this year, and i thought that would lead to more m&a. but there hasn't been in the energy space. why has that twice that? >> i have a little bit of a -- why is that? >> i have a little bit of a different view. scarlet: we are watching bloomberg markets. we want to welcome our global audience. now, we are listening to talk tear dealmakers from goldman sachs. let's listen in. >> you put all of that in the same bag and that volume is up 2% year on year. the one thats everyone focuses on because of the price of oil and is probably the most tangible. if you look at the downstream part of it, that business has been really strong. >> does the price of a barrel of oil the to get to a certain

level, before big deals get done? where companies feel comfortable selling or buying? >> typically. whether that is economics are --e confidence, it's like energy executives are like any other executive. they will do things when conditions are good and when there is positive momentum. because investors will follow that and they -- it takes a lot to print a transaction in an environment where he have a tremendous amount of volatility. >> one of the positive developments in 2016 -- and we are so going to hit 3 trillion plus in m&a, a pretty nice number -- has been asian, mostly chinese companies going outbound, chinese companies looking at deals either in the united states or europe. wire the chinese looking outside? are they concerned about that -- why are the chinese looking

outside? are they concerned about their internalare they concerned abour internal gdp? ? are they worried about the slowdown or looking to expand into other regions? >> the driver for china to look outside have been strong and continue to be strong. i don't think they are as short-term as growth outlooks. it is very different from the investment horizons that u.s. companies look at. certainly what the u.s. markets look at. oftentimes, you see a lot of price around a high multiple. but if your investment horizon is 50 years or a hundred years, the way you look at the value of an acid is very different from three years or five years or seven years. so fundamentally, there are sectors that various companies in china have decided that they are focused on and interested in. outboundlook at china activity, it is not indiscriminate across every sector. there are focus areas.

it's been focused on brands and real estate in technology. and there are particular identified areas and very focused as opposed to being random. companies heinese coming more sophisticated? ? do they understand the culture, the financial issues over here? a lot of people say, yes, they have. they're much better. but on the other hand, you still see situations -- there was a company, fairchild semiconductor earlier this year, where boards chose a lower usb -- a lower u.s. bid rather than a higher chinese bid. will that over -- will that ever go away? >> the first part of your question i think is accurate, which is the chinese are showing themselves to be extraordinary fast learners. they watch with development market's do, what western markets do, how they get

transactions done. if you look at this year and part of last year, there have been deals with the chinese will say said -- i this tacitly -- i'm going to respect the due diligence at the western competitor has done on this asset. therefore, i can prove to the government that there is a competing bid and i will jump over it. that's the first time we have seen in a long, long time. cnooc was thel cyni last time there was a sizable deal jump. there was more than a handful of those types of transactions. where the respect to the second they areour question, going to continue to drive this. theink we're going to see staytional soe player

within their and bid, within their frame. types, entrepreneurial which we have seen more active this year -- and i am taking out the collapses and the cold -- the consolidations between companies and their affiliates. there is an entrepreneurial class year that is very interested in expanding the breaths of their enterprises. you will look at them do some transactions that seemed to not fit together. but as i said, were the passage of time, they clearly have a hopscotch mentality on how they are going just rainy together. together, we have the situation with hungering insurance company which made a deal with starwood hotels. then they were gone. literally and 48 hours, they as interested as possible to disappeared. is that the kind of thing that seats into the mind of boards down the road? are we sure that we can trust

us? >> let's go back to the prior question also because i did not answer it with respect to the fat -- the fairchild transaction. when you're in the board room boards are working with there is this risk calibration going on. ,particularly with the chinese, the saphenous regulatory process is scary to a lot of directors because, unlike the antitrust regime, where that eyes -- where that is well-established -- >> and they can hire a lot from that specializes in antitrust. >> saphenous is relatively new. investigationsng that are not within the -- itional boundaries of

withve seen transactions tremendous scrutiny. a board will obviously look at the two sets of values and look at what is deliverable and what is in the realm of the possible and put a discount rate around the regulatory process. semiconductors, the archetypal one for my think everything one by really been scrutinized this process. directorses sell great cause. >> we have -- great pause. dealshave seen huge, huge . halliburton had a $35 million deal with baker hughes.

the -- it feels to me, like in the last 18 to 24 months, the regulatory landscape, there has been more scrutiny. i am as that impact if board or someone looking to do a big acquisition? do they say this is just not worth it? >> i think the regulatory environment does play a role to tie that to something you said earlier. asking how chinese companies involved in understanding is companies. let's ask the other way. has u.s. company boards involved in figuring out how to evaluate regulatory risk? because that is evolving as well. and what tools do you use, whether it is for china regulatory approval or antitrust? in the world of antitrust and many of these deals getting there was a state of in market deals that got approved

in 2014 and 2015. there were certain sectors were people say we don't think a number one or number two in the sector can merge or number two and number three. and those deals went through. when boards are looking at the 2016, ok, you calibrate that risk and you go forward with the deal. but when the deal does get turned down, you have to think --ut it much more than just and the cost around it because of what is the damage to the franchise and what is the damage to the company. there is increasing focus for , not justtry to price in terms of the dollar amount, but in terms of saying where am i better off? if i take this deal? risklower regulatory or a higher real

atar -- or a higher regulatory risk andx price? >> are the termination fees going up? >> that was the bloomberg markets most influential summit. we take you live to talk with donnie roessler. you can watch all the panels through the day on the bloomberg. scarlet: let's get you caught up on the markets. stocks right now in the red with energy producers erasing their .ains as crude oil sinks lower that is kind of dampening sentiment and spreading to other

sectors. the benchmark index is already trading above wall street's average year-end target. what is the case for buying stocks right now? let's check in with severe to super run in. let's get some insight to see what keeps bulls up at night. when my we start to see a payoff? >> one of the frameworks we look at his sentiment, how bullish or bearish is the street on stocks? that shows they sentiment and pessimism on the market is on three-year lows. it is a good indicator. i don't know if we see those gains in the next few months. i would be cautious on stocks through year-end. we got a lot of catalyst for

downside risk to stocks in the next few months. arguably, i think expectations have to come down a little bit. i think an entry point might be when we get a little bit lower on the s&p 500, one we get past the election, when we get past the potential december rate hike date. i say between now and year-end, as potential minefield for potential negative headlines could pose some risks for stocks on the downside. one particular area i am concerned about is the idea that infrastructure is now our new hope for growth. we use bloomberg data to look at this and we noticed that the number of bloomberg headlines that include the word "infrastructure" has hit the highest levels we have seen post crisis. everyone is expecting this. you know, that,

expectations have done a little bit of head of themselves in terms of how much money we are actually going to see, how likely it is if we get a split government that the future president can actually pass a lot of these bills. that is another area that is potentially priced too high in the market at this point. ix declined about seven points yesterday. do you see from now to the november elections the markets being vulnerable to more volatility spikes? savita: i do. this is based on historical precedent and based on the current set up. even during a normal election, where you don't have such a evenar set of candidates, during a normal election year, you tend to see volatility rise from where we are right now in a year through november 4, through election day. that has been this very normal trend we see every election

year. we have also seen during election years that companies will pair back on spending. companies will guide down on earnings expectations. there is a lot of kind of insurgency heading into an election. to us isis surprising that we haven't really seen volatility react at this point. i think one reason we follow -- we sought decline yesterday is that the first presidential debate didn't really change the game too much. to the twolistened candidates, they really reiterated a lot of the policy stances we already heard. but i think this could become -- depending on the next debates, depending on where the candidates start to shift their policy managers, weakest -- policy measures, we could see balaji and chrissy -- we can see volatility increase. scarlet: there is increased volatility in bonds. it is not exclusive to equities

markets. what kinds of companies would stand to benefit most versus the punisher most? savita: here's your year-end, i extensivek through a bias. my favorite sectors are health care and technology. i think there is some risk to the downside for stocks from here. another metric we are looking at is sales growth. -- here wey about is are after seven years of the fed doing everything naked due to growth.rate economic . and if you look at sales growth on a currency adjusted basis, it has been decelerating over the last couple of years. where you would expect to see demand actually increasing in the economy -- and the economy actually improving a bit come all you are seeing is better jobs numbers and maybe some stronger consumer numbers, but you are not seeing a broad read demand pickup.

i think having a defensive, a lower bidder buys as we approach the end of the year might make sense. >> what will define the trajectory of the markets going forward? if it's not about her earnings or if this is not going to be about stimulus, what will be defining the trajectory? savita: i think it is meant to be about earnings. it will be about stimulus. but stimulus and earnings are set to disappoint. what defines they market trajectory come i think getting past the election and removing that insurgency overhang so we know it sectors to buy, which sectors to sell. thehis case, i think election actually matters, not necessarily for the market overall, but the internals of the market. it will be a story of has an have-nots postelection. i think we would like to see a clear path of growth. we are not really seeing that yet. that is really the missing link here. sales growth, a lot of

uncertainty around policy. has basically exhausted monetary measures and we are moving into a more tightening buys, although a very slow, protracted tightening bias. of course, as the fed tries to figure out what to do next in its search for any sign of inflation, what evidence of inflation do you see at the company and at the sector level? who really has pricing power in this environment? savita: it's a great question and its hard to find pricing power. if you look at major industries like retailers, financial services, there is massive deflationary pressure in place on a eight book of industries. -- on a big bulk of industries. you are seeing some inflationary

pressure in health care costs, rents, pockets of the market. but we haven't really seen a broad spread inflation. risk is good because the of keeping rates too low for too long is that you get inflation, fears, violent inflation. and we certainly aren't seeing that. , violent-- fierce inflation. and we certainly aren't seeing that. you look atme as global capacity utilization and it is at 830-year low. so there is still a lot of slack bethe system that has to rationalized to get pricing power back, a normal economic recovery that we are used to seeing. i think we are a ways away from that. >> given the gravity of the situation you are explaining, how do you think the fed is going to react to this? and does a marginal rate hike really matter to fix the problem? savita: 25 basis points on the

short end is kind of, like, is that really going to do well in the economy? not.obably i think what we need to cvs corporation's come back into the fray, what has been absent over the last seven years is companies spending money on hiring, on new projects. rmb spend has been note -- rmb\/ has been ok, but companies have basically been doing buybacks. that has been a missing link in this recovery. until we see corporate confidence enough in demand and a healthy economic recovery, i think that is going to keep the .dp numbers fairly stymied i think this can happen slowly.

what is encouraging is that we are seeing consumer confidence building, job growth has been healthy and sustained, so it hasn't just been a good data point your there. it is a sustainable trend. so that is encouraging. what would be nice to see is some measures of pricing power at a company level as well as some kind of a pickup in real demand. >> right. we leave it there. we've got some breaking news here. viacom and cbs will be asked by the controlling shareholder, the redstone family, to explore a merger. national amusements, the holding company of the redstone family, will be sending letters to both companies, both cbs and viacom, soon as this week to request that the boards established independent communities -- independent committees to discuss.

we will continue to monitor these headlines for you. we are live all day from our bloomberg markets most influential summit. still ahead, erik schatzker will bring you live. this is bloomberg. ♪

currentlyhe senate is voting on the saudi bill and it does have enough votes to override the obama veto on legislation that would allow americans who lost family members in the 9/11 terror attack to sue. says it would have grave implications because there would be read to be should take in. onthe senate again voting that bill to override the veto. that is ongoing at the moment. but it does have enough votes to

do so. we will continue to have you posted as we get the headlines. one of our guests is ares .anagement head tony ressler tony: we love the business and the asset class and we have been indifferently five years or so during but the simple answer to low question is, with interest rates for extended period of time, low behold, people are seeing higher multiples for companies. some folks believe buying companies at higher multiples, 12, 13, 14, with higher leverage multiples can still work. it can, of course. but what you have to do is be extra, extra careful because your margin for error is much smaller. doneave to see real image earnings run.

you have to take your companies and stocks, pick your companies much better, much more carefully. hopefully, in the world we live in, we also have an ability to -- ite the rescue capital is how we built our private equity shop. erik:erik: when you look at those relatively high prices, those are equities for potential equity deals, is there something looming out there that will be a catalyst to change that, to drive prices down? what do you think is my to change that? tony: generally speaking, not unlike real estate, a lot of attractively priced beverages available. lo and behold, people pay a higher prices for assets. that is what is driving purchase multiples. as far as i am concerned, when interest rates go up, there will be an adjustment to multiples and enterprise value and asset

value. most folks hopefully can appreciate that. you tried to run your business to the best of your ability knowing that that is out there. >> given what you hear from janet yellen. she is testifying right now, not on monetary policy but more regulation. when you hear what is coming out of the fed, wendy you gain out interest-rate rises over the next -- when do you gain out interest-rate rises over the next 15 much? tony: we don't try to argue that we are the best interest rate prognosticators. but we have is a business where is af our assets in credit floating rate. interest rates go up. my personal opinion is everyone gets hurt a bit. some much more than others.

use fixed-rate leveraging your private equity in real estate assets and trying to invest in floating rate assets in the credit funds and separately managed accounts that we have on behalf of our institutional investors, to us at least, that's our best method of being hurt the least or being hurt in a way that we can handle it. correct me if i am wrong on this number, but your exposure, as it were, through various 1200tment is to roughly middle-market companies around the world. i would imagine it gives you than aeper insight normal person would have into the might of a ceo, the mind of a board of directors. how a jew characterize the mood, if you can generalize, is sort of the c suite right now? 1200, the 1300 companies we do see, i would say 400 or so are actually in the

middle-market. i would say 700 or 800 are larger companies in our tangible credit business. great overview and consider that one of our core assets inside of ares management, the ability to see such a wide array of companies and performance. we are seeing pretty decent performance in the north american businesses we are invested in and lending to. we see decent performance recredit perspective at least in the european confidence. we haven't seen the dramatic drop-off in the u.k.. we have seen actually great performances. we are comfortable with. performance post brexit. there are some issues on real estate. estate assets and adjustments, sure, liquidity nervousness. we have seen spikes in volatility and nervousness, no versus -- nervousness based on

perceived volatility. the investment business or building houses or creating technology or software in some fashion, you are nervous about increases in volatility in the marketplace today for a whole lot of reasons. people talked about brexit. i say there might be a little election going on soon that i think also adds to that perceived increases in volatility. >> how do you think about that little election we have coming up in a few weeks here? from your perspective as an investor, does it change her behavior at all? does it change the behavior of the people you're lending to? what do you worry about as we get within 40 days or so of this election? tony: i think everyone is entitled to an opinion so i guess i will give mine. i am not in the business of talking about politics. i am in the business of how we

are going to run our business. -- i am not think determining are bidding on who is going to win. another has been some discussion. aso think donald trump president will add meaningfully to the volatility in the marketplace. i mean that's my core because he makes statements that the president of the united states i think should be very, very hesitant to make. president will add meaningfully to the i think those will have really significant impact on volatility in the marketplace. increased levels of volatility people somewhat nervous. on the other hand, it is fair to say that if we lowered corporate tax rates, more companies would be comfortable holding businesses and factories here and research and people somewha. i would like to suggest it.

no doubt in my mind, volatility will increase even more so. you back to take the mix of your business. part of what is happened -- has happened is you and a number of your peers have become publicly traded. we do notthan what normally associated with alternative assets historically. stock -- chart of performance relative to your peers. there is the white line since june. audienceyou in the maybe cannot see it. going down, you look at i have to, carlisle, think some of that has to do with what you talk about. what is your take on what public investors see in your company?

>> the businesses you have us competing with on this chart, i am not sure we actually compete with them. are great investment firms. global private equity franchise, privateeal estate equity franchise. they are great businesses but by definition, a bit more volatile. we are dominated by our credit businesses. that does not make us better but it does make us a different business. they seem to look for stability for alternative assets. credit, trying to earn, running

a high-quality equity business and real estate equity business. this is a business we keep getting paid to be in. i like the mix. what we like and what we set out to be, despite your friends calling as a private equity, that is ok. >> we talk about public investors. lp's at think about this point, a lot of angst because of bogeys to pay attention and fun college and whatnot.

when you think about nlp, what is here she most worried about in the current environment? of our investors, think about what they have to deal with. global equity portfolio that has meaningful increase in volatility and has a pretty good with high levels of volatility was does not give comfort to your boss and partners. on the other hand, you're dealing with the corporate rate offering you 3% return. boardu are bored, -- your is forcing you in some way -- way or shape or form -- constituents, whoever they may be. that is a fair assumption in many of our largest investors. sovereign funds have the advantage where they do not have

the requirement or payout. have every oak concern on the global equity and fixed income side. self-serving as it might sound, -- sound, a large portion of fixed income should be alternative fixed income products that we believe to our core. ofcould offer higher rates return without dramatic increases in risk. we can prove that over the 15 years we have been building -- building it. that is obviously self-serving and that is what we believe. they have done it well and can do it well and we are not the only folks. we think it is a business that will continue to grow because we are serving the needs of large investors today. no question. products ineturn power private equity and corporate private equity which ifare enormously proud of,

our performance is satisfactory to our investors, that will do well as well. >> from the structure of alternative business -- >> that was jason kelly speaking in an exclusive interview. much more ahead from the influential summit. next hour, we will speak with the cofounder of poetry capital group. looking forward to that. down with the ceo -- india. we asked about the next big change in the stock market. >> there are old -- always abundant things to do. areas of several significant economic impact and value emerge and they begin to emerge.

income.round fixed i think innovation, the ability thesech out to customers, will make a huge difference in what the markets can provide as value. >> we have seen a significant increase through the mutual fund group. you have seen brokers find an extremely challenging time. what is being done to ensure direct participation in the markets? we haveis something been focused on for many years now. , i wouldme changer like to stress that in india, we have seen in direct participation in a big way. it is the ability to be a significant game changer for the

markets. >> you are pretty dominant. what is your take on the debate? >> there is a need for ensuring savings come into the market. we have to build on that base. carlos like mutual fund, and bring him into the markets. having said that, all markets across the world today have diverse anticipation.

i would say you must be able to provide the magnitude of access. it will be intermediated and sometimes not. success and job is making sure you do not drive anyone away. open up access. >> do you have a view to ?econsider the plan -- a veryt think broad perspective of where they want to see the markets go. this is what they are looking at. they are all looking at it from a quality perspective. i do not think we should get into a particular suggestion. end of the day, regulators across the world engaged with the market.

we have to be empathetic to whatever those requirements are. >> which sectors are you hoping would be in capital markets and where is the growth for you? secondly, what is your understanding? >> when you talk about sectors, year, comem -- last to market to raise capital. what is interesting about the story is this time around, there is a healthy number of midsized companies actually coming to the market to raise capital. it is not just for the billion dollar -- midsized ranges.

india is no longer a small piece in the market turnover. india is significant and india -- top growthge and market expansion since last year. this gives us a sense that indian markets continue to be a strong interest and an attractive destination. >> coming up, the wells fargo ceo willing to forfeit $41 million to keep his job at the bank. will it be enough? this is bloomberg. ♪

>> consumer confidence bouncing back. >> what should you call the new company. >> china and the u.s. actively investing in the continent. .e start in europe bouncing back the weight of the brexit vote. the second month in september. still below where it was before the u.k. voted to leave the european union. home prices as well as household finance.

>> a reasonable position to deal with brexit. he said the bank with the little impact. speaking at bloomberg markets in london this morning, he said the bank is at a comfortable capital level. >> under most scenarios, we do not need to risk capital. that would not be wise. extreme scenarios. there is a lot of debate last -- they areher going early. >> who will pay $1.1 billion. market backed securities and unions. the bank paid $1.920 million.

that means the end of corporate identity that dates back to the 19th century. approve the $103 billion takeover today. >> we provide context and background. c this giants playing there right now are china and the u.s. here is the situation. china plus investments have 44 since 2003 and can be seen in every country on the continent. the chinese government can be joined to create a $2 billion africa growing together fund. companies have been criticized chinese workers rather than training locals. take advantage of africa's cheap

that high unemployment. u.s. development in africa is driven by the private sector and concentrated in just a few including liberia and south africa. the u.s. began the initiative to create the capacity to build generators across six countries. they worked with african companies including general electric. european imperialism left deep scars in south africa. during the cold war, the u.s. intervene to put the pit -- dictators in power and left labor -- legacies of poverty and conflict. even now, about 600 million sub-saharan effort and, about population, lack electricity. rich in minerals and energy sources. africans have benefited from experts of the materials. china's rapidfire state funded

holding provides infrastructure needs for africa. back construction can be shoddy. it is cooling and the investment in africa is dropping 40% in the first half of 2015. the u.s. has consistently used development to shore up but the company is subject to anticorruption laws that make it almost impossible to do kneels in places where this is common. that is your global business report. had online for more stories. ♪

scarlet: if you look at how equities are faring right now, losses.caring for the dow loses 17 points and the nasdaq down by eight points.

let's check in with abigail doolittle live at the nasdaq. care.l: a flip-flop we we started higher and now we are a bit lower. ironic considering we have a safe haven. uncertain --bit of uncertainty out there. as for what is dragging the most a little on this talking it hurt its company and its search business. suggesting downside potential of more than 10% for shares of alphabet. the biggest boost today, amazon

yesterday. coverageery initiative . just yesterday, jpmorgan taking to $2000.rice target a lot of bullish sentiment on shares of amazon. as for what else is dragging, we have the nasdaq lately down. the biotech index down. biogen is down. going back to the 10 year yield in the specter of the expectations for rates to rise this year, perhaps the december longmeaning we have a chart here, the u.s. 10 year yields in white. if the rates go higher and we a seems likelyns, it that fallen rates really helped the biotech and stocks go higher . if rates go higher, it may suggest the index which right now is in a bear market, may

paint ahead. this is something to keep an ion in the weeks and months ahead. >> love that chart. abigail doolittle reporting live >> $41 million. of stock salary as the bank invest the account please of the more than 2 million for customers. it may not be enough to satisfy lawmakers who called for a resignation last week. testifying on capitol hill again tomorrow, joining us, you have been following the story. to us. the context this is unprecedented. >> it is for any bank ceo since the financial crisis. to give up this amount of money is unprecedented in huge. but there are so many big numbers being thrown around on the numbers that

seem small by comparison. a false expectation about what could feasibly be available versus what actually was available under wells fargo's policy. >> the bloomberg view columnist writes status our way to discipline bad employees and therefore deter current employees from doing bad things. we have a situation where energy -- we have a current employee. are there ways to discipline you? >> there are and like elizabeth warren want to see other things implemented. form.s still a minor rewards he would get in the future. they are not reaching into his banking accounts and giving his stuff is invested in already. in that sense, it is a halfway measure, but not quite going in

.nd grabbing stuff he has been at the bank and its since 1982. >> does he have a future? >> at is an open question. also a reporter, talking to a lot of bank analysts. the most to think for part that wells fargo has done what it needs to do to move past him,in terms of punishing but what they are looking at is totally different than what lawmakers are looking at. >> in the public as well. a extent is this more about the industries test behavior? quite often interesting question. if you think about the big scandals we have had, there is a lot more money at stake. wells fargo did not make a lot of money on this. you talk about public anger and

there is something innately creepy about the account practice that i think is driving people to specifically target wells fargo for this. >> people can feel victimized. all right. thank you so much. >> on capitol hill tomorrow, you can watch it live on bloomberg tv, our website, or on bloomberg at life go. still ahead, much more from the influential summit. howard mark joining us for an exclusive interview. this is bloomberg. ♪

scarlet: good afternoon. >> welcome to bloomberg markets.

♪ scarlet: we are covering stories from washington, london, and mumbai in this hour. three big interviews from the most influential summit. marks him -- investment strategies and insight into the economy. then bruce richards tells us where he sees opportunities in the debt and energy market. who he is backing in the presidential election. it has been an up and down day.

>> we are seeing not huge gains but again nonetheless. the map today. it is not helping stocks at this point. earlier today, inventory data oiled a drop in inventories, estimating a building cap, so that pay -- pushed oil around. propose some kind of production plan. not helping stocks overall. we got late breaking headlines on viacom and cbs according to a person familiar with the matter.

to explore a merger, that is in the form of national amusements. that is holding company controlled by the red stones. letters to media giants this week to request they establish .n -- independent committees this is not the first time talk has come up. the two might potentially look at this. both shares are rising, but not seeing a huge spike. another potential combination that had been dismissed and now it is back in the -- on the table. the ceo is still potentially open to a deal. the ceo there, remember those two had previously dismissed coming together. then of course, the other potential target we have been talking about his twitter.

shares are down 3.5% and a stocks are getting negative commentary. these are not the first about the price that twitter -- we see disney little changed. citigroup today saying the analyst -- twitter is not as good for various reasons. including that it will be difficult to improve twitter's is this in the opinion of that analyst. that is the latest on this potential combination. >> thank you for that. mark crumpton has more from the newsroom. allowing saudi arabia to be sued for 9/11 attacks.

more than enough to clear the two thirds threshold. the president argued the legislation could open the u.s. -- around the world. overess has not written -- it in one of president obama's vetoes. voteo thirds of the house to override, the bill will become law. james comey says five people at least were granted immunity during the investigation of hillary clinton passes use of a private e-mail server. the number of immunity agreements is not unusual for complex investigation. also repeated criminal -- saying people not be reopened. traininge as a facility for military supply and the justice operations. the white house says the president does not intend to do any politicking even though virginia is a critical swing

state in the election. who of global leaders will attend funeral services this week. this -- earlier today after suffering a stroke. over a six decade time, he won the nobel prize in 1993 for historic peace -- with palestinians. britain's prince charles are among dignitaries scheduled to attend friday's services. he is 93 years old. dayal news 24 hours a powered by more than 2600 journalists and analysts. i am mark crumpton. this is limited. -- this is bloomberg. scarlet: taking part in bloomberg's most influential summit next for an exclusive interview. this is bloomberg. ♪

scarlet: bloomberg markets most influential summit is underway in new york there at erik schatzker is any by with a special guest, cochairman and cofounder howard marks. >> thank you. i've had the pleasure of speaking with howard and the conversation continues. i want to begin by sharing with you something the president of blackstone group told me yesterday and we will play it for you. i want to begin by sharing with you>> the markets are great rigt now. >> just because prices are so tractive. >> prices are high in any historical context.

almost any asset. >> prices are high by any historical context. one of his colleagues, another blackstone guy, speaking yesterday, ran private equity. high moguls just cash flows made this the most treacherous moment anr in his career as investor and just to put it in perspective, he is about my age. what do those two statements tell you? >> that is a healthy thing. the riskiest thing in the world is to believe that there is no risk. when people talk about risk in the markets, that is a health the thing. memo titled on confidence in the summer of 2012 and i said the great thing is the confidence is not too high and when you turn on the tv and

washing like bloomberg, they have not reissued dow 36,000. and so forth. that is healthy. the problem is even though most people are not thinking bullish, most people are acting bullish. .ost people are still buying i think you told me a lot want their hedge funds to on hedge and so forth. my late father-in-law used to call these people handcuffed volunteers. they have to because they are making return. >> i will ask anyway, the folks at blackstone who compete with are some pretty sophisticated investors and are not the only ones taking advantage of high valuation. if the most sophisticated marketer selling, what does that

say about the people who are buying? >> somebody is wrong in every transaction. we usually cannot cut it finally. i think for the last five years, this has been a time for caution. when i say caution, i think of myself and my firm as being cautious. i'm talking about more than usual. sellers.t net hire us to manage their money. we cannot go to cash. it does not help them if we return their money. to somebodyve to go else who faces the same options we do. we are investing but with unusual caution. >> is there ever a time to say i'm sitting it out, i will go to signand that is as much a

of conviction as buying? think the right thing for us to do is to call the client overvalued market is . would you like us to go to cash? i do not think it is right to go to cash unilaterally. at 5.5%.d bonds should we go to cash? if the client thinks it is the best thing he knows us and we sort his goals by going to cash? i do not think that is right. >> what is the prudent course of action than right now? you tend to look at investing with a long-term horizon. but investors need to do something. what does that mean if they are cautious? think when the investment strategy goes to work

he faces two, risks, of losing money and missing opportunity and every day, he should say should i balance them 50-50 or worry more about one or the other? for the last five years, i have been saying balance them but worry more about losing money. if you are more worried than cash, but could go to .hat is tough to do the other thing you can do is raise your standards. historically, we have probably bought 30% of all high-yield bond issues and now close to 20%. we are insisting on a higher , where we canty get it. the trouble is, and overheated market, not only are prices

and, but risk is high standards are low. in a hard to be selective heated market but we are doing everything we can. >> does that mean you either believe or worry more that every incremental dollar invested more the following day will end up losing money? i do not think that. if i thought that, i would not be investing. be calling the clients with alarm -- in my voice. i do not think that is true. >> is there ever a time, and i will remind everybody you have been in the markets since 19 nine and a professional since 1968. was there ever a time when you felt inclined to pick up the phone or any other means of communication and say we have got to get out? >> absolutely.

the first half of 2007 was such a time. the yield spread on high-yield bonds, extra yields you get above a treasury for taking a credit risk is now 500 basis points. in march or april 2007, it was not enough reward. now it is enough reward. there have been times. phone 2005 through the end of in oure sold assets closed end funds, real estate funds, we sold assets aggressively because we thought the prices were unrealistic. we are not doing that today. compared the continuum of the cycle to baseball games. in those situations, you are

very much in the last out of the ninth inning. where are you now? times,up cycle, the good inning.he seventh words, the game is more than half over, the runs have been scored and when you're in the seventh, the yield could be in the eighth and you do not know it and one of these days, will be in the ninth. i do not think we are there yet. ino not see bubble prices assets. the s&p for one indicator sold at 32 times earnings and is about 19 today. a big difference between 19 and 32. >> what about treasuries? >> well, i'm funny that way. when i buy a bond, i do not

think about what it will do tomorrow. i say, will it pay off. you buy a treasury today to get 1.5%, if rates go up, he will have an interim price decline but you will not lose money if you do not sell it and if you buy it today at a yield of 1.5 and hold at maturity, you will get paid and make 1.5. 1.5?uestion is do you want the strong are you is you should get 3% because that is folly. if you're happy with 1.5, today, high bonds at 5.5. that plays a role in your portfolio, you could buy them. they may go down in the interim and there may be a better time later, but if you buy them today and they turn out to be creditworthy worthy, if you have done the credit analysis or you have a manager who has, he will get the 5.5 and today, that is pretty good.

talking aboute the bark -- the bond market, people have been predicting a bond bear market since at least 2012 when the 10 year yield drops to 140. the yield did back up the next couple of years of this year, we saw the yield dropped to 136 and the fed is no longer in that. as a signallook for that the beginning of the bond bear market is upon us? >> this is not the kind of thing we concern ourselves with. we are not market timers. i dislike the word traitor. we are not traitors. we are long-term investors. if we can buy the debt of a company we are convinced will pay off with an attractive yield, -- i'm not a fed watcher. >> let me phrase it another way, shorting?

is we are not the one you buy a bond, you get the interest. when you short a bond, you all interest. doesu short a bond and it nothing for two years, you are not even. you are behind by the amount. with ame finish up question about returns. any investor putting money toward today, 5.5% yield on 1.5% yield ond or treasury, has to have some expectation about what returns will be overtime. looked at 30 year returns for several asset classes. since roughly this time in 1986, equities have on average returns 19.8% returns. mortgages, 6.6% and treasury 6.2%. 6040 you get to 7.5, which is what pension funds

have historically hoped to make. what is a reasonable expectation for a blended return on the balance portfolio in the year -- in the years ahead? >> they will not be a .6% in the next year or two. high-yield bonds, on upper end of the yield registered instruments at 5.5, stocks expected to return by most people at five to six. at two, high grades at three, and those together and you do well to get 5.5. fund and running a someone said what returns do you think they will get, with modest to moderate risk over the next years, i would probably say 5.5.

>> it sounds to me like some people need to go back to the drawing board and reset expectations. always a pleasure speaking to you, the cofounder and cochairman of oaktree capital, alternative asset manager. about $100 billion. always a pleasure. back to you. >> still ahead, we hear from the asset management ceo about why energy is a buying opportunity. this is bloomberg. >> and breaking news, the department of justice is in conversations with credit suisse and barclays about resolving investigations about their sales of mortgage-backed -- it is not just the settlement the doj is requesting. this is all according to people familiar with the matter. we will dig into this story next. ♪

scarlet: this is bloomberg markets. >> deutsche bank is not the only lender wrestling with the united states. talks of the justice department according to people familiar with the matter. we are joined with more details. what kind of settlement are we talking about? >> this is the last set of banks going through long-running investigations as to how banks treated mortgage tax securities and whether that harm investors or other banks in terms of how they were packaged and sold. civil investigations. the penalty is thus far with banks that have settled have been very high. bank of america close to 17 billion and jpmorgan was close to 13 billion. goldman sachs settled for about 5 billion.

you see big numbers. credit suisse and barclays, areg with deutsche bank, negotiating to basically close this out and figure out how much they have to pay for this. >> do they have more room to argue they'll last he covers of u.s. thanks? does that matter? >> not necessarily. fast is not a hard and rule in terms of what they pay that there is a correlation in terms of how much issuance there was prior to the financial crisis. >> what happens next? >> they have a long and painful negotiation with -- the department of justice holds all the cards -- the cards. deutsche bank has started out with a high number around 14 physically given its financial condition and profitability at this way. it is expensive for the bank.

the bank has pushed back quite a bit and they hope to get that when down. >> talk about the level of urgency. is there a statute of limitations to be reminded of? >> know, typically you see rushed through at the end of the year but this is not linked to the end of the administration. >> thank you for the breaking news. we have got because much more great interviews from the summit. this is bloomberg. ♪

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headlines. mark crumpton has all of the headlines from the newsroom. is threateningy to cut off all contacts with in syria.r the war the state department says he issued the ultimatum in a phone call to russian foreign minister insisting the russian and syrian government and their attacks on aleppo. the secretary reportedly expressed concerns over attacks on hospitals, and other civilian infrastructure. hillary clinton has gotten a slight host debate out. she is up three points, 38% among likely voters a month -- over donald trump. according to a politico survey released today. trump is up by 1%. gary johnson gets 8%. jill stein is at 4%. obama warned voters

about supporting third-party candidates. he said during a radio interview that a vote for a third-party candidate is essentially a vote for donald trump. mr. obama's comments, as democrats are targeting the libertarian ticket over concerns .t has drawn support serena williams is joining the national conversation about black men who died in violent, patients with the least. toliams took to facebook express the fears for the safety of her 18 euro nephew and others. she emphasized she is not wrongly painting all police officers with a single brush but she said ignorance and fear are affecting millions and millions of lives. global news 24 hours a day powered by -- more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. scarlet: erik schatzker was joined for an exclusive

interview at the most influential conference in new york city today. he made a pointed comment on the election. the am a believer that country is missing how much there is a desire for change. a presidentelected since george h w de son constancy. that is the way i look at it. it has been about needs. i think the company has -- there is a desperate desire to change. i predict blow it but that donald trump can win the election. scarlet: he went on to speak about how this will affect executive. >> i can really only speak for our company. you are right i have never heard a ceo think their company is trading with the right multiple so count me in on that crowd. we will generate a great

business model. since we have been public over two years ago, we returned the value on dividends and special dividends and i think the market will notice. >> i am sure you feel competitive when it comes to things like valuations. what is it investors are not seeing when they value your earnings when they put 12 x and 16e on your earnings on every core? you could argue the core has got them had been and that confuses stuff but i want to know what you think. an expert on everyone else's multiple but a lot of it is we run a clean business model. we sit with substantial excess capital. about 200 million on the balance sheet and we do that to attract managing directors and make them feel comfortable about delivering long-term advice.

we do not want them to think about the firm as their responsibility, so we keep an exceptionally strong balance sheet. you see a lot of pro forma in the numbers. i think the fcc has required people to do more straight cap accounting and you will find our valuation is probably slightly better than you think because of how clean we run the model. >> maybe i did i make this clear enough, pardon -- part of what i was getting at is the clean business model very much leveraged to the amount of activity taking place in mergers and acquisitions and restructuring. since been taking off 2016. down 35% from is the first quarter and fewer deals were getting done as well. they tend to beast mode -- smaller on average. does the trend continue?

>> possibly. i do not have a crystal ball on m&a. >> but you have got a pipeline and i do not. >> the conversations in the market, the amount of activity the strongest it has ever been and the government has got more active on the trust front, the inversion activity has stopped a bit. companies we talked to are facing a challenging and low growth environment and they need to do things to improve the fifth us. the amount of conversation is the highest it has ever been. >> economic growth is challenging but they have to do something. does that mean they are growing more come with the idea of paying up? valuations are pretty rich right now. >> yes. they have been here for a while. asked all the time of the

confidence of ceo's east. i believe the boards and ceo's if are confident that we have a low growth economy. they are confident nothing radical will change in the next that they could see. they have to look at m&a as a of improving or spinoffs or things of that nature. yes, the low growth the -- low growth is helping people's desire to do things. people are really buying into the fact that we may have low interest rates for a longer thought 10ost people years ago. >> another thing most ceo's is have to keep in mind. tony james told me yesterday is sellingrm everything they possibly can because's credit

spreads are so skinny. put yourself in your client's shoes for a moment. would you be a buyer is private equity are running for the exit? quite say former partner of mine and one of the smartest people i know, i cannot refute tony james. always a fire and a seller. i turn on bloomberg and say the there went down because are more sellers and buyers i always laugh because they're usually has to be a buyer for every seller. i think there are still people trying to come push things. synergies ander market share, there is huge technology thread. when i find fascinating about my business, i get to talk to ceo's broad range of geographies and businesses and it is always incredible to me what technology is doing to their business and how they have to respond and how threatening it is over the next five to seven years.

>> what about political risk? how many of your clients have told you they are holding off until after the election? >> i would say zero. we have some things people wanted to get done prior to the iection but i know of nothing can think of being held off until after the election. what about preference? you can make the case there is more certainty and clinton presidency, more of the same. party,es from the same secretary of state in the president's of net. of the same people or others could make the case that trump could do a lot to improve conditions for m&a. deregulation, rewriting the corporate tax code, protectionism for all we know could have a positive impact on the desire for dealmaking. >> it is interesting, actually a lightlyead upon very

this election. aboutk people are nervous talking about their preference. there are preferences they may not want to talk about in public. there is a feeling hillary clinton might be more visible. chris christie came down and made a good case that the first thing they will do is go after the regulatory environment. no industry where you cannot find people worried about the burden of overregulation. if he continues to adjust the community on the burden of regulation and lowering the tax you might -- he might find some support in those industries. >> one of the messages, the words that hillary clinton likes to use, fairness. she talks about it in the context of income inequality but

what's ceciwonder and the department of justice might take under a clinton presidency. load you expect? >> i do not know. almost two regulatory environments for the first five or six years and last year and a half. something changed and we have a much more focused justice department on m&a. obviously, the inversion legislation that was put in place has chilled that environment. i do not exactly, i cannot likect what it would look -- what the ftc would look like under clinton. >> do you think it would be more hand up -- hands off if trump for president? he thinks the regulatory burden is killing american business. that is regulatory burden, i think he would, i have not asked

him directly. schatzker atrik the bloomberg markets most influential summit. >> some breaking news, chicago fed president speaking at a community bank event in the prepared text of his speech. he made some comments about interest rates saying i would likely be stuck with low rates for a time and we think they will be a good deal lower than in the past as well. you are seeing here a live webcast of the speech in chicago at the moment. also, lower equilibrium rate could be due to a reduction of economic growth and assets are likely to keep market rates low for a while. you can follow along real-time online go on the bloomberg. the chicago fed president giving this speech.

next, goldman sachs remains skeptical that any deal would stop oil prices from falling. that is the subject of the chart of the day next. this is bloomberg. ♪

scarlet: deaf an important one over the past week. seconds,the past five will they freeze, won't they freeze, will they or won't they,

according to a document the plunder was given access to algeria, to cut 700,000 barrels per day but iran and saudi arabia do not want to come to this now. perhaps they will in november. higher once again today. here is the backdrop, this is the chart of the day. we are looking at output versus the price of oil. the price of oil, a blue line going down steadily since the 2014.ing of there have been a lot of false starts on the production target past couple ofhe years. a decision not to act going back to winter of 2014 in them there was a target agreement and then there -- the target was abandoned. slip were some up-and-down the production but overall, opec output has risen and that is now

at a record high. that means when you are talking about a cut or a freezing saying even if there is an agreement, it will not make that big of a difference for oil prices and goldman says the supply demand model builds in the fourth quarter of the year. and we talk about iran as well. when the hold out here going back between it and saudi arabia. iran's output always back until 2008. they want to get their output back up to 4 million, which is up here. it is still below that level. it has said in the past it would not freeze and told got to this level. even if you are looking at an agreement on production cuts or what is more likely, production freeze at this point, you are still talking about plentiful

supplies and production of oil. are not even talking about the rest of the glove. >> bloomberg markets, most influential set -- we're hearing from some of the world passes biggest managers. cofounder spoke to why energyn about debt is a great place to put your money. >> right now, the default rate for distressed debt, high yield, is around five percent and most of that is coming from the energy sector. all high-yield energy companies have filed for bankruptcy in the past 12 months. the rate is around 5%. without energy, the rate is only 1.7%. defaults are rather low at the current juncture.

it can change of course overtime but earnings have been going down six consecutive quarters. as well as protection being rather weak. we think the cycle will kick in as we get into the economic cycle perhaps in a year and a year-and-a-half. the single most interesting thing i think for your viewers cash, $50 billion in distressed holdings that marathon and other creditors in $50strip -- creditors hold, billion will be paid off in the coming year. bankruptcy, the old debt he comes equity that is lifted and you will be able to sell that or new debt will pay off your old debt, giving you biggest weing the

recently had. we are still bullish and think it is a terrific opportunity and that is one of the opportunities we are referring to that will pay off. will be caesars, infusing the distressed market with $20 billion in cash as he comes out of bankruptcy and the new debt offerings payoff field is a terrific infusion into the community asing at an opportune time the next year approaches and we move into the next cycle. >> exactly. it point, managers will look ahead of them. about we go, ask you energy. what about now? >> we like energy. energy prices will firm up over time.

interesting part of the commodity cycle right now is not necessarily oil and gas but coal. number one. coal companiese in the u.s. to file for bankruptcy, number one -- never two kerley in bankruptcy. you have thermal coal used for electricity and mostly heat andng the winter months, prices from where it was, about $1.8 to three dollars today. that part of the market is doing nicely and is recovering market share. but what is used for cooking and still production, it has rallied from $75 to $205. a 270% increase this year. imagine a debt of a coal company and the underlying base

commodity has gone up nearly threefold. how do you think you are feeling? pretty strong in your position. of these companies as they come out of bankruptcy, not yet, could be rather substantial. >> coming up next, more from the most influential summit. next, we hear from andrew wilson , ceo, goldman sachs. this is bloomberg. ♪

scarlet: this is bloomberg markets. investing in a world of monetary policy, should europe look to japan for warning signs on the consequences of trading deeply into negative territory? andrew wilson says yes.

the firm manages more than $1 trillion of asset folk earlier today as part of the most influential summit. >> if you think about the development of central bank policy starting with negative rates and moving into quantitative easing and now in japan, yield curve control, were they potentially fix the around 0%, and it has gone lower than that. the comment i made was really around how much further the policies can go. cutting rates into negative territory has a negative impact on the sector. now you have a transmission mechanism trying to keep it going. they are notdful putting in place policies that prevent what they are trying to achieve, which is getting growth going. the looknteresting, through europe will be more challenging because there is a

range of different countries and exactly how it policy would be implemented would be complex. it will be interesting to see the development of policy. in terms of looking at europe as well and banks in focus at the moment, we have been hearing from deutsche bank and also the italian bank issue onongoing, what is your view the sector in general? do you think we might see a crisis? >> in part because of what the policy is doing in terms of the net interest margins for the banking sector, i think we are taking a more cautious approach and are being wary and we would like to see how the policies will buffer the impact of negative rates and the key here banks cannot pass on the negative rates to consumers. if you find a way to do that, it is a long way down the track before that as possible so i think that is why the bank of japan is interesting because it

is trying to ensure the year -- yield curve has a slope to it curves across the world. >> that was andrew wilson at goldman sachs asset management. >> coming curves up, the top rag , weighing ins us on fed chair yellen's testimony. this is bloomberg. ♪

david: it is 2:00 p.m. in new york and 7:00 p.m. in london. vonnie: welcome to "bloomberg markets."

we are live at bloomberg world headquarters in new york. covering stories out of canada, washington and zurich. coming back from losses during most of the session, stops hovering around the flat line -- janet yellen said the majority of central bankers see a rate hike this year. whereore on her testimony she revealed that the central bank is taking a close look at the biggest banks. we will hear from maxine waters later this hour. duke energy wants to bring natural gas to pennsylvania, ohio and west virginia best how the company plans to make it happen. markets close in two hours. julie hyman is here with the