aig, and has requested major changes in both. and the force maybe with us. retailers attempt to cash in on the hype around the new "star wars," movie. welcome to "bloomberg go," i'm david westin. stephanie: i'm stephanie ruhle. i try not to agree with tom keene as much as possible, but he was right, walk, don't run. outstanding. anchor isanger is -- megan murphy. we have a lot to cover here, but we are also following breaking news. turkish forces shot at a russian warplane knew the border with -- near the border with northwestern syria. officials say jet fighters

ignored repeated warnings they were violating turkish airspace. ryan, russia is denying entering syrian airspace, and says this is a very serious incident. it was more clarity around the details. turks of,e then, the with satellite images that they the russianate airplane was in turkish airspace. but on the surface, this is a very serious incident. it would be, after all, the first time in nato country has taken down a russian jet. that since the syrian conflict began. and since nato was actually formed. that is perhaps the issue here. pilots, the two pilots of the russian jet both ejected. and we have subsequently heard that one of them may have been churches --ethnic

turkish forces inside syria, not turkish nationals. and that the second russian pilot may have been killed. in fact, may have hit the earth, already dead. a very serious incident indeed. the russians is that a lot, the turks of said lot. the main thing is, we haven't heard from russian president vladimir putin, who just happens to be meeting with the king of jordan today. talk about this, and that's what you need to pay attention to. david: how important is it whether the russian jet was actually over syrian or turkish airspace, given the age of gps, both russia and turkey must know the answer to that question. stephanie: that's a good point. it's not incredibly important. what's important is how the russian president decides to play this. they are probably trying to figure it out for themselves right now, whether the plane was in turkish airspace. it shouldn't be very difficult

to figure that out. at the end of the day, that's really not what matters. it's how they handle it, and what they say happens. if it turns out i think the plane was in turkish airspace, they could conceive that -- concede that, were denied at. perhaps responded little bit less robustly in what might be abutting conflict between russia and turkey. stephanie: you are talking political response. power the markets responding to this news? -- how are the markets responding to the news? ryan: we saw negative response. treasuries -- u.s. treasuries rose. fell,ssian stock market the most of any stock market worldwide. turkish stocks fell most in three months. both the ruble and turkish currency fell. and we saw a little bit of a pullback. rattled they it has markets. it's always been a concern that

something like this can happen. we saw that initial pullback in concern, that highlights how bad this could get. ryan, thank you for joining us. we will check in later in the hour. more will unfold as world leaders responded. let's bring in andrew barton who joins us from london. andrew, russian officials have condemned this attack. had we expect vladimir putin to respond -- how do we expect vladimir putin to respond? andrew: he will respond, the question is how will he respond? if russia concludes it was warned, we will see strong words. be the behavior may restrained. if the opposite is true, we may see a strong reaction. everyone we spoke to says it will be asymmetrical response. they may hit up turkish proxies in syria, they may go the economic route and go after

turkish exports. or russia has a lot of links with kurds, they could make turkey's life difficult that way. there are a lot of avenues, but for now, they are trying to get to the bottom of it. putin to clinton -- speak soon, we we listen closely to what he says. david: thus far we have been talking about turkey and russia. one of the chances this could expand? nato, onea member of of the dangers this will not be confined to just between those two countries? that's why, initially when we had these reports, every market tanked. we had emerging markets move, gold moved. when you get this uncertainty, it makes things very risky. jordanian pilot was captured and burned alive, that was the catalyst that made the

syrian conflict much, much uglier. the big question is, what happens next? how will people respond? turkey has tried to walk things back. we said not only did we warn the pilot repeatedly, that we had no idea who's plane it was. we did not know the nationality of the plane involved. they are trying to send a signal saying it's not that we went directly after russia, we were clear rules of engagement. we acted according to those rules. it wasn't targeted and anybody. -- at anybody. nato is meeting later today as well, and so far they have been very restrained. everyone is trying to defuse this and walk it back until we know exactly what happened. megan: is this going to have any impact on that aspect of things as we have a meeting with obama in the u.s. today? everyone is on such high tensions, will this disrupt things in any way? it is messy.

it was messy a few months ago before you through france into the mix, and their aircraft carrier. russia carried out 500 airstrikes in the space of three days. you have everybody basically in goingand cameron will be to parliament asked whether he can exchange -- extend airstrikes in the syria. it's a messy exchange and everyone at this point will see how quickly we can put a cap on this and prevent something unknown from happening, from this playing out in way as yet unknown. david: andrew barton joining us from russia, thank you. it's time for first word from vonnie quinn. vonnie: good morning. the terror alert in brussels has been extended for a week. belton officials are warning that the islamic state terrorist plan to attack highly populated areas like shopping malls and public transportation. the locked out in brussels will use tomorrow.

the subway in school systems will gradually start to reopen. the state department and the u.s. is looking -- lifted a travel warning for americans. the apartment warns terrorist groups are likely to be planning attacks in several regions. to beans are being urged vigilant when using transportation networks are going to public places. four people have been killed in that crash of an army helicopter in fort hood, texas. the black hawk helicopter was on a routine training mission when it crashed yesterday afternoon. the army says it is investigating. 24these and other stories hours a day at the new bloomberg.com. matt: markets now with matt miller. matt:let's take a look at the implications of shooting down the russian jet on the price of oil. things that happen in the middle east drive the price, and it's up 1.5% right now. take a look at features as well. u.s. futures are down across the board. drop in&p contracts

nine points. the dow jones futures down 63. if you look at the world equity index chart, you can discount what happened in u.s. markets because these are yesterday's live trade. but look at europe. every thing is down. the tax is more than 1% as well. the two year yield from germany fell to a record low, it is -0.4%. that is the yield on german to your debt. you pay them to hold your money for two years. in equity news, a lot of stories to talk about this morning. carl icahn is a name that came up at aig yesterday and today, with xerox as well. he has taken a more than 7% stake in xerox. he is the biggest individual holder of xerox stock now over darwin decent.

that stock up 6% in the premarket. tiffany going the other direction, cutting its full-year 10%cast for earnings 5% to because of the strong dollar. that's compared to last year, it earned 420 last year, it expects to earn as much as 10% last -- this year. shares down more than 6%. another deal of the buying pmcor space, sierra. unchanged in the premarket, but they initially start of the building at 1050 a share. -- $10.50 a share. down in the market, but it's a small deal. maybe we will see some movement at the open. david: thank you, matt. we turn to washington, where french president france hollande to discuss the islamic state with president obama.

and it strikes me that given what's just happened over the skies of turkey and syria, president alums job is gotten more difficult. kevin: we'll be a huge topic of conversation as president obama meets today with the french president. there's a lot of pressure on president obama to have a more influential, more powerful response to what's going on overseas with isis. polls suggest the american people are looking for him to have a more aggressive strategy. so far, president obama has not committed to u.s. troops on the ground. stephanie: does it seem like we are hearing more and more information from world leaders other than president obama? the fact that we haven't heard from the white house, many are saying where is the president? this is one of the reasons that u.s. markets continue to be strong, because we have a president who gets out front in

these situations. kevin: that's a great point. if you look at what's happening in the 2016 presidential field, a lot of candidates really on the republican side criticizing president obama for not effectively communicating the u.s. strategy, particularly as our counterparts overseas have raised concerns about where exactly president obama is on this. many republican presidential candidates calling for there to be u.s. troops on the ground in a more -- a stronger force, if you will, from the coalition. all of that could be discussed, and i think that president obama has consistently said he supports the french people, and there will be more airstrikes, if you will. but falling short of that can to u.s. troops on the ground. david: -- stephanie: megan, where is president obama? loves to feel like

president obama is in the pole position and they haven't heard from him. megan: we need to separate the rhetoric we've seen from the presidential campaign in 2016 season. you have people like trump and ted cruz and marco rubio really seizing on this -- what they say is an absence here it we haven't articulated clear syrian strategy. i think with the president would say is i have articulated my strategy again and again and again. -- assad that a sod needs to be ousted, and i do not believe that rims on the ground is the solution. that would require trillions of dollars and hundreds of thousands of troops and animal to your campaign. i think the president was very eloquent when speaking about this and saying i look to the kids i ordered to go over there and fight who have lost a limb. i would to the parents i have to tell that their son or daughter has died. are americans really ready to stomach that kind of conflict? i think it's no, my military

advisers think it's know, and my foreign-policy advisers say no. david: that's a consistent narrative from the president. we understand what he doesn't want. i want to go back to kevin, what does he want? hollande wants. what does president obama want? kevin: he wants to show that the american government remains hind and supports the french government as well as their counterparts overseas in regards to isis. and he wants to ease some of the concerns that he hasn't been out front as much as his critics have pointed out with regards to a leadership position. the bottom line is less than two weeks after the terrorist attacks, this meeting is clearly going to be generating a lot of buzz, if you will, particularly with that plane going down just hours ago. david: i understand there's now a travel advisory for u.s. citizens on all international travel?

kevin: yes. it's one of the most busy weekends for american travelers and the u.s. state department coming out and saying they are urging americans to get there early and expect long lines at the airport, and to remain vigilant. the threats in u.s. cities from isis continue. stephanie: thank you, kevin, at the white house. would you behavior behavior this weekend? david: i'm getting on an national flight today. stephanie: you? megan: i wouldn't. stephanie: i disagree. i was going to take a train, now i'm driving. most likely, nothing will happen but i am a parent in the risk management business. i don't want to go to a train station or an airport. we've got to move on and talk carl icahn. some companies are moving too slow for this octogenarian. iss billionaire activist

pushing for big changes in xerox and aig. ♪

stephanie: -- vonnie: looking back to "bloomberg go." , futuress will rise contracts indicate traders now believe there's a 74% chance the federal act next month. himecently as mid-october over the probability of less than 30%, the fed hasn't raised rates since 2006. facesports as coca-cola the agenda of a company fighting obesity. e-mails obtained by the said thed press company influenced the group.

apple wants to launch the iconic payment system in china by february, according to the boston journal. deals with china's for big state-run banks, facing competition from alibaba and another. there's talk about carl icahn, who has set his sights on xerox. the billionaire investor is taking 7% in a company, making him the second largest shareholder and he wants to talk to management and possibly shake up the board. shares are moving in the early section -- early session, the same day carl icahn pressured aig to break itself into three companies. kraut joined by daniel and alex sherman. a lot of people just xerox and said they need to get there act

together, or they will make some things just doesn't matter anymore. >> from a carl icahn playbook, this is a little bit of a head scratcher. usually the way he does these things, especially fees pushing for strategic review after sales, which is what he is usually looking for or return of capital, he comes out a makes a statement, it's a bit of a surprise. the stock moves up, and there's a bit of a tussle with the board as he tries to get more. came out andonth, said we are going to do a strategic review of the company. basically saying everything is on the table except an all-out sale. it's a little unclear when he is pushing for, if anything, that the board wasn'already doing? that's a bit of a detour from the usual carl icahn way. like sharesst feels are undervalued, or he can be a presence in the boardroom that

make sure certain assets are done correctly. david: has he given any specifics about what he wants? no specificsgiven yet. p going to speak to the board and management. stephanie: xerox has got to do something. [laughter] it kind of can argue that. xerox, you still mess with them at christmas parties. but if you were to say what are they doing right now? what do xerox mean to you right now? megan: i think the eastman kodak comparison was in interesting one. they need to move into new markets, figure out what parts of the company are nonessential, but i agree -- in contrast to aig, the board already announced strategic review. that's why wanted to bring daniel and say on the aig issue, what do you think the prospects are that he has for actually

getting more leverage to do what other people were already talking about as well, which is what that company into potentially three arms? how likely is it that he will get momentum behind that? daniel: he's really trying to push the urgency button. aig has directly said they do not support his plan of dividing the three companies. john paulson, also aig shareholder indicated he would be willing to the company shrank, sell assets. aig has never -- has not directly said what they are doing. we've already been selling some stuff. they will come out with another presentation. it will be interesting to see how far they go. -- inns latest letter carl icahn's latest letter, he says what's your plan b? that's more typical carl icahn. there's a suggestion made, that ebay, he pushed to split ebay and paypal. $100apple, he pushed

billion of capital, the company was against it. for: the company is already everything you could possibly ask for, except the sale of the whole company, which they said we don't want to do. i don't think there's a buyer for the whole company. look at carl you strategy come in the past, it's basically rational behavior. and starts toin -- not criticize, but review a company, all of his points across the board are -- that make sense. it doesn't make sense for this business to exist in that form anymore. i think he is simply making the point -- what are you guys doing? weorder to be a public company and do well, you have to be growing. what on earth is iraq's doing to grow? xerox is a target you could do something with like ibm, you can make the same

argument for a lot of stuff there. a huge company. difficult for an activist company. stephanie: it's gotten easier and easier. this is the first time we've seen an activist go after a financial firm this year. in the past, this big companies have been behemoths. the fact that ge has an activist involved is extraordinary to me. david: come back to aig. understand peter hancock and his plan for aig. stephanie, he came forward with a specific plan that made sense because a regulatory capital reserves -- hancock's have this plan, he says we're going to come up with something. stephanie: it is so hard. david: it reminds me what you were saying before with president obama or he has a long game, be patient, everything is going to be fine. and it may be. daniel: but if you're looking for a quick stock hit -- megan: you have the deferred tax stuff and the assets that they

have to give up potentially 5 billion of those and an advantage they hold. there are real issues, there is complexity. i don't think it's as easy as people think just a split it property and casualty up in a, a life insurance company, there are real issues they have to grapple with. he says no is talk about two big fail, this is too big to succeed. stephanie: matt miller is giving us the -- he has something great in the terminal to give us. but that's later. alex sherman, dan kraut, thank you. megan, stay with us. we are back with more "bloomberg go." ♪

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. you are watching "bloomberg go." look at that gorgeous shot of our nations capital. it's better than looking at d.c., where president obama is

with president along. here with us is our own bureau chief megan murphy and marty , from bloomberg global economic the government. that's a big "bloomberg go," moment. fresh off the airwaves from the radio, tom keene. tom: marty is in new jersey. stephanie: he wishes. a morning in the garden state, nothing better. you are right. the big short. tom: did you watch it last night? i thought i saw it on one of the las vegas things. stephanie: it was fantastic. tom: as was the michael lewis vehicle that brad pitt is doing. stephanie: brad pitt, ryan gosling. tom: i didn't of the christian bale was. -- i didn't know who christian

bale was. but it captures the speed of wall street. i first met marty schenker company, he says you talk too fast. he said no i don't. it captures the velocity of the dialogue on the street perfectly. stephanie: thinking that you talk too much. david: speaking of velocity, let's go to nnie quinn for the first word. turkey,we begin with who is shocked on the border of syria. the kremlin calls a very serious incident. turkeys as it shot down the plane after the russian pilots record -- ignored repeated warnings they were violating turkish airspace. turkish tv shows video the plane in flames, tumbling to earth. the rejected, one report says one of the crew members was killed. president along will be in new york meeting with president obama. driving to build a an

antiterrorism coalition. yesterday he met with british prime minister david cameron. tomorrow he will be in moscow meeting with vladimir putin. john kerry is meeting in tel aviv today with benjamin netanyahu. to stabilize relations with palestinians after nearly two months of violence. in the latest incident, three soldiers were hurt when a palestinian rent-a-car into national ran a car into a checkpoint. you can get the stories 24 hours a day at bloomberg.com. stephanie: marty is now here, he teleported from new jersey. bloomberg senior executive editor, marty, welcome. but your debut visit to bloomberg go. marty: it special being next to tom keene. megan: he's my boss. marty: and i'm her boss. stephanie: you got to deliver. part of the polarization of

our country in washington, this is john bolton, one of the great conservative speakers publishing in the "new york times," to defeat isis, create a sunni state. he's bold and being outside the box. he is always bold and controversial. may not beni-stan switzerland. this is not a democracy, cold power politics. strategicistent with objectives of obliterating the islamic state that we share with our allies, and it is achievable. this is john bolton in gauging -- engaging the conversation. he affects the terms of the space. i don't think there's one single player in the middle east would be in favor of this, including saudi arabia. they think of themselves as sunni-stan. tom: i don't have an opinion whether he's right or wrong. i have an opinion that it's

interesting, particularly with the challenges of turkey and kurdistan, that we've got a guy talking about something outside of the box. everything else has failed and the senate into chaos. a great the conversation. does strike me, tom and marty, that the one thing that's true about isis is there is not one opponent over there who has as their first goal, eliminating isis. every single person has something else. the turks are worried about the kurds, and no one has that is their number one adjustment. tom: did you listen to the press conference this morning? that's what they're going to be discussing today, how to reprioritize defeating isis as opposed to other objectives we have in the region. the consensus is forming internationally that stability can only be achieved when people can unite in a coalition with

isis is the primary target. do i see that happening anytime soon? no way. but i think they will, with some lip service to that. marty: what you're listening for is any kind of movement on obama's part towards the issue of creating a consistent force against isis. tom: andrew morton was on monday, he worked for years out of dubai running eastern european coverage. thethe desperation, but absolute mystery about the united states engaging with vladimir putin, made much harder in the last one of four hours. david: by the plane being down. marty: obama has said the russian involvement in syria is fraught with danger. and now we've seen that actually happen. david: it's difficult for me to understand -- how could they not have known it was a soviet plane? stephanie: everyone's got gps.

david: who else is flying fighter planes? tom: there seems to be a clarity that they were warned 10 times in five minutes. marty: the turks are trying to dial it back. they're using an excuse to make it sound like it was in russian directed, it was just one of those things. nothing personal. megan: it just happened to be in motion -- a russian plane. david: we have to talk about tax inversions. tom: can you get me washington capitals against? -- tickets? david: that's on the brakes. after we went off the air yesterday, politicians came forward. we have hillary clinton coming down really hard with full guns blazing. stephanie: they are weighing in. whether we are changing religion has nothing to do with that. megan: marty knows, this is our favorite topic. stephanie: things get crazy. megan: yes, you saw hillary,

with a very strong opinion against the tax inversions. but the politics of this issue have changed from where we were september 2014 when the treasury first released relations designed to clamp down on inversions. they found they actually couldn't do anything to stop inversions with a commercial purpose. pfizer has a real commercial purpose for these two companies, and they been very clear about saying every other competitor has already done it. and yes, the treasury put out some statements and new rules. but they can't do anything about it. stephanie: it's legal. it's their company. this is just political noise. marty: it certainly that. what intrigued me about donald trump's criticism early in the campaign, he was criticized for using the bankruptcy laws. playing by thet rules. now pfizer is playing by the rules for shareholders, and he is criticizing them.

stephanie: whether mr. trump or carl icahn has intact inverted -- attacked inversions -- whether or not they change the rules, right now, these are the rules. these companies need to do what's in the best interest of their shareholders, and to operate. marty: last time i heard, that's how capitalism is supposed to work. david: is there substance, or is this just political? tom: it's a very important debate. that's why they are tearing the support of morning, the lexicon is outstanding. i think all the viewers understand that in some way or some form, whatever your sophistication, the taxpayer in some way is losing money. megan: which taxpayer? the u.s. taxpayer? why are we setting this in such a u.s., american, parochial context? a completely legal maneuver. this is not something like starbucks taking the revenue through luxembourg, through very

sophisticated partnerships through ireland. in this case, it's a very simple re-domicile in ireland, where allergan has an actual tax base. i don't understand when jack lew called is un-american, when the eight administration calls and un-american. this is as american as apple pie. people moving themselves to lower their taxes. stephanie: when hillary clinton, was a very good chance of being the next president of the united states says tax inversions will leave americans holding the bag, what does that even mean? how is this americans fault? marty:marty: it means they struck upon a really good, populist take idea, and she's going to play it for all it's worth. but when and if she becomes president, she is going to confront the same problems everybody else is facing -- tax reform is a very difficult thing. stephanie: marty, houses the popular american opinion? americans are so frustrated with washington gridlock, they get a

statement like this get you right back into gridlock because nothing can be done about it. i agree. what it does is deflect the real issue, which is the tax code and policy engineering. the complexity it causes is the result we see with taxes. stephanie: they don't want to tackle the fact that corporate tax -- tom: the gridlock in washington is a topic no one wants to talk about. what will be the catalyst to engage congress to amend the laws, not so everybody wins, but there can be some sort of moment?' tom: where is speaker ryan on this? megan: you always heard it's possible that would attach reform, --al attacks tax reform, which is repatriation of the trillions of dollars in american companies have a broad as they don't want to bring them back into the united states. center dot repatriation holiday for that money. i think he has the gravitas to potentially force some sort of

bipartisan work. tom: do i understand that pfizer is repatriating dollars to dublin? with the verbal idea that it will be invested in the united states? megan: what they can do with this is use that money, they can use that now under this deal, which is a reverse merger to sort of invest that money at a lower tax rate. tom: there is lots of sort of here. started withwe john bolton, want to be provocative. tom talked about gridlock, i want to submit there is no gridlock at all. it's gridlock only if what you want is legislation. if what you want his reelection, there is no gridlock in washington. they are incredibly efficient at doing that. your point, the way to get things changes when they think it's going to affect when they get reelected. both republicans and democrats are wonderfully getting reelected. marty: and there's no such thing as anything called moral leadership. you will not get anybody in

congress than to stand up and say what is right versus what is expedient. and that's a sad state of affairs. stephanie: that also speaks to short-term is him. these people need to get elected. even as americans we say we want the right thing done, that's not how we vote. we vote in ways that give us what we want today to satisfy our immediate needs, much like toddlers. marty: i disagree. i think when people actually come out and speak what they feel from the heart, americans respond. megan: is that we donald trump is doing so well? marty: that's exactly why. megan: going back to waterboarding, that's what you are seeing playing out for 2016. and that's why obama take such a hit on syria. people to believe he is taking the moral compass. stephanie: whether you like his heart or not, donald trump speaking from his heart. i interviewed him and i walked away, helicopters lost spinning on fifth avenue saying do i just think that was awesome?

he does speak from his heart, and we haven't heard that from washington and so long. david: he does believe what he has said. thank you, tom keene. and bloomberg's new senior executive editor, marty schenker. stephanie: he might be back after the break. i'm going to try and keep them here. with us now,is we're going to talk about "star wars," on "bloomberg go." this is a really big merchandising venture. "bloomberg go." that's coming up on "bloomberg go." ♪

david: we're calling it the jedi effect. "star wars," toy sales expected bring in $1 billion. how does it stand to gain from the toy invasion? ramy inocencio digs into the force awakens. amy: the force awakens in the

darkside returns this holiday season. with a, a potential $1 billion in "star wars," toy sales. and in the heart of new york's times square, toys "r" us is ready for star wars fans to storm in. >> this is a huge driver for insumer projects -- products the twin history. we are seeing great sales, we get a big pete -- peak. be new kids collecting across the whole "star wars," world. the: richard barrett read -- led the unprecedented rollout. we started two years planning for what we had, executing, and more than doubled our space in the majority of our stores. ramy: toys "r" us is packing its shelves with historic characters , andthe reintroduced r2-d2

a reengineered yoda with robotics technology. along with new characters only teased in trailers. >> star wars is the biggest property in the toy history. we are talking about $1 billion to 1.5 billion dollars worth of toys sold this year. expert tim silvers says "star wars," fans and span generations. >> you have five-year-old to start wanting the toys, and you have 50-year-old and 60-year-old collectors in either action figures. base hasthe customer grown, so have the number of toymakers looking to profit. >> you have hasbro, you let go, you have mattel. ramy: and that less known toy brands rolling out blockbuster toys. >> this company gets a huge bump. not a lot of people have heard of them before, now they are on everyone's radar. you are lucky if you can get it. ramy: the millennium falcon

drone is another hot troy. , it willill be around be sold out. ramy: retailers are positioning themselves to be the retailer's destination for toys. >> if you want toys in the "star wars," franchise, come to us. countdown to star wars and christmas, retailers will be battling for customers, hoping the force will be within this holiday season. ramy inocencio, bloomberg news, new york. disney is also the king of corporate synergy. i know. i've been there. david: -- stephanie: that was not great light saber dueling. i like ramy inocencio. he's got to come to my house and see the real light sabers. david: paul sweeney hester explained, and we have marty and megan.

i can't remember the last time there has been this much hype. i feel like they could sell "star wars," toilet paper. marty: it's everywhere. nobody does merchandise arguably better than this way. no one ties that intellectual property better than disney. he always talks about brands. it's not a movie, it's a brand. marvel is a brand, and they extend that brand across all of their properties. merchandise, theme parks. you will see tv shows on the disney channel. stephanie: is this franchise just bulletproof? it is. it was a once-in-a-lifetime opportunity for disney. was going to do a deal with disney. they bought it, either that with marvel and pixar. you can look over the next 10 years at the studio slates, and it is maxed out. binks.two words, jar jar

i was serious bullets taken to the franchise. stephanie: could one make the argument that all press is good press? we certainly talked a lot about him. megan: that's true. david: i want to come back to the dealmaking side. whenever you get up for auction, george lucas would not have sold to anyone other one that disney. paul: he was definitely the preferred buyer. there's a lot going on there. is still involved, but he's not directing the films anymore. i think he was certainly looking thea caretaker for characters and stories. another was concerned that disney might export it. and hereuple with it, we are. the expectation is to billion dollars in box offices, that's the expectation. $1 billion in merchandise. stephanie: i can envision a scenario where bob iger was going to go low-budget on the deal. he was going to pay george

lucas, that wasn't a deal. himd: he was going to will -- woo him it. bob came in and made the deal. stephanie: marty, do you have a "star wars," sleeping bag at home? marty: i bring it into work at everyday. licenseso it -- such a to make money, why don't they make an "star wars," movie every year? paul: probably every other year for the perceivable future. they're doing spinoff movies as well for the odd here. you're going to have "star wars," coming into the theater for as long as we can see. marty: and they say innovation is dead. stephanie: they like to say the stuff of innovation was born five years ago, but it wasn't. matt: matt, we have breaking news. vladimir putin is saying the loss of the russian warplane was due to backstabbing.

he says that russia has an agreement with the u.s., as far as the safety of planes over syria. and that turkey is part of that agreement. this,very angry about saying the plane was a kilometer away from the turkish border when it was shot, it landed four kilometers away from the turkish border. he says this will have serious consequences for russia's relationship with turkey. and that he is going to do something in order to show them that he takes this very seriously. it will have serious consequences, again, for the ties with turkey. i want to make clear that the turkish government has supported rebels in syria against the charlotte sides -- bashar al-assad's government. withe supplies them

planes. syrians are flying these jets, as well as russians flying these jets, and that could make for a misunderstanding in turkey. stephanie: vladimir putin saying we won't tolerate this. what do you make of this, marty? marty: did he say anything about the fate of the pilots? i think a lot will be determined on where they are and whether they get back safely. david: it doesn't sound like he is walking a back down. marty: he can't do that. megan: i do worry is natural impulse is always to go strong and happy. so aggressive. given the climate we are in. that's not exactly the kind of statement that will -- happenedu wonder what when the turkish pilots were going back to headquarters and saying should we go or not? someone decided to say yes. stephanie: putin says russian warplane in no way, he says turkey lost the russian warplane today due to backstabbing, serious consequences for turkeys ties. we have to break down what this

means from a business perspective in terms of being -- these images we are showing right now of the jet being shot down. these are big, big trading partners. what does this mean for country as small as turkey? their exports to a place as big as russia, this could be a massive hit to their economy. been: turkey has not having an easy time with its economy. megan: the trading partner and the synergies there, as far as also the markets go, it's one of their main trading earners. i think you will see him come down heavy and hard, i think direct repercussions of this could be quite lasting for turkey, at least over the next several months. the wrong time it. and it's even been three weeks ago when this happened, i think we would have seen much less global attention. but now the eyes of the world are on this. stephanie: turkey being at odds with russia, what does that do for the rest of the world with a tourism and travel standpoint? our people are going to want to go to turkey, a country potentially at odds with vladimir putin?

it depends on the putin response if he decides to do something aggressive and destabilize the area even more than now, it will have a chilling effect. david: we can only hope that doesn't happen. you have to bear in mind, turkey is part of nato. you have to be very careful about escalating this. you could get into a situation you don't want to be in, really fast. stephanie: you have to bear in mind, you have no idea what vladimir putin could do or say at any time. is aact that someone member of nato, that's not something vladimir putin necessarily cares about. we cover the story for the next two hours. francois hollande at the white house picking with obama. we're back with more on "bloomberg go." ♪

♪ megan: russian president via putin threatening serious consequences after turkey shoot down a russian warplane after repeated warnings. well the fed play hardball?

more regulation. the talk of the street, the head of one of the world's largest banks says bankers are still paid too much money. welcome to the second hour of bloomberg go, covering lots of news around the world. i'm stephanie ruhle. >> as stephanie just that, there is lots of news with vladimir putin. there will be serious consequences for turkey in response to turkish forces shooting down a russian warplane today. ryan chilcote joins us from london. tell us how big a deal this is. i understand president clinton may be speaking as we speak. yan: is is a big deal. this was always going to be a big deal in the context of this

being the first russian plane to be brought down by a nato country. turkey is a nato member and the clearly built down -- brought down the russian jet in syrian skies. what everyone thought is when the russian president spoke on this matter, he was a to downplay the incident. quite to the contrary, he is exposing deep concern about the incident, saying it is the result of backstabbing, a reference to turkey, saying the aircraft was in syrian airspace as opposed to turkish airspace as the turks have suggested. saying the russian jet post no threat to turkey. russia and turkey have good neighbor relations. finally, this would have very serious consequences for russia's relationship with turkey. so far from this being an opportunity of the russian president speaking out during a meeting he happened to be having with the king of jordan, an opportunity to dial back the geopolitical crisis, he seems to

move things forward. it remains concerning. share prices are falling on his comments. stephanie: could it be, as he said this canin have serious ties from turkey-russia relations. how dependent is turkey on russia? dependent. turkish air, the largest airline, the state has a significant stake in it. russia is the most important market in terms of upcoming and incoming passengers. turks by their natural gas from russia. they have a lot of relations. they depend on those being good relations, particularly when it , the russianism resorts in the turkish resorts on the mediterranean are popular with russians. response, a business i think we can be a little relieved. the russian president seems to be suggesting that he is more concerned about this then leaving this to business

response. i think we are about to see a diplomatics at a minimum. stephanie: a diplomatic spat? ryan: he has the policy. need to keep turkey on their site. the russians and turks in the eye onve seen eye to many things. syria is not one of them. the turks have been complaining about the russian jets in syrian skies bombing ethnic turks inside syria. they have raised that issue as recently as a couple of days ago. they have raised concerns about russian jets in their airspace. aere was an incident a few weeks back when a down a russian drone. this is different. a russian plane with pilots on it. they catapulted just before the aircraft was taken down. nonetheless, the most recent supports we have suggest that

one of them is missing or captured my fighters in syria. one of them may have even been killed, that upon hitting the ground. that puts the russian president in a different situation. he can't have russian servicemen dying in syria and the turks saying they did it without saying this has serious consequences for russian- turkish relations. last point. from your reporting, do we know whether the russians are talking to the turks directly or through intermediaries? if there is the policy, they have to talk first. ryan: no overt indications. you can only imagine they are speaking. the russian foreign minister was supposed to go to turkey today for talks. they were supposed to talk about how russia and turkey could narrow their differences over part as russia tends to be

of this grand coalition along with nato forces going after isis in syria. on ice.p, at best, is that is one to watch, to see if russia sends his foreign minister to turkey despite the downing of this point. it is hard to imagine a going forward. >> thank you very much. first word with vonnie quinn. innie: francois hollande is washington today meeting with president obama. he is looking for support in the fight against the islamic state. yesterday, he met with david cameron. tomorrow, he will be in moscow, asking for vladimir putin's help . four people have been killed in the crash of an army helicopter in texas. it was on a routine training mission when it crashed yesterday afternoon. they are investing in. to get more breaking stories 24 hours a day, go to the new bloomberg.com. a look at futures, down

across the board. the trend is moving lower. s&p many contracts down 13. we were down six an hour ago. the dow jones futures down 100 points. we were down 60 an hour ago. look at the intraday moves. right here is when the plane was downed over syria, at least, it landed in syria according to reports. the turkish say it was in there are it here is one vladimir putin makes his comments that not only is there going to be serious consequences for russian-turkish relations, but also, that turkey is buying oil from isis. that is a very interesting headline that we need to keep in mind. this is what vladimir putin is saying in sochi, but it is important headline if it is true that turkey is supporting the islamic state by buying its oil. the dollarseuro,

losing strength today. that doesn't stop again in the price of oil. because of geopolitical concerns, oil is up, west texas intermediate up 2%, 42.54 a better -- a girl. nymex is running better. look at the 10 year. we see a lot of people getting into debt in europe. the bar selling debt here in the u.s., at least a little bit. the yield on the u.s. 10 year moving down as the german to your most two and all-time low, yielding -.4%. stephanie: we are joined now by the bloomberg contributor and author. also rising:, and bloomberg executive editor christine harper. welcome. perfect day to have you here. yesterday, david and i sat down

with daniel, and he said that banks should prepare for a harsher capital demand. just when i thought things couldn't get worse. take a listen. >> there is a good chance, a better than good chance that in the end of the day, all of the capital surcharge or through other mechanisms such a as the one you were alluding to earlier of more infamous -- infamous uncharted counterparties, there will be a net increase in the post stress minimum capital requirements. stephanie: this dovetails comments we heard a few weeks ago from new york's said president including "banks will face increasing calls for breakups and dissolutions if there is not clear evidence of better behavior. that is why banks should treat the reform of culture as a matter of accidental

importance." we are going to break this down for a minute. can the banking universe -- can we change the stripes on this beast? when we hear bank ceos saying we just want to know what the rules are -- they want to know what the rules are so that they can figure out ways to circumvent them. as long as there is a job coaching call structuring, that is what you do. rodgin: i am not sure i would agree. i believe banks want to know the rules so they can avoid violations. the penalties have become so severe for violations that i think anybody today who is trying to get around them is making a serious error. there is another problem. we talk about apples, the barrel . it has been a cultural problem. institution after institution. it is not the culture of the entire institution, it has been the subcultures permitted to grow in the institution. they create a problem for the entire institution.

that is where the focus should be. stephanie: how do you change at? this isn't an industry that makes a product. these are human capital businesses. these are the humans they hire. gets toe: this incentives. what do you reward your employees were doing? traditionally, they have been reported for making money. everything else has been secondary. some firms have been better at emphasizing ethics in the culture than others. all of them emphasize making money. if you can show that you make money, maybe these subcultures, out, turn aint blind eye and the ways of making the money in the service of the bottom line. stephanie: antony jenkins in a job as ceo specifically says i'm here to change the culture and take it away from bonus incentives. the guy got balance. christine: we saw yesterday these comments from deutsche bank, essentially doing

something similar to what antony jenkins did. taking on the culture of his bank and saying people are overpaid. i'm budget changes fundamentally. the most surprising thing he said was the idea there is no link between pay and performance. that goes at the heart of what capitalist society believes in. all businesses reward people because they think that will make them work harder. if you don't believe that, it is very surprising in our business world. i think that is being driven by the fact that shareholders, regulators are tired of seeing these problems arise over and over again. these messages get stronger and stronger from the top of the firms. i don't it will succeed. think is a basic distinction is a structural issue, one is a behavioral issue. people in any organization will do bad things. you have to police that. i wonder when we keep increasing the capital requirements, if --re is an another role

inevitable effect that has nothing to do with behavior but structure. whether the banks can state a big with increased capital requirements. rodgin: at some point, the increased capital requirements for the largest banks would force banks to reduce themselves in size. on the stress test is quite real. that is the constraining capital requirement for some time. what is really important is not just substance the process. if we are going to increase these capital requirements, shouldn't there be a notice? the stress that has always been any shadows. the models the fed uses is a black to -- box. the estimates they use are a black box. if they are going to increase the basic requirements, this one should be out for comments. --istine: you could argue

what he seems to be saying in the interview is that the fed is considering, and maybe they will do something else, but considering including the surcharge imposed on the eight biggest u.s. banks in the capital minimums they are required to make. a surprising surcharge. they are supposed to be adhering to that. i'm not sure you can argue this is coming out of left field. they have known this exists, they know the fed made higher than international standards. jpmorgan has reduced its assets to get into a lower surcharge bucket. what reaction are you hearing from the biggest banks? rodgin: christine, to begin with, absolutely right. the governor has foreshadowed this, the issue, for some time now. ever since the surcharge was imposed. the banks really want to be able in theicipate decision-making. there are many areas in the stress test of potential conservatism. the models, economic

assumptions, numerator, product, all of that should be the subject of consideration. one more critical aspect. telac, how does it relate to going concern capital requirements related to the stress test? rodgin: what do you think the banks that you work with, if they are getting input, which of thee proposals of mr. governor would they be ok k with? sure counterparty? rodgin: there was a shared counterparty proposal that went down in flames because of the underlying facts not being there . that comes back to the real .ssue we need to be able to do a

data-driven analysis of what do these new capital requirements mean? stephanie: what if hillary clinton becomes an ex-president? it seems like these bank ceos are afraid right now. rodgin: i don't think that they have a particular political view other than with respect to the estranged of both parties. the political atmospherics have not been a critical element. banks are afraid, they are afraid because it keeps coming at them from a lot of different angles. back to your original question, they just want to know what the rules are. rodgin: you agree with the governor when he says we can go a little easier now on the regional and community banks he said in the interview yesterday?> we will look at easing those roles because they are not systemically risky? but we have to keep getting tougher on the big banks, many of whom you know very well? these regional and

community banks have gotten strangled since the financial crisis, since regulation has gotten kicked up because there is absolutely no way they can compete -- they can pull together all of that compliance, that manpower needed. jpmorgan can easily add another 500 employees and not blink. rodgin: you certainly right about the community banks and the regional banks. there are some very easy fixes. there is legislation to get it done. there just has to be the congressional will. for example, the vocal role has no application whatsoever to banks of under $10 billion in assets. to call a $60 billion bank in columbus, ohio, or salt lake city, utah, systemically important is absurd. that limit needs to go up. here in an opportunity the next few months to get some meaningful legislative reform. stephanie: you say absurd.

yesterday, a lot of bankers and traders on wall street crying absurd. you brought it up earlier. deutsche bank's incoming co-ceo is calling out wall street pay saying "many people in the sector still believe they should be paid entrepreneurial wages for turning up to work for the -- aar salary, it had pension, a health care scheme, and playing with other people's money. there doesn't seem to be anything entrepreneurial about that except for the compensation pictures." -- structures. i know you love the subject. whether he is right or wrong, is this following on deaf ears considering the kinds of people who banks employ? exi is absolutely right, number one. it is not falling on people at deutsche bank. if you are a deutsche bank anchor, trader, executive, you think all my god, i fear my pay will be cut. i think that is the right thing for deutsche bank at this point

in its cycle. the problem for deutsche bank is going to be a competitive one versus other banks. if goldman sachs doesn't do what deutsche bank did in terms of cutting pay for other people, guess what? everyone will swarm -- all of the talent will swarm to goldman sachs. if that happens, what does deutsche bank look like? bad news boys -- bears? william: maybe you have a moneyball effect going on. maybe you need lewis to come on and talk about how moneyball and will affect the banking sector. overachievers might be the salvation of deutsche bank. stephanie: that is how scrappy firms are created. that is how you end up seeing unethical things happen. william: scrappy isn't necessarily equated to unethical behavior. they could turn out that people were carter, not as complacent -- harder, they have a chip on

their shoulder. we have seen firms going in and out of wall street many times for many years. i think this might be an interest in strategy. to say --want shouldn't it be a differentiation between firms? christine: deutsche bank is making poor returns on their money. they should be sending a tough money desmet -- message on cost for the sake of their shareholders. credit squeeze is doing the same. the takeover of morgan stanley -- that that point, morgan stanley's returns were bad. they are not amazing now, but they are much better. william: i think the return on equity has to get out of the system. with capital requirements now high and going higher banks to dan cirillo and the other fed governors, that is a meaningless statistic now. return on equity has to go away. there has to be another way to think about incentivizing boards of directors and top leaders of these companies. bankers, fact is that

executives, traders on what you are overpaid as a relative matter and they deserve to be overpaid. these are banks, they also have people working there. i have not run a day, i have run a big organization, you have to send a message to your people that there is a reason to be here. it is fine to say i have to cut your pay, but you have to give a reason why you should be here. that is what i'm not hearing. stephanie: deutsche bank is a firm that people want to work at specifically not for the culture. they went for the money. i do not want to, in any way, underestimate the value of the culture at these institutions. there has been a serious culture breakdown in terms of these subcultures as i said, being able to flourish. part of it has to be compensation. it shouldn't be a system where have you wednesday -- heads you win, tells you in.

that is not the right system. there has to be a look more carefully not so much at the upside, but the downside. stephanie: a fantastic point. before the financial crisis, you could look at b, c, d players at banks being paid millions of dollars because that is what the seat was theoretically worth. matt: i am stuck over here in ceo pay land looking at what chief executives are getting paid compared to the return they are giving shareholders. universe,k at this the dow jones industrial average, you can see certain companies like visa don't pay the ceos write much relative to other ceos. opposite, almost $10 million in total compensation for a ton of return. 30% over the past three years. ceosu move down here, some like exxon mobil, are getting $35 million in total compensation for giving

shareholders nothing over the past three years. stephanie: who is a on top? nike? matt: nike has the best return and is not paying its ceo more than the median, which i think is interesting. if you look over here, disney, ge have the highest-paid ceos in terms of total compensation. frankly, maybe three years is too short to look. these two companies have ceos that have been returning money to shareholders for a lot longer than three years. they are still up -- disney is still up there with more than 35% return over the last three years. general electric is performing at the median of 17% return. an incredibly interesting chart. if you want to spend time, go to gsgo on your bloomberg terminal. jpmorgan.erican, goldman sachs. stephanie: there you go.

the co-ceo of deutsche bank is the number two the person on the bloomberg terminal right now. as soon as there is any story about wall street compensation, it spikes to most read. the bonus topic is so important. rodgin: this is right around the time of making the decision. christine: people on wall street gin no, thisrod is when people worry about what their specs look like. obsessingey are also about the new rules on compensation that should be coming out of the agencies within the next 60 days. compensation clearly dries behavior, but it has to be part of the cultural theory. in my extremes, it comes from the ceo. the ceo has to set the culture. the ceo will not set the right culture and as he or she has the right incentives from the board. my doubt it

is is more than just culture. what is the basis? why do people work there? they work there because they want to make a lot of money. christine: one problem of berkeley was that they brought in antony jenkins who said things about how he wanted to improve culture and was wearing a hair shirt all the time. he didn't work out. in annie: then they bring american banker. william: that is exactly the right tone barclays board is trying to achieve. not only is he an american banker, asset manager, calm, politic. that move makes complete sense. once upon a time -- stephanie: did jenkins not make sense? william: that seemed like an overreaction to bob diamond who they loved for all of those years that he was making barkley a global player, buying lehman

on the cheap. for bob diamond was a fall guy for also to things in the u.k. in terms of governance of banks at that time. let me get back to the point -- once upon a time, as we saw in a short movie, is that the banks --racted no mbas, people felix rowan got paid $37 a week when he started on wall street in the 1940's. that was a long time ago. i can see to that. it wasn't once upon a time all about money. in the 1980's, it became about money. the bankers became rock stars, the wall street journal put them on the front page, etc. we wanted to be like that. stephanie: the perverse thing about michael lewis, he is hypercritical of that wall street culture. it is those books and those movies and the culture that attractive people to want to be part of it. i want to share this quote.

"culture cannot be regulated like capital and liquidity, but it is just as important." this from bill dudley, new york fed president. important, but it is the culture of greed that attracted so many people. aboutvie "wall street," bad behavior, has made so many people want to go into the industry. david: it was always our goal to return the most money to shareholders. every year, more people would get up and say you do something to dishonor the company, you're fired. he enforced it. you hear the music? stephanie: you will be back after the break. david: executive editor for finance, bill cohen, stay with us. you have more thoughts on bloomberg go.

david: we are here with bloomberg contributing editor cohan and brendan

greeley. we have a lot of news today. --nie: russia's pleasant president vladimir putin says that turkish stabbing in the back led to the downing of a russian warplane. after the pilot ignored repeated warnings they were violating turkish airspace. putin accused turkey of being a compass is a terrorism and said there would be serious consequent is. less than two hours from now, francois hollande will be at the white house to discuss the fight against the islamic state with president obama. he met with president -- david cameron yesterday. already, the u.s. and france agreed to share more intelligence. the number of refugees arriving is set to fall in november. that is because the weather has gotten worse. the eu is tightening their borders. through number 23rd, 116,000 refugees across the mediterranean. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com market desk.

we are getting breaking news on the economy. futures here are down. we are getting gdp numbers that are banged in line with the estimates. revision. we are seeing personal consumption at 3%. it is a little lower than we were looking at. we were looking at 3.2% in the survey. personal consumption coming in a little bit lower. retail, we have been talking about that for a couple of weeks. it doesn't look that incredible. index,ce and thought -- 1.3% compared to 1.2%. quarter over quarter, this is what the fed looks at to decide where inflation is and how close it is to their target. pce is coming in at 1.2%. in line with expectations. far off of the 2% target. david: we have been following breaking news all of this program. vladimir putin is rushing of

very serious consequences for relations with turkey. greeley and ryan is back withondon us. keep us up-to-date to date with what is going on. what else do we know? ryan: what we know is that turkey has said they have down a .ussian jet inside syria two russian servicemen inside i jet ejected from it. we don't know the condition of those two pilots. suggestions that one may have been captured and a second is that. that also hearing reports there may have been even more russian military action following the downing of that jet, perhaps a russian helicopter in that same area that may have gotten shot down emergencye made an landing inside territory controlled by the syrian government.

very fluid situation. stepping back from that, the russian president making some very strong remarks on turkey, saying that turkey effectively backstabbed the russians, that the russian plane was no threat to turkey, at the russian plane was inside syrian airspace. even going so far as to infer that turkey was in some ways supporting the islamic state inside syria and that turkey was buying oil from the islamic state across. very serious allegations from the russian president. they come at a time when analysts thought they would use his appearance in front of the press to dial back this incident and condo geopolitical tensions. ivid: just to be clear, understand that turkey says that the jet was inside turkish airspace, syrian. ryan: that is correct. they have satellites images that

prove that. it is a tricky part of the border. in fact, turkey sticks into syria right where this plane was in a portion of lane. -- land. there is a possibility of confusion. david: is this a pattern over the last 12 months of russia tiptoeing in and out of nato airspace in the baltics elsewhere? there may have been some of that. the turks have complained for the last month and a half that russian aircraft were violating its borders and going into it airspace. there was an incident when turkey actually downed a russian drone. the russians complained that their aircraft at the time, whether it was a previous violation, was admitting hostile fire. they apologized for it. turkey is a nato country. russia has been very consistent in its efforts to probe nato's defenses and find out how far nato is paid to go when russian

aircraft are in its skies. box one of the things i understand that the russian president putin has said is that the oil from isis is actually being trafficked through turkey. >> that is right. that is not really a surprise. many people know about this. the united states knows about this. nato knows about this. quietly, they complain about this. the official story is that that's trade, the illicit sale of syrian oil by the islamic state through turkey is not something that the turkish government sponsors. it is illegal trade that turkey is trying to shut down, doing its best to do. with the russian president's adjusted today was that ,ctually, he thinks turkey unlike what it is saying, has an interest in keeping islamic state alive and is supporting it. stephanie: the headline is crossing, turkey calls diplomats

of five nations to inform on the syrian incident. what does this mean? five un security council members. what does this mean in a broader sense? if you are turkey and russia is making a statement like this right now, you need to reach out to global leaders. cut off from russia, you're in a that's attrition. brendan: for turkey and france and the eu. -- you are in a bad situation. we're trying to figure out who will be dominant. nato, a clear and obvious response. treaty five of the nato says mutual defense -- they come to each other's aid. france, a week ago, invoking the mutual defense clause of the eu treaties which has until now been toothless. just yesterday, two nato countries and eu countries informed france, lithuania and estonia, we will not be a part of any alliance with russia. there is such a complex overlapping everything.

i think the organization that will lose is the eu. nato has teeth. you can do things with the un security council. you cannot do things through the eu. alliance all over the region are being shifted rapidly. we find ourselves in alliance versuse run, -- iran isis. it was inevitable when russians started bombing syria that they would test along the turkish border. i think this is clearly an era of heightened tension, even more than normal, and shifting alliances. i don't think people understand where it will come out. stephanie: on the tension front, another headline, the paris metro service has been interrupted on five of its different subway lines on security concerns. this isn't going away. mind inhing to keep in headlines across paris, there was a panic about nine days ago.

brendan: it is impossible to walk around in paris and not see security forces blowing up somebody's duffel bag. they are on a heightened response. it is hard to tell with the security relates are. >> what is going on in brussels. william: three or four days of people walking on tenterhooks not knowing where the next bomb or something michael off. people are freaking off. -- might go off. david: if you are in turkey, you look for friends. you want to go against putin by yourself. abv u.n. news is good news because turkey is reaching a directory to talk to russia -- maybe you and news is good news. stephanie: and you talk with vladimir putin? david: you have to hope you can if you are turkey. brendan: i think we will know at 5:00 p.m. brussels time, 11:00 a.m. here when they meet. this is a clear matter for nato. this is part of the pron.

turkey has always been on the inside of nato and the outside of the eu and has been resentful of this. even though they are a european country, they are not invited to be part of the club. david: interesting to see how europe response. it may bring turkey closer to your. one can hope. stephanie: we are going to .urkey and the ctf s they will hold an open meeting for a proposal on automated trading. , bartrmer commissioner chilton, led the effort to implement such rules that some are criticizing. joining us from pensacola, florida. criticizing your good work? bart: maybe they are calling me a turkey, who knows? stephanie: give us more context. bart: one of the commissioners, who i actually respect a lot, chris carlow, said we had

botched the policy analysis on our swaps rule. to cut through the mess for people, swaps are something that are not regulated prior to 2010, prior to dodd-frank, and actually helped lead to the economic calamity of 2008. we were charged by congress, the regulators, with regulating swaps. we did that. we did it based upon no data. it was tough. he is criticizing the policy analysis. as david and bill probably remember, billy preston line, nothing from nothing leads nothing. we didn't have anything to make the policy based on. we did the best we could. if the regulators want to revisit the issue, that is appropriate and encourage them to do so. right now, we say if you have a billion dollars worth of swaps trading him $8 million, you have to be registered. -- 8 billion.

that was down in 2018 to $3 billion. to me, a millionaire, a millionaire, you end up talking real money. $3 billion is a lot of trading and probably should, at least for the ball to do the training, be registered with the agency. david: for those of us not as familiar with the market place, expect to us with the new regular to do. you have to register if you have this auto trading and revealed your all the rhythm -- algorithm to go through how your business works? two separate things. the one rule is when we passed a couple years ago with the registration. for swap steelers. if you have more than $8 billion in annualized trading, you have to register. that goes to $3 billion. the role has already passed. there is a study now they are revisiting. with regard to the meeting at the commodity futures trading commission today, it involves algorithmic trading which i have talked about for years.

the proposal i expect they will consider today will come out for public comment if it is approved will require that proprietary traders, some of which are not currently registered with the agency, that they are registered, conduct testing of their programs prior to being used in the production environment, the markets. switches.have kill if something goes awry, you can stop it. they may also deal with transparency of these market maker programs, these incentive programs which both the cftc and the security exchange commission are looking at to decide whether or not those are helpful to markets. at the, they may deal cftc and an hour or so with self trading. some people call it wash trading , roundhouse trading. that has been traditionally illegal. wash trading. with the advent of technology,

that seems to happen a lot. the self trading. there is so many orders being put into the system at once. they may further try to delineate that. brendan: what if anything to the numerals or existing roles have to do with helping us understand price of these derivatives? william: they are notoriously difficult to price, difficult to value. that was a big problem in the crisis. people can value these contracts. part of putting the idea of putting derivatives on exchanges and having more transparency was to help price discovery. it is that stand after this stuff is settled with the new proposals under consideration? bart: you have written about this stuff many times. you know it well. the bottom line is people didn't have a good sense of what their risk was. under instearns went

the spring of 2008, when lehman went down and was the linchpin that helped lead to the calamity in the fall of 2008, a lot of firms didn't know what their positions were. you could ask the guy in charge of equities with the exposure was to lehman or the guy in charge of features, but you didn't have any net. fortunately, there are technologies being developed right now, some of them are in place, which actually tell you what your exposure is. that is a huge financial technology advantage. additional reporting and recordkeeping of these swap dealers, the proposal and rules in place, and the additional transparency that the cftc will act upon today could not only help with price discovery but help with transparency. that breeds, and my view, greater consumer confidence, greater investor confidence which leads to better liquidity and ultimately, that is good for price discovery, consumers,

exchanges, and the economic engine of our democracy. stephanie: do you believe we have all of this, or at least improvements on all of this today versus 2008? many people are concerned we are approaching more asset bubbles. if we see a real downturn in the market, what we could see? bart: this proposal is quite frankly too long in coming. high-frequency traders, automated trading, but in this area of technology, low-frequency regulation. this is something i have been talking about since 2010. i am pleased that the agency is putting forward the proposal. there will be a comment period, not sure how long, 60 or 90 days. i hope the staff and the commissioners get on this and approve a new rule related to automated trading and co-location, where the actual servers are, the traders are. that they do that sometime in the beginning of the new year. stephanie: thank you so much for

joining us this one. bart chilton, a former c.t.s. he commissioner -- cftc commissioner joining us from pensacola, florida. i sawioned all morning the big and short last night, a big viewing party. field. zig it is generating oscar buzz with steve carell and ryan gosling. it details the event preceding the 2008 financial crisis brady subject of the movie, mark rosenthal, denny was at, steve eiseman, greg lippman was there. a real character's name was still in there. vinny and porter, greg lippman and steve, are regretting it. they came out looking good in the movie. --n ryan gosling plays you they don't like that earnings are in it. i didn't want their names used. they look so cool that they wish their names were used.

he allowed his interviews, started vinny and porter. what did you think of the movie? i'm not quite as easy ethic as you are. -- as enthusiastic as you are. where they had to explain what a derivative is, where they had to explain what a swap is. stephanie: you found it insulting? william: a woman in a bathtub with bubbles -- i thought that was a little bit -- stephanie: that was the point. william: maybe there was irony i didn't see. stephanie: you have a dropdead gorgeous woman in a bubble bath expanding it. david: that would helping understand it better. stephanie: i think that is the point. we hear about it, we call it a bad word. here is what it really is. when they break it down, you think, this is legal? when we come back will m&a 2016 rival this year's megadeals? we will find out. ♪

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stephanie: welcome back to bloomberg go, i'm vonnie quinn. vonnie: in the semiconductor industry, a bidding war for pmc sera. they will pay $2.5 billion. they withdrew their own offer, ending a month-long contest. mergers are being pursued at a record pace this year. in the third quarter, the luxury jewelry chain posted earnings that missed estimates. the forecast for the entire year , overseeing sales has been hurt by the -- launch its to electronic payment system in china by february according to the wall street journal. they have cut deals with china's big state run banks. it faces competition from alibaba's digital payment

system. that is your bloomberg business flash. stephanie: we have to move on to m&a. 2015 has been the year of the mega m&a deal with record deals from the beer sector to pharmaceuticals with pfizer and allergan later this -- earlier this week. looking ahead to 2016, how many deals are yet -- left? cohan is still here. what will 2016 bring us? >> i don't think in the day is going away. companies are looking into finding growth. there is not a lot to be had organically. chief financing will be available. we will see a lot more deals. whether we will see megadeals is up for debate. we have seen so many at this point. the biggest truck merger, food merger. so many semiconductor deals. there are not that many big targets left to consolidate. you are looking at huge regulatory issues for the megadeals we already have area it is hard to see how you will do many more.

stephanie: with in megadeals, is this a positive for big banks but negatives for boutiques? refinancing that they need, only big guys provided balance sheets. some of the allergan-pfizer deal, a smattering of boutiques, guggenheim with goldman sachs. see this is a typical pattern with the banks and bankers where they have little boutiques. could because eric cantor advise them on the inversion concept and whether they could get away with that. that is what you will see. i think you will continue to see a big deal as long as the justice department isn't stopping them. you had a big deal in the drugstore industry that is still pending, walgreens. if they let that go through, they let anything go through. david: that is what i wanted to ask you, brooke, are the natural limits to these big deals? either because of regulators, or

because you have merged as much as you can merge? brooke: that is definitely true. look at health insurance. two of the biggest deals we have ever seen with antonin cigna and at night and humana. they are already facing huge hurdles. lots of pushback from politicians like hillary clinton. if you get those through, and that is a big if, it is hard to see how you do more, at least on a large scale. stephanie: i want to stay on this. we are talking about deals. bill ackman for a moment. we learned last night that he ant.ed his stake in vale latest followings show him at an end when i'm percent stake in the troubled canadian drug company. what does the terminal tell us? matt: if you look here on bloomberg, folders, although the

big holders of the stock. if you look into pershing square , the chart shows you the update in november his stake by about 2 million shares to 21.5. as you mentioned last night, he got another 40 million shares. if you click -- 14 million. if you click over here on the market value tab, is that guts? stephanie: guts or nuts, he was an activist in valeant. you know the ways of mr. ackerman. matt: he sold out his elegant lergan stocks. i think you may be run trade on both sides. wentanie: one allergan activist instead of valeant, he sold a position to buy more valeant. william: the thing is, he has

left a lot of money -- he made a lot of money on allergan, but he has left another 30% or so on the table. david: bill ackman doesn't mean need to defend him, but it doesn't necessarily mean he vale willa go out ok, it just means he thinks there are underlying assetsnt with intrinsic value that will be valued more than what the marketplace things. stephanie: nobody is arguing there aren't valuable assets and drugs there. william: if it goes the way of enron, the market is a total confidence, and implosion, it won't matter. stephanie: brooke sutherland, thank you so much. cohan, always a pleasure. we will be back with more. ♪

david: 30 minutes and 24 seconds from the opening bell. stephanie: joined by our coanchor, brendan greeley. brendan: good morning. you know what else we have with

us? david from goldman sachs. we have been talking about the fed in the green room and there is more to come. david: offside all the time. -- all fed all the time. stephanie: a developing story we are following this morning, vladimir putin says there will be "serious consequences in turkey." that is in response to turkish forces shooting down a russian warplane earlier today. vladimir putin says he will not tolerate such crimes. i would like to bring back ryan chilcote joining us from london. trying to get our heads around the ramifications of a statement like this from vladimir putin. what this means for turkey. ryan: i think the ramifications are to fall. i wouldn't be surprised if the russian president on the back of this one after turkey's economic interests.

-- they are two fold. there were some suggestions immediately after the russian jet was down by the senators and russian politicians that russia should cut off airlines with turkey. that would hurt turkey. russian tourists are a big part of the turkish tourism business. there is the issue of russia going after turkey's interests in terms of turkey's proxies in syria itself. there, i think, the russian president would use military means. we have heard the term a lot over the last couple of weeks to talk about how russia should not kmans to thetur south of its border. we have not heard from what russia thought of turkey's request. it is fair to say that russia in its response to that part of the country in syria. as far as the russian president is concerned, many of those nationalskman, syrian

fighting the syrian government are terrorists themselves. brendan: you have been talking to him for a long time, when he uses it were like backstabbing, what does that say to you? what does that mean to you? think he sees this as turkey overstepping its interest . turkey trying to get involved in this confident syria. here at user. using the excuse of the russian aircraft being too close to its border. the turks, importantly, point out or argue that the russian plane was on their side of the border, well within turkey. i think he sees this as a sinister, cynical move by the turks to inject themselves in this geopolitical conversation at the expense of bilateral relations. that is where the backstabbing comes in. he was just in turkey himself last week with all of the other

leaders at the g-20. he shook the president's hand. the russians and turks generally get along. says that is it for turkish-russian relations. brendan: ryan chilcote is so familiar with turkish-russian relations with his experience. what is the first word? vonnie: president obama discussing the fight against the islamic statement the president of france. he is tried to build the coalition against isis. he met yesterday with their cameron. cameron says parliament could vote next week to send british planes into syria. dozens of governments warning that the threat of a terrorist attack is not diminishing. a state of high alert has been stunted into next week. the lockdown in brussels will be eased starting tomorrow and schools and subways will reopen. indianapolis, three white males after the shooting of five people overnight.

-- mini. demonstrators protesting the killing of an unarmed black man nine days ago. their wounds are not considered life-threatening. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. checkout futures down across the board. futures have moved lower throughout the program. smp is down as many as 13 points, dow futures down as many as 100 points. you can see the drop at the intraday charts. the news of the russian jet being shut down. the russian euro being moved up here when we heard the news the jet was shut down. the lossen putin says of the warplane was backstabbing. interesting. maybe that can be viewed as weakness in the dollar as opposed to strengthen the euro. reacts strongly to movements in the middle east, to geopolitical heat.

you can see nymex crude up 2% at 42 $.36 a barrel. 2.2%, $45.87 is the gain in brent crude which is what comes out of that region. taking a look at the 10 year, investors running into the tenure and buying, pushing the yield down, yielding 2.22%. there was a turnaround in the german to your. t -- two year. an interesting turn around. you are now paying the government -.4% to hold your money for two years. stephanie: francois hollande's plane is approaching the air force base. there it is, lending right now. we talked about this earlier. the french president is going to be meeting with president obama later this morning.

it is hard to see -- i know there are french flags. i've got it. there we show these images, pilots were waving french flags out of the window. you can see it right now. he is arriving later this morning. as i mentioned, he will be sitting down with president obama. a lot to cover. >> what i love about images that air force one is a boeing -- president on where -- right and airbus. david kaufman just released a report telling us what is good to happen. he is right here with us. three major themes will be imply next year. higher rates, bifurcated somatic returns. we will find out what that means, and margin expansion. david, let's stand -- start with the basics. when you look at the s&p 500 over next year, you see a continuation of the sideways market. david: that is christ. what will drive that is the fact that valuations of the market is

at a high end. it is at the upper end. that is number one. number two is higher rate environment. i higher rate environment is more likely to result in a lower multiple which will offset what earnings growth is likely to take place as the economy grows. the bottom line is the reason for flat overall u.s. stock market is because the interaction of higher earnings and a lower multiple results in a flat market. pretty much deja vu all over again which is what we had last year. more of the same for next year. brendan: when you talk about the higher rate environment, you agree with the fed and disagree with the markets. you see the same the gratian janet yellen says we will get, 25 basis points. why trust what the site is saying? -- what the fed is saying? david: to be fair, my duty is to forecast the u.s. stock market. the forecast is that inflation is starting to increase, not in

a rampant faction -- fashion, but you have wage inflation, increases in housing, apartment rental rates. higher medical costs. those are inflationary drivers that will give the green light for the fed when it begins hiking our expectations in december. we continue to brace steadily into the 60. that is your driver for why the fed might move higher -- the driver into dozens extent. -- in 2016. stephanie: what will i do to eds growth? if the fed raises rates in december, we could see private equity compression. wearable company's growth moving forward? growth and present a looking good as is. it seems like it will get worse. david: the u.s. economy is growing. a baseline forecast of over 2% is consistent with revenue growth, consistent with what

leads your topline sales growth. self growth -- sales growth is why you get higher earnings. $120ngs for 2016 will be for share for the s&p 500 and $109 -- remember energy earnings have collapsed my 80%. profits of energy companies are down a lot. next year, energy companies will come back a little bit. stephanie: why? david: the economy is growing and oil prices -- the rate of change has been so dramatic, $100 last year, $50. our forecast is it will be around this area. prices,lat level of oil that leads to growth in energy earnings. modest, but still positive. brendan: overall, the stock market when a grow in terms of earnings. what will outperform in that environment? some will be up and some will be down. about the way to think

this is we are bifurcating the market, a split market. while the overall index is flat, certain themes are split in the market. one would be u.s. companies that sell the mystically. outperforming those internationally, more exposed. that is one split in the market. stephanie: you want to be smaller rather than larger? david: not necessary. you want to be the largest cap stocks, and others do it, the mega-cap stocks. stephanie: not having an international presence? david: you are correct that smaller cap companies have more to mystics sales. evaluation of those -- from a naturally -- another split, stronger balance sheet versus weaker balance sheet stocks. larger stocks can have stronger balance sheet. in a rising interest rate environment, one of the singular steady character six is that stronger balance sheet stocks outperform. a second split would be strong balance sheet as opposed to week balance sheet. another one could be growth versus value. if economic growth that we

forecasted is modest, around 2%, that would be consistent with growth equity doing better. in a scarce environment, seeking growth. think about domestic versus international, strong balance sheet versus week balance sheet. those are the kinds of sports. ultimately, the market will move sideways. brendan: on the theme of growth versus value, in the notice, it says what what them -- drive demand for u.s. equities is the continuation of corporate buybacks. what will change that dynamic? david: nothing. margins, themselves, are high. now margins were the market are around 9% and have been hovering for five years. the forecast will be another couple of years or flat margins. the high quality problem is what companies will do with that cash? the number one use of cash is capital spending. companies are reinvesting in business. there is the lots of cash available. buybacks remain a significant use of cash. my forecast is around 7% increase in buybacks in 2016.

this year, 18% higher than last year. buybacks have increased a lot. almost $600 billion among the s&p 500 companies repurchasing shares. that is a key driver of a demand for shares. that is the only driver. demander sources of cancel each other out. it is corporate buybacks. stephanie: a question coming at us yet instant bloomberg. what asset classes should investors be buying for 2016? will any asset class return more than 10%? i want to point -- we are watching francois hollande arriving right now at the andrews air force base just before he meets with president obama. 2016,o asset classes, anybody going to return more than 10%? david: in an environment -- currencies could do that, goldman sachs view is that the dollar continues to be strengthening significantly.

depending on how one injured ash invests internationally, you might get better returns. say, japan. broadly speaking, it is a flattish asset return market for next year. david: an extraordinary amount of cash drives the mergers and acquisition business. david: i would expect the use of cash would continue to be a focus. the decision inside corporate boardrooms are what to do with cash? a certain amount goes for research and develop and spending which is important. other uses of cash for growth would be the cash component of m&a. will be an area of focus as well as share repurchase and evidence. -- dividends. ,rendan: in silicon valley banks and hedge funds are going out there because returns are there. anything will change that

dynamic in the next year? david: technology will be the leading sector of the market in 2016. that will likely continue. it is one of the few areas where there is strong demand for products. the reason there is strong demand is that companies are struggling to keep margins high. companies in all industries -- one of the ways to do that is to invest in technology. , andng at cyber investing annexes tension -- stephanie: a bottomless pit. david: and ask essential crisis. -- existential crisis. a source of revenue for those companies. brendan: do you see the growth that used to go to equities being lost in silicon valley to people who get in before the growth is? david: the growth is from the larger cap stocks. ande is revenue growth multiple expansion. one of the things we are focusing on is where is the revenue growth in a world where it is likely to go lower in a higher environment associated with following b multiples?

looking for countries with topline growth. stephanie: when we return, i want specific names. david will go christmas shopping with us. what you want to own in 2016. if you have questions for mr. kostin of goldman sachs, send us a tweet to boomer go. we have him here for the whole hour. for now, a quick break. when we return, global activities -- equities and a lot more. you are watching bloomberg go. ♪

welcome back toin blac bloomberg go. ,e're back with david kosten the chief equity strategist at goldman sachs. before the break, we were going your overall outlook for 2016. let's get smaller. names that you like. you like a strong balance sheet,

potential for expanding margins. what companies? david: for example, the alphabet for google, visa, starbucks. characteristics such as a strong balance sheet and expanding margins. that is one of the rare investment characteristics, the ability to get margins higher. stephanie: why specifically these three? when you think of these are -- -- visa -- david: when you think of metrics to evaluate the strength of a balance sheet, if you look at the forecast, my colleagues find expansion opportunities. different drivers for that. domestic revenue. we talked earlier about the idea of a bifurcated market and the characteristics of stocks that do well and less well. the idea of the mystic revenues, the u.s. economy growing, the stronger dollar not contending

with export competition, those are examples of competition. wells fargo, domestically focused committees. everything you have named so far is a service company, not industrial. they don't make things, they help people do things. david: that is a characteristically picked up. goldman sachs does a s&p 500 beige book. one of the characteristic we found was the idea that the consumer is strong, the industrial facing businesses are showing signs of contraction. that is the management reflecting the demand for their product. they talk about this directly on the conference calls. the idea that there is less demand for oil services, oil spending for oil spending has dropped to medically great capital spending revenues that allows industrial companies -- material companies. to your point, there are a lot of industrial companies having more challenging environments so there is less revenue growth and

less margin expansion opportunities. brendan: you pick this up in the conference calls before we knew the rate hike would happen which will make the world more difficult. david: we publish this a few weeks ago. the third earnings season. we are at the taliban's. most of us take place -- we are at the tail end. most of these happen from october to november, when you are starting your program. that is when we took this up. david: talk about the other side of the equation. increasing margins -- some companies are very dependent upon the energy input. the price of that has gone down substantially. that should increase their margins. david: there are companies that to inputr benefits costs. the u.s. consumer is tantamount to a tax-cut if you have gasoline vices go from three dollars to two dollars a barrel -- a gallon, some link or mental spending. we have not seen that thus far. at some point, you would like to

think that would factor into that wouldending -- lead to incremental spending. airlines, for example, jet fuel is a large part of their operating expense. that is a margin enhancing opportunity said. we knew the economy to be growing for there to be growth. that would be an example of an industry where it is benefiting from our input costs from energy. -- from lower input costs. stephanie: we know what you love. what do we want to avoid? david: we want to avoid weaker balance sheets, -- stephanie: is there ever a year where you think you are looking for a week balance sheet? for four years you had extraordinary outperformance. one of the most study outperformance is of a week versus strong balance sheet trend. the reason was if the fed was keeping balance sheet slow, that was enhancing the opportunities for expansion. this is not the environment you want to be in.

you want to have stronger balance sheet. that was the 2015 story. you wanted to be shifting from a weaker balance sheet series of to a-year outperformance fear of stronger balance sheet companies. that will continue in 2016. stephanie: does that mean we are finally getting back to fundamental investing? following the financial crisis, you had research analysts pounding tables saying no one is listening to me. there are terrible companies. because of the momentum play an effect doing whatever it takes, it was go on and be strong. david: i disagree with your statement about fundamentals. you want to be heading for different after of the economic cycle. you want to be paying for growth and stability. in this context, for a stronger balance sheet which tends to do well in a rising interest rate environment which we are likely to do next year. that environment is benefiting to those companies with larger market cap companies.

pay twoe: no reason to and 20 and two dozen 10, 2 dozen 12, there is to the best managers? david: it is a challenging environment, within sectors, and across the market, stock selection has been made more challenging. the breadth of the market is extorted the locality lowest in 30 years. that means a few companies are driving the returns. those are the after each we have tried to end the fight. brendan: there something inconsistent among what you're saying. avoid week balance sheet open is, avoid industrials. are we just talking about oil companies in the shale? david: no. materials, x porting companies. companies with most of their companies from international. a challenge with the dollar that will continue to be increasing. that is a challenge -- a price and volume. price for all these reasons. translating back, they'll use

less than the dollars. in terms of volume, less user volume. david: thank you very much to david kostin. when we come back, we speak to the former president of belgium. ♪

>> welcome back to "bloomberg ." we had to matt miller with a quick check of the markets. matt: we look at futures. they have been down on concerns of geopolitical heat from the middle east. accusations of that turkey supplies islamic state with funding via purchases of oil. s&p futures down 13 points. mini contracts down 106. those accusations, from vladimir putin and have not been confirmed. look at the dollar. the dollar weakness causing euro

strength. you see 1.069. not the strength we have seen as bell. towards the opening crude oil shown strength all morning. orther you look at brands west texas intermediate. up 3%. $43.01 a barrel. $40 overis dip below the weekend before trade open. the 10 year. investors piling into 10 year debt. yields swung up earlier but they have come down. we are a leg up in the yield. investors selling off the debt as we prepare for open in about one minute. >> since the terror attacks in isis, the european union thinking about the schengen area.

the former prime minister of the leader of a party in parliament. he joins us now. you are a committed integrationist. what needs to happen in terms of a common interior security policy to prevent this from happening again? need as fast as possible is a european capacity concerning intelligence. -pole on the side of the police. what we need desperately is that the european intelligence agency. in all these cases, belgium, the a lack in 2004, we find of cooperation and transfers of

thelligence between national intelligence services. that has to change what is the root of that -- stephanie: what is the root of that? why is there a lack of cooperation? >> the reason is simple. 28t we still work with national intelligence services. these intelligence services are to change their information to the other colleagues in the european union. the consequences of this is that services likence the british, the france, the germans have knowledge of terrorist attacks or preparing for it, but it does not share it in an appropriate way with the intelligence -- intelligence services or police services. that is what we have seen since

the beginning. in 2004 a attacks in rate. and now again in paris. createn thing to do is this european intelligence capacity as fast as possible or at least introduce a mandatory exchange of information between these national services. >> you have been the center of negotiations around the structure of the european union. the thing you are talking about that should happen has been difficult to do. why will it suddenly be possible and will it require a treaty change? mr. verhofstadt: i think it is under the pressure off public opinion. is seeing everything happening now and asking how is it not possible to love void this -- how is it not possible to avoid this.

it is about sovereignty and security. public opinion is committed to saying security is more important than sovereignty and that it is necessary to have more security to protect citizens while may be a little iss national sovereignty possible. it is these types of tragedies like happened in paris that can push forward this idea of a eu.ed sovereignty in the to thent to go back tragedy in paris and in brussels now. i would like you to clarify about a particular neighborhood called molenbeek and difficulties with radicals there. was this known to authorities? was this expected at all? everybody knows

that in brussels in general, there is a huge community of jihadists living there. that is also a little bit normal, because brussels is the center of europe. between three big countries. the u.k., france, and germany. it is obvious and normal that these communities are using belgium in general and brussels in particular. but there have been massive measures taken against it. as prime minister, i created the center where we gather all of the intelligence of counter terrorism in belgium. a plan against radicalism. i think belgium is may be the country that has convicted the most number of jihadists and

radicals worldwide. --rly every year, they are there are trials before courts, convicting these people, sending them to prison. -- theblem is not upon problem is not one particular country or city. the lack of sharing what we all know in one structure, one european intelligence agency is the problem. and a coast borders guard in europe. we have a common schengen area, where there is the freedom of mobility. but we do not have, borders. >> the sense we get from france is a small amount of frustration with belgium and security services there despite the work you did as prime minister.

you think their frustration is merited? mr. verhofstadt: i have to tell you that in the meanwhile, french authorities have apologized for some people working in the past in the accusingtelligence and belgium. that has been rectified by french authorities themselves. you there is] in between french and belgian intelligence. it is not enough. take the case of abdeslam. theslam is one of perpetrators of paris who was controlled in the belgian border by french police, and they had no evidence of him. they found nothing in their security system and let him go. meanwhile, belgian authorities know him well. that is proof these things are going to continue to happen if

you do not have a single european intelligence system in the near future. there are already cases and the opposite case. the perpetrator of this attack in a jewish museum in brussels came from france. is a stupid thing to point the finger to one country. it is better to build up something in common. what is most important is not sovereignty for the moment that the security of the citizens. for want to talk economics a second. the great achievement of the european union has been the free movement of people and goods across borders. is that in danger? mr. verhofstadt: it is in danger. in a number of countries, there is political pressure to stop the free movement of people. the freeu block

movement of people in the eu, immediately, you damaged the internal markets. because you cannot have free free movement the of people. goods are not traveling themselves without the help of human beings. saying thesere terrorist attacks, we can only avoid them by rich reading behind national borders, which is a stupid idea. is to increase external borders and increase security and intelligence in the european union. >> current leader of the european -- let's see where stocks are

trading. matt: take a look. down across the board. almost all of the major names down as well. the s&p losing about nine points. dow jones down about 66. we have seen amazing turnaround in a lot of markets in the last hour. the euro showing a lot of strength. it has come back almost to unchanged against the dollar. 1.0640. you also see the turnaround in the 10 year. crude oil rising. nymex oil another leg higher. barrel.43.13 a you can see it here back to unchanged in the yield. you had buyers this morning pushing yield down. now investors are selling back the debt.

we saw this turnaround in european markets this morning u.s.re seeing it now in governance. now let's head over to abigail doolittle, live from the nasdaq, where she has speak -- has the latest of dollar tree. abigail: shares going higher are they reported a mixed fiscal quarter. they beat sales estimates. perhaps less dogged by the macro trends. but they missed earnings by nearly 9%, due to a higher mix of the low margin family products. this showed in the stock chart. stock went down 25% at one point. now shares appear to be stuck in a sideways install, one that could be good or bad. >> thank you. later today, do not miss the

director of research at autonomous, one of the top banking analysts in the business. whend our next guest says it comes to investing, there is something for everyone and they are not all the same. ♪

stephanie: -- : welcome back. some prices in u.s. cities rose five point -- 5.5 cents. rosell prices nationwide 4.9%. analysts say the $160 billion deal of allergan looks legal. pfizer would cut from its tax

bill by shifting those tax basis to ireland. futures contracts think there is now -- the arts have more than doubled in the last six months. that is your latest bloomberg business flash. brendan: now for our value proposition. anthere such a thing as emerging market anymore or are they all different? this was the topic of nir yesterdaytopic afternoon. our fund managers getting smarter, not just throwing in the e.m. trade in putting in a big basket now? not most investors still think about emerging markets as a monolith. i expect much of the exposure is .hrough an emerging market fund

which makes sense, if easy. at least it can be cheap. the reason i was compelled to write the column is there seems to be a unique opportunity, giving extreme valuations, to more accurately express your investing preferences. stephanie: is that a currency play? or are you talking corporate's in each region? so muchm not focusing on currency. i am looking at the fundamental of the companies. just to clarify, you are talking about court -- about corporate debt in the emerging market? nir: no, stock valuations. >> you talk about extreme valuations. where are the extremes in the high and low? end, you havew brazil and russia, which are in the low and single digits, two

to four times depending on how you wish to value them. india are trading in the high teens. that is a egg spread that you are not likely to see in many environments. >> does that look better this morning? nir: it depends how you look at valuations. i tried to normalize earnings across the business cycles so i am not looking at quarterly or even one year's earnings. notone day's movement is likely to make a material difference. you can have price movements so extreme they were changed the valuations materially, but these are more long-term ways of looking at markets. option onave a great the bloomberg outbreaks down the portfolio of any holdings you may like to. nir pointed out the emerging

vanguards etf year. enough, russia is one of the stars of this holding. this is a ctr function. it has the contributions to total returns. this is the contributors to the gains in this etf. click on russia. it is contributing about 53 basis points. the drawbacks are coming out of asia. china, taiwan. even though the valuations are different, it is interesting to see the winners and losers. >> if you're going to ask people to differentiate in emerging markets, had you break that down? is that countries that sell to china and those that do not? do: the first thing you can is if you own an emerging market fund, you can look at what it holds.

then you can decide whether you like the exposure it is giving you. if you're emerging markets fund has a lot of exposure to russia and brazil, you know you have deep value exposures. there is ar hand, if lot of india, taiwan, mexico, mainland china, you are looking at a more high valuation growth play. if that does not appeal to you, single country etf's are another way to get exposure. what is unique about this environment. you do not always have that opportunity. david: what you're saying in your call him, is this the reason why goldman went away from their bric fund? it is hard for me to speculate, because i do not have any real information on

decision-making in goldman. you tend to have investors leaving markets when markets are starved for capital. i think that is what creates the opportunity for investors who if you want,o be, last resort and investors. that is the situation you have in brazil and russia. starved for capital and therefore a deep value play. , probably.gher risk it depends who you ask. if you ask market your its, -- theyu ask behavior lists, will tell you there is an overreaction. that is a general statement. david: thank you. bloomberg's gadfly columnist nir kaissar. stephanie: crossing on the bloomberg terminal now, russia's

foreign minister canceling a trip planned tomorrow to turkey. russia also putting out a recommendation to citizens not to travel to turkey as the terror threat is high, saying it is as high as it is in egypt. we will be right back. you are watching "bloomberg ." ♪

>> welcome back. now for some of today's top moments on as heard on go. >> the penalties are so severe for violation i think anybody today trying to get around them is making an error. there has been a serious culture break down in terms of the subcultures being able to flourish. part of it has to be

compensation. whereuld not be a system heads, you win big and tails, yo u win. >> explain what the proposed regulations would do. >> in the proposal i expect they will consider today, which will be in public, if approved, will require that a parody traders, some not registered with the agency, are registered, conduct testing of programs prior to being used in the productions of markets and that there be kill switches. >> the economy is growing. the rate of change has been traumatic with $100 last year and now it is $50. with a flat level of profits in the oil prices that still leads to energy earnings. modest but positive.

stephanie: rodgin cohen, bart chilton. we did a lot. >> the two things we took away, you love the big shores. and rodgin saying at some point banks may have to break up. stephanie: i also like he was not blaming middle-management. at the top of the organization, they want changing. but when you promote subcultures happen.not, it does not we have terry lundgren tomorrow, ceo and chairman of macy's with us. today, we continue the coverage of the french president in d.c. with president obama. that and more. thank you for watching "bloomberg ." ♪

>> it is 10:00 a.m. in new york city. 11:00 p.m. in hong kong. welcome to "bloomberg markets."

>> from bloomberg world headquarters in midtown manhattan, i am erik schatzker. putin says turkey faces serious consequence is after shooting down a russian warplane along its border with syria. french president francois hollande will meet with president obama in the white house moments from now. bankers do not want to hear. the head of one of the world's they are stillay overpaid. let's check in on the first word. here is vonnie quinn. vonnie: french president francois hollande meeting with president obama to discuss the fight against islamic state shortly. british prime