after this hour dan is going to be breaking down how we behave, what we did. you end up not feeling very good. dan: now i'm self-conscious. vonnie: good morning. france preparing to extend the state of emergency that was declared after last friday's terror attacks. the french parliament begins voting on the measure today that allows the government to ban public demonstrations and carry out searches without warrants. statevideo, islamic threatens to attack times square. police say there is no specific threat. since the attacks in paris, new york has employed extra police across the city. when it comes to who has a better temperament to be president, republicans pick ben carson over donald trump hadbut ,when asked to can get something done, can fix immigration and manage the economy. those responses were from the latest bloomberg politics national poll trump was the first choice of 24% of republican survey. marco rubio third with 12%. you can get more on these and other breaking stories 24 hours a day at bloomberg.com. upt: take a look at features across the board after the fed minutes show that the federal reserve feels the u.s. economy is strong enough to handle a rate increase. mini futures up 7 points. if you look over at europe, if you look at asia overnight, it is just green across the screen. on the world equity index function, you can see that literally every single index on that top page is green. take a look at something really interesting i think is that some of the things we look at normally with the 10-year, for example, to see that the fed is going to raise rates and while europe is expanding q.e., normally you would see a lot of buying of dollars. , looksu see, the 10-year like investors are starting to pile into that. yields are down. the dollar has shown a lot of weakness. this is because investors feel ok about the fact that the fed is going to raise rates at a measured, slow pace. so, there is no reason to pile into the dollar and take advantage of rising interest rates here. stephanie: we got to dig in to this pfizer deal. valuing the botox maker as high as $150 billion. this should be the drugs industry's largest deal ever. one of the reasons -- i spoke -- this deal made so much sense for tax purposes. the treasury department is starting to look at this. is it going to block it? tried to do this deal last year when he tried to buy astrazeneca. he said, he does not see a way for a government to stop them from doing this. pfizer is a multinational business. they make tens of billions of dollars overseas. they cannot bring back unless they want to pay u.s. taxes. this gets them out of the u.s., gives them access to a ton of profits. lowers their tax rate. they're willing to pay some serious penalties even taking a little bit of heat from the treasury in order to do that. has been a major goal of the ceo. stephanie: let's talk about the heat. tax inversions are legal but more and more they are considered socially unacceptable, dare i say, unethical. where's the responsibility of a corporate? it is a deepink question because what you're really asking is what do we value? do we value shareholder value? do we value some things about society? really, kind of an experiment in which we got people to be in charge -- the manager for a bank. they could do all kinds of measures that are revenue enhancement in the industry but you could call them screwing up your customers. the manager of a virtual bank has a choice of which of those measures to use. in one case, w there only obligation was to maximize shareholder value. the other one we said, you're running the bank. the moment you add the statement, maximize value, all the sudden people find ways to use these unethical measures. the thing is that it's often self-serving. so, if you make a ceo get paid based on stock options, they find a way to do these things for shareholder value, but in fact for their return, right? so, there is a really complex situation. if you give people a reason to do it for selfish reasons, and you give them a way to do in a way that they can morally justified it. they use the justification of shareholder value to justify what is good for them personally. i would like to see a more objective company and say, what would happen if they were not compensated? would they still find it moral? david: dan talked about the forces at play. how big -- is it at this point? u.s. corporate tax rate is 35%. profit you make in the u.s. will be taxed at that rate minus whatever you're able to do. pfizer gets down to 25% globally. taxes abroad are much, much lower. allergan are based in ireland and they pay 15%. when you're talking about shaving 10 percentage point off a company that brings in $55 billion in revenue every year. it's a massive amount of money for pfizer. it is a huge boost and advantage for a company that lives in a lower tax -- i think we've seen numbers tossed around billion in tax in tax synergies. we have seen these companies, not just pfizer. a ton of companies have moved into these european tax domiciles. a trend we have seen going on in the pharama industry. this one would be the biggest one of all time but it is far from the first. stephanie: are you surprised by the pricing? he thought the deal would come between 325 and 350. maybe a year from now when the dust settles, you could truly realize the value. maybe 375. here we are talking 380. drew: it is not out of reach for pfizer. tax allergan is this situation. the way these rules work to get out of the u.s., you have to buy a target that is a large enough size to pass muster with treasury. so, there are not many of those things available to have the flexibility to do a deal. one of the things went pfizer tried to buy us to seneca, they ran into a ton of political problems. eca,r zeneca, -- astra zenca the u.k. government was worried that pfizer would fire all these british scientist. allergan has technically run out of ireland, but their offices are in new jersey. -- there are t very few companies of that size that did not present the obstacles you have on a nationalistic front. that is an extremely viable asset. allergan-pfizer is not the only news. square race 1/3 less than sought. 0hile match group raised $40 million. you have been following square. erik: this is what many people thought was going to happen to square. square had been taking down the targeted range for a deal for a while already, but this is in the doomsdays scenario for a company that is trying to go public. the company that had raised money at a rich valuation. a $6 billion valuation. jack dorsey also the ceo. tough market. there is no question for the market environment is very challenging. but to have the momentum and the optimism surrounding your company, which was very strong a year ago, all of a sudden evaporate at the wrong moment up pricingou end your shares below the very bottom of what you thought you could raise. stephanie: why did they -- don't they wait? ventures of their vc wants to cash out. there is so little momentum, they are losing money. the competition is intensifying. better to get the cash out now, than to wait for the possibility of might be worth less. sten, we areiete running out of business. there is too much competition. do you want to buy? david: we are losing money. erik: the criticism here isn't necessarily directed at the investors who are willing to pay $9.00 a share, which is what it sold it last night. it's the private investors who decided it was worth $6 billion a share in the last romp of the craziness as around the valuations in the private finance. stephanie: the final round of private investing is a classic fear of missing out. i would love to just be speak to the psychology behind us that people are racing because they think that these are unbelievable businesses and not looking at the numbers. dan: the fear of missing out is everywhere. facebook is giving us lots of -- it's about two things. stephanie: now facebook the company. the way people use facebook. an: it is about creating different reality that you can compare yourself to. so, if there is a great party and you do not know about it, no issue. but if there is a great party and you can find out about it, what do you have? i don't want to get into a statea in which i say to myself i could have done that. we compare cells to an imaginary state -- we compare ourselves to an imaginary state. imagine missing a flight by two hours or two minutes. more painful.s is not because of being stuck at o'hare with bad food. because you can imagine the reality. you compare yourself to that reality. that reality you cannot easily imagine comparing yourself to. there is a beautiful study asking who is the happiest? people who win the silver medal or bronze? what they show is the bronze people are happier. why? stephanie: happy to be there. dan: what are the civil people saying? years -- for four i could have been there. a lot of things about information create the possibility for creating -- for comparing ourselves. we fear that something will happen. we keep on checking. i do want to say one more thing about square. there's a principle called the pain of paying. so, imagine you go out to dinner tonight and you pay with cash or credit cards. they feel differently. one is you see the money going out. imagine owing the restaurant and people eat 50 bites and pay $50.00. i will give you a discount, half a dollar per bite. the bit you don't eat, you don't pay. i mark down every bite. people hate it. it is a cheap meal. when i teach people about the psychology of money. i bring pizza and i charge them 25 cents per bite. they eat huge bites. but the return -- now, square has the capacity to create very low pain of paying. you see money going away. you take a bite and say, there is money going on. what worries me about this technology is as long as we had physical money, we are constrained by it. now that we have digital money, there are ways to make additional money feel more or l ess pain of paying. we can get people to be more thoughtful. you can get people to be less thoughtful. are going in the direction of getting people to be less thoughtful. people do not register the amount of money. how good will that be for society long-term? it is gooduber now, for them to get money out of people without them understanding what money is going out. do we want to create electronic payments that get people to spend a lot without thinking about it? where is our future if that is the reality? erik: you are running a business. david: the pain of paying. drew armstrong, thanks for joining us. two interviews coming up on bloomberg today. latth group chairman greg balt joins us h ere. and jack dorsey at 10:15. from the new york stock exchange after the company begins trading. now it is time for global . we head to japan where the central bank kept its policy pledge unchanged. it is not increasing stimulus. this comes days after reports showing the country fell back into recession. jodi joins us from tokyo. increasedid they not the stimulus because they did not think they needed it? or because they did not think it would work? >> well, two things. first, there is a lot of thinking that the economy in the fourth quarter is picking up. recession as a result of contraction in the second and third quarters. there is a lot of thinking that -- inventory is one of the drivers of the weak gdp number. inventories went down is a good sign that companies may be needing to produce more. this is a massive amount of stimulus that the boj has undertaken over the last two years. it's unprecedented. and one economist told us they have done so much easing, and a bit more is not going to have an impact. said this in his press conference, they believe that they are on a path to the inflation target. david: explain that a bit. because they are showing actual recession numbers. what makes them feel so optimistic about inflation going forward? jodi: that is a very good question. and a lot of people in japan are asking that. prices fell in august and september again. but the governor said why this -- consistently. last month when he made his comments after they did not make any change in policy and again today. oil,thinking is,well, low when you discount low oil prices, we are moving towards the inflation target. no one in our survey think they are going to make their inflation target, which they have moved now to a year forward. but the central bank continues to make that statement. stephanie: thank you so much for joining us today. out of japan. now, we have got to talk about what is happening here. the market moving news out of the fed. members of the fomc waved her magic wand yesterday. a quick quote. the sense that while no decision has been made, it may well become appropriate to initiate the normalization process at the next meeting." we bring in our economist. that quote kills me. where are we already? >> we are at the point where there are very few things that can stand in the way. we have the november jobs report december.in few economic data releases that could really jeopardize that. so, market expectations are about 2/3 to 70% likelihood of a rate increase. we have had a lot of fed speak since that jobs report. all systems go for december left off. the minutes did not add much new information to that because we have heard so many speakers. what's new in the minutes is this discussion of the real interest rate, the neutral real interest rate for the economy. the minutes said that staff is suggesting it is potentially zero. we are at zero now. you have ice chair fis -- vice chair saying we have an accommodative policy. this is a big communications snafu. stephanie: but is also too much communication. dan, when do we get flooded with content that we can no longer make rational decisions a cousin or is so much information coming longerat us -- can no make rational decisions because there is so much information coming at us? how you go to men and say, worried are you about prostate cancer? no so worried. would you like to get a biopsy? people say, not really. . i am not worried. then, we take another group and we do a psa test. it is a terrible test. the data you get is terrible. it is ambiguous. you give people the test back and you say, we don't know. we measured you and now we know you do not know. now they really want the biopsy. so, what happened is that there is a -- state of uncertainty if you do not know you had -- i'm not that worried. the moment you know there is a number and you don't know it, it starts getting worse. stephanie: this is making investors crazy. you hear from janet yellen. two days later, you hear from seven members of the fed. it was easier when you knew less. david: more information does not make you better informed. the other point i noted in the minutes is they said, quite explicitly, if we raise sooner, we may be able to keep it more shallow. the sooner we get started, the easier it is going to be. >> this is the way of building a grand coalition among the policymakers. the hawks want to raise rates. since march and june of this year. the doves are willing to acquiesce to a december left off, because that means the fed will be able to go a lot slower. beenously, the fed have telling you we will raise rates at 100 basis points per year for the next several years. what we are going to see in december is the fed neutralizing the impact of the rate increase by signaling a much slower pace of increases in 2016. stephanie: i want to share a quick thought we got from wilbur ross. p.r. that has the preceded it, you would think it was the end of the world, 25 basis points. if that is all that has kept the economy going, we have nothing going on. stephanie: p.r. people need to start making decisions. >> the fed acknowledged as much of the minutes where they said that raising rates in december would be a vote of confidence for the economy. and really a declaration of success or victory over the financial crisis. stephanie: you get to take december off. >> i don't think so. i think we will watch closely to that jobs report. dan: in general, you give more uncertainty, people hate it. there is one exception. notes.s love if you get a love note from somebody and you don't know who it is fro that makes people much happier. we imagine a lot of things. interest rates, we imagine -- stephanie: we are going to save love notes for the commercial break. dan, you are staying with us. you're watching bloomberg . ♪ stephanie: you are watching bloomberg . breaking news. activist investor -- is urging yahoo! to drop a plan to spin off its alibaba stake. erik, you have got a lot of. erik: a few things to add. star board value activist investors shifting course, urging yahoo! to sell its core search and display business. and instead retain the alibaba and yahoo! japan stakes it wanted to spend off. -- spin off. it is threatening a proxy battle. we will look to make significant changes to the board if you continue to make decisions that destroy shareholder value. the proxy battle always in the background with star board. writing.in a direct threat to marissa mayer, the ceo of yahoo! it is only going to heat up. stephanie: stay with us. we have got more breaking news. ♪ i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. david: welcome to "bloomberg ." thank you for being here. let's get you some first word news. obama isresident doubting the russian optimism that they can reach an agreement with france and germany to fight the islamic state. the fries president has agreed to full cooperation and president obama wants to see proof that russian forces are focusing on the islamic state in his concern to russia is more interested in propping up assad. france is trying to maintain security. about 80 heads of state will gather in paris at the end the month for the united nations summit on global warming. a protest march is already been canceled. the more than 1100 caret dimon has been discovered in africa. andcan get more and these in other stories at bloomberg.com. stephanie: tom has a bad face on. you have a morning must read? tom: i do. business week is always smart and sharp. this is a terrific and important article on where the islamic state was years ago when we did not know what it was. barely touches the importance of this article. what i found important is the idea that they don't need a financial system. david: it is stunning the extent of their financial strength. they think it's $500 million per year they are getting from oil. then they have grain and wheat. and thegot the reserves banks. it's really stunning. tom: the reserves from the bank is the key thing. 90 banks were taken out when they took over most of iraq and that is the balance sheet strength would give them an exceptional financial independence, different from what john taylor faced working with secretary snow in 2001. david: they are very cash positive. even more disturbing is they are financially disciplined. they control their costs and don't pay their warriors much at all. talked aboutthey trying to cut them off financially. this looks like it will be tough. gethanie: you can't even your head around what they are and how they are doing it. i don't know what is going on financially with them but the thing about terrorism that is interesting is how much fear there is. i grew up in israel and we have a long history with terrorism. stephanie: i am going to interrupt you because a headline is crossing -- french prosecutor who was thepect leader of the attack is dead. this is the person we have been tracking all week long. there continues to be so much security around paris. we don't know more specific details where this happened but we have gotten this official announcement from the french prosecutor. excuse me, he was skilled in st denis. there is a body that was so badly shot up that they were trying to identify it. stephanie: this was a massive raid that the french police carried out in the early hours of yesterday. they have been doing dna testing so there was a body and that body has officially been identified. there we have it. this is clearly not over. one of the criticisms we have heard in the last few days has been against the media calling this individual and a few others the mastermind behind this. which enables them to recruit so many young people. the way weot change look at this? this is not a mastermind. >> let's think about fear for a second. imagine the risk of driving or walking in new york. the real danger is very high. there is no question that heart attacks kill more people than terrorism. the thing about terrorism is it is random, directed at you, and you feel there are evil forces at hand. if you drive, you feel like you are in control and you are not as worried. everything we can do in terms of framing this that creates the lack of control and the feeling makes usirected at us invoke this tremendous fear. it is completely out of proportion. that: it's a little like you have a concussion. the worst damages inside. the worst threat may be our reaction to the terrorism, not the event itself. tom: you mentioned israel. applying the israeli security measures to other western societies -- you are an important voice on this. is that feasible? >> i think it would be very hard. in a very complex situation, israel does racial profiling. tom: exactly. it's a chilling experience. >> on the one hand, it's a violation of human rights. as a society, we decide to do racial profiling and we put people in a category they do not therve to be and increasing cost of their lives. if we don't do it, the cost to everybody is incredible that we cannot do searches properly. how do we deal with this dilemma? i don't know but i think as a society, we will have to opt into a heightened level of security and giving some privacy. imagine when you go to the airport. tom: what you say is we need profiling at jfk like in tel aviv. >> something like that, we spent half an hour and maybe we should spend two hours. we are willing to take some other measures. a small act of terrorism can paralyze society to such a degree that we have to fight not just the risk but the paralysis. we want to move on and we mentioned oil and we want to stay on that speech and share this. lawmakers are looking to raise funds without raising taxes and they're turning to the strategic petroleum reserve as a potential cash cow. tapping into the american emergency crude oil could lose congress money. phil mattingly explains. cash,in the hunt for new congress may have set up the government to get fleas. they have zeroed in on emergency reserve of millions of barrels of oil to help finance new government spending. in fact, the latest budget deal requires the department of energy to sell 58 million barrels from the strategic petroleum reserve. that is over eight years. >> congress is tryi to make money and this will be the worst trade in the history of trades. phil: the worst problem is congressional price predictions for it to raise more than $5 billion, oil needs to go from $45 today to more than $70 by 2018, more than $80 by 2019, more than $95 by 2024. market is flow of the not the only potential problem. this is the least defensible way to sell oil into the market. if you do this for money, you will lose every time. phil: the specific timetable may leave government at the mercy of taxable oil traders. every scheduled sale is a sitting duck and traders have to get on the other side of it. sell into the sale and buyback afterwards and it's a direct transfer out of the american taxpayers pocket and into the returns for commodity traders. all negative, the budget deal included billions of dollars to upgrade the reserve facility. only 695 dollars -- million barrels in reserve and lawmakers have identified these barrels of oil as a potential pot of gold. that makes some lawmakers very uneasy. >> we are looking at this as nothing more than a cash machine at a time when we are looking for more money. i think this is wrong and i think this is irresponsible. . stephanie: thank you for joining us from idc. dc. this is classic government where they are making decisions based on politics, not economics and buying high and selling low, why? phil: the simple fact of the matter is they need money. it will give them some money. what they are doing is using predictions that are not in touch with reality. that is the way they will raise billions of dollars. they don't necessarily care what happens in 2018 when they start selling off this oil. they need to be able to say now in 2015 that this is what projections say we can raise, more than $5 billion over 10 years and that checks the box and they move on. stephanie: they don't care because they will not be in office any longer. david: that's exactly right and their main job is to get reelected. beyond that, it has struck me that their accounting methods are in need of help. they would have to do a write down and congress does not do that. they just express it through their income statement. it's like found money. stephanie: well the government ever be accountable? we are flabbergasted as business people. question about thinking about long-term is important. this is one of the biggest human weaknesses is to think long-term. we can say it's other people but we have to admit that all of us under save and don't always wash our hands and have unprotected sex. stephanie: it's not even 8:00 in the morning. about long-term thinking, it's not something that characterizes human nature. we make a town of mistakes. in the health care space, you think about how much our own mortality is caused by our own bad decisions. you take politics and you say our policy -- our politicians able to better think long-term? we have elections every two years and are we creating a system where they can? you want something that pays up in 10 years. do we have a system that can do it? a private company and someone owns a share and they can think long-term. get something that focuses on have a system that makes it really hard to think long-term. stephanie: we don't wash our hands, we overeat, we under save, and we have unprotected sex. david: that's not fair to us. phil mattingly, thank you to us. slidingealth stock is effort he may pull out of the obamacare exchange. more on "bloomberg the story coming up next on." ♪ stephanie: welcome back. it would be the biggest deal ever in the drug industry, pfizer is an advance talks to for $150 billion. they could relocate to ireland for tax purposes. and tinder begin pricing on an ipo today. matt is a unit of barry diller plusiac. about 0.25% of colleges surveyed expect tuitions to rise 3% next year. many of the schools have to offer deep discounts to attract students. unitedhealth group, the largest u.s. health insurer, says it may pull out of the obama care insurance exchange market and cut its earnings estimate for the year. shares are moving lower on the news. here were thus is megan murphy and drew armstrong. good piece be a very of news to the white house. this is news that is echoing what other insurers have said which has been the obamacare market is difficult to achieve the earnings they need on these products to make it viable for them. we will have to see how the administration reacts to this and what people will say. this has been a consistent issue we have seen where obamacare has been very successful at doing what it was intended to do in getting uninsured on to some sort of plan. in the actual market place from providing that insurance from the businesses that do it, it's a tough market to make any money. we have seen smaller players go out of the market and have seen huge players like united and and him continually expressed concerns about the margins available. this is a pretty big blow to the market now. stephanie: stay there and i want to bring in ceo of athena health, jonathan bush. what do you make of this news? >> it's not surprising. i think political pressure for the huge payers who do a lot with the government to play ball are free to act rationally. of the many little tidbits of obamacare it's that the product called health insurance was so tightly regulated that you could not do any product management or build a differentiated product. want aifically said we spreadsheet to choose the lowest number. who wants to play a commodity magnet game especially for assault -- a small number of lives that have to be individually customer serviced. it does not surprise me in the slightest. david: they say they may pull out so it's not a done deal. is there ae, where critical mass lost and undermines all of obamacare? who in the sponsor group you're talking about. we hope the commercials would drop out and there would be this great draft to a one payer movement or a draft a government payer into existence so those guys might be giggling a little now. the other alternative is to allow a little more product management and a little more variability in the products for sale. if you want to buy your own mammogram but we will cover other things and cut your premium in half. or if you want a cadillac, we will give you something else. those things are illegal under the new definition of insurance under obamacare. mayville they will get -- maybe they will get eased back into life. >> we have seen a lot of volatility in this market, will we see others that do the same thing? could there be a race out of these markets? >> as others leave, the calculus changes. it gives you more scale and and canys operate generate plenty of cash on not very much margins. i don't expect a run to leave but the game was designed by people who have not had a lot of jobs in their lives or been in entrepreneurial situations. stephanie: i don't think that's necessarily fair. you say the game was designed by people in government who have not had a lot of jobs? we put them in net position and voted for them. >> guilty, i voted for obama the first time. it was so romantic and exciting. i did not think he would go as far as he did. stephanie: as a member of the bush family, you voted for barack obama? >> there are 12 million people watching here. this idea that you give people multiple options and people would choose the right health care-it's crazy when you think about it. imagine i give you a choice of multiple health care and the amount of the deductible out of pay pocket, all of those things, what is the calculus you are supposed to do to figure out the right amount? we tried this out. just like the things we talked about earlier, people focused on the short-term amount rather than the long-term benefits of health. , in you give people choices this particular case in which you are supposed to reduce and is an unbelievable risk that could kill you financially, do we really want people to make choices? if you give people the choice, they say i want a lower monthly payment and i want to pay less for a co-pay and they choose things that put them at tremendous risk later. the idea of letting people choose assumes people can choose correctly. the health market is so difficult to figure out the right thing. difficult, wes so have to look at how the shares a responding. matt: shares are down in the premarket about 6%. it's a drastic slide. tradeot the premarket down $7.58. it's not just that it's pulling out, the company is saying many things are proving difficult. the reason it would pull out is because it cannot make a profit in this business. areou are an insurer, you used to weighing risk and charge appropriately. if the new law says you cannot do that, where do you go? stephanie: can you make a profit? >> we don't do any of this. we are more peaceful people. we take a piece of everybody's activity back and forth. we get a small percentage of the doctors or hospitals activity regardless of who they deal with in order for us to do the crap work. an information backbone than an insurer. we are unaffected by this. it's fun to watch. megan is in washington, these people did not make up the regulations in a dark room. they must've been talking to the industry. is this a surprise the administration? >> we have heard these murmurs for a long time about this earnings pressure in this market. there is no question that obamacare in terms of a commercial proposition is very challenging for big insurers and challenging for small insurers that went into this market. the administration will point to the success they have had and that's undeniable about moving long-term uninsured and people who were draining the health care system without any prospect of paying for it and moving them into insurance. there is no question that goal has been reached. these problems of the commercial pressure and who will provide this insurance. so many of these people are coming in and have long-term chronic conditions. one thing obamacare was designed to address was to allow those people to get insurance. they are elderly and have been outside the health system for years. bringing these people back is an incredibly difficult proposition commercially. that is what you are seeing is how we actually -- how can anyone make any money doing this and how is the system sustainable long-term if they cannot make money? it's a problem and they will have to grapple with it. david: i want to be clear about what they have said. the company is evaluating the viability of insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017. they may pull out, it's not a done deal. stephanie: it's a game. are we going to see other health insurers pull out? the arithmetic changes. they may want to stay in because there are more customers for them. >> that's right, they are in a commodity business and you end up with a small number of players. we saw this with the consolidation of health plans. if not just the obamacare marketplace. it's the entire insurance business. it's large really being pulled against the commodity magnet. i hope we will see other people enter the insurance marketplace not as health insurers but let's say as fall risk bearing health systems that will take on responsibility for your employees without bothering with an insurance company. there will be all kinds of new models of care that will start to emerge. my doctor prescribed some pain a month ago and i am still waiting for the insurance company to approve it. can he help? you have to get those guys onto athena. stephanie: thank you for joining us this morning. i know we have lost so much of our time. human emotion, right now your biggest take away? >> human emotions have some beautiful possibilities. it has caused us to volunteer and help other people. you see someone in trouble and you want to help them. is the thing that gets us to do all kinds of things we should not be doing. revenge, hate, anger -- all of those things and how do we get the good part of emotions without paying the price? stephanie: thank you so much. one of my favorites. you are watching "bloomberg ." ♪ >> the day the sky high tech valuations over, square releases plans for its new ipo. an activist investor told yahoo!, keep the alibaba shares and get rid of the internet business. started a fashion empire from her kitchen table. now her company may be worth as much as $1 billion. we will talk to her in a moment. ♪ david: welcome to the second hour of bloomberg . stephanie: just getting warmed up. here with us throughout the hour, founder and ceo of tory burch, the woman herself. david is the ceo of the tech economy. and he is a bloomberg contributor. >> worried about not wearing a tie. tory will decide. we will get into the news first with vonnie quinn. vonnie: organizing the terror attacks in paris, the man accused of that is dead. he was killed in a raid yesterday. there were reports he was plotting another attack. eight other people were arrested. five missions, among them infiltrating and obstructing, -- ecting vital overwhelminglyrs take ben carson over donald trump but they say trump when asked who could get things done. this is according to the latest polls. 24% of the republicans surveyed, carson was next with 20% and marco rubio third. 24 can get these stories hours today at bloomberg.com. news on oil. rt showsng show -- cha you live pictures now, an absolute drop-down 2% on concerns the u.s. has massive stockpiles. you the stockpiles are huge as far as what we're looking at for the strategic reserve ran out. watch this story. it will be huge throughout the morning. 3997, a massive story. features up this morning. we are still seeing gains, but about half of the gains we are seeing on the s&p many contracts now four points rather than eight. gains of 40 points on dow jones. we are now seeing gains of only 10 points there. in oil story coming through a futures. a couple of individual stock stories that are amazing this morning as well, edison has in nounsely volatile stock, -- now down 9%. largest solar stock in the u.s. stock last year and a worse this year, down about 90% since june. here after earnings beat the estimates. if you look at our new fast news products, you can see that of itstions to sell more cold press machine are not good for the holidays. finally, best buy, absolutely tanking in the premarket right now. estimates butles only by -- it posted 8.82 instead of 8.83 billion dollars. the man suspected of organizing the terror attacks in paris is now officially dead. i want to bring in our own international correspondent hans nichols for the latest. the author of these violent attacks is concerned -- considered dead. abdelhamid abaaoud was one of the people killed north of paris. previously, and why this took so long, it was because the bodies were so you live -- so mutilated. riddled with bullets. we did not know if there were two corpses or three corpses coming out of the squad very using as a safe house. secondly, the national assembly approved emergency measures for a state of emergency for three months. that goes to the senate tomorrow where it is expected to pass. warned thereister could be chemical and potentially a biological tax on paris later this year. later saying they do not have any actual intelligence and that was not based on any new threat assessment. moving the stories back to belgium where much of this was land in the neighborhood outside six raids have taken place there. he was the one who fled and corrected some of the vehicle. we do not know where he is here and we suspected he may be in brussels because he controlled at the border going in. a final thought, he was thought to be in syria up until a -- up until a couple weeks ago. it will be an interesting and potentially political and difficult conversation for leaders across europe. thank you for the update. two tech companies are about to be trading here in new york. square, which priced below its range at nine dollars per share, and an online dating company match group, which priced at the bottom of its range. i want to bring in emily chang here this is the first time we have had you in person or we have had you from san francisco. welcome to bloomberg . let's talk about those ipo's. what does this tell us if anything about the larger situation of tech startups? emily: think about shares privately, it is a big disparity. the question with square is, is it a tech company or a payment company? it is a payment company. people make comparisons to apple and google but you are really comparing two companies like heartland, first data. square has a strong core business like square capital and square cash, how much those will meaningfully continue in the business. you think about a multiple. there is not a multiple of anything here. they have never made any money. 56%,: it is growing slowing down. tory, you are on president obama counsel for entrepreneurship. this is a great company for startups for entrepreneurs trying to build a business. tory: i have heard people use it and love it. i have not used it myself that i have heard great things. emily: in san francisco, every cabdriver uses it. the expectation is that people underestimate square's position. the question is, how big is the market? it is not that big of a market. david: i have encountered it a smalld plenty of other businesses are they have good visibility and a think of paymentes not as a company but a small business automation company. jack dorsey's's primary thing. this says important things about stephanie: does that actually matter what the company does? has anyone in the last two years actually done their homework? possibly the investors are not doing enough homework. we are seeing traditional investors trying to get concerns at a time when interest rate are is aw, they think this gold mine, there is tremendous innovation happening in the tech community and am we knows it well and i see it every day. plus companies are worth more than $1 billion is crazy. many of these companies will never be close to the next facebook. i can tell you the comparisons to that company are almost always wrong. cases an absolutely unique of a global opportunity. >> thank goodness i did not do an ipo. tory: i will never do an ipo as long as i can help it. you are absolutely right. isn't it -- it, is not viable. market there is a big for it. i did there is a bigger market than you are commenting on. talk a little bit about why you don't want to go public. it is counterintuitive. people look at the market and say it is a dream. you have more control. tory: private is a luxury and we do not have to make decisions based on quarterly earnings per at we want to grow our company in an organic way, in the right way for the future. david: do you find many of them say i wish they could be in your situation? tory: maybe more now than five years ago. everyone wants to go public. we took onn investors, it is the first thing i said, that this is not in my plan. we have got to take a commercial break. you are all staying with us. we will share one more thing and go to break. hosts of late night into pocket squares. jimmy fallon and j.crew men's teaming up to bring you the pocket style, and iphone case and he will love this. j.crew is going through trying to do a reinvention tour. if it works. the photograph and look works. do you agree? tory: it is brilliant. stephanie: there you go. yahoo! yet again under pressure from -- star board. ♪ stephanie: activist investor star board doing an about-face. saying the risk from attacks is simply too good. emily chang, tory burch. about -- re talking emily: it is very unclear if alibaba does this, are they going to have to pay billions of dollars in taxes? will yahoo! have to pay taxes? is, what isquestion yahoo! without alibaba? in the minds of a typical wall street investor. it is a substantial company that does not show h menace amount of energy or growth right now. a major force in the internet economy not generating tremendous enthusiasm. emily: marissa mayer's time is up here and a lot of people are saying, let's give her time. are you over critical of mercer mayer? tory, marissa mayer is a target since she got in, she is going to have twins. and everyone is going out there. heavy felt like, being a woman, you get extra scrutiny? tory: of course i feel that fear of mercer would be the first to say that fear she is really smart and i really like her. i think women are looked at definitely and that needs to stop. do not think she would say it because she is always trying to pretend she is just facing ceo but she is getting tremendous criticism. they are saying if they spinoff yahoo! instead, they might pay less tax. hold on to the alibaba's shares and make the most sense for the company's investors. who would be a buyer for this? the last time i checked, the market valuation of yahoo! is pretty much accounted for, and they sell it for something. it is worth a fair amount. emily: that is why they are saying to sell your media business instead. they were saying aol ought to be the buyer at one point and now it will has been bought by brett -- by verizon. buyers.there will be maybe one billion or two. does spinoffoo! alibaba, then looking at going private. some of my sources are saying that would be very difficult for yahoo!. stephanie: dan put her in that .pot that is one thing they have done a fantastic job of figuring out how to manage this. now it seems that is not the case. i think she has generated more enthusiasm for these core businesses, just not on wall street. i still use their e-mail and a lot of their products. emily: you still use yahoo! e-mail? [laughter] >> both mercer mayer and to wall street. she has made a fair amount of investment. that is fun -- fair to wall street. i do not know of another instance where you have a strong internet ran that has gone down and come back up. does yahoo! mean something in your life? tory: yes. stephanie: you told every viewer that you have a yahoo! e-mail. zillions will be trying to find it. emily: the ceos that preceded her, they all faced a lot of pressure and tough question spirit i am rooting for mercer mayer and i want her to succeed, especially because she is a woman. than, it hasvalley been a long time and we have not seen many results. stephanie: one ceo we haven't mentioned who was responsible for alibaba. tory burch. down in our from now with the square ceo jack dorsey. when we return, we will dig deeper with tory about fashion, where she sees growth, and what her customers want most. join the conversation, send us a tweet. ♪ david: just over 10 years ago, tory burch launched a fashion trend for her kitchen table. -- from her kitchen table. it is available in 50 countries and some estimate it is worth as much as $4 billion. you built quite an empire. how are you expanding it? what is the growth? tory: now is time to look at the business. the world is changing and technology is making people think about, every company should be a technology company. the retail is changing. we are growing in europe and asia and the u.s. it is really measured growth. technology, does it make you want to pull back from brick and mortar? 108 stores when more of us are online. tory: i watched e-commerce and people thought i was crazy. they said no one would ever buy online. it is now 20% of the business. there will always be room for brick-and-mortar and it will be, how do we make this experience seamless and how do we make the customer experience. how do we personalize it? much of that 20% of your business is mobile? a big shift going toward mobile. that will be more and more important as time goes on. we are deeply investing into mobile. e-commerce, seven come -- seven countries. we are exploring as we go. consumers have become addicted to sales. it iswer has shifted and in the hands of the consumers where it used to be in the hands of designers and retailers who created the great product. how do you feel? tory: i think department stores used to control everything and then it became the designers. 2008, it got super promotional immediately and the customer got very accustomed -- accustomed to that. that is of promotions, what we have done. we were promotional at the right time. measuredo do it in a way as well. need to stay relevant and remain a brand that people care about. the end of the day, it is about products. if we do not have a good product, it does not matter how we are doing or how technology driven we are. it is all about re-engaging the consumer in a different way. much access to so much information, they are price shopping. if your parting with someone and they go on sale, there are so play.ifferent elements at we try to just do the promotions at the right time. your best product right now? new travel ballet, the mini. tory burch is staying with us. when we return, consumer spending. the broad landscape of retail. ♪ the only way to get better is to challenge yourself, and that's what we're 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. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. stephanie: a little bit gray but i will say still the best city in the world, that is midtown manhattan. we are right here in nyc. welcome back. hour, torys for the burch and i will welcome steve andan, former ceo of lumens also served as president of eddie bauer and brooks brothers. david: let's get started with this first word. the suspected organizer of the paris terrorist attacks have been -- has been killed. abdelhamid abaaoud died yesterday in a paris suburb. he had been linked to two failed islamic state terror attacks in france. a record influx of refugees. sweden has a population of 210 million. it is expecting more per capita than any other country. in u.s., atlantic city will run out of money and april according to the mayor. the new jersey gambling center is currently under state oversight. to atlantic city, he wants the state to have more power over the funds. you can get more on these and other great tories 24 hours a day. matt miller has more breaking data now. matt: pretty much in line with wall street estimates. 271 house and were the jobless claims. we are looking at continuous 21, 2,175,004 the time and he and november 7. both goals are in line with estimates. thettle bit higher than estimates, 271 versus 270. you can see futures coming down not in reaction to jobless claims. oil that just tank. i'm concerned the u.s. is just holding so much, everybody around the world. i want to get to this morning's morning meeting. blackrock portfolio manager paul ebner joins me now and he is a portfolio manager at the longshore global equity fund. paul, thanks for joining us. very interesting. you use an artificial intelligence system to read of nodes.ousands how helpful is it for you? paul: for the last few years, we have been investing in big data. we have been hiring people from silicon valley. they can take natural language and then extract information from it. it is something we find incredibly valuable. we get them to not just pay attention to one conference call but every quarter. 5000 reports a day. matt: as you are sifting through big data, a couple points you pulled out was that tone has health more positive on care and even though it is been reduced as little in positivity on social media. walk us through that. paul: that is right. often times, the change in opinion starts to trickle out in a language they use in the report. it is important to find the reflection point of where that starts to change and that allows us to position early for the change of the rating down the road or what we have seen in social media is while it is still a popular area for analysts and may have a positive tone, we have started to see the signs of the tone starting to become a little less positive. if that point continues, it could be a big trend for the state. about health care. a low point but has become much more positive. we can see an inflection point on health core and other things. what do you like that you are acting on right now? paul: a long stocks, that started the year short to the u.s. what we're seeing is basically it is the strongest economy in the world though it is still showing a much better sign of strength than europe, especially. have crowdedstors to european trades on the back of qe. on the other side of that, countries like germany, france, and the u.k., germany and france especially because the crowded eu trade has already priced in at ecb easing nuc names that will not benefit much from further easing already priced in. matt: fascinating stuff. thank you for joining us. back to you. consumer spending expected to slow in 2016 according to goldman sachs. where that -- will there be bright spots in retail? in the last few years, if you look at luxury prices, it got higher but prices have gone down . collect that is a loaded question. the people who have my will always have money. people with that kind of income by what they want when they wanted and they want to have it for their friends and for everyone else. it does not matter what the price is because there will always be a customer for the business. the rest of the population does struggle a little more. look at all the department stores, they are all getting into the price business. other people still shop off place. it is a lot of change and people are being trained. retails are training the population to wait or you could get it at this price or wait somewhere else. it is a whole dynamic change in the industry. youhanie: where are focusing the business? pushing high-end luxury or going to the mass-market? torre: we always have to keep that in mind. the idea was to look through a luxury lens and make it accessible. that is a great spot to be. luxury will always be a good place. we see this spot where we are doing a great product at the best prices. to see a pattern. do you see a pattern from your end in retail right now? >> i think retail is changing by the minute and it is interesting. technology is a big play in that. look aboutg to retail differently, about customer experience. it is all about the customer and that is driving it or us. consider selling directly from a platform like amazon where more people shop that it may not be your brand? toy: i sure we would be open different options be a we are careful about distribution. we always look at opportunities as we go. stephanie: when you look at michael kors, those are desirable brands but we are seeing a selloff. too many options right now? content is king. in terms of fashion, so much content. >> a little bit different. you have to look through the lens and stay there and not just fluctuate every minute what someone else is doing. they were very big and probably still are big in the off-price world. when you start selling to everybody to try to do profits, at some point, it will not work. that.ect example of be true to your customer and always keep your customer in mind, that is the most important thing. sell to you believe your customer is and do not just try to grow quickly for the sake of numbers. david: matt miller? matt: something fascinating this mine from a bloomberg news story. you take a look at retail stocks, it is a set -- a tale of two cities. this is the s&p retail index, doing pretty well. it looks like all is fine. in -- etf andtail it is down 9% this year in 2015. a was performance since 2008. the problem is here in the retail index for the s&p, they include amazon and they do not include amazon in such a big way in the etf. doings why they are poorly. also, thank you because loman's and brooks brothers are staples of my wardrobe. stephanie: the importance of technology, that has got to include social media and we have a twitter question. what is the biggest threat to your brand today and in five years? traffic has slowed down tremendously in the last months. an interesting phenomenon. instead of going to 10 stores, they're going to two. always evolution, thinking and not looking ever, and really just looking at the customer, and also, our team is the customer. that is the lens we look through. is one thing there going through the holiday season running the brand today, what would be your focus? everything you want out of the store at the right time and service your customer and it is a great experience. david: thank you for being with us. tory, please stay with us. could the u.s. treasury put the brakes on the biggest tax inversion in history? that is coming up next on bloomberg . ♪ vonnie: welcome back. buy third-quarter sales missed estimates. in its third year of a turnaround. it may pull out of obamacare insurance. united health also cost its -- ings estimate per year third-quarter shipments plunged 35% on a year ago. overall shipments in the quarter rose 15%. shares,arch group said 2.2%. stephanie? stephanie: pfizer says it is nearing an agreement to buy allergan in what could be the largest u.s. tax inversion deal ever. shares of allergan slid last night in extended trading after the u.s. treasury issued a letter saying later this week we intend to issue additional inversions.deter d.c..oins us in clearly, the statement made an impression. how big of a threat is this? let's get real about the ability to change law. zach: the treasury simply does not have the authority to stop a allergan ise one discussing. pfizer and allergan are already talking price right now. effectll already have an on the value. potentiallythem have to rethink the pricing of the deal depending on what they think. what treasury is doing is within their existing authority under the law, which is not that great, do anything bigger about tax inversions, you have to have -- ofge of an legislation inversion on legislation. that does not look like it will be anytime soon. >> i do not think the deal will get hampered by what treasury is trying to do. a lot of clinical maneuvering but i think pfizer will anticipate this. it may come into the negotiations or affect price going forward. given the uncertainty of what treasury can do and what the impact they will have, it is hard to see pfizer not having the models were these scenarios and what treasury is doing. they know what congress can and cannot do. they have been talking about this for a long time and trying to have some kind of tax reform. i think this is already considered in the price. stephanie: how strong are their lobbying efforts in d.c.? valeant making the point they are a target because they have no lobbying efforts. lotarmer just pharma has a of influence and that is unquestionable. regardless of that, considering it justhappening now, does not seem possible. it seems like pfizer and our again may be want to get this done so it is on the table, but treasuryind when the first cracked down on inversions, inversions still got done since then. it is not as though companies are afraid of doing it. they are willing to find the price. i do not see them as stopping the deal. david: they have gotten a bad name. stephanie: but if you are the ceo of a company -- david: exactly what is going to say. you must plan for tax. up $2 billionpass per year? >> talk to congress. you tell me. i think it is important. an important discussion we all have. clearly this statement from the treasury last night made waves. carl icahn recently made more ways pledging $159 to a super theseat would prevent specific kinds of inversions again. is all of this just noise? zach: treasury does not have much authority under the law because the law is quite clear about what sized company you can merge with a broad and take its tax address. changes nothing you can other than going back to congress and rewriting the law. thank you for joining us from d.c.. when we return, we are not talking inversions, we're talking good business, the kind we should all be doing, led by tory burch and her new program. ♪ david: today is women's entrepreneurship day. a big passion for our guest host today. tory burch has just launched a year-long fellowship program describing the latest program. tory: we have been working on this program. we will narrow it down to 30 businesses. they can be any business. what we are doing is we are giving the public a chance to weigh in on the businesses as well. we have narrowed it down with an extensive amount of work and we have already had hundreds of applicants as of yesterday. very exciting. once we do that, 10 entrepreneurs will be awarded $10,000 and that will go toward education for their businesses. the finalists will's -- will receive $100,000 grant. stephanie: what advice you specifically have for women entrepreneurs? tory: if you have a great idea that is unique and different, go for it and own your ambition and that is something i think women have a hard time with. . had a hard time a friend saw an article written on me and said he shied away from the word ambition. i felt i did and i really learned to be more confident and really believe in what i am doing. stephanie: what is the harder part of your business, entrepreneurship or the design side? tory: all of the above. it is excruciating at times. but entrepreneurship is interesting because you have to be flexible and prepared for anything. and i think it is not for everyone. it has been part of the business plan since day one and we knew we had to have a successful business until we have attraction and finances to start it we launched in 2009 and had great partnerships, one with goldman sachs and 10,000 businesses. we are doing a corporate -- cohort right now. a nine week program where they get education on everything. how patient are your consumers? if you have a bad season or a mistake, how long do they give you? tory: i think they are patient to a point. it is about authenticity. that happens with social media as well. a huge problem with when we were switching systems and we had no visibility on what was shipped and going out. you have to be honest and authentic and they were very patient in that instance. it depends we are very interested in customer service. ago, we werements talking there are brands out there that have taken names but they do not mean anything to us. how do you mean something to us? tory: it is all to me about pushing ourselves and evolving but that is something i am passionate about. i look at each question, proud of what we are done, and also where we are going. it is not necessarily about -- relevance is interesting, but hopefully what we are doing will resonate based on trying to evolve. -- ath-leisure, we are doing both pair there is a shift in the way women are dressing and it is changing by the minute. we have been working on this for the last three years. it has been very exciting. we will be opening a store in march. taking on nike? tory: we will see. we have an e-commerce site and so far, so good. you mentioned you wanted to wear it. you have three kids. it is also a younger aesthetic as well. it is functioning -- functional clothing. stephanie: thank you so much. still ahead, a ceo discussing the company's ipo. stick with us. ♪ ♪ (ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. stephanie: we are now 30 minutes d abt 24 conds away from the opening of the bill. and i'm stephanie role. lever of precision. .e have a lot to talk about let's take it to vonnie quinn. vonnie: the suspected ringleader of the paris attacks is dead. tests have confirmed that abdelhamid abaaoud was one of two people who died during a raid yesterday in a paris suburb. paris -- french warplanes are bombing. stateave hit 35 islamic targets since last friday. americans held hostage in yemen are free, brought out with hol lande. the vital steins of america's job market -- signs of america's job market look good. -- onn get more and these these and other breaking stories at bloomberg.com. : oil fell off a cliff -- matt: oil fell off a cliff. traders tell us this is because the contract rolled over, the last day of december into the january contract trading. it has to be said, there is a glut of oil around the world down stored and oil coming as a big effect on today's trade. futures were much higher earlier. when we kicked off the show at 7:00 a.m. they were up 40 points . now they are down seven points. the 10 year, i find this absolutely fascinating. minutes showed they were ready to raise in december. we got the jobs number after, a huge positive surprise. yet the minutes, people took as really a dovish sign. as a result, you see buying in the 10 year. you see buying of gold, selling off of the dollar, so that is very interesting. the market expects the trajectory to be low, as if we did not know that to begin with. best buy is a big story, missing revenue. they were looking for 8.83 billion in revenue and they came in at 8.82. also concern about the holiday season pushing down best buy 10% in the premarket. speaking of concern for the holiday seasons, gadfly has concern for green mile -- green mountain coffee roasters. you can check that out on the gadfly button on your terminal. eurig has a huge jump in the premarket, adding about 1/5 to its value. it is an exciting thursday. will have another does go stocks to talk about when they start trading this morning. stocks to talk about when they start trading this morning. is casting at shadow on square. was the market range that fell short. datingroup, owner of apps cleared the bar but just rarely, selling 3.3 million shares. we will be speaking to match chairman greg blatt later on this morning. another interview you do not want to mess, emily chang will be speaking to square ceo jack dorsey, who also happens to be the ceo of twitter. stephanie: pfizer in advanced talks to buy allergan. we have been covering it all morning, for as much as 150 alien dollars, making it the drug industry's largest deal ever. the u.s. treasury department released a letter saying it is targeting tax and version deals. shares of both companies are trading down in the premarket. investors really are saying that shares are trading down, this is a buying activity. this is washington making noise because they need to, because populist opinion is so anti-in version deal. david: i think this is politics more than business. pay to rattlenot the sabr if your saber is a butter knife. stephanie: if they do not, it looks like -- it makes them look complicit. said: unitedhealth group it may pull out of the obama care insurance exchange market and cut its earnings estimates of the year. shares are trading more than 5% down in that pre-market. it says next year they may do this. why don't they just do this? the beginning be of a negotiation with the regulators. need to see now is who is going to come in after united health, if any of the other major health insurers will join the chorus, and the pressure will build. what they really want is for congress to take up the affordable health care act again and make the kinds of tweaks that were promised, and understood where necessary when the legislation was first passed . because of the interaction and gridlock in congress, that did not happen. stephanie: johnny bush said you did not -- will not necessarily see other insurers to follow suit. erik: those are for today only the three stories that matter. stephanie: you are looking at bloomberg businessweek. check out the images from the tehran museum of contemporary art. it holds some of the greatest art collections that have been artists including pablo picasso so and andy warhol or on display after more than 30 years when protests started. they put pieces of western art into the vault. step towardis a big liberalization of the regime in iran. back, we: when we come are going to be sitting down with had me nick they -- henry mcveigh. if you have questions, send us a tweet. ♪ erik: you are watching bloomberg . europe, a continent already struggling with the migrant crisis. trouble in the u.s. ipo market and doubts over the equity valuation. here with a few ideas of how to take action or not is henry mcveigh. welcome. henry: thank you. erik: had you been here just a couple of weeks ago there is no question i would be asking you about the migrant crisis implications short-term and longer-term. what weave to overlay saw transpired this weekend with the paris attacks. henry: it is a human aspect. erik: no question. henry: let's put that aside. if you take a country like germany, they are bringing in about 1.2 million migrants this year so if you think about that, about 12,000 euros per migrant, that is stimulative. the economics community has said that is a positive. something we have been focused on at kkr is what is the social and political component. i think you are going to see the ecb is going to lean in so you will get more negative deposit increasedecember, buying, and make equities more attractive. on a longer-term basis, you do have to question, does the velocity of money and travel slow down as you direct permanent or semipermanent walls. last time i was on, we talked about europe as an interesting destination. we are still talking about equities in europe. the second thing i would say is that the restructuring of financial services industry right now -- stephanie: european banks getting smaller? henry: it is another leg up. the u.s. banks will restructure, the european banks will restructure. there is a banks, change in management, they will shrink their footprint. that is creating a lot of nontraditional lending opportunities and i think you are seeing that go off market. i would call that private lending, or traditional things that may have gone to a bank that are too complex is going to a private equity firm or a hedge firm. stephanie: i feel like we have been saying that for the last four years. henry: what i'm telling you is it is finally accelerating in europe. , thisk there was a huge is going to be a big opportunity and the banks were not ready to sell. they needed equity. what is changing today, i think that for the first time we are seeing that take up and that is an interesting opportunity. erik: is there more of an opportunity for nontraditional lenders, whether they be hedge funds in europe, because of the fact that it does not really have a corporate bond market and certainly not one like we have in america? henry: a high-yield market in europe has grown exponentially so they are getting a high-yield market, but in aggregate i would agree with you. as the banks restructure and shrink their footprint, you will see more alternative avenues for capital, but the high-yield market is growing. europe will have a high-yield distress that they did not in the past, just given the size. i think it will be forthcoming in europe. stephanie: who is going to bring those european high-yield deals to market? they were the dominant players as far as advisory business, but if they are shrinking, is he going to be the jp morgan's getting bigger? henry: the data would suggest u.s. firms are gaining market share in europe, whether it is m&a, but i think europe will try to defend their backyard. the data will suggest on higher value added, you are saying morgan stanley's. stephanie: but you cannot defend it if you do not have the balance sheet and the bankers. henry: i think we will see how these new management teams to. some of these will just be execution. they weregards, trying to do too many things for too many people. erik: on balance, do you think it is a positive or negative for companies, clients and, that most of these banks, say for jpmorgan and citigroup, have given up ambitions of being global universal players? henry: in 2007, we got to a world where the light -- the banks were levering 30-1 and that is not good. when you talk to anybody in the fixed income markets globally, there is no liquidity. stephanie: and it is not coming back. cost: i think the friction to buy and sell on fixed income has become a major impediment, so i think we have gone from one extreme of overleveraged to probably overregulated, and the best spot would be in the middle or companies can freely use banks that if they want to do something more complex they can go off market but not do it in a leopard format. is that why we are seeing more hedge funds trying to do funding in -- henry: i think if you look at what is starting to happen, volatility is increasing. one of the beauties of our model is you want to have longer-term locked up capital so you can ride out the cycles. stephanie: we all want that. henry: but you have to put the infrastructure in place to do that. you have to put some throughput through that to justify 22 offices across emerging markets, developed markets. backther thing to tie it to the banks, a lot of banks are pulling lines from hedge funds to raise their profitability. you guys have documented some of this, so that is going to take some of the additional liquidity out of the fixed income market. cannot really transact in fixed income quickly because the friction costs are too high, so if you are looking to hedge, your only avenues are the s&p's or the mexican currency or the euro. s&p, weast month on the are at 2080 today. months have been extraordinary. it is very abnormal. david: henry coming you mentioned emerging markets. let's start with china. there is a slowdown in the rate of growth, growing but slowing down. you see a government intervention and nonintervention. and a switch from a manufacturing to a service economy. add that up, what does it present in terms of an investment? henry: it makes a challenge. fixed investment. traditional consumer, and high value added services. we havenally, i think set watch out for the fixed investment, the consumer is ok, and focus on the services. i was just in china at the end of september and that second bucket, fixed investment is definitely slowing. consumer, profits are not there. you may be selling things but profits are not coming through. stephanie: amazon style. henry: this is a great example. if you think about amazon relative to walmart, in china there was no walmart or target.com. it just went to alibaba and 10 sent. dwarfsket share gains what you had in the u.s.. you are seeing a lot of malls in china where they are having to become restaurant malls instead of retail malls. we have 16 or 17 companies in china and we are focused on the high-value added services. i think one thing as investors that we need to think about is not just the fixed investment but what does china and this current cd valuation mean for global trade? theink people are on to fact that commodity prices are down. investors, forth to let's think about the implications of global trade his we have lowered currencies around the world -- erik: relative to the dollar. henry: but the exports have not gone up. that is creating some dislocation and i think that is something worth noting. erik: what happens if the imf puts the one in the strategic drawing lights? henry: i still think it is going to move against what the government wants. ultimately they need to weaken their currency. if you look today at global gdp in dollar terms, there are only two parts of the world that are growing, the u.s. and china. everybody else has lowered the value of their currency so they are not growing. china is bearing a huge burden by being tied to the dollar. i think what they are trying to do right now is say, if the fed moves more aggressively we want some flexibility to ease our currency. one -- yuanting the into that basket, it gives it time to appreciate? you are expecting the government will have to come in and actively devalue the current city -- the currency? henry: what i am putting forth is, once it goes in, i think they will continue to let it devalue because they need to. there exports at the low end are less competitive and ultimately we are in a dollar bull market. stephanie: you are a tactical asset allocation guy. let's go regions, let's go asset classes, that's go. henry: starting with the european dividend equities. number two, private credit. lending to businesses where investment banks are lessening their footprint. credit.e: private henry: i think people will continue to see within the u.s., i think you will see what i would call secular growth stocks do well, google and amazon will continue to perform. ,umber three is japanese particularly midcap equities will perform well because i think it is a lot like the u.s. was in 2011, piles of liquidity but no gdp growth. dot drives corporate's to things and we are seeing a lot of interesting opportunities as a form there. a lot of japanese companies have a lot of cash on their balance sheets that ultimately make them cheap. those would be a couple areas to go. the other thing we get pushed on, should you be dipping your total back into emerging markets? i still think it is early. erik: even for a place like brazil? henry: i think so. there are a couple things we're looking for, one is valuations. two is that we have a mini crisis where the government says, we need to change, and the population buys into that. most reform areas, india, indonesia, rozelle, there is tension so you need to get everybody on the same page and see some flows and momentum. david: one country you did not mention is russia. could sanctions be lessened or reduced? henry: i went to a dinner last night and that was one of the themes. i still worry overall about their currency so i'm going to stick to what i know better. but i think there is the chance, if they come closer to europe on certain issues as it relates to isis, but in terms of investing, we do not do a time there. erik: quickly before we run out of time, outside of those secular growth stories what happens to the stock market? henry: if you think about this global rally, emerging markets started doing well and growth stocks started doing well. capital management stories, i think you guys were commenting on this earlier, not doing as well. you typically get a blow in growth and that ends the bear market. erik: and this is able market. henry: and we start a bear market. time to have your guard up. mcvey, thank you. match group will begin trading on the nasdaq. we will speak to the chairman, greg blatt, coming up next on bloomberg . ♪ i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. erik: welcome back, everybody, this is bloomberg . match group makes its trading debut on the nasdaq. it went public last night, pricing its shares at $12 apiece and raising almost $4 million. a business incubated and rolled up inside iac until all of a sudden it is the dominant industry -- dominant country -- company in its industry. here is match group chairman greg blatt. greg: thank you for having me. erik: we are all looking forward to how your stock trades, but why go public last night? the ipo environment is tricky. why was it important? ing: i think we said it motion and rethink it is important operationally to have separation from iac. of growingistory assets to a certain size and creating independence for it. despite what is admittedly a tough environment, we feel good about where we are coming out and optimistic that we will be well received. the market likes a company with a long history of cash flow and earnings, which we have got, 15 years. we are continuing that growth and we have this tender overlay on top which gives explosive upsides. stephanie: you also have explosive reputational risk around tender. there are questions, is this a sex matching site? given that you are now a public company and you have shareholders to answer to, do you need to make a management change? greg: i do not think so. i think there were a lot of inaccuracies and a lot was taken out of context in that article. i think he has created an incredible asset. erik: so he is a good businessman, but to stephanie's point, do you need to put a gag on him? aeg: i think he needs to be little more careful in how he speaks with certain reporters, but i do think a lot was taken out of context. erik: going public is a double-edged sword for any company but perhaps in the last few years more than not. what are the positives and what are the costs? greg: match has indirectly been a public company for a long time. i has been part of iac and have been doing the earnings calls for the past five years. instead of being indirectly public, we are directly public, giving us a sense of independence. own balanceour sheet so we think it gives us more flexibility going forward, and i think the incremental , arets of this form of insignificant. stephanie: the key to being a public company is growth. but if match works, they are going to be leaving the site. i am not leaving facebook anytime soon. there are a lot of ex-boyfriend's i want to stalk. --tinder, it should be one and done. greg: we have been growing for 15 to 20 years with the consecutive model. people actually do come on for a long time. people who are paying us turned first time payers and 50% people who come back. better or worse, people are living longer, staying single for a larger percentage of their life, and people use our products over the lifecycle. stephanie: does that mean you have big senior citizen gains? greg: we actually do have quite a large population. we have a product called our time for people over 50. we are evenly distributed from 20 up through 60 plus. david: a lot of us basically know your company because of tinder, how much of your company is it? greg: it is a small part of our business. we just started creating revenue with it this year. with match, we have been growing for 20 years and that is sort of the bulk of our business. the bulk of our revenue and the entirety of our earnings come from our products other than tinder. ark: i think match.com has fairly large profile. i had a profile on match.com 10 nder. myo, far before ti point, if you are on a site like tinder, you are not looking for your soulmate. greg: that is not right. tinder, because it has a younger demo tends to reflect the dating patterns of a younger demo. there are complicated algorithms. you get various information and use it to interact with someone. threshold onld the a second. -- hold on a second. greg: the first thing you notice is the physical appearance and then you go beyond that. erik: what about the risk that users is going to absorb from match and you will not see growth? .reg: that has not happened it is the biggest in terms of users. der's users are under the age of 35 so there is not a lot of cannibalization. people tend to use more than one product and our average is two products at one time. is a very high concurrent use product, and has been an entirely expansionary. stephanie: what about the advertising strategy? greg: we have this huge user base of people who do not pay for the product. erik: how many right now? greg: 60 million global users. we now have 55 million nonpaying users. we have incredible demographic targeted information for our users that advertisers can use, and we think we will build a big advertising business. erik: what have you learned about mobile advertising from facebook? greg: they are doing an amazing job. in the early days, users were on the internet and advertisers were not. that is now happening with mobile. the publishers have figured out how to have good ad products. facebook is nailing it on mobile advertising and we market a lot with them. we think it is a big paid acquisition channel for us and an opportunity for us on the revenue side as we start to mobilize. stephanie: why not create a social media platform? it is all about creating creative content to make you more attractive. i see you at social media. greg: our products run a gamut. tinder in particular has a social aspect. --re are erik: what does it mean if the stock opens below the ipo price? greg: the price of liquidity has been high. we think we are undervalued at the ipo price and we expected to trade well, but we have a long term view. i feel pretty confident it will trade well. stephanie: congratulations, and good luck. match group chairman greg blatt. another ipo coming out today, square will begin trading any moment, it shares priced at nine dollars each, below the expected range from 11 to 13. i want to bring in our bloomberg editor at large, cory johnson. what do you think about square? cory: a really interesting business, but i think the valuation, a lot of the common air -- commentary was comparing it to unicorns. square sort of benefited from a twitter effect with ceo and founder jack dorsey seen as this who might create a wonder of a payment business, and it is a very interesting credit card processor for merchants and not much more than that. i am sure when goldman initially selected the range they thought the range is going to go up, not down. it is certainly a disappointment i would thing for what they had planned to do with this ipo. erik: is it just a reflection of square's business model, or the realization that the company does not make any money now? it's gross margins are skinny and going up against legacy players like first data, it is going to be very difficult. cory: part of the deal is there are cops in the market. --comps in the market. and they direct comps, see some fantastic revenue growth. that is a big business, a $1.2 billion run rate. you have to go with that. gross margins are not quite as important in terms of how it works. they lost $15 million in the first quarter before they filed to go public, and mounting losses are something to be concerned about. add to that that you have got companies like heritage payment systems, focused on credit card transactions for small and medium-size as mrs., square -- businesses, square was not the first to come around. square is a clever technological company but they are faced with not only competition, but competition that has a value in is public market that trading at one-times sales and two times sales and three-time sales. that is a much higher valuation than any of the competitors. it is growing a lot faster but i think what square is facing, the are already out there and valued by the public market. david: they have added quite a few ancillary businesses. it sounds like they are trying to be ncr. do we have any way to know if those ancillary businesses are getting traction? cory: there is the existing this,ss and if we grow and you can make your own projections, you can figure out how big this can be, this could be a much bigger company that we are presenting to you. i think the -- while those ancillary businesses can try to market to others, that is all the sizzle, that is where the hope is. is where this business is losing money. they do not exist all the way through the payment system. they are really on the front end. they help process things to the bank, to the merchant bank, to therensumers' bank, but are other businesses that might grow and they do not have a lot of those. david: cory johnson, thank you for speaking to us. emily chang will be speaking to jack dorsey at 10:15. matt: stocks opening down after oil dragged down futures. fivee seeing the dow off points, the s&p 500 off about two. an incredibly exciting market across all asset classes. oil has come back a little bit but still trading at $40.32 a barrel. take a look at gold. gold has just shot up. obviously, in the big pictures scheme of things, it is still fairly low at 1082.70, but a big move all of a sudden. this could be happening as contracts roll over. it could be happening as the dollar comes down. the dollar is dropping right now about 6/10 of 1%. because of the fed minutes yesterday, investors are kind of thinking of a fed that is going to raise in december as a dovish fed because it is going to be such a low trajectory of what was communicated, and that is why you see these meds -- these moves as if the fed were moving more dovish. crushed ins getting the premarket. it was down 9% in the premarket. is this a live trade today or is this yesterday? we are showing best buy up 2%. sometimes it takes big moves to open in the stock. it has taken a little while for them to open best buy at the nyse. check out sun edison. best buy missed revenue expectations. sun edison, a big move. exciting day here. it is going to mean an exciting day on the nyse. sun edison has been incredibly volatile. yesterday it was stopped because it was rising to quickly and then it stopped. dan logan pulled all the way out of the stock. -- davidi heart has einhorn has risen deuced his stake -- reduced his stake. stephanie: matt, i think you want to take a closer look at best buy because i am getting bloomberg saying it is down 8%. matt: exactly my point. it takes them a while to open the stock. the trade was not live. almost 15 minutes into the open, it should be open now. stephanie: i can see on my screen it is down 8%. you are getting indications -- erik: we have an opening indication on square that the stock is going to open around $11, great news for those who still on some square shares. thee was some concern that downward spiral could continue and that after opening it would be trading below nine dollars, but it looks like square is going to pop as they say at the open. stephanie: if you are jack dorsey, you want to get the highest ipo level you can because no one wants to leave money on the table. next, why the cloud could spell big trouble for traditional tech companies like dell, cisco, and hp in 2016. the future is in the air. ♪ abigail: welcome back to bloomberg . one stock is soaring, curie green mountain after the company beat third-quarter estimates. made $.85 per share, a penny shy of last year, but much better than the 9% decline anticipated by the street. the stock has sank more than 20% but with these results, their outlook for growth in the fiscal investorswe may see focus on the very attractive valuation. erik: abigail doolittle at the nasdaq. dell, cisco, and hp are facing some big challenges. they are lost in the clouds, and clear skies ahead for google, amazon, and microsoft. he has done all of the hard work, the research for what uncovers what we call old tech. there is a bifurcation of how cloud companies by hardware. traditionally, you want to have your handheld and now the public , they do not want to buy hardware related this anymore. they want simple, consistent, and cheap. they are not going to the dells and hp's of the world, they are s.ing to the quanta you are seeing this morphing, and the public cloud has been growing and traditional i.t. has been sinking -- shrinking. erik: the customers that used to buy from the cisco and ap and dell, also have to be deciding themselves that the cloud is a viable option. anand: when you think of the cloud, do you think of a fortune 500 company or do you think of google? when you think of cloud cover think flexibility, cheap, consistency, permit availability -- permanent availability. these fortune 500 companies want the same characteristics so they are going to google to get a piece of the cloud. not buying, they are traditional i.t. but buying the systems that -- erik: the enterprise manager is a shrinking species. what about the rack spaces and places like that? anand: it remains to be seen. is a great company. guys who are going to see revenue growth. you will see some bifurcation, but these are the winners. has a serious strategy to go after some of this revenue. david: thank you very much for joining us. next on bloomberg , we will take a look at the top moments from today's program. ♪ david: welcome back. let's look back at some highlights from today. valuewe value shareholder or do we value some things about society? if you make aco co get paid based on the stock options, they find a way to do these seemingly first shareholder value but in fact for their return. square has the capacity to create a very low pain of paying. >> i have never wanted to do an ipo and i will never do an ipo if i can help it. remaining private is a luxury and we do not have to make decisions based on quarterly earnings. 11 ago -- 11 years ago, i launched e-commerce and people said i was crazy. .t is now 20% of our business if you have a great idea that is unique and different, go for it and own your ambition. >> i think we have gone from overinvestment to overregulation in banks. butanies can go off market do not do it in a levered format. does is reflect the first aspect of society, their appearance, and then you go beyond that. hephanie: from dan arielle behavior economics. greg blatt -- erik: greg blocked. -- blatt. stephanie: a huge day, and a bigger one tomorrow. the father, the grandfather of the distressed market. john sykes, and ceo of canadian pacific rail hunter harrison. you know he is going to be talking about that potential deal heading their way. that does it for bloomberg . stick with us for market day. ♪ betty: it is 10:00 a.m. in new york. welcome to bloomberg markets. from bloomberg world headquarters in new york, good morning, i am betty liu. could be the drug industry's biggest deal ever, pfizer said to be in advanced talks to buy allergan for as much as $380 per share. could the u.s. treasury the deals tallest hurdle? we are still awaiting opening trades above square and match. we will bring you those us in as they appear. in the aftermath of the paris terror attacks, a new bloomberg poll shows that more than 50% of americans want to stop admitting syrian refugees into the united states. what it could mean for the presidential race.

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