On companies that maintain a lower taxdress to bills. Stocks are falling around the world, as europe is down. Iron ore has fallen before below 80 a ton for the First Time Since september, 2009. The u. S. And arab allies have expanded airstrikes against the Islamic State into syria. Fighter jets and tomahawk missiles were used in syria in a bid to push back the groups rapid advance. For more on the bolstered efforts, i am joined by willem marx. This is a different operation and many of the arab partners are going nameless, but how does it compare to the group that went into iraq . Beene russians have criticizing the airstrikes. The french that have been cooperating with the u. S. Say they are leery about international law, and they might be trespassing on sovereignty. The u. S. Is taking some criticism from allies and russia. Turkey is on board. They are on board, and a lot of the diplomats that have been held by Islamic State have recently been released, and that frees up their hands a little bit. About a groupking that i was worried about, and now i am worried about it. Tell us more. Eight of these strikes were group,ng this specific led by an al qaeda veteran who spent many years in. In iran. He and his group are very involved in trying to recruit westerners. They have no fight against bush are all shot bashir assad. Concern to Many Americans ising up to this headline is this another step that brings us closer to u. S. Troops on the ground. On,ill have Michael Turner and many in that party are calling for boots on the ground. That is something the administration has categorically ruled out. I think it is unlikely we will see that in syria anytime soon. Willem marx, thank you for joining us. Back to the u. S. , avi is it taxng shyer to reduce bill. The u. S. Is calling for a crackdown on tax and version. I am joined by peter cook. Break this down for us. How does treasury secretary jack lew plan to Keep Companies from moving overseas . He will make it more painful, at least in terms of making paying their taxes. There are a couple of steps the treasury announced. They go further than a lot of people expected. A crackdown on what is called loaning to ans foreign entity and avoiding u. S. Taxes now, a lot of those loans will be treated as a u. S. Event, taxable. There are now new rules regarding ownership stakes in these companies. If you merge with a Foreign Company it has to be very controlled in terms of how much the former u. S. Ownership how much they hold of that new company. Taxe will be tougher treatment of spinoffs overseas spinoffs it has a lot of companies have been using those because a lot of companies have been using those rules to get around paying taxes. This does not affect retroactivity. It does not reach back in time. That is a plus for companies that did yields in the last few weeks or months, but does not affect, of course, the eighth pending deals right now that are in play including the burger some tim hortons deal, and of these that you see here. I am sure it has all of those bankers biting their nails. For more perspective, i want to bring in the president and ceo of the organization for international investment, the trade group that represents the u. S. Operations of many Foreign Companies, and one of them being shier. What, your reaction to treasury secretary jack lew has announced . Does it change the math . Does it put pending deals on ice . I think what the treasury did will make it less profitable for inversions, but not unprofitable. The question we want to as is do we want to spend our time punishing Companies Rather than devoting energy to an all hands on deck effort to modernize the tax code . My organization represents 170 u. S. Subsidiaries of Foreign Companies. These are companies that have jobs ando in source shyer is one of the members as are other takeover target. They have an impact on the u. S. Economy. They punch above their weight. Even though they represent less than 1 of u. S. Businesses, they employ 5 of the private sector workforce, produce over 6 of the gdp, and pay 60 of u. S. Corporate taxes. Our biggest concern is while the treasury and congress is focused on punishing these deals, Foreign Owned Companies will get caught in the crosshairs. And if you look at why these companies are going overseas, it is about getting their hands on foreign cash, right . Absolutely, but inversions are the symptom, right the problem itself is washington keeping themselves globally competitive. Rate99, the Corporate Tax average was 35 . 34 , just today it is 24 and the u. S. Is still at 35 . Over that same time we have lost our share of foreign direct investment. There is a linkage. We need to focus on underlying problems rather than get distracted by inversions. Peter, i want to bring you back how does secretary of the treasury jack lew respond to this . First of all, he would agree to the ultimate solution of an all hands on deck effort to get Corporate Tax reform, maybe comprehensive tax reform. Nancy mclernon knows as well as anyone in this town it is not happening anytime soon, and in the meantime what the treasury argues is these deals are egregious, in their mind, unpatriotic, as the president said. These deals are simply to avoid paying u. S. Taxes and not for business purposes and they represent a small sliver of the International Transactions happening. They support crossborder deals, just not these kinds of deals which seem to be intended simply to avoid paying u. S. Taxes. Peter, this of course is the executive action president obama promised. How likely is it we will see Congress Move on something substantial . That is a question on if what treasury secretary have done will get the fire moving in congress. Ony are not that far apart the basics, but the details matter, they are a long ways off and a lot will depend on the midterm election. Nancy mclernon, in terms of your clients options, is this a roadblock or something they will be able to circumnavigate . It is one more thing that prevents u. S. Competitiveness, and the administration has actually made attracting Foreign Investment and economic priority. They spend resources and taxpayer dollars on trying to bring foreignowned companies to the u. S. , and even though Foreign Companies are not the target, they easily could become the collateral damage. Some of the congressional polls that have been introduced would encourage foreignbased companies from having top management in the u. S. And would impact their ability to expand here, so, you know, we are in this very political environment right now, and it is sucking the oxygen out of the room. Ourinversions are taking attention away from trying to get to the real solution and that is the focus on Corporate Tax reform. How nervous are your clients . Our clients coming up with contingency plans . You know, it has to impact how they view the u. S. It changes the Business Model of how they do business here. Even if they are not a target, they may be impacted by legislation. And chiefclernon, washington correspondent peter cook, thank you both for your time. Still to come, they netted nations tries to reach a deal on cutting greenhouse gases, but india and china are no shows. Stay with us. Were just getting started. It is the first day of fall here on in the loop. We will be back in two. Withesident obama, along 100 World Leaders are headed to the United Nations amidst the airstrikes on syria, with the focus remaining on Climate Change. Julie hyman has been looking into the issues here in the u. S. , and of course we think about the drought in the west and the hurricanes in the east any sense on what kind of economic toll these indications of Climate Change are having . Well, we have seen the economic hole already from those examples you mentioned in california, the drought, Hurricane Sandy hearing that to thest, and according epo, we might see more of these effects. They looked region by region. You could see water changes with less snowpack in the winter, and also more rain in the winter and less snow, so what effect does that have through the year . The southwest drought, which we are already seeing there is a great risk to the water supply with the aquifer not being replenished, and talk about Human Health Risks this could be anywhere. The change and spread of diseases, especially in sexborne diseases, as a result of what we see in fact insectborne diseases, as a result of what we see from Climate Change. Giving those alarming warning signs, what do a Missions Look like from the u. S. . Overall, there is a 2. 5 increase predicted this year for fossil fuel and cement in nations. If you look back in 1990 through the end of this year, you are looking at a 61 increase during that period of time. I country, china has the big by country, china has the biggest. If you look at it per capita, the u. S. Is still far and away person. Est polluter per of course, china has a much larger population. China, however, has just overtaken the eu per capita in terms of global emissions. Julie hyman, thank you so much. For more on the Global Campaign to combat Climate Change, we want to bring back one of the world first socalled Global Warming worriers. Which organized the march of this past sunday which brought hundreds of 50 hundreds of thousands of people out into the streets of new york and worldwide, 2600 marches. Very impressive. Welcome to in the loop. Good to be with you. Given the enormous scale of these marches, explain why you feel we are at a Tipping Point . I hope we are at a Tipping Point. We have known for 25 years what is going on, but the power of the fossil fuel industry has been powerful enough to prevent action. People are catching up to that and building a movement that can stand up to the garage all caps the oil industry can throw at this problem. We do not have that kind of money, but a lot of bodies in new york and other places last weekend. Sunday evening, the Rockefeller Brothers said they would be divesting investments in fossil fuel. How big of an impact will that have . This is a big impact, the forcing ssil fuel fortune, and the heirs think it is unwise and immoral to invest. What excuse do the rest of us have . Oxford showed this was the Fastest Growing campaign in history, and it is powerful to see how many governments, universities, Church Denominations this summer, the World Council of churches are visiting 580 million churches said we would no longer participate in investing in fossil fuel. And the diversity of people that turned out on the street, it was remarkable. It was not the usual suspects. Kimoon, chemo, ban bill de blasio, celebrities. And frontline communities that have felt the impact. It was powerful testimony. I am curious about what you thought that your thoughts on the role of businesses. Ban kimoon pointed to blackrock 346 Institutional Investors to call for a price on Carbon Emissions and a climate a mission to shift copies away from fossil fuels. How much will that help . That will help you the rest of the industry has left this to the fossil fuel guys, and they have a huge interest in making sure we never change, but now they are beginning to understand theyre facing a carbon bubble that makes the housing bubble look small. If it is stranded assets in beneath the ground, should we ever take Global Warming seriously, it it represents a huge risk to investors and the wise ones are backing away. I like that a carbon bubbler makes the housing bubble look small. You wrote an article in Rolling Stone and said since president obama took office, summer sea ice has disappeared, sea water is 30 more acidic than quadra decades ago, and the creatures at the bottom of the ocean are feeling the brunt. California, one of the bigger states and countries, caught in a drought deeper than any time since europeans arrived. What kind of marks the you give president obama on his environmental policy . He has expanded the amount of territory or we can dig for fossil fuels. U. S. Has time, the passed the russians and the saudis is the biggest oil and gas producer in the world. You cannot have this both ways. If you are serious about slowing down Global Warming, you have to stop digging up more fossil fuel. President obama has done more than george bush, but i have had more beer than my 14yearold niece, two, so, you know 11 too, so, youh know fair enough. There is enough to the thesis that humans are warming the planet, but the question is if it is substantially different than natural variables going on in the climate. This is an entire new thing we are doing. The climate has changed at times in the past, but in this case we know why this happened. We are digging up hundreds of millions of years of biology and burning it and it is having the biggest effect that anything has ever done. We wish you luck. Bill mckibben. Stay in the loop. Back with more in two. Good morning, you are watching in the loop, live on Bloomberg Television, and streaming on mobile. I am Olivia Sterns, in for betty liu. Up tophilips is breaking create two separate companies. One company will focus on Health Care Equipment and consumer lifestyle products. Facebook wants to make it easier for advertisers to target you. The social network is getting ready to launch a new advertising platform this week according to the wall street journal. They hope to challenge google. 400 modelsrecalling because of a tropical trump latch release that does not work from the inside, meaning someone could get stuck inside of the car. Of the 244,000 and yes, i am told the trunk is actually in the front of the car. It is 26 minutes past the hour. Bloomberg tv is on the markets. Lets take a quick check of rightmarkets are trading now. Overnight, we had a bit of a selloff from europe. European stocks lead broadly lower. Stocks that are down by about 1. 5 . The benchmark in london, off triple digits, 116. Down by about 80 points right now. U. S. Futures at this hour are also moving lower following mondays selloff. The dows judges are also up, pointing to a lower open. Thats quickly show you what is happening to treasuries. Treasuries are railing a 10year yield is down by about two basis points, trading at about 2. 54 . Gold futures are higher. Copper futures, interesting gold futures are higher amidst a flight to safety on news the u. S. Has launched airstrikes in syria. Lower ontures were concerns of Global Growth but have turned round slightly. We will be we are on the markets again in 30 minutes. Well, the question this morning, why are americans buying more houses . Andting home prices fell new home sales were down 2. 4 in july. Michael mckee has some answers. Are a host of little reasons, but two main drivers one we knew about, the other surprising. Heres a surprise during the baby boom years, america got andied, they needed houses, bought a lot of them. Look at what has happened since the great recession. A drop was expected. Getle could not afford to married and move out, and we thought that we change the economy, but last year the Census Bureau said we added four hundred 76,000 households in the year ending in march, and that compares with households of 1. 3 million in each of the prior years. Why, we do not know it is a big flashing warning sign for the Housing Market. The is another problem new york fed did a survey of potential buyers why dont they buy . They do not have money for a down payment, they do not make enough money to qualify or the credit is not good enough. This has been an ongoing problem. The government tightened regulation. Make a loan to anyone with even marginal credit. The average score for a loan has come down, but it is still higher than at any time before the housing crisis. You can see what you needed back in the 1980s. We have a shortage of buyers, and many of those who could buy cannot. A car is a big investment like the house, but the automakers are not having the same problems. What gives . You are right. They dropped during the recession, and look at what has happened people with great credit can always get loans and buy cars. Look what is happening in the subprime market those with worse credit can buy cars. A lot has to do with how they are financed. The Auto Industry has Auto Finance Companies making most of the loans. These are the banks. They are not making a lot of loans to auto sales. Independent home lenders went out of business during the recession, so you do not have the same kind of market. Buckle k, economics editor, thank you. Michael mckee, economics editor, thank you. I want to bring in stan humphries. Mike is with us as well. What is your reaction that existing home sales fell should we be heartened that supply is clear the market, or concerned that demand is drying up . It was a soft month. Volumess are not by the they once were. If there is a silver lining, it is that firsttime homebuyers will find it an easy market to compete in. The problem, of course, is that the first time home buyers cannot get the credit necessarily because banks are restrictive on home mortgages. When did that change . In terms of the credit box itself, and how tight the mortgage lending market is, it is generally cyclical and we are at an alltime low in terms of the lending standards, but as the cycle continues, we already see more lending occurring below 640, and some banks go well below the 20 down payment requirement, even on nonfha mortgages. It is natural that as they attract businesses they will enlarge that credit box. Is it easier for your customers to get a mortgage then it was one year ago . Broadly, it is. It is still a substantial part of the market. You have mainstream lenders like wells fargo that are now doing more lending at the subprime level and down payments are going down. One of the macro shift in the Housing Market right now is this trend of millennials do not want to buy a house. I am one of them. I have not bought a house, i read, and i pay way too much for it in chelsea. We have seen big money take bets that this new rate of low home loan homeownership is the new normal. Im thinking of jeffrey garlock. Do you think it is the new normal . I think it is likely. 64 , but probably not below 63 before it is all over with. Millenials do want to buy homes. 82 eventually want to buy a house. 62 want to buy a house in the next five years. The troubles are those aspirations are frustrated when they get into the marketplace and try to find a home to buy because during the recovery, a lot of the job recovery has been parttime jobs, which impacted their income, and as you mentioned, they are paying a lot for rent. Ofis at a all time low level affordability, and if they cannot screw together the savings to afford a home, the problem is the stock of entrylevel homes or is not a lot of them on the market. A lot of that is because of investors, and because a lot of that is negative equity. Drop. Did not just clip cliff. A it is at a time when things are supposed to be getting better. That is exactly right. We see a transition from a Housing Market that was on a fast engine for recovery fueled lowow home prices, very mortgage rates, and very little inventory, and we are transitioning from a more organic, but Slower Growth recovery. The trouble that you noted is the house formation rates are not where they need to be an incomes are not where they need to be, but over the longterm we will need them to start responding in more normal savior in order to get the Housing Market back on track. Normal behavior in order to get the Housing Market back on track. Lets and there is a huge issue and there is a huge issue of the ballooning debt over the heads of millennials. How will a rate hike impact your business . Rate hike weve already seen last summer when rates went 4. 5 , we saw an enormous response in existing and new home sales, and we expect that as we near the middle part of next year the fed will start to raise the target rate and rates will go higher. That doesnt affect the demand that does impact the demand for housing. Affordability at the u. S. Level looks good, but what keeps the affordability looking good is low mortgage rates. As rate head north, you will see an impact on overall demand. Will sales fall next week next year . Transact thes not marketplace itself. Do think you will see lower volume across your site . , generally we see more Real Estate Research moving online from offline, so we are bullish about our prospects. In terms of the overall number of transactions in home sales, we think new home sales will look flat in the near term because builders have referred to take price overvalued and they will have to build lower volume homes to generate more volume. In terms of existing home sales, we think that if slightly up over the next year and that is dependent on incomes growing faster and households growing. So, no boost to the economy . From the residential sector, no, no kind of a boost. It is more of a normal new normal. Stan humphries, chief economist at the zillow, and economics editor michael mckee, thank you both for joining us. Is scheduled to speak at 10 00 a. M. Eastern this morning from the south lawn, the morning after the u. S. Launched strikes on Islamic State target in syria. Stay with us. We will get reaction from tungsten Michael Turner, congressman Michael Turner, who has been critical of the president s handling of the situation. Stay in the loop. Big number gs 30 million that is at the s p says it paid to a foreign tipster who blew the whistle on a foreign fraud case. It is the agenciess biggest reward and it could be larger. We do not say we do not know much more about the case. The agency says the reward is based on the amount of money it has collected in the fraud. That is a real incentive. There has been a rash of corporate prosecutions from corruption to wrongdoing, and along with lawsuits we have seen multiple multimillion dollar fines for wall street banks. The u. S. Attorney for manhattan, one of the prosecutors leading the charge, he sat down with Erik Schatzker at the Bloomberg Markets most celestial summit in new york yesterday, and here is what he had to say about bnp paribas record 9 billion penalty for violating u. S. Sanctions. The punishment is supposed to fit the crime 55, ethical was not to the crime. The goal was not to put them out of business, and sometimes it is an appropriate goal. Nobodys shedding tears caused the entire enterprise was criminal, and that happens from time to time. Here, as in all cases, you want to make sure the punishment is commencement with the contact, and although it was serious and related to transaction with companies where there should not have been transactions, the punishment was a serious one. The goal was not to exact the death penalty. But it was to make them feel pain. Yes, and in our view, there was a considerable amount of them, i dof you ask not think they are happy about it. It represents Something Like one year of revenue or profit for them, which is substantial. Now, what you have made the record that you are cap will going after institution capable of going after institution in that way, and doing that twice in the space of a few weeks, the next time one of those institutions engages in misconduct, they have less of an excuse in the punishment can be ratcheted up appropriately commensurate with the conduct. Are you developing similar cases where we will see guilty pleas as well . I think so. I think regulators and prosecutors have learned the lesson that you have to be tough, you cannot accept conventional wisdom from people that have a selfinterest in performing a bit of a false conventional wisdom, and i think people are looking at those cases to see how the world would react, and i think, now, you will have people, myself included, looking, always, to have on the table the possibility of a criminal charge if it makes sense in a case, and the trick will be not to go overboard, and have the pendulum swing too far back in the other direction where irresponsibly without consultation with regulators, and in a way that is not proportional to the conduct, engage in overly aggressive action, but i think we have more options on the table now for holding individuals and institutions accountable, and that is as it should be. That was it is 26 minutes past the hour. Bloomberg tv is on the markets. Makerss market anchor Erik Schatzker speaking with Preet Bharara yesterday. It could be the biggest u. S. Bank ipo in more than a decade as royal bank of scotland gets ready to share sell shares of citizens financial. In the u. S. Steps up against the Islamic State, we will talk to Michael Turner of the Armed Services committee. Stay tuned. Were just getting started. First. Bloomberg. Overnight, the u. S. Alongside allies expanded air strikes in syria for the first time as part of president obamas new plan to degrade and destroy the sunni extremist group. We will hear from the president later this morning a scheduled speech. On the ground, congress has approved training and arming syrian rebels, a plan that has drawn scrutiny. I think we need to understand what we are getting into when we are talking about spending half of a billion dollars to support people in fear that we say we we do notto vett, but really know where that goes. Frankly, our history has not been good. This is the kind of conversation we need to have on the floor of the congress. That was presented to jim imes. Sentative jim hjim i want to bring in Michael Turner. The strikes overnight was a necessary step . What does it achieve . I think its absolutely necessary. All the generals that have done an assessment had indicated that the head of operations, the core inoperations for isis is syria. The president determined he had the legal ability to go into syria and he did so without congressional approval, and without giving us a clear assessment of what is overall plan would be, but he has begun what will have to be a long and sustained process to diminish and destroy isis. It appears that it is inevitable before we see u. S. Troops on the ground. We had a former nato commander calling for 10,000 troops on the ground and republicans have called for much more. You agree that it is only a matter of time . If you look at general dempseys comments before the senate, indicated that airstrikes alone cannot achieve this. Somebody will have to hold the is diminished or move backwards, and even though the president is arbitrarily say no bullets on the ground, military advisers, pretty much uniformly believe that if at some point they at wrecking military is not able to hold its ground, some action from the u. S. Military will have to be taken. Training Syrian Opposition forces in saudi arabia that rings so many alarm bells had i mean, so many times the u. S. Military has, sort of, trained the next generation of threat like we trained also bin laden to fight the russians. What makes you confident, particularly after two or three years of war in syria where so much of the moderate opposition to assad has been wiped out that there are actually enough moderate Opposition Forces that we can coherently somehow trained despite a decade of trying to train iraqi forces that will be a competent force to tackle the Islamic State and will not be creating the nextgeneration threat to america . I am not confident. The president , by neglecting the situation, has created a circumstance where he has several bad choices. This is the best of the bad choices. Back to the issue that someone has to hold ground, take ground from isis as they are diminished from airstrikes this is the president s attempt to try to put a military force that might have capability in syria as he attempts to attack them where their stronghold is, and certainly the president has allowed the situation with the destabilization of iraq and allowed isis to come in and take territory in iraq that has put us in a very bad situation, and one in which the president has begun to commit himself to. Now, we still do not have a coordinated plan for the president. We have isolated actions that are taken, some appear to be haphazard. Everyone is unified and we have to address this issue and defeat isis. But what should be the plan what should be the plan american have a history of being successful, stopping airstrikes, but then what . Do we go back to nationbuilding . Nobody wants to see that. Chris you go to libya you go to libya, they had no postregime plan, and they had pass. With iraq, the president removes u. S. Troops, though he said he was committed to a stable iraq and that integrity, and Holding Islamic extremists at a, and then he walked away from that to do list. Today, were in a situation where the president is having to go back in where we have lost some capability and ground. I think the issue here that is incredibly important is that the president needs to rely on his military advisers. At this point, i think he has approved haphazard portions of an overall plan instead of requiring a plan and committing, you know, full u. S. Troops to it, and military capability. Talk to me about the coalition that is now gone in on these airstrikes in syria. Different parties are now with us for example, india and france england and france have not joined. What made the group that did, alongant to did come want to . It is interesting. Nations made different decisions, nato allies do not believe they have the standing to do that. What is important about the arab allies that the white house has listed, they are not detailing what actions they are taking, but they are indicating we are in support of what we are doing, and that is an important step, and it shows that even in the neighborhood were isis has taken hold, that their neighbors are with the United States and this has to be defeated. We had ian bremmer of the Eurasia Group earlier this morning, and he said what we are doing makes it less likely by the hour that we will get a nuclear deal with iran because were pushing ourselves further away from the russians who honestly do not want us to be striking syria, and we are feeling the secretary and conflict secretary and conflict. I have thought for a long time the deal would be allusive and the administration might be unable to achieve a deal with iran to begin with, so i do not think that the Nuclear Issue with iran should be a deterrent for us to take action that we have to take, which is go back for a stable iraq, and defeat isis. Likely, i was down at the world trade center, with the flood wall street protests for clever change, but it was one of the first times that i had really looked at the memorial, and i quite a change, and it was one of the first times i have really looked memorial, and overwhelmed by the fact that 13 years later it looks like we are created more islamic extremists then there was on that day 13 years ago. Do you ever feel it is not the right strategy to combat extremism dropping bombs from the air, or having a total different approach . I disagree. If you go back to the 9 11 commission report, chapter 12 was a warning and said do not look at this as an issue to defeat al qaeda or osama bin laden. The president indicated in his cairo speech that he was dedicated to that, but the president took his eye off of the ball, and because of that, the warning of the 9 11 commission was enough to go after al qaeda. You have to address this as a broader issue. The president did not, and we are facing it. It has grown. Commerce been Michael Turner out of ohio. Well be back in the loop in two. Stay with us. Good morning. We are 30 minutes from the opening bell. You are in the loop. I am Olivia Sterns in for betty liu. Features indicate u. S. Stocks will be lower at the open. Treasury secretary jack lew is cracking down on inversion deals with new rules that will make it tougher for companies to get a foreign address to lower the tax bill. The u. S. Led and pain against the islamic faith has struck at targets inside syria for the first time. Stateent obama islamic has struck at targets inside syria for the first time. President obama is expected to speak at 10 00 a. M. Stay tuned for coverage. Futures indicating stocks will open lower after the dow fell by the most yesterday in six weeks. Scarlet fu joins me for what has been weighing on the market. It looks like we are headed for another day down. Pmi numbers out of europe and china are not helping sentiment. Just to give you context on the declines we saw yesterday in the s p 500, 90 of the 500 numbers declined, and 25 out of the dows 30 constituents lost ground. It was fairly negative, and this was a different take than what we have seen in the past couple weeks with minor pullbacks. Sure. What seems to be the trigger any sense . Macro concerns . The domestic and global economy. The china finance ministers signaled there would be no further stimulus even after data came in fairly weak. But we also got existing home sale measures, which showed an unexpected drop in the month of august. That put investors in the mindset of putting of being at record high levels for the last couple of months. Volatility is still relatively contained even after the vix jumped. In terms of what well be watching for today . It is what you just discussed, this riskoff sentiment circling the globe. Straighte for a third day, and bill dudley was speaking at the influential brokers conference, and there in been noise about a bubble bonds julia roberts, the hedge fund manager, that will and in a bad way. All of that is percolating and reminded everyone of the risk. Small caps led to declines in u. S. Equities. People point to that as a technical indicator, and also a sign that the rise in big caps will start coming down. Emerging market stocks continued to decline, and commodities are also falling because of the stronger dollar. Gold is a little bit of a safe haven. A little bit of a safe haven, but it has been percolating at 10mudflows, so it has come 10month lows, so it has come up already. Scarlet fu, thank you. It could be the largest u. S. Bank ipo since Goldman Sachs went public in 1999. Citizens Financial Group is set to price and its Parent Company royal bank of scotland is selling shares allowing citizens to compete on its own with american regional banks. I want to bring in elizabeth from bloomberg news. That a little bit why about why they are going public now is it a good time for the debut of a regional bank. As you said, it is a big deal. It is on track to be one of the biggest ipos this year after alibaba, of course. We have seen a number of Financial Services companies go public. Ge,consumer finance arm of allied financials, and what is interesting about the deal is it is not just the amount of money they will be raising. They will be selling 25 of the state, and it is really about for their balance sheet. It will allow them to unload riskweighted assets, something you need to do to comply with regulations. Will notens, and they be profiting directly from the sale, but what what what this will do is allow the bank the independence, if you will, to expand its operation, and boost a number of measures of profitability, which has lagged compared to other u. S. Regional banks. I am listening to the story and find huge irony to the fact that the Scottish Referendum was last weekend. Scotland voted to stay in a union, meanwhile their Subsidiary Bank is able to spin off and become independent. It is also relevant because of the fact that rbs is majority owned, still, by the british government. Of britain,ns including scotland, that will actually read the rewards of this ipo . It is a succession that rbs is on board for that was citizens plans to do four. What citizens plans to do is expand the bank. They have made hires in their commercial lending lending unit. Down toit all comes boosting profitability most notably, a return on equity citizens lagged peers and this is something the ceo will be under pressure to show investors they can do that. What about the pricing . Lookat why we see citizens at a debut price that is cheaper than rivals . It is. It is priced at a discount. Investors are pointing to the fact that it does lag its peers on a number of these metrics. You said they want to focus on wealth management, capital markets. Any sense of what the plans will be postipo . Cutting costs. Capital as well. In interesting area because citizens was one of the u. S. Units of foreign subsidies that failed the stress test earlier this year. That will be closely watched as well. Elizabeth dexheimer of bloomberg news, thank you so much for joining us. Thank you. Quick moving and shaking this hour, the billionaire founder moving and shaking this hour, the billionaire founder julian robertson, who spoke yesterday in new york. The economy is definitely getting better. I think because of that, though, is the development of two bubbles that will bite us. The first bubble is that bonds are at ridiculous levels so a Small Charity has no place to put its money except into stocks. Situation isthe serious on that score. Nobody seems to be concerned about that. It is a worldwide phenomenon are buyingments bonds to keep their country is moving along economically. In the mid1990s, robertsons fund was averaging losses forceand them to turn tiger into a business that starts up hedge funds. In the future, classrooms might look like this hr one and hr order and desks, a chalkboard and desks, but the online classroom has not. Thus, we will dig deep into carnivals report. Stay in the loop. Now, why would you pay one quarter of 1 million for a bachelors degree when you could get the same qualification from a Top University for free . More than 8 Million People have signed up for these massive open online courses, and given the enormous shortfall in the u. S. That we face with the lack of collegeeducated workers, this might just be the perfect solution to fill that skill gap. I want to bring in the Rice University president from washington, d c, one of the elite schools offering this. Good morning, david. Notuestion is, are you running the risk that you are cabinet cannibalizing your own business when you are giving away degrees that others are paying 200 grand for . We are not giving degrees away. We are giving courses away, and that is a great thing as we expand Educational Opportunities to people, not only all across the United States, but all across the world. But you can earn a degree in some places you can. There are traditional for profits offering degrees. You will see more schools offering online degrees. Whether they will be offering undergraduate, online degrees, that is an open question. This space, the space of higher education, which is already very diverse, is going to become much more diverse, offering a great deal of alternatives for students, and not just online or physically in college, but a bunch of blended opportunities as well. So, maybe you do not get the degree, but it adds training. I have read that nearly 90 of those enrolled already have college degrees, so, to what extent, does that mean it will actually pose a skills gap . Close a skills gap . I think it will close many skills gaps. Youre right what we see is people with college degrees, and also younger people people in high school that want to get ahead. Rice will offer advanced placement courses online. This will be a great opportunity for people to supplement the education they have already had. One of the catchphrases we are all using is lifelong learning. In todays unemployment market, that is what is necessary, and some of that will be free, but a lot of that will be for small charges if people want a certificate or a degree. That will be some change in what we are able to offer. Tuition costs have run up an incredible amount, up about 100 and 64 since night 164 since 1994, better than the s p. Look at that on the screen. It is incredible. For all thebenefit bells and whistles that you pay for when you could be getting this online . It is a good question. One should note the actual price people are paying, then that price after scholarships the net price after scholarships is not up that much. Scholarships have gotten much more generous over those periods of time. A College Education is only in part what you get in a classroom. When i went to college, or back in the 1980s or so, maybe 75 of what you were paying for was for the inclass experience. That is not the case anymore. Navy that is 25 . People are paying for maybe that is 25 . People are paying for internship opportunities, international opportunities, networking, people will be willing to pay for additional things they can get out of a college experience, that they will not pay that amount of money to sit in the back of a classroom for four years. Announced a plan where withwill bring in classes open roman for free specifically targeted to high school students. Are you targeting high school students, perhaps retirees, or Young Professionals who are trying to take the next step in their careers . Well, we trial target anyone that is interested, and , and wecipate in edx are one of the larger providers of online courses. What we see is everything from quite young people taking sophisticated Computer Programming courses you can have an 11yearold, and you might have a retiree in a sophisticated Computer Programming course. You might get someone that is at another college or does not have that same kind of instructional opportunity at that college. That is really the great thing about making the offer and in an online space making the offerings in an online space. That is interesting. It is not just one demographic or one group. As you pointed out, it is not the College Mission collegeh groups, but younger people, and even people that already have a College Education or want more out of their own interest or in preparation for their careers. It is a great idea. 8 Million People have signed up. 7 completed their courses. I am one of them. I have to give it a try. ,hank you, David Leebron joining us from washington, d c coming up, there is a global selloff as treasury secretary jack lew crackdown on tax and version. Stocks set to open lower as we had to the opening bell in just about 10 minutes. Theust out with earnings, Worlds Largest cruise company, carnival, beating revenues. Has spent a long time on carnival cruises and joins us with more. They are beating on both the top and bottom line. What caught my attention is they are boosting annual forecast again. Go back to the june order, they did that as well. Some analysts are saying this could be if we get a Strong Quarter from carnival this could be, maybe, finally the longawaited turnaround we have been waiting for. Us talk about the year adjusted 1. 84 to 1. 88. Their outlook is getting better. They had a lot of concerns. They had a tough few years. The cost of concordia, not their fault, but still an overall staying on the reputation stain on their reputation. People were getting sick on their ships. It seems like they are putting that behind them. They went through a couple of years. Terrible for them. It hurt their image, and it hurt their top and bottom line. I spent some time last fall and one of the ships. Spendingspelling 700 million to improve and make sure these are not happening again. The thing they have had that is tricky is brand perception. People saw the pictures and people do not want to take cruises on their line. Those and then issues. What we saw in the june quarter was bill those were the issues. You will talk to the ceo. What will you be asking him . He will be first on bloomberg, talking about the pricing, the outlook, and finally, if the turnaround is here. Carol massar, thank you for joining us. We are just a few minutes away from the opening bell. We have the top 10 trades you do not want to miss right after the break. Keep it here on in the loop. Talked in the loop. First. Bloomberg. Welcome back. You are in the loop. I am Olivia Sterns, in today for betty liu. It is 26 minutes past the hour. Bloomberg tv is on the markets. Heres the latest on futures in the last moments before the opening bell. Futures right now are pointing a little bit lower. Stocks set to drop at the open amid state global selloff we have seen around the world triggered by concerns of a alsoown in china, and we see healthcare stocks in detail in in particular in europe, and stocks fall in the u. S. Following jack lews crackdown on inversion deals. Lets calm you down to the open with a top 10 trades the only stories count you down to the open with a top 10 trades, the only storage need to know. Number 10, carmax reporting an 11 increase in quarterly revenue. Earnings, however, missed analyst estimates. Shares are falling on the premarket. Number nine, dicks sporting goods. Cited entry competition from amazon and shares are falling sharply. It has been a rough year, off 20 so far. Cf industries confirming they are in a limited discussions regarding a potential merger, paring the worlds biggest fertilizer supplier with sales. Sales shares are rising on the report. Number seven, phillips, splitting up its business in two separate units. The companies will continue to use the philips brand. Six, a seen a retail targetinga retail, marketing issues, and forecast fullyear profits that trailed analysts estimates. My nieces used to love justice. Now they are little older. Number five is herbalife. Shares are continued to climb after a lengthy turnaround yesterday with speculation dropping yesterday on speculation carl icahn was winding down his investment. Interesting, bill ackman happy to hear that. Companyour, another bill ackman might be asked in allergan has received escutcheons to buy the farm started discussions to buy the pharmaceutical company. Number three, procter and gamble the Consumer Products giant is selling it at care business to spectrum brand. They sold about 82 of the global pet care unit to mars earlier this year. Number two, tesla motors the electric carmaker, elon musks company, dropped to the lowest level in two weeks yesterday. A j. P. Morgan analyst projected a sharp rise of less than 200. Shares continuing to extend that drop. It is probably that discount because of the fact that they are branching out into space taxis. The space taxi discount. A stock is only up 66 . Poor elon musk. Shyerr one stocks and estrogenic astrazeneca. In a deal right now to be bought. There are lots of questions right now about whether the crackdown that jack lew has announced will be a crackdown. We have the chief investment strategist at history bank, saying it is smooth sailing. For stocks and that it is choppy seas with risks decreasing. We have gone three years since the 10 correction. Why are you more confident than earlier this year . We had specific concerns related to growth coming out of witharsh winter geopolitical concerns. We are seeing those concerns lessening. If we are taking those risks off the table, it makes sense for us to go to where we see Large Capital opportunities. What about todays global we are more than it today with recent highs. We think the markets are struggling a bit to understand the balance between what Global Growth is going to be and what you should pay for that growth. We think of that is clinging to the small caps. But growth is still a factor. Wegiven the selloff that have seen . We dont think so. We think that they came into this reevaluation of growth at much higher multiples and it is more of a rotation story. Index has been climbing as much as 5. 6 over the past three months. We have a chart showing how the dollar typically jumps after the end of programming. This time, however, it is different because the dollar strengthens before the end of qe. Rising in tandem with the stronger dollar, do you presume a delayed reaction to the stronger dollar . We think that that connection between qe and the dollar has been broken. That is old news, it has been tapering off as we all know, becoming less of a month by month issue. The real driver here is that we now have some tightening which is positive for the dollar compared to the situation in other countries. Not so great for multinationals . Well, it depends. In general one of the things that we are observing is that we have moved from this by everything to buy countries, to buying sectors. You really have to look company by company. Stronger dollar helps to depress commodities and commodity prices, good news for the consumer at this time of rising employment. Many investors are worried about potential corrections. Yesterday at the most influential summit we had Julia Robinson saying that he is concerned about the bond levels that he sees right now ending in a very ugly way. Do you agree with that . We dont. First of all, one of the reasons that we raise cash was is dallas in anticipation that the market would need adjustment. We think that that is common wisdom now. That was not the case at the beginning of the year. And tightening wont trigger a correction . Because it isink, now baked into the market. It may slow the pace of gains in the market. We wouldnt expect the doubledigit gains we have seen over the last two years, but we think the bull market will not end until we get to a recession. I want to come back to what you had mentioned about the consumer seeing improvements in the jobs numbers. Consumers are not yet sort of picking up their spending, for sure. Looking at the backtoschool numbers and one estimate, when september is over we will see an increase of 3. 1 for the backtoschool season, which is however lower than the earlier forecast. Looking at traffic numbers, 4. 2 percent in july, 4. 7 in august. When you speak to the retailers, consumers are not coming through the door unless they get a bargain. What do you think that is going to mean for these cymer discretionary companies . Remember, much of this activity is going online. The count in stores is not the full measure. But the bigger point in my mind is that this is been a slowmotion recovery expansion. Everything has been happening on a slower and more delayed asis. What about the slowdown from overseas . China, the Chinese Government for the last couple of days has been signaling that we cannot expect them to throw yet another wall of money at the slowdown. They are limiting the amount of stimulus. Meanwhile, mario draghi has his hands full. Couldnt that be a real drag on u. S. Equities and perhaps trigger a 10 selloff . It is an issue. It is a concern. At the end of the day we made a judgment call that as long as china is still growing, the stronger dollar we things help we think helps germany and other exporter nations to stabilize European Growth with monetary support. It is certainly something that we think about, something that keeps us up at night, but our best case years to stay with it. Your end target . We dont have a yearend target right now. We are in the process of formulating one for next year, but we are not there yet. But you have raised it . We have. We went through what we thought it would be, for many people this year. Fargo we lostls her, alone there. Thank you so much, jeff. And of course, thank you to scarlet fu, our chief markets correspondent. Aboutto come, talk bargains, alibaba may be able to buy one of its biggest shareholders for nothing. We will explain that next. Last, apple really needs a streaming service. We are just a few minutes into the session, so stay with in the loop here go. Heres a look at the top scores on the bloomberg radar. Videogamethe xbox one console in china next month, it was said it would be delayed, but the first legal sales of xbox one are there since the country lifted its ban on game consoles. Apple says they still have them beat, denying a report to shut down claims on music. The head of the company of course founded by gray according to a person familiar with the matter. Carl Richard Branson call Richard Branson rocket man, saying that urge and galactic will be in space by the end of this year. He says he plans to get there by taking a trip with his son in 2015. I am confident that we will go to space before the end of the year. That is not very long to go. What held us up was the rockets. It took us a lot longer to build up than we were completely comfortable with. We have now tested those rockets. They have passed all the tests. Technology,n todays this versus that, should ali baba by yahoo . According to one calculation it wouldnt cost them a penny. You know the story, the biggest ipo in history raising 25 billion last week. 38 on its first day of trading, falling backwards a little since then. Babas biggest shareholders, some say its biggest asset, is the stake in alibaba. We did some back of the envelope babating, showing that ali could purchase yahoo for 7 billion in cash and 384 million in shares, and 8 premium to the price. Yahoo just appears to have billions in cash and 384 million shares, alibaba would get its investment right back. Something for investors to think about. More than 100 World Leaders are gathering in new york for the u. N. Climate change summit, but rising temperatures is not the only issue being faced by these leaders. Erik schatzker got it chance to talk with the mexican president about the issues his country is facing and he joins us now with more. We are trying to bring some order to the traffic of immigrants to the United States through central america. This phenomenon is the result of lack of development and balance in many places. For more on his interview now, i am joined by Erik Schatzker. X earp of the interview, a privilege and an intimidating experience at the same time, i had to do it in spanish. Congratulations. Thank you. People forget that many of the immigrants who arrived over the arizona barter or texas border are not in fact mexicans, they are coming from honduras. Mexico has a similar problem to the one that this country is facing. Dealing with the problem of illegal immigration. His view is that we need to go to the root of the problem, the horrific conditions that many of these people are in during in a place like honduras, not pointing the finger at mexico and saying that the problem is yours. Perhaps not surprising, but it gives you a sense of how he looks at the problem philosophically. You can necessarily fight it with border security. What is the other approach to take . You could say what can we do in honduras . Excellent question. Of course the other thing that we could do if congress wanted to was pasS Immigration reforms, like such as the president has proposed to at least stop the threat of deportation. That onh in support of a human rights level. In support of the president s plan . Yes. Ifing with the democrats, you will, and there are some republicans in support, but the president S Immigration form proposal does not look like it has any traction. We look at a town of other stuff , like his view of the legalization of marijuana. He thinks there needs to be a hemispheric bait so that there is some consensus instead of this patchwork approach that america has taken. You can watch the whole on marketith him makers, of course. Today we will also of course tonye he speaking with james and asking him about the dearth of leveraged buyout and what is going to happen now that the u. S. Economy is accelerating and europe remain stuck in the mud. Looking forward to the show with you in just a few minutes. Thank you. Still to come on in the loop, a legendary italian brand is taking lingerie to a whole new level. You definitely dont want to miss this. Time now for a global outlook. Jimmy choo plans an ipo in london this month. The owner is betting on consumer demand for its humps to drive investors. By groups have been hurt Slower Growth, however, in asia. Offs fashion week kicks today coming of course on the heels of fashion week in new york and milan. Milan is where the showcase was in the 2015 line. The upscale brand has been focused on enhancing business in existing revamping boutiques, planning to open three locations in the next few months, all part of a broader International Growth initiative focused on appealing to an even more luxurious consumer than before. Joining me with more is the ceo of love perla north america. A great way to end the show. Something is going very right there. Year to date your sales are up double digits. You said that even this month they are accelerating. Whats happening . As of one year ago we were purchased by a new company out of london. There have just been a lot across the board to elevate the brand. New ad campaigns, new marketing, something we havent seen in the last five to six years, renovating the store and making sure that our boutique environment is elevated inconsistency with what you see throughout the brand. We want that customer experience, as well as new products. We have taken the products and customers are responding in sales. It is sort of counterintuitive that you could raise your prices and demand spikes, although many Luxury Brands have done it. Seems torices and it be working. You, now, have courses that cost 50,000. How big is the demand, really, for multithousand dollar horses . As our new ownership has committed to date in the brand up in every way, we launched madetomeasure, where some of the items have 14 karat gold thread in the lace. The fabrics are the best that you can find. The laces are produced and cut only for love perla. Some of the items require 30 measurements and take months to make. There is a customer that wants sartorial, custommade experience and we want to make sure that we cater to them. It is really a global luxury traveler. Clients through the middle east, the u. K. , those customers are looking for that experience and we want to make sure that we are providing it. Is that customer . A young woman splurging on lingerie . A middleaged woman with plenty of money . Are you selling in the u. S. To americans . Or is it perhaps men looking to spend a couple of thousand dollars on a corset . We do sell to men and we do have a business there, but the core of the dna is the brand with women confident about buying for themselves. We just did some research as a company and when you look at the fastestgrowing part of our business it is a younger customer. Certainly the core business is that dirty to 35 range, which the internet really speaks well to, bringing newer and younger customers to the brand. Also our core customers are still what i would call pretty young. So, you would again think that with luxury settings and more mature clients, here we are also bringing other clients into the brand. You are also getting into mens clothes. An italian label known for luxurious lace and garter belts, is theand elegant, what menswear line going to look like . It really is part of our growth strategy. When you look at the research, it is an important part of the luxury market longterm. The Ownership Group saw that and wanted to make sure that we continue that business and build it out for the long term. We have a creative director that launched in june and the product is the finest fabric. T takes inspiration from perla are we talking boxers, briefs, or just some shorts . Silk. Amazing fabric, going back to the craftsmanship. Cool, so looking forward to seeing that in north america. Thank you for your time. Does it for in the loop. It is 56 minutes past the hour, meaning that Bloomberg Television is on the markets. We are Just Moments Away from a statement from president obama on his campaign against the Islamic State following the extension of airstrikes into syria. We will bring it to you as soon as it begins. 30 minutes into the start of u. S. Trading, wall street is extending its trite selloff into a third day. 1 10 of 1 , little changed at the moment, treasuries cracking down and sending healthcare lower. Over the past three months the 10 year yield is down to 2. 5 . Here with treasury prices gaining for a fourth straight a. Joe covers equities and lisa covers fixed income. I want to start with equities. We have a 10 reduction. Any risks in coming along . With acquisitions have taken a huge hit. In the event of a big event they think there could be a big selloff. That has not happened, but there is such more out there. This bubble will end terribly and we have never seen anything like this. Back to the rates that are going to keep everything low . Treasuries are a benchmark for everything from mortgage debt to auto loans to junk bonds. This is going to destroy their borrowing costs and fuel the bubble, frankly. That sort of interesting this is still the safe haven trade. They are rallying for the longest stretch this month, since midaugust. Just general concerns that after i wonder if the euphoria that we saw following the success of the listing last week has faded, that the event is over and they have moved on. It is interesting how that has received back a little bit. And saw the high last week are thinking that maybe they want to take a little bit of profit and selloff a little bit. Institutional investors are behind but i would not say that it is completely over yet. So many people coming out and saying that we think there still is value in stocks because of this dynamic. What level will people just come back to be buyers again . The next couple of days will be telling for that. It should be interesting to see how sentiment shakes up. Thank you so much for the roundtable on the markets. Back on the markets once again in 30 minutes. Live from bloomberg headquarters in new york, this is market makers. Raising the stakes for the first time, the u. S. And arab allies target inside syria. We are to hear from president obama