into a november route. the economy unexpectedly fell into a recession in the third quarter. opec prepares to beat, but is it prepared to deal. the price of oil continues to drop. it is now every petro state for itself. good morning. this is "bloomberg surveillance ." this is monday, november 17. i am not tom keene. i am brendan greeley. haveeene and scarlet fu left me to the tender mercies of stephanie ruhle. topet's get you to the headlines. i am not sure if you did all your homework. i'm here to help. let's get started. an unpleasant surprise for the world pot third-largest economy. fell into actedly recession last quarter. gdp fell at an annual rate of 1.6%. that is the second quarter in a row the economy has contracted.

the japan has struggled to shake off the impact of last april. shinzo abe is expected to put off another tax hike to next october. the tax may not be imposed until 2017. of more a lot of talk sanctions on russia. european foreign ministers are meeting today to discuss expanding a list of individuals being targeted. meanwhile, russia hospira's in a, vladimir putin, left the g-20 they toldposco -- prudent to quit arguing -- quit arming ukrainian rebels. at one point he ended up leading lunch by himself. he was prime minister david cameron. >> if he continues to destabilize ukraine, there will be further sanctions, further measures, and a different relationship between european countries and america on the one hand and rush on the other. >> guzan says he left brisbane

early to be at work this -- vladimir putin says he left brisbane early this morning to be at work. he said it is a long flight from moscow and he needed sleep. families of those killed or injured in crashes with faulty ignition switches will have an after month it submit their claims against general motors and what is the reason? hundreds of thousands of gm car owners are just now being sent owners about the claims program. so far more than 2000 claims have been filed. are --an 200 of those >> so far the second round of obamacare has had a much better start than the first. the administration says 500,000 people log on healthcare.gov saturday. 100 thousand submitted applications for insurance. no technical problems were reported in the first 24 hours. again, a low bar to clear.

that is a big change from last the obamacare website collapsed on its first day of business. and the postal service will deliver holiday packages sunday in big cities in high-volume areas. to delivery is a profit center for the postal service that expects a 12% increase this holiday season. e also has aic deal with amazon. those are your top headlines. i feel kind of bad for vladimir putin. do you think anybody will send him a christmas package echoed dr. definitely not gary kasparov. world's to one of the most famous chess players. mi said that he's eating lunch by himself? maybe not so much. i love the surveillance question of the day. ?e sanctions work they do not work if the person

they are against is basically a gangster. >> stephanie ruhle has entered our twitter question today. if you want to answer with stephanie, tweet us @ bsurveillance. the futures -- sorry, let's take a look at the euro, which is up a little bit. japan-yen is down. futures in general not looking good. >> if you think about this across the board in europe, they are having a soft response to the news out of japan. a slight surprise because on friday we got a good gdp at a good gdp number out of europe. the fact that we got this negative news from japan, europe does not like it, you had to see where the u.s. is going to open up. it was just a few weeks ago that everything was cracking because of europe, because of japan. then everyone says forget about that horrible market crash. at newse are looking

going backwards, not anything right now happening in japan. we are looking at revisions from the third quarter. in theory, the jump that they took should still be cracking. should still be doing well. >> you have to take a look at dollar yen. you have to see what the u.s. response is. have such a strong economy. if we see the market in the u.s. this morning, it will not be u.s. markets. we cannot forget how weak europe and japan are. japan is in bad shape. >> we have a new index on our data check today. the shanghai cop. we of capital flowing into shanghai. not much coming out to hong kong. all of it going in. nichols.heck with hans the g-20 in brisbane, australia, is over. stop that went to

talk to substance. and vladimir got mad at everybody. he took his ball and went home. hans nichols is our international correspondent. was it as awkward as it sounded? >> that did not sound awkward. we have all been to a stephanie ruhle cocktail party, so we have a different definition of awkwardness. these are big major issues. in some ways, i am perhaps more concerned about what happened in bonn, germany, last week. that is when a russian diplomat working in the consulate denver spell. russia then responded by expelling a german diplomat out of moscow. it is important because if you see any wind-down to the tension in ukraine, angela merkel and vladimir putin have to keep talking. if they are expelling each other's diplomats, that is an ominous sign. >> leaders are meeting now to

try to figure out what to do. has anything changed? are they going to do things they have not been prepared to do in the past? >> they are talking about adding a couple of more names to the list of people than -- to the list of people banned. in terms of stepping up sectorial sanctions, you need to have all 28 members agree on that. they are at least weeks if not months away from that. strongmerkel had language. you played david cameron but also with some strongly which. but there are ways it seems like from another round of sect torah sanctions. >> what is your biggest g-20 takeaway, hans? >> that is the issue, that you can never come away with a g-20 thinking -- look at their top light number -- their topline number, that they will add another $2 trillion to the global economy in 2018. that is a made up number. it requires all kinds of economist acrobatics to get to that number. the climate change stuff is

fairly significant coming out of the g-20. i do with optics. it is important with -- it is important that vladimir putin left early. that is an important moment because international fora breakdown,- if they that is troubling. >> there you have it. it is the a terminal g-20 -- is the eternal g-20 takeaway. >> on cycles in berlin is telling us to take it a little more seriously than we have been. >> maybe if they had added the wind choice list, that would help me. >> thank you. we have with us in the studio, doug kassie, the street's most famous bear. he started reading an actual inker on paper, comic stores 1992, and he is the founder of seabreeze partners, and he is

plugging a book today. that is why he is here with us. >> i do not think -- i do not feel like i am on the bloomberg set. i feel like i am on saturday night live. we wake up, japan is under recession? really? >> we have a routine we have been working out. stephanie is shaking her head. i want to ask you a question. you sent us the lyrics to a song , which tells me -- >> oh, my god, you are the musical guest. >> this is "saturday night live here go we have this amazing chance to stay -- to take a snapshot. are you prepared to sing the chorus of what you wrote? >> i do not have the words. ns i am in happe possession. singwill do this if you

along with me, the words to "american pie." >> i will sing. let's do the course. where is the chorus? >> ♪ a long long month ago i can still remember how the markets made me smile what i do when i have a chance advance and add another social media stock on the pile with every speech that she delivered frontws on the global still i take one more punch if i criedmember when i heard about the lowly cpi, but you could lose your capital and your pride the day the market died. >> wherever tom keene is right now, he just took the covers and put them over his head. [laughter]

>> the data market died. what died? >> the fed and the central bankers around the world have made a mockery of the fundamentals. >> who cares? it works out. 2007ey told me that it and that worked great. there was no price discovery back then, and then all of a sudden the excrement hit the fan. [stephanie laughs] if tom was here, i would have said something different. italy, spain, or tool, france,-- portugal, japan are in recession. we have a meager global growth outlook. >> would you lay this at the world of -- at the foot of the world central bankers? >> i do because they have created a situation where you have the emergence of animal

spirits in all sectors, private and public sectors, from retail investors buying up stocks to all-time highs while growth, -- wild growth, you have subpar prospects. then you have a huge demand factor that has been understated. >>. the problem. every single thing you are saying is correct. central banks have floated so much money into the system, if you are an investor, can't you laugh at the grim reality and say who the kel cares -- who the hell cares, i am going long? risksalk about the associated with that mentality in my book. >> we are going to talk about what you call the golden swan, the price of oil. stuff lead torice the demise of opec? this is "bloomberg surveillance

."

>> this is bloomberg "surveillance." i am brendan greeley with stephanie ruhle. tom keene and scarlet fu are off today. feld -- theicole producer of "disney's frozen on ice." >> i live in tribeca. people were flooding to this show like it was the super bowl, but way cheaper. >> i have 25-year-olds in my house. we are all frozen all the time right now. >> you had better get yourself to "frozen on ice."

>> i will keep this on my desk. oil.om ice to oil prices slide to a four-year low. when i interviewed oil man boone pickens earlier this month, he took things one step further as only he can, stating it is time to wipe out opec altogether. >> we need to get rid of opec. opec is the problem. when you are buying opec oil out of the midis, you will be paying the terrorists, too, because they pay the terrorists a ransom and that is your money that takes care of both sides of the war. ofrobert rice is the author "lighter, denser, faster, cheaper," and congratulations on the book. boone pickens, you never know. you have got to wipe out opec.

>> the pressure on opec is enormous. we have enormous quantities of new supply coming on stream third we have mexico liberalizing their energy economy and lackluster demand. so what is opec going to do? they are notorious for cheating on each other. venezuela is running around the world. the foreign minister from venezuela is going to libya, to qatar, saying let's cut production. saudi arabia is saying, wait a minute, we are the only was likely to cut production and the rest of you will get a free ride along with us. hands's say they all hold and sing "frozen" songs together. do they still have the pricing power once they do that? >> i don't think they do. i think opec's power has diminished if not completely vanished. you look at the u.s. in the last few years, you look at the increased productivity in the u.s. oil market, or the u.s.

drilling sector, and eia last month came up with some numbers well in average new north dakota is increasing productivity by 100 barrels of oil per month. -- per day, rather. this is an incredible productivity gain. even if opec decides something, the u.s. oil and gas freight train will continue on. >> do you equate opec with saudi arabia? >> clearly. they have always been the one with excess capacity and were the first one to take a hit in terms of sales, that the saudi's have said to opec members that they will protect their market share first. as a smallerns players start to drop out? do you have larger players getting together in creating pricing power the way opec did? >> i doubt it. where are they going to coordinate? i do not know what doug's view is. thestreet.com, --

my question to you is, i think in some measure, the perception by the investment community is that this decline in oil -- i --some ofil vey" that is accruing like a golden swan. >> stephanie ruhle just did a spit take. >> that is very good. >> let's stick with this because you are famously cranky. you are talking happy right now. >> let me get to the bottom line. the production by the investment -- thaty is that loyal lower oil prices will be a boon to the economy. income, in thee middle class will benefit. but the fact of the matter -- and the question i had to you,

because you know the business better than i -- there is a lot of negative fallout in terms of employment related to production of shale and other -- >> it is a really good point. >> and economist at purdue added threeale has percentage points to u.s. gdp, $500 billion of economic activity. so we have already seen continental resources and others say they will cut drilling in the next six months. that will mean fewer jobs. >> when i see the article this morning, about when you got up -- there is a cover story bankled, "north dakota returns are the envy of jpmorgan and goldman." so when i see that as a short seller, my years pick up and that is a top. there could be some economic -- adverse economic ran from --

adverse economic ramifications. >> i think there will be some pain for investors in north dakota. i was there a few weeks ago. we are talking about average apartment rentals in wilson being $2000 a month for small apartments. >> i have two sons here. on to read weld have got to take a commercial. you could in the next two minutes tweet us. our twitter question of the day -- do sanctions matter?

>> this is "bloomberg surveillance."

i'm brendan greeley, fencing all withng with scarlet fu -- stephanie ruhle. scarlet fu and tom keene are off today. here is an excerpt. "when returns are low, returning to -- when returns are low, charging to present merely holds assets is indefensible. offered winslow jones set of virtuous example." >> hedge funds, stop asking for two and 20. the likes of bill ackman, they go old-school steve: style. takentupper has not investors in years, and people are knocking his door down. this is silly. >> doug kass, do you have anything to add?

nader raider and someone who is left of obama, you would normally see me critical of had talks. but the fact of the matter is some of my best friends and these people like tepper and co hen are the searing goal -- are the single most charitable men i have met. >> i have to jump in real quick. some of my best friends are hedge funders. >> i just think if you do not like -- ♪

>> this is "bloomberg surveillance." brendan greeley with stephanie ruhle. scarlet fu and tom keene are off today. >> let me take you to top headlines. an unpleasant surprise for the world's third-largest economy. japan unexpectedly goes into recession last quarter, gdp falling at an animal rate of 1.6%. that is the second straight quarter their economy has contracted. octavus closes in on an opposition -- closes in on an acquisition of our dan. share,ll pay $215 per

allergan.r jim carrey's "dumb and dumber " debuts at number one at the box office. the sequel, which also stars jeff daniels, brought in ticket sales of $38.1 million. it took the spotlight from disney's "big hero six." "interstellar" was third with $29.2 million. those are the top headlines. i can only hope you and i are not the index ration -- are not the inspiration for "dumb and dumber three." we have to talk the botox maker. i sure hope not. we have to talk about this.

everyone is saying bill ackman has lost here. bill ackman has not lost merely because he is on the side of valium. poppycock. he was up 100% on his investment, proving yet again that bill ackman wins. >> he made over $3 billion on paper if this deal goes through. if that wasonder machiavellian motivation to begin with. >> those who will attack bill, they will go to regulators saying this was foul play. he was so careful from the beginning. carefully weaving this through the eye of the needle. there are other investors who that he has made so much money, and people think he has crossed the mark -- that he has doublecrossed the markets here. >> it turns out we have been thinking about it all along -- we have been thinking about it all wrong.

running the center for industrial progress -- he has put it all in a book, "the moral case for fossil fuels." alex, fossil fuels are a miracle? >> no, they are a project -- they are at product of human ingenuity. fossil fuels are a technology. the world is full of what we can call -- raw material that was useless has turned into the best form of power man has ever known. would you wear a pin that says, "i love fossil fuels"? >> i do believe that hydrocarbons have been incredibly positive for humans all over the world. the question i want to put to you have written a

compelling book that really looks at the case for technology for human advancement. but let me ask the question in the reverse. why have the hydrocarbon opponents of fossil fuels been so successful? there is a university of texas poll that came out in october that showed a vast number of the majority of young people, those under 35, are in favor of renewables, think that we need a carbon tax, etc. why have they been so successful in demonizing hydrocarbons and fossil fuels? >> from the perspective i comment, the issue is philosophy. that is my background. a lot of the philosophy is, how are you taught to think about things? the way we have been taught to think about fossil fuels is only look at negatives, not positives. when it is negative, young people tend to be idealistic. what turned me on his learning gosh, look, oh, my at how superior it even is today. look at the history of this. >> we agree that extraordinary

progress was made using fossil fuels. why are the two of you not very ry concerned -- tableitting at a dripping with brilliance. the question is, there is an unknown about carbon in the future. it has worked really well up until now. why are you not more concerned about this massive unknown? >> which unknown? >> the unknown about climate change. >> what is unknown about climate change? if it exists? it exists. >> sorry, i have a cold because i am from southern california. we have not gotten enough global warming. >> that is a shameless plug. >> for nature?

this gets to the point of only looking at negatives. for you it is ok to say climate change is real. but in my view, philosophically that is a meaningless statement. -- is it moderate climate change? >> the best possible interpretation we have our the risks that we know, that in the future it will be somewhere between problematic and catastrophic. >> i would like to know where you got that. today we have a lot of predictions. you deal in predictive sciences, in economics, and you know they are wildly inaccurate. >> am very familiar with economic modeling. economic modeling is often very wrong, but trying to figure out how to get it right. >> let's talk about catastrophic predictions. all of these thought leaders have been making these exact

same catastrophic addictions for decades -- catastrophic predictions for decades and they have been exactly wrong and we need to look at why. >> can we even look at climate ofnge when the biggest focus the g-20 was climate change? dark it if everyone says that it is a huge catastrophe? >> it is obviously a huge issue. what all of those world leaders be focusing on it if it was just another -- >> do you know how many world leaders got together to try to ban ddt and killed half a billion people? i am unfamiliar with that play, ddt killing that many people. mckibben's just bill teaching college students to think wrong. how fast does the conspiracy have to be if you have the pentagon, many heads of state deeply concerned about this?

here is what worries me about the book. i completely agree with you that oil has been a force for development and good. what worries me is that we have real trade-offs we have to consider. we have a risk that we do not know about that we have to manage, and we have a possibility that in managing the risk, we will share that we will shave many percentage points off of global gdp. you are telling me there is no choice. >> i am not saying that at all. i have a question for you. suggest reading it. >> i would have suggested that your publisher get it to us earlier. >> have we been getting safer with climate or more dangerous? i would bet a lot of money that we are not aware of them because we are never taught the fact that the climate is getting safer, things to technology. >> let me jump in here real quickly. alex andne area where i disagree somewhat. let's look at reality. what is happening globally?

the global economy is turning to cold in a big way -- to coal in a big way. germany is turning to coal, not just china. why are bangladesh, pakistan, india, vietnam, all of these countries, doing this? because they want to bring their people out of the dark. the best way to do that is to get wealthier, and especially these poor countries. they are going to need to protect themselves from the more extreme weather events of any kind. so the reality is, whether we agree with ip cc or whether we agree with alex, the reality of the global energy market today coal market and the absolute need for more electricity in the world. >> we have to take a break. alex, congratulations on the book. alex epstein. we will be back in just a few.

our twitter question of the day, "do sanctions matter?" ♪

>> this is "bloomberg surveillance." i'm brendan greeley. stephanie ruhle is keeping me

honest this morning. tom keene and scarlet fu are off today. it is time for our single best chart. what is everyone so worked up about? >> fossil fuels and climate change. that is what you are so worked up about. >> we got a little excited. we are taking a look at what happens to equities when the fed raises interest rates. the answer is not that much. there, you are looking at an average the last 30 years of the s&p before a rate raise, and on the right-hand you are looking at an average of what happens afterwards. there is a little bit of flagging there, but not a catastrophe. we have had six years of zero interest rates, four bouts of quantitative easing. >> so this night is not like all the others. >> why is this night different than all other nights?

[laughter] matada?n, hakuna >> are you going to sing that when? >> hollande. this is a time where we will look at special photos. it is monday, when we are focusing on hard-hitting news and animals. let's start with our number three photo. here we go -- the koala in australia. are, posing in australia with tony abbott and president obama. he is a two-year-old, and also had the honor of meeting vladimir putin, angela merkel, india prime minister. i am only said that letterman couldn't is waiting -- is wearing a suit in that picture. >> maybe that is why he went home, to work out. why didn't the kalama make him

happier? >> are you agreeing with alex that may be business does not get done here at those shots? >> it looks like the carson show. they brought the animals out. goodall, i get that. our next two photos i will say hit home. they are dedicated to the two of you. the number two photo, doug kass, also an animal enthusiast, 's best for theld mile with two-year-old pacing colts. >> you are riding behind a horse. here is what i am amazed by. you name to horse after two -- he is notlanca a loser in the sense of the he famously lost.

what do you like about losers? shorts the market all the time. glassiew the world as the half empty. won at 18 years old and is in the hall of fame. >> when did you become friends with him? >> when i started driving courses in 1980. >> how did you get into that? >> it is a long story. my friend was part of the exchange, and we shared two interests in common -- stocks and horses, and we were the best of friends. i drove around the world, drove, he taught me how to drive, and he was an amateur driver. >> i have to go to our numbers. our number one photo, robert

and beekeeping. that is what he does. he keeps bees in his backyard. there is a photo. i thought gary was at number one beekeeping guest, but clearly i was wrong. how did you get into the beekeeping gated? >> i moved into a house that backed up to a creek and my friend said you have a great house for keeping bees. let me be clear to the world -- i am the world's laziest beekeeper. that is my son and i. >> but you are the most energetic oil analyst. we have a redhead on the terminal, breaking news -- halliburton to buy baker hughes. >> this will be a stock transaction valued at $34.6 billion. that is a big number. are you surprised we are seeing this kind of deal flow right now? >> i am surprised it has happened this soon.

are two very big companies, and baker has been around for a very long time. the fact that they are apparently dealing -- are apparently agreeing to this deal quickly is surprising. i think from here on, if we do see riggs breakdown and the oil market -- >> is this a testimony to their concern about price? >> i am surprised that it happen as quickly as it did. >> what are your concerns about the long-term price of oil? >> i think it is going lower. we will see what happens. >> i will be surprised if opec comes out with a significant cut myself. >> watching this, where do you short? >> i am more interested in becoming a long-term investment buyer, not a traitor, in the world -- not a trader, in oil stocks.

in the super majors or the upstream stocks? >> i would stick with the companies with the strong balance sheets -- exxon, chevron -- in the event that the decline is much steeper. dark it we need to take a quick break. we will be back with more in just a few. you are watching "bloomberg surveillance" on bloomberg television. stay with us. ♪

>> this is "bloomberg surveillance." i'm brendan greeley with stephanie ruhle. are offfu and tom keene today. >> 40 years and counting. about how oldking i am because we all know i am only 38. kass is sharing what he has learned with his first book, "doug kass on the market." what drove this book? i had something to say. it is kind of a kaleidoscope of my experiences from attending woodstock, the music festival, in 1969 --

>> do you go to birmingham now? >> no. but i still see the dead at the beacon. and years later, having worn .warren buffett speak i am writing for "the street" with jim cramer. >> what did you write? what is the book about? about the basic tenets of investing that i have learned from doing -- from being a hedgehog, from rubbing elbows with a bunch of pals. >> what are they? >> the most important precept is stop your losses. david tepper, to paraphrase mae west, "too much of a good thing can be wonderful," so really wait for a sector in the market when it is going for you.

>> they are happening at restaurants, salons, where investors get together and trade information. are those conversations still happening? >> to a lesser degree because i think the medication with social media has changed that. you are referencing a relationship i have with scarsdale fats. his real name is bob ramberg. originally, he had george soros and michael steinhardt at a deli downtown, so he is known as scarsdale fats. club,ed it up to harmony and we would have these great discussions over lunch. could not be distributed, that the- the substance of conversation. it is where i'm at everyone. >> every bank has roundtable dinners every night of the week. they cannot even get big-name guys to go anymore. you're also very close to so

many luminaries in the hedge fund space. is it there that the american people love warren buffett that they hate on hedge fund managers right, left, and center? thearren buffett is greatest investment manager of all time, but he is really sold corporations in particular, especially during crises, a bill of goods. >> why is he a good guy and bill ackman is a bad guy? >> he is a good investor because he can navigate the noise and make very quick decisions. he made the decision to invest $6 billion in bank of america while bathing in the bathtub. guy?e a good i will leave that up to you. >> there is a difference in your public persona. bill ackman is your dark knight. >> how did bill ackman and david tepper and george soros see the

wall street fat cats that obama hates, and -- >> because warren buffett has him over to play softball. >> he has had very good press. doug, who do you like to read? there are thousands of investment books, investment analysts. who do you follow? who do you like? >> i like the market wizards series very much. it captures a picture in a succinct way of the great managers and their basic tenets. >> you use to actually watched a ticker. you can watch the ticker and make the trades? >> no, it is nonexistent. when i was in college, i spent my christmas and spring vacation literally at an office, and it was like a movie to me. i would sit there for six hours. my grandmother made me put

,ogether a notebook of stocks picking up stocks. >> rockville center,. doug, we have to take a quick break. we will be back. ♪

[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> vladimir putin is pouting. the ft the g-20 summit october surprise has turned into a november malaise. japan's economy fell into recession in the third quarter. and mire has to figure out what do with the $15 billion tax bilch good morning. this is "bloomberg surveillance" live from our world headquarters in new york. this is monday, november 17. i'm brendan greeley with stephanie ruhle. scarlet fu and tom keene are off today. time now, stephanie, give me some headlines. >> important news from around the world in japan, it is the incredibly shrinking economy. the country sank into recession last quarter. g.d.p.'s fell at an annual rate of 1.6%.

according to people family with the matter, the tax may not be imposed until 2017. vladimir putin has simply had enough in australia. russia's president left the g 20 summit in brisbane a bit early after fellow leaders berated him over ukraine. they told putin to quit arming ukrainian rebels. at one point, putin ended up eating lunch all by himself. here, british prime minister, david cameron made a few comments. >> if he continues to destabilize crarningse there will be a completely different relationship between european countries on america and russia on the other hand. >> he left brisbane early so he could get to work this morning. he said it was a long flight to moscow and he needed to get some

sleep. >> breaking news about the energy business this morning. halliburton has agreed to buy baker hughes, a deal valued a more than $34 billion, combining the world's second and third largest oil field companies. the shareholders will get a combination of cash and stock. and we're on the verge of a $64 billion deal what activists are paying for the makers of botox. a deal may be announced today. off began is trying to fend ffers from office. package delivery is a profit center for the postal center and expecting a 12% increase. the post office also has a deal with amazon for sunday delivery. those are your top headlines. >> you ship a lot of christmas gifts? >> i ship all christmas gifts.

we are exclusively an amazon family. it's easy. >> i have three kids. >> i'm sorry, you have three kids. >> i don't ship anything because at my house, santa, my kids who are watching, brings all the gifts. i guess he doesn't come to your house, amazon. yeah. sorry. for me, it's a sleigh, a guy with white hair. >> i was thinking of the gifts we send to other family, stephanie. the government is we wrap up for -- >> we actually craft our own gifts at home. the husband has a woodworking shop in our apartment and i'm knitting. >> cable sweaters for everybody in neat irish pattern that you've handed out from generation to generation? >> pretty much. that's how christmas goes in my house. but you stick to amazon. >> the christmas cocktail party wiz awkward at the g 20. it's over.

barack said some things about global warning and then he got mad at everyone. did anybody leave brisbane with a new b.f.f.? >> a koala, maybe. >> good question. i suspect tony abbott tried to do his best to align himself with the climate. i wasn't there so i can't give you a readout on it. but putin did find some time to do an interview german state broadcasting and that's been replaying all day here in germany. and what you get is a sense of how much putin will never leave crimea and thinks he has a moral obligation to the citizens of the eastern ukraine to protect them as he says from a potential neo-nazi state. the rhetoric is not cooling

down. it's only heating up. i think there are going to be some difficult negotiations and we'll see what happens in terms of sanctions. at least the german public sanction seem pretty upset with putin right now. >> he does this dance said i may be a dance but that's a hypothetical. what do you think he was trying to tell the german public? >> that he feels like it is well within his sphere of influence, crimea and then eastern ukraine and he has an obligation to protect them. he's establishing a predicate and the predicate is russian speaking people can be protected by moscow. if you're russian speaking, vladimir putin will be on your side. we say that he's the odd man out at this summit in brisbane, in some ways, he's never been stronger in russia even with the ruble pushing $47.

he does seem to have popular public. >> is beating on vladimir putin just for optics? at the end of the day, would there beedly impact on him? does he actually care? >> that is a great question for a criminalologist and anyone that is a student of soviet history. las, i am not. if putin were clamoring for respect and having sort of international friends were important to him, you would have seen a much more concerted effort to make sure that the obama-putin meeting in moscow in the summer of 2013 went forward. it was called off. they just ended up having that g-20 st. petersburg meeting and

that putin really didn't seem to care that president obama wasn't visiting him. in so many ways -- >> he's doing a backstroke in a swimming pool caviar. he don't care. [laughter] >> hans nichols, thank you. you be careful there in putin threaten germany. jamie met zell is with -- > thank you. >> there has been some news before the g-20 with precaution overtures towards china, closing of the gas deal. does that signal a real move towards china? is that something substantive or is that just another thing he can threaten in the west? >> it's very real. russia is a basketcase economy other than natural resources. and so for russia to go anywhere in the future, they need much more relations with europe.

as a result with ukraine and sanctions, putin now doesn't have the option as much as he did in the past so he has to turn towards china and that's why the russians have to rake over the coal in both of these energy deals with china that they've been negotiating for 10 years. they couldn't agree on price. now, russia got completely screwed. >> we've been saying is all morning. >> so china had leverage that they hadn't had before. >> absolutely. and russia is the junior partner but they don't have options. so yes, russia is having this pivot towards china. it's also a pivot against europe. and if i was a nationalist russian, i would be really upset. >> what did china want out of a g-20 and didn't get it? >> they got a lot. apec was a big success for china. and the g-20 was a big success because they got a lot of the things that they wanted. they got a statement about economic growth which is an implicit affirmation of china's

economic reform plan. there wasn't a huge amount of pushback on south china sea and east china sea. they got a change in optics, particularly with japan. so i think it was a very good week for china. it was also a good week for the united states. >> not a good week for japan sliding into recession. >> yeah, the prime minister has come into office and he said there's going to significant economic reforms. there was quantitative easing and government spending and stimulus. but the third arrow is structural reform and they're having a harder time delivering on that third arrow. and now that they're going into recession, very likely they're going to call an election. abe's party will win and he will have another mandate party. >> seems like the arrow in japan that never gets talked about is immigration. they're not looking to fix it. >> it's not the only problem. it's a real problem. and the problem as you know is

cultural. 20 years ago, japan was in a position where their economy could have globalized in a much more significant way. it didn't because their culture remained an island culture, not looking outward so immigration would be one piece of that story. you look at korea which is also a homageous society and it's growing. japan needs to go that way. but it needs to do other things as well. >> jamie will be with us. steph? >> we need to focus on the "bloomberg surveillance" question of the day on twitter. do sanctions matter? give us your answer. tweet us @thesurveillance. we'll be right back. stay with us. ♪

>> this is "bloomberg surveillance." i'm brendan greeley with stephanie ruhle. scarlet fu and tom keene are off today. >> so i'm very excited to have the chance to do the morning must read. from the knew media world, the place with all the smart on eds are these days. twitter. marc anderson's weekend tweet here's one i like --

there's one more i want to share what do you make? >> marc andreessen may be living a dream. i spent the weekend in and out of the hospital. i have to say that this is an eternal source of media criticism. he is not the first person to ave said this.

>> are we that media? have we been focusing on bad stories? >> i think we as an organization try to figure out what is the smartest story? but the truth is, in order for an audience to care, you've got to have a hook. and that hook, though i wish it was isn't always gosh darn it in, people are not always doing great stuff. and we've got to sell something at the end of the day. >> great pivot. you talk about criticizing marc andreessen and saying we at bloomberg are only doing the best stories. i love it. >> give us one good story. >> there's lots of good stories. it's raining outside and it will help the plants grow. i don't know. there's got to be -- >> jamie metzl walks along with

his umbrella slung over his shoulders thinking happy thought abc the flowers. >> here's a good story. because i'm the asia guy here, we'll start with asia. for months, the story has been south china sea, east china sea. china looks to be taking a step towards more responsible behavior. hat's a response -- positive response. >> one good thing from jamie metzl. coming up next. ♪

>> this is "bloomberg surveillance." stephanie ruhle is teaching me how it's done because scarlet fu and tom keene are off today. top headlines. >> the families of those killed or injured in crashes involving general motors ignitions will have an extra month to submit claims. the filing deadline has been

extended to january 31 of next year. g.m. has notified almost four and a half million eligible claims to date. the second round of open enrollment for bach has had a much better -- obama care has had a much better start than the first. ,000 people logged on, for the sign-up. 100,000 submitted applications for insurance. no technical problems were reported. last year, the website collapsed on its first day of business. m carrey's "dumb and dumber" to debuts a number one. the sequel from universal pictures which stars jeff daniels brought in ticket sales on the $38.1 million. it took the spotlight from "big hero 6." ntertainment tonight" --

"interstellar" with third. what do you want to see most out of that lineup? >> i'm really, really glad that jeff daniels has moved on or return to true form from being a smug television anchor. i just feel like that's such a better way to see jeff daniels. >> "dumb and dumber" was an extraordinary movie. i really want to see that stephen hawking movie right now but i'm pretty sure i'm going to see "dumb and dumber." >> we have pretty low standards at "bloomberg surveillance." we have to ask about kim jong-un who reappeared in october. he's limping and today, his special envoy left for russia. jamie metzl is here with us. i'm going to try this to say in a way that doesn't implicate you. you recently served as an advisor to the north korean government. >> yes. >> what was that like? >> yeah. i was part of a small delegation that went to advise the north

koreans on the establishment of small economic zones which is something they're trying to do. it is extremely difficult for them with all sorts of reasons which i was blunt them. it was a very difficult and challenging place. >> how did these conversations go? >> that was it. i was saying they would take us around these different sites where they were planning on having special economic zones and they would talk about -- >> what is a special economic zone? >> it's a little area where they say different rules. capitalist rules will apply here. >> one more time? >> yes. believe it or not, they want foreign investors to come to invest in north korea in designated areas where they will have capitalism inside of those spaces and have special tax treatment but not outside. >> the only advantage is the cost of labor in these zones. how is that not western companies engaging slave labor? >> it is and i told them that when i was there.

>> how did that work out for you? >> it went pretty well. i said there is no way that was going to work unless you do x, y, and z. if they do the things that will be necessary in order to do at least in part of what they're saying they want to do is going require -- >> but is an idea this cockamamie on their radar, how can they possibly listen to sound advice from you and walk away and say yes, that's what we're going to employ? >> there's so much that's cockamamie, to use your word. >> very technical. >> in north korea, and there's a lot that -- it was a horrible place. up to 200,000 people in terrible conditions, star separation there are many of us who would love to see a very -- transition very soon. but if it doesn't happen, there needs to be some past. >> you've been watching north korea for years. let's say these special economic zones work. >> yeah. >> does this lead to anything or

is this just more foreign capital that they need? >> if it could work and the only way it could work is they would have to have a huge number of people with access to the outside world, with access to other people. it could lead to some kind of processing. it's a long shot bet because there's a conflict between anything that needs to happen for economic reform and the impossibility of political reform. if you keep the society so suppressed, it's going to very difficult to have that kind of reform. >> mad, bad, or sad? >> couldn't he will be a combination of all three? >> it's not just him and there is a system and he is the figure head of that system. and it's an insane system. the insanity is baked in to the structure. and so again, as i was saying, for him and his small cohort of people to remain in power, they need to brutally suppress everybody else and that's the name of the game in the north.

advantages to a small number of people and everybody else is suffering enormously. >> if it's a brutally broken or corrupt or insane system, is there any possible light at the end of the tunnel? do you believe in our lifetime we are going to see a productive state, a positive north korea? >> i don't think this system can survive. so if collapse happens in one way or another, what we will see is a reunification of korea and that would be a very positive thing and that is possible. >> in our lifetime? >> it is possible. the reason why the soviet union fell and north korea hasn't fallen is the soviet union weren't willing to use unlimited force. if they just open fire on everybody at the berlin wall, the sophia vergara could still exist today. and -- soviet union could still exist today. right now, they have many, people die to maintain the power of regime. >> this is not a good story.

i'm not taking anything happy out of this story. >> no way. stay with us. >> here is our twitter question of the day. do sanctions matter? do they work? tweet us. ♪

bloombergs " surveillance." scarlet fu and tom keene are off today. stephanie ruhle is picking up the pieces. this morning, china open the hong kong stock connect so far, it seems to be moving in. fromuest just returned several years in hong kong. she was there when connect was announced. both marketse -- acted like a fair lady and gentlemen. so they were in their first phase of dating, getting to know each other. what is happening? >> we both know the first day of

dating does not mean the entire relationship will be harmonious. >> that is right. you do not meet someone on a date -- you made his representative. >> you made a liar that tells you he likes watching "real housewives." far, success. ceot off the phone with the of china tech solutions, and he said smooth sailing so far appeared from shanghai's point of view, they do not meet the quota. that there was excess demand. there were quotas in place for hong kong investors and shanghai and investors in china looking to get access into hong kong. they hit their quota by 2:00 p.m. local time, $2.1 billion. >> why are they doing it? >> they want to be on the stage. they want to have the ability to be in a market that has very open financial system. they want to get money to the right companies.

a lot of these are state-owned enterprises. the money tends to be speculative. they want more strategic money from overseas investors and raised the investment standards. and they want international currency. >> does china want, like, a city of london and shanghai? >> china has a huge problem of misallocation of capital. it is for political reasons. because of their political structure, they have money and enterprisesgoing to which is showing up in their economy. so they need to internationalize . >> they might want to look like cosmopolitan london, but when you talk about state-owned enterprises, how can you possibly have that? big question for china. they recognize the inefficiencies of the system. they are trying to do the juggling act of opening up and not having economic reform, and keeping the trolls for the party to maintain. >> that is not worthy -- and

keeping controls for the party to maintain. >> that was not with the money was going. >> the market in china tends to pay higher dividends compared to, for example, they are also listed duly and hong kong. also, as china looks to go from an investment-led economy to a consumption-german economy, that is a big that. these small names are looking to get the benefit from the growth, despite the fact that china may grow at its slowest pace since 1990. >> a lot of individual investors. banks trading on their own book. >> yeah, that is because they have an established account. you did not see as much demand from china going into hong kong. the reason for that is you need 500,000 yuan or $81,000 u.s. a lot of these have bank accounts set up. they put the money the old-fashioned way, under their hello.

>>real estate here at exactly. tuition for top-notch university programs. that is one of the main issues. and because the fact that the international community is stepping into this shanghai market, that has driven up the shanghai composite. why would you put your money in seng whenong -- hang that is coming down? forhat does this mean china's hong kong policy? >> china right now is struggling with its hong kong policy. they know that they need hong kong to be china's financial center. whatever they are doing and shanghai with a special economic zones and the linking of the soft market, it will be a while from now until when shanghai can lay the role of hong kong, let alone london and new york. slowly, they recognize they cannot be so dependent on hong kong now that there is a political problem.

they are trying to slowly migrate some of hong kong to shanghai. >> we have to get a day to check. everyone is looking at the markets because of japan. across the board, red, red, red. we have to see how the u.s. markets will be in a couple hours from now. for now, this global economy is weighing on us. >> this is "bloomberg surveillance." >> time for some news. is ones alibaba stake giant tax puzzle for yahoo!'s ceo marissa mayer, and it may lead to her making tough choices. running as is leslie of bloomberg news. just a few weeks ago, dan loeb, the guy who put marissa mayer in that seat, said you have to give this woman a whole lot of credit. people are saying yahoo! is not expanding. but how has she kept a ton of dollars in that? she recent figured the tax base

as it relates to alibaba's position and was able to hold onto a lot more shares than they thought they would. this has been a win for marissa mayer's. >> if you look at the market value, a couple weeks ago it was trading at a negative market value if used about yahoo! japan and the alibaba stake. now it is looking to be above $6 billion. it is an improvement from where they were a couple weeks ago. >> what kind of tax bill will she have if they have to sell? >> if they sold the shares into the public market like a secondary offering, it would be about a $15 billion bill. that is on a $44 billion stake, about a 35% tax on that state. so she is looking for creative options to substitute for that. one of those is a cash rich split which is what we're seeing a lot with warren buffett and his deals. it requires a lot of involvement from ali baba, which our sources they they are not so inclined to really help out at this time.

>> why should they? do you think jack ma is going to say, let me head on over and let me help you figure out that tax bill? >> they wanted to buy them out for years. >> what is left of yahoo!? let's say it works out and she sells, what is the company that is left? like they do a spinoff they are being encouraged to do, it would be the core yahoo! portal, the website we are familiar with. kind of like going back to the 1990's. the one where dougal went public, that was their biggest competitor. -- the one where google went public. shehe possibilities of what can do are massive. think about the money. to be ahoo! is going very smart capable woman in silicon valley with a staff and

a lot of money. it is like she is a startup. with good vc funding. >> and a lot of vc funding and a history and the ability to do something. she is starting with real assets. there are intellectual assets. i would not that against her. legs and their tax bill defense on their strategy. if they just do a spinoff, they will not have access to that cash. the value from the alibaba steak and potentially yahoo! japan would be distributed to shareholders to his or she really will just have kind of the core business to be in charge of with some cash from their original share cell from ali baba's ipo but not from the remaining stake. ofshe needs to keep a time this money basically in her control so she can have this war chest to figure out the right acquisition or partnership. excitedne, we are not about them, but if you were a yahoo! shareholder, this ali baba transaction has been a

grand slam home run. so you might as what we use yahoo! for, but we use it to get access to ali baba. >> and it is still the highest e-mail provider. >> there you go. >> i was struck looking at the hong kong-shanghai connect. a lot of the money went to ten cent. is that going to be bigger than ali baba? >> you never know. these are like death con politics. alibaba has the 70% market share because the chinese government has allowed them to have that. at was growing and then there were problems with hong kong. then there was political pushback and economic consequences. it has potential but you never really know. >> can any of them grow outside that market? >> that is the big question. some will come here looking for acquisitions. they can buy companies that have inen -- i know jack ma was

silicon valley shopping around the right now, there are huge issues with cultural differences. it will be difficult. with money, you can do anything. tothere is a lot they want do in silicon valley. back with more. ♪

this is "bloomberg

surveillance." what are we talking about? my favorite swamp dweller -- "shrek" is struggling to find a new home. and dreamworks said to cancel sell stocks. are they leaving the swamp? >> this is part of the problem, you are still talking about years since the film came out of dreamworks. it has been that long since they have had a hit. -- peoplemovie piece must identify with dreamworks, and they have not had a hit since then. stephanie, do you think people do not understand you because you are like "shrek"? >> "rise of the guardians come

coach remarks took a hit with that. "mr. peabody," $57 million hit. "penguins of madagascar" was also a big wash. >> trying to pull on that handle again. >> and he cannot find a partner. >> maybe i just have bad taste. out on friday, right? they still have $300 million -- they saw $300 million in their stocks wiped out when it was learned that jeffrey katzenberg was trying to sell the company. he has gone from everybody from rupert were bought -- rupert murdoch to comcast to time order -- time warner over the years trying to find a buyer. >> why can't he find a buyer? >> i just listened four or five movies that have failed in the last several years. >> look, he has tried to branch out. he does live entertainment. he has done a deal with television.

>> what can he learn from what "frozen"? write with >> everything. >> hasbro does have a contract with "frozen." "frozen on ice" producer coming on "market makers" today. one of the reasons these entities are so popular is you create one singular popular animated movie, and you have the rides at disney world, the on-ice production, the lunchbox. i mean, if you get these animated films right, it is in less the possibilities. it is extraordinary. >> who knows, 10 years from now you might still be talking about "frozen." >> the thing is, you do not need hasbro to do it. they did this in the public domain and reworked the story. well, it enhanced it.

>> it works, but i'm talking about creating the movie. the used source materials. >> it makes so much more sense to partner with a marvel, for example. the marketing possibilities. i'm not buying a "midnight in paris" lunchbox. >> thank you. our film critic, not buying the lunchbox for anyone the alley -- movie.dy allen here is our question -- ♪

memberng up tomorrow, a of council on foreign relations will join us on bloomberg television and radio. this is open road bloomberg surveillance." fu are offnd scarlet today. stephanie ruhle and i are getting it done. >> let me give you some top headlines. and a pleasant surprise for the world's third-largest economy to japan unexpectedly sank into recession last quarter. falling at an annual rate of 1.6%. that is the second straight quarter the economy has contracted japan has struggled to shake off the impact of last april's self tax hike.

a story that broke earlier this morning in the world of m&a. halliburton agrees to buy baker's hughes in one of the largest takeovers of the u.s. energy company in years. the deal is valued at more than $34 billion. it combines the world second and third oilfield services companies. baker hughes shareholders will get a combination of cash and stocks in this deal. closes in with allergen. ant is out.-- vali the transaction is more that's worth more than $54 million. it will help the botox maker fight off a hostile advance from valiant pharmaceuticals. those are your top headlines. it is m&a monday. i love it when this happens. ella burton buying baker hughes.

palo buying baker hughes. let's talk about this increased activity. some have said maybe the bull market will contract a bit. when you see a number like $64 billion, it feels like this is a dealmaking environment. >> absolutely. some buddies have a lot of cash on their balance sheet. private equity firms have cash to spend because of infrastructure. interest rates are low and valuations are high. people are feeling this frenzied environment, and they feel that now is the time and if you do not do it now, you will miss something. at some point, what goes up must come down. right now, it is really coming up. >> this always says to me that they have nothing better to invest in ban other companies. i wonder why is it there more cash going into r&d or more cash going into organic growth? friday, there was under armor.

kevin had never made an acquisition and simply said i wanted term under armor into a company focused on technology. it to buy 80 engineers and then turned it into 135. >> when looking at an acquisition, how do you determine whether a company is grasping at something new to do and a company that is buying engineers or talent that it needs? >> cost-benefit analysis. if there is a freestanding entity -- look at dreamworks animation. those small guys who are out there floating around, in order to monetize their business, like will ferrell and funny or die, they need to turn that into cold hard cash. you figure into these, they need to buy the small guys. like so want to talk about capital in the bull market in china. ofking at the lack correlation between other world indexes and shanghai fascinated

me. that money moving in, it is almost a hedge, but is it going to change china? >> it is not going to change china now. china needs to open its capital accounts over time, but they cannot right now. over time, that will have a big effect or but now china has this push and pull of wanting to allocate its capital and resources more efficiently and trying to maintain political control. >> how do you encourage free markets and capitalism in china? >> that is the entire bet here the chinese leadership is making the bet that you can do that from the top-down, top-down reforms. is certainlyd it western perspective, that it will not work. but they are basically betting the country on a top-down reform model. >> are you surprised at how little capital is left in china today? >> i am, and in a sense, i am not. there is a ton of capital leaving china.

in hong kong, a lot of people are laundering money out of china. in new york, all tens of people are buying real estate around the world. that is a bet that chinese people are making against the future of their economy. >> and it disrupts the numbers we get around china. if we had jim chanos or others, they would say they do not believe the data. >> in the premier has said they basically make up the numbers. >> on january 1, they will know the gdp -- >> and we revise our numbers. >> one of the things about russia and china, what does it say about the society? anybody in that society with money is getting back -- getting out. the answer is implicit at the question. it is a vote against the future. for china to succeed and for russia to succeed, they need to turn their population -- this is our talented the chinese and russian people are, especially when they come here. they need those people to be as talented, innovative, and creative when they stay there.

>> thank you very much. we're going to look at our agenda. >> the stories that are shaping the day. legs the eu is going to meet. this time, they really going to do it. they are going to get so angry and vladimir putin and we're going to see what kind of weak brewed in brussels. >> i am going to talk about something real, sitting down to talk about activision. bill george is saying enough of these activist investors being called the smartest guys in the room. maybe the likes of bill ackman should not be going after strong, well-run comedies like cap c. if you look at how these activists operate, many of them are not in for the long haul. dan logue, the guy put marissa mayer in that seat, we talked about yet -- if you said that i talked to him about yahoo! today, he would save what? he has been out of that tree for over a year. that is what george will argue.

let me introduce you to eddie lambert and sears. >> who are we to tell them what to do with their money? >> we're not saying who one should invest in. simply saying activism is not the way to get the best-run companies out there. people who know those industry should run those companies. should eddie lampert be running sears? does he know the retail landscape? some might say no. >> the only thing that -- our only option right now for north glad jimmyia, i'm .ezzo is here the question is, do sanctions matter? can they do anything? >> the answer is yes, obviously. there is the historical model of south africa. ron.at you why is iran coming to the table? oil prices. we talked about north korea

earlier. the sanctions have really constrained north korea in fun mental ways. they do not always matter. to match her, they need to be coordinated and we talked about vladimir putin. when russia invaded ukraine and took crimea, everybody said that is really bad that you could have crimea. but if you take another step, we will really get mad. he keeps doing it, and the sanctions have not been that serious. when they are organized, sections can be very effective. >> we're going to see what the twitter followers are saying. >> let me share one with you -- iran. i cannot read that. sorry. >> iran would not be on the table but-for the question spared >> a second tweet -- it is a real criticism.

>> yes, it is true. iraq, iran, and all those places, these environments that are constrained, it is the most advantage for people with smuggling routes. >> another answer from a twitter follower -- only if you get the world on board or diligently severe ones. halfhearted sanctions are just feel-good initiatives. >> i completely agree. iranu have the examples of and russia. have we learned anything about rest practices? we keep relearning best practices. what the twitter person just said is they need to be coordinated and smart. everybody needs to be on board to it when they do that, they can be effective. when they do not do that, it is not very effective. >> sanctions work so long as you can get the entire world to agree. >> coordinated, smart sanctions work. >> all right you diss agree.

>> had and i disagree for >> all right. jamie metzl, thank you so much. from the atlantic council. "bloomberg surveillance include quit continues. "in the loop" is up next. ♪

>> good morning. you are "in the loop." i am betty liu.

the keystone bill hits the senate floor tomorrow. newly relate to kentucky democratic congressman raising -- whys move is not can't chef recaps at berg find a -- why can't jeff katzenberg find a partner? a look at our top stories this morning. a surprise from japan today. the country unexpectedly sank into a recession in the third quarter japan is struggling to shake off the impact of a sales-tax tax hike pushed by prime minister shinzo abe in april. he is now set to delay a second hike. here's the head of japan equities research at jp morgan. --so delaying the tax hikes no tax hike in 2015 increases the probability that japan's economy does hit a