support of 47% of likely voters nationwide and mr. trump has 40%. the survey was conducted over the last two days. sign-ups for the obamacare health plans will climb 8.7% next year according to u.s. government projections. by the end of the 2017 enrollment period, 13.8 million people will have takes individual health plans through exchange marketplaces. numbers showedhe steady growth for insurance markets created by the affordable care law. it is consumers are starting to feel brexit's bite. real wages are rising at the weakest pace since early 2015 as oil prices and the weaker pound stoke inflation. the pressure looks set to intensify. employment growth is slowing. economists are predicting price gains as fast as 3% next year. russia is threatening to retaliate after a british bank terminated the account of .ussian state-run tv channel rt

the bank did not give any and says theion but rt bank is reviewing the decision. the kremlin stated that moscow would respond "in a practical manner." global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. scarlet: we are 30 minutes away from the close of trading in the u.s. live from bloomberg headquarters in new york, and scarlet fu. julie: i'm matt miller. -- matt: i am matt miller. scarlet: a rally in energy companies. joe: but the question is, what you miss? scarlet: investors are driving

into passive products. we were here on this topic. and it is a showdown in sin city. presidential nominees donald trump and hillary clinton face-off for the third and final debate in las vegas. we will take you down with a preview. and one of clinton's biggest supporters, billionaire a little steve case, joins us live from -- aol founder steve case, joins us from the vanity fair summit. we will ask about lessons learned from the tech bubble. matt: take a look at where the major averages stand. been most of the day -- nasdaq not moving much at all. hovering around flatlined. s&p, one third of a percent. dow jones 67 points. off the session highs but still showing gains. abigail doolittle is standing by.

have had the nasdaq around even all day. fluctuating between small gains and losses. slightly higher all afternoon. this largely reflects what is going on within the largest sector, technology. it comprises about half of the stocks here at the nasdaq. i will plug war between winners and losers. -- a real tug-of-war between winners and losers. facebook, alphabet, and netflix trading hybrid yahoo! also trading higher. the company beat third-quarter earnings estimates by as much as 43%. as for the losers, the hardware and chip stocks. beat earningslogy estimates nicely for the second quarter revenue guide was flat so investors are somewhat disappointed. the big story here today for the nasdaq, intel. shares are sharply lower.

on pace for the worst drop since the middle of january. missing street estimates that caught the street off guard. demands like weakening behind the week guide. this is not the first time this year that this has happened. they also went down in january when the stocks had a roughly 9% drop on the day. worst drop since today. we do have analysts defending these shows but very, very lumpy business. matt: is there any reason -- if you look at the chart of intel, you can see the lumpiness in the stock price. any reason to think the underlying business should show a boost? -- cany really have it they pivot to cloud? ntel,il: we look at i

35.92. the moves in a more pronounced manner, the stock is stuck in a range. for recently the stock has been trying to push above the top of the range as investors were becoming excited about the possibility of the cloud business. but the stocks dropped right back down into the range, suggesting more weakness could be ahead. hard to say whether or not there is some sort of recovery. more lumpiness in the business is ahead for intel. abigail doolittle joining us from the nasdaq market site in midtown manhattan. traders are stepping up its that central banks will cut borrowing costs for the first time in four years. policy will meet tonight and investors are present in a reduction from a quarter to half a percentage point. a meaningful cut in brazil is a prerequisite for investing in the country. our guest joins us now.

two of the 58 alice that -- analysts that bloomberg surveys expect the rate cut tonight. : if you look at the factors they cited, food inflation coming down, progress on the fiscal austerity front, which we have gone through congress. the third factor is meaningful deceleration in services that has been slow to come down in brazil, despite the severe economic recession the country is going through. i could be a reason they point to. at this -- matt: a reason they point to if they don't cut. gabriela: right, meaning we want more meaningful deceleration in that sticky point. the other factor and especially the fact around the deceleration just in inflation expectations can really 20 two the rate cut today. that is a global phenomenon, right?

breakevens don't look so week. gabriela: the issue in brazil and a lot of latin american countries is bucking that trend. while the world has dealt with deflation, they have dealt with stagflation. hi, sticky inflation levels. inflation, while they say it has come down, still quite high and above the midpoint target of 4.5. scarlet: this is a huge turning point for brazil and yet it is only part of the prescription. the other party's fiscal reform. what is your confidence that the economic dream team can deliver? the expectations on that front are pretty high. -- they: there are very are very high and that is the explanation for the rally. it is all about expectations from expectations of policy change, especially when it comes to fiscal austerity. we are seeing the first signs

that the michelle; made first -- that the temer government may push to reform. aboutxt step, 2017, all pension reform. that is going to be huge in terms of reining in fiscal spending but also in terms of the political capital that will inspire. matt: problems here as well. pension problems here, massive pension problems in the u k and europe as well. these seem to be global issues. i don't know if you solve the story from gadfly today, story about how much investors are holding in cash. do you think that is part of the difficulty in brazil as well? our people hoarding cash there, too? gabriela: no, and the brazilian investor. i wouldn't say they are taking on a lot of risk but there used to fixed income. whether sovereign bonds,

corporate bonds, i do think there is investing taking place. it is in fixed income. if we start seeing some rate cuts, maybe that could encourage risk-taking. maybe going into equities. we see how that has worked in other countries. gabriela: i think we are still far from that in brazil with rates at 14.25%. [laughter] matt: good point. scarlet: exactly. i wanted to bring everyone to this chart on bloomberg. emerging-market investors are the most bullish and corporate eurobonds relative to sovereign notes. here is the yield spread. way down. it has been narrowing. what is it about sovereign debt in these emerging nations right now that is not proving to be quite as attractive as it had been previously? gabriela: i think the first of all the rally in emerging-market bonds was that first step. we saw actual sovereign bonds,

there was still a bit of trepidation into wading into the corporate pool. using brazil as an example, resilient spreads on the sovereign side game down for corporate bonds are quite attractive. it is a shift from saying maybe we have narrowed spreads too much on the sovereign side and it is time to go to cheaper corporate bonds. fascinating -- matt: fascinating, as saudi arabia puts out the biggest emerging bond issue of all time but we saw argentina, with $16.5 billion. gabriela: there is still appetite for emerging-market debt. pretty much a fixture for the next couple of years even in the u.s. scarlet: the u.s. federal reserve throws everyone for a loop and raises interest rate or doesn't raise interest rates, surprise inng to

december, when does that mean for emerging markets? gabriela: not so much about the fed raising 25 basis points, but what happens to the u.s. dollar? when the dollar was rallying 20% against a whole basket of currencies, for us the question is what is the fed's rate hike mean for the dollar? what they are indicating to us is it is still gradual and to such a low resting point, it is good news for emerging markets. scarlet: thank you, gabriela santos of j.p. morgan asset management. , the ceo of the second largest public pension fund tells us about california's new disclosure laws. this is bloomberg. ♪

matt: what'd you miss? california governor jerry brown signed legislation applying a disclosure law that applies to fees on pension funds and retirement systems into private equity venture funds or hedge funds their investing in. it will affect america's second largest public pension fund, of course, calstrs. jason kelly flew out to california and sat down with cio chris ailman. it goes into effect january 1 and we are already making the steps and it will be disclosure fees and carried interest on private equity and hedge fund in january going forward. we are setting up the webpage

and getting ready to record that. any fees and not going to accrue for several months or probably a couple of years. carried interest will take longer. the information will be out there for the public to look at. >> what is driving this desire and his push from governments to disclose more on the part of private equity and hedge funds? >> i think there is been constant interest for more disclosure an understanding of the cost of investment management. we have disclosed out direct cost of fees we pay out to a money manager. we are not disclosing the fees netted out of the return. kind of like a mutual fund. they now have the cost and you don't report that. what we are doing now with the board's encouragement is recording the cost annually of real estate, private equity, infrastructure, hedge funds, any private investment. we show that at the asset class level of what are repaying in management fees, featuring, profit sharing, which we would call carried interest.

and anything we are paying and portfolio monitoring fees so they know what has been netted out of the returns. payingmately you are fees for the returns. how do you feel about the returns you are getting from private equity act of -- from private equity? >> well, that is the key. we have to have profit to share in it. we are seeing returns come down. seea surprise because you veterans and a lot of asset classes continue to compress. prices for portfolio committees are very high. that is not a period where you see outsized returns. we still believe in the process and think they can add value over we can get in other investments like public equity. heard people like david rubenstein talk about a secular change in terms of the returns private equity can deliver. not 20% or more but down into the middle teens. what are your expectations for private equity going forward,

numbers-wise? >> we look at it as the spread over public markets. we used to expect 500 basis points. now we expect only 300 basis points above that net overall the cost. if you look at the last 20 years you see the fact that the industry went from very small, very amount of capital, to large amounts of capital and it is now a full industry. we are not surprised there has been a compression of those return advantages. more transactions are going to an option. they are not being negotiated so you and i seen the discounted prices used. >> you said, i believe on the go, you are not expecting to meet this 7.5% bogey you have to hit. how are you feeling now as we get closer to the end of the year? >> for us that is the halfway mark. our year end is june 30. we still have to get through october. that is a mother that worries

everybody when it comes to u.s. stocks -- i month that worries everybody when it comes to u.s. stocks. going to be a tough year. quarterlying into earnings season and we are really going to have to see how the earnings come through in equities. expected, it is going to be a tough year to make money. roughly 9%at allocation to private equity at this point, i believe. your target is up to 13%. how do you get there and how soon can you do it? >> it is not a matter of choosing a particular target. we are investors. we have plans the next couple of years to keep investing could part on the challenge of private equities you can commit money but the gps have for years to invest. it is not like you are going out and buying the stock and increasing allocation. we are looking at secondary ,arket options, coinvestments

looking at ways to expand the portfolio. the 13% target is our long-term consistent target. we were about that in the early part of this decade, and we are going to be lower now simply because the investment cycle. >> when you think across asset classes even beyond private equity, what do you like going forward over the next two to three years? >> two to three years is going to be a challenge because you have the brexit during that time period. private assets have a better chance of making money. but it is still going to be an thatesting challenge nothing cheaper right now in the world with the exception, i would say, of emerging markets, and not every emerging market. it is a whole bunch of individual markets. people have to look at their portfolios. diversification is going to be critical. having a nice spread in the portfolio of equity, a little bit of debt, and if you can come alternative investments to generate returns. matt: that was chris ailman, cio

of calstrs, with jason kelly out of our san francisco office. scarlet: time for the biggest business stories in the news right now. we begin with st. jude medical, facing allegations from muddy waters. the short seller says the pacemakers and defibrillators can be easily hacked and turned against patients relying on them. the firm released a video that covers what it says are the polar abilities. st. jude's says it stands behind the safety and security of its devices. credit suisse is reducing jobs at its cash equity business according to a person with knowledge of the matter. the swiss bank is extending cuts to an area it previously earmarked for growth. credit suisse eliminated 20 jobs in cash equities. and please in london, dubai, and south africa among those -- employees in london, dubai, and south africa among those affected. starbucks is pushing ahead with expansion into china. starbucks has about the dean

dozen stores in the u.s. -- 13,000 stores in the u.s. in brazil, the man who spearheaded the ouster of former president dilma rousseff has been arrested as part of a sprawling probe into corruption at petrobras. he has been accused of taking millions of dollars in bribes. he denies the accusation. he resigned as a of the lower in september.ess that is your update. matt: we just heard from the cio of calstrs. in the next hour, marc levine, chairman of the illinois state board of investment, which oversees a $16 billion defined pension benefit plan, on why that board has converted its plan to and all index fund lineup. this is bloomberg. ♪

scarlet: i am scarlet fu. what'd you miss? today's big economic data point was new home sales, or i should say housing starts, excuse me. it showed a big crop off in the construction of multifamily homes, which are the purple bars here. down 38% to an annual rate of 264,000. the last time we saw 264,000 come in was about three years ago. the 38% drop is the steepest decline since the recession. that helped you drag down the headline number of housing starts. the headline number is the white line. according to the bloomberg intelligence economics team, housing's contribution to gdp will be less this year than it was last year. they also say the drop off in multifamily housing starts may not last because the cpi report we got yesterday indicated that rents are rising fairly quickly,

meaning that the multifamily housing start drop may reverse itself because people may want to add was applied to the market. matt: housing starts make up 3% of gdp. it is a massive drop, 9%, but in multifamily housing, which has been on a tear the last few years. scarlet: good context. matt: single-family housing starts were up 5%. scarlet: it did draghi headline number down, though. matt: for sure, because it is so much of housing starts. but single-family housing starts may be on the mend. scarlet: good point. matt: i'm taking a look at domino's pizza, not because i'm hungry, unless i was hungry for a return, then i would be in luck, had i bought this into any time -- in 2010. i'm sorry, 2004. dominoes and google, or i'm sorry, now called alphabet, ipo'd in the same year. if you bought dominoes instead,

you would be on top. return.use of total it is mostly because of dividends. about half of this 2167% return you got from domino's since the ipo comes from dividends. google, of course, doesn't pay a dividend. is also-domino's crushing its competition. pizza hut decline in sales this quarter. real winnera not only a monk pizza chains but restaurants and silicon valley firms pit we will talk to the ceo patrick ball tomorrow at 2:00 p.m. eastern. scarlet: that was set up so nicely. matt: thank you. scarlet: the market closes coming up next. we want to mention quickly that american express and ebay will be announcing results after the bell. both gaining more than 2% in today's session and late trading at the moment. before we head to the close, if

you look at amex, best day since august, and for ebay, biggest one-day gain and still. also look at the major indexes. with less than four minutes before the" modest gains but gains nonetheless as little surprise plus $52 barrel.

>> we are moments away from the closing bell, "what'd you miss?" s&p with its biggest gain of the month. oil shot up to a one-year high, corporate earnings with signs of profitability at the close. i am scarlet fu. >> and i am matt miller. we welcome our viewers worldwide who are viewing into twitter. you can watch our closing bell coverage on twitter from 4:00 to 5:00 p.m. eastern. scarlet: we begin with market minutes, closing higher on the s&p 500, led by energy. wti approaching 52. up to a leveleen that it had not seen in 15 or 16 months. we saw $51.80 for a little while today. and $51.40.

energy stocks, the biggest winners. it financials doing well today after morgan stanley came out earningnced expectations. also, fixed income currency and commodity trading, almost triple the same quarter last year. well,al stocks doing consumer stocks and staples doing poorly. take a look at the winners, solar. those are riskier assets. bloomberg intelligence had a great primer today, saying the technology they use is starting to rival silicon technology as effis efficient the -- ciency. -- michael cores kors gaining. many of them talking about kors on twitter.

out -- intel down of the most in nine months. treasuries, it looks less interesting than it was earlier. no change for the tenure and 30 year yield. but we did see selling in treasuries. that might have been because you had saudi arabia coming up. the kingdom pricing its three part sovereign sale. i wanted to show as a tribute to joe weisenthal, of five-year chart of treasuries. show this level here. you can see we have come up through the first fibonacci level. through the end of 2013, this recent bounds in yields has been significant and it continues -- it continued on this morning. scarlet: we are consolidating now, right? matt: an interesting thing to

see. currencies had a lot to do with it. scarlet: let's focus on the loony. weaker versus the dollar, but it had gained. the dollar losing value versus the canadian currency. it was unchanged at .5%. dropped a reference to downside inflation risk, then a and theerence came out governor said they actively discussed the possibility of a rate cut. that is what you see the reversal. when it comes to the dollar overall, the bloomberg dollar index indicates a third day of , and it has been mixed. gradualooking at a very path being projected. a look at oil,e

the run up this morning was pretty amazing because opec said it is getting strong signals from non-opec partners. and because demand has been strong and inventories were low. inventories this morning were less than the market had expected. this time of year, inventories typically go up. i have a great chart later on. natural gas futures really tanking today and gold coming up at 12.20 around. scarlet: we move on right away to earnings. amex initial numbers have just come out. i only have the bottom and top line. $1.20 -- when it comes to the revenue line, $7.8 billion, higher than what analysts were looking for, they were looking at $7.7 billion.

looking at the shares in after-hours trade, moving up. matt: they will bounce, because 2017is raising its guidance. as you get more details you will see the stock rise. right now, a gain of 2.5% on american express. aarlet: looks like we have different number, maybe $1.24. either way -- matt: the guidance is more important than historical numbers. the market has to be semi-thrilled with that. scarlet: given the stock reactions, they are kind of happy. let's move on to ebay results and inflation. we have data showing how u.s. data inflation rose at the highest taste and five months september. is the trade now starting to pan out? martin hagertyis

. when you look at that inflation data, are we at a turning point where it is now sustainable and we will get to a point where the fed will let inflation run hotter than its 2% target? >> you asked a lot of questions in your initial. scarlet: i did. ofif you recall at the end 2015, beginning of 2016, we saw a rapid changes in energy prices. that component is starting to fall out. on a headline basis, one month 1.5, and nowt closer to 2% at the end of the year. and we're forecasting close to by the beginning of 2017. the second part of your question about the fed allowing inflation to overshoot is important because what i think they want , it is not specifically

due to base effects. fxt: what you mean by based -- base effects? jump in the a big quarter of 2016, for example, we had a big decline -- as those declines fall out of the metrics , it picks up. matt: i find you are talking about the drivers of the inflation number. there is good and there is bad inflation. view,s pushing in your pushing us to 2.5% by 2017? are a couple things. i have spoken on your show before about services component. in the u.s., it is a very large driver of inflation. services, and another big contributor is

health care. we are seeing shelter with a very strong print this month, running at a high annualized rate. 40% of the core calculation or 32% of the overall cpi, it is a big contributor. medical care has an outside give back this month, still running it almost 5% year over year run rate in cpi. scarlet: what is your strategy in terms of tips and how to position yourself for this 2.5% inflation by the middle of 2017? it, we havelook at a run rate of inflation that is incredibly low for a very long time. i mentioned before, you look at five-year forward, we are improved, a cpi rate where a couple months ago we were at one point

4%. that is a cpi equivalent, which is not what the fed targets. the fed targets cpe inflation which runs 45 basis points below cpi. an inflation regime that suggests of the fed will miss its target by a long way for a long time. given where policy currently resides, they want to ensure that they can deliver on inflation component of their mandates. given what inflation markets are pricing, they feel they have do what janet yellen mentioned on friday and allow the economy to run hot for a while. to try to ensure the inflation expectation moves in a fashion that is in line with their target. matt: a quick plug of the bloomberg terminal, libe gives you a look at breakeven rates across the world. i plugged in the u.s. and we see exactly what you are saying. all of these breakeven rates are

well below the fed's target of 2%. sayingy, if what you are is that janet yellen intends to stockse past be shallow, will be coming down in order to achieve the target. >> indeed. also get that on the bloomberg terminal. , and maybe that is too strong a word. i have used the word normalization before, and that is the path that the fed is embarking on. they could shift on inflation expectations. scarlet: let's move on to the u.k. where we see lots of inflation. the data this week shows that is picking up. does the bank of england have less room to keep cutting rates. does its next move need to be a rate increase?

>> dealing with the u.k. is a pretty special case, where you had the brexit vote that occurred in june, a fairly precipitous decline in the sterling in the last couple of weeks. that should have an upward bias to inflation. and that will be priced into the inflation market. i mentioned the forward rates of u.s. pricing. if you look at equivalent rates in the u.k., they passed the inflation marker or rpi, a slightly different metric to cpi, the difference is that rpi includes a housing component. the next 10n for years is anywhere between 3.5% and 4%. which, if you assume the difference between cpi and rpi is anywhere between 50 basis points and 100 and coming down toward the lower end of that range from given the potential for less house price appreciation post-brexit, we are pricing a bank of england

scenario that we will miss our target for a long time. yes, the bank of england is in a delicate spot. but they have bigger fish to fry right now, dealing with the brexit. scarlet: absolutely. martin haggerty, thank you for joining us with your thoughts. i want to give you a reconfirmation of american express profit and outlook. third-quarter adjusted come up $1.24. that smashes the $.96 estimate from analysts. the company is boosting its 2016 forecast and reaffirming its 2017 eps view. greater for0 or 2017. they thought previously eps this $5.40 to $5.70. you can see the share their, up. scarlet: one of clinton's biggest supporters will be

joining us live from the vanity fair summit in san francisco. we will get thoughts on the upcoming election and lessons learned. ♪

mark: i am mark crumpton, trying to get the first word news. hillary clinton and donald trump will be in las vegas, nevada tonight for the third and final presidential debate. a new poll from bloomberg politics shows trump could use some luck and a big win. the survey has clinton ahead 47% to 38 in a four-way matchup. trump is losing support among men and the less educated. mark halperin and john heilemann will host a special predebate broadcast. you can watch it at a: 30 p.m. new york time.

it will also be live streamed on twitter at #debate. a tutor style home will be auctioned at the roosevelt hotel here in downtown manhattan. opening bid is $849,000. trump lived in the home, built in 1940, by his developer father , until he was four years old. michigan considered abandoning its a one person emergency management structure and instead install the team for municipalities and school districts, under state control. that is according to a report released by a legislative committee that -- related to the flint water crisis. many have been criminally charged since medical experts innd elevated levels of lead children. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.

i am mark crumpton, this is bloomberg. scarlet? scarlet: thank you so much, we have ebay results. per share.ed that is better than what analysts anticipated. the range for analyst estimates was fairly narrow. $.42were anywhere between and $.44 in july, so this is better than they had forecasted. line, $2.22ue billion. but you can see it is tumbling, off by about 8% in after-hours trading. the total growth immersion by volume was 21 billion dollars, shy of what analysts were looking for. anticipated $20.3 billion. that could be one reason. full yearnue for a was just slightly higher than what the company had expected. $8.95 billion, a fairly narrow range when they had up to $9.5forecasted

billion. matt: they are saying they expect in the fourth quarter, revenue between 2.3 6 billion dollars and $4.1 billion, so i pretty tight range. 4.6%. of we will continue to dig into this release because those shares are down 8% right now in the after-hours trade. living to politics, hillary clinton and donald trump will meet for their final presidential face-off in las vegas tonight. -- as youal face-off heard, the latest polls have clinton leading by nine points. joining us now is bloomberg politics reporter from las vegas. i had to chuckle because it has not been very presidential in the past. there is been a lot of bickering. do we expected this debate to be more refined? matt, i think based on donald

trump's style on the campaign trail in the last few weeks, we should expect it to look more like the second debate than the first debate. donald trump has gone all in with a mobilization strategy to supercharges base by raising fear about a potentially rigged election and making them believe this is their last shot at achieving the america they want. up to dialed the volume 11 and there is not a lot of outreach happening now. -- not a lot of outreach for the constituency. men, less educated voters, a theyling sign for him. found he is a little with those groups. this will be a big moment for him to get those people back and maximize that constituency. i think back to the second debate, what stole the thunder was the press conference that proceeded it in which he brought out three women who had been linked to the clintons in one way or another. of themcation -- two

bill, one of them hillary -- is there any indication from the trump camp that he will surprise anyone with a new visitor tonight at the debate in the front row? >> i would never rule out a possibility of donald trump executing a spontaneous move and surprising people. no clear indication that something like that will happen. there have been rumors trump may bring president obama's half brother to the debate, they do not get along. i am not sure the impact that would have on hillary clinton. is wait and see, they have not revealed anything on that front yet. matt: what kind of numbers are we seeing tuning into the second debate? so many to and in for the first 10 to 20 minutes of the first debate. do you expect as much viewership tonight? >> matt, i think so. we see record viewership and

that initial debates, and they do not think that will change tonight. i think american voters are more tuned into this election than previous elections. we will see where that leads to in terms of voter turnout. ,hese are very high profile controversial celebrities as the nominees, so everyone wants to see what will happen. i expect high viewership. scarlet: after the first two debates, donald trump campaign complained about the moderators. now they have chris wallace moderating the debate. to be moret him sympathetic to trump, or has the campaign said anything on that front? >> chris wallace is known as a news,ht shooter on fox who are known to be commentators and very conservative. everyone expects them to be very fair and play it evenly with the two candidates. tomakes it harder for trump

make allegations of bias as he did with cnn and previous moderators. we have not heard anything about chris wallace from the trump campaign. the trump is aggressively attacking the media and strongly accusing the media of rigging this collection by being unfair to him. we will hear more of that in broad strokes. i do not think it will be targeted to this particular anchor. and there has been a lot of tweeting from donald trump, his recent # draintheswamp. what does that mean? >> i am not sure what he means by that. what i believe he is talking about is washington. a plan with a lot for progressives to like, it was nonpartisan. it was a crackdown on those who

work in government and use their connections to lobby. i believe he is talking about draining the corruption and the revolving door in washington. much.thank you very we have breaking news to get to. we were talking about this, brazil has indeed come of the central bank has cut its benchmark interest rate by a quarter point to 14%. you heard earlier of the country has serious service inflation to deal with and more tepid inflation numbers as far as that is concerned. scarlet: the first rate cut since 2012. matt: i will continue to talk

about this and its effect on global markets. ♪

scarlet: european banks are catching a bid. if you come inside the bloomberg and take a deep dive into the chart, you will see the group has moved above its trend line. the blue line, the first time this has happened in more than a year. we saw it happen last august. even after a 25% rally off the lows in july, we see banks are the worst performing sector this year. analysts expect they have fallen more than any other industry group. so what has changed? a couple different analysts and firms have upgraded european stocks. bank of america and merrill lynch upgraded it, more of a

tactical call. they say the earning power is still questionable. they're heavily under owned and have these attractive yield dividends. stocksso said european are among favored factors. matt: interesting stuff. i will show you something that is related because it happened there, as well. me that today is the anniversary of black monday, the stock market crash that brought the dow down 500 points. it started in hong kong, went to europe, and hit us in the year -- u.s.. 1007 hundred 38 was the dow. you can see we have come up to 18,202. so pretty good, we have come back 10 times as strong as we a 500n that day after point crash, a 22% crash.

i was in middle school. scarlet: up next, the vanity fair summit in san francisco. ♪

scarlet: let's get a recap of today's market action, gains across the board for major indices. oil prices climbed to $52 a barrel, raking out of the range they had been stuck in. energy the big winner of the day. after hours, interesting move here. american express climbing after beating analyst estimates and the company's estimates. a sufficienty be outsized reaction where was gaining of a 5% because estimates have come down so far for amex.

take a look at the bloomberg, this is eeg function, for the third quarter, that just ended. at the white line is the price. take a look at the bloomberg, this isestimates have continuedg down. but they are beating that in their listing estimates. it is a worst picture for ebay. although ebay came up with adjusted eps of $.45, they put out forecasts for the fourth quarter of adjusted eps from continuing operations, a key measure for ebay, of $.52 to $.54. that encapsulates the expectation of $.54. but that is only at the top end of their range. if you look at the eeg chart for ebay, analysts absolutely slashed estimates for ebay in the middle of 2015. after coming down that far, they still cannot hit their fourth quarter target. now you see the stock down in the after-hours. "what'd you miss?" 's" summit is in san

francisco. they have in florence, and influencers and political pundits. we are there with a very important entrepreneur, the founder of aol. emily: thank you so much for being here. you recently endorsed of the presidential candidate for the very first time, you endorsed hillary clinton. why did you do that? >> i have tried to focus on policy, to be a bipartisan, behind the scenes person. but this year was a little choice, especially with regards to technology and innovation. i think hillary clinton has laid out a framework to move us forward and donald trump has not. he talks on a sound byte level but there is not much of there.

so i decided to endorse hillary clinton. is a clinton presidency versus trump presidency mean for innovation? steve: i think hillary clinton understands you have to lean to the future and back the next level of entrepreneurs all over the country. if she is a big believer in entrepreneurship and leveling the yield so everyone has a shot at the american dream. she is looking forward but trump has been looking backward. build walls and get back the jobs we used to have, which is unrealistic. i understand why people are supportive of him, many do feel left out in left behind, fearful of the future, worried about the impact of globalization and digitalization. i get that, but trump is not the right way to solve that problem. we need to focus more on the future and job creation and the next industries. 200 years ago, 90% of us worked on farms.

today, only 2%. you have to constantly re-create your economy and jobs for the future. clinton will do a better job than from. emily: what would happen if trump was elected? there is talk of the stock market thinking, do you think that could happen, what are the potential consequences? steve: hard to say. i think there is worry that people will get complacent. will be driven by turnout. i expect trump supporters do not necessarily show up on the polls, just like with brexit in the u.k.. a lot of polling data said it would go one way but it went another. that is what democracy is all about. hopefully i think clinton will win, it will be better for the markets and technology innovation and investment. but i do not discount the possibility that trump might win. that would be more damaging in terms of our continued moving

forward and supporting the next generation of on-chip nor is trying to build the future, not rebuild the past. emily: speaking of business, you experienced firsthand the first thewave of mma -- mna, second-biggest sense of the.com -- the dot com bubble. steve: i think there will be a lot of activity, including late stage growth financing. the market has not been a strong as it should be. as a result, some companies that have been around a long time and the investors are thinking about exits and that will drive mna. and as in the book i wrote, "the third wave," one way to do this is to partner. -- it isig companies not just the tech companies

be muchating, it will more real-world companies and fortune 500 companies trying to figure out what their future is. that is to invest in and acquire some of these starts. they are starting to impact their own core businesses. -m&a will we see acquisitions working out? steve: i think with the right comes and execution, it down to people and culture. acquisitions are hard and strategically, these things in there he can work together but ultimately as thomas and edison said, vision without execution is hallucination. cannot just be about the deal, it has to be about after the deal, making sure the strategy is clear, the team is clear, the priorities are clear.

emily: michael dell and his whole philosophy is bigger and better. and another says leaner is better. steve: it depends on the market and the cycle. buttimes scale does help sometimes it creates more of a burden around moving quickly. agility is more and more important. that is a key theme of this third wave. you have to look at the cycle of investment in different sectors. becausepanies bulk up they think strategically that is important. you also see some trying to be leaner and meaner and more agile. emily: aol is in the process of billion, we are in a bit of a gray area as to whether it will go through. do you think it is a good deal? steve: it makes sense for verizon once they decide to bulk up in terms of their internet access, extending that with

yahoo! strategically makes sense. issense is that verizon looking at recent disclosures, maybe there will be replacing. yahoo! everu see becoming the great icon? not say it is impossible, but improbable. remember when steve jobs went back to apple, they were almost given up for dead, the market share in the pc software business was only 3%. everyone thought apple was done. -- with that leadership there have been other examples of some recoveries. but it is particularly hard in tech. never say never, but it is unlikely that aol or yahoo!, or inse brands that led the way the first wave will be as

important as the third wave with new entrepreneurs. not just internet, tech, software, but education, health , a lot oficulture things are up for grabs in this third wave that will require entrepreneurs to understand partnerships and policies and have more perseverance. that will happen not just in silicon valley. it could happen all over the country, this next wave of american entrepreneurs will be much more broad and inclusive and impactful. that yahoo! hack of 500 million accounts, the biggest in history, verizon did not know and is investigating. should a materially affected the deal? steve: it might. -- it was ats -- didure that did the surprise them.

if i had to guess, they probably will be looking to get a lower price continue to go forward. emily: what about twitter? there was a lot of critique around twitter and the product vision. my view, 10 years ago this did not exist but is now a phenomenon. a great example of entrepreneurship, a company that is quite valuable and impactful. they just need a crisper product vision. emily: there is a some debate about whether investing in technology is a good thing, so much muddy flooding the market be funding ideas could not good for venture capitalists. what do you make of it? come: there are two worlds of the world of silicon valley of new york and boston, 75%

the venture capital goes there. and the rest of the country is really starting for capital. that is why we have an initiative to promote regional entrepreneurship. there are bankers here in san francisco they do not focus here, but on entrepreneurs all over the country. they are building great companies and starting to lead the way in this third wave. when i was in albuquerque or phoenix or omaha a couple weeks ago, you never hear this discussion about too much capital, maybe we are in a bubble. they are struggling to get attention to get the capital. investors should visit these entrepreneurs because there are with more modest valuations. emily: are we had a moment of great valuation or technological stagnation? they are and that the same spectrum, but some people believe we are not seeing anything. optimistic. even thinking of it as a tech

sector, it has matured to the point where every company is a tech company. the real action in this third be how techt companies are doing but how big companies integrate technology to move forward. had we wrestled -- revolutionized how it think about health care, how our kids learn, how we eat, how we move around cities? of the largest industries in the country have not been interrupted that much in the first or second wave, but will be in the third way. i see a great era of innovation. not just tech companies in silicon valley but companies across the country tackling these challenges. emily: obviously, a first-hand experience, steve case, revolution ceo. matt, back to you. emily chang there from bloomberg technology with steve case, the ceo of revolution. we have so much more for you coming up from "vanity fair's

new summit. the vice chairwoman will be our guest, tune in for that at 6:00 p.m.. scarlet: the pension system with a $100 million shortfall, among the worst funded in the country, giving illinois the worst credit rating. state boardrom the of investment, which last month toed to convert its plan index funds. does the shift to passive investing help you tackle illinois's shortfall? >> no, we did it to simplify the portfolio. we are doing much on the pension side of our work, as well. we are really all about taking politics out of our pension

and the way we are doing honeypoty removing the of all these imagined fees. we are improving the portfolio as we do that. chairman you are responsible for three of the four big state pension funds. i am sure, doing what you can to try to ensure these pension fund problems. how difficult is it with the state of political gridlock that illinois faces? nott is funny, it does affect us much. our board had its challenges initially. andwe have come together made very significant changes to make it really easier for the trustees to do their job. come from all walks of life and they are not

necessarily investment experts. i used to think that was a problem, but it is not. we need to make life eva -- easier for the trustees. we need to move hunks of money into passive investing. scarlet: can you tell us about the next step for the pensions? theirate court ruled that constitutionally protected and as a result, people are speculating the state needs to vote to change the constitution. what does that mean for you? >> it is possible the state could vote to change the constitution and the legacy problem is significant. little weeally very can do. we manage the index. no beneficiaries benefits will be cut. that is not our role. mosty to do the responsible job we can do as trustees.

we manage that 120,000 active and current state workers as well as the legislative and judges. but i will tell you what, we take a responsibilitywe manage e and current state very seriously. doing things like taking $1 billion out of our hedge fund portfolio, which was underperforming, and moving that into a much simpler format, keeping our volatilities in the right place -- everything we do is about simplifying and being more responsible with money. actives a role for management, and we take about two thirds of the portfolio and moved it. that what was written about yesterday. are taking the remaining third and we will do our best to invest that responsibly. that could be hedge funds were things like private equity, opportunity -- opportunistic credit. alpha trying to get some out of active investments. that we are focusing attention on the smaller portfolio. and by the way for other pension

funds out there, there is nothing wrong with indexing your entire portfolio. buffett, theyen say there is nothing wrong with that. in a political format it makes a lot of sense. are one $.9 trillion nationwide of unfunded pension liability. how can you invest your way out of $100 billion? and if you cannot, what do you do as the chairman of illinois a statewide investment? >> we have a target return of 7%. that is a pretty big number if you look at where markets are today, with zero interest rates. that is a pretty heavy target as it is. that is what we are trying to do. that will not do anything to reduce the $100 billion plus of pension liabilities.

pension liabilities will have to come out of some combination of constitutional amendments, perhaps something on the federal level and eight bipartisan basis, like what was done for puerto rico. billion, weout $20 are managing it as responsibly as we can. we will try to hit our 7%. hopefully we do it, and that is what we can do. are you doingelse on the cost side to bolster your ability to generate better returns? it has not been fun necessarily, but we have terminated more than half of our active managers and taken $60 million of annual costs out of deferredon fund -- our

plan that was written about in "the wall street journal." that is very material, and frankly, our performance will improve. in those cases, the managers were underperforming basic benchmarks. we have improved big-time on the cost side. we are responsible and proud of what we have done. matt: sincerely tightening your belt, you have the eye on the prize. mark, thank you so much for your time. really appreciate hearing the story of how you are transforming that fund. coming up, a closer look at microsoft numbers. ♪

scarlet: i am scarlet fu,

"what'd you miss?" to european union advised take a look at microsoft $22 billion takeover of linkedin. they have criticized the deal and says it threatens the future of innovation and competition. let's dig into microsoft in today's the numbers do not lie. expensive, which sets a high bar for microsoft to prove it is worth it. the deal has the highest earning multiple, valued at $5 billion this year. microsoft value at 84 times. you see it is really pretty high up there. this is al qaeda -- this is all microsoft's strategy. there is growth of 108%. to orientort

microsoft's business around the cloud comes as traditional software sales shrink. -- ann see, an order overall return to revenue growth. it is starting to pay off. nonetheless, the legacy business is delivering. year, windows,t and commercial pc growth, those of the orange bars. they returned to the positive for the first time in seven quarters. consumer growth in the yellow bar is doing better, jumped 27%. however, this growth may not last. intel shows your long pc demand might not. and like the other big tech names, microsoft is a swimming in cash, well over $100 billion worth. like apple and alphabet, the bulk of the cash is held overseas. microsoft is not likely to repatriated without a huge tax bill.

and they signed off on the buyback of an additional $40 billion of equity, helping boost earnings per share. microsoft will release earnings after the closing bell. task, dell made an acquisition last month. they held their first ever dell emc conference. founder of with the dell technologies. >> if you think about this as a in 2013.o private of two was a combination dell and emc. act iii, how long will we have to wait and see? we have a few ideas.

andre focused on dell emc pivotal, and the other things we are doing. we see plenty of opportunity to consolidate. we will continue to make acquisitions. and, alliances and partnerships are also supported. we also have a ventures program hundredsare investing 46 months out24, for the future. >> you have the desire but the financial capacity to do those things? >> yes, we do. >> running a company this large present so many challenges. yet, when i ran into you yesterday, i would say you were dy, i could see that boyish excitement on your face right now. what is it about the future and what you are doing that has you so optimistic?

>> we are tremendously excited because what we have been able to do by crating this company together, we are number one in everything, all in one place. matt: that was dealt technologies ceo, michael dell. ♪

scarlet: u.s. stocks rose higher, oil prices at the highest since july 2015. tomorrow we are looking ahead. the u.s. -- the europe central banks to read matt: and u.s. existing home sales, the big story, we get home sales. we will continue to measure the

health of the housing market. scarlet: and american airlines and microsoft and paypal after the close. matt: john: i am john heilemann.

mark: and i am mark halperin. respect, i hope the debates do not get picked up for a second season. ♪ on our blockbuster vegas program, smoke and mirrors, and political acrobatics. in other words, it is debate night here in sin city in nevada, las vegas. donald trump and hillary clinton will appear for the third and final time on the debate stage. tonight's debate moderated b