betty: good afternoon. i am betty liu. here is what we're watching at this hour. stocks are really struggling for any direction today after the fed filled rally we saw yesterday. jobless claims are hovering around four decade lows. basically failing to take off in trade today. -- allergan could be brought in what could become the drug industries biggest deal ever. in the pastf rally areh, energy's shares struggling to stay in the green. why the outlook could get even worse. we are about an hour away from the close of trade this thursday. i want to head to the market desk where julie hyman has the latest that is the scene today, we just could not carry the upper direction today. julie: we could not carry a

downward direction either. not changed.re has a mixed picture between them. pull we arethe push experiencing here. not exactly equal, red and green, interred data in terms of up and down. nonetheless, declines in energy and health care are definitely dragging down the overall averages, putting pressure. take a look at oil prices and you will see what is going on with energy stocks. off theil has come off lows, still lower. sachs, in agoldman worst-case scenario were mild weather continues in the u.s. and europe, we could see it fall to as low as $20 per barrel, causing some concern. in terms of health care, these stories all day, united health backconsidering scaling the informal care act.

allergan getting closer to a deal but will they face resistance from the administration in terms of the tax aversion status potentially of such a deal? utilities are the best performers? yes, they are doing the best today. it looks like what is going on in the bond market. yields on treasuries and utilities tends to move inversely. the fed minutes yesterday are being read to mean that we will see a gradual case of interest rate increase. 2.25% on the 10 year. we are seeing the longest rally in price decline in yields since august, three straight days since we have seen people on the longer end of the curve, meaning the yield is moving longer. also i look at the u.s. dollar as a result of all of this as well. a similar direction here, down versus its peers. betty: thank you, julie.

now let's get a check of the headlines on the bloomberg first alert news this afternoon. mark richt it has more on the news desk. mark: thank you. the escalation of airstrikes against islamic state targets inside syria and iraq. he has received help from cyprus's foreign minister who says he will accommodate any french request to use the main airbase permissions. earlier this week, president aland called for a global coalition to fight the militants paired after initial conflicting reports, french officials confirmed the man they believed attacks inast week's paris is dead. killed in yesterday's predawn raid in the paris suburb. he was a belgian authorities described as an islamic state operative. there were reports he was plotting another attack and had been linked to another four foiledailed terror plots

by french authorities. president obama is promising to threaten a veto to tighten the refugees.of the vote total is enough to sustain the veto. the bill would block syrian and iraqi refugees from entering the united states unless four top law enforcement and security officials tell congress the refugees are not a threat. byee americans held captive shiite rebels in yemen's capital have been freed. the state news agency and officials in yemen says the u.s. state department asked him to bring the americans out of the country. americans had been detained for at least two months in the rebel held capital. former subway spokesman jared fogle has been sentenced to more than 15 years in prison, pleading guilty to childhood

pornography charges in a deal that proposes lifetime supervision. prosecutors asked for 12 point five years behind bars. his attorneys argued for a five-year sentence. get more on these and other breaking stories 24 hours a day at bloomberg.com. i am mark crumpton. back to you. betty: thank you. let's get to the big deal, pfizer may be closer to inking that record deal to buy allergan. shares of both companies are falling on speculation the treasury department crackdown on inversion could stand in the way of the $150 billion deal. the managing director and a buylty drug analyst has rating on allergan and a four dollar price target. omar, do you think the deal will get through? omar: this is the most telegraphed a deal we have seen and it seems increasingly like,

based on the press leaks coming out either from the company or their bankers, and also from almost the defensive language we lew's's lettery to congress, it seems like there is an announcement coming, yes. betty: the answer is yes. however, both shares are falling, why? omar: there are a few reasons. when you think about the risk of the dynamic of the deal, a short, trade that you go that is part of the perhaps weakness on the pfizer's side. on the allegan side, there are a couple of pieces of feedback. number one is the price being thrown around is slightly short of the expectation out there. the expectation was something with a poor handle. i think that is primarily it to the second one, and this is confusing people a little bit now, the other media league are implying this will be an all stock deal.

the announcements a lot of people have been beginning to run now is it may be an all stock deal, but how much in a share buyback could happen outside the deal and you can ask what the cap buybacks are based on treasuries. omar, but let's say and brentrough saunders becomes the ceo of both companies, does it make sense? that bread is the ceo of both companies? betty: that and also that these two companies merge. there are a few elements to that question. pfizer is playing about -- paying about three fourths it's reported test rate. that is only because they have to repatriate. pretax income base, that is a problem, that is

point number one. if you think about where pfizer is headed next, additional m&a down the road, brent saunders seems to be the guy to take it to the next leg of the story and his reputation in the industry now given what he has enabled to allergan, the investor and hek is very positive communicates very well. betty: thank you very much, omar raffat. for more on the pfizer allergan deal, i want to bring in the chairman of the investment bank -- partners. theyust heard from omar are going to go positive? >> this is one of the more orchestrated deals we have seen. i was thinking about your question as i dug out research reports for morgan haley over the summer in july, in which they were talking about the benefit of emerging deals,

including that emerging deals save money and create wealth for shareholders and thereby enable you to pay more. this has beenubt on the ceo of pfizer's mine for a while and no doubt pfizer tried to buy last year and the deal fell apart because astrazeneca and themselves would .ot oftrange territory inversion, results were people , where theto gain it treasury department may come out in terms of ownership levels. betty: this also complicated but is it worth it? on what: it depends sense we're talking. in particular in the pharma industry. these deals can happen in any industry. if you're trying to gain your taxes, it has been done in a lot

of industries. the reason these are so all the rage in pharma is when they make profits,ey make cash and they also have to hoard read about innovation developments for the future. where they made that money is sort of a moving target, difficult to pin down because there are a lot of different pieces of the puzzle. what you do with the money next is also important. yet the u.s. tax code complicates problems, in ways that are anti-competitive or american. clearly, the treasury department is to is there anything the treasury department really could do to block this? the treasury department may already somewhat be on thin ice. that they hadity not historically used in this

type of area to issue regulations. they issued a notice of intent. i think this thing has been brewing for a while and they have not been acting and it is becoming a bit of a face-off between corporate america and washington over this. betty: this could well be the trigger. it is that big. marshall: if there is no clarity on the subject, then the party will take some risk. in the case of shire, and inversion deal attempted and withdrawn last year, they actually paid one billion feet because they could not break that deal. maybe's say we do not have to cry over one corporation breaking into another, but it is not easy to plan taxes around a moving target in washington. -- drugo you think companies, there is some

regulation around them. they have to go through the approval process of the fda. when they say, g, theo not want to piss off treasury department that much or washington that much, but we also have to play ball with washington as well? marshall: may be. i think there is some of that to be sure. in the end, in the final analysis, this is really about tax policy and ultimately, if i were the czar of the system, which i am not, and none of us is, if we only had lower capital gains and less opportunity to gain taxes, if we had more clarity and lower rates, this would become easier. i know i sound a little bit right wing to you, but on tax policy, we have created a little bit of a monster. betty: republicans and democrats agree. manyall: there are not

companies on earth that cause you to pay an up charge in taxes merely because you want to pay what you would jimmy lee pant passes it overseas. this is not good tax policy. betty: and they are not a good comparison. thank you so much, the sherman of -- chairman of sonenshine partners. northernies bid for southern. that is tomorrow night :00 a.m. eastern time right here on bloomberg markets. ♪

>> welcome back. downgraded exxon mobil. why is that? >> we are bullish on oil, not for tomorrow or next week, but over six to 12 months, we think oil will be at least in the 50's by the end of next year, potentially in the 60's. context, exxon will not be the stock that will do the best, not even close. of course, it will go up. by practically anything else you buy in energy that is oil ever, it should outperform what is the most offensive energy stock on

the planet could ask him was great when oil is going down. not as great when oil is going up. betty: explain that to me exactly. are two dynamics here. one is the stoxx itself when you look at the correlation between different shares in energy and the oil price, for example, exxon has an r squared of .48 troyoil parity look at the him, and other large cap, their correlation is .64. about one third higher. that is the latest oxnard. in terms of fundamentals, exxon gets half of its earnings this year from refining and chemicals. goingbusinesses are not to be benefiting as oil prices go up. they may turn into a headwind. betty: they absolutely do but still, we are $50 or $60.

refining at a higher level from now, but that is still a very low level from where we were just about a year ago. pavel: sure it is. as i said, if we're right about oil, exxon will be higher a year from now, just about anything you can own other than that in better,it will do even in many cases considerably better. it is a question of, the fundamentals of the asset days, for when a great asset oil is falling. a natural hedge for refining and of chemicals. it is too late to play the game unless you think oil is going to dollars. if you think oriole is going into the 60's about year from now, you want to own companies the most high you he that's the most highly leveraged and exxon is not it. this guy thinks oil is

going to $20, possibly. let me up the his comments for earlier in the morning about why he thinks $20 per barrel is feasible in the oil market. about $20 permanent but that is the marginal cost of producing oil in texas and in the version elf. we're in a price war and that is the marginal cost that matters. it is not a full cycle cost of drilling a well with the and ever structure. the cost of budgets for saudi arabia or venezuela or anybody else. it is the marginal cost. betty: he sees that as the bottom here for oil. they are is right that important for determining whether oil can go in the short run. the reality is there are plenty of places around the world where the cash cost of producing oil is higher than $20. all the enhanced

recovery assets. some of them here in the united states and places like columbia and venezuela. for those enhanced recoveries, the heavy oil project, they're cut -- their cash cost is above $20. you would immediately get a entire oil fields. large amounts of production would be shut in. if oil went to 20, it would snap right back because you could lose potentially 5% of global almostply instantaneously. in practical terms, that is a very remote scenario. i can understand the argument. our view is oil is not going to $20, even briefly. and more portly a 12 month basis, we think upside for oil is at least 30 plus are sent from current levels. betty: thank you for joining us, pavel molchanov.

still ahead, as u.s. stocks bounce around, we look at the options trade, and option insights with a look at mining shares next. ♪

betty: time now to look at options markets. julie hyman? know you haveng i had your eye on his gold or the dollar is going down on the perception the fed will be gradual. it has faced interest rate increases. a bullish call on gold, a gold adjacent call. jim: it is a counterintuitive trade.

february in the market sector policies junior gold miner etf and we want to set out long exposure. what we showed in a note this morning was 25 call spreads earlier. it is up to little bit on the day. that,uld've paid $1.15 on above 25 at expiration. thatcal to make the point does not speak to the view of what happens to the fed and what happens to the dollar. it plays to a non-textbook outcome right after the fed likely titans on december 16. that: -- jim: what is outcome? likely to ease further, you would expect the dollar to rally, pressure on commodities, all of the asset classes to play out as expected. historically, if you look at

1994, 2004, the last three fed the first cycles post tightening, the dollar was weaker by almost 7% and gold was actually stronger. a textbookt peruse outcome people were expecting this time around. julie: your trade you were looking at was for a february expiration, not quite six months re yet that is that why you were looking at february and not a further out call? yes. the point is the dollar rally in offfed rate hike, it eases a little bit. typically stronger, and yes, we could go out next year. and couldet about 25 set out the trade that way. julie: why the junior gold

miners and not the etf itself? why focus on the juniors? jim: something we pointed out larger capg was the gold miners and g dx j, you would think trade in parity. in reality, they are applied volatility right now is at parity. it is very unusual to usually, a 10 volatility points read with gtx j being higher. .t makes sense historically two reasons. one we think is complacency. the other -- go ahead. complacency, and we think that could flip the trade around. the other thing is the indebtedness of the larger gold miners. julie: we have got to leave it there. we will be back. ♪

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:betty: live from bloomberg's world headquarters

here in midtown manhattan, you're watching bloomberg markets. im betty liu. let's start with the headlines. mark ronson has more from the news desk. mark: the u.s. house of representatives has ignored a presidential veto threat and approved legislation that would temporarily lock syrian and refugees from entering the united states. the 137 vote is enough to sustain a veto. the bill specifies that before refugees from syria or iraq are allowed to enter the u.s., four top federal law enforcement and national security officials must affirm that the refugees are not a security threat. france is planning more airstrikes against islamic state targets inside syria and iraq and cyprus tosses foreign ministers says he will allow the phrase to use the mediterranean island's main airbase for missions over syria. those in authorities say they have detained nine people during raids and around brussels. a prosecution official says two were related to friday's attacks in paris. several others involve the

entourage identified by police as one of the suicide bombers outside france's national soccer stadium. the pew research stadium says there has been an historic reversal of migration patterns between the united states and mexico. more than one million mexicans have headed south to reestablish their lives in the last five years. only 870,000 mexican citizens migrated north to the u.s.. a new report says women are being paid the average weight that men earned a decade ago. according to the world economic forum, at that rate it would take women 118 years to catch up . the report measures the gender gap around the world. iceland does best, and the u.s. fell from the 20th to the 28th. get more on these and other breaking news stories 24 hours a day at the new bloomberg.com. from the first were desk, i am mark crumpton. betty, back to you. turn to the markets and

the nasdaq, abigail has the latest on two of today's top performers. we have a directionless market. abigail: it is amazing. the market has been flat all day but we have been watching big leaders here. shares trading at a record high after the company beat earnings and revenue for the third quarter and earn -- offered a fourth-quarter outlook that topped outlooks. all this in the face of a slowing china is impressive. jeff kelly raised his price target along with other analysts raising it across the street. quite a ride this year. shares are of more than 140% year to date. to another stock all day, this after the company posted fourth-quarter adjustment of the company's own outlook and ahead of estimates. the company made $.85, a penny shy of what they put up in the quarter of the previous year,

but well ahead the 9% year-over-year decline the street have been looking for. the company also raised quarterly dividend by 13% in the face of stocks plunging over the last week on a bearish analyst call. now, a return to growth in 2016, when looking at the company's outlook, it could turn into a compelling value play with shares trading at a deep discount to the group betty:. will with abigail, those stocks there even as the media industry goes through seismic changes, this country has managed to seven straight years of record profit growth. with is standing by stephen schwartz, the president internationalhe council summit at the paley center. david? you very much. steve schwartz, thank you for joining us.

let's talk about your business. you have had a remark string of success financially powered by a lot of innovation, moving from old to new, including the movement a few years ago. espn, for example, was a huge success for you. huge successes also have challenges. bob iger just recently said the growth may be flattening out a little bit. how do you replace that? steve: i think it is a challenge of all media companies that benefited from fabulous cable networks. they are still growing and espn is doing great for us, but we realize that some other sectors have to step up. for us, the biggest sector there is business information and business services. businesses we have been in for many decades. we now own 80% of the ratings this is. we own a number of health care information and services -- businesses.

those are growing faster than any we have in traditional media today. david: do they think of your business? fish was a very big acquisition you made to go up to 80%. how much of that is international? steve: about 50-50. business a thriving around the world. this year, fish is had a great year. it gives us a little bit of a problem when earnings are translated back into u.s. dollars because of the strength of the u.s. dollar. we have great expectations for it going forward. david: what is the size of that potentially? the most powerful media company in the world at this point. can it get to that sort of scale? >> we look at all of our business information and combined, nowce the second biggest source of profits for the hearst

corporation after our cable television network. they are growing asked her and we are looking to make more acquisitions in those areas in financial services, in health care. we also have good transportation assets and we're looking at other sectors. david: another attractive investment, margins, very attractive. kenny replicate anything close to that in terms of margins in your business? >> absolutely. our business service is have outstanding margins. this year, the fastest-growing business is a business called home care home base, and operating system for home health care agencies run by a fabulous great.and just doing good margins and very good growth. david: as warren buffett always talks about, is there a lot of competition? we try to buy a leader in

the field with great management or in the case of one of our large health their businesses, we actually built that over many years. most of the business information businesses in our portfolio are a true leader in their field and are doing great. you in the market for further acquisitions beyond those? steve: no question. we are looking at the energy field and would just ask in various aspects of transportation data. opens, we are certainly for business. although we are very proud of some of the investments we have made in recent years in consumer businesses, with our amd networks and our partnership our venture operation made and invest it in bus feed several years ago and we are proud of that. fabulouspiece of a

business that is majority owned by dreamworks. jeffrey katzenberg's company. a stake in another fabulous consumer screening business called complex media. we continue to believe in the media business. david: hearst has been sometimes it is fairly modest. is the idea a sort of gateway investment or you hold a smaller portion and you go up, where you have an investment where you turn cash over time, intuition? >> it is really all of the above here it under our leader for many years, the chairman of the frank, we try to be pragmatic about everything we do areas so yes, would we rather own a majority of a business or control it in some way, yes. we do with a lot of our businesses. but we are flexible in cases

where a majority state does not seem practice, we are willing to be a minority investor or a 50-50 partner. we think it is very good when we look to make acquisitions that have a reputation for being a good partner and a good home for businesses. david: we have known each other for years. there was a partnership there. 8020, 50-50. does a lot of partnerships, more than other media companies i can think of it what makes hearst such a good partner? >> we try to be pragmatic. franco is taught us you have to treat a business that you own 20% or 50%, in the same way you own something 100%. we always look for win wins. it is not just to be a good person. it is good business to be seen as a good partner and good business to be seen as a good

home for a iron ore's and businesses. it has helped us many times when we have in trying in a competitive auction to have the management of the company we are eking to buy want to make their ne home at hearst. david: what is the biggest opportunity apart from what you are could -- pursuing right now, what are you interested in? right now, business information, and then emerging media company. we have learned over history that when new platforms are businessn media, new is created and digital and streaming is clearly an exciting new platform and we want to be there in as many ways as we can. that is great. steve schwarzman, thank you very much. betty, back to you. betty: thank you, david lesson .ith steve schwartz from the paley international county summit.

more is ahead in the next 20 minutes of bloomberg market. squaring the opening bell. new york stock exchange shares our store -- are soaring. the payment company priced itself too low. shares are falling as the nation's largest health insurer says it made all out of obamacare already. is the health insurance law doomed from the start? coming up at 5:00, with all due respects is down with democratic residential contender martin o'malley. ♪

betty: disclosure requirements for sites like jack kings. after weeks long reviews to investigate whether the company's daily contest were legal, the company needed more transparency and more regulation. adele's 25 is scheduled for release tomorrow. services like spotify and apple are not invited to the party. the artist has said no to streaming. ands the british singer

songwriter's first major release in five years. it is expected to be a major blockbuster. "hello" is already a hit. get more business news at bloomberg.com. square.p to be shares of jack dorsey's mobile payment company are surging in the trading debut. i wanted to bring in joe weisenthal. raises the question, when you see a pop like this, did they miss price it? joe: people always say that. i think there will always be modest pop because it away, i think of the pop as part of the fee, as part of the cost of the price of poker for so to speak for the company. there will probably be some second-guessing. the big story is that it is priced not below what it is

trading today but the low, seen as very bad pricing based on where it had been valued. the goal is between 11 and 13. it is surprising. he would think people may be took a look at it and got negative and that would bleed through to the public markets area i think it has to be a huge relief. you have to wonder still, what the big question now is, the trickle-down effects on other late stage evaluations, if the perception is the public market or the people buying these ipos are not excited by it. betty: you think there might be a pause for airbnb. joe: this is not even theoretical. there has always been -- already been a pricing of so-called unicorn startups. that is already happening. this is the first one where we really saw clearly in the ipo market. that already happening

people are questioning some of these. betty: url looking into the topic we have talked about in the past few days. the risky markets getting even more risky. joe: absolutely. the question we have talked a lot about, high-yield, junk markets, some of the debt that banks have not been able to move off of their books, you have to wonder whether it is connected, the square ipo, the risky junk debt. you had six years, this incredible search for yield, economic market boom, and, these late stages of the market boom. what does that mean for the fed? are they tightening at times where we are already seen deterioration and risk appetite and what does that mean? are they throwing fuel on the fire and making things more dangerous? betty: a lot to chew over. thank you so much, joe weisenthal. they will be chatting with the global head of fixed income and economics research at credit

suisse. much more ahead on bloomberg markets. we are nearing the close of trade as we head to trade. here is a look at sector winners and losers today. ♪

betty: welcome back to bloomberg markets to i am betty liu. 10 minutes away from the close of trade. us have been kind of not doing that much today. julie hyman has a look at where the major averages are. we have got individual movers. julie: this is after the biggest gain in stocks in a month yesterday. now a sort of stalling out of that activity today. we approache it as the closing bell. very little changed for the three major averages. today after the fed minutes were released, investors still trying to suss out what the fed is going to do in december. the fed's minutes really emphasizing again that the fed

gradual in its pace of interest rate increases. i want to talk about, speaking of the fed and stocks, reports out from goldman sachs this week the bernanke he put it would be replaced by the yellen call. in other words, if you look at stocks under ben bernanke's's tenure, particularly after we saw quantitative easing, you saw gains in stocks and the perception was the fed was sort of the backstop. this quantitative easing, the easy money in the market would continue to support stocks. this is just the end of his tenure and not through now. of course, stocks have continued to go up to some extent, not at the same pace as under bernanke. now there is this idea of the yellen call that the federal reserve will start to raise ises once it things it warranted. this is not necessarily a .evolutionary idea

at the same time, we have the goldman strategist saying the dollar will be able to continue to strengthen even though ironically, it is not strengthening today on this idea interest-rate increases are going to be gradual. we are seeing a little bit of a pullback. something notable today in the bond market, the 30 year bond is now seeing three days of buying, three days of declines in its yield is the longest streak since august on the idea of gradualism on the fed. the yield from that now reaching 3% and it in the dollar moving in tandem today. fedperception that once the starts raising rates, we will see an increase in yields and in the dollar as well. betty: thank you. let's turn to oil now. as you know, it has slid 45% over the past year and investors are worrying about this in inventories. looking at energy stocks forward

pe ratio, they are the most expensive of the s&p industry group. is the sector still overvalued? joining us now is david wilson with a dive into energy shares. they are overvalued? is what david b ocalan tell you. achieve equity strategist at deutsche bank. he highlighted this in a report this week, you have got the s&p 500 index at about 28 times projected earnings, where the forward comes in. you look across the rest of the 10 main industry groups in the s&p 500. you cannot find any higher than 20. is on thevaluation consumer confidence. the others are below 20. it shows you how out of whack the energy stocks are though they had been the worst performers in the s&p 500 this year with energy down about 16%. betty: right. they had been beaten up.

then?s the explanation dave: too much optimism. he figures the s&p 500 energy is kind of stands reflecting $65 to $70 prices for crude oil. bear in mind, this year, a look at new york trading, the average is about $60. you look at bloomberg estimates for next year, folks putting in their projections, it is more like $55. there is a bit too much optimism in his view in terms of what is happening, what will happen in oi prices, and how earnings and revenue will respond. betty: may be forward -- maybe that is not the right way to look at the energy stocks. what about other gauges? dave: some investors will certainly tell you that given that we have certain potential for turnaround, it makes more sense to look at revenue and asset values. know, theseges, you

energy stocks are not quite so far out of whack as they are when you look at them relative to projected earnings. betty: before we go, united health care, a whopper of a story. they may pull out of obamacare. the worst in years decline. what does it mean for the health care sector? dave: you go back a couple of years and people figured it was really going to ignite the health insurers and the hospitals and everyone else, they would get all of these new customers in essence and earnings sales would be great. it is not working out that way. unitedhealth group had a $500 onlion loss next year alone the insurance it provides through the exchanges under the affordable care act. given a number like that, you can understand why they are thinking about quitting the business. betty: it is true. the insurance copies will be the ones hit a long united? dave: it is clearly broad-based. you have got and the man cigna and aetna and humana.

they are all lower. you throw another hospital owners, and they are down as well. people look at this group and they are looking across this kind of groups to figure out what is happening and how obamacare will affect the companies. dave wilson you, pair that is it for "bloomberg markets." is next. you miss" here's another look on how stocks are trading with the closed less than four minutes away. less than four minutes away. ♪

scarlet: we are moments away from the closing bell. ♪

u.s. stocks closing mixed this afternoon, a day after the s&p saw its best rally in four weeks. waiting on a fed, our guests says the u.s. economy is already prepared for a rate increase and has the charge to prove it. cory: what does this mean for markets? russia is a key player in the fight against islamic state. will leave harris attack spring the u.s. and russia closer? course of the markets, when you look at the major indexes across the board for the three major indices, i was looking at the dow jones industrial average -- less than 91 points, that is the smallest move this month that compares to the three-month average.