Transcripts For BLOOMBERG Bloomberg Markets 20151120

Are half an hour into the trading session. Julie hyman has the latest and a different picture today thanks to mario draghi. Some also thanks to retail earnings. Seeing an overall lift in stock markets. All three major averages are trading higher. If you take a look at my terminal, Consumer Discretionary and utilities are the best two performing groups. Consumer discretionary gaining along with those earnings. Utilities doing well as we continue to see that slump in bond yields. We are seeing quite a lot of news coming out. It plans toouncing buy back 12 million of its share. Foot locker out with numbers that Beat Estimates. The shares are rising after it raised its forecast for the full year. The company is putting itself up for sale. That rising in terms of retail. More news in retail. Even though the Company Numbers missed estimates, it cut the fullyear profit forecast. Finally abercrombie fitch, a lot of optimism. It is finally taking hold. Hollister sales, up 3 better than estimated. Hollister makes up half of its overall sales. Lets move over to oil prices, commodity. We have been talking about how many days we have seen oil something for the month of november. You can see oil taking a bit of a leg up in the past few moments. A lot of negative commentary on oil prices this week, not to mention the weekly inventory report, and gold prices. The rally still continuing, lb it in a small way. Apparently it has been priced in. Vonnie quinn has more from the news desk. At least 20 by happen freed from the hotel. Three people have died. Lets go to our bureau chief, in our london newsroom. So far we know this is a much more brave attack than has been happening in the past. We had a shooting in march in the capital, where five people were killed. Nothing like this where civilians are targeted at a very popular place. The u. S. Has confirmed that , american hostages have been safely secured and taken out. The u. S. Does believe it is an Al Qaeda Linked group. Nothing on this particular scale. Does notind of thing happen. Most of the fighting has been. Imited to the north moving to the south, a populated capital, it is a huge step up. No one has claimed responsibility. Our west African Bureau chief in london for us this morning. French Authorities Say rates have been conducted. The interior Ministry Says last ,ight Police Conducted raids detaining 17 people and seizing weapons and drugs did 164 people have them placed in house arrest. The French Senate will vote to extend the state of emergency for three more months. They convicted spy is a free man. He had been serving a life sentence for spying. You can get more on these and other breaking stories 24 hours a day at the new bloomberg. Com. I am vonnie quinn. Thehe euro dropped for after indicating he ran out of patience with low inflation. Not subject not sufficient to achieve our objective, we will do what we must to raise inflation is quickly yes possible. I want to bring and brendan lives and our Frankfurt Bureau with some reaction. Some of the reports reacting to draghi, saying he sounds increasingly worried and desperate about the european economy, is that a right trail . Them i would say worried is better than desperate. If you are going to make a move you have to prepare the markets for that move. There is a very good likelihood that we move by expanding the asset purchasing program, possibly even moving the policy rate in december. If you want to move you have make sure people are going to move. Speeches. D dueling he said what we expected him to say, monetary policies isnt going to fix europe. We need more workforce participation. Draghi agreed with them. She said he said these things they are the only game in town. If he has said these things before, these are largely on the lines of his stance, why does it gain so much attention . It is so explicit the way he laid it out. Also inflation on his radar, core inflation is 1. 1 . It is nowhere near their mandated target. Inflation is at. 1 . The up the argument across these two speeches is how much of an influence is oil on inflation . 1. 1 if you strip that out, is still nowhere near their mandate. What he is stressing as he sees risks skewed to the downside. He thinks in the mediumterm people could get used to low inflation and we could get stuck with it. That is what is new today. Have the odds gone up to near 100 that the ecb is going to add stimulus in the coming weeks . And what the reaction will be in the markets leading up to it . Get to 100 ever because then the move has already happened. A movie today, but it wasnt a huge move. It was a psychological move. We saw the psychological barrier ofone dollar seven area 1. 07. I think this was new confidence. Yes they are becoming increasingly confident there will be a move. You cannot let the markets know. You have to let them know that is where we are heading. Betty it seems like we reacted to it here, maybe less so than in europe. Brenton, thank you so much. Rendon greeley Brendan Greeley come our senior correspondent. Much more ahead in the next two hours. We will be sitting down with three heavyweights. A corporate litigator, legal mind. A former pimco ceo. And a legendary investor. All of them on Bloomberg Markets in the next two hours. Wall street regulators have been stepping up their scrutiny. Andrgan, deutsche bank, credit squeeze are having their leverage practices examined. Reuters says walmart expanded floor by about 45 . Said the Service Definitely needs improvement. Facebook is breaking up a little bit easier. Memoriest to block after the likes turn to something else. You can always get more Business News at bloomberg. Sinces first studio album 2012 for studio album since 2012 drops today. Adele and sony are betting big that this business move is going to pay off. Joining us now is entertainment. Eporter lukas shaw didnt taylor swift do the same thing . She did it with 1980 nine, beyonce did with her previous album. Dell and adele did not put it on spot of five for a while. She held it back to increase album sales. This is a smart move. Projections range from 1. 5 million to 2. 5 million sales in the first week. If it hit 2. 5 million that would be the biggest opening since 1991. If it isquestion is going to have the same longevity. Adele, she had a strong opening but then she won all those grammys. She was the topselling album for two years in a row. What would she have left on the table if she would have allowed streaming services to take on an stream . Have have caused cost some money . May be some of the of people who would stream it will now go out and buy an album. The other one may be a more philosophical argument. She doesnt believe Free Streaming Services should get new music. Album if they her restricted it to pay. It is not clear how much his business and how much is taking space. Pandora is going to stream parts of this . Is actually one of the main points of contention. Pandora gets music through statutory licenses. Ace s pandora plays pandora pays a slightly lower rate. If you are a pandora subscriber, you can actually stream 25 . It is not on demand. Can come up. To mention 25 will be a part of it. Hello is always the first song. There are other winners. It is good for itunes because Digital Sales have been weaker. Target, which had some exclusive deal, expects to sell 700,000 copies. Anybody who is a retailer likes this because it is encouraging them to buy rather than stream. If you look online and see all the places that are selling the album for 1099. 400 build 400 million views in a month. Much more ahead in the next half hour. One of the top lawyers in the country is joining us. He will tell us why he is ready for a fight. Lineup toe new legal take on eric schneiderman. He will also weigh up on aig and the investors who want to break up the company. Is it too big to succeed . Betty we have an update on the attack and molly. I want to turn to our first word news headlines. this is thenie paper we are speaking of p it is published on the website that one doesnt have been killed. And Al Qaeda Affiliated group that has claimed responsibility, this is reported by reuters. We will keep you uptodate with all of the details on this as the hour goes by. It is time for the Bloomberg Business flash, a look at the biggest business stories. Shares are rising today. The Sporting Good Company Announcing a buyback program. Nicely splitting its shares. Coming off the most profitable year ever. Shares are soaring. Top by sales at its hollister unit. That it isshows starting to take affect. Showslysis of u. S. Stores the bases growing far faster than staffing. Decade,open in the last expanding space by 45 . Walmart said Customer Service needs improvement. Always get more Business News at bloomberg. Com. It etfs are now 3 trillion in assets and account for nearly 30 of all equity trading volume. Julie hyman is standing by for a deep dive. Is a very timely deep dive. Are starting to pullout money from bond etfs. He is bloombergs etf analyst, so lets start with what is happening now. It is the same thing happening in bonds. , peopleseen bond yields are selling bonds. Eople are im not saying this is another false alarm. There is a threat of a fed rate hike. Expected we see a lot of money coming out at jfk. That means the investors are a little spooked. In addition, money coming out of why, of shy. This makes it different were money moved to the short term. Partsis coming out of all of the curve. Them if you look at the bond market on the longer end, we have seen people coming into the 30 year, because the fed has emphasized numbers on the table are going to be very gradual. That gradual view reflected in bond etf . We are seeing flows to aggregate bond etfs. They are still allocating money going in there. That also saw about 500 million. All of the different areas have seen uploads. Run me through some of where some of the flows are going. A quiet trend is in maturity bonds. Way to an old school play rising rates. 2017, they were actually etfs that matured a certain year. You actually buy them in a set. You put them in the years they have where the rates are higher. It keeps buying at a higher rate. It is plain vanilla. There is nothing funky going on. There are leverage etfs people will use. Listen to the stat on the target bonds. They only had 1,000,000,002 years ago. It was only 10 two years ago. It makes sense that they go to the interesting environment. There is a hedged one. Packaged the one trade for you. The pro shares investment great Interest Rate hedged etf those long Corporate Bonds and short twentyyear treasuries. Institutions have been doing trades like that. Essentially what you get is a duration of zero without any Interest Rate risk at all. In the past month and in any window, these outperform. These are the equivalent. If we see the rates continue to sort of plain vanilla twins, you are going to see a lot to these. Really interesting where the money is going ahead of that december meeting. Sending it back to you. On television, david boyd has defended from the likes of now fighting for draft kings and pimco. He is joining us in just a few moments. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Betty youre watching bloomberg television, im betty liu. Lets start with first word news this morning. Bonnie vaughn vonnie quinn has more from the news desk. Vladimireek begin with putin and president obama. They agree on bombing the terror groups oil. Obama has refused the russian leaders offered to courtney, but the u. S. And russia are both targeting the Islamic State facilities. That is where the group gets much of its fronting funding. Inquiries to the army website day gone from 500 to 1500 a. The french army currently has 112,000 troops. This weekend, nato is testing alliances ability to defend against terror attacks cyberattacks from rogue states. Nato countries are concerned that terrorists are combining cyber warfare with more conventional tactics. The senate hasnt indicated whether it will take up the bill that temporarily blocks syrian and iraqi refugees from entering the u. S. The house passed the measure overwhelmingly yesterday. Has puteaker paul ryan off the polls from the refugee Settlement Program for six months. President obama will veto it. Some u. S. States arent just opposed to new Syrian Refugees resettling interstates. They also want to take a close look at the ones already living there. Bobby jindal has ordered police to monitor 14 syrians for threat. Is investigating 59 refugees living in the state. That is a look at first word news right now. You can get more on these and other breaking story 24 hours a day on the new bloomberg. Com. From the bloomberg first word us, vonnie quinn. Betty vonnie quinn at the news desk. A storm over Fantasy Sports. Will knownd fanduel my things getting whether they will have feast or famine for fans in the biggest market in new york. They are set to square off before a judge in manhattan bit on the member 25th. While fanduel has been playing a nice, drafting is ready for a fight. Drafting is making a big that we are joined by david himself in the studio. David, great to see you. I know this is front and center for you, Fantasy Sports. Why have draft kings, why have they decided to be so antagonistic . David they are not being antagonistic at all. All they are doing is what they have been doing for years openly in new york. For more than 80 years, daily Fantasy Sports competitions have been authored offered to new 8 years, 48for for the last four years or so, by draft king. No one ever suggested, not the Attorney Generals Office, not in the public officials, no one ever suggested that these games were in any way a legal right not a hint of that. Betty until they started making hundreds of millions of dollars. David that has been going on for a long time. Whether you have 15 million or 20 million in entry fees doesnt determine whether what you are doing is legal or illegal. This is not something that was not open. Everyone knew what was going on. My children, i suspect the children of some of the people in the Attorney Generals Office regularly play this game. Betty they have been on a, pick their fantasy players. You mentioned the smaller players. Order fromand desist the Attorney Generals Office. Im not sure that is exactly accurate. For example, yahoo , the number their player, is continuing to operate. I dont know anyone other than fanuel that has suspended their operations good most people like draft king who believe their customers enjoy these games only to play them it is a form of entertainment. Betty i agree with you him about why not hold off and say we will sacrifice a few days or a few weeks of operations until it is very clear in new york before restarting again . David remember this has a very clear in new york for eight years. Ordinarily, you dont change the status quo until you get a change in the law. The attorney general can change his mind as to whether or not this is legal, but he cant change the law. That is up to the legislature. All we are saying is what any business would say are any business would say is if you want to change the law, go to the legislature. Dont do an aboutface and say we had to turn off your business returning on and turning off a business is not as simple as turning on a light switch. We cant just say we are going to close shop for a while. Betty what is a good copper mice . Compromise . David i think a good compromise is what, for example, Massachusetts Attorney general is trying to do. Massachusetts attorney general has been looking at this a lot longer than the new York Attorney general. Attorneymassachusetts general has said is that this is obviously not illegal gambling but there are issues that need to be addressed. We dont agree completely, obviously, with what the Massachusetts Attorney general wants to do in terms of radiation, but we recognize that that is a sensible way to approach it, a middle ground. Betty she had said there is limits on advertising to people 21 and over and other types of restrictions. David, lets move on to the other cases that you are working on. , whatpresent pimco theater and drama is going on in the filing by pimco which you prepared . Throughout the case, you said it is reputational warfare. You do not give up easily. What is go to trial . We dont think it should go to trial. Whether or not this is a legal case is something the judge is going to decide. As we have said in our papers, this really is not a legal case. This kind of battle over betty why is a not a legal case . He said he said . David it is an argument between a legendary bond trader who founded a great company, pimco, and the company he founded over who said what, it is always difficult when a founder doesnt want to abide by the rules that everybody else has to abide by. Company, he the left the company in a situation in which i think is rotation suffered some his reputation suffered some damage. He wants to cover the damage. That is understandable from a human standpoint. That is not the place to do that. The courts are the place to decide legal questions. Betty are you confident this could be settled . David i dont know about settled, but it ought to be resolved. This is not the kind of argument about a founder and its former company that really belongs in court. Betty do they have a case to countersuit bill gross . David i think there are lots of arguments that can be made, lots of claims that can be made. Pimco would go on and do what it does best fun, andbe a great, mr. Gross will understand he ought to get satisfaction from helping to create that company and not trying to tear down. Betty david, youre also on the word of theranos. Why dont they just publish their data . Quiet the speculation . David remember that they have published more data and made more Information Available than any of the other lab companies. , and part because of these arguments that are going backandforth between it and its competitors, is being challenged to do things that no other lab company is doing. Their nose is doing that. For example, let me give you an example. No other Laboratory Company submits its tests to the fda. Theranos does. That shows the confidence they have in those lab tests. Betty clearly, even if they published right a bit of data, that is not enough to satisfy the questions of the medical community and the Science Community have. They say these claims are outrageous. If proven true, it would be enormous. Why not publish the data . Data is being published. That is why this is frustrating. With all due respect to you and the press, what you do is you see an article in a place like the wall street journal and you assume that it is true. Hat becomes your baseline not the facts, not the underlying facts of what is actually happening. Os bungled theran their Committee Case in . David that is another problem with the press. You assume that if a company and a newspaper have a disagreement, somehow, the company must have bungled it as opposed to the press bungling it. This is unfortunate, and im a great fan of the wall street journal, this is one where they are way off base. Betty they are factually incorrect. David they have their facts wrong, basing their stories on a series of Anonymous Sources. Not Anonymous Sources were you have an insider you are trying to protect. This is where they are simply repeating what competitors have said and refusing to identify who the sources are because they dont want the readers to know that what they are reporting are simply attacks on theranos by its competitors. Betty the story is out there, the people have this year. Could they have done a better job afterwards and addressing what they see as complete inaccuracies and mr. Visitations and misrepresentations . David look at the facts. , universitynalyses of san francisco, people all over the company, desk country, doctors, hospitals. One thing people lose sight of is that this has been in operation in arizona for a year and a half. The wall street journal betty they have stopped their operations, right . David again, they havent said that at all. They are continuing to operate right now. Is therehappened hasnt been further expansion. What is going on is still going on. There is so much about information out there. So much false information. One of the frustrating things is that it is very hard for a company to get these kinds of facts out there. People are much more interested in the sensational charges and the negativity than what the actual truth is. Betty david, we are going to set the record straight on some other companies you worked on including aig. Nobody knows aig better than david boeis who has worked on that many years. In our next hour, we are setting down with the format simcoe ceo. Buyinghe best opportunities are. Those interviews and much more coming up. Betty i want to give you an update on the situation in mali. Recoveredhave been from the hotel and the gunmen are no longer holding hostages. In the meantime, it is time for a look at the other business stories in the news right now. For the second time in 14 months, the u. S. Is making it harder for companies to duck taxes by moving abroad. They could ease the tax bill by moving their headquarters to ireland. These deals called in versions are a hot button issue in washington. You can always get more Business News at bloomberg. Com. We are back with high profile lawyer raymond boyd. David boeis. Do they have this power . David whether they have the legal power to do it i think is questionable. The real problem here is this is a structural disconnect. You ought not to have a situation in which you have these kinds of incentives for american corporations to move abroad. You have to have a way to rationalize a tax system so that they want to stay here. Herecant stay economically. You dont want this kind of situation where you have a big savings if you move your headquarters outside of the United States. That is not rational. Betty someone who has talked about Corporate Tax or form is Hank Greenberg, the former chairman and ceo of aig. You worked closely with hank, on the case right now against the federal government. I am curious. You dug in and know how this company operates. What do you think of a breakup of the company . A breakupont think makes sense. The problem with aig to the extent to which it has a problem is the fact that it was forced to sell off its crown jewels before. During the crisis. As hank paulson has set a number of times, this never would have happened if Hank Greenberg had stay there. He was managing the company in a way that maybe company the most Outstanding Insurance Company in the world. People say is aig to be to succeed now . When hank is running it is twice as they come right . Most it was the successful Insurance Committee for decade after decade after decade. Betty what was a back then that worked and white cat it work again . Why cant it work again . David i think it can. You need the right is this components, you need to add from the critical mass, and you need the right management. If before, what was it it is not too big to succeed, what was it before that worked . David i think what worked before was that you had a great set of assets. You had some Outstanding Insurance Companies in the world come all over the world. Byintegrated company run somebody who i think is a phenomenal manager. I think everybody recognizes that when Hank Greenberg took aig from something that was less to 1400 million billion company. Betty do you think Hank Greenberg could go back to aig . David he wont go back, he has his own company. Betty is he interested in buying any parts . David i think if they are selling he might be a buyer. Is to aig, he would like to see it succeed, he helped create it. He has enormous loyalty to the employees, many of whom are still there. He would like to help in any capacity he could, but he is not interested in going back and running the company. Betty short of breaking up aig which is something you dont advocate, what do you think it satisfy the active investors like carl icahn and what could be a come from ice . Compromise . Investors need to look at the long term. The current management needs to begin a chance to maximize the value of those assets. There are tremendous assets there. Those assets dont get more valuable by being split up and divided. In fact, i think that, if anything, one of the problems that aig faces are the loss of some of the parts of aig that help make that also effective. I dont think it would be desirable to sell it off. Off andalways selling buying. In other words, a company like that always falls off assets and acquires more assets. If you are talking about net attrition, net investiture, that would be a mistake. Betty thank you for sticking around. David boies with me. Much more ahead on business markets right now which have gotten a jolt in europe with the ecb. Abigail doolittle is live with the nasdaq with more. Looking at the top performers, having a. Abigail stocks overall are higher. We have to stocks significant higher on strong earnings reports. This retailer beat Third Quarter comparable sales and earnings handedly. The company also boosted the fouryear profit slightly. There is lots of positive commentary other good some are saying this is a quality Third Quarter beat. The guidance should prove conservative. This stock is currently having its best day since january of 2013. Another earnings winner into it, maker beat fiscal quarter estimates. The company is saying they plan to make between 17 and . 20 in the current quarter, well above that five cent estimate. The momentum is being driven by an acceleration in cloudbased products according to the ce oh. Whether the company gets back to growth and is going your tony 16 as is currently planned. Betty Abigail Doolittle live in the mastec. Still ahead on Bloomberg Markets, shaken, not stirred. They drink mixture that is perfect for the holidays. Now hitting stores. We are back with the cofounders right after the break. Betty alternative beverages are a hot thing in a new cocktail mixture is shaking up the mixologist world. Watch out skinny girl, the women behind the new venture are joining me now. Christina and jennifer. They had just taken the beverages from online to stores michael foods. Thank you so much for joining me. Stores like whole foods what is the thinking behind this . I feel like there are a lot of things like this out there. There are a lot of things in the better for you category, but nothing in the cocked of mixer space. We differ in a lot of ways. There is no alcohol in there so you can choose what to mix it with. What is your spirit of choice, or if you want alcohol at all. It makes a great mock tale. We didnt want any sugar in it. I am type one time at a. To find a cocktail with not a lot of sugar. Betty who are you targeting . Women like you . Christina we look at our market as being anyone who is looking at the life and saying i want to be more fit, healthier, i want to embrace the wellness trend. I want to have a lot of fun. Cocktails are about celebrating and socializing and having fun. We look at our market as been quite broad. Betty it is certainly the holidays, people are looking for drinks. Why are you taking it off of online . Why are you going from online to being in stores like whole foods . Christina we want to be everywhere were people by drinkard auto beverages on solid online. We work surprised how great we did there and the other delivery challenges. We just want to make it easy for people to have a great cocktail, especially over the holidays. We dont want the fuss. We made it super simple. You dont want to spend a ton of time behind the bar. We are about the convenience. Betty what is the edge to the competition . Kinny girl is established dont forget the red bulls of the world. They are out there, they have the shelf space. How do you compete the shelf space . Christina one of the things we look at is how to introduce people to the product . This is a total different cocked on mixer than anything like skinny girl or red bra because product, alnatural no sugar product, and its about having the flavor first. Taking all the wonderful cartels and putting it in the consumers hand and saying you, too, can make it. Retail, wees to think about ways that we can introduce it in an unexpected way. It is about different shop placement. Discovering it next to produce. But he had welcome all i, avocados that you are about to make an seeing and allnatural product. Seeing the guacamole. Ty we cant help notice steve ross is your dad, have you gone to them for some support here . Jennifer they have been great mentors of hours. All along, my dad has always told me to do something that im passionate about. This is something to they are biggest cheerleaders. A like to give us a few ideas. Sometimes we listen to them and sometimes we dont. Betty what ideas have they given . Any in particular . Jennifer they are about distribution. Get out there and move quickly. Christina to dream big. We think this is something many to be pervasive and out there and that is what we are going after and we are going to create. Betty thank you so much for joining me. Mixed and much v my head. You want to watch my miss my interview coming up next. Betty it is mende in hong kong, 4 00 p. M. In london, midnight in hong kong. Welcome to Bloomberg Markets. I am betty liu, here is what were watching at this hour. A gunman strums a Popular Hotel mali leaving at least 18 dead. Reports of moments ago say the hostage situation is now over. The mystery remains on who exactly is behind the siege. Former pimco ceo is telling us with the square ipo and how the company could have raised more money. Were also joined by another big guest. Mario will tell us where he sees the best buying opportunities here and in europe. We are 90 minutes into the trading session. I want to head to the market does were julie hyman has the latest on the markets. Mario draghi saying he will do whatever is necessary to increase inflation rapidly, he said, in fact. This is a reiteration of what he had said before. None the less, he does seem to be giving a list to risk assets around the world. Stocks here and the United States are higher. I wanted to talk about the effect is having another aspect classes come as well. What is interesting is you would think that we might see 10 year yields or yields generally in the u. S. Treasuries moving this commentary from mario draghi. That is not what we are saying. We still have a perception that even though rates are going up in the u. S. , it will be a gradual pace. A little bit of a downtick in those rights today if you look at the two year yield and what we are seeing there in terms of action. , but downhange slightly. What is notable is what is going on with european sovereign debt. Germanys 2year note, the yield their reaching alltime lows. The reaction over the past year is a record low for those german two years. At the same time, the euro is doing what you would expect. 106. 72 it fell. Betty we have been discussing retail this morning, big gains in the sector. Julie that is the other big story in the United States. It is a bounce back because there has been a concern about retail recently. The results have been uneven. There is more positive news is mine. Abercrombie fitch are reporting sales that Beat Estimates that beat optimism about the turnaround that has been in progress for quite some time. Reports coming out, raising their forecast, the have been concerns about demands of raising good to particular, especially because they are warmer than seasonable weather. Cabellas is considering being put up her spell, along with bass pro shop. This has been talked about for a month or so with sure is moving up another 9. 5 . The newslie hyman at desk. Lets check in on bloomberg first word news. Courtney donohoe has more from the news desk. Thetney we focus on mali, latest headline from the deadly standoff today in the capital of mali. Asp is reporting now that to them and have been killed and that at least 18 hostages were killed in the attack. Lets go right now to bloombergs west Africa Bureau chief, he is in our london news right now. Give us the latest of what you know. As you just said, there have been 18 bodies that have been recovered. We also know of one belgium diplomat it was most likely therefore peace talks involving separatists in the north. Two up a linkhat groups from the north that have been fighting it for four years have kinder spots ability three mauritania newspaper. We are starting to get more about the details that are the most brazen ones in mali since the warranty doesnt solve happen. In 2013ch help the mali to repel the islamists. It is one of the most brazen. The u. N. Soldiers from france and other countries that have targeted now, this is 170 civilians in a Popular Hotel in the capital that is frequented by businessmen all over the world. Courtney put this into context for as. There have been attacks. We recently saw that in august. We have not seen anything on this scale. Cracks definitely not. That leads some to whether whether this is an escalation, whether this is group trying to outdo themselves after what they saw in paris last week. Whether it is people showing sympathy to the Islamic State or making sure that people know they are still on the radar and that they are powerful in ma li. Horny Andres Martinez in london right now. France says europe needs to pull himself together when it comes to fighting terrorism. The French Interior minister took a thinly veiled jab at belgium after investigators brusselst three residents took part in the paris terror attacks. Evidence shows that to be an intelligence breakdown that allowed the terror leader to roam freely, despite having warrants out for his arrest. After 30 years in prison, convicted spy is a free man. Earlier today, he left a prison in North Carolina where he is serving a life sentence for spying on israel. He was granted parole last summer. The case was a little sore point for years between the u. S. And israel. Political sore point. Betty that is first word news right now. You can get more updates on these 24 hours a day at the new bloomberg. Com. Thank you. I want to get more insight on a geopolitical and Economic Risks in the Global Economy. We heard earlier today that ecb president is saying the Central Bank Must act despite price gains as your faces an environment of weaker growth. Ourhe downsize risk for economy has increased in recent months due to the deterioration of the external environment. Demand,ook for global especially in emerging markets, has notably worsened. Uncertainty in Financial Markets has increased. Global growth this year will be the weakest since 2009. Betty joining us now for some perspective is a Bloomberg View columnist and the chief economic advisor. Do you think that drhagi was too negative on the outlook and europe . Is weighinghink he the Downside Risk and he wants to signal to things. Ecb is in the wit paradigm, that is, whatever it takes. It will push enter traits even more in negative push intertrades even more in negative territory and extend its qe. It said today it will act rapidly. That is even more devilish than dovish than before. What he is trying to do is curtail the Downside Risk. Betty is it all but certain that the ecb will be adding more stimulus . Mohamed you have heard me say it for months, now. They will add more while the fed in december. S what you will get and what we will talk about a lot is the notion of divergent Central Banks. Betty you see that divergence being priced into the markets, too. Does any of this make it harder, at all, for the fed . Here he is, mario draghi, talking about the risk in the european markets and talking about the downside, deflationary pressures. Mohamed its does make it somewhat more compensated. Why more competition complicated. The euro is at 106. At some point, the fed will stop worrying about the exchange rate. The answer, as always, as you expand your policy instruments and ring and more of what you can do, the fiscal side, the structural side. That is the answer to so many problems, including the complexity the fed faces. Betty they have always said they need washington involved, as well. In helpingvolved them along. They havent gotten that. Fed thent, is the going to then, even if theyre going to raise rates, going to temper that trajectory of rate rises . Inamed yes, they will, and three ways. First, it is going to be a very shallow path, secondly, a stopgo process. There will not be a hike every single meeting. They will stop along the way. Third, they will end up below historical averages. You absolutely betty but what i be . What will that be . Mohamed i think you will be around 3 as opposed to 4 historically. Vertically, they will leave that open and it will be stopped go and a shallow cycle. Betty you have some folks, Goldman Sachs included, that are saying this route that we have seen, this global volatility has really taken down emerging markets, we might by next year see a bottom to that. Goldman sachs said the 2016 could be the year emerging markets assets are at a bottom and start to find their seat, particularly given this divergence in the developed economies. Do you believe that . Mohamed i do believe that is typically overshot on the way up and down. I believe that in certain countries, russia was one, brazil, more recently, it did overshoot. It is an asset class for knowledgeable investors who have to be more tactical than i normally like to be. Where we go longterm is a bigger question. It is a question of whether the Global Economy is able to hold , or,o higher growth alternatively, we continue to rely on Central Banks and we end up with the risk of greater financial instant body. That is a critical question, and unfortunately, it cannot be answered today. That is why investors have to be nimble. Betty at his right. You cannot answer that question today. Is it too early to try to, as Goldman Sachs is doing, call a bottom in emerging orchids . Markets . Mohamed i dont think it was too early two weeks ago to call a shortterm bottom. We have sought the e. M. Bounceback impressively across the board where it is foreign exchange, local debt. I dont think that was too early because we overshot significantly in august and september. To make a longterm call right now, that is premature. Stay with us. Much more ahead on the next half hour of Bloomberg Markets. We will continue our conversation with mohammed because he wrote an oped today on bloomberg about what he thinks of the recent square ipo. They went public yesterday. In theond biggest Bank Netherlands returns to the market after receiving a bailout during the financial crisis. We will hear from the companys chairman. Plus, mary cavalli gives his and his outlook on the fed. Betty good morning and welcome back to Bloomberg Markets. I want to head to the market desk or julie hyman has a check on the company movers including Health Insurers after the United Health story. Julie the Health Care Insurers fell sharply yesterday. United health says it was considering pulling back on its participation in planes linked to the aca. They are coming out saying the weakness is a buying opportunity, the company has a lost cap on aca related products. They dont see these changes as material to the companys earnings growth. We are looking at admin shares this morning, one of the other stocks aetna. The company reaffirmed its for your forecast. There was concerns about the cost related to these exchanges for the insurance companies. And them is also reaffirming its forecast as saying anthem is reaffirming its forecast as saying it is when the insurers that is nothing back. Betty julie hyman at the markets desk. Joining us from california in the studio is mario cavalli, the founder and ceo, investor, staying with me for the next half hour. swant to turn to mohamed Bloomberg View pc brought today on the square ipo. Shares jumped 15 in their first day of trade after pricing below the targeted range. Mohamed wrote in his piece, divergent interests, misaligned incentives, and competing initial conditions often make delivering a successful ipo harder than many expect. It certainly shouldnt the left exclusively to the investment banks. Mohamed, why did you write this piece . What were you trying to say . Do you think that square bungled their ipo . Mohamed i dont think they bungled it, i think it is a reminder of how difficult it is to get an ip all right. You have a lot of misaligned incentives. I used to have the most heated discussions with Investment Bankers on issues whether they were sovereign or corporate. When i was a money manager. You have mario there, he can speak to that. Longterm investors and companies are interested in a successful ipo, the one that is not too volatile. The something pops 70 minute it trades as square did, and ends up 45 higher, it raises the question as to whether there is a better way to handle this ipo. What do you think, mario . Mario it is a science, not an art. Ed is right. Google had a reverse auction. That is not the way to go. There are a lot of ways to do it. On balance, when you have a bell shaped curve, 80 90 of the deals work well. I, as an investor, would prefer that if i want to going to buy something, nobody else wanted. That never happens. When i want something, i get a large percentage of what im interested in, i know i overpriced the stock. You did the same thing with the bond market. Betty where you interested at all in this square ipo . Mario no. It was off my radar screen. We were more interested in families doing financial engineering. Our analyst mike, but it was not an area of our core competency or compounded knowledge. Si what do you think from the fact that the stock clocked on its first day of trade it was still well below the present evaluation. Many people are talking about how these unicorns will be guided 30 less. Is that a danger sign for the markets and for the economy at all . Mohamed you have the best person sitting right next year to speak to the, much better than me. Mario i dont think there is any sign for the market at all. We go back to 1999 when you had com and they popped because you had uninformed investors tried to play the game. Betty why do you think there is a disconnect between the elegant private . And the private . Mario it happens. It is part of the free market process. You will get it right over a long period of time. Mohamed i would add that you have two interesting disconnect, private versus public, and the second one is what is happening and what is market happening to the bond market. If you look at the stock market, we will end up having one of the best weeks, if not the best week for the dow in years. This speaks to two issues. One is that share buybacks and nikes announcement of 12 billion again today is another indication of how important that is to the market, and secondly, as julie mentioned, the Central Banks, especially the ecb. That is causing a divergence, a decoupling, not only between public and private, but also between certain segments of the public markets. Betty let me talk about something that both of you as former active Money Managers and current active Money Managers can talk to. We talked to jack bogle earlier this week. Record flow into them. This is what he said about index investing. Jack the reality is that index funds will do better than entity managed funds. If you want equities, the place to go is the index fund spirit that is what is happening in the industry. Money is pouring into index funds. Morningstar data shows 450. Dutch 450 billion in the index funds. Going out of actively managed funds. Betty can you not wait until the fed raises rates . Maybe that is one active Money Management mohamed jack and i have had this argument forever. 1990 nine, they were buying cisco and they represent 50 of the markets. I like the fact they were creating these extortions in the market. Dont ignore the fact that jack ignores the fact that the virtues of the funds, they are selling a product. Wait until you have another august 24. Betty what about you . What marioagree with said. I would add something. It is not an either or discussion. There are some places where active management has been shown over and over again to add value. Imperfect markets. Emerging markets, for example. You want to be careful when you go passive, especially in the that market. The most highly indebted countries have the highest weight in the index. There are certain places where active management makes sense. There are other places where a more passive approach makes sense. Having that as an either or discussion misleads people. Mario i dont disagree. We are actively going in and starting. It is a business decision, not an Investment Decision to do actively managed eds that are not visible. Nontransparent. You talk to the fixed income market, i was addressing the equity market. The bubble was on the equity side. It is the same dynamics for all players. Betty hang on, we will have you in the next half hour. Great to see you as well. Former pimco ceo. We will be back in a few minutes. Betty moments away from the european close on this friday. Mark barton joining us from london for the next halfhour hour to drill down to the most important news. Lli is joining us from new york. You guys are taking the aftermath of what mario draghi said today. K we are, look at this. The biggest game for a while with the highest close were heading for an almost three months. Draghi does it again. We will discuss that in more details with the gentleman to your left. I have a great stat about mario. Find out if this is true. Over the course of his 39 years, his investments have averaged a 16. 9 compounded annual return. Is that true . Mario that is gross. We have had for down years and we will have more. On leverage, a great till end of a bull market for the last 40 years. Mark stock six up 600 by double figures. Smp up by 1 , do you keep on money into europe . Dont say anything. We will come back to get the answer from you shortly. We are also hearing from the abn betty he is smiling from your prior stat. Nobody could have said it better. There you go here dont miss our interview with the chief executive. Battle of the charts. Mark im coming to get you, joe, see you in a minute. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Betty welcome to Bloomberg Markets. London 30 p. M. In where markets are finishing the day and week. Mark barton will be joining us for the next half hour. Mark the biggest weekly advance in a month, the european close starts right now. Betty were going to take you from new york to london in the next half hour. Mark, kick us off with postmario draghi movements in the market. Mark the fourth day of gains in 5. Investors rushing off. We had the worst terror attacks in over a decade the vast friday in paris. Investors are shrugging off those, sending stocks higher. The best weekly gain in a month. Dont forget, the feds dictated the movement