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