Transcripts For BLOOMBERG In The Loop With Betty Liu 20141016

Stocks are down for eight straight days. That is their longest losing streak in 11 years. The second Texas Health Care worker infected with the disease has been transferred to a hospital in atlanta. The cdc had given her the goahead and said passengers e at little risk areas where always open about what we know when we know it and we always share more rather than less information as we work to protect americans and provide extra margins of safety wherever possible. Ago, tom frieden said any hospital in the u. S. Can safely take care of ebola and were finding out that is a different story. Beatue and earnings estimates and goldman boosted a Quarterly Dividend by a nickel. One reason, Investment Banking lows. Portion of revenue to pay employees. The company known for secrecy has leaked pictures of its newest ipad tablet. Apple done in typical style, they were posted wednesday on itunes before being taken down. And apple is hoping the new ipads will jumpstart sales. In hong kong, the government is offering to sit down and talk to student protesters but there is a catch. Thing most constructive that a Hong Kong Company can offer is to sit down and listen what we can do, together within the framework. That problem or the problem is that protesters have demanded dozen 17. Ions in two and they say that issue is off the table. In the meantime public outrage is growing as it shows Police Beating and kicking the protesters, they say they are investigating the incident. Back to the top story, it is been disturbing, the futures showing we are headed for another day of lead here in the markets. Stocks falling for the eight straight day. Joining meespondence now with a look at the turmoil. Fort is the longest slump stock since 11 years. The stock 600 is continuing today, it is technically in a the trading and paris down 2 the dax in germany off by 1. 4 now and it is officially in correction territory. The heavier telling is in the periphery of europe. Urgency ofke a wrist the european debt crisis. You are seeing that play out in the treasury and bond markets. Lets show you what is happening to european debt once again. You are seeing the diversions between what is happening in the core and the periphery. Youre seeing money going into 10 yearty, look at the german low trading at a record low of. 75 . While yields are kicking up and italy, the italian 10 year up 8 today. 20 basis points. Greek has already defaulted so you have to take this with a grain of salt but it is up trading it eight point 09 . Italy is what you really have to watch here. When these bond yields go up by 20 or 30 basis point each day, if this gets close to three and a half or 4 that is where we have to worry. We are down basis points here on the 10 year yield back home. The futures market is art he shaping up or what could be another wild ride. Of course and the hour it drops down by 1 10 of 1 . Arry a little bit of 1 little bit of that we are down in the nasdaq, with futures pointing low by 9 10 of 1 . Shellingury market the selling is continuing. 2 10year note trading at earlier. A low 2 . Oil,hats happening in earlier today it dropped below 80 a barrel for the First Time Since 2012. Couple months a ago trading at 100 a barrel but now at 80 and the dollar stronger. Stakes for going to the market action. With me this morning for a look at what is spooking the markets, one professor of finance and the bestselling author, Jeremy Siegel is joining me, also with is the managing director at Graham Fisher and co. Author of reckless endangerment. In the middle of all this, lets take a breath. Lets step back for a moment. I spoke with Lee Cooperman who is clearly in equities and he said, the bull market is still intact, and he gave me a list am a yesterday he made a speech to a group of portfolio managers, a 25 page report where he gave me a list of reasons why the bull market is intact. One of those is the corporate Balance Sheets are still very strong. Its at the highest level since 1955. Stocks as a whole are pretty said it shows around 14. 9 but that does not by any means indicate a peak in the market versus what we have seen in prior bull market cycles. You, you haveith all these great factors, should the market go higher . Not sure the Balance Sheet really matters unless youre doing something productive. Youre seeing a lot of buybacks, at the same time youre not seeing a lot of investment. A lot of investment through the economy or building businesses, so buybacks are great but at the end of the day that doesnt last too long. Qa qe is discouraging. You add to that questions in the market about the impact of Energy Prices and the overly strong dollar and you factor in things like worry when you have a slowdown in europe and questions about the sustainability of the u. S. Recovery. The fear of trade but it is also very real and the risk speeding in on itself. Yesterday remove suggest someone got caught upside down and that feeds on itself. Are we a rational . Scary, we saw what happened with sars in the far east, i think that was more serious than ebola, certainly more infectious, nonetheless that fear is a good 5 or 6 of tos slowdown, in response josh, i am not absolutely sure that qa qe will end. If we really get a slowdown, if we see what is happening to inflation, going well below the fed target, i was looking at the fed Fund Futures Market and it is dramatic. We thought there would be a tightening in april and may, that they pushed it all the way back to november. If this economy really does is that thefeeling Interest Rate hikes which sony people fear for next year may be off the table. I dont think so now because i dont see a lot of Economic Data coming in, i dont think were going toward a recession, thirdquarter earnings are coming in pretty good, but it does not look to me that this ofl be any more than around 10 correction. I think there are values here in todays market. Earnings are coming in strong, primarily driven buybacks. Fundamentals are not terrific d i worry quite a bit that at the end of the day, if the fed does end up pushing it off, their credibility takes another hit. Feds end of the day the only power comes from its ability to move markets with credibility and confidence. Ofsome point the fed is out bullets other than qe and prolonging it. Why would them putting it off go ahead professor. I dont agree with that at all. Janet yellen and everyone at the fed says our decision of when to stop or start is data driven. If the data changes dramatically, they are going to change. I do think it is dramatic enough qe atr them to stop qa the next meeting but you hear what people are saying, we may not raise until the end of next year. Anything for does credibility if this economy weekends. Stockis bowl and the market is predicated on a strong weakening of the economy. Data is the driving force. Their forecast has also been a lot rosier than reality, so in that, credibility is at stake. You said something about how it is data dependent, so we are now going to be even more dependent on the data we will get. Economy seems to be growing pretty well. The jobs market is going up, almostent is going up, every part of the economy is improving, so even though the market has gone down, is that enough to reverse the economy . , at all. Isnt youre right, where looking at 3 plus gdp for the third quarter. Three or a little over or under in the third quarter, but that is not nearly enough for a reversal. A lot of people are fearing the stock market, when that empire new york report came in, and now with ebola, this could be a turning point. I disagree with that but i think everyone is looking whether to see whether that will happen. We will continue this conversation in a moment, Jeremy Siegel stay with me, and josh will stay with me as well for more on the markets and fed policy. Makers formarket interview with James Bullard. We are watching closely this morning is netflix, shares plunging in afterhours trading, falling as much as 28 . Warningg Services Subscriber numbers are glowing growing at a slower rate than expected due to a price hike they say for new members. They might say that it is the price increase but it sounded like netflix wasnt sure themselves. A real double whammy yesterday, a couple of big things happened to them, one of them was early in the day age be a said it is coming out with its own standalone program. It is taking the page on the netflix model, it shows it will be another alternative, and we decide which channels to buy and there will be another alternative to netflix, people will be making harder choices. That hit them first. Earlier in the day, and then later you have the results coming out and theyll have slower user growth in the Fourth Quarter and people want to see them growing at a rapid clip. Iss shows you that something going on with the consumer right now that is making them tighten their belt. Companieser consumer put out numbers in the forecast, ebay for example that gave an indication that the Fourth Quarter may not be as great as everybody hopes for. There may not be as much consumer spending, you have a stock market, it was a perfect storm for netflix yesterday. Consumer facing companies, google and flays book were slaughtered, across the board. That has to be weighing on netflix to a certain degree, but you want to see robust Subscriber Group growth, you want to see in the u. S. Which is their base, they are doing well internationally it does not compare to the u. S. Which is a much bigger pool. Us,om thank you for joining the managing editor for technology. Reporting another blowout quarter. Some good news on the earning side, beating estimates, we will dive further into numbers and the bank. Shares of Goldman Sachs are falling in the premarket, their net income rose as they set aside a smaller portion of revenues to play pay employees in the first half of the year. Still with me is josh rosner, the baking analyst at Graham Fisher. I know you typically cover these things, so goldman with more of the same here, right . It was a fine quarter but a fine quarter driven by trading. Investment banking wasnt terrific, Asset Management was fine, p trading was you sound unexcited, im generally unexcited towards the banks. Help,day did not volatility is up which is on the one hand good for trading but we aretremely worse seeing the Investment Banking becomes a big risk. On top of that there are questions about the broader economic recovery but what happens to Interest Rates and it continues to weigh professor i know you dont cover these banks us specifically but tell me what were worrying learning about the recovery from the oh wait crisis and finally seeing some growth here. To put this in context. I think what is happening over the last few days, the Interest Rate plunge has hurt the financial sector, the banking particularly. This feeling, and maybe a little too much that higher Interest Rates are going to be put good for banks, with the plunge and the last week, people are saying when is that high Interest Rate coming, on the Investment Banking side, trading in a badant, but equity environment, that cant ipad, a question if we can get a recovery in the equity market which i think will happen by the yearend. If not that will continue to put pressures on the martin margin of these investments. You say put your money in the stock market and you will make money, and you say you expect equity markets to recover do expect them to make up these losses are actually recover in a healthier way . Now, 15 times earnings, with a 2 long bond, to me is a nobrainer, anyone with a little bit of a stomach is going to come out ahead in the next six to 12 months, and my feeling is if ebola does not spread dramatically that we will get a good yearend rally in november or december that will more than make up the eight or 9 decline. Predict onrous to the short run, but i do think we have a good chance of hitting highs by yearend. On the backside i have more concerns than he does. Overall, i think the ebola thing, i think it does have a real risk of impacting us, if you had 10 more people in a major city with ebola, the question will become who will fly or take the subway, i think that is dramatically important. On the other side to economies, two economies and the consumer remains stressed. Thank you so much. We will be back. In the loop you are watching on Bloomberg Television. 26 minutes past the hour which means Bloomberg Televisions on market. If you are in equities you might want to cover your eyes. European stocks at this moment deep in the red, some german debt down by 1. 3 . Stoxx index off almost 2 . Deep inutures we are the red as well, in particular the nasdaq futures down about 1 . Selling as weue head toward the opener. On the market again in 30 minutes. Apple is set to unveil its latest ipad. The company known for secrecy stole its own thunder bite leaking images about details on the new tablet. They say it includes a gold option along with other features. Joining us from apple headquarters is bloomberg west editor cory johnson. Theo they kind of blew surprise for everybody, but still this is an important release for apple. Think theall see, i focus will be interesting, obviously releasing products and they are announcing this time of year and theyre looking at fourthquarter sales of consumer focus. I ipad mini is also very consumer focused see what that means for the iphone 6 plus facilitated in the old iphone. If one cannibalize against the other, but one of the things i will be looking for is what your focus is going to be the on the consumer particularly with the ipad hair, and if hell talk about things like ok, and patrick just ares and things that might enable apple to expand its market share. That we have seen from the sales success,ible initial creating a new industry and throwing it past than any technology ever, and have also seems that is down. Sales ofquarters the the ipad are down and Fourth Quarters, and that is a rough think that his company and at that international ipad mini is lower average selling prices of these devices, that is something of course that apple like to do less. How many they need to sell to say, these figures . These are winners . Numbers inking that the tens of millions but more than any given quarter, i think one of the reasons, this is corey speculating, you can seek like going with ibm trying to create new partnerships during the device was so instantly successful, these brilliant people that work at apple and make them that are Pretty Simple to use, this device is piggybacking on the success of the iphone was so initially successful that it did not grow slowly. Quite the opposite, it grew so quickly that people used it like the old device and havent found the new uses. It is one of the reasons the growth has petered out. Theyre hoping to now develop theuse aces, and one of reasons for the ibm partnership. Thats one of the things you may hear about today. Cory johnson our bloomberg editor, outside the event. Weve gotten a better picture of the american consumer, are they getting new ipads . On one hand, the National Retail Federation Said today that Holiday Shoppers are going to spend 804 this year, up 5 from last year. We will be seeing scenes like that again on black friday. For more on the retail economy were joined by matt wrubel. Chairman and ceo of several top retail brands. Great to see you. Today isk the theme point this out for us, we were just talking about sorting out the market, so sort out what is going on with the consumer. 804 this season, does that sound like too much . Know i think you have a very solid holiday season, what is going on with gas does free up dollars for families were been quite constrained for a long time and what we have seen with the consumer is when you free up one portion of the pocketbook of a into the other side, i think youll have a very solid season but you have to choose your winners. Who are the winners . The winners are structurally set up to get the customers online and instore. Thateryone is trying to do. Theyre trying to but not everyone is executing well. You also have the middle to lower end of the marketplace that will start to come back more than it has in the past. It has been quite constrained for a while and this will do a big job for it. The areas where you have to be a little cautious is the luxury on at, the luxury Market Global basis has taken a step back because of europe and asia swelling. And also with the travel advisories due to ebola and different things. That is a challenge. It makes sense, because it seems ready well known that the equity rally we had in the last five years have been at the top 20 of income earners in the United States. That is why you would see that. The nordstroms of the world or and those marcuss retailers have done pretty well walmartthe fact that continues to struggle. I think the tiffanys of the world could have challenges, because with traffic and tourism being more challenge with travel they havent done a lot of innovation either. They havent made their rand resident right now and also there are travel advisory type things that will impact them. Look at the basic businesses, i think they will be quite solid. Yesterday walmart had their investor day and they put up their Sales Forecast and said, were still trying to sort out our inventory situation and we need to figure out more what our customers want. Sharp drop will help their consumers the matter what, but a big retailer like walmart, are there other factors at work as to why they continue to struggle . Amazon, and amazon continues to go right at the consumer. Still amazon . Amazon affects a broad base of issues, what you will start to see them get their act together, they are a broadbased retailer. They can move to food and different tack and gadgets, and there is slight inflation on the food market which is positive because inflation in food will end up keeping sales up and give d leveraging to overhead. I think it is solid. One of the things about finding thatetail leadership, these Companies Might think there are opportunities there to do better than they have. Before we go, some might say the era of the super sensor, the allinone store and the massive warehouse type store, that might be coming to an end . Get think Consumers Want to andnd out, they won it now efficiently. More and more technology can assist with that. I believe that the large store format which was all about leveraging overheads into a marketplace is not a Shopping Experience that is resonating with the customer today. Take you so much for joining us. At tpgior advisor capital. Breaking news on jobless claims. Were watching where it is heading. Low economist estimate. We surveyed jobless claims fall in by 23,000 to 264,000. That is the fourweek moving average. It is very rare to go this long with a stretch below 300,000 or the monthly average, continuing claims are very slightly. The states with the greatest claims move it increase in new york, texas and california. Futures right now moving a little bit lower on this perhaps investors thinking that this is a signal and a strength of the labor market and that means the fed wont rush in to provide stimulus to support the markets if we do see equities continue weeklyoff, a much better jobless plan that economist had figured coming in at 264,000. Keep in mind that at 915 we will get Industrial Production and later will also get the comfort index and the Economic Expectations and it 10 00 a. M. An update on the market. Certainly some data points that we will want to watch. Olivia thank you so much. Plan he backtracks on his to buy u. K. Based shire, we saw that yesterday, and why the company says the deal is no longer in its best interest. It looks like the deal is dead. Here is a look at our top company moves. Abbvie no longer interested in buying shire. Billion 52 billion dollar takeover would of moved the headquarters to the u. K. Nestle sells 3. 1 in the first nine months of the year and the kit kat maker bracing for a challenging Fourth Quarter. Some concerns the deadly virus on the ivory coast, where 40 of the worlds coco comes from. I know to moving to the ivory coast would have a major impact, that is the most important thing major purposeis a i dont what to extend their but that is priority. Lets turn back to the tech and media landscape, i would a bring in the founder of a commercial bank focused on the Media Internet and consumer sectors. He is also the cocreator of the founders forum. Ceos,hers together entrepreneurs and investors and is being held right here in new york. This is the third time, right . Yes. I wish the weather was better for you today. Lets talk about the tech. You dont apple is having this event, in cupertino they are announcing a new lineup, hbo is going over the top. They want people to consume tent, that is just an example a company like microsoft or apple sponsor many more companies and innovations, tell me how that will be a theme. Bringing artainly variety of entrepreneurs from europe and innovation is largely the theme. New york and london are both cities with souls. Corporates and elitists in them that encourage innovation. One of the talks is on the house of the future, the internet of things. And those sorts of developments are leading out of new york a very different environment than what we saw a year ago. Look at the world, we just mentioned ebola, europe, your neck of the woods worried about another recession, in china things are slowing down, how is that . Is there any fear among people and the tech sector that that will start spilling over . Yes i think growth and innovation will always continue, i think entrepreneurs are people you try to help solve some of the bigger problems, if you look at what is being done around the world, and using examples of best practices in other cities, that in itself is trying to the economicuel and entrepreneurial developments, and the social responsibility, some of the greatest tech entrepreneurs are people who, case in point you may see one of them who might be despite the cells trying to balance. And work out what their legacy not to to our own horn but lets say in europe, what do you guys learn from the Silicon Valley entrepreneurs. What do you learn from people Mike Bloomberg and bill gates . It is not just the Silicon Valley entrepreneurs, i think over here, the markets are slightly bigger and the social impact has been better and more variable, but i think also entrepreneurs and countries here had a lot more coming out of london and europe. If you look at the media, with a panel today with how it Howard Stringer the x of sony, in many cases is being led by talk about an industry being disrupted, right . Very healthy balance between the two cities. A chart where we have seen a record funding for a number of startups in london, and i believe the one number is funding hasion in been made into London Companies in the past three quarters, it has an american bc in thoseore over 60 of involve a u. S. Vc. Some might look at that and say, does that show there is too much money sloshing around, that maybe this might be a sign of a peak in funding . I think it is good, there is never too much money. Spoken like a true capitalist. I think innovation carries on being fueled. London and cities of new york are great hotbeds for that talent. I think the access to capital and the fact that 60 of the companies are trying to raise money in europe with an american vc is indicative of this increasing global and transatlantic relationship. Those companies are across the board question mark they are across the board, those companies are across the board . Tion mark back into truman its. Minutes. Wo as we have all been learning a nurse infected by the a bowl of patient has been tracked transferred to a hospital in atlanta. We now know she contacted the cdc several times to alert them about the flight and was given the all clear. She was the second of two Health Care Workers who was infected. Im joined now by two people reporting up close on the disease. Followingshannon is the race for the company developing vaccines against ebola. Ebolaory two weeks ago on and a new case on the cdc and the latest edition of the magazine which you can lead read digitally today. We areef is that, yes all scared of ebola, but in many ways if we hadnt seen some of these mistakes this year that happened in dallas and the cdc, we might not be as frightened as a couple weeks ago, people asked about it and i said we certainly do have a Good Public Health system, what i didnt get then is that the cdc is not designed to do logistics or medical care. They know about viruses, they understand it, what you saw and dallas was the cdc team came in and began tracking other people who might have been in contact, and completely ignored a crucial problem which was getting nurses suited up in the proper way and protected. The cdc is a limited organization that is struggling to handle a logistical problem. The cdc made an assumption that americas hospitals would be prepared to deal with this and they are not. That is what we found in dallas. Borders, sayst americas hospitals dont have the equipment, they have had their budgets cut and when budgets are cut the first thing disaster planning, drills and preparedness. The cdc right now is trendy people to go to west africa, and what they have done is taken a Doctors Without Borders facility and recreated and ebola treatment unit in alabama. When was this . This was yesterday. The Doctors Without Borders way of suiting up is a whole routine. You go in with a partner who checks you and you check your partner. If you feel compromised you both leave together, you walk in through the clean areas room and leave through the dirty areas so you dont get the clean air it dirty. Your suiting up in a way that requires learning and muscle memory to get the thing off. It is called a offing procedure. A doffing procedure. Doctors without borders treats this am and it is much more involved, it is a routine and not just a suit. Nothingallas they had like this. They had skin that was exposed and in some cases they were putting on tape. They said the suits were too big so they put on tape to secure them in place, some of them are putting on multiple layers of gloves, however and makes it more difficult to get them off, and in the process, you risk getting that fluid on you. And the most crucial thing is they did not have protective boots and all the fluids are on the floor. That is where youre most likely to be compromised. But americans who are not at ground zero with ebola, they are wondering, if i do get it how can i be treated . What is out there. Right now we dont have proven drugs or vaccines, we have a few things in testing that may or may not be promising, one of the most promising things is the vaccine. We should hopefully have some data on vaccines that could be used for Health Workers in africa. They hope to have 10,000 doses that they could give to Health Care Workers. We know a lot about how to make vaccines but this is not a virus that cannot have a vaccine. We believe we can develop a vaccine. Part of the issue will be doing it with enough exiting to vaccinate on a widespread scale. On the drug front, a big question is how do we test these rug so we know whether or not they work and are safe . How do you do that in an outbreak . This is what people are struggling with right now. The urban issues on ethics that everyone is struggling with. Well, back ins two minutes. Bloomberg television is on the markets. The market was down again. Coming in at a 14 year low not helping sentiments at all. Two big names with us at the open. Welcome back to in the loop. 30 minutes away from the opening bell. Openantially lower at the and it begins the day at its lowest level since april. The index lost all the scene to the index yesterday. It fell for the eighth straight day in a row. Paul krugman says get ready for more of the same. Interest rates will go up next year and everything will return by 2018 to the way the world was in 2007. The market doesnt believe that anymore neither do i. Goldman sachs towing the line when it comes to compensation. The bank set aside a portion of revenues to pay employees. Overall revenue was up 25 . Estimates beaten at delta airlines. A Strong Performance and domestic travel. 4 billion in the last three months. Might benefit from lower oil prices. The center for Disease Control is handling the ebola. The cdc had given her the goahead. The white house has asked why the u. S. Has not banned travel to and from west africa. Down travel to the area of the world would prevent the expeditious flow of personnel and equipment into the region. The only way to stop the outbreak is to stop this outbreak in its course. And the households a hearing on ebola. 30 minutes away from the start of trade, lets count down. Reporters matt and scarlet joining me as we kick things off in new york city. The attorney general, Eric Scheider coming up with a report , threebout how airbnb quarters of rentals in this city. Illegal. Three quarters are illegal. Where the owners are renting rooms in their homes . Exactly, the interesting thing is we all sort of new, that airbnb was a gray areas. The interesting thing i found was that most of these rentals are done not by you and me will we want to make extra money, but by commercial operators. Handful of new york Property Owners are running Illegal Hotels over airbnb. Not just hotels, a third are hostels and places were listed crime is happening. Is that still illegal . Thats insane in this day and age. Fromrd of revenues commercial revenues. It shows you cant trust human beings, if we are not regulated we will do something bad. Amazon creating 80,000 seasonal jobs, increasing customer demand. Tired for these season but then they converted some of the Seasonal Workers to fulltime. They do this every year with a get themselves a pat on the back saying were hiring all the Seasonal Workers and convert some of them but how high are these jobs . And how much of a pay . Being asked tore give up their own time to be inspected whether they are walking out with merchandise amazon isnt paying people for the time trapped inside the building. That doesnt make sense at all and the Supreme Court will understand it the same way, but the interesting thing i think is that out of 80,000 seasonal hires they convert 10,000 fulltime jobs, that is a substantial amount. The big question, what is the quality and how much are they paid . We continue to get these job numbers wages will be a bigger factor as we look at the job market. Ok number eight, apple you need a refresh on your ipad . How many ipads can you possibly have . X i have four already. You have kids that explains it. And less it does something awesome or has some retinal display that turns 3d scanners a fingerprint i dont need it. Atoll be unveiling their recent ipads but leaked it out by mistake. At this point is a game that everyone plays. Apple has a secretive event but something came out ahead of it. Jpmorgan accidentally put it earnings out at four clock p. M. , i dont buy it. This doesnt seem to be a substantial departure, it will not be larger or have a better display, it seems like an incremental improvement. It is not about the ipad, it is the iphone that drives apple. Number seven is tesco. You hear Warren Buffett from time to time admitting his mistakes. He is admitting his mistake in the eight years stake in the troubled retailer of tesco. He is reduced his chair to less than 3 . Tesco to try to get into the u. S. Market, the fresh and easy supermarkets. That never caught on. Did you ever get any inkling that would be success . Here in the u. S. People are not as familiar with tesco, the problem with the company, even though Warren Buffett could not foresee, with his hair were problems, allegations of number some executives have falling as a result. It doesnt seem to be the same quality as potatoes waitrose. Here in the usa people killing it are trader joes and whole foods. Walmarts largest retailer is cutting its Sales Forecast yesterday at the investor meeting. Technology to have a stocking shelves and stacking scores to win back customers. Is a Worker Health benefits and paying very little. No thanks. You may not have a choice. Still, you go into walmart and you will see very few staff, they clearly dont care that much. Until they realize they had to cut their Sales Forecast to two point 3 from 5 . That is a big cut. Theyre trying to be everything to everyone. Theyre adding in more fresh food, organic, things of that sort. It is still a tossup whether they can get access. Strasser says he is still making a buy recommendation on walmart because the defensive characteristics are important. I know that theyll just rang but last time i was in the walmart, i was there with my kid brother and they had no problem handing us automatic rifles to check out but when we went to the beer section, everybody freaked out. All the employees came over, is he 21 . Theyre are dinging me. I thought that was interesting. Bloomberg view columnists, joining me to sort out what is going on. We continue our countdown to the opening bell. Our countdown so it is time for our deep dive into number five. The global stock market is this. We were to bring in mohamed chief Economic Advisor at elians. Allianz. River the economic numbers are still coming in, today jobless claims hitting a 14 year low. Why is that not adding a buffer to what is going on . Buffers not adding a because we are in the grips of a technically driven correction and in addition, fundamentals were so much lower than where prices were that you need fundamentals to improve faster. While a lotee for a of pressure on risk assets. Patri, theill remain good news is it is somewhat less disorderly. Fact earlier in this morning we were speaking with Jeremy Siegel who says, with the ce ratio at 15 for the s p and yields below 2 , this market is going to recover by the end of the year. The issue that sentiment . Comment about the pe is controversial, because different people measure it in different ways, and there is a fundamental question about the outlook. I would put a big margin of uncertainty around the estimate for the pe. I think more fundamentally, it is interesting to see how quickly people are calling for the fed to do a qe. That tells you this is not a Market Driven by fundamentals, it is a Market Driven by confidence in the central bank and that the central make one remain the markets best friend but it cannot do that forever. Interesting that those were calling for a correction implicitly assume it will have qe4. The hurdle for that is much higher. Arguably this would be Janet Yellens first test. How do you think she will handle this . Bankersnd other central will tell us that rates will be lower for longer. That we will get many comments on qe4 unless things get a lot more disorderly. Is quite a high hurdle to do qe4. It is. When you say Interest Rates will stay lower for longer, the you expect that forecast of a rate rise by the middle of next year is off the table . Is off thenot say it table because of what you said earlier, which is that the underlying economy in the u. S. Is not that bad. Unemployment has come down a lot, so a lot will depend on the data. I wouldnt pull it off the table but i would say it is less likely. That is the balance Central Banks have to strike between Economic News on the one hand and on the other hand the financial instability issue. That is a very delicate tradeoff and a half to get the balance right. Let me tell you what paul krugman is saying where yields are headed and why he thinks that Interest Rate hike is off the table. Europe is seriously scary. China is seriously scary although it is harder to track. We are not an island, International Independence can be overstated but you really would not expect the u. S. To be completely immune to these bad developments and we are not on that solid a basis here. Aftere we are six years leave and sell still very fragile. He went on to say that bond markets are pricing at depressed rates. He saw that yesterday. You see that changing . He is absolutely right in saying that with the exception of the u. S. And the u. K. , the Global Economy is slowing. And that there isnt enough conviction that we are going to way, and back in a big therefore no matter how hard it tries or how fast it heals the u. S. Will face headwinds from abroad. He is correct on that. He is also correct in saying, au played it earlier, that as result, nominal Interest Rates will be lower than what they have been historically. I think the market has priced that in. Where there is still a big debate is how much lower. That will continue for a while. Thank you so much for joining us. The former ceo of pimco and now are Bloomberg View columnists. Makers 10 00rket a. M. Eastern time. They will be with the resident james dollar. Countdown continues, coming up. Welcome back to in the loop. Lets bring you all the important stories you need to know. Netflix is on the skids. Theyre saying a price increase of one dollar a month has slowed subscriber growth. Not just here in the u. S. But also overseas. It lost a quarter of its value whacks shocking. Theyre so dependent on that one number. That one number can account for doubledigit percentage drops. There also under forecast. I just cant believe that a one dollar increase i feel like they may have gotten the numbers wrong. Monthit like 7. 09 per and the increase was to 8. 99 . If your kids do nothing other than watch netflix as far as their Screen Entertainment is concerned, theyre not going to care about one extra dollar, especially if you are paying. As you are saying earlier i pay 130 for my cable bill i dont care if im paying 9. 99 for netflix. Shire againste, funding for the second day in a of abbvieeo encouraging shareholders to vote against the merger. Ian of saw this coming feel like we underestimated how big an impact tax aversion changes would have. The shire and abbvie situation came about yesterday on a day when the markets tumbled anyway. We didnt really take. Of what might happen. Investors did not realize how serious these changes were and i still dont think they realize that it seems like abbvie got cold feet and away it is a little bit ridiculous to have a order of shareholders to vote have putay holders forward, it doesnt make sense at all. I think it kind of also underscores how shaky this deal was in the first place. If this was a strong deal, it would have gone ahead anyway. Companyoing to grow the even more, no amount of tax regulation is going to deter that deal. Goldman sachs, the banks thirdquarter profits grow, beating estimates and cutting costs by setting aside less money to pay employees. Weve seen that across wall street. Compensation costs coming across wall street. They really set the standard when it comes to other banks, goldman is doing this means other banks will start following in its footsteps. And heoke with charles said one of the reasons the banks did so well was because of the rise of volatility of september. But good volatility will turn into bad volatility in the third quarter. He also messaged me this morning saying he was going over the Goldman Sachs report saying they reduce their bar and exposure to risk. Like a good decision after what we saw today. This is a bank that makes smart decisions, obviously that will not turn out to be one of them. And of other banks will follow in their footsteps. Is a good quarter for goldman, i wouldnt say a blowout quarter, that is a general feeling that these are good numbers coming out from the bid bank but theyre not fantastic, Bloomberg Television on the market, a final check on where futures are. Futures down 1. 25 . Coming in on a 14 year low. Nothing you can do about it. It doesnt seem to help at all. Our top ory on the opening bell is next. Welcome back to in the loop. Lets get back to the most important stories before the opening bell. The number one story to my today is crude oil prices. Four year low. The lowest price we have seen is 1 providing one point trillion of stimulus to the Global Economy. We talked earlier with one retail analyst bruce to the same thing with lower gas prices will cause it to unleash some cash. My question is it will it really cosan to spend the extra cash, or were they just save more money. We know that when wealthier individuals get a hat and have more spending money they dont necessarily spend it. Think yesterdays retail floor was one of the factors that led to the huge slide. Analyst estimates by so much, but one of the same reasons is that gas price estimates are lower. Greatauto sales were that last year but with lower gas prices, and be more people will buy cars and they will definitely have money to spend on other stuff when at walmart or cosco. I would a bring and roger altman, the chairman and founder , roger, you weigh in on this, what do you think about lower oil rices. There are obviously winners and losers depending whether you are a consumer or a producer, but from an Overall Economic point of view the citigroup report is directionally right, it is a huge stimulus. Americans have a very High Percentage to spend in marginal dollars, so i think a great deal of this extra money in the pocket will be spent promptly. Lower oil prices are a net plus. Not if americans keep seeing stock markets plunge. They see that on newspapers every day. But we will do this, we always do. Now likely a week from though i have no real idea, markets will have found a level, fixed income markets and commodity markets, those headlines will attempt down so damp down so to speak, and that is just a plus. Theyre coming down fast and strong by the way, if you look at wholesale gas prices over the weekend, after you are done worrying about the dow, and next week you have an extra hundred dollars in your pocket, you are spending that money. The way speaking about down, the speed of the decline is incredible, looking at the markets, the dow is off by a hundred 72 points, were talking about a percent one minute into trade. I want to talk about the Global Market tread, jp mark and morgan joining us, you would talk as well about oil prices. And you see that as of eventually a big stimulus for the Global Economy. Absolutely, the oil prices coming down will put more money in consumer pockets. We know that the countries it hurts, it hurts russia, all the exporting countries but they will eventually reach consumers. Important. It is more for peoples outlooks on their own jobs, but that is quite strong. I want to ask how much of yesterday and today has to do with the european debt crisis not being as over is a lot of market watchers thought it was. Note see debt in greece finding buyers and you start to see the same for that in italy, is it rearing its head again . I think absolutely, if you go back a few weeks and look at the totality of these market declines, the worst is happening right here in europe. Factnk it reflects the that in the last few years, people have brought europe out of the hope that the depressed corporate earnings and margins will be bad, and they will make a huge return, it just hasnt happened, at the same time that we have inflations lower and concerns about what that does to the debt dynamics. The question i would like to ask is whether the market consensus or near consensus of the moment is yes, europe is sliding back into negative growth that affects a third. Of negative growth, is that the mainstream view of the market . It is a risk that is front and center, i think that is slightly overdone in some of the concerns, some of the data ultimately what has changed on the periphery, best and look at it and say not a lot. Theres stuff going on in italy thingsin, some of the that might push against that is the authorities coming to the party a little bit more, look with it ecb is doing and what the euro has done, that has helped with the margin but ultimately how is a country like greece going to suspect expand with sustainable growth. I want to bring it back to the session is already four minutes old, this morning we talked to Jeremy Siegel who you know very well, and you know he is as a longtime goal. In with why he believes this market is going to recover, i want to play for you what he said. Anyone who has a little bit of a stomach for volatility is going to come out ahead in the next six to 12 months and actually, my feeling is if ebola does not spread dramatically, that we will get a good year and rally in november or december that will more than make up for the eight or nine percent decline. Again it is dangerous to predict on the short run, but i think we have a very good chance of hitting new highs by years and. Talk about short run volatility, you can see the point three. It is definitely increasing. Women tugofwar going on right this instant in the market, between what i would say are exogenous factors reticular lee ebola and some fear that even the smallest spread would fear,an outbreak of airline travel, with put everythings examples, going to the mall and so forth and that that could have a very substantial albeit temporary, negative commercial and economic effect, it is a much more significant wildcard for isis and the ukraine. Ill think they are particularly preoccupied at all. They price that in and completely ignored it. Theyve been looking at those issues for weeks. Yet the tugofwar between this wildcard factor and fundamentals. The fundamentals are very mixed because there are legitimate concerns as we discussed about growth in europe, and it may revert to negative territory. As Jeremy Siegel said, the basics in the United States are quite positive. There are more positive than people give them credit for. Think that absent some spreading of this wildcard factor concerning ebola, the fear not the disease, i think the fundamentals are such that we will move out of this. Im not as confident as he has as he is about the market effects but i think they will reassert themselves. Manager, wherend do you recommend people putting their money, do they sit out of this until it dies down a little bit, do they begin building a position . X you can build positions to u. S. Equities. The fundamentals are good, maybe not great but that is what has been driving the markets. Look at the last few weeks, look at the dollar rally, these are investors buying the u. S. Growth story. Youll see four or eight or 12 quarters. Remain,llen will theyre not going to prematurely tighten, youre going to have gridlock. You dont address the longterm changes, and you dont do anything to avert the cover as well, investors put their money to get the growth and now anything from u. S. Equities is a time for 12 months or 24 months out to be higher. Thank you so much. Roger stays with me, roger altman and the chairman or founder of course the former deputy treasury secretary, coming up, thank you guys, it has been a hot year so far, but volatility in the market causing more companies to delay going public. What is in the pipeline and what will be told. His been almost a month since alibaba went public here in new york. The ipo raising over 20 billion. Even though yesterdays selloff, the volatility this month has scared off other ipos both postpone their offerings until next year. He helped lead the alibaba ipo and now is attending bloombergs next big thing summit. Altman,ing me is roger the chairman of the wall street bank. Now that me talk with you on this. You cant speak specifically about alibaba, but looking back people might say years from now, allie be a alibaba the ipo was a peek. After us a couple of Companies Went public, i like to say we are in the golden age of technological innovation. The cost of content creation has come down dramatically. Everybody has internet on their hands, and weve seen a lot of Companies Getting 100 million users and 22 months, 24 months, 26 months. It is incredible. Were seeing disruption in many categories. The ipos for these companies will close down, arent they . In the very short term there will be certain ideals postponed in a market with this volatility whether they have a strong hook or not. You would not bring an ipo into a market like today. You would take a deep breath and wait. But i do think that suggests it all that the ipo market will or that the healthy. With seen right now is over analyzing and suggest a brief cause. As i said earlier it will serve itself in the ipo market will continue to do well. What about the implications for other Chinese Companies wanting to enter the u. S. Market. Tooken before alibaba, we other companies public. There are an incredible amount of innovations happening, and the consumption of opportunities are growing. Sometimes Chinese Internet Companies in new york wanted 800 million users, and others doubling g and b and six months. About the china market. Are responsible for getting Global Investors into the ipo, right . So tell meur role, what Global Investors are looking for. Ive been traveling around the world and meeting Global Investors and i think what we ,re seeing is that investors globally are excited about technology opportunities. It is a volume game. Companies like google and facebook have a lot of users, and a lot of the users are coming from emerging markets. The investors are looking for companies with high emerging market exposure. I was speaking with some an yesterday who wouldnt go on the record but he was saying an environment like this all stock will go down but what is important is who stays down and who goes back up. The ones who will stay down are the Balance Sheet. They do not have that wall to protect themselves. That they may have this Balance Sheet and a live video wants to stay down and a market like this. I think we just have to wait and see, the tech sector has been leading us how many respects the market, leaving the ipos and so forth, i think whether this is a true correction in terms of separating some more Tech Companies from their access to the ipo market for us how much one, that remains to be seen. And lifey stays down, sports are not sure how profound that it. Guess, also on i the flipside is that you can running a Terrible Company and everything is up on that. Plus the chances are that that it willes are go up in the next phase and it is essentially a correction. In retrospect if you see that the market was for a correction. Action occurred, and so car and is not a correction is technically defined, and so far, it is not a correction has technically defined as technically defined, but we will see. Staying in the tech markets, mark benioff founded salesforce 16 years ago and ever since he is been credited with leading the migration to the cause. Ofery special Edition Studio 1. 0. A full episode tonight it 8 30 eastern time. Back in two minutes. Stay tuned to bloomberg next hour amake the conversation on the economy and the market. This, andwant to miss fact markets are recovering from the lows of the recession, now down by 81 points off by half a percent. A bit of a recovery in the last 20 minutes. In hong kong offering and all of branch to student protesters. They say the government is ready to meet with protesters to discuss the election. The government wont give in on one of the students demands that china drop its plans to vet all candidates first. In greece, yields on a 10 year bond has soared the past few days and are approaching 9 . Coupons dropped 17 in the last month. You should be concerned about the markets but not freaked out, the words of the president of the european commission. Bloomberg in an exclusive interview. Youve seen the possibility of slow growth globally. Demand, there are several indications that can growth. Slower global of course we take this seriously. That does it for today on in the loop. Lawmaker whou. K. Could become londons next mayor. We will be talking about britains recovery and ask about her political ambitions tomorrow at 8 00 a. M. Eastern time. Bloomberg televisions on the markets. Stock stoxx 600 is down 1 again. The longest slump in 11 years. The dax in germany and frankfurt trading by 6 10 of 1 . Lets also show you what is happening on the u. S. Side of things. Equity markets are lower. 1 but two thirds of Holding Steady above 16,000 as if that should make us feel better. The s p is down by three quarters of 1 and the nasdaq trading at 4178. The jobless numbers came in at the lowest level in 14 years. Lets show you whats on the treasury market again, money pouring into the safety of government bond. , on the short end of the curve selling off. Reagan, and in mike the so called bond girl who covers debt markets. It looks like we are set for another wild ride although it seems much better in the u. S. Than europe. What are the catalysts. Obviously the concern about the Global Economy of europe and china going down front and center. The big question on peoples are these things being exaggerated by liquidation of among hedge funds and other big speculators. Ifis harder to prove that, you look at the wrong numbers, Hedge Fund Stocks are down, a lot more than the s p. Rally, there 2000 is something unusual going on. That suggests something besides the general selling of stocks. There are some derivative placed ranking the market down, but this is all speculative at this point. It is interesting that you have the smallcap rally yesterday. Are those small caps technically still a correction . Absolutely. Thehe huge volume also in other market are you surprised the front end of the curve is weaker . That is a parade pretty direct response to the data showing the jobless claims being the lowest in 14 years. The frontend has really done well over the past couple of days. This would give them ammunition. They will perhaps the fed will wait too long to the hike. As big a move in the equity markets they have been bigger and the treasury markets, what is going on . It is a flight for safety. The ebola case we saw in the health care worker, this is not an epidemic yet, it is very small and the u. S. , only a couple of people, but it is still raising concerns about the stability. Lets find out what is happening in europe, you are saying this to virgins between the core and the periphery. Thread is taking out. If you look at the spanish 10 year, there has been a big to virgins and it is definitely a flight to safety. Divergence. Ons it is definitely a flight to safety. This is market makers. Here we go again, markets strongly in the red again. The wild ride on wall street and where will they end up . Qe . E or not to that is the question facing the federal reserve. Will ask one of the decisionmakers James Bullard about the u. S. Central bank, that is where he works. Revenue up