Playinglls a hostile is and fighter jets if it was claimed in addition to produce in exercises. North korea increased its opposition in south korea. Global news 24 hours a day powered by more than 2600 journalists and analysts in 120 countries. This is bloomberg. Live from bloomberg bloombergs will hike in new york, im scarlet fu. Joe i am joe weisenthal. Matt i am matt miller. Scarlet Jabil Circuit case for connotative monitoring policy. Matt at a speech in new york, vice chair Stanley Fischer said Government Policies can hardly counteract the impact of the games that could be holding back u. S. Economy and weighing on Interest Rates. Tugofwar been in a lately over whether the company and continue to add subscribers or if it has hit a wall. Bank of America Today reporting its best Third Quarter for fixed income trading in five years, labonte trading revenue continue to be a bright spot for Goldman Sachs tomorrow. Scarlet lets look at where the major indexes stand. We are still down but we have taken a like lower in the last 10 minutes or so. At what is a look going on current abigail it has three majorabout averages. In the u. S. , the dow, the nasdaq, three major averages down 3 10 of 1 . Investors are treading water. This follows backtoback weekly declines for the dow and s p 500 and. August 4 to brexit. We take a look at the 10 year yield and today it is lower. If there could call a few years ago, he thinks rates have gone lower. We see over the two days, it has basically been a roundtrip and the 10 year yield is up ever so slightly. It is worth mentioning on the , bestthe 10 year yield month since june 16. Today werning movers have quite a few. Has felt bank of america are trading higher. Hasbro and bank of america have put up great orders. Put up america has been higher early as the revenue and earnings. Some strength is coming from trading revenue and something that is not stable. Finally after the bell come reporting recorder, shares are down into the work. Sloppy quarters this year, missing numbers in some cases indicting down and the reaction of the stock has been volatile after dropping more than 10 . There is reason to think we could see volatility and we take a roughly twoyear chart, up and down within a range. We see the stocks trade lowest average. Above the toppped of the range that as it happened earlier, it has gone back down into the range suggesting perhaps that we could see more the sharesahead or of netflix on the back of veterans report coming up. Joe thanks. Isying on the kill reporting, a number of concerns rising costs and the increased spending. For more on the stock is the Senior Research analyst who joins us now from portland. Thank you for joining us. Is the key thing you will be looking for from netflix . Will be subscriber growth into mystic and international when therticular impact of the pricing increases and starts to wane. On international specifically, there is hope a big new growth driver for the , some signs of growth but may be disappointing. Do you see evidence it is gaining traction . It is definitely gaining traction. It is hard to argue it is not. Question is how fast is wening traction and see some pluses with that, last has been phenomenal. This year it has been hard to tell. What kind of competition does netflix look like outside of the u. S. . Spain, i see people getting things from different sites because netflix was not available and people are used to finding content for other sites, often pirated. Is there any legit, big competition . The u. S. Is the most competitive market in the world. Maybe germany, you do not have that level of competition in most. In some cases, it is amazon. In a lot of cases, it is competitors. There are tons of competition. Trulyny competitors are global like netflix is. Lets is is holding below 100 right now. You have a price target of 125. You say that share prices are reported by the value of this position if it were to be acquired. You explain that . Yes, i do not expect it to be acquired because the expectations will be quite high. It is it. Difficult for companies to acquire it. I think this is the one you would build for future. If a stock or a company would have shakeup in terms of its dropped. Hen the price that is the support. Otheryou think about really hardiants, to build of the Network Network effects of the social network that form. Amazon is a logistical monster hard to replicate. Entry thatrriers to amazon or apple or a Cable Company like comcast can essentially eat into overtime . Simplest is the amount of set forent in the bar the amount of content you should get for 10 a month. They are spending six in dollars cash for content. You will have to spend something close to that. Over the course of a few years, you are massing tens of billions of dollars of losses. Why couldnt amazon do that . Dollars, billions of another reason to buy toilet. Aper for them i know things like this have been theorized for a long time. Reasoning, orown is apple more likely because they are done it with apple music, why not with the exact same thing with apple movies . They are doing and on amazon, that is the short answer. Today free shipping. You have tos with that in order to scale the video as well. Apple could do it. Even for a company as big as apple, the amount of losses you would have to commit to our big, those are big numbers. That he would not begin on keep success, the better option would be to buy netflix if that is the direction you want to go. Matt how much Pricing Power does it have . Im to be seen as twoday that all but also 99 per year. I signed up to you tos advertisement free service, 999 a month. 9. 99 a month. Classes will depend on the market. We are seeing price increases in the internet is this is easy to turn off, it is hard. You have to have a tremendous amount of value. Also at least in the u. S. , people like watching tv a lot and if you can get them to watch a decent amount, which people already are at netflix, 30 is Pricing Power and a challenge is to figure out how to execute against the Pricing Power in a way that does not cost us much this year. Have we seen amazon or apple or any competitors make up netflix waswhen raising crisis . Click i do not think so, not in a meaningful way. Amazon is hard to track because it is tied to prime. They are gaining video subscribers because of that. They would not suggest anybodys in most of the markets, what we have seen is netflix extending its elite. ,att i am looking at a chart making it easy to compare a bunch of different stocks over five years with reinvested dividends. Is stopping amazon and apple over the past five years. To continuet them over this kind of trajectory and rate . It has been a total return of 509 . Go fromit is easy to 10 billion to 4 billion than from 40 two 200. Probably not quite the same return expectations. At designing a Business Model for the next 50 years in video, this is probably the one, mf global market. I think the stock could go higher. Joe thank you very much. Matt 75 u. S. Executives are planning on a transaction in the next 12 months. We will hear from their vicechairman next. This is bloomberg. The global vice chair of ,ransactions Advisory Services steve. Heres what he said about the study passes results. 75 in the united states. Everything realize has changed for ceoss except expectations of shareholders around high growth and high return. The lists of what has changed is pretty significant. Lightning speed technological change. Uneven geographic growth that we could not have anticipated, political and nationalism creating a lot of turmoil that would normally slow the markets but we see the opposite, 57 wanting to do an acquisition 75 in the u. S. Whether they are Institutional Investors were activists, when they pursue these deals . Absolutely. Shareholders are pushing for harvard higher returns. So yes, theyre getting support to do the deal. You had mentioned the shave club as an example of a typical deal. What did you mean . Billion dollars deal that was announced a few weeks ago. Why did the deal fit so squarely into the kinds of deals we are seeing . Isi think the deal representative of what i will call the technological change category. Whether it is technological change but it is a different channel, the market, direct to consumer model, a step in a different direction for a different for a shaving business. The technological change in the cross sector we the subng and also in billion dollar range because we see a High Percentage of companies, looking to 1 billion in deal value. We have noticed deal value more than dollar value, but the number of deals are up, the raw number of deals are up and that interest inlot of the 1 billion sized deals. Nontechee a lot of Companies Like gm did a deal with left. A 500 Million Investment they put into left. You see more of these companies companies. With tech absolutely, whether it is the gm with deal or the Cruise Automation deal. You can point to a number of different automation deals to take advantage of ridesharing getting into the driverless car. One that was Just Announced last week that i do not think we talked about, the transaction of andng Semiconductor Chips adding a Laser Technology to detect moving vehicles. You start to see the companys bridging across to take advantage of Consumer Preference and say ahead of the competition. You have been doing this survey for seven years. What is the single Biggest Development you have seen over that course of six or seven years. I would point to a couple. One is the resilience of ceo pocket and senior executives, recognizing in organic growth is part of the toolkit. If you had the kind of uncertainty referenced earlier, that would have ans install the market. Today, 57 playing to do deals and looking at alternative transactions, alliances, etc. Is the wayig change deals are being done. Companies are now using analytics and data more powerfully. You see integration taking more of a customer and front office focus more than a back office leading the way. A lot of change over the last seven years. Where our Companies Looking to invest . A headline of the u. K. Fell out of the top five. Maybe that is in large part due to brexit but it seems the traditional places like the u. S. And china remain the most popular destinations for big m a. The u. S. Is a very popular destination. Bought out by 50 countries, that will continue as they continue to go for ip which assets and go up the value chain. The u. S. Is an attractive destination, germany, do not count out the u. K. Either. The u. K. Continues to be an attractive market and may be out of the top five for this survey, but i expected to be back in the top five in the next six to 12 months. In the u. S. , they still feel for the rest of this year and next, right . Absolutely. 76 are confident we will see stable or a growing economy and samenumber is close to the in europe, just below. Strong confidence overall and i think executives can see the medium to longterm as opposed to only the short term. Matt up next, is it time to change the channel on netflix . We will look at the shares and tell you the story ahead of earnings. This is bloomberg. Berlet netflix will therting earnings after bell and the big scene for netflix is that earnings is a huge catalyst or the stock. The bellblue lines show the oneday percent change and it is not unusual for next to have huge plunges or spikes, standard deviations above and below its usual price movement. The green and red are when the company boost produced earnings and redder when it missed estimates. No correlation between p if and mrs. With moves in the stock. The stock moves whether it is international or you or u. S. Deviation moves anything above the green line or below the red line. Keep watch for Something Like that this time around. Matt it is always a fascinating chart and met his wife options insight trying to tell investors how to hedge a risk out of the earnings report. A technical look at ibm stock goes back to 2007. This is what Technical Analyst call longterm rounding. You can see the green line arching over and for laughs, i put in the retracement levels here. My ode to tom keene. Longterm, it does not look good. A trend down. It has talked to that trend recently. This Earnings Release today, the cloud can be a more substantial part of their earnings than the legacy business. If that is not the case, it will continue to go down. How i will know argue with that bounce. I am looking at a macro story, funding costs. A ourline, we have libor. While other regional Banking Systems there has been a buildup, you can see it is much more dramatic for saudi arabia ranks to geopolitical tension, oil, all of that stuff. Signs continue to build a financial pressures scarlet a place to watch. A fantastic row file over the weekend about how he is trying to affect change. Matt on surveillance this morning, always good to see her, a shout out from saudi arabia. Take a look at averages with less than four minutes to go. The dow is off by 52 points. This is bloomberg. We are moments away from the closing bell. Stocks alternating between gains and losses for a seventh session with banks unable to sustain early games after profits he estimates. Netflix sinking as much as 2 for the Company Reports and two minutes. Im scarlet fu. Joe im joe weisenthal. Matt i matt miller. You can watch a coverage on twitter every day from 4 00 to 5 00 p. M. I feel like it is more exciting when you are streaming it live so give it a shot even if you have a television in front of you. Scarlet whats begin with our market minutes. U. S. Stocks fall to start the week. Seven out of 11 major groups are declining. Consumer discretionary the big latter. Mixed Economic Data that did not do much in the way of giving us clarification on what the fed is going to do. Most arts pecking the fed to go ahead with a rate increase in december. S p closing at its lowest level in one month. Joe a generally quiet day. Matt if you take a look at the imap is strikingly red. As scarlet said, seven out of 10 groups were down. You can see that the only gainers today were utilities, telecoms, real estate, and materials. Utilities and telecoms are fairly defensive. Thats where investors flee. Consumer discretionary stocks for the biggest loser. You can see what the strategy is like their. Oil coming down really have a lot to do with todays moves on the s p. If you take a look at the s p breakdown you will see that of the percentage losers, almost all were energy companies. I have a list here of the top four, southwest, chesapeake, devon and cavett. A number of others running at the losing side. Joe lets take a survey of some bond yields around the world. We have u. S. 10 year yields dropping a little bit today. You can see still in a really solid uptrend since july. A lot of interest in tomorrows cpi numbers. What they will say about inflation. The belief that inflation pressure is starting to build causing upward move in rates around the world. A sixmonth chart of german 10 year yields. Looks like roughly the same story. 10 year yield clearly in positive territory. Also down a bit today. The story is clear rising trend since the middle of this summer. Youve got to look at u. K. 10 year yields. Those keep shooting higher. Combination of inflation concerns. The weaker pound. 1. 12 on the 10 year. Still very low but the highest since the wake of the brexit vote. Scarlet the dollar taking a pause after steady moves higher to a sevenmonth high. Looking at the dollar as measured by the bloomberg dollar index retreating. The worst from Technical Levels from volatile strength index which suggest the dollars recent valley is due for a pullback. That is what we got today. Other currencies worth mentioning. The rant, best performer among extended route major currencies. The group of south African Business leaders its press support for the finance minister as he faces fraud charges. The dollar using value losing value. A real the president predicted in a permit rebound in the final three months of the year. We did see the real boosting toward the close of trading and you can see it did gain versus the dollar. Joe a look at some commodities here. Not much move. Gold basically flat. Crude oil at the bottom falling back below 50. Alternating below and above 50 enteredile in wax texas west texas intermediate. Concerns over demand. But in the end not giving up that much. Scarlet lets bring in our guest. Head of north America Research paul sweeney who joins us for a preview on networks before the Company Reports in minutes. Us toter cheer also with break them a trading day. Paul, we are looking at netflix and we know the stock tends to move quite a bit when it comes to the results. The theme will always be the net addition of subscribers. His Domestic Subscriber growth more important . Paul i think the International Story will be the growth story for this company. The u. S. Market is more mature, more saturated market. The International Markets are where they are seeing the most growth in subscribers. The concern for netflix highlighted last quarter is they expectedr than subscriber numbers domestically and internationally and guidance for this Third Quarter we just completed was also below estimates so that really is a concern for shareholders because this really is a subscriber momentum stock, not an earnings momentum stock but one driven by subscribers. Joe the other half of the equation is cost in people warning about spiraling contest competitors where are they going with that . Any signs of containment . Ted surrenders who runs the content side of the businesss most popular man in hollywood. They will spend about 5 billion to 6 billion in programming this year and many close to 7 billion next year. They continue to spend money on licensed content but also increasingly on original content. Matt we were talking about this with andy hargreaves. Why dont we see a competitor like apple come in . Billion and they already have the itunes set up. They done it with music. They could do it with mu these with movies. Paul they certainly have the Consumer Brand to do that but they do not have the ability to get exclusive content because hollywood knows hollywood is holding the cards. They will license content to the highest bidder on a nonexclusive basis. Apple does not bring anything to the table other than a huge checkbook, which could very well be important. So far theyve decided not to get into the video side of the business at all. Scarlet we got netbooks numbers. Earningspershare up . 12 for the quarter which is six cents better than what analysts have been looking for. Anticipating six cents compared to nine cents in the last quarter. The key numbers that paul said you were looking for, international trimming additions, 3. 2 million, better than what analysts predicted. As for domestic net streaming additions, 370,000 was the actual number for the Third Quarter. Analysts were looking for joe the stock is surging 16 after hours. Munster beat on the international niche streaming ads and the domestic. That really doesnt seem to be at first glance the story of this quarter. Big beat on subscriber growth. Scarlet netflix sees operating around break even for the rest of footie 16. How significant is that line . Pretty consistent with what they have been saying. Domestic business is already profitable. International business loses money as they ramp up new markets. Now in about 190 markets globally. We are at that Inflection Point right now were the domestic profits offset the losses on the International Business and presumably as the International Markets continue to mature they will become profitable. The key issue is these subscribers in the Third Quarter as well as fourthquarter guidance for subscriber adds is better than expected and we see that in the stock now. Scarlet the advert Fourth QuarterInternational Streaming would be 3. 7 5 million when analysts were looking for 3. 5 million. Fourthquarter earnings per is . 13. E outlook the consensus estimate is . 15. Netflix lowballing for the outlook . Peter their earnings are going to come in generally in line with what the street is looking for. The key issue we see quarter after quarter, subscriber growth. Subscribers will drive future revenues which drive future profits which will fund the over 12 billion in programming liabilities they have on the balance sheet. Best the longterm story for netflix, driven by subscriber growth. Matt in the letter to shareholders they say their revenue above 2 billion for the first time ever. Global streaming revenue held by strong content including street are things in the Second Season of marcos. How well does the original overseas . Ay out obviously everyone around the watercooler was talking about Stranger Things, but is that the same in other countries. Peter they have regional programming all around the world. One of the challenges they are facing in some of the International Markets. Some of the u. S. Content was not playing as well and they are making significant investments in local programming. Narcos it plays very well in the u. S. And globally. Making Big Investments in original programming because they believe that is what really sets them apart from some of their peers, whether amazon prime or hulu. That is what they believe will drive subscriber growth. Netflix inalize poland, turkey, talking about subtitles in dubbing. Is that a strategy they could replicate . Have a show in the local language but with subtitles and an appeal that can blow up in the u. S. . Paul they would love to leverage production costs on a global basis. Well have to see. Narcos was a show that gave them confidence that if you produce a high quality, compelling show, the language is not as important. Made it a thought originally. That is a big part of the programming strategy. Matt they need to make a show based in china. Although, can you watch netflix in china . You got to go over a vpn i believe. Paul no netflix and china. Almost impossible to get Cable Network content into china. The company said so. This china looks like a market they are not going to be able to get into at least in the near term. Most of the Media Companies that do develop a presence in china do it with a joint venture partner in the marketplace. Scarlet thanks to paul sweeney. We will come back with peter tchir. Some other breaking news, this time from visa. It says Charlie Sharf will resign as ceo effective december 1 and the reason here is because he could no longer spend the time in San Francisco necessary to do the job effectively. As a result, the board has unanimously voted to appoint alfred kelly as the ceo. A current visa board member. Former president american express,s current ceo of intersection company. The stock is trading at 81 per share three it stock closed matt i got it at 80. 95. Down about 1. 8 in the afterhours. Drop of about 1. 50. Not a huge move it definitely reaction. Relative to netflix, which at one lloyd i saw up 18 . Gaining almost an entire extra fifth of its value. Is,sy day but the question what did you miss . Fixed income units of u. S. Banks have been on a search. Goldman sachs out with earnings tomorrow. We breakdown major u. S. Banks. Miss on solarnt energy. The trend for installed solar power might surprise you. The public and president ial nominee donald trump is ramping up his rhetoric saying the elections are rigged. Will it resonate with voters . Scarlet bm shares higher in trading after Company Reported profit in sales that beat analyst estimates. 3. 29 for the Third Quarter. Adjusted earnings per share. On the revenue line, ibm reported sales of 19. 2 billion when analysts were looking for 19 billion total. As for the outlook, ibm has affirmed its fullyear view including precash flow. Gross margin for the quarter, the one thing i saw that did not quite come up to snuff, 48 for the Third Quarter as analysts were looking for something above 50 . The stock up i about 9 10 of 1 right now. Matt we had netflix out with fourthquarter domestic streaming adds almost half a million more. International ads also impressed for netflix. The domestic niche streaming ad is the big number. The interesting thing is the shares are trading up almost a full fifth on top of the value they had before the bell. 18 is the after the bell trade. Netflix came out with a request for money kind of. They said they will raise Additional Debt in the coming weeks. The kind of thing that does not usually please investors. Scarlet although paul sweeney was saying this indicates the company is planning is planning to spend even more on content. They are going to tap the debt market in order to raise more money to spend more on programming. Joe that seems to be a key area of where the moat is around them to show that they have that other people dont have. Not surprising that they will keep spending like crazy. Todayas treasuries gained benchmark yields retreated from a fourmonth high. Original measure of manufacturing out today. Undercutting the fed case to raise Interest Rates this year. Our next guest says it is time to raise rates. Joining us is peter tchir had a macro strategy at green capital. I think everyone kind of most people feel it is time to raise rates. See the doves on the fed what they are ready to do it eventually but do you think there will be behind the curve if they do it once now and once next year . Peter im not sure whether they will be behind the curve. We have to get this behind us. The entire market spends way too much time about whether the fed will or wont. I think they just have to get on a cycle where people can get away from the fed. Equities no one has a belief that it is real. Matt will they go november 2 . Does that put more pressure on janet yellen to actually go before the election . Peter their case that they are not political maybe a little stronger because that has called into question recently. Still to be december. I think we should move off this zero bound we still sit on. Joe lets talk about banks. Bank stocks have been doing decently on part the hope that longterm fed rates are starting to rise. The king at a chart on clearly that long and lift helping finance it little bit. How much further could that go into the financials have further to run . Peter this yield curve that does help improve for the banks across the board. I think when you start looking at the money side what really does what we need at Money Center Banks is higher transaction volumes. To this raising rates, changing the shape of the yield curve, a lot of talk about everyone wanting you for yield curves. Some level of pullback from keeley creating a trading environment. Joe the changing yield curve not only helps the raw spread but it creates some volatility in trading. Peter do we want to be in highyield . Doing what the state out of treasury . I think that lets trading come. Newetflix comes with a deal, there is money to be made from that from the institution of doing those issues. I think that is all helpful for the banks and that is addition to this deeper yield curve. Scarlet clearly a standout performer from most major banks. Tradinges, commodities,. You have a charger that shows have trading is getting harder and harder. We talk about have as good volatility and bad volatility. Explain what the chart indicates. Peter one of the things we been trying to watch is, were seeing wrong way liquidity. The seems to be a lot of liquidity on the way up when the market is going down. If you need to sell something at that time, its very hard to find. The clow were seeing market in the cmts market. Both are acid backed securities. One is nothing but bids. Five buyers maybe for every summer and the others move the other way. You have to be right. In the treasury volumes where you get these gaps and air pockets. The rising to go to rates. How much further do you see that potentially going at the 10 year . What happened . To risk assets if we continue to see a left peter my target has been the not bearish on longterm rates. Considering we started the year at 220, 2 would not be hard. I think one thing joe it almost seems astronomically high. I donte a chart do Technical Analysis i made these crazy pink in green trendlines. Yields have been in a real downtrend for the past two years. Over the past few months we have seen a pretty serious bounce. Is that hold or do we continue longerterm in the downtrend peter . I think that bounce goes. If you look at the peaks to the right of your pink line that would be a good target. The equities are going to have to digest this a little bit. I think weve seen so much of this flight to safety that people will have to go back to chasing beta stocks. I think we will see a bit of selling pressure but then you can get beta chasing and netflix might be a great example. Joe what do you think is the main cause of this bounce . Some people signed inflation pressure. Some people say Central Banks may be pulling back on qe. Peter i think people got a little bit too aggressive in yields were going back to zero. Midtolate july when we were back 140 of the 10 year, when you had every etf that was thinkbased, getting i people got this positioned and they are not prepared for this backup. Stick withtchir will us because we will dive deep into inflation dynamics next. Scarlet another check on shares of netflix because the stock is surging in late trading as a top subscriber assets for international and domestic. Up 19 . His is netflix equities serve it shows earnings history. The doubledigit percentage moves are typical for netflix. The last four quarters we did see decline down 13 following the Second Quarter results. 13 again following First Quarter result. Matt after positive surprises. You see the surprise in the column that has green numbers. Quarter. Eat on current the outlook misses and you see the stock dive. Today we had a positive outlook. Scarlet this is bloomberg. Matt we are back with peter tchir of green capital. We wanted to talk to you about inflation and take a deep dive into the bloomberg and see what your reaction is to some of the charts we put together. Inflation numbers coming out tomorrow. 8 30 a. M. You can find the charts we are losing on the bottom of the screen. Mine is 4348. I have been hearing people talk about real wages lately. What i have here in blue is average Hourly Earnings growth. A purple line is cpi. The spread down below. People are really feeling like they are making more money if they are not paying too much for goods and actually getting a raise. Peter i think weve seen Earnings Growth over the past two years. At 2. 6 number came in year on year. More people are having jobs so theres a growing slice of income available to be spent. I think there is that chance that all of a sudden some of these other measures of inflation will start catching up to what has been a creeping higher on the wage front. Scarlet that is what the fed is looking for, some kind of meaningful wage growth. On my screen i have wage growth versus employment population for prime age workers. This is the kind of think that a courage as the fed to believe there is room for hiring to continue. There is some slack in the market. Numbers think the job are little fickle. One good what, one ok 1, 1 may be mediocre. I think last month was the best ever and then it kind of slowed down. Were not seeing consistent data. I think there is that upward pleasure. That upward pressure. Scarlet how do you determine whether we are at full employment . Peter i would like to see a much higher Labor Participation rate. I think so much as changed in how the economy works in terms of benefits and what you get from not working. Matt alan krueger would tell you it is a demographic story as well. Joe i want to talk about actual inflation. We looked at the wage component. People would say there is no headline inflation. Heres a chart i was putting together. The white line is Core Services x energy. Nontrivial goods. Not much of an International Impact on Core Services. Debt is at its highest levels the crisis. That is some pretty meaningful games. This blue line is chinese Producer Prices which has been a deflation. A good proxy for the international slack situation. It just turned modestly into inflation. If we say let the domestic nontradable sector for the international could that be peter we have been seeing it in the service side. I think thats why the average american feels it is worse than the headline numbers weve been dealing with. Joe by worse you mean higher . Matt the average american is not buying the stuff that is made in china. Rather paying money for services. Peter youre not seeing this alledge deflation. Stories take time and wall street has built up this twoyear meme that inflation is not going on. A pleasuret having you around today. Coming up, Goldman Sachs is set to release earnings Tuesday Morning in the u. S. Stock is followed 6 trailing the s p 500. We will dig into the bank numbers and see if fixed income trading can help turn things around. Courtney lets get to first word news. President obama says Americas High SchoolGraduation Rate has reached a new high, 83 point 2 . Increases were seen for all ethnic groups as well as disabled students and those from low income families. The president spoke at a high school in washington. We live in a global economy. , youre noaduate longer going to be competing just with somebody here in d. C. For a great job, you are competing with somebody on the other side of the world in china or india. Because jobs can go wherever they want. Because of the internet and because of technology. Courtney the growth in Graduation Rates has been steady since states adopted a uniform way of tracking students in 2008. Two People Killed and at least six others injured in an explosion at a facility belonging to Chemical Firm basf in germany. The blast occurred today at a river harbor used among Flammable Liquids and liquefied gas. In haiti, eight is reaching coastal towns devastated by hurricane matthew. The amount of medical supplies increasing. Authorities say they have been struggling with the surge of. Atients suffering from cholera more than 500 people confirmed dead across areas struck by matthew. Global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. Collins. Ney this is bloomberg. Scarlet lets get a recap of todays market action. It was a down day across the board for major indexes. We were really not moving by huge margin toward the end. Everyone was kind of dissecting stan fishers comments i could provide more insight. Im not sure they necessarily got anything. Some struggle for early direction even as financials came in better than expected. Joe ending down lower. We were just talking about inflation. A lot of hype this time for that cpi report coming out tomorrow morning. Scarlet speaking of earnings we got more earnings after the close most recently from united continental. The airline reported adjusted earnings per share for 3. 11 when analysts have been looking for 306. 9. 91 billion. Down 5. 8 . The airline had seen a doubt anywhere from 5. 5 to 6 . Pretty much in line with what was expected. You dont see that much of a move in the stock price. Matt the stock basically unchanged. People expect present to continue following it that is why they will be reducing capacity. He big story is netflix increasing capacity. Probably as much as they can. Up as much as 20 . Adding a fifth of its value. The company beating estimates for subscriber growth. Ucas shaw joins us now coincidently here in new york. Reat to see you here in person what do you think about netflix . Is this about shows like she greater things being so successful that people around the world want to watch them . Says that is whatnot x every time they that is what netflix says. What actually contrary its the growth, it is hard to know because we are not in the household with the people deciding whether they sign up or not. The big take away for them this quarter is there have been some concerns after the last quarter that their growth was slowing. They had a really good First Quarter after they expanded to 130 New Territories during growth went down rapidly and this quarter it goes back up and they are on pace to add as many subscribers as they did last year. Scarlet for the last two quarters there was a lot of focus on free cash flow. In the thirdquarter freak cash flow was negative five hundred 36 million whereas in the Second Quarter it was negative two hundred 54 million. Investors dont mind that as long as the net adds subscriber adds the Beat Estimates . Data shows that the more netflix spends on programming the more new shows they release the more people sign up for the service. Joe what if they dont have a hit . Ive heard people talk about hbo saying they are there are not any must watch is pure shows. What netbooks go through a dry spell . Lucas a prolonged dry spell would be a problem. The thing that puts has going for it is it is producing so much new material that the assumption is one or two of the shows to work. The most recent quarter they released the get down in august. Though i have seen every episode most have not. Nobody talking about it but it also released Stranger Things. Scarlet for those of us who have not seen it, what is it called . Matt the get down. Was a success. S even beyond the u. S. Because so much of the dialogue is in spanish much more of the world can appreciate it. Stranger things, not sure how much International Viewers care about winona ryder. You mentioned free cash flow. Netflix fa, one of the oldest in easiest i should say most rich functions you could use on the bloomberg. You can graph almost anything. Free cash flow. You can see how much trouble they are in if this does not turn around. The big drop is 2015. The two slightly shaded drops are forecast for 16 and 17. This is a company that spends at a lot of money. Are we able to see how many people are watching kingpin and Bad News Bears on netflix as opposed to Stranger Things and arcos . Do they give you split between what people are watching . A netflix releases source of great frustration for press, most of the people who make the shows dont care because as long as netflix writes their checks and lets them make the shows they want their happy. Scarlet when netflix debuted house of cards, the first big program that really made it for netflix, it does not own it outright. It cannot really do much more pointt past a certain lucas . Correct in they dont have the rights to house of cards in some territories. Something netflix is in the process of changing. They want to own or fully control almost every show they can. Theyve gotten it more and there is a release this morning. They signed a lease for space in hollywood they will be using to reduce programming in the future. Joe do people still watch movies on netflix . Lucas yes but a smaller amount which is why theyve spent so much on original series that on original movies. Joe is that a choice . Did they decide we will do it ourselves. We will have these assets nobody else has so we are not going to invest as much in the content library from thirdparty producers . Lucas they actually spend as much if not more on the library from thirdparty producers. When you look at the growth in any given year the amount they will spend is one billion more than this year. Most of that growth will either go to regular step ups in deals or to new programming. They are not investing a ton more in licensing. Matt the new apple tv allows you to search for movie on any platform. If i say show me the big lebowski it will show me that i can access it for money on itunes or for free on netflix. Obviously im going to choose the latter. Seems like there helping competition of it. Joe Lucas Shaw A Bloomberg news, thank you very much. Scarlet, over to you. Scarlet thanks, joe. U. S. Earnings season is in full swing with 80 members of the s p 500 index announcing results next week. Goldman sachs will unveil numbers before the u. S. Opening bell. Lets get a look at how Lloyd Blankfein is steering the ship. Anchor earnings of a whole have been positive. Jpmorgan, citigroup and bank of america have blown past estimates for fixed income trading. Goldman relies on trading more than any other big bank. That business made up about 45 goldmans revenue the last two to three years. Far and away the most important unit with Investment Banking which is the white line or Investment Management or investing in lending, the blue line. Take a look at the breakdown of its trading unit with fixed income, the white line, surging last quarter by 33 . An upswing in fixed income currency Commodity Trading could drive profit higher. U. S. Banks indoor their least profitable quarter in more than a year. Return on equity for banks overall, those of the gray bars, around 30 8 in the last quarter. The lowest since june of 2015. Almost half of the historical average prior to the financial crisis, that upswing before it went down. Goldmans rle is the orange line. Analysts expect and are only about 8. 1 for this last quarter, the thirdquarter. Costcutting remains a huge part of goldmans profit story. Second quarter expenses dropped 26 . Legal in compensation costs pose a 74 increase in secondquarter profit. It is estimated that goldman will cnet revenue increase yearoveryear for the first time in over a year. Looking for any kind of details on goldmans reported plans to at jobs, especially during Conference Call following goldmans results following tuesdays u. S. Opening bell. Joe coming up we speak with jan stuart. His call on europe in the Energy Market is next. Joe jan stuart of Credit Suisse is joining us now to talk about the oil market and Energy Market overall. Weve been seeing west texas intermediate oscillate above and below 50 a barrel for the last several weeks. Was the next direction . Jan it feels better than 40. Joe youre an oil producer. Jan of course. The idea is it saves lives in our view. Opecgh the winter, unless does pull off this deal and takes barrels off the market inventories begin to decline faster, then we could stay out of the range that was 40 to 50. Scarlet you sound kind of skeptical. Is anyone convince opec will follow through . Jan it is so interesting. You want to take a big picture view. You want to see that the linchpin producer, the one that says go away, that is the one that bounces. Theyre the ones with all the cards. It looks to me like they want the deal so badly maybe they are giving iran leverage to frustrate things. Side then setly up, if they do that right, what does the demand side like . Longerterm, not on a decline but a slow growth picture . Jan im happy to report to put five years into this crisis demand still is not the problem. Even in emerging markets where recession, inowth the worst of cases recession out right, still north of a Million Barrels a day. Develop market economies, especially here in america cannot we themselves off of oil that fast. While demand growth, 1. 5 Million Barrels a day. Forecasting a lower number next year. Joe i want to talk about the big picture macro look. A report for the World Energy Council anticipating that we may be less than 15 years away from peak demand. Peak oil not alone time ago. The demand. Here is a chart that suggests between an attempt to reduce Carbon Emissions and technological disruption oil demand might be in a permanent downturn i20 30. You think that is a possible assessment of the market . Jan the short answer is yes. Three broad drivers of oil demand left. Gasoline, diesel, the middle eastern complex, and petrochemicals. If we are all lucky, we can peak gasoline demand. Diesel kerosene will probably take longer. Petrochemicals will take longer again. The other ones all in permanent climbed the second half of the next decade. The same answer i give you 10 years ago. Matt so youre consistent. I saw a report in spiegel that germany wants to ban the production of gasoline engines for cars starting in 2030. Which is not long from now. Jan volkswagen cannot make the diesels anymore. Matt a lot of the producers of skeptical. Jan im being really nasty. I think it is a sign of things to come. If you can actually get the battery, the currency makes the best electric cars, 1500 pounds to heavy, make that battery way 500 pounds with the same range, youre almost there. One big gulp away from having a lower cost. It can be done, it should be done. Middle of the next decade as good a point is any. You kind of want that to be the case. Scarlet at the same time the cost of Renewable Energy like solar panels has been going down. Joe does another chart that is mind blowing there is another chart that is mind blowing. Installed solar versus expectations in various years. The white line, it is even beating 2015. The bottom line is where we thought jan my little pet peeve. I love these 40 long charts with straight lines. How dumb are they. . Joe we are crushing even light even last year. Jan i think it is called asymptotes because it is that good. Wind is that good. Im dutch, i ride a bicycle. This is what should happen. Joe is it going to move the needle for big players . Is a getting big enough so that it really matters . Utility. A west texas it is that good. Especially once it is installed which is much easier to do with subsidies. The price ofask getting the stuff out of the ground. I think the price of getting it out of the ground is maybe more important to read if you can get it out of the shale for less than 40 you will continue to bring it up without any kind of curve on production. Where do you see these prices . Jan thats a really good question. We built a model, a dynamic model. Getting it out of the ground, not that big of a deal. We can do it that way. 70 in our balances we kind of get too much. Blue is kind of precisely right. As things stand now. Pretty much the end of this week. The point is, you can find an insane amount of oil and get it to the surface and get it into 70. Arket at 60 or that would be a new 100. Things are improving until such time as the as they dont anymore and you have more expenses. That is why the curve whats to flatten out. Joe jan stuart of Credit Suisse. 55 a barrel call on brent and 6250 on wti. Thank you for your shortterm look and your perspective on the big state of the industry. Admonition to leave the big gulp. Its time for the Bloomberg Business flash. A look at some of the biggest stories in the news right now. Matt netflix. Huge news. Netflix added 3. 6 million subscribers in the Third Quarter due in large part to the hit series ranger things. Ranger things ar the Worlds LargestOnline Tv Network rebounded adding about 375,000 customers in the u. S. The company added 3. 2 million customers outside of the u. S. Where is the growth coming from . Thirdquarter revenue exceeded estimates things to after growth for newer businesses. A sign the couple he may start expanding again soon. Ibm operations now make up 40 of total revenue. Becoming a key driver in ibms revenue performance. That is your business flash. Scarlet coming up next, 22 days away from election day. Donald trump repeating his warning that the outcome will be rigged. Just how founded are these claims . Matt trope in clinton will meet for the third and final debate wednesday in las vegas. Joining us from bloombergs washington d c euro to lou on let me first ask you about the spread between Hillary Clinton and donald trump as far as the polls are concerned. Is she looking more and more like the winner here . Tulouse every pull that weve seen in the weeks since Donald Trumps campaign imploded with everything from the access Hollywood Video to his attacks on some of the women who have come out and accused him of groping them and sexually assaulting them, we have steadily seen poll after poll showing Hillary Clinton steadily ahead anywhere from four points to 11 points. In the swing states she is ahead everywhere from florida to pennsylvania. Preclose in ohio. Places like virginia and colorado. Matt not ahead in ohio. Toluse it is pretty close. About tied in ohio. Some polls have trump still ahead but he is sort of hemorrhaging votes specifically with women voters. Of these tapes and at positions. Its been difficult for him to find a pathway to 270 electoral votes. Joe donald trump has been cracking up talk about how the election is rigged. Over the weekend his surrogates said he means the media is rating it by being biased against him. But then he came out and said, i dont just mean the media. Also many polling places. His donald trump trying to undermine his own surrogates . Toluse they are definitely having trouble getting on the same page. Donald trump has consistently said the race will be rigged against him and there he is saying there is voter fraud happening already and its going to happen on election day. His Campaign Surrogates have tried to walk that back. He seems up i everyone from paul ryan to Donald Trumps running mate have said they will accept the results of the election and that is part of what takes moxie are freethat elections and fair. Hes a little out on a limb by himself but it seems like thats where his campaign has been going for the last couple of weeks. Scarlet glad you bring up mike pence. He has made it clear that trump will absolutely he intro will accept the outcome of the election. What is the gops confidence that mike pence speaks on behalf of the campaign . Toluse we have seen places would mike pence and donald trump have split. Everything from syria to the most recent announcement about whether or not the campaign is going to be rigged by voter fraud. It seems like it is hard to take mike pences word as the word of the campaign because donald trump is so such a strong speaker that he can veto what his own Vice President is saying from time to time. When you are listening to the democrats they are saying that they believe this is a sign of a campaign spiraling out of control. Donald trumps desperation, the fact that he is now saying the election is rigged against them. Matt story earlier about the fbi reports that Hillary Clintons aids at the state department were afraid to mark her emails classified or felt pressured not to do so. Is that gaining traction in washington . Toluse a little bit. The most recent announcement about this ongoing fbi investigation into Hillary Clintons emails. There we are hearing when they were doing this investigation it was clear that people at the state department felt pressured to say that these emails were not classified, something hillary clip that said before. Hillary clinton had said before. Matt thank you for joining us. Toluse olorunippa, joining us from washington dc. Joe what you need to know to gear up for tomorrows trading day. Scarlet Goldman Sachs earnings come out before the bell tomorrow and we will see intel after the bell. Cpi inflation data out at 4 30 eastern time. We find8 30 a. M. Out what inflation john im john heilemann. Mark im mark halperin. With all due respect to tom brady, would you say your enthusiasm for donald trump has deflated . On the program tonight, Donald Trumps rigged rhetoric and democrats are shouting quid pro quo whoa. The suggestion in fbi official might have discussed a change of the classification of one of Hillary Clintons secret emails