-fire in syria might be weeks away according to secretary of state john kerry. , syrian opposition leaders are accepted to name a delegation to negotiate -- next month, syrian opposition leaders are expected to name a delegation to negotiate with syrian president bashar al-assad. a battle over funding for syrian refugees could lead to the next shot down -- next government shutdown, in fact. urgingcan senators are adding language that would block plans to take in 10,000 syrian refugees. 25 republican governors have vowed to keep syrians from settling in their state. nicaragua is trying to close its southern border. costa rica has given the cubans transit visas after they enter the country through panama. they're hoping to make their way to the u.s.. on sunday, nicaragua and troops fired -- nicaraguan troops fired tear gas at refugees.

president obama is in manila. his first stop was a symbolic one. he toured a navy ship that has come to represent philippine resistance to china over the disputed south china sea. china does not want claims to the sea over the agenda, -- on the agenda, but the president says it is likely to be discussed. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. i am vonnie quinn. betty: thank you so much. today marks the last day of the robin hood investors conference in new york city. it has been -- not quite business as usual. a lot going on. the two-day event is a gathering of business visionaries and features top names in business and flattery. stephanie ruhle and erik schatzker are there now, and they are joined by bp capital founder and ceo t. boone pickens .

stephanie: thank you. we are here with one of my favorites, t. boone pickens. we have to sit down to talk about oil, and the last time you said prices would be at 70. santa claus is knocking on the door, and that is not where oil prices are. stephanie: -- mr. pickens: we are not in the end of the year. stephanie: you see a big recovery? mr. pickens: i feel like the guy that fell off of a 10 foot floor -- at the fifth floor, he says i am not dead yet. i'm trying to make a joke out of may be a bad call. if i am off, i may be off by six months. stephanie: can you hold tight until then, or are you willing to say this is a bad call and i am going to sell? we have reduced

positions, so we are in a mode where we still have, you know, powder, and we are out in the market right now. --out of the market right now. stephanie: you are out of the market right now? mr. pickens: yes. erik: meaning what -- no exposure to -- mr. pickens: wti. erik: wti. if people see you selling, should they interpret that as capitulation, or something different? mr. pickens: no, i haven't -- i had it right, and we shorted it at $98. then we had it wrong. we believe we saw the bottom. we did not see the bottom, so we losses,k in long, took and are now out waiting for an entry point again. erik: would you short it in the meantime? mr. pickens: no. i have had enough short right

now. the short was good to me. no, i do believe we go below 40. stephanie: i want to talk about oil exploration companies. you sold out of larger companies like apache, occidental, but took stake in smaller companies. where is the opportunity? mr. pickens: they would recover more quickly. pioneer has so much acreage held by production. that means they do not have to develop it. pioneer can develop at the pace they want to, not developed -- whatever. they can hold their acres. the others are just like pioneer. those, but we thought we had seen the bottom, and we did not, ok? and the reason, i think where i missed -- i am the guy that missed -- is the decline of production when the rig shutdown was not as severe as i thought it would be. yes, we're coming down.

we are down 500,000 barrels a day. so, we are 5% down from the 9.6 million barrels we were. 9.1, and in to another six months, we will be down at least another half million barrels. erik: is that why you do not think we will see oil -- w ti, drop below 40? mr. pickens: yes. erik: there are people that believe oil could briefly drop under 20, $25? where are they wrong? mr. pickens: we will see. i think supply is tightening up is what is happening, and there is no question when prices down, demand goes up, because it is cheap. you buy an suv. all you women by suv's? stephanie: all you women? mr. pickens: women by suv's. i do not have to haul kids. stephanie: because women, they

have to haul kids? what? -- wewhere is it going have seen the industry, shell oil be are more elastic in its response to price, right? you can't turn on production pretty quickly, too, were not? -- or not? mr. pickens: you have to drill it, is that what you are saying? we have wells that have been drilled -- pipes set, and not perforated and treated, ok? there are number of those wells. erik: you can turn those on quickly. mr. pickens: those, on pretty quick, but to say you turn them on and off -- no, you cannot turn them off. erik: no, but you can turn production on -- in other words, if people stop drilling, they can start drilling again pretty quickly, as long as you have funding. mr. pickens: there was one that

came out yesterday. a week to the deal. it will take you some time to get back to 9.6 million barrels. you will have to drill wells to get there. it sounds like you are very skeptical of the people that say the industry will bounce back once oil prices crossed $50, $55, that the u.s. oil industry, with a shell oil industry -- the shell oil industry will bounce back as fast as it is now receiving? mr. pickens: yes, i think it will bounce back. what will happen -- i think before you see a lot of rigs comeback in, it will be at $65, $70. stephanie: i want to talk about keystone for a moment. the last time we sat down you when,t was not if, but with regards to keystone, and you just tend an op-ed criticizing president obama come his leadership. give us an update? mr. pickens: question for you.

stephanie: ask it. mr. pickens: who was the most transparent president of the united states ever had? stephanie: ronald reagan. mr. pickens: i'm talking about the one who said he was. stephanie: president obama said he was. mr. pickens: over and over. obviously he was going to turn down keystone for seven years. why did he not pull the rug out --bad idea? stephanie: you're saying why did he string us along. mr. pickens: why did he string the canadians along. they are the best partners we have here -- have. stephanie: i agree. mr. pickens: he should have told. -- told him. it will be done. a democrat is not going to win in november. stephanie: hold on. the potential election -- you democrat will not win.

the last time we sat down you did not think hillary clinton did not make it to a starting gate. mr. pickens: i have three more things i have not been right about. i think we will run out of time before we get to all of my dad productions. i did say obama state had a good football team. stephanie: you did. but you do not believe hillary clinton will be the next president? erik: who will be? mr. pickens: a republican. stephanie: who will that be? -- pickens: rubio and cruise the other ones that are on top -- trump and carson, i somehow believe they will not make it, but that is on the one i said. stephanie: you are a supporter of jeb bush. mr. pickens: i gave carly money. i have given carson money. stephanie: but not donald trump.

he does not want money yet. mr. pickens: that is right. he loaned me money. erik: lady think would be best for the country? mr. pickens: best for the country -- a republican. erik: of those people we talked about. mr. pickens: bush is fine. bush is trained for the job. he cannot get traction. nobody can criticize him, which is good. he is a good, clean, honest patriotic man. a wall tablett on -- a clean sheet of paper, ok, and you put down scandals bush -- no scandals. ainton, page five, wait second, page six. scandal, scandal, scandal. i mean, the bush's are clean. it does not look right now as though jeb bush will take the nomination. mr. pickens: i have to agree with you. erik: so if you have to choose

between carson, trump, rubio, cruz, who would you vote for? mr. pickens: i would vote for whoever you give me, but i did not answer the question. erik: you did not. mr. pickens: if that is the four i have, i would vote for you -- rubio or cruz. stephanie: why do you think jeb bush has not been able to tell the story? he has all the credentials. mr. pickens: i do not know. it has not caught on. maybe it will. he says he is not through. he has money. he has his team. let's see. we are a long way from nominating. i say that, but we are not that far. i mean, you are coming up on february as i want. people that win iowa have not won elections. i do not know when anybody won iowa and won the election, right? santorum won it one time, and somebody else.

it does not play out that way. new hampshire -- it is a little bit of a better predictor. we will see how it goes, but there still is a lot of time. let's go back to how you are positioned. we know what your call was on oil. this point you are out of wti. what are you long -- what are you looking at -- this conference is about investment ideas. what matters to you most, what are you betting on? mr. pickens: the only thing i know is oil and gas and i know more about oil and gas and these people at the conference -- this conference because they are not oil and gas people. these people are investors that are making money. i am an oil and gas guy not making money. why in the hell did they have me here? i am old -- erik: what will bounce back faster, oil or gas? mr. pickens: oil. i do not know if gas ever bounces back. erik: really? guess is that money?

-- dead money? mr. pickens: there is so much natural gas. it is a killer. you have wells that will do 30 million a day. let me tell you -- i have had half a dozen -- haven't had half a dozen wells in my history that will do 30 million a day. erik: put that in perspective. mr. pickens: they would do 50 if you open them up. those are good wells. stephanie: you said in the past we will change regulation here in the u.s. and we will be allowed at some point to export oil and gas. mr. pickens: sure. stephanie: when will that happen, why hasn't it? mr. pickens: when you get a republican president, that'll happen. stephanie: there you go. potentially next year. when i give you a word, what is your immediate response -- fracking, what you think? mr. pickens: good. erik: often should

--octogenarian. mr. pickens: good. you have made it. [laughter] stephanie: warren buffett. mr. pickens: smart. stephanie: activist investor? mr. pickens: me. get this. i will be with carl icahn this afternoon, and we will do a podcast. i will say carl, i was there before you where. he will say no, i was never number two. i am older than he is. carl, a good guy. stephanie: does it surprise you that activist investment is the asset class du jour now? mr. pickens: it is. activist investor -- most, i would say, 75% of the time are better. they will make something happen. stephanie: a good activist investor. mr. pickens: what is a bad activist investor? stephanie: one who fails, who

does not understand how companies should operate. we've seen good investors like bill ackman sale investments like jc coming -- jcpenney. erik: i would like to know why you are not doing what others are doing like carl, in freeport mack brown, if you are the original greater? mr. pickens: i do not want and i had to happen and a and of having to run a company again. i have done all that i want to. stephanie: what is your one piece of advice -- your leadership advice. trump, if talk donald he is the next president, what would you tell donald trump? mr. pickens: i would tell him to relax. ming down he is cram too fast. ," and heyou to say "ah will stuff it down your throat. let me have a little distance. let me think about this. are you the man?

you do not need to come in. i will make the decision. stephanie: there you go. last person -- vladimir putin. mr. pickens: i think, when you look around the world for leadership, he looks like he is the leader right now. i mean, the guy does not do anything without a plan, and i think he definitely has -- this is something that is worth talking about four three minutes. he was kicked out of the middle east in the can 73. stephanie: vladimir putin. mr. pickens: yes, well, russia was. now they come back in. it is like "hey, come over here, see what we got." he is back in there. he is sitting right there in mideast oil. let's clarify before we start. i'm not talking about opec, but these countries are members of opec, but not all of opec. mideast oil and russian oil is half the oil in the world. putin needs money bad.

and $40 sick economy oil, and if you look to see what the cost is, he needs to produce about 10 million a day. saudis are producing 10 million a day, and the saudis are losing $500 million a day. too.utin is, here we are. who got hurt in the drop? opec, and the u.s. producers. that cleaned up the street. who got helped in it? everybody else -- the u.s. economy -- it was like a shot in the arm with cheap gasoline to the u.s. economy. so, there you are -- putin needs money. he is back in the middle east. maybe he is persuasive enough to a compass what he wants. i do not know whether he will try to get tough with anybody or not, but he is capable of getting tough. he is a leader. he is going to get results. results for him -- he has to

have a better price for oil. stephanie: wow. erik: i should say so. stephanie: i did not think we would end on that note, but we did. t. boone pickens, thank you for turning us. always great to have a conversation with the one and only t. boone pickens live from the robin hood investors conference. do i so much. mr. pickens: i have run -- thank you so much. mr. pickens: i have run that. betty: he certainly speaks his money -- mind. someone else's speaks his mind, jack vocal, the founder of vanguard, the world's largest provider of mutual funds, still going strong. 196as brought in 100 -- billion dollars worth of inflows through last month. joining us now is the vanguard found no jack -- vanguard founder jack vogel. he joins us now from boston.

at a time where we keep hearing this money is on the sidelines, index investing seems to be the way to go. how long you think this is going to last? mr. bogle: i think it is just the beginning. i really do. i get letters, phone calls, e-mails from investors every day, and it is the way for them. they have been doing it for years, and they have done better than they imagined by getting their fair share of market returns. people should understand, it is not very complicated. there is a market return out there. we divide it as a group. if you take a tiny cost, like vanguard's is usually as little as 51 hundredths of 1%, you get almost all of the market return. it will cost you about 2% a year, and you will get 90%. so, it is the math and the spirit of the day. betty: well, jack, i think you have obvious the been on the forefront talking about higher fees and how much that is

robbing investor returns. i think others are listening to you. blackrock, for instance, which competes with you for these inflows, have also turned to reducing their fees. i'm in, on their etf -- some of the etf's are much cheaper in cost to investors. might we start getting into this ,ace to the bottom for fees then, jack, partly brought on by you? mr. bogel: well, i do not know if it is a race to the bottom or a race to the top, but certainly the existence of vanguard, the way we do things, operate as a truly mutually operating cost, we set a standard. what people like blackrock will do is pick out a small handful of funds, three or four, i guess, in the recent blackrock case, and price it a little below us. they cannot get much below five basis points. the big funds that are their bread and butter, they leave them at their high costs. it is a marketing strategy. it is not bother me.

i do not think it is a durable strategy, but that is up to blackrock to figure out, not me. we have seen several hedge fund managers cut back on stock holdings, and i believe you gave an interview recently with morningstar saying the same thing -- stocks -- it might be harder to see bigger returns in the stock market. so, how do you match that up with telling people to invest in index funds? is bogel: well, the reality index funds will be better than actively managed funds, so if you want equities, the place to go is the index fund. that is what is happening in the industry. money is pointing to index funds. moaning -- morningstar data $450 billion coming in to index funds. activelyng out of managed funds. it is not an allocation

decision. it is a change in the investment units. betty: right, but jack, you do see these returns in stock markets, that we will not be able to repeat them next year? at bogle: well, i never look a year, ever, ever, ever. a year is based almost entirely on speculation. when i look at the next 10 bers, i look at it to dominated by what american industry produces and what american industry produces is a dividend yield, which is now 2%, and earnings growth which might 8%as high as 6%, an investment return. i look for lower pe's to take that down to about 6%, because the speculative return will be difficult to maintain. i look for 6%. i think i told morningstar the baseline was 4%. there is no difference between the two. this is not a desperate -- decimal point business at all. they will not be as good as history, but stocks will, in all

at the cut, do better than bonds. betty: we will have to keep it there. that is up and you have been espousing for some time. e, the vanguard founder, joining us on the phone. we have much more ahead on markets -- on bloomberg markets. switching gears, actually, to mn &a., m join us from brian kelly, the founder of the website that helps consumers find the best travel sector we're almost going to a you go there for a moment. excuse me. so, how are the points going to match up between marriott and starwood? mr. kelly: that is the billion point question everyone wants to know. they have not released details. my guess is they will not operate to separate programs,

but they cannot merge them overnight. starwood has a lucrative credit card deal with annex. marriott is with chase. they cannot dissolve the program. i suspect in about two years or so they will merge the program, and that will be winners and losers on both sides. betty: ok. who are going to be the big losers -- that is what i want to know. mr. kelly: starwood points are the most valuable point currency today. they transfer any really good ratio. you can use them for events at a lot of starwood members, myself included, are nervous that when you dilute it into a gigantic mega program like marriott, you will lose value, and, frankie, mergers are all about creating -- frankly, mergers are all about creating efficiencies. i do not see marriott's seeking the program. betty: we'll have a few seconds here, ryan, but should you be cashing in your points, or do you want to hold on? mr. kelly: absolutely. points hoarding is an epidemic. they lose value over time.

actually, take a minute, and use those hard-earned points. betty: all right, cash them in. it is time for the holiday spirit you can buy some stuff, too. brian kelly. thank you. much more on bloomberg markets after the break. ♪ ♪

betty: it is 11:00 a.m. in new york, 4:00 p.m. in london, and 11:00 p.m. in hong kong.

welcome to bloomberg markets. from bloomberg world headquarters here in new york, good morning. i am betty liu. here is what we are watching at this hour. police in germany make more arrests in connection with the paris attack. we will the latest on the investigation and manhunt. then we will tell you which jobs on wall street are poised for the biggest swings in pay this year. who will get the most, and who will lose? a new challenge -- we will look at why the female libido drug is not doing well. we are about 90 minutes into the trading session. i want to head to the markets desk where bloomberg's julie hyman has a look at how we are struggling in the market. well, we have stopped struggling as much. it is an unusual movement. the major averages are higher by about a half percent across the board. if you look at the intraday

chart of the s&p 500, you will see what has happened here. initially, we had bouncing around in a very tight range above and below the unchanged line. about a half hour ago we saw stocks take off. it does not seem like there is an obvious catalyst to the turn around, vonnie: the we had relatively strong news on the economic front with factory output rising for the first time in three months. we also saw consumer prices post their biggest tech to back gains since the spring, getting closer to the fed's 2% inflation target. there seems to be a sentiment that the economy is on relatively strong footing if, indeed, the fed will raise funds in december -- rate in december. this looks at the interest rate increase probability. we are now looking at 68% for the month of december been priced in. here is the trajectory of the change we have seen on the

bottom chart here. it is a little lower than it has been. still, it has been holding right around the 70% mark. betty: also, we had inflation data. how did that affect the bond market? julie: we see an effect there with rates going higher, selling on treasuries on the lower and shorter end of the car. the 10-year yield is up 2.3% today, the increase in yield as people are selling in the wake of that data. on the two-year side, a significant move there, up two basis points to .80% in terms of .88%ield on the -- 88% -- in terms of the yield on the two-year note. the dollar is that a seven-month high against the euro as we got this data. the euro is falling. 1.06. it was 1.07 earlier. we continue to see the declines there. betty: thank you, julie hyman. i want to check in on first word news this money.

courtney donohoe has more from the news desk. courtney: we focus on russia today. a vladimir putin says france is an ally in the fight against islamic state. can -- vladimir putin put naval forces to work with french ships. meanwhile, russia has launched cruise missiles. revenge after confirming a bomber took down the russian jet in egypt. an islamic state affiliate claims it blew up the plane. meanwhile, french president francois hollande, who met with secretary of state john kerry today, heads to washington next week. he will meet with president obama on tuesday, and then goes to moscow to meet with vladimir days later. in germany, special forces have arrested five people suspected of being linked to the paris terror attacks. the arrest took place near germany's border with belgium. at least three of the suspects are foreign nationals.

once again, the eiffel tower has closed. there is no word why the paris landmark bashar down. the tower reopened yesterday -- landmark has shut down. the tower reopened yesterday following the terror attacks. a powerful winter storm blanketed the rocky mountains with several inches of snow overnight, forcing the cancellation of more than 200 flights in denver. forecasters said to 10 inches -- six to 10 inches of snow could fall in denver before the storm pushes east into kansas later today. that is a look at first word news. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. i am courtney donohoe. betty: thank you. john paulson might be on the same page with carl icahn when it comes to breaking up the insurance company aig, but he is also open to another alternative .- that is selling aig units according to people familiar

with his firm's thinking, the billionaire hedge fund manager would support a sale of assets. what is the plan that john paulson would support? >> he supports a plan that keeps aig as a property casualty company because if it was it would not be a systemic institution. no life insurers are. if you hold the light -- fold the life insurance unit, it takes away the designation. about worryou get $3 billion in asset sales from shedding the life insurance units and another 6 billion from the mortgage unit. sonali: one thing, it would traded higher multiples. it would traded at 33 billion instead. people are willing to pay premiums for these assets, so

the idea is why not take advantage of that and start to sell while you can, really. has aig commented on this possibility? sonali: southern -- said there are no cyclic cows, some people start to look at what to buy and that can be in big chunks, globally -- it could be really, anything, not. is a little more dramatic than what aig has said the war that they are willing to do, but -- say no sacred cows is not promising the company is going to be together then. sonali: absolutely. absolutely. they: give us a sense of size -- how big is the property-casualty versus life insurance? sonali: the pnc is bigger and has more of a global reach. hancock has really made

his career at aig in the property-casualty unit. they would sell to consumer clients, right? they have a big business. they see it as a $44 billion business. that is 11 times next year's earnings. they would still need to cut a lot of cost. this is still aig, and a lot of the same problems still exist, but if you get rid of all of the other businesses, you can still focus and shed the fat. betty: we know that icon and peter king -- carl icahn and peter hancock have met. do we know what he thinks about this idea? sonali: we do not know. it is different. he wanted three different pieces. if you had life insurance trading sever the committee would still be a $33 billion company people could invest in, but if you start to cells assets, it would be a different copy. the verdict is not out yet -- company. the verdict is not out yet. betty: it is certainly not out.

sonali basak, thank you so much. staying in finance, jobs are headed for big pay swings this year. this is the time of year when bankers are talking about bonuses. they want to know how much they will make and take home by the end of the year. this is a big year for m&a bankers, while high-yield might be disappointed in their paychecks. we are looking at wall street winners and losers this year. who are going to be the winners? michael: we have this report from a reporting from the does this annually, and this was the year to be a health care banker. we have seen a ton of big pharma deals. they predict them to be up 20% from last year. betty: a 20% rise in the bonus? michael: in total compensation. betty: total compensation. ok. michael: a lot of this follows the business trends we are saying. high yield has had a tough year,

distressed debt has had a tough year. those people will likely be down. betty: are they going to be down 20%? how far down are they going to be? michael: some groups, depending on how they did, could be down as much as 20%, 25%. betty: wow. michael: these are big swings at the md level. health carede of bankers, who else is likely to get a big paycheck? traders,derivatives and there is always a fight for talent in that area. even though fixed income broadly has been down, you saw some activity in rates because of central banks, because of the, you know, speculation, will they, one day -- rates options traders will probably be up. that has been an area where they will be -- they will be fairly strong. it has been a little bit across the board, but investment

inking, particularly -- banking, particularly m&a has been a standout. betty: what about equity trading versus fixed income trading? michael: equity traders, on average, are projected to be up for the third straight year whereas fixed income is down for the third straight year. fixed income, historically -- the traders there have been paid more, so this is closing the gap over the last three years. we have seen that on revenue and you see that on management. you see some of the equity management take over whole trading divisions. they are restructuring, putting equity guys in charge. betty: and in part of the survey consumerhird of bankers would trade their 20% pay for better work/life balance. michael: yes, the hypothetical -- what would you trade a 20% bump in pay for? some of the junior people would take that work/life balance. betty: how about not working

until 4:00 in the morning and sleeping under your desk? michael: right. it was higher among investment bankers, but the old the generation just said give me the money. betty: they paid their dues. michael: right. i have been through it. betty: give me the money and let me go. michael, thank you so much. michael moore of bloomberg news. coming up next, valeant's biggest problem -- it turns out the female libido boosting drug they launched is no viagra. what the company is saying today about it. --nce ripping up security as wrapping up security as french president francois hollande announces france's at what with the islamic state. we will take you lay -- to paris for the latest on the investigation. thus, france's second-biggest airline easyjet hits record profits for the second straight years. with people not showing up for flights following the pairs attack, will it hurt the bottom line? much more on bloomberg markets.

♪

good morning, and welcome back to bloomberg markets. it is time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. for the first time in three months, factory output has risen. 4% incturing rose october, beating estimates, as factories made more cars and domestic materials. consumers are keeping the industry afloat. the stronger dollar and weaken global demand has heard overseas sales. the so-called core cost-of-living rose last month. inflation, at the consumer level, minus food and fuel, was up 2% for the second month in a risingowing prices are

closer to the rate of the fed inflation target. toyota first fuel-cell vehicle has come to the u.s.. last month, toyota sold 34 in california, the only state where it is available. the price tag -- $58,000. toyota argues hydrogen-powered cars are a better solution to clean air regulations than electric cars. here that, elon musk? you can always get more business news at bloomberg.com. let's head back to the markets desk where julie hyman has a check on some of those companies in the energy space. julie: let's start with oil and talk about the ripple effect. oil prices are down today. they had a rebound yesterday about 2.5%. it was short-lived. now down by 1.8%, ahead of the weekly inventory report which comes out tomorrow. there are concerns about the ample supply out there in the oil markets. with the decline today, i was looking at the month of november. we have only seen three of days for oil this month, down about

12% over the course of the month. it has generally been a negative tone. also, natural gas has not been following as much -- falling over the course of the month, but it is falling today by nearly 2%. i want to talk about oil and natural gas related movers. we are seen analyst calls as well. just big energy, which has been one of the worst-performing stocks in the s&p this year, down another 4.5 percent today. it was downgraded from neutral to buy with analysts talking about the effect of lower natural gas prices on the company, also saying the second lien loan might not create equity value. southwestern energy was also , ingraded over at stern ag this case, to underperform from neutral. there is a risk to natural gas prices. they also talked about southwest having balance sheet deterioration. corporations

downgraded. analysts are talking about continued deficit spending in a -$70-oil environment. betty: far down below that. thank you, julie hyman. well, ladies are a paneling not buying it. the new women libido boosting pill is what we are talking about. addyi -- in fact, prescription is a -- the number of prescriptions in the first two weeks is a whopping 227. drew, valeant owns the drug. they bought it from the company -- drew: sprout pharmaceutical. shortly after it was approved, they paid about $1 billion to buy the drug. it has been on the market for three or four weeks, and the demand has been really, really low. betty: really low.

why? drew: there are a couple of things. if you are a doctor, you have to do a 10-minute long training course, but then you have to fax a form in. it is a little bit of a pain. the other thing, despite a ton of attention in the press, online, and anything like that about this drug when it was originally approved, i think when women go -- from the doctors we spoke with -- when women go and talk about the drugs and with the side effect -- you cannot have alcohol because there is a risk of thinking and low broad pressure. --is not terribly effective blood pressure. it is not terribly effective for a lot of women. many are making the decision that this is not the drug for them. betty: and they have to take it every day? like viagra.ot viagra, when it came out in the market in the first month in 1998, half a million prescriptions for the drug. it flew out of the door. betty: pfizer owns viagra? drew: pfizer owns viagra.

you heard a similar amount of hype and interest, but not even anything close to that kind of demand by women going to the doctors. betty: ok, does this look like valeant overpaid? betty: it remains to be seen -- drew: it remains to be seen. it will be a much slower launch than other sexual this function drug sweep have seen. valeant paid $1 billion. they were never thinking it would be a multibillion dollar a year drug, but it is not a fairly chump change either. i think we will see a much slower ramp up, and frankly -- has been in the news for a lot of other reasons for some of the troubles may have had. we will have to see how those problems read through to this drug. betty: that is exactly right.

have they been so distracted with these other issues, the perhaps it not put enough marketing muscle. they've been distracted. drew: i think they have about 150 sales reps working, 35,000 og be white ends, 50,000 primary care doctors -- a lot of people to get to. yes, there is, at some point, or another, going to be a wrapup in the marketing. sales startly see to pick up then, but so far, the lunches been slow. betty: juwan staten, thank you. be on it have a clock p.m. today. you do not want to miss that interview. ♪

betty: it is time for the bloomberg business flash on this fall afternoon. a look at some of the biggest stories in the news right now -- greece has reached an agreement with european creditors and economic measures so that he can get its next batch of bailout money, including a $10.7 billion injection. the top finance official says greek creditors have reached a deal. it also reaches -- final discussions on resolving the debt burden one step closer. volkswagen is audrey -- offering discounts, but it is not enough to keep sales from following -- falling. the lost shares in october, the first full month since the emission scandal came to light. dealers in germany offered customers an average of 11% off the ticket price. overall carl, while sales were up. back in the u.s., u.s. attorney

-- new york attorney general filed a lawsuit to stop draftking this from operating in new york. order to keep an them from operating. says the ag has wrongly characterize their businesses as illegal sports gambling. you can always get more business news at bloomberg.com. now, we are moments away from the european close on this tuesday. londonrton joins me from for the next half hour as we drill down into the markets. it has been another day where we have seen stocks rally, right, mark? mark: what a day -- the biggest increase for the stoxx 600 and six weeks, or it could be, when the markets close in a matter of minutes. it is fascinating looking at the french stock market. you will remember yesterday the cac 40 finish down by 1/10 of

1%. look at it today -- every single stock on the cac 40 rose today. the biggest decline or yesterday was the europe -- europe's biggest hotel operator. see companies like louis vuitton, christian door, the big decliners yesterday on concerns that france's terror attacks friday will dent tourism. consumer spending -- there are no decliners on the cac 40 today. i will be focusing again on events in paris. of course, brendan greeley is on the ground as francois hollande, the president, faces continuing pressure after the second terrorist attack in 11 months. is pledging to flout budget rules as it wants to increase spending on security. we did have inflation data today in the u.k.. in fact, there is not much inflation. we have a problem of deflation. betty: yeah. mark:lly: inflation --

inflation actually fell. core inflation is an inch the topic in the u.s. as well, isn't it? betty: the focuses back on the data, and core inflation numbers again signaled that the fed is probably right in wanting to raise rates next month, so we will see. mark: which leads to the question, betty, when will the bank of england --how soon will the bank of england follow the fed? core inflation here except to 1.1%. betty, the markets are just about to wrap for the day, it could be the biggest increase in six weeks. the european close is next. ♪

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. betty: welcome back. it is 11:30 a.m. here in new york. at the top right here, i want to

bring in mark barton in london for the close. mark? mark: europe is still set for the big rally here the index rebounding. the european closed right now. ♪ betty: we will take you from new york to london to brussels in the next half hour. tell us how the markets are about to close. mark: this is the market everyone is focused on. up by two point 7%. investors shrugging off geopolitical concerns. overorst terror attacks in a decade. also a contributing factor, falling to a seven-month low. 3.5 billion pound acquisition of

cable and wireless communications. highly inquisitive, as we know. betty: we had inflation numbers out in the u.k.. .ell me the takeaways mark: we have got deflation for the second month of inflation. mark carney likes core inflation. highlighting brazilians within germany. the domestic economy is strong. good u.s. just the eu core inflation figures today as well. betty: we did indeed and we will talk about that in a few moments. donohoe has more from

the news desk. courtney: we look to france first. the french president wants the u.s. and russia to join forces to defeat the islamic state. they will make the case next week. met with secretary of state john kerry. next tuesday, will speak with president obama and the white house. meeting with russia's prep -- president vladimir putin. today he told the russian navy to cooperate with france like they are our allies. corporate events in paris following the terror attacks. startup airbnb are among those who have curtailed events. a survey by the business travel coalition found a few percent of companies will probably cancel some trips to france. john kerry says a cease-fire in be weeks away. the secretary of state says an

agreement would be a big help in the fight against the islamic state. syrian opposition leaders are expected to name a delegation to negotiate with president bashar al-assad's government. to takefire is supposed effect. greek authorities say at least nine people including four children died when their vote overturned near the island. they were trying to cross into .reece the coast guard says they rescued seven people. to presidential politics, hillary clinton is launching an attack on bernie sanders's health care plan. campaign says it means higher taxes for the middle-class. sanders says it will help in the long run. you can get more on these and other breaking stories 24 hours

a day at bloomberg.com. from the first alert news desk, i'm courtney donahoe. betty: dropping to a seven-month low as we saw, the ecb executive board member said the executive bank credibility is at stake. >> you have to absolutely make sure that your inflation and dictations remain anchored. that would complicate dramatically if markets would revise structurally the long-term expectations. betty: a possible d anchoring of -- ition expectations found -- sounds like it may grow more fuel on the fire. mark: you can take his comments as dovish as it leads to the case december the third where literally is being counted down to. strategist joins us now.

when an ecb board member says there is a risk investors at the tumors will lose faith in the ecb's projections for reviving that a member basically telling us to get ready for more stimulus in december? >> i think so. i think the comments on bloomberg are very important. you mentioned a dangerous cocktail you just referred to. i think there is an acknowledgment there is a cyclical economic recovery going on there, but they also understand the downside risk. more portly was the focus on inflation expectations, the oil prices make a new low that will weigh on that. it will certainly be very difficult. getting back to a 2% inflation -- >> you are questioning whether qe is the best approach for the

member? what is wrong here? >> it goes back to whether the monetary union is optimal or whether the one-size-fits-all interest rate and exchange rate is suited for countries as diverse as germany and greece and it clearly is not. it has been a long-running argument. more recently, sticking with the greek debt crisis, there has been a growing division between creditors and debtors. the debt is now higher and it is much more difficult for the debt companies to get their way out of that mess. it is a real problem. the migrant crisis and the terror attack, some are talking about the fidelity of the current form, particularly given the free movement to labor, a key pillar. now under challenge for obvious reasons. betty: if we see the ecb

contingent as a stimulus, where is the euro going to go and does that mean we will see a euro-dollar parity this year? >> parity is certainly undemanding. the top side of the range is probably around 115. the line in the sand for the ecb and anything above that would be very hurtful for exporters out of the eu. draghi'snk with mr. comments, he is likely to reiterate they will be prepared to review their options. one of five is the key technical support level. if we could punch through that, parity is on the cusp. betty: we saw our own inflation data, the first in three months

in the core inflation. look like we are hitting the target the fed wants. was it surprising to you? >> i think the market certainly lined up for a december rate move. i think the best way to think of it is it is clearly on the table. donenot think it is a deal. some economic numbers have been disappointing. by the year on year rate increase, very nearly zero. if it keeps going, we will repeat this curious seven-year cycle we have seen in the sector back in 2002 and 2009. that is slightly worrying. my thesis has been the fed is getting boxed in and maybe it left things too late and maybe it should have moved earlier and with the dollar factor within international developments, maybe they're running out of room to really motion through any serious interest rate increases. mark: core inflation is mark carney's key measure.

he released his quarterly inflation report. headline inflation is going in the opposite direction, minus point 1%. are you and advocate of core inflation and have you always been? is this the new index measure? >> it may well be. headline inflation will keep weakening because of reduction in the oil pricing. our carney's right to look at underlying measures. the -- like the fed, the bank of england has left interest rates too low for too long. the banking system is fine and i think there is a case for formalizing interest rate policy. give me a month. economists are more bullish. >> i would have done it last year. the markets are more bullish. rightfully highlighting the downsides such as china.

perhaps less worried about that. mark: give me a month? >> february 2016. indeed. mark: there you go. first bankary, the of england rate hike. that is a big call. say you have to bring him back to make sure he actually made the right call. i'm glad you pinned him down on that. much more is ahead on bloomberg markets. theill go back through streets of paris for all the public reaction and the sweeping security changes proposed in the region and also, what does this crisis inhe migrant europe days after the attacks in paris? we will be back. ♪

mark: welcome back, live from london. this is the european market close. the ftse 100 had its biggest gain since october 5. the biggest gain in six weeks. betty: that is right here the markets really did light up today in europe. it is now time for other stories happening around the region. business flash, some of the biggest stories in the news right now. feeling slightly less confident heading into next year and still, the overall sales look remains favorable. the index went to 62 this month, down slightly from what i was reading. conditions are good rather than poor. janet is urging congress to

reject more oversight of the central bank. the house votes on a proposal this week that would require the fed to establish a formula that would dictate how it adjusts diplomacy. they say it would hurt the overall u.s. economy. enrico -- on retail, the news today after the stock was crushed last month. the world's's largest retailer posted profit better than expected. plus walmart increased the low-end of the annual forecast and shares are up today your last month, walmart said the earnings would fall as much as 12%. fall ahead of the holiday season. attentionturn our back to the paris attacks. mark: declaring france is at war here.

a new coalition against the islamic state. he asked for sweeping changes on the ground there. he is under political pressure and his credibility is at stake after the second attack on paris a month.nder >> i had someone explain it to me a nice way. he said what we saw on friday is the end of indifference. towardss have changed surveillance. they rolled out the plan they will present. the prime minister will present at the parliament. . constitutional change what they are doing is combining , adding some military powers

into the way they handle a state of emergency. that change was suggested by a committee put together by nicolas from the right several years ago but it was never tenable in france until just now. the speech he gave, sweeping changes in domestic policy is suddenly something france is willing to hear. betty: it is indeed and it has certainly changed the game quite . bit what about on the politics side? how is that already changing? >> we know looking toward the regional elections in december, everyone knows it is in the background. what we expect on sunday is relatively benign words and a on theely muted reaction right.

what is interesting is since the speech yesterday, they have not been able to come out forcefully anything against him because he has taken ideas from the right and basically presented their own ideas that to him. it is hard to say whether that will have an effect on the elections in december where he is not expected to fare well. mark: thank you for joining us. toheads to moscow next week meet with obama and discuss the next move. let's move in on brussels. i know spending on refugees by e-mail or states is being monitored very closely. >> it is being monitored extremely closely. a lot of things are happening in belgium in the wake of the paris attacks, president hollande signals -- excel the budget deficit. the commission says refugees spending by eu nations may receive some reprieve from budget rules.

here's what the commission vice president told bloomberg earlier today and brussels. five for cop -- so far, countries additional refugees plans. some other countries may follow. we will be looking on substantial increased expenditures. austria, italy, belgium, impact on thethe budget with extra spending on the refugee crisis to for more, i want to bring in joan in brussels to what kind of budget relief are we talking about? >> we have pretty strict rules within the euro area in terms of what kind of budget deficit you

can run from year-to-year. it is usually 3% of gdp. that is the limit, the feeling they put on it. of course, the refugee crisis is an extraordinary event and there has been a lot of spending on already and it looks like it will continue to be heavy spending to do with the crisis. it is unfortunate because we have the financial crisis with the big impact on the budget deficit and we're just getting in on that. refugee crisis is one of the biggest factors, one of the biggest things we have to deal with here. at the same time, we need to stick to some kind of budget. mark: france said it will disregard the eu's budget rule to increase spending on security. how is that going down in brussels? >> is the same kind of situation.

brussels is very sympathetic to what is going on in france. it is a tragic occurrence and they have to do something to deal with it. it is too early to assess exactly how much spending they are going to need and what impact that will have on the budget, but earlier today, it also said they will look at france and see what kind of leeway and what kind of edge they will give france going forward. reportingnk you, joan from brussels on the extra spending the nations are asking for on the refugee crisis. i want to turn back to what is going on here in the u.s. because our stocks are still trading. abigail has more live from the nasdaq. abigail? abigail: thanks. stocks are trading higher there. too stocksn watching

trading in the red all morning. the company missed third-quarter estimates sending shares lower. looking so far is worse, suggesting the fourth quarter could be off to a rough start here there are two downgrades out there. advisory market reform from outperform, saying a lack is not yet passing results and across all brands, it could. foras been a rough year stocks. shares are down 44% year to date. betty: thank you so much, abigail live at the nasdaq. mark, what do we have in store? mark: we spoke to the chief executive who is confident that traffic will bounce back after the attacks in paris. why the shares have fallen even though the company reports the

six year record profits. we will endeavor to find out next, stay with us. ♪

, ony: the european close bloomberg television from london earlier this morning, carolyn discussed the air carrier's earnings results as well as the impact on the attacks in paris and air travel. >> i think it will not change the way we do business but i think it will be reassuring to passengers that not just the u.k. government, actually we have theensuring airport security is tight as it can be, so they are auditing and sending in their own experts. i think that is to be supported and we certainly support that. does she have evidence to back that up that this will not have a big impact on air travel?

>> she was saying today that they are seeing some no-shows and that people are taking advantage of the offer to reroute if they want to. also pointing out the fact that after the bombings here in london and september 11, there definitely was a traffic rebound and people continuing to want to travel. mark: shares fell despite six year record profits. what happened? >> little concern about crossley. one analyst is just saying, maybe there is not that much excitement and they want a little more fun and positivity and enthusiasm for what happens next year. mark, remind us, the european markets finished well today on this tuesday. matt: your -- mark: european

stocks all finishing higher today, shrugging off geopolitical concerns following the terror attacks in paris. i want to tell you what i'm watching here tomorrow. pearson obama addresses the 21 to preserveking u.s. influence in the region. also, china property price data for october release. the city's in of 17 months, thanks to purchase restrictions and very quickly, do not miss our interview with the ceo, the network equipment maker is close to defeating -- we will see tomorrow. ♪

>> welcome to bloomberg markets.

scarlet: good afternoon. i'm scarlet fu. alix: more arrests made in connection with terror attacks. moore are not welcome to we will talk with the international rescue committee ceo who says refugees are not a threat. alix: we will talk with the cofounder and president of lift, john zimmer. i want to get you started with a snapshot. welcome back. alix: