brent breaks $80 per barrel. will it break opec? it is so 2013. in 2015.o bitcoin good morning, everyone. this is "bloomberg surveillance." we are live from new york. we say good morning to you. greeley is decidedly off today. it is november 13. i was going to say friday the 13th and then i got rattled because it is thursday. more signs that widespread fighting is about to resume in the u.k. -- ukraine. tanks are moving into the eastern part of the country. the u.s. and europe are considering more economic sanctions. has negotiated a peace plan and then systematically undermined it at every step. it talks of peace, but it keeps

fueling more. -- war. >> both sides are accusing the other of preparing to attack. the battle over the keystone pipeline resumes on capitol hill and if likely to have a huge impact on the one senate race that has not been decided. the house votes today on the controversial project. very landrieu of louisiana persuaded the senate to vote on an identical bill. she faces a runoff against bill cassidy. hallelujah.st say, i will say it again, hallelujah. you would never have passed his body and not have any chance of getting the president's signature. >> even if the bill passes, president obama could still veto it. they probably don't have the votes to override a veto. >> president obama is an myanmar

today. he meets today with the president of the country. they have transitioned from a military dictatorship to a semi-civilian government in the last two years. he will also meet with the nobel prize peace winner, leader of the opposition. the obama administration wants more than $6 billion to fight ebola in africa. the money would be used for research, treatment centers in liberia, and enhanced screenings at home. >> the polar vortex is back. the rocky mountains have been battered. up to two feet of november snow. bitter cold temperatures. -3 at denver's airport yesterday, causing hour-long delays.

boston is bracing for a snowstorm tomorrow. meteorologists say we throw around the storm polar vortex to loosely. it refers to westerly winds. >> it refers to cold weather that is just too cold for anyone. already cooler today. unbelievable that denver was closed because of the cool. >> where was the polar vortex five years ago or in my youth? >> that was called normal weather. >> now it is called the polar vortex. the chart today is awesome. oil, south. as we look at the vixx, 13.02. brent crude. the ruble is front and center with ukraine. a weaker ruble.

brutal moves. to the chart. i have never shown this. this is oil back 64 years. >> the blue. >> this is the polar vortex of oil. [laughter] down 3.4are plunging standard deviations. in 64 years, we have only done during --ther time, >> for a man that gives lessons about walkie charts -- wonky charts. sinces is the last time 1950 that we have seen what we have seen in oil, which opec has to address november 27. >> or maybe they won't. >> i don't think they have a choice here. something that the big slide in oil prices is because workers are realizing that oil -- opec

is not going to do anything. work a goldman sachs and bank of america merrill lynch, all looking at this interesting back-and-forth. >it seems very supply based rigt now. >> all that supply is coming from the united states. the u.s. is swimming in barrels. >> the president visits myanmar as russian troops visit ukraine. opec will visit november 27. we visit with david wu. meetings. give us the update on oil. think francisco feels that $80 is going to represent the bottom. anything can happen, but i think it is quite interesting that opec came up with their dayection of $1 million per -- one million barrels per day

in declining demand for the next year. >> we will talk about oil and a bit. ukraine is really front and center right now. how do you look at russian ruble as a litmus paper for what we are seeing between nato and russia? >> it is interesting that finally putin is moving ahead and taking a more aggressive stance. it is very clear that the russian economy is suffering, more than putin would have thought possible. his staying power in this ukrainian struggle may not be quite as strong. >> tom always shows us the ruble chart, how it keeps weakening to new record lows. does it push vladimir putin to do anything? the russianial to economy? or can they continued to valuing the currency? >> russia imports most of the

things it consumes. they really don't produce very much. this is going to feed into higher inflation. will affecttion consumer confidence and public support to putin. if the inflation continues to is going to hit on standards of living in russia and that is when you will see a change in russian foreign policy. >> can the russian central bank afford to bailing out the ruble -- continue bailing out the ruble? >> more recently, they have actually stopped. they have cut back on fx intervention. from that point of view, they are finally trying to preserve their firepower. that is why the ruble has been going down much faster than a lot of people expected in the last couple weeks. >> what kind of effect you see another economies in the region?

is europe change anything it does because the ruble is continuing to we can? -- we can? >> germany is taking the biggest hit. as the ruble falls, russia possibility to import anything is weekend at the same time. ultimately, the engine of the eurozone is germany. russia is the third largest trading partner for germany. >> the pressure is on germany. all eyes are on mario dra ghi. how much lower do you think the euro is going? >> we think it is going to go lower eventually. we have a 1.20 target by the end of next year. toryone is expecting draghi do it tomorrow, but most likely they are not going to do anything until next year. >> bill gross, six months ago or

eight months ago, begin to talk about global liquidity. you look at the ability of markets to move. is there enough oil in the machine to make the markets move in an elastic and supple way or do we face some form of given the newsre flow we have seen? >> i think that the end of qe by the fed was a bigger deal than generally people ignore knowledge. -- acknowledge. i don't think the ecb is going to be able to provide an offset to the end of qe. 'se dollar as the world reserve currency makes the u.s. far more effective. is thisur expertise, nothing more than the rationalization of a currency adjustment? are we doing nothing more than currency debasement to solve monetary issues? >> i think that is probably true.

i'm just basically a little bit that we have not heard more protest politically in the u.s. >> what about in korea? , it putsat yen yuan hyundai out of business -- period. >> absolutely. it is all people talk about in asia. undermining. asia? you plant trees in can i do vladimir putin? >> he is standing. >> don't do that, actually. [laughter] >> i was pretty negative on china to begin with. i came away thinking there was probably more downside than upside. werebly only chinese bonds

not a bad thing. perhaps inflation is china -- in china is going to continue. the g 20 was to coordinate global economic policy. we just mentioned allegations of currency manipulation. are the currency war allegations alive and well? well is the g 20 coordinating monetary policy? >> i don't think there is much coordination. i think we have got to be very careful. on the currency front, personally i think the storm has not hit the u.s. that is when the whole currency issue becomes more of a problem. >> we need to go to asia.

phil maadding lee -- ttingly is in myanmar. be in20 summit will brisbane. we are going to check in with phil, who was on the road with the president. does he had to myanmar with a tail wind? a sense of achievement because of the climate change agreement? >> i think if you add the extension of visas they were able to lock in, also the information technology agreement , they are spinning the matter what when they come out of these trips and they want is to presume that it was massively successful. compared to the 2009 visit, now there is actually policy coming out. -- felthink they pelt pretty good about the trip. >> he is expected to meet with

the opposition leader. there is a lot of criticism that the president gave too much credit to myanmar, when political reform has stalled. >> it is merited criticism and it is criticism that the administration has been forced to a knowledge. -- acknowledge. that thea recognition military still has too much of a hand of what is going on in the cause i civilian government -- quasi-civilian government. there is a lot going on. that was heldea up as a triumph back in 2010, 2012. the president was the first president to come and visit. they just do not feel at progress is being made at the level they wanted to be. the president said today that there is backsliding going on and that is a major concern. >> perhaps he acted a little bit

too quickly. the president has a big to do list heading over to brisbane. what is he likely to accomplish? >> it is a great question. it is not as much deliverable as it is that u.s. officials feel like they are going to the g 20 at the top of the world economically. it is their position. as one administration official told me before the trip, we are going to this summit and we get to tell everybody that we were right. there has long been an argument about stimulus versus austerity, our versus their policies and we get to say we were right area that might be getting a little bit ahead of themselves, but that is kind of the perspective they are taking. there is a lot of concern in the u.s. and worldwide. the u.s. position is that they are going to try to position themselves to take the steps. >> thank you for giving us some important context. , with brent crude

trading below $80 per barrel, where does that leave opec? how much yelling across the negotiating table will there be at the end of this month? we will discuss on "bloomberg surveillance." ♪

>> good morning, everyone. what will be your biggest investment in 2015? you cannot say tuition. that is already taken. [laughter] >> this is "bloomberg surveillance." greeley is off today.

brent crude falling below $80 per barrel. .e bring in stephen schwartz thatanalysts are saying even if opec does agree to cut thist at the meeting later month, prices would just keep falling because of the supply glut. >> eventually, markets are self-correcting. there is a supply glut. we have to keep in mind that demand is at its lowest point of the year. we are in a shoulder month. demand will come back into the market in the united states refinery demand will pick up in the next couple weeks. the situation in opec is a concern about the potential supply in the market.

it is outstripping demand. >> you think there will be a contentious opec meeting. >> i think all opec meetings are contentious. we are talking about a number of countries that culturally, geographically, economically, there is always a concern. long bond is trading $.55 on the dollar. threat ofn severe default. they are going to have to pump to get income into the door. -- there ishey are going to be that discrepancy between the haves and the have a knots. >> where is the bottom for oil? you can never say how low any

commodity can go or how high. i think we are at the bottom. we are at that mid $75 level. youhing below $70, then really begin to impact the economics of north america in production. then producers will begin to hold back barrels from the market. that there is no agreement on any sort of cut by opec. this is a broader sign of not dissension within the cartel, but the cartel's concern with regard to global economic health. >> thank you so much for joining us. primer, howarda ward will join us in the next hour. stay with us. "bloomberg surveillance." good morning. ♪

>> good morning, everyone. let's get right to our morning must-read. you are going to like this one. it comes from the "financial times." ,rime minister abe economically japan has a best chance in a generation to and deflation. deflation. it would be as tedious to return as it would be to get over it. abe so desperate

to a vert continued deflation that he is going to need to call a vote to avoid a second sales tax hike? this, way i would look at i was just in japan recently -- the problem with the weaker yen is that it is not longer clear that it is a win-win for everybody. >> is it meant to benefit them? >> the idea is that the weaker yen is supposed to make japanese goods more competitive, so they should beginning market share and so far they have not. everything is a lot more expensive than last year in the supermarket. that is weighing on confidence, it is weighing on basic consumer spending. at this point, to me, the limit of this is more interesting than the potential. olivia's great point about the election that may happen or of the greatthink

work of bank of america and morgan stanley emphasizing the lack of a third arrow. what is a third arrow and where is it? think markets i are starting to become a little bit more skeptical of basic abenomics. you see much more volatility. >> speaking of volatility, qe is over or is it really? david woo says there was a secret qe score. did olivia quote shakespeare? she is awesome. ♪

>> good morning, everyone. "bloomberg surveillance." we need to get to our top headlines. they are newly minted. >> at goldman sachs. the firm has named 78 members to its latest partner class. employees in the trading and research division makeup the new 38%. this new class has 11 women or 14% of the total. partners typically get about a $900,000 salary.

investors paying a visit to twitter's first analyst day. the ceo's vision includes $11 billion in revenue in 5-8 years. 7.5%.r shares rose google's youtube unveiling a new music streaming service and raises stakes in its competition with apple. it will begin on an invite only basis next week. will be $7.99rice per month. taylor swift's music will be included. >> i'm going to rip up the script. we have a class act with us, david woo. i am dumbfounded by the media's fixation on any given firm's partner appointment. do you agree with me that it is ludicrous to single out goldman promotionsanagement

and the intended compensation that comes with that versus every other firm on the street? i just don't get it. >> i'm not in a position to comment, but goldman is the only bank that actually has partners >>. >>you have managing directors and the rest. whether it is in youth and harris or the others we speak to. >> i want to chime in. have you heard of something called bridge street? it is the goldman sachs employee only private equity firm that lets partners invest with no fees. lloyd blankfein and got $126 million in the past five years through that fund. is an investment of bank of america merrill lynch. enough on this jury of let's get to something important. i just look at the fixation >>. >>membership has its privileges.

>>. . oh stop. i just don't get it. perhaps i will get economics of -- perhaps they will get back to the economics of david woo's textbooks. will we see instability? >> i think we will. good news has been good news. bad news has also been good news. bad news means the fed is going to do more. that is good news for financial markets. forward, you have to recognize that now that the fed has exited qe, the political is so fareenter qe down the line, things would have to get a lot worse. qedo they like in their migration to the animal spirit of a given nation?

how do they link this decision train? >> you could say now that it did not take very much bad news for them to justify qe. would have to believe that things will have to get a lot worse. when he said that we may not end qe, the stock market has not stopped rallying cents. thinkforward, do you they're going to come in your program and talk about qe? no. the market has not fully appreciated the cost of the fed doing qe. that means now that bad news is bad news. >> i love when we get guests that talk asymmetrically. [laughter] that was a great asymmetric conversation. >> there was also a secret qe floor going on.

,> i think the secret qe for any tapering by the fed in terms chinese andchases, u.s. bank purchases and further securities. this is the reason why, instead of being a surplus of treasury securities, the market has had to absorb a shortage. >> there has been plenty of demand from the private sector and chinese banks. are burdened with having to meet the liquidity coverage ratio. with china and citibank and the fed, demand for securities is largely price insensitive. citibank will have to do price lcr. the fed is doing qe. china is looking out for its reserves. this is a much bigger impact on prices. >> three levels of elasticity in that one. [laughter]

that was a massive data. would you like to lecture us on elasticity? >> i would really really not like to do that. [laughter] in this brave new world without the fed put, ken draghi fill the punch bowl backup? >> i personally think, no. how does u.s. qe work? the dollar is the reserve currency of the world. >> but they don't have that luxury. >> exactly. the only impact on the bank of japan is the bank of korea. is in my years saying i have to explain. explain the superiority that the u.s. has with the dollar. the fed can print more money

and actually get more for it. no other currency can. that is the single most important difference. >> from a game theory basis, how many degrees of freedom has draghi lost because of the bank of japan announcement? >> i think since the , heuncement, if anything has benefited. >> the bundesbank will blank. -- blink. [laughter] the buddhist bank will blink. do you relax they have oxygen tanks in our control room? people are trying to figure out what the hell you and i are talking about. [laughter] >> everybody thinks the bundesbank will blink.

i think of the cover of "paper" magazine. >> oh my gosh. not safe for work at all. [laughter] >> go google it. >> really? >> i blush. ♪ kanye. [laughter] ♪

>> good morning, everyone. "bloomberg surveillance." what will be your biggest investment in 2015? we heard from the boston red sox. their response was the middle infield. good morning, everyone. it is "bloomberg surveillance." we have a single best chart. off.an greeley is howoday's chart shows active some emerging central banks are when it comes to liquidity injection. the white line is the fed. what these lines do not measure is the value of each balance sheet. .he white line is the fed

japan is in red. europe is in blue. >> the blueline rolls over. >> they are pretty much a 3.3%. the green line is china, brazil, india combined. they make up a most 8.5% of global gdp, more than the u.s.. and the u.s. has been arguably the most aggressive central bank. king was way out in front of this on level matters. there is something about the blunt interest, the blunt reality of level, isn't there? >> i think the biggest take away is that china is becoming much less responsive to basic liquidity and credit stimulus. over the last three years, for every one dollar and china, they have been able to grow less than basically $.30 per new gdp. that is telling you the

productivity growth is coming off in china. a lot of investment is going to wasteful investment, a lot of it is maybe going to manhattan real estate [laughter] . --do you believe what are it larry summers says about china reverting to the mean? >> i'm of the view that chinese growth is slowing. the chinese miracle is going to be stunted in the next two or three years. perhaps global markets have not priced in the full impact of the chinese slowdown. that speaks of india, brazil, and china. we left russia out of that wonderful chart. here is a wonderful discussion at oppenheimer fund studios. i spoke with the chief investment officer at oppenheimer. i spoke with him about the importance of his india. >> india has become far more relevant in the global context.

down,k with china slowing that will only increase. theink the task for narendra modi government is to make sure that from a policy and execution standpoint, they deliver. they implement the structural changes that they need to implement, raise the capital that they need to raise to build infrastructure that they need to build. as you advisor clients, could you get on the indian bandwagon? or is it just going far enough? i think it is a terrific story. i think india is going to give china a run for its money in the next 10 years, possibly. for most of our clients globally, it is indian equities. it is a great story. the main lesson this year is the right train crowded becomes the wrong train. that is a very relevant point. >> i think he just answered our

twitter question of the day. >> i think he did. >> toward the rupee. >> do you have top photos? numbers start with three. the world's shortest and tallest man have met in london. this is a man from the paul the measures in at one point -- one foot and nine inches. and the man from turkey measures eight foot three inches -- a foo. >> so three inches taller than my hand? london is great. you could not get these to treat new york. >> should we send you to london next year? >> what else do we have? >> the polian's hat is on sale in an auction -- napoleon's hat is on sale in an auction.

the auction will take place in france where napoleon had a palace currently owned by the family of prince louis. fontainebleau?in ciad. do you think a chinese buyer is going to buy it? >> napoleon's hat. >> the chinese admire napoleon. 30% of home sales have gone to a chinese person. >> the other 60% went to marissa mayer. >> you are going to like this one. >> satellite 67. the satellite landed on the comment yesterday. it is the first landing on a

comet. the harpoon failed to secure the landing, but since, it has stabilized. [applause] to 10 years to complete. the satellite traveled over 4 billion miles. the comet itself is 2.5 miles wide. it weighs 10 billion tons. it has its own gravity, which is how the lander is. sitting there in hoodies, which is completely different than the movie apollo 13 where everyone is in shirts and ties. >> there is raging debate. the expense of man's travel in "apollo 13." versus this. you wonder where the debate moves forward. a have a bloomberg link event number of months ago on man's travel expenses. >> you have to bring richard branson into the conversation. >> he has had a tough front of it. -- run of it. it shows the risks. >> it is a big step for mankind.

we have a lot more coming up. we discover -- discuss bitcoin. that brings us to our twitter question of the day. what will be your biggest investment in 2015? tweet us. ♪

an important conversation in our next hour on radio and television. you know him as a bull. he still is. he has been incredibly right. howard ward in our next hour on 2015. we say good morning. "bloomberg surveillance." in new york city. awaiting the polar vortex. she'st -got-her-down-jacket fu. may bemworks animation bought by hasbro. another data breach at hsbc's

turkish unit. 2.7 million customers have been compromised. the intrusion resulted in the theft of cards and related bank accounts. they have no other information that was stolen. a breach should not result in financial risk to customers. revenue forecasts at cisco of estimates. analysts were looking for a percent. cisco has struggled. those are your top headlines. across the bloomberg terminal. versus 1.6 eight. good to see that. home entertainment down 38%. filmed entertainment grew. >> you know why that is? "transformers: the age of

extinction." >> he doesn't know "transformers." >> oh please. you are a font of viacom wisdom. >> i have been babysitting boys. >> i'm going to do bitcoin. we trust. bitcoin has clear potential for growth. that is what david woo forecasted in december 2003. back then, bitcoin was trading around 1200. where is it going to be in 2015? currently come a are around $400. it is probably volatile -- pretty volatile. do you still think that quantifiable? >> there is no reason to think otherwise. we have to separated as

an investment versus a payment system. i think as an investment, i think it has limited upside. that was the purpose of the original research report i put out. in this environment on the dollar is going up and gold is going down, people are running for safe havens. i think bitcoin is a payment system has less constraints. in number of companies are adopting bitcoin. you have to see it as two different things. >> the fundamental problem is that it is just so volatile. it is -- is it not too volatile to be used as a currency? >> i think it has become a little less volatile this year. as -- >> come on. you are driving me nuts.

i'm looking at the price movement. i agree that we have seen the dampening function of dollar volatility brotherhood in the last 12 months. we are nowhere near a currency equivalent that makes visa and mastercard go. we are years away from that. >> i agree. the point is that also in new york, they are embracing the idea of creating a regulatory framework. that has to be a condition. >> we have a little bit of a sound from the new york's banking regulator who is a bit of a bitcoin believer himself. the promise of bitcoin is very interesting. i think the technology, though it is still nascent, is quite powerful. someday in the future, if virtual currencies get off the ground and become more widely used and scalable, you could see some real advantages in an alternative payment system that some people will use, some of them not, when it is more efficient to bring costs down to

you can move money all over the world, even to countries without a modern banking system. >> the ease-of-use has its obvious appeal. wendy you think this is really going to catch on? is 2015 going to be the big year? >> i don't know if it is going to become the next big thing. iphone payment might. i think it will stay and specialty countries. remember, right now, if you make a purchase online, you are paying as much as 2% or 3%. where the real advantage of bitcoin is. it has certainly caught on in countries like china as well. think is a much for joining us. -- thank you for joining us. >> the headlines from ukraine. the ruble is down. it is a weaker wrubel this

morning. eu foreign ministers announce meetings in brussels on monday on russia and ukraine. one of our themes in our next hour here on "bloomberg surveillance." stay with us. howard ward is next on your 2015. ♪

return, keyeen men

of for attack. as the united nations holds its 26 meeting on ukraine. crude breaks $80 a barrel. can brick and mortar retail survive? good morning, everyone. this is "bloomberg surveillance ." i'm tom keene. with me, scarlet fu and olivia sterns. let's get our top headlines. >> ukraine appears to be on the brink of widespread fighting once again. russian troops and tanks have been moving into the eastern part of the country, which has prompted the u.s. and eu to propose more economic sanctions against russia. >> russia has negotiated a peace plan and then undermined it at every step.

it talks of peace, but keeps fueling war. ukraine signed a cease-fire with pro-russian rebels more than two months ago. now, both sides are accusing the other of the tack. -- a planning to attack. candidates in the runoff election in louisiana support keystone. mary landrieu and bill cassidy. the information we've gotten is they plan to pass it tomorrow. let me just say, hallelujah. i will say it again, hallelujah. >> even if the keystone pipeline bill passes, president obama could be tell veto it. >> if it is thursday, it must be myanmar. that is where president obama is.

he will meet with the president of myanmar to push democratic reform. president obama will also meet the the leader of opposition. tomorrow, the president flies to the g-20 in australia. the obama administration is asking congress for more money to fight ebola. it wants 6 billion more dollars build a treatment centers. >> it is frigid. the polar vortex. perhaps the beginning of a nasty winter storm. the rocky mountains battered by up to two feet of snow. below zero in denver. causing massive delays. to the east, boston bracing for a snowstorm tomorrow.

westerly winds that circle the arctic. -- what didrstand we call it eight years ago? there is a polar vortex on each and every walmart. a data check as we look to walmart. crude south $76. let's get to walmart's earnings. >> walmart's net sales increased 2.8% in the third quarter. when hundred $19 billion. -- $119 billion. the earnings per share, $1.15 for the quarter. a slight beat on that. $5.02. we know walmart had already cut

its forecast earlier in the month. this is great news. not seen comparable same-store sales growth into quarters. >> you are so glass half-full. >> you want to know what's going on with walmart? rollbacks on princess elsa costumes. that is the story of this christmas season. >> kohl's coming up with results as well. missing analyst estimates. >> like what we saw with macy's yesterday. -- howrican consumers important is american consumption to your performance with your 401(k) in the stock market? joins us this mike at retail has been sluggish for year-and-a-half. that a good or bad thing?

>> the key thing is what will it do for the next 12 months? the next 12 months will see a decided uptick in consumer spending. that will be driven by the decline in gasoline prices, lower mortgage rates and increasing payrolls. >> do you scale towards the walmarts of the world? >> you can do either at this point because both stock groups are somewhat beaten down. there are some real opportunities in global luxury brands because they have really been beaten down. >> walmart at 2.4% yield. 12% dividend growth. people don't expect that from a nominal gdp retailer. >> they don't. it won't be 12% every year. walmart is -- has a terrific window on the u.s. economy. they have been through the difficult times. a very well-managed company. >> three dollar gasoline helps

walmart. what other american copies does it help? >> guesses below three dollars now. -- gas is below three dollars now. north of four dollars to $2.80 a gallon in the last couple of months in denver. this is going to help all parts of the economy except the energy industry. thing for theive developed world. the global leading economic indicators are highly correlated to declining prices of oil. the price of oil is not going to rebound significantly anytime soon. >> i want to put some context around the benefits. as a general rule of dumb, everyone sent change in the price of gasoline to a billion-dollar change in consumer spending over a full year. thumb. general rule of

this is great news for anyone that relies on the grocery -- on discretionary spending. i'm thinking amazon. >> amazon will be a primary beneficiary. is consumer free cash flow disposable personal income and you take away the financial obligations and food and energy costs. this is not a new high right now. it may take another few months or a quarter before it starts to kick in for the economy, but it's going to happen in 2015. in much stronger economy that people are expecting. >> does become a drag on inflation? they are not supposed to look at the commodity prices. it should not. i don't think so. the decline in the price of oil is going to be a terrific

tailwind for our economy. the fed needs to focus on their mandate of employment and core inflation. it going to be in the back of their minds and will influence their decision? it might, but it's not supposed to. >> because of the volatility. , peopleyou look at this that are cautious and skeptical. howard ward was there at the dock as the boat left and then you dived out in the water and swam out to the dam boat. --you have been this right is there something unique about the last six years? >> i've been doing this for 36 years. mario has been doing it for 150 years. experience does play a role. i'm aging like a fine wine. too.e plenty of mistakes,

i've made lots of big mistakes starting with brazil. what was the biggest mistake you made on a broader long-term investment? >> going back to the second quarter of 2002 when i was way overweighted in media oriented stocks. the problems with aol and media, the whole thing fell apart. that was a killer. >> you learn from that. what can our viewers and listeners learn from when you as a pro made that screwup? portfolio't want your to get too lopsided. i had 23% in media oriented stocks. the overall market is 3%. i was way -- >> growth equity fund only has by,. -- has viacom.

you must be thrilled about the success of transformers. >> whatever you say. >> this is important. what kills you in investment is what i call how much it is. when you own too much. how much do you own? the most underestimated thing and investments. >> you know what you can't own enough of? princess elsa swag. >> still there. price persistency. >> what would be your biggest investment in 2015? this is "bloomberg surveillance ." ♪

>> good morning, everyone. maintains that optimism in the new year. and better than ok earnings growth. we have to get to the details. from february of 2009 -- my goodness. you're talking 15 times more

earnings that a market right now. just under a 2% dividend yield. third-quarter earnings growth is about 9%. 2015 is going to be similar to that. above consensus. i think that is where the economy is going with some acceleration. importantly, competences back -- confidence is back. the fifth record year for gdp growth. that confidence plays a huge role in the economy. >> buyers respond to people like robert shiller who would suggest we are richly priced. i will disagree with his work because it is backward looking. i know it has real historical validity. i focus has to be on the next 12 months, the next 24 months.

not the average of the past. the stock market is pricing itself on the future, not pricing itself on the past. >> what about technology? cloud-based, should to cloud. the hardware companies like ibm and cisco. is there extraordinary value there? >> you have to be careful there. the clout has been disruptive for a lot of these big legacy enterprise companies. a million selling dollar box with a big service agreement attached to it is not what it was. there are lots of alternatives that are far cheaper. those companies are going to be challenged from a growth perspective. they may ultimately get more revenues from the cloud. is ahead. the cloud >> we will give you more on that

with the chief executive officer of cisco systems eared will be on market makers today. he has a lot to talk about. the visibility forward for cisco. a bit rocky yesterday. we have so much to talk about. the view forward to 2015. ♪

good morning. scarlet fu with our top headlines. >> the spacecraft lands the first ever probe on a comet. was notessful touchdown known until 28 minutes after the fact. the amount of time required for a signal to reach earth.

hasbro isaiah major step into entertainment. the toymaker is in talks to a choir dreamworks animation. profit and revenue forecasts and cisco falling short of analyst estimates. cisco says sales will climb 4-7% this quarter. analysts are predicting a percent. cisco has been struggling with a customer shipped to cloud-based networking. trucks of aid 82 will be sent to ukraine tomorrow. nato says they are already anding tanks, cargo supplies over the border. both sides appear to be -- it is onlya going to get worse.

why does it appear that putin is marching troops back into ukraine? to keep ukraine unstable. the point is to make ukraine and unreliable negotiating partner with the west and raise doubts about their ability to pay their debt and keep ukraine dependent on russia over the longer-term. we were talking about the same thing last time i was here. they can do this by infiltrating the country, support from the military for rebels on the ground, use natural gas. momenthis an incremental or a jump condition to something new? thet is incremental in sense that i don't think this is a sudden change. they will go back and forth over the longer term. this was not a 2014 story. it's a longer-term story. >> you mentioned how this is deja vu. why go to the same playbook? >> he is doing something else in

the sense that the near term tactical goal on the ground for the rebels is to create a piece of territory they can defend. they want to expand the territory to the south to good access so they can really supply. another way of the russians and we don't care what you criticize. >> one thing that is different is the calendar. winter is upon us. this is absolutely suburban. -- superb. bloomberg view. i'm cold." he walks through -- a snapshot of the corruption there.

why are imf dollars going to such corrupt enterprise? put peopleputin has on the spot . they don't want to look like they are impotent in the face of russian aggression. we saw angela merkel singh yesterday the russians are undermining the agreement. the more the russians are aggressive, while it serves their purpose at home, it keeps the europeans and the u.s. on the edge of wanting to what's necessary -- wanting to do what's necessary. >> desolation of violence as a goal. doesn't that raise questions about the strategy of sanctions? >> they will not isolate russia. at sanctions have a long-term effect on russia but give the russians opportunity to back off if they want to. clearly, they don't. >> do you see more sink is coming in the next 48 hours?

>> there are sections coming in weeks, but not ours. >> you don't like resell or russia. -- brazil or russia. you start to cut down on holdings in europe as well? >> to the extent that what's happening in the ukraine results russian economy and greater trade sanctions and more of a negative impact on growth in europe, at the margin, we would have to weigh that, yes. the european stocks in many cases have grossly underperformed u.s. stocks over the last 12 months. there are real opportunities there if you believe that europe can continue to grow. canraghi does everything he , is that still enough? >> winter is coming. putin is feeling he has a

stronger hand of cards. we have heard he needed a hundred dollars a barrel to balance his books. it is balancing his books not putting pressure on putin, what would it be that would hold his feet to the fire? under 20ave for billion dollars in reserves. they have quite a cushion they can work with over the near-term. -- they have $428 billion in reserves. clearly, they think they have risk tolerance. they probably do. over the longer term, it becomes a bigger issue. responsepect no nato to the images of tanks going down roads into an almost nato nation? >> there will be a rhetorical response. there is a big difference between a nato nation and an almost nato nation. unbelievable.

the latest between ukraine and russia. our twitter question of the day. what would be your biggest investment in 2015? tweet us. we will be back. ♪

>> i don't care what you say. doing a -- i'm not vladimir putin naked body thing. we are not doing that. >> i just showed it tom a picture of vladimir putin topless writing and their. -- writing a bear. >> we will talk about ukraine. ukraine appears to be on the brink of widespread russian troops have been moving into the eastern part of the country. ukraine signed a cease-fire with pro-russian rebels more than two months ago. both sides are now accusing one preparing toe

attack. the obama administration wants $6 billion to battle evil in africa. -- battle ebola in africa. another data breach in one of the world's biggest banks. the date of 2.7 million customers has been compromised in a cyber attack. -- the day top of 2.7 million of 2.7 millionta customers has been comprised in a cyber attack. who with a 5000 statistic on ebola. better than expected. >> they still have the 22,000 number that looms. we want to go back to the hacking theme. individual criminal hackers are roaming the internet and there empires.ng

then, you have anonymous. a leading expert on activist hacktivist-- on the collective. welcome to surveillance. people have different ideas about what anonymous really is. who are they and how big are they? >> anonymous is a bit difficult they are aecause name that different groups take. , ituse they are anonymous can be quite difficult to know how many people are involved. when there arets big protests when 5000 people show up on a chat channel. a lot of people participate. >> do we overestimate their strength? >> in some ways, we do. their biggest role is providing a publicity bump for certain

issues. when they do infiltrate systems or hack into places, that can have quite a notable effect. is buyingre hathaway duracell. procter & gamble is getting wind of a bunch of different businesses. they are buying duracell. >> they will pay $1.7 million in cash. exactly the kind of big acquisition we expect from warren buffett. this comes after he bought heintz for $12 billion. not a big surprise. likely to see a big pop in p&g shares. coleman.o gabriella hackerng from your book, s or whistleblowers. this is a culture that adopts disruptive strategies for

capital gain. what are the group's core believes? >> they don't have one mission statement or one ideology. in many ways, you can only do find them through particular operations. most of the participants are geeks and hackers from the internet. they tend to care about civil liberties like free speech and privacy and surveillance. the three corporate and butter issues. aside from that, that's the difficult thing. there's nothing you can say universally about anonymous. become occupy wall street or did they come out of occupy wall street? they jumped in wooden occupy was announced and became an informal propaganda wing. >> thank you so much for giving

us a snapshot of anonymous. let's get you a data check. futures are higher. the 10 year yield coming down to -- >> good morning. i'm olivia sterns. world leaders converge on brisbane, australia for the g-20. russia will be on the agenda. how does this latest incursion affect the conversation? of these multinational groups have such a wide variety of interests. they have various relationships with russia and europeans and the u.s. it will not be a very interesting discussion because nobody wants to take sides that

might cost them commercially or politically. >> is there a lot of sympathy in the g-20? the foreign minister reiterated that if we hear from russians, it's nato that has been aggressively expansionist eastward. is there sympathy in the g-20 for what it was saying? if you look at the united nations boat when the russians went into crimea, who voted with the russians? sudan,, belarus, zimbabwe. not exactly an all-star team. if there are countries like china that find use in partnering with russia on specific things, then yes. they have sympathy. a lot of people would like to limit u.s. and european power in the world. this is not ideological. >> we thank you so much for attending.

with -- howard ward with us. mr. buffett acquires in a chronic brand. this is classic buffett. a recapitalization. he comes out with crash. -- acquires an iconic brand. >> it is not a great business. the battery business is a commodity price intensive business. that's why p&g wants out of it. well with the same discussion you just had. can berkshire hathaway prosper with a perfectly competitive microeconomics ? >> does it fit into his portfolio of consumer businesses? i'm skeptical. --lette was the original they bought duracell and p&g bought them.

i don't view the battery business as a compelling business. >> it's amazing to look at this. in under $5 billion transaction. i never would have guessed that. >> $6.4 billion in cash and stock. recapitalize -- this is a move that is already moving berkshire hathaway shares. >> a critical distinction with png. they generate 8% dividend growth. they are an old stallworth. that is not good enough anymore. these big stodgy companies are trying to be subtle as we see spinning off duracell. >> he has done a great job as -- he is a smart guy.

he would not be selling duracell unless he thought it would enhance the overall growth. >> continued pressure on corporations to permanently change to these new efficiencies , he would you would to do with a portfolio -- new acuity with what to do with a portfolio. there might be a bit of that. lot of brands at png and they have been going through this process of calling the brands -- not surprised they're calling this one. more power to them. win, andto illuminating book. will we see more of this from these big traditional companies? >> yes. it i agree.

>> one of the reasons howard ward is bullish on equities. carp with the question of the day. what will be your biggest investment in 2015? -- our twitter question of the day. ♪

>> this is "bloomberg surveillance." warren buffett berkshire hathaway making an acquisition, buying duracell from procter & gamble. and shares. in cash this is already having an effect on the stock. p&g shares are moving higher. >> i want to bring in betty liu. energize are pop.ng ia >> a man who has been going elephant hunting. >> this is classic warren buffett. procter & gamble is a company he knows very well. imagine warren buffett sitting in his office in omaha and saying, come on, everyone is ries for use batter

the rest of their lives. the same thing he said about bubblegum and coca-cola. this makes perfect sense for buffett to buy duracell. dollars ofions of liquid on hand. he has been looking for lots of acquisitions. while it is $6 billion, a drop in the bucket for buffett. >> ministers are looking for something to do with that cash. they have been prowling the same targets. >> buffett is still in the process of constructive acquisitions. >> he's against buying back shares or issuing dividends. when he has his capital, he

wants to put it to work. >> one plays he is not putting his money is real estate. something you will be talking about on "in the loop." many are looking to sell come including matt damon. this is his home, which is for sale in miami. are you a bidder? >> the $20 million price tag? of course. apparently, miami is continuing to heat up. it -- making his first foray into miami this year on south beach. despite all the economic problems around the emerging markets, it seems like latin american investors are buying in.

liu, thanks so much. just an aside on the warren buffett deal. whopping $4.7 billion of p&g shares for the duracell unit. he bought those four $336 million. get.e kind of return you >> the kind of return warren buffett can get. ♪

>> good morning, everyone. friday, the number one expert in america on the pollution of china. elizabeth economy will join us. the momentous decision made by the chinese and united states on climate. thrilled to bring her to you. we have important breaking news. mr. buffett at it again. >> he is buying png's duracell unit, the battery maker. buying it for $4.7 billion in equity. he already owned p&g shares.

he will turn that over to png as the purchase and take on duracell, one of the brands png was disposing of as it tries to slim down. wouldt gwyneth paltrow call a conscious uncoupling. >> it was their sixth largest holding. >> there's a nice headline within the bloomberg terminal. thrown around like a cupcake on wall street, part of the income statement. adjusted for a hunk of the balance sheet. png is giving this dog away. received is seven times next year's duracell -- a giveaway in this market. know, at valuation like

that, it tells you this is a low growth business. i am not a fan of duracell. maybe this works for warren buffett. >> why would it work for berkshire? what does mr. buffett see in this transaction? >> maybe he think's is an attractive price and maybe duracell throws up a lot of cash. >> he gets p&g shares, right? >> yes. it's not just making an outright purchase. they will recapitalize duracell with $1.7 billion. >> the mechanism here -- they get a preferred cake on the shares. i don't see that in the announcement. >> it will push the price up nine points. >> it is a kick with png if they come back.

it gives mr. buffett a greater cash flow. >> no one can cut a deal like warren buffett. he is in a league of his own when it comes to negotiating these special deals. the battery business, private and other competitors, most consumers do not have a lot of brand loyalty. >> i just get the costco brand. &g. don't own shares of p -- durablemer consumer stable company be a growth stock? >> can it be a stock that has steadily increasing earnings even at a relatively low level? yes, it can. p&g, bigunilever,

global businesses knocking has with each other. they have all been pursuing emerging markets. a very competitive space. that's why png reached a point why instead of throwing more and more brands out there, they are retrenching. >> there were headlights back in august saying png was hoping to shed half of their total brands. including tied and pampers. >> tide would be one of the big ones. >> we are thrilled to have howard ward. this is the new corporation. lapsley -- when you look at this, it's a new corporate

egos. ethos.porate user >> they have to determine what they want in their portfolio. they have to measure each unit and have an expectation for what the future growth rates are. if they don't measure up, they have to unload them. you also say stocks remain incredibly under owned. only 42 percent investment stocks versus 53% in 2000. >> right. , the 10 year treasury was yielding 6%. now, it's 2%. year, there has been no stampede. it did of a constant trickle this year.

i think that will continue. moved fromes of p&g berkshire back to p&g. i have to believe there is a sidecar deal here. always -- he always has something going on. form of preferred transaction. >> we want to get to our twitter question of the day. what will be your biggest investment in 2015? >> straight up equities. did you tweet in? >> buy stocks. >> gold. what goes down must come up. >> what a dicey call.

>> i don't think it's a good environment for gold. >> final answer. my wedding. hoping for good returns on that one. i like that answer. >> a long-term investment. a preferred deal. olivia sterns reading the new york times today. >> my 2015 investment. --the 90th floor >> i can't imagine a better way to spend money. a beautiful penthouse apartment. >> that would be very good. olivia dreaming. a big theme in new york city, mega skyscrapers. >> let's get to our agenda. tom, you are looking overseas.

russia. i don't agree with the russian invasion. are agree that sanctions again on the table. it will be fascinating to go to ande eu meeting on monday get action. will we see some form of enhanced sanctions? >> the rhetorical response. my agenda item is the president in myanmar. he finished up in beijing. he is attending the summit in myanmar meeting with the vietnamese prime minister and the opposition leader. he will make i his way to the g-20 summit. >> secretary clinton made this

real priority. myanmar, burma. she was the one that added an initiative to jumpstart the new dialogue. >> some might say she moved to quickly. bush was also a big champion. speaking of bipartisan consensus, congress now wants the keystone pipeline. they are set to vote today on the keystone pipeline. the senate will vote next week. , democrat from louisiana said earlier this morning, hollowly a. she is a big supporter of energy infrastructure. -- said earlier this morning, allelujah.llowly

>> howard ward, thank you so much. "bloomberg surveillance" on radio continues. in the loop with betty liu is up next. have a great morning. ♪

>> good morning. we are live from bloomberg world headquarters. we have a great show lined up for you. warren buffett going hunting again.

berkshire hathaway buying into the battery business. a big move this morning. i will bring you all the details in a few moments. the miami condo market is sizzling. look frack from his latest of element. lunch with chris christie last week. they were apparently discussing the elections, perhaps. first, here's a look at our top story this morning. that big move from the big guy. warren buffett buying duracell from procter & gamble. $6.4 billion. p&g has been trying to streamlihe