45%. it ain't over until it is over. what yogi berra could teach us about investing, according to howard marks. it is friday, and welcome to "bloomberg ." i'm david westin. stephanie: i'm stephanie ruhle. lots to cover. 170 hostages are being held in mali. we have that and a lot more, but for its list get you first word news with vonnie quinn. u.s. and french troops have entered the hotel in the african nation of mali. three people have been killed. in mali's capital, by mike: -- bamako.

u.s. and french troops are living room to room to get guests out of the hotel. no word on who the gunmen are and what they want. beenhan hollered has released from prison. he wants to go live in israel, but after terms of his parole, but under terms of his parole, he has to stay in the u.s. for five years. ministerh interior took a thinly veiled jab after plus, there are forants out for the arrest the parents of -- the markets now with matt miller. matt: let's take a look at futures here. we are seeing gains across the board. futures did come down after the

news of the terror attack. but we have bounced back pretty substantially right now, with s&p futures up about five points, dow jones mini contracts up about 5. you see the dollar had come down . it has come back up a little bit. take a look at gold. you are going to see a decline in gold after the news comes out. we have pretty much recovered --m those levels, 10.83 1083. oil range remains low. nike will buy back $12 billion in stock, that is after it is done with any billion dollars buyback that it is already working out. it is already -- it is going to split the shares.

if you own the shares on december 9, december 23 you get that back. and it will raise its dividend to a bloomberg had been forecasting. a very interesting story this morning with nike. stephanie: there is already criticism that may be nike should have taken it, possibly bought lulu lemon, which has struggled the last couple of years, and nike cannot seem to get in. david: we now want to get you the latest on the hostage situation, still unfolding at the radisson blu in bamako, mali. we do know that 170 people were taken hostage. what more do you have to report? situation is changing very quickly. the latest reports from malian tvs that 18 of the hostages have been released. we know that french troops, about a thousand of them in the country have gone to the hotel. american troops are by their

side. situation is really coming to a head. stephanie: how long have they been there? how long have the hostages been held? franz: there was one report that the gunmen came into the hotel in a car with diplomatic plates. that is unconfirmed. there had recently been barriers put up around the hotel, but obviously that was not enough to hold them back. stephanie: for those had been -- for those who have been freed, the 80, do we know if they have been injured? are getting isolated reports here and there. we know there are a lot of foreign nationals -- indians, chinese, turkish people -- in the hotel. some of the turkish airlines crew have been released. three of the assailants have been killed. more than that, we are not sure.

david: what do we know about what the police and military are doing now? who is on the ground? quite a few are different groups on the ground. n special the malia forces on the ground. the french troops and the american greens. those are the forces on the ground. in terms of who the attackers are, there are many groups active in northern mali, and there have been a number of attacks throughout the country this year. we have very little information on that so far. stephanie: i want to point out that there is a lot of conflicting information out there. you were reporting there are 80 hostages freed. we are hearing from mali tv there are only 40, so the reports keep changing. thank you for joining us in johannes berg. we will check -- from johannes berg. we want to bring in andres

martinez. you know this country well. give us more background here, and why are there u.s. troops there to begin with? arees: the french troops the ones that have the biggest presence there. in 2012 and 2013, it was a former french colony. islamic militants were pushed back by military planes and troops in the north. that allowed the government to regroup, regain control of the u.n., but it has led to mandated missions. it is one of the most deadly missions in the world. they have about 40 soldiers who died this year. the u.s. has increased its presence with a drone-based in nearby niger. support offering the that they need in the region, these different groups. david: we do know more about

this conflict ongoing. it has involved the native tuaregs, but also the radical jihadists. is there any sense that this is an islamic, a radical movement? want their tuaregs own independent nation. they are in political talks and have been on the sidelines in terms of violence. the islamists, on the other hand -- there are a few different groups that have mostly been allied with al qaeda, but in the past year they have changed their strategy, some allied with islamic state. no one has claimed responsibility yet, but this is a sign of sympathy to islamic state. stephanie: there are some reports that some of those hostages who were freed were able to recite verses from the koran. that being the case, assuming the reports are true, that would make one believe that this is a

eontinuation of the insurgenc we have heard coming from the north regarding islamists. andres: that could be the case. it is probably best to wait, that given how things have changed with the proliferation withms, weapons, training islamists and libya, mauritania, iraq, syria, it would seem to follow. there is an escalation really. the last big attack in amako was in march. it was at a restaurant. it is a different stage, a different kind of thing. underscore teen us, thank you for joining us from london. we do have a quote from -- andres martinez, thank you for joining us from london. president hollande has said that

we will do everything to free the hostages. let's go on to europe. mario draghi has been saying he will do what it takes to spur price gains. hans nichols is live in frankfurt. give me a sense -- because we have heard a fair amount from mario draghi now -- who is he having the conversation with? he needs to bring the germans along, but it looks like they are already on board for additional quantitative easing. he needs to convince banks to start lending. i am here at the frankfurt opera a wagnerianhis has approach to it. they need someone to move in and think about spending. he made his case by pointing out how bad things are. he cited global risk. the growth this year will be at the same levels at 2000 -- as 2009. he talked about how bad and slow

the recovery is in europe, and then he compared the length of the recovery. it is 30 one quarters that you get back -- it is 31 quarters that you get back to pre-recession levels. he says and not only gives him a mandate to act but a requirement. >> the balance of risk to our medium-term price is skewed on the downside. we will act by using all of the instruments available within our mandate. thearticular, we consider asset purchase problem to be a powerful and flexible instrument , and it can be adjusted in terms of size, composition, and duration to achieve a more expansionary policy stance. hans: perhaps the biggest bit of news we got was him talking about how they were going to fiddle with the deposit rate. that can accelerate

asset purchases. but there is a danger you overshoot the runway and cause some sort of bubble. it is amazing what has happened in the states of last four or five years. you translated into german or in this case italian. stephanie: have we seen officials in germany signaling any sort of need to ease policy even more? january, yes, is your answer. in january they kind of threw in the towel and said they were not go alonglitigate or with the idea of quantitative easing. there is a danger in saying things are too very or glum because that can effectuate the outcome you are warning against. in some ways there is not that much difference between them because what they end up doing now -- how much will that torque it down the line? neither of

them has a crystal ball. yes, mario draghi indicates he will act in december, but he is indicating he will not act too much, and he is going to fiddle, not fundamentally alter the size and scope of quantitative easing. verde?like wagner or amazing building, built in the 1880's. stephanie: i guess you're not aware, justin bieber is performing in new york city today. you can keep wagner. i am all set. ownown house nichols -- our hans nichols live. this businessman graduated high school in 1959 from the deerfield academy in massachusetts, but he went to college at m.i.t., where he set for the mostrecord

points scored in a single game, 41 points, to be exact. look at that handsome devil. it is not our guest later in the hour, howard marks. you can tweet us your answer. i'm guessing this businessman is pretty tall. when we return, we will talk argentina. we will tell you what changes might be in store for the country and investors. you are watching "bloomberg ." we are just getting started. ♪

vonnie: welcome back to "bloomberg ." shares of nike up as much as 5% premarket. they plan to buy back $12 billion in stock. abn amro -- while

abn amro,ment owned it transformed itself from one of the world's largest banks to a consumer lender focused on the netherlands. a sign that the new star wars movie could become the biggest grossing movie of all time. four weeks before it hits the screens, it has taken in a record $50 million in advance ticket sales according to "the wall street journal." david: now to global go. there is a big election in argentina this weekend. it is a store, and the opposition candidate has had a lead until recently, although now it seems to be narrowing. no matter the outcome, their economics will be changing. we always turn to katia porzecanski. it feels like a classic right-left state intervention, private markets contest. koch." it -- america things

get to a point of change where the situation has gotten so dire that it needs to change no matter what. even the folks saying we need to push these more populist up concedingends some of the assets like it does in brazil. from an investor's standpoint, what outcome matters most? what do they want to see happen? they want to see somebody get into power who is aligned with market policies, and that would be most specifically the mayor of buenoscyrus -- aires. putting in place policies that have isolated the country from the rest of the world market wise and gotten it to a situation where it is going to tip over in terms of account balance. they want to see the shock policies in place that will turn

the situation around so that the rest of the administration can really be utilized to pull money into that country. david: the biggest pressure point on the economics of the currency controls? you cannot- katia: import things that you need to import. the supply change gets that the supply chain gets backed up. their purchasing powers have completely dwindled and they are going to need to give value. stephanie: we have had three, maybe four disappointing years. many people are surprised that goldman has come out with a call saying that emerging markets are about to turn the corner. katia: it depends on your view of how countries have adapted to the new world. have a gotten a house in order? some of the commodity exporters will not see a great year next the global trade picks up.

just because your currency has depreciated a lot does not mean everything will go back to normal and left -- unless there is demand for commodities and exports again. goldman sees a brightening future for india, for poland, for russia. but other countries like columbia -- like columbia, south africa, still might not have hit bottom. katia, thank you for joining us. katia porzecanski will not party this weekend because she has to focus on the election. i am going to tell you a bit more about that interview. this man is known for global income markets, bruce richards. he joined me yesterday during bloomberg's hedge fund for him. energyed everything from to puerto rico. but first he had to start with his past. what year did you start marathon? january, 1998.

this is our 18th year. stephanie: could you do it today ? bruce: of course i could do it. hiring a few people -- it is not just two guys from bloomberg. it is a small group. you need bigger groups, you need operations and financial controls and risk management, and your analyst team and your portfolio managers. to need client service provide 100% transparency. it is a lot more ins to civilized than it once was 18 years ago. do you think january of 2016 we will see less independent funds in the market? bruce: there will be closures. you are already reading about it. stephanie: macro strategies? ince: you will see it

structured credit, in emerging markets. you will see it in macro. thewill see it across various strategies because it has been a relatively difficult year for most hedge funds. stephanie: i take you back to last april. franklin templeton was right up front. they felt like champions and then they had to ride it down to 20. what this cheap really mean? bruce: $40 oil is a lot cheaper than $100 wti. the bank debt may have fallen from the traditional energy company, may have fallen from 70 to 65 or 60. bonds may have fallen from 90 to 80, or par to 20 or 30. so the age-old argument about where value lies in restructuring -- these companies need to restructure. we believe the default rate for

companies, oil and gas, will be 12 5%. that is over a cumulative three-year period. services, oil, and gas -- 500 companies. that is about 125 companies that will have to restructure in the next three years. i am not saying we will go to $20 oil. i am just going to say we are going to stay low for a longer period of time. stephanie: some of your competitors are in the room. he wants to know what some of your favorite assets are right now. bruce: puerto rico, and the creditor group, that era thought and many other creditors come have struck a deal that will cent cut in

principle. we will lower our coupons across the board. its debt to gdp is above 100%. it is not sustainable. they need to restructure, and i think 2016, one of the things that is happening in 2016 is they will be restructuring puerto rico. hashanie: john paulson acquired many assets. have you? focused on buying debt to real estate. stephanie: you are talking about the distressed european opportunity for five years. bruce: and we are doing it. it is one of the great opportunities. what is happening in europe? we will be at it for years and years to come. the first thing that you realize have assetyou

inflation. the first thing that inflates his treasuries. , theere does portugal front-end be portrayed? less than zero today. what is going on in greece? bruce: greece is doing very well. is business suddenly booming? bruce: let me tell you about the 10-year greek bonds. it traded at 50 over the summer. this morning it traded at 77.5. you finding other government bonds that is trading where it is trading? how about next year when the ecb is lower? i think they go to par. i would not buy any for par, but that is probably where they go. stephanie: that was bruce

richards, the ceo and cofounder of marathon asset management. it is really tough to hear when the investment community says europe is doing fine. this is the fundamental problem that central banks and things like consultative -- like quantitative easing cause. we look what qe did. who did it really help? did it help the economy? you walk through the streets of athens, i do not think anyone is saying we are doing fine. we will be back with more in a few. right now, check out the most viewed person on bloomberg this morning. jack dorsey taking the number two spot. they had their big ipo yesterday, square. when we come back, howard marks. ♪

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. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. stephanie: welcome back. you are watching "bloomberg go. trees -- tom, you must be

honored to see howard. interested tos see where we are going. stephanie: maybe a little baseball history. report --d molly, a in mali, hostages have been freed. agency says that 80 have now been released. french troops are in the hotel, taking guests to safety. no word who the gunmen are or what they want. convicted spy jonathan pollard is a free man. inwalked out of a prison north carolina after serving 30 years for spying for israel. israel's prime minister says his country welcomes his release.

blocksl that temporarily syrian and iraqi refugees from entering the u.s. past the house overwhelmingly yesterday. if the billuse says becomes law, president obama went -- would veto it. stephanie: thank you, vonnie. time for this morning's must read. at: i was going to look paris again, but i thought i would go back to finances. it works with howard marks year. stephanie: everything works with howard marks here. tom: this is an incredibly trenchant essay. observing a publicly traded price isn't mysterious and all, but on the other hand it isn't

proof of a correct evaluation either. it's just another price that investors put on square. after all, the other prices we put on square, you can reasonably suspicious about whether this one is right. i think that people want to get rich and they want to get rich easy, which means not doing any work. tom: and extrapolating out instant value. howard: we saw it in 1991. the internet is going to change the world. stephanie: and it did. toard: everything still has be tied to value for it to be a safe investment. stephanie: we're hearing the same argument now. it is not the internet, it is disruption. a does not--

necessarily lead to be. people want to get rich if they wanty, and to believe that they can do so by buying some play on the future like these companies, they will do it and they always have. david: let's go from ancient greece to silicon valley. when you try to make those extrapolations you inherently have a problem when you do not have much of a real business to extrapolate off of, and that is almost inherent in the tech move. howard: there is only one kind of safe investment. there are many kinds of profitable investments but one kind of safe investment. that is when you figure out what something is worth and buy it for that price or less. it goes back to what you said, you have to be able to figure out what it is worth. most of us do that by figuring

out what earnings and cash flow will be, and the best way to do that is to figure out what they are today. stephanie: that is why the retail's sector is -- retail sector is failing. consumers have so much information, they are not walking into a store and paying. howard: so if in the retort -- retail store they do not just walk in and by because that is what they have to do, why don't about figuringe out what these stocks are worth? tom: who do you fault? do you fault the entrepreneurs trying to goose the price forward? you cannot -- howard: you cannot fault someone who would rather sell their price any -- still their stock at a high price rather than a

low price. think back in the mortgage price, everybody had 100 people they thought were responsible but nobody named the end buyer. tom: three extrapolate within our private transactions and get to an ultimate buyer who is under prospectus of the sec. do we have laws that are just outdated in dealing with that extrapolation up to some initial valuation like square? howard: i do not think we could ever have a law that effectively says you cannot do an issue for more than it is worth. tom: i agree totally, i just do not think we can legislate it. you must getward, shown private deals all day every day. what do you think of tech valuations? howard: we do not invest in tech. stephanie: but you must shown this kind of stuff all the time. howard: yeah.

i know i am not smart enough to rest in technology. stephanie: for a type of industry to say "i am not smart technology,"est in that makes me feel like i'm in a bubble. howard: one of the many things that distinguish warren buffett is he knows what he knows and knows what he does not know. mark twain said, it is not what you do not know that kills you. david: there is one more must and has ammed al lori piece in bloomberg that takes to task square. my favorite must read is your letter. it, is what i took from which probably says i did not fully understand it. aboutn learn everything investing from yogi berra.

here's a quote from howard's to put anotherd 50% into understanding human behavior. the market is made up of people and to beat it, you have to know them as well as the thing you are considering investing in." howard: yogi said it is 90% physical and 10% mental. the markets are made up of people and the opportunities to outperform come when assets are priced above and below their fair value which is usually the result of psychology, so you have to understand psychology. you have to understand the things that tom was talking about this morning with the tech ipos. you have to understand what is going on in the market, take the temperature of the market. is the market overheated or

frigid and that will tell you whether to be defensive or aggressive. there are a lot of comparisons between investing and pro sports. tom: when you look at your street ofnd the main america that says it is rigged, how do you respond? if everyone has the same information, information that is harder to grasp, is it rigged? howard: what rigs the market is the errors in psychology. tom: exactly. howard: the mass behavior. it is the mob itself. tom: the discipline of loss work. they are getting crushed. howard: there is an old saying in las vegas, the more you bet, the more you win when you win, and you cannot argue with fact. that goes to something in human nature. it causes people to do things

that are irrational. my prior memo was entitled "it is not easy." one of the things i try to convince people is that it is not easy to make money, and it cannot be. there is nothing intelligent to be taught about making money because the study would be intense and everybody with a positive iq would be rich. whennnot be easy and people think it is easy, that is when they get in trouble. that is when you have bubbles. stephanie: after that letter in september, you also warned of the risks you see with dts, particularly high-yield, investors who should not be playing their because it is so easy. yesterday i sat down with bruce richards of marathon and he had a different view. bruce: i am on the side of the

etf's because you know something, it is working. efficiently.t they can do it in reasonable size, and it is up to the great managers like blackrock and others to handle those flows. stephanie: i was quite surprised. popss saying that moms and are able to trade and get into these etf's. i said, what about when the market cracks and he said, it is already cracked. howard: it is a jar, it is a little crack. i'm not saying ats are wrong. -- ats are wrong. -- etf's are wrong. such thing as a bad security, it is only when people buy them under him proper expectations.

that is my only issue, is that ,eople should not expect an etf which into the liquid securities to provide more liquidity than underlying securities. david: doesn't that make it an inherently unstable investment when you have short term and long-term need for investment? howard: absolutely, and i think that liquidity is not an unmitigated whom. -- unmitigated boom. too much liquidity makes people over trade. the best way to invest is to find something that you understand, value it, and by it and hold it for a long time in the belief that it is a good, long-term investment. trading in and out, gambling, speculating, these are not things that can be undertaken safely. stephanie: my takeaway is do

your homework, be disciplined. howard: right. stephanie: more with howard marks and his view on the overall credit market. we are going to let tom keene head back to radio. here is another look at the yearbook game. this businessman once survived an airplane collision. he said earlier, he played basketball at m.i.t. and was the highest point score in one single game at 41 point. he went to deerfield academy for high school. stick around, you are watching "bloomberg go." ♪

david: euro finance reek is wrapping up this week is wrapping up in frankfurt. "the ecb willaid

do what it must to raise said --n." while vaden brendan greeley is there with more. jens weidmann is going to lose. -- brendan: jens weidmann is going to lose. the bond buying program in december, jens weidmann has always been saying what europe needs is more structural policy. he says it as loud as he can, as often as he can, even when it looks like he is about to lose. it is clear when you look at core inflation at 1.1%, it is nowhere near their target of 2%. david: brendan, from over on the side of the atlantic, it looks like draghi has been trying to

do this for some time but has not made much progress. what can he do to actually change things? we know what he wants to do but it does not look like he can get there. brendan: jens weidmann's argument is, we need to let it run out a little bit longer before we add to it. i think what is worrying people is inflation is not where it needs to be. it is higher in the u.s. but in a lot of economies in the world it is not showing up. what they have, been consistently seeing as with every new release of economic data their target of 2% has moved off a little bit into the future. they are wondering, why aren't we getting back to inflation? they are going to try to use a tool that they know has worked in the past. the thing that no one knows about quantitative easing is

that we just do not know how itg it takes or whether loses effectiveness after several years. , it unleashes a little bit of financial instability. assets grow in size, you begin to see bubbles. i spoke with the vice president her,e bundesbank and asked how do we see bubbles in a time of quantitative easing? >> we do not provide information where a bubble is because i think really testing, identifying whether or not there is a bubble in certain markets i do not think this is a task of central banks. we would rather try to see what are the incentives in the system, or their misaligned incentives that induce investors to go into certain asset classes which they would not do under the right incentive? david: did you catch that?

it is not the job of a central bank to deal with bubbles. stephanie: that got my attention, brandon. -- brendan. that is our own brendan greeley joining us. still with us is howard marks, oaktree.nd -- of week, when we see the collapse of a five and a hat billion dollars -- five and a half bit -- billion dollars sale, what does this say not only about this field specifically, but high-yield markets? howard: it says there are limits to what can be done. and that buying appetites are not infinite. skepticism is in place and people who had only the fear of

missing opportunity now are balancing that with the fear of losing money. this is all very healthy. for the bank. howard: or the issuer. markets are only safe and sane when people apply risk aversion. when not everything can get done and not every deal is feasible and investors are demanding. this is what we welcome seeing. stephanie: you could potentially have deals that need to get funded, that are in the works, and you see what just happened what justned -- happened with carlisle. issuer we are not in nearly as often as we are a buyer. the buyer wants to see

securities come down in price. they want to see some resistance. stephanie: so this is a positive for you? howard: that is right. david: are weaken us see more banks left out there who have committed on these things and cannot sell them? howard: and "the new york times" today, the first page of the business section to that effect. they say it is 600 million in their, which is not a lot of money. it can get bigger. what normally happens is, they say the last deal we priced at ask and could not get it done -- priced at x, and could not get it done so we will price this at a higher yield with better structure and better covenants and the buyer gets a better deal. stephanie: can't that knock a bunch of process -- investors out of the market? if high-yield starts to back

out, they will retreat. we are only going to be stuck with a few big guys. howard: they should like more when the yields are higher, not less. stephanie: should, but that is not how the mark of -- how the market will work. matt, what does the terminal tell us? matt: i remember talking to howard in canada and at the time no one could believe he was saying there is not enough opportunity out there. this is the bloomberg high-yield corporate debt index, and you can see over the last five years, we have climbed up here but now we are starting to see it kind of break down for little bit for the second time in a year. i wonder if you think people are -- what do you call it, overly exuberant? when peopleink that

are afraid of being left behind and afraid of not getting a deal, and afraid of not -- stephanie: fear of missing out. howard: then the market is not a strict disciplinarian. when they balance that with fear of losing money, the market is much healthier, and i think that is where we are. i think the events of august on top of a sluggish rest of 2015 i never minded people, there is risk. people, there is risk. stephanie: we are now entering a foho,he calls soho, -- fear of getting hosed. it might be a time to start looking at certain deals too short, do you believe that? howard: we do not short, but it might the.

the point is, that is so much healthier. the opposite of when you have and balance is much healthier than when you only have fallout. that turns into a bubble. i am afraid i'm going to miss a deal, i have to buy it regardless of price is equivalent to a lack of discipline. david: i wonder if there is another thing that may be healthier. there is a way to adjust this by having the companies that are on money to not be as leveraged. an earlyif this may be indication that we are over leveraging companies. howard: these are all indications of a more sober market, which is saying there is such a thing as too much debt in -- such each thing thing as too weak a structure, and these things are all healthy. the riskiest thing in the world

is the belief that there is no risk, and that is not on right now. stephanie: do you think this is going to mark -- not hedge fund players -- knock hedge fund players out of the market? when we go into 2016, are we going to see less funds? howard: i am on record as saying there are probably more hedge funds than we need and probably not all of them are run by geniuses. essentiallyn print there would be a leading out. of course, i said it in 2004 so i am not wrong yet, i am just early. stephanie: could you start oaktree today? howard: i think we could because when we started over three we had a 10 year record -- when we started a country we had attended -- oaktree we had a ten-year record and a group of

clients we were able to bring over. we started the first day with zero and we ended the first year with 5 billion. stephanie: but your background is research and we have seen a lot of hedge funds launched in the past that were trading based. they do not have a research background. is that going to be the problem we face now that there is real volatility? howard: volatility helps the traitor, but i am not a fan of trading. it is what you do to implement here -- stephanie: howard marks, not a traitor, and investor. ♪

stephanie: breaking news in the details. have commodities in a tailspin. oil on a three-week long losing streak. how low can crude go?

the dell is calling the shots. you can buy her new album -- the shots.lling you can buy her new album but they won't be free. we will tell you who was calling the shots. ♪ stephanie: it is 8:00 a.m. in new york city. i am stephanie ruhle. erik: i am david -- david: i am david weston. we have john steiner here with us. how was marked just here? david: a lot of people think of me in the same category. david: he has experience in a treasury, washington, all. we will start with first word. vonnie: thank you. in mali, troops are inside the

radisson blu hotel where gunmen are holding hostages. took 170inally hostages and the hotel owner announces 125 guests and staff are being held. three people have been killed governmentwhat the want. president obama says the white house is monitoring the situation. at one point, u.s. and french soldiers got guests out of the hotel. convicted spy jonathan pollard is a free man after 30 years in prison. lifes been serving a sentence in north carolina for spying for israel. the case has been a political sore point for years between the u.s. and israel. hillary clinton is clarifying her lead in the presidential nomination. bloomberg politics national poll says clinton leads sanders 55% to 30% among those registered democrats. but thated 32% to 24%

followed joe biden who decided not to run. you can get news 24 hours a day at bloomberg.com. a look ats take futures. up across the board with s&p 500 index many contracts up about six points, dow jones up about 56. if you look at the bloomberg, a one-day chart of the s&p 500 index many contract, i have it on my screen. write about here, we have the headline on mali in the futures came down but recovered. an interesting move of the morning. interesting move is the euro. mario draghi gave a speech saying he would do anything necessary to hold the weight deflation. -- cold away deflation. the euro coming down even further and expect the fed to raise in december are you draw the expands qe, or reasons for capital close to come onto the

euro and into the dollar. oil is an interesting trade today, coming down below $40 a barrel. after the news of the attacks, it has come back up a little but still at $40.19. take a look also at gold. gold has come up this morning. it has done stronger over the past few days. .ight now, 1083 sort of 3, 320 when we got the headlines. a couple of stocks i want to mention. abercrombie & fitch absolutely destroyed the street estimates burnings. we were looking for 22 cent and they cannot with 48 cents. staying sort sales dropped that they did not drop as much as the street looked for. you can see the game, 20% at abercrombie & fitch in the premarket and foot locker beating on the top and bottom lines of the gain of 6%. not quite as dramatic but good

news for retailers. stephanie: thank you. we have to take you back to johannesburg where pauline has the latest on the hostage situation developing in male. -- in mali. what are you learning? last we heard, there are 138 guestsbeing held, 125 and the additional or hotel staff. pauline: there are conflicting reports. they have been reporting about 18 hostages have been freed. at the same time, we get reports from the hotel from the radisson chain saying about 100 30 hostages are still in the hotel, so the situation is not quite clear. david: there have been reports that police and military maybe storming the hotel. have you heard anything about that? colleen: what we are hearing is there are troops inside -- pauline: what we are hearing is there are troops inside.

what we just heard from an army spokesperson, troops have gone inside to fight the attackers and supposedly, there are three of them and they have locked themselves in on the seventh floor. stephanie: what can you tell us about mali, western business there, our interest, i know nothing about it until this morning. pauline: it is a landlocked country and very poor, so not very well known. more will none with trench business people -- with french people. there are major gold operations in the south and it has not been conflicted about the conflicts in 2012, so they have continued as normal. with the attack in the capital, it will he more difficult art risky for business people to come to mali and try to invest there. they had tried to rebuild after the conflict and this will be

quite difficult going forward. stephanie: thank you for joining us. our own pauline joining us from johannesburg. we will take you back to talk tech and the ipo of market square and how they saw it the market debut yesterday as the nasdaq. dumpingsterday, we were on the ipo market saying both match and square were coming smaller can be expected and then we saw a pop. alex: some of that may have been managed by and the writers is a big event for them. they do not want the kind of overhang that the likes of facebook had with the nasdaq glitch on their first day. we had eight square up of 45% at the close after it priced about

one third lower at nine dollars then initially marketed. match priced at the low end of damage today's ago and trade up 23%. the investors who got in at the ipo enjoyed the trading yesterday. stephanie: a 45% popped, this is an investment bankers get ranked by the issuers. this is when jack dorsey says, are you kidding me? i left 45% on the table? he had a long-term view on this. alex: they all say that. that is important to note almost every investor made money on the deal. even though the price was higher, they ratcheted down and the initial investors made a ton of money. even the person who bought ipo shares, so almost every perspective, a healthy investment. david: we won't be crying for the investors, but this is not the way the investment bank had it planned. they did not say to go in 45% down.

joshua: it is hard to do valuations. the one who did the last round did not think that would be the price. the market injured it out. what is unusual is everyone made money. stephanie: it is your goal to have an exit strategy. if you are one of the private investors and you said you wanted to cash out of it but you look at it in the long term, we don't know if everyone will make money. joshua: until you have liquidity, you don't know. alex: on the tech world, the questions come in because you look at last rounds. the stock is trading close to 13 seven yesterday, and i was in san francisco yesterday and this will be one of the ipo's people are cap or the largest private round where you have the crossover investors getting in. david: does this mean there will be more tech ipos? alex: potentially. i hear backlog is healthy. the biggest impact this will have immediately is a rethinking

of some of the exuberance and fear of missing out that you were talking about howard marks in the private funding market in later stage rounds. will also show the importance of the ratchet. that provision will become more and more important in the later rounds. david: the ratcheting is controversial. alex, thank you and josh, stay where you are. here is another yearbook game clue. this 1959 haskell graduate grew up to be a vice president of candidate in the 1980's. -- high school graduate grew up to be a vice presidential candidate in the 1980's. coming up, how much farther well oiled slide? also, i learned the word ratchet from interviewing akon. ♪

vonnie: welcome back.

he is your latest business flash. mario draghi set the stage for more stimulus. speaking in frankfurt, he said the ecb will do what is necessary to reach the goal of under 2%. policymakers are deciding whether to expand the program that began in march. nike just did it. the largest exporting company plans to buy back $12 billion in stocks in shares two-for-one. it has the stock up 5% in the premarket. they are coming off with the most profitable year ever. $3.6 billion in the ipo and that allows the dutch government to recoup some of the money, bailing out the banks during the financial crisis. why they owned abn amro, it turned them to a consumer lender from the netherlands. david: thank you. francisco is the head of global commodity research of thick of america and merrill lynch joins us for a third weekly decline of

oil. francisco knows his commodities. i spent quite a few hours with francisco and i'm honored. stephanie: wearing a smart suit today. david: he always dresses well. there is global oversupply in oil and signs it will persist. take us through what is going on and with commodities. is there a bottom and when and where is it? francisco: we are entering the fourth wave of commodity inflation. we had the yen coming down in japan and the euro and this year has been emerging-market currencies. i think we'll get through the exercise in china over the next few months before commodities bottom. in other words, until it peaks, commodities will have a lot of headwinds. better with looking lower supply in some markets and brenda demand, but the more head is very strong. stephanie: take us to the terminal. matt: there with me because

there are a lot of lines, but the point is if you pull up the bloomberg on my screen, -- david: a lot of lines. matt: green is oil, the blue is china, iron ore -- stephanie: go through the timeframe. matt: this goes back 10 years. the point is that all of the commodities, oil, copper, .luminum, all coming down the only thing doing well is china's iron or, so it looks like that could be the one thing that they are holding up. francisco, there is another bank i will not mention that came out with a report saying emerging markets will come back in 2016. you are focusing specifically on yuan.cy and u.s. versus francisco: china is 50% markets, soe world

just oil, it is the only market that china owns 10% or 50%. my worry is if they allow the yuan to weaken, we'll have zero gdp growth in china for the first time in a long time at market exchange rates. this comes down from 25% in 2007 when china had it to gdp. we are looking at limited contribution. frankly, the chinese with the service economy, they don't need as much steel, copper. josh: they cut the benchmark for lng as well and they said they would not allow to be imported at a lower price than traditionally. it was a 25% cut. why do think they did that and what does that do to demand for gas on a worldwide basis? toncisco: they're trying engineer their economy and take

advantage. we will see president xi and pushing at the paris summit for a global climate change deal. ultimately, we deal with the pollution problem in china because china has not become extremely rich but richer than 25 years ago. they want to have that pollution -- they had that pollution they had today so i think importing more gas is one of the solutions to china's pollution problems. i think another solution will be more renewals which they are working on. of course, more nuclear power. china is trying to move away , which is what i say the fuel has milk salvation. nobody likes it. more salvation. nobody likes it. the rest of commodities depend on case-by-case basis. stephanie: what time horizon should we give only look at china's strength carried only get that numbers, we think,

things are not working, but the more and more investors we speak to you have been there, they echo what you are saying with it is just the countries shifting to a service-based economy. francisco: that is right. when i talk to my clients on the chinese economy and the cruise line business or airline business, they are doing ok. they see passenger traffic, china goes on vacation more often, chinese going to the movies more often. what is not happening is more skyscrapers, no more towers. stephanie: there are still a lot of empty wants. francisco: they don't need anymore. china is exporting a lot of the pollution into the world and deflating the world of the commodity channel, the same channel they used in the 2000's oil spiked $150 a barrel. joshua: you see a lot of difference between short-term and long-term investors. it is almost impossible to be a

successful short-term investor in china. the extent to which the government intervenes and the way you see changes in government policy and how that affects the markets makes it hard. you see a lot of relatively bullish people and that is a disconnect relative to other markets. stephanie: investors versus traders. david: private versus publicly traded companies when it comes to commodities, if you are private, you have longer terms and you can stay with long-term capital. if you are publicly traded -- stephanie: what about lately? francisco: i am in favor of the private board, but there are big distinctions. joshua: one is all assets in trading businesses with different cycles. the capital structure of the two businesses has to be different. training businesses rely on access to short-term capital. if you have short-term capital what you are asset had the in the commodity business, that is a dangerous ways to be. stephanie: this is one of the reasons people point to glencore, the best trader in the

market, but when you become asset owners, you cannot run for the exit. joshua: that is right. david: francisco, we had written a here -- stephanie: founder paul tear. david: and she had a rosy picture and i want you to respond to it. >> i think within three months for six months, and i'm not predicting we will have a big rally by any means, i think that we are going to be experiencing a lot of mean. it fits of my global economy chugging along. david: rene is a little more optimistic. will bee: she said we at $70 oil by the end of the gym but he thinks by june we are getting there. not sayingi'm commodities cannot turn, they can, but i think they need to bottom out first. this means either the fed task to become a bit less hawkish or central banks have to start getting more in line with the

u.s. eventually, commodities will rally. everything will eventually. francisco: 15% rally as soon as the central banks move the other way, before the time being, i don't know. everything points to a stronger dollar and that is a big headwind for commodities. you very much. joshua steiner will remain with us. let's turn to media. yesterday, i sat down with see sorts -- i sat down with steve schwartz and we talk about opportunities and challenges and we talked about how to replace the loss and growth and the benefits of being a private company. steve: i think we have great advantages in being private. we have seen a number of media companies have to make moves, cut perfectly good businesses loose or spend them off because of pressure holders. we value every media business we are in and we stay in it for the

long haul. one example, the san francisco chronicle, it took us several years after we bought it, but they make money today and it has a very fast-growing digital business, and we are glad that we stay the course. have we been public and an outside -- having we been public, and outside investor may have pressured best to say to cut it loose. we have great businesses like a magazine business. a growing profit but maybe not as fast as wall street might like. we love business is that are growing their profits. we can take the capital and we deploy it, so we can take a long view with profit and do what is in the best interest of the business without these outside pressures. david: you mentioned the magazine business. you made a major acquisition. what was it, three years ago? steve: maybe five years or six years. "avid: including "elle magazine. steve: exactly.

it strengthened us. passion is a big one and the fashion segment remains probably the best thing in the magazine does this today. with the acquisition of "elle," we added back to "harper's bazaar," and "cosmopolitan" and strengthen the businesses. is doing great and "harper's bazaar" has never done better as well as "marie claire." david: how well can you move those magazines interdigital? steve: i think we are doing great. i head of magazines rod and choi young about three years ago to have digital for magazines and he has done a fabulous job and great friends at "cosmopolitan" have skyrocketed since i knew team came in. you --it strikes me that that we share one thing, we have succeeded in the business

legends in the business. frank bennett for you, so we share some experiences. with advantages and some disadvantages. whatyou just talk about the challenges are and what the opportunities are? steve: for me, frank is right down the hall, there every day, and i have not had and could not have had a better mentor. -- wisdom and just didn't his wisdom and judgment and the culture he builds of close to 30 years of running a company, it is still what powers the business today, the relationships he made, the reputation he had for being a great partner, a great place to work, and a great place to sell your company continues to drive outsidet is really all as far as i'm concerned. david: is there any challenge what hass maintaining made the institution great and

moving forward at the same time? steve: the 128 year history at hearst is constantly pushing forward with new things. iran. purse, think about it -- he started -- william randolph hearst, think about it, he challenge those supports her, went across the country and got into the radio and television business before he died, so the legacy was there when frank bennett took over in 1979 & into cable, business information, and it is part of our dna, you have to look inward, find what core strengths you have and take them into areas that you think cap faster growth. schwartz,t was steve president of hers. josh, what -- resident of hearst. josh, how do you look at media? joshua: there is no question that they have been the beneficiary of unbelievable catch innovation machine of espn, which has funded -- and to be honest, hit a couple of

mistakes -- probably -- stephanie: he did not hit. fairness, they probably stayed and television industries longer than they should have. it is a hard business to manage. steve has been a really good job, especially with fashion magazines. if you look at publishing, you better have a deep nature with high-fashion appetizers. stephanie: that is why nobody can believe "playboy" will not have news. mediae come back, iheart joins us to talk about the business of music on bloomberg . stick around. ♪ ♪

(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring

(don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. david: welcome back to "bloomberg ." we are having a great hour. josh steiner is with us. stephanie: he runs all the bloomberg verticals.

we have more to cover with josh. let's get to the first word news with vonnie quinn. mali.andoff going on in attackers in the capital originally took 170 hostages. there are conflicting reports on how many of them have been released. at least three people have been killed. no word on who the gunmen are. soldiers haveh both entered the hotel and president obama says the white house is monitoring the situation. refugees -- the senate has not said whether they will take up the measure. the site pause in -- settlement program students ended a 32 hour sit in at the university presidents

office. wilson was a princeton graduate and president who had a number of racist views. matt: we want to go to morning meeting now where we hear what key banks are looking at today. estate --out the real the retail economy right now. it very interesting morning because we at a couple of clothing retailers that usually abercrombiented -- & fitch and the luck beating estimates and gaining by a lot. a place where the u.s. consumers are spending money now. -- abercrombie & fitch and foot locker. >> you have shared takers and

share losers, but there has been a cloud over apparel with the hurtingther setting in, broader apparel retail sales. he saw a number of department stores in particular -- there was some positive results out of jcpenney and kohl's, macy's, dillards. >> how much do you buy the warm weather excuse or last year, the cold weather excuse? how much you have to factor that in and how much detailed that is just management making excuses for poor performance? >> history is a good indication. in prior years, when you have inflections, particularly in the fall and spring around the weather, sales respond. it is a very valid excuse. is it the entire problem? not necessarily. since we have come out of the recession, consumer spending has

not been straight. it has been choppy. q3 felt choppy. we heard from best buy yesterday that the consumer perhaps is waiting a bit for the big november deals. used to have black friday. now it is black november. a lot of retailers saw low october spending. some of our own checks came back as well. punished byuy was investors yesterday for just barely missing revenue estimates. you like the company, though. you still have a buy on it. customers are spending on big-ticket items. >> absolutely. at where consumer spending is today, it is housing, home improvement, autos, auto related -- personal care, cosmetics. some of the smaller to get areas have been hurt before.

areas like apparel have felt that. in the case of best buy, you have a fantastic management team that has done a lot with that franchise over the last three years. today, it istores more exciting, the vendors have partnered with best buy, they have supported them financially and with training for their employees. the experience overall has gotten better. 's online sales exhilarated in q3 when a lot of other retailers assault deceleration. when a lotted in q3 of other retailers saw deceleration. matt: a great place for investors to make money because yesterday, investors created an opportunity and the stock price drop of best buy. david: we want to take a look at

iraq and syria. there is a businessweek cover story this week that takes a close look at the islamic state's finances and why the organization is so well-financed. i found it disturbing. arguably the least appreciated resource for islamic state is its fertile farms. now, we are joined by cam simpson from london. i did read this piece. we heard about oil. there is more than we thought. there are so many other ways they are raking in cash. >> absolutely. they have gotten really good over the years at squeezing all the cash they possibly can out of the territories they control. we've been dealing with this group, these same people since 2005. these are the people we went after with the surgeon 2007. -- surge in 2007.

they were pushed down to nothing , we thought nothing. logs showed they were still squeezing money out of the population. they find ways to get money from school fees, taxes on kids, religious taxes -- we talk about getting a repentance identity card from them. if you work for a religiously inappropriate regime, you buy it for $2500. and you have to renew it every year for $200. piece of theevery economy they can and take money. you talk about the farms. they seized farm equipment and rented back to the farmers. even if they are not selling wheat and barley on the black market and they control a huge amount of the farm production -- stephanie: say that one more time. they seized the farm equipment

from the farmers at least it back to them? >> absolutely. they've been doing similar things across the territory that they control. the farmland alone that they at least half for of syrian wheat production, maybe up to 70%. in iraq, 30% of the wheat production come 40% of the barley production. even if they are not taking those agricultural commodities and selling them into the market , they can tax every bushel, they can tax everything. >> they control the region to a horrific extent. what are we doing to prevent those from flowing outside the region? the proxy wars being fought outside the region are being fought by proxies, that is not their money. a lot of those groups are just as good at generating funds as

they are. in terms of what happened in paris, the going rate for an a cave 40 black market in europe right now is about $500. ak-47 in the black market. i don't know that they had to move any money for that. they don't need the international financial system. the mindset that we had after 9/11 about sanctions and putting people on lists just does not work with an organization like this. we have not even talked about the oil yet. stephanie: that is what we would love to because oil has been the central focus. there's a quote i want to pull out. crude to sell raw truckers and middlemen rather than refining it themselves. while islamic state maintains some refining capacity, the majority of the oil is refined

by locals. what does this mean? >> when we initially went in ,ith a bombing raid a year ago the u.s. intelligence community was claiming victory. they said we had decimated their oil revenues through these bombing campaigns down to $100 million a year. that proved to be completely wrong based on intelligence we got this year. they are making half the billion-dollar's a year from their oil. -- half a billion dollars a year from their oil. refined oil is a lot more valuable than crude. we went after the big refining capacity that existed because we thought that was how they were making their money. they are making money selling it out of the pump. hose pipes buried in the desert.

there are so many of these extraction points across the territory that they own that they are selling from the can. everyone else in the economy, the truckers, the people they ,re selling to, people refining those are civilians. isis has made its money at the extraction point. it is not just their lifeblood, but the lifeblood of the whole economy for everybody who lives there. it is a tough thing to take out without killing lots of civilians. how do you start these guys without starving the people who live under their brutal regime? stephanie: fantastic, fantastic piece. cam simpson from our london bureau. his story is on the cover of bloomberg businessweek. broader oro a bit

take us back to mali. it has not yet been confirmed that the hostage situation there and the attacks in paris are connected. look at the situation, what is your big take away? , how arehey mobilizing they communicating, how is this happening? >> it is horrific. eou have to think about tha for families -- if you see how these situations have changed, we used to see hostage takers using that situation to make a political point. they wanted a platform to make a political statement. paris was then violence was the statement. , willestion here in mali they use this as a platform to say something or are they only interested in violence?

if you go back to the horrific ables in mumbai, we were to intercept the messages between the terrorists and their handlers. we were able to work with blackberry. because of encryption now, it has gotten much harder. that will be a really important question going forward. david: there are reports that the white house wants to ask silicon valley people to rethink the encryption issue. you had a senior position in u.s. government. how could we have been so wrong about isis consistently? we were calling them the jb. -- jv. i think these things are a lot younger than people think. -- harder than people think. this kind of terrorist attack did not require the importation of sophisticated weapons or materials. they were able to do that by supplying themselves in belgium.

you have seen one of the outgrowths of a problem in yugoslavia and the balkans. a flow of arms into western europe at a low price point. one crisis many years ago leads to a buildup of a new crisis many years later. stephanie: scary. thank you. we have a lot more to cover with josh steiner. we will change our attention and moved to music. i heart media is joining us. the business of radio right here on "bloomberg ." ♪

stephanie: welcome back to "bloomberg ." the business of music. dele's highly anticipated

album released today. it will smash records for physical cd sales. the songstress has decided not to string her outcome on services like apple music and stream her album. huge adele super fans still with us. adele will have a huge record anyway. streaming or no streaming. she is an artist who comes around once every generation. think about it a james, barbra streisand, dell. eta james, barbra

streisand, adele. for her last record to sell 31 million copies at a time when big artists would sell maybe one or 2 million is truly an anomaly and a breakthrough. a record from her is like star wars or a bond movie coming out. stephanie: if they choose not to use a streaming service, that is not an industry trend. they can do whatever they want. >> when you were that big, you call your shots. since they make more money from cds or a download, they may do that for a few weeks or for good depending on how they feel. that a personal decision an artist and the record label make. we promote them on radio, we help people discover music. at that point, each artist makes his or her own decision. david: you make more money off a cd.

stephanie: i don't know where you purchase a cd. >> it would cannibalize the higher sales if they also streamed? >> in some cases, it would. especially with younger listeners. one of the reasons that dell is doing this is because she has a large following among older listeners who will buy cds. this becauseoing she has a large following among older listeners who will buy cds. you get that first week sales bump that makes it a record breaker. >> it's careful not to onlypolate too much that lebron james got a primetime show to announce that he was moving to miami. these are super talented artists. ele worked hard, had a c

hild, but she has good advice and she is thinking carefully about how to build her own career. >> this is a business in flux. changed at how mtv cable tv. you see what amazon has done and what netflix has done -- the industry is at an exciting time in music. the path they will take to monetize music. radio is alive and well. 93% of people listen to radio every week. record is delivered to consumers is changing and it's exciting because it is now in the hands of the industry. how they will more efficiently deliver music and monetize. david: what does adele do for the eye hurt business -- i heart business? it is like a star wars or bond movie coming out because it

just brings us so much attention to the sector. talkingrd has everyone about music. in andare coming listening like crazy to these -- to "hello." it helps everyone because it really puts the focus on music. --ic has been alive and well the challenge has been monetizing. stephanie: people make the argument that being different is why you would not be able to get in. why is it in her case looking and sounding different is her signature? actor story of any big who did not really look like an actor or singer who did not seleka singer. the first time you heard staying -- who did not look like a singer. st first time you heard ing, he sounded different.

when you break the mold come at first, there is a step back. i'm sure the first time they , she soundedalk like this normal british person, then sang beautifully. david: the sake of business. -- this is a tough business. >> many artists are making their money from life music. the recent spotify is so important to them is it promotes their brand. moneyre making their through life shows. -- live shows. stephanie: he wants to go to jingle ball. you are talking about how great their life events businesses. my kids would love to go. a very good-looking guy. smart, too. david: i'm disinvited from jingle ball.

i heart is very popular but it has not had an easy time as far as markets are concerned. a business that never sold itself well. radio, ratings go up and down. it is 93% of the people who listen to radio every week and that has not changed since 1974. 250 million people tuned in every month. we are the biggest media company in the planet. they have not done a great job of selling what it does. our fearless leader is changing the game and we have a platform -- our shows are on television, 702 million downloads of the app. we want to lead in discovering music. , adele will sing

and permit or her new album for the first time across america on the radio. the first public she ever played, 200 people. -- the first pub she ever played. you will hear her in front of 150 people. she came to radio first because that is where -- david: can you monetize that? >> it will drive more people to our stations. i ratings go up and we sell advertising. >> is the online radio business enough? we love our position in the discovery business. we love the fact that we turn more people onto new music than any other platform out there. if they want to go out and do a deal with an on-demand service, fine. it is a very personal decision

for an artist to make. there's three or four ways to do it. you can still go to target and by that cd. -- buy that cd. you saw it in newspapers, saw it in music, saw it in television and publishing. these were incredibly attractive businesses with healthy margins. they generally attract a fair amount of debt. as those businesses come under more pressure, those balance sheets get out of whack relative to the expectation for the business. they grow the new parts of the business and traditional parts come under pressure. they are turned to grow them fast enough to compensate that traditional businesses are declining. stephanie: let's talk about the power of women in music -- the biggest earners right now comeau

--once, taylor swift, dell biggest earners right now, beyonce, taylor swift, adele. i think that what has happened over the past five like areatats --undig -- ariana grande ♪

david: we are now 29 minutes away from the opening bell. welcome back to "bloomberg ." stephanie: we are joined by our

co-anchor for the hour, erik schatzker. erik: extraordinary hour because guess who is here -- the ceo of canadian pacific railway. a man trying to pull off one big deal. randy is a former treasury undersecretary under george w. bush. he's now the managing director for utah-based investment firm. welcome. this is going to be fun. we are going to start this hour off with vonnie quinn. west africa, three gunman barricaded and holding hostages in mali. three people were killed. the attackers have abducted 170 people. troops are going room to room to freedom.

-- free them. jonathan howard served 30 years of life sentence -- the obama administration granted parole. the latest bloomberg politics national poll shows hillary clinton far in front of her democratic rivals. two months ago, she led by nine percentage points. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. continuedre seeing gains in futures and the trend is up this morning. we are now seeing a 7.5 point gain. 83 point gain on the dow. futures dropped this morning as headlines of violence in northern africa came out. we have recovered and we are

going past the point where we originally dropped from. the dollar also very interesting. mario draghi's and he will do whatever it takes to get that big local bazooka of his -- qe will be expanded in europe. money comes out of the euro and into the dollar as a result, the dollar index is rising. very interesting story in oil today. oil came down below $40 a barrel, now back up and $40.14. a drop of one full percent. gold continues to rise. gold has been gaining steadily over the last couple of days on concern about geopolitical risks. showed that we will have a slower trajectory for rate increases. 1081 even a troy ounce.

erik: a man behind a bold new plan to combine two of america's biggest railways into a transcontinental giant. week, they offered by northrop southern best norfolk southern -- it is not a done deal. many obstacles stand in the way, starting with norv folk southern itself best norfolk southern itself. the ball is back in mr. harrison square. hunter harrison is here right now. what if you cannot persuade jim directornd his lead and their fellow directors that this is a fully valued author? >> we talked to the shareholders. erik: you will go hostile? >> i'm not prepared at this

point to call it hostile but we will get to the shareholders with our story and message. we think these are the key people that should make the decision. in your case, bill ackman has been a driving force on your side of the table. >> i'm not sure he is the driving force. he is a large holder of 12% now. i don't think bill would be called a driving force. erik: did you try to do it directly with them first? >> yes. david: and they said no thank you? >> it was all about shareholder value. we don't want to do the deal. shareholder value is an important consideration for any investor. they are looking at their shareholders. cashut on the table $46 in and a share exchange ratio of

.340. did they give you any sense as to what they would consider a reasonable offer? >> no. erik: they just said that is too low? >> they did not even say that. i read it in the paper. i asked them, what would it take? from the social issues and other issues that we did not get an answer as to what the issues were. this was all about driving shareholder value. stephanie: analysts have said this kind of merger would cause major job cuts. could some of this half to do with -- have to do with them try to preserve their employees? >> i'm not sure how up to speed analysts are because there has not been a plan announced. we have not even had an opportunity to do due diligence.

we are looking at public numbers. people are getting ahead of themselves. it is too soon to tell. you have to define major. what is major? we have effectively made the cuts. they have been through attrition. hopefully we can do the same thing. gois not our role in life to into norfolk southern and say we will make major job cuts. david: give me a sense of what the guys -- the size of the workforce is overall. >> close to one third. david: that is significant. a third of the workforce. erik: i would like to try to pin you down on two things. the first is going back to price. is there room for a higher offer? >> yes. erik: how much higher? >> that depends on a lot of

questions. if they have one model, the price might be one number. if they have a different set of we have toage is talk. erik: but you have to make this work for your shareholders as well. -- i find give away it hard to see how you can offer much more in cash. you are levering up quite a bit with this deal already. >> you have to understand, potentially the value creation. it is something that is exciting to us. erik: exciting enough that you would -- people need to get a sense of this. if they are going to get behind you and you want to persuade the shareholders, get to see the promise of this deal. about 10% more than what's on the table now?

>> i don't want to strap a number to it. the thing i tried to avoid is negotiating in the media or paper. that is not the best place to negotiate. stephanie: it is for us, though. [laughter] >> you will have to get a lead somewhere else. is there room? yes. would it draw a line in the sand, no? did we say what does it take? no response. , wen some of their wants are happy to sit down with them. there will be some correspondence throughout the day. erik: when you say correspondence with them today, you are planning to communicate with them now? >> just through e-mail. stephanie: do you and the ceo know one another? >> no.

i met him six months ago. a quick dinner. i spent two hours with him a week ago. stephanie: how different is this potential deal than the one you envision with cfx? >> it's a lot different. the culture of the two organizations are different. that fit with us is different. what they have gone through recently as different. the have a lot of turnover at the top. it is a nice opportunity for us and our shareholders. and the north american network and the u.s. what are the factors that drive you to want to make this -- operational efficiencies, larger network, tax efficiencies, disrupting the industry? what do you think is most important and wanting to combine the two? >> if you had to pick one, it is

clearly operational efficiency and driving shareholder value. you were not trying to disrupt the industry. we are an outlier. we see the world a little differently than some. i don't know what their position is going to be. people that have said this should get approved -- if you look at everything that shippers have asked for in the past, we are addressing. barriers, bottleneck -- we are making a more competitive landscape out there. erik: you are making a case for the net benefit. this is not just antitrust. >> absolutely. it not only has to preserve, but enhance. erik: canadian national failed to pass back in the late 1990's.

why is this going to be any different? >> the industry then was not in very good shape. they basically went to washington crying saying, look, these successful railroads are going to emerge. it will be wonderful for them but the downstream effects will cause the rest of us to do some irrational things. i don't think they will get a if they goathy today to washington and say these guys are going to need us alive. at us alive. david: have you started reaching out to groups who can support you? >> yes. david: are you receiving an encouraging response from them? >> yes. david: you would get support from some of the most effective

in the regulatory process? >> we had mostly spoken to shareholders. -- i havet spoken to not spoken to any regulators. david: i'm thinking trade groups. >> we tend to prefer to deal with individuals rather than groups or lobbying groups. we have not reached out to any measly -- middle league or industrial groups. we have reached out to major shareholders. erik: can we go back to the debt for a moment? it is a key component of this proposed transaction. by some measures, you are doubling your debt load. is that right? >> yes. erik: how uncomfortable is that going to make credit rating agencies? how much more that might they be

comfortable allowing you to take on? >> we have had dialogue there. that wesaid publicly want to maintain our investment grade rating. we would not push the envelope so far to lose that. erik: there is only so far you can go. >> so be it. stephanie: it has been 15 years since we have seen anyone pose the idea to build a transcontinental carrier. why doesn't work now? >> i've been saying that for 15 years that it works. i turn to others and say what is your alternative. you think this infrastructure we have, particularly chicago east, is going to withhold growth? what is going to happen? where does the capacity come from? we have a common carrier obligation to halt all these aul all these

goods. we get criticized in 2014. now, we try to build infrastructure and the community says no. if the service transportation board says no, what is the alternative? what would you suggest? what would anyone suggest? we can put two carriers together that have been very successful in the end, we can route traffic different ways, ride around chicago, create capacity without adding infrastructure, without any tax burden. the rails and others created this so-called bridge in chicago and it was an original budget of $900 million. today, the price tag is $4 billion. stephanie: there you go. we have a lot more to cover.

you can stay here for the hour and i will be satisfied. erik: we have the yearbook game for you. .e is a businessman he was organized a $50,000 a plate fund-raising dinner for mitt romney in 2012. stephanie: that made me choke. erik: who is this man? tweet us with your responses. ♪

erik: we are back with hunter harrison, the ceo of canadian pacific railway. one of the things that norfolk southern shareholders may want to consider is something beyond just the price.

they would be getting some of your stock. i want to turn to matt miller because your record at canadian pacific speaks for itself. you been able to reduce costs as a percentage of revenue. matt will show us just how much. matt: they were high, if you i haveck to 2010-2011 -- taken data for adjusted operating costs. it takes one-time gains and losses. this is canadian pacific. it has improved from 90 down to about 60%. i put csx in red and norfolk southern and white. norfolk southern is higher than these two competitors. graph them against everybody else, they have the highest operating costs. erik: lower is better.

matt: of course. you want to spend less money compared to the revenue you take in. erik: the question people raise about your chances of doing the same at norfolk southern is that it is the eastern u.s. come up much more contested market, the canadian railways run freight across the prairies mother is nobody there, it is easy. you will have a much harder time doing it in the eastern u.s.. is that true? hunter: no. they are not railroaders and don't have experience. i've been doing this 50 years. i started in the east. the more congested they are, the more opportunity there is. they said it at illinois central, said it at canadian national, they said it at canadian pacific. when are they going to be right? they have not been right yet. i do know who your sources are,

but i would love to publicly debate them. >> if this merger which are happen this were to happen, what more consolidation in the industry? hunter: the suggestions we have made of what we would do before the service transportation board, we are not suggesting what they should do with the rails. we are suggesting what we would voluntarily do for this. whether other rails decided they need to merge, it is hard for them one day to say mergers are bad and horrible but if hunter emerges, it is ok. maybe they can make that case. past af you can get reluctant ceo, how long do you estimate the regulatory process would be and how confident are you a success?

hunter: if you wrap everything isthere, there potential to end up with a voting trust. get would take 50 days to the permission for the trust. by statute, they could take 24 months for the approval, which is why we are going to a voting trust so there is not the so-called that money and we can close the transaction upfront. -- the so-called dead money. they can have their paper and do what they want to with it. , it affords the service transportation board the opportunity not to forecast what we are going to do, to watch what we are doing. david: can you start making those operational efficiencies? that is a long time to have uncertainty. under: yes and no. let me make sure this is understood. if one of the companies is put

in trust, they can have no interaction with the other company. if we in conjunction with them decided to put an individual at and put them in trust and maybe it could be the opposite, we could go to work right away installing and operating plan and getting a running start on bringing norfolk southern up to speed with our metrics as we put the companies together. erik: here is one thing that needs to be added to that conversation. if it is 24 months at the least because you said there could be even more time involved, you will be 73. some people want to know whether hunter harrison will stick around long enough to see the benefits of this deal. >> yes.

i have a contract through 2017. if we do this transaction and i am part of it and i intend to be , i'm surely not going to walk out in the middle. i will stick around and see it through. erik: that would mean until when? hunter: i have to speculate there. it is reasonable to think by 2018, we could have an answer and know which way we are going. erik: and the integration takes -- some time after that. ,> if you've had somebody there what if i went to norfolk southern? and i got them up to speed, geared up to the cp way of thinking, the integration is not so difficult. david: shotgun start. erik: thank you so much.

great to have you here. up, how the fence transparency might be doing more harm than good. 's transparency might be doing more harm than good. ♪

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. stephanie: welcome back. i always say this, but i will say it again, you are watching a special day on "bloomberg ." we are joined by the senior -- we had to the fed. are saying it is a foregone conclusion they will race in december. will it even matter? -- raise in december. >> what does matter is the way the fed has been telegraphing its decision. surrounding it.

it has tried to become more transparent. says that is one of his seminal a accomplishments. central banks around the world have been trying to become more transparent. increasedsparency has uncertainty. stephanie: it's confused them because there has been so many messages. david: if you had a big company and you were totally transparent about what all the board members -- itnagers are saying would be total confusion. randy: exactly. i am all for transparency. the fed has that part of it right. that itnues to believe should be following a rule. if you are going to be transparent, yet to be much more rule-based. the transparency has to involve this is the rule we will follow so that the markets can say we

now understand what the fed is going to do. we can see what the inputs are. we will know how to react. the decision-making process is we will decide whether to invest -- what will they decide? not what the economy is doing and how the fed will react to that. it's what these people think. members of the federal open market committee ranked by what they thought their influence would be on the ultimate decision. -- what their influence would be on the ultimate decision. it's a crazy way to run a railroad on the federal reserve. >> did the fed make a mistake? did ben bernanke make a mistake in doing what the ecb didn't do, which is effectively decentralize power, at least in public. when mario draghi speaks he speaks for the ecb.

when voting members speak, they sometimes seem to be speaking for the fed. >> i don't think it is where's the discretionary authority. analysis.mplicate the a it going to be discretionary decision based on the individual assessment? is the federal reserve's monetary policy going to be more ruled base? will we determine on what the ?ool -- i want the rule is wall that rule is in effect thereon -- in effect there will be certainties in the markets. the market uncertainty is riven

by the fact that decision will not be knowable. just come up with a plan. you have been in washington. as soon as they come up with the plan, what does that do with congress? one it is more ad hoc it is much harder to influence the fed. it increases the politicize a shin of monetary .olicy if you have a more rules-based i think that makes the whole process of monetary policy .ess political >> we are talking about washington, regulatory changes.

>> i think out here is where politics comes into play. quite likely if there is a republican president. one of the principal differences -- and itary policy could have developed the other way. nothing necessarily saying this is republican rather than democratic policy. an important element of republican thinking is it occupies rule space. if there is a republican president i think there will be a new chairman of the fed. i think you would see a significant change. >> hillary clinton would like to see a double down on dodd-frank. if there is a republican president can we see something like dodd-frank repealed?

>> dodd-frank repeal is difficult at this point but i think you will see significant changes. there many aspects of dodd-frank. i don't think dodd-frank was ambitious enough. and other forms of regulatory policy. >> you are the former undersecretary for domestic finance. you have to be paying attention to what is going on in the aversion debate. the only way to solve this problem is with tax reform, which is not coming anytime soon. if you are the treasury secretary, what would you be telling jack lew? >> on the question of tax policy i don't think there is go for jack lew over anybody to do anything between now and the election. but i think that the policies of comengton are such that

the election, whether it is republican or democratic president, there are factors on that would support for mental tax reform. -- support fundamental tax reform. >> we are about to see another aversion. >> at the end of the day i don't know that the government should be doing it. i think these are decisions that will be driven not entirely by tax policy, but this is an important signal to the government. i don't think there's anything practical that can be done between now and the election. it is important to signal to the political process -- >> when people are buzzing about alec and pfizer, maybe this deal won't go through?

>> i completely agree. the treasury secretary doesn't have any ability. >> that is so important that the treasury secretary, it wouldn't be his job. >> he said that publicly. way, they significant are not connected at anything. he has an important policy role. the treasury secretary -- on behalf of shareholders it is a rational some -- rational pursuit of self-interest. that is what the board and doagement have been asked to i shareholders. .- do by shareholders

>> it shows that our tax policy is uncompetitive. we can make changes in tax policy that can be revenue neutral. and i do think that considering tax policy it ought to be revenue neutral on a dynamic basis. if you take into account economic growth, you ought to be revenue neutra, but i think you can have a significant reduction in overall corporate tax rate. >> we want to check in with the markets. matt: i'm looking at the and seeing mark cheadle is telling reporters that six u.s. hostages have been freed from the hotel that was attacked in mali. a general at the pentagon

telling reporters that these attackers are most likely linked with al qaeda, saying islamic state is not a factor in mali. board, gains across the not related to what is going on in mali. futures have come back. the s&p is at 10.5 points. if you look at the map, which i also have in the terminal here, there is green across the screen. only teleconference -- only telecoms are losers. the index of discretionary stocks up. it is amazing how retail has come back today. take a look at the sportswear stocks. nike says it will do a $12 million buyback, raising forecast, raising evidence,

doing a split. you are going to get what hundred percent dividends, so that will be your splits. foot locker raising its forecast almost up 9%. southeast upin the 18%. most interesting to me, possibly a sale here, only because i have interviewed the ceo of bass pro shops. he may be interested as well as private equity companies. take a look at some of the clothing -- ross stores beating estimates. the gap, lowering its forecast. things will be worse than we previously said, profit maybe

242 instead of 280. there were down 40% year to date. that ae retail so much rising tide lifts all boats. >> i don't think people love retail today. i think there is a potential trade to be done given that the selloff may have been too big. i think they love a trading opportunity. people who bought to night, very happy. doolittle live from the nasdaq, taking a look at software companies. storing --ares are shares are soaring this morning. the company expects to earn between 17% and 20% versus the five cent estimate. this momentum is being driven by

a neck celebration in cloud-based products, according to officer brad smith. and something that could help the company return to an expected growth in the fiscal year in both sales and earnings. autodesk, ato company making a transition to the cloud. its shares are not faring as well after the company gave fiscal fourth-quarter guidance that is below estimates. it is be worth knowing flat up on a year-to-year basis and the third quarter was noisy, but he could turn constructive on weakness and he applauds the move to the cloud. stephanie: abigail doolittle joining us from the nasdaq. work driving private equity returns. are going to see if they take out public equity markets in the long run.

an analysis of walmart shows that store space is growing far faster than stopping. will be by 45%. yearompany said this customer service needs improvement. 880 workers. tyson says they are old and will be too costly to modernize. than 300,000 more midsized sonatas. even when the driver isn't stopping. the recall affects 2011 and 2012 models. that is our latest bloomberg business flash.

eric: time to stoke a little debate and here is a question for randy, who has spent years in private equities. in a world of high valuations and rising interest rates, how can private equity firms deliver outsize returns? randy: they will do it the way they always which is by significant lead driving operational improvements. when i was at carlisle we did analysis over the history of the firm and what the end -- what the developments have been. a significant that significant portion was in the heyday of financial reconstruction. the returnsrtion of came from multiple expansions. the overall environment improved.

a certain portion of the returns were driven by financial restructuring improvements. at least three quarters of the was driven by expansion and earnings. with aity firm invested variety of actions in the company. management,proving making the company part of a private equity firm. those operational improvements. it has been the driver of success and private equity for the whole life of the industry. i don't think the current financing environment is going to make -- if you make it at it expensive price -- erik: that is a powerful number. why do these companies do it on their own? they weren't willing to do it?

widen they clean up their house? -- why didn't they clean up their house? randy: that is the difference between a large private equity firms and smaller ones and the returns they can generate. is a harder question to answer for a very large firm that has the resources to have the best management. for a smaller firm, for a firm 50 million of equity, and that is how all the private equity firm started out, 25 years ago. to see howeasier bringing in the resources of a proximate -- of a private equity firm -- week,n you look at this this is a carlisle buyout, we are watching it fall apart. if you look at a lot of the

companies, their debt is trading really low. the banks are making it clearly a lot harder -- the regulators are making it harder for the banks to do average loading deals. >> i think whatever the financing environment, the principal returns from private obviously that has been a factor, but not a driving factor. >> this is your last yearbook game clue. this businessman is also the richest resident in new york city right now. i will give you some other information, he went to deerfield, went to m.i.t. where he holds the record for the most points scored in a basketball game. he hosted a republican dinner that was $50,000 a plate. tweet us your final guesses.

coming up next we are going to look at our favorite conversations for this week.

let's take a look at this week's highlights as heard on go. >> the idea that we can stand apart and watch from a distance, that is a false idea. >> next thing we know we triggered a series of today and points. >> square has the capacity to create a low pain. you see the money go away. .> it could be expensive >> that is something we definitely want to buy. let's do it. do an ipo aser long as i can help it.

that we turne fact more people onto new music. a >> people want to get rich and they want to get rich easy. easy,eople think it's then they get into trouble, because they let down there guard. they don't apply skepticism. reflects -- the first thing you notice in anybody in eddie sending -- in any setting is physical appearance. over save and we have unprotected sex, the american way. i'm still reeling from tender not being about hookups. it is time for the big reveal. businessmanthis broke records, survived a plane crash, was a vice president candidate, through an expensive dinner for mitt romney, and is

the richest resident in new york city, which is why i say he shouldn't even charge 50 grand a plate. tina people guessed it was wilbur ross -- two people say -- two people guessed it was wilbur ross. it is none other than david coke. he lives in west palm beach. eric says that is not the case davidu to i have to say bradley give us the answer via twitter. there you go. >> some people may wonder just how rich is he to be the richest resident in new york city? bloomberg has a function. $51.9 billion fortune. >> which is why i say you didn't need to charge 50 grand to your friends for the mitt romney dinner. am i think there were regulations that would and let him do that.

>> we are talking about the koch brothers. how involved are you this election cycle? randy: i have talked to a few of the republican campaigns. i haven't committed to anyone. i know all of the candidates instead of trump and carson somewhat, but i don't have the same connection that i had to mitt romney. if the italian selected berlusconi -- shore group.he that does it for us for today. cia monday. -- see monday.

>> welcome to bloomberg markets.

from bloomberg world headquarters in new york, i am bloody -- i am betty liu. gunmen stormed the hotel in molly, taking hostages. people have been freed, including six u.s. citizens. the latest from the standoff. it's ecb president mario draghi saying he will do whatever it takes to spur price gains. who does drug you need to convince? it is a daily fantasy sports legal showdown. one of the most powerful warriors in this country joining us to tell us why he is flight -- why he is fighting for draft kings. plus other high profile cases. bill gross veus