Billion of losses in west africa next year. Sierra leone is likely to be the hardest hit nation. In the u. S. Comedy family of an dallas,ctim died in questioning the care he got. The family once to know why it emergency room released him. At t will pay the price for bogus claims on mobile bills. Million for unauthorized charges to customers. Among them, Subscription Services for horoscopes, ringtones, and love tips. Most of the money will go to customer refunds, tony 5 million will go to fines. Device media cofounder shane smith helped kick off sandy media cofounder shane smith helped kick off the vanity fair senate. The holy grail for every Media Company is mobile. Mobile is the wild west. It is where everyones scale is coming from. It is difficult to monetize and difficult to get our heads around. We are trying a lot of experiments. Experiments with providers. Mobile. E first of the summit continues with Stephanie Ruhle and emily chang. They will be live from San Francisco later on this afternoon. Has rattled investors. Shares down as much as 9 in extended trading. Gap said it would replace ceo glen murphy. He will be replaced by president of gaps innovation and digital unit. Im not surprised. The store is appalling. Boring, boring, boring. I dont have bowties. It is back to basics. Those are the top headlines. Olivia sterns has not been a gap. A back to basics. Back to blue. Boring. Currencies,nds, commodities after yesterday. Adam got whiplash. Futures up 5. Yields are stunning. From 2. 43 to 2. 29. Euro stronger, hydrocarbons churn. From 17 to, vix 15. 11. Jawdropping. S 0. 50 towl to the brim, carnage. Tunning ready to makeyear record lows. Lets go to the bloomberg terminal. The red line is japan, back 20 years. Below yields, life is terrible. Here is the animal spirit of europe to sending. This is where we are, the japan verification this is where we are, the japanification of europe. Of all the stories, dow, blow the bond yields my mind. 88 basisn germany is points. In switzerland, 43 basis points. 0. 45 . 0. 5 . Ss than there is no place to hide from. It is your money safe. Dr. Faber, bring in gina, please. Help us. 8 Earnings Growth good enough to keep people in the insane markets . In the short run, it is going to be tricky. The shifting centralbank policy macroape combined with weakness outside the u. S. Is striking fear in the hearts of equity investors. In the short run it will be rough. Out 12 months, we feel pretty good about the u. S. Outlook. Why . It looks ok. The necklace you are wearing a spectacular. Could you provide comfort the gap. Tocould you provide comfort people that hear Christine Lagarde say the new mediocrity at the imf, the real economy is terrible. Yet companies are minting money. How does that happen . When you think about what u. S. Companies are exposed to, 70 of sales are in the u. S. The fact that we have added 200,000 jobs per month every month for the last year. The fact that we have unemployment below the 20 year average. We have consumers that are still slower than longterm pace, but still spending. A Housing Market is in recovery. These factors support u. S. Specific growth. Absent anything that happens overseas. That is helping u. S. Centric what is your call on earnings Going Forward . In the Third Quarter it could be week at 5. 5 because of the currency volatility and the commodity price volatility in the short run. Every 12 months, 7 or 8 . Weeks,8. 5 move over 8 corporations could not hedge effectively and it happened quickly. September alone, the dollar moved 4 . Incrementally all summer but in september it was volatile. Oil from 100 to 90. Many of the fashion industry visited with the first lady in washington. Testifying. Was no, i was in a meeting with one of the gses. Gina martin adams can talk about financial earnings. What is the stated our banking economy . Two cities. Anticipation of rates going up thegiving the interest opportunity to widen. We have a problem in terms of what washington is doing to the industry. And the perception weighs heavily. One of the key things as we look at jamie dimon or brian normaln, is this a banking environment given what janet yellen is doing . No way. When you see what the two yielded yesterday. The industry being able to try to generate loan demand. At the same time, better customers are axis in market time, bettere same customers are axis in the markets directly. They are getting theres an irony, thanks are trying to stimulate loan growth. Last week, ben bernanke could not get a mortgage. Alan krueger told us he could not get a mortgage even though he had cash. A number of pieces to the bernanke piece not getting a mortgage. He transitions out of a job. He has not the same stable income. Youre saying that ben bernanke was unable to get a mortgage because he is temporarily unemployed. If you move to traditional underwriting standards, that is the person i think his creditworthy. Josh rosner sense us the thickest powerpoint of anyone. Ridiculous. S is you feel that the complexities of doddfrank are going to end up concentrating power in the big banks. I dont see how it ends any other way. When you create an environment where you have does cut resolution regimes when you create an environment where you have to resolution regimes, you are creating a tale of two cities. Cost of funding advantages to the larger players are real. The pastseen that for decade in mortgage finance. That is continuing. Gina, i know you cannot speak specifically about individual banks. Lookur securities analysts at big bankssmall banks, is there a difference . We are overweight on the largest of the large banks. More of a market weight on the small and regional you are overweight on josh rosners world. Banking sector, those are the banks that show the most upside. Part of it is the regulatory aspect. Headlines have damaged the big banks most. Violations are much lower than regional banks right now. Part of it is a persistent loanloss release that reinflate it hasnt been the driver. Smaller banks have benefited from that. Incrementally we like the bigger banks better. Gina martin adams and josh rosner with us this hour. Tie that up, jp morgan trades at 9. 8 times earnings, s p traits at 16. Facebook Ceo Mark Zuckerberg making a trip to india looking for new friends. Is trying tohe make money . I would say yes. You are watching bloomberg surveillance on bloomberg television. Streaming on your phone, your tablet, and everywhere you are. We will be right back. Good morning. Bloomberg surveillance, carl icahn at 3 00 p. M. On street smart. Look for that this afternoon. This is bloomberg surveillance, im tom keene. With me, Olivia Sterns and adam johnson. Futures at five and data feature couple of 32 after yesterday afternoon. He has adam johnson. The cyberattacks spree on wall street is wider than thought. The hackers who hit j. P. Morgan chase targeted a dozen other firms. At least one of those institutions had its data stolen. Money might be flowing out of pimco, so far it is not filing bill gross. Has taken andfund 66 milling dollars, a fraction of the 23 billion that has left pimco since his resignation. The metropolitan west total return has taken in 1. 5 billion. Nfl owners approved the sale of the buffalo bills. 1. 4 billion. A, surpassing the 1. 1 billion paid for the Miami Dolphins in 2009. Those are the top headlines. Studying. It is a lot less than what mr. Whats his name from microsoft paid 2. 2 for the clippers. The buffalo bills. 1. 4 billion. Wow. Incredible. Olivia sterns on the trip to india. The facebook cofounder is in india attending at twoday internet. Org summit aiming to make Internet Access more affordable. He is likely to meet Narendra Modi. Here are zuckerbergs comments on indias computer revolution. Have embraced science and research and education, the next generation here has the opportunity to define the future. And bring india to the world and the world to india. Key to this next big opportunity is going to be a bracing the internet. Here is the deal. India is already facebooks secondlargest country. Only 20 of the country is currently on the web. There this enormous opportunity. At 2. 5 billion people could be on the web by 2018. Zuckerberg and facebook hoping to tap into that. Theres a sense that india is on the brink of becoming more tech savvy because you have a new Prime Minister, Narendra Modi, who famously campaigned by attending conferences via hologram. We heard some of this from Columbia University yesterday. In technology is so much bigger than other nations. Bezos, satya nadella, adam johnson will go next week. I would love to go. Professor made the point yesterday. The infrastructure does not exist. There is a dream of reaching people but a lot of them do not have access to electricity or internet service. , social katie says you have to advertise in india. It is stunning. Theres the hologram. This is Narendra Modi campaigning via hologram. You mean like in star wars pic. The key to india is mobile. A majority of users access via smartphone. Our twitter question of the day. Which wall street jargon drives you absolutely nuts . Tweet us bsurveillance. Josh . Cash on the sidelines. Im a jargony person. Mine is cautiously optimistic. Be cautious or optimistic, do not be both. We will be right back heres the image that of what the immediacy Martha Ravitz of abc said wit on with all due respect. This is in syria. Larger flames than what we saw yesterday. U. S. Very clear that the military is upset about the ineffectiveness of the airstrikes. Martha raddatz comments on planes returning to aircraft carriers without dropping bombs. That shows limitations. Theres the image from south of syria. My morning mustread is from the wall street journal. Daniel henninger is fed up. U. S. Bureaucracies have become a clear and present danger. Josh rosner, in your world, the doj, late to the party. What has taken the doj so long to flush out libor scandals, mortgage scandals and now currency scandals . I think you need to be somewhat slow in putting cases together. That part of it is sort of normal and appropriate. The other side, the situation has become politicized. Are talking about enforcement agencies and financial regulators, it should not be political. The whole thing has become negotiated settlements with Senior Management in the room. At some point, who have a natural conflict between their own personal interests and the interests of shareholders in initiations. What is fascinating is the technology and its democracy we live in. Here is albert camus. You can imagine the gentleman who just died in dallas writing to his loved ones. Nothing has changed from camus plague, except we have facebook, government authorities. It is a cheap shot against cdc. They are dealing with for allergy, not press moments. And not twitter. That is not my area to speak. There was a lot of warnings and a lot of academic papers about the risk of a conflagration of. Bola in 2011 it seems like we are illprepared. The dallas hospital that admitted the gentleman. Thats not the governments fault. Do you know what adams favorite nine words are im from the government and im here to help. 9 most dangerous words. Noah feldman had a great workersying amazon are todays coal miners. An analog to the coal mine. Is the distinction the length of line insecurity . We go through security everyday here. It takes 20 seconds. Long are youhow required to the on the premises. How long did it take to go up and down the mine shaft. If you have to go through security to ensure you do not steal anything, shouldnt you be paid. The Obama Administration is siding with the amazon contractor. Halon does it take you to go through security . I swiped in. That is not the case in litigation. Some amazon workers contend they have to wait 25 minutes or 30 minutes to go through security. Which is patching them down to make sure they didnt steal something. If you are required to be on the premises, the argument is you should be paid. Be paidif you had to for the amount of time it takes you to take makeup off. They found a pocket protector. In our next hour. The serious issue of ebola. Us from berkeley. We will go to newark airport. Shall the holiday has a thermometer in her mouth. We will be back on bloomberg surveillance pickup morning, bloomberg surveillance. Olivia sterns showed up. Lets do a data check. I got whiplash yesterday. What a market. 15. 11. M 17 to yields. 0. 878. 10year, stunning government, take my money. Your 401 k is underperformed. Stocks,ely because big bluechip large caps have underperformed. That is changing. Excellenceap sustained . Gina martin adams says watch the fed, it links directly. Everybody has large caps. Degree, folksr have fled to small cats at midcaps because the returns have been faster. Do not chase performance. What if that guy say at pimco, he left . Gross. Where are we in small caps to large caps . Large capshifting to over small caps. Large caps have outperformed as the Small Cap Index has started breaking down. Consistent with the middle of the Economic Cycle and the stage raising the fed starts tourist rates. I will rip up the script. Icle,portant art share buybacks do not work and we need more dividends. Do we like large caps because of dividends . Also because they are experiencing acceleration in Revenue Growth. Which is pretty rare. Ever last three years, weve seen no Revenue Growth. We are starting to seat revenues accelerate into the year ahead. It is a misnomer that everything that happens overseas impacts the largecap index more than anything else. The smallcap index also has ever sees exposure. Large caps tend to outperform when the dollar is rising. The correlation right now is positive. Where is that revenue coming from for the bluechip, from the capex . R or health care and technology. Health care, a lot of that is biotech with Revenue Growth after lots of investment. Some of it is technology, from semiconductors to i. T. Services. Lets rip up the script again on ang the security analyst can you own jp morgan as a blue chip . At the end of the day, you are owning the institution having a hard time generating topline Growth Without underpricing in certain lines and taking on more risk. We are not releasing the loan demand. As much as Everyone Wants to talk about credit demand, we have to worry about im sorry, creditability o availabi. You also have to worry about credit demand. It undermines the enthusiasm for stocks in general. If you do not have the banking sector, the secondlargest weighting in the s p 500. Underweight financials and we had a small return over 12 months. You can have an environment in which financials outperformed the broad index. If you go back 30 years time, outperforman when the yield curve is flattening. It is the environment from 1995 to 1999. It is the environment from 2005 2007. Time in whichf they outperform in the index still rises. Is slowly coming to understand that even at the point when we finally see rates rise, the Net Interest Margin growth is dependent upon demand. Which is not there. You will have loans grilling off work repricing higher. If you look at the commercial loan books at big banks, you have a lot of covenant light, years50 of last issuance was credit light. The banks are doing the worst credit on their balance sheet, the best credits can access markets directly or do not need to borrow because they had great balance sheets. Is, when mettion interest margins widened, are you going to start seeing a lot of credit impairments on the commercial books . Even on the consumer books, borrowers who cannot get repriced and those who are therefore the demand side. Gina, on the consumer. You said part of the revenue will come from the consumer for blue chips. Discretionary is the only sector even expect earnings to shrink. Why . Consumer discretionary is an early cyclical sector. Itically outperforms typically underperforms as the fed starts increasing. ,yclically positioned consistent with where we are in the economic landscape. Is that gap . Retail is the single most ratetive to fed it increases. Where did you get your necklace . Were underweight retail. Just because of the rate cycle . With are seeing consistent the rate cycle deteriorating earnings. The consumer let me interrupt you. Pepsi is crossing early. This was supposed to come out at 7 00. Better than expected. One of your boring consumer stocks. 1. 36 versus an estimate of 1. 29. Revenues better than expected. Pepsico boosts forecasts. Those signposts. Heres a big u. S. Company making money. Im not sure what portion of their revenue comes from the u. S. On the bloomberg terminal, that will tell you. Revenue growth is accelerating. For the first time. Is that just for biotech and health care or the market as a whole . It is the market as a whole but it is faster for biotech and health care. Suggest management will continue the overt pressure we have observed to make change and to make it more rapidly . Just this immediacy. Esay, paypal, or gap stor unloading their ceo. Do you sense and urgency into autumn . It seems that way. Taking a step back and looking at the broad landscape, we are a point when valuations have reached their peak. Violations have been jotting the market for the last two years. Now we have got to see Earnings Growth. What i hear out of the banks is a thunderous silence. The opposite. We wish himis ill, the best. Everyone else is quiet. Why . Not a lot of good news. The ideas. Not have when you think about the fact that apple pay, you think about what apple is doing. The credit card looks exactly as it did 50 years ago. Andakes someone to come in emulate. You are starting to see that happen. How much of the benefit will flow to the Financial Sector . Chipssico lays potato olivia, you have boxes of those. Milton peltz wants to keep them separate from the soft drink. Thenacks is one third of business. That is why pepsi has been able to outperform coke. 1 growth is not good. Can you tell the difference between coke and pepsi . I