cyber monday and bowtied tuesday will not bailout american retail. , and protests in hong kong turned violent. police restraint is not weakness. good morning, this is "bloomberg surveillance." we are live from our world headquarters in new york. december 1. i'm tom keene, and joining me is scarlet fu. rendon really is back from a four-week vacation. oil just passed another milestone on the way down third west texas intermediate fell below $65 a battle for the first time in 5.5 years. oil dropped 18% in november. there is speculation prices will decline more. oil prices are no guarantee that shell oil producers will produce the output. a bloated shinto all-day -- to

shinzo abe -- a blow to shinzo abe. there is uncertainty about whether japan can reduce its deficit and boost growth. he has helped to make his economic policies the focus of the campaign. brendan? >> in hong kong police are battling pro-democracy protesters that have occupied the city's admiralty district. police used water hoses and pepper spray to push back protesters. trying toters are expand their hold on central hong kong. is protest leader alex chow. >> any movement that can successfully surround the city government headquarters makes the authorities lose face and gives them a slap in the face. if they want to keep their dignity, they should respond directly to citizens' democracy requests. protesters have demanded that

hong kong allow free elections for its next leader. the government is refusing. in d c for the lame-duck congress, a lot to do and not much time to do it. lawmakers are back for the next couple of weeks before a new congress convenes in january. on their list -- come up with a new budget keep the government operating. renewhey are expected to funding for syrian moderates fighting isis. you were distracted away from the news over the weekend. this is important. forget about football. that works for cyber monday -- you will now be able to buy your supply of girl scout cookies online for the first time ever. the girl scouts have approved the digital cookie platform to .ell samoa's, thin mints scarlet, only thin mints.

>> love them. >> it is a shame because now girl scouts do not have to monitor volume flows. >> the girl scouts can now get into big data. a merit badge? can you get a big data merit badge? the wayirls leading with microeconomic analysis at an early age. this goes live in january. let's get to an important data check. no cookies here. futures were much worse earlier. negative nine gets your attention. 10 year yield and two-year come in. 65 .19. crude -- with some real drama about 3:00 a.m. this morning. on to the next screen -- if you , 13.33. the vix

1171 now. crater, way off the last couple of days. the russian ruble off in a world of its own. you were looking at nigerian currency as well? >> it has shot up since november 1 and is slowly growing. it has changed completely. >> this goes back to steve hankey at johns hopkins. exporter but does not have refining capacity, so it is in the world stood -- it is in the worst of all worlds. >> a chart was shown a number of times. this is saudi oil in 1950. measuring ann and approximation of rising wealth. all you need to know. here is persian gulf, here is the collapse of opec in 1986, and we got richer. because of that, oil was not so expensive. we have come back almost to where we are because of our increasing economic might

income, wealth a little bit. but rising incomes were really getting back to the good times. >> it is amazing to look at the consequences of cartel pricing. if you create volume in three dimensions using the volume of production, all of that area is money that was lost to u.s. consumers. this was all from our pocketbook. x,did you just work in the y, z space? >> i did. we are moving through time. it feels that way for a lot of different oil producers as well. we have seen the seemingly mixed -- separatemargaret market before. then come some news items out of the blue like overnight, moody's, because japan's credit rating, yields may rise in japan

without growth of the japanese economy. point withd starting our guest from citigroup. first, you are considered one of the global -- edward morse is one of the experts. what does he say about the path of oil? i don't think he expected to be quite at this level because neither is the world economy opected to be -- nor is likely in his hands for the best of times. at some point one is left for the cartel, visibly much less than there was. a price point, professor, about where the saudi's link? s blink? where the saudi' >> they are living --

>> like americans. >> they are better with financial wealth. this is clearly not sustainable. they either have to get a higher price or start living within their new means. >> what we kept hearing from the saudi's, the euphemism was it will stabilize at some point, the price. what does that mean? president do we have for what stabilization means? >> stabilization starts falling. they could not get an agreement and they will try again later. >> the hong kong protests, out of the blue, moody's takes on japan. >> loadings -- moody's takes on japan. kind of acknowledging what the market has priced in. is that the case here? debt at they were in

2.5% of gdp. a full employment primary, it is clear that japan is a fiscal show of harbors -- a fiscal show of horrors. point the agencies will wake up and japan will find itself in a pickle. >> everyone acknowledges japan is different than the rest of the global markets because it is so domestically focused, especially the bond market. >> and mixed of difference because someone still has to hold it. -- it makes no difference because someone still has to hold it. they will not hold these things. i think in any case japan is about to become a persistent deficit country.

the leader of securities will be us, no longer the japanese pension funds. >> i also want to bring in mark ellwood, the author of "bargain fever," to give us some perspective on the shopping madness that was supposed to be over the weekend. it is estimated there was an 11% drop in thanksgiving long weekend sales. have people had enough of black friday, cyber monday? >> it has been stretched out. we do not call thanksgiving thanksgiving anymore. we call it gray thursday. i think cyber monday will go away because it has all been fleshed out. it was said that creative destruction -- he was an economics guy. do you look at mark's world and say this was just passive creative destruction? >> absolutely.

you want to try on clothing before you buy them, you still go to a physical store. mark, we talked about how people are spending money faster earlier. the stores begin promoting at the start of november. does that change how money is spent during the holiday season? >> that is the big problem. there is a limited pot of money. britain'say now retail space has increased 4% per year since 1981. the population has increased 1%. >> that's great. say that again. we are up 4%? >> every year, american brick and mortar space has increased 4% since 1981. the population has increased 1%. >> this is the conversation we were having before the show. this anyone by clothing online? the answer is a resounding no. you go to a store? you have not bought a suit

since, what, arthur burns was chairman? >> since before suits were invented. >> those were classic lines. in our twitter question of the day because it is apropos. are you shopping online from work today? if so, what are you buying? 40% of people -- >> sorry, 40% of online sales are purchased at work. dirt -- >> during business hours. like cyber retail this, retail that. >> we have a lot more coming up on "bloomberg surveillance." ripplelooking at the effects of a new oil order. this is bloomberg surveillance from bloomberg television. ♪

>> could not be better time, folks. 10:00 a.m. this morning on "market makers compo frank keating. not only his perspective on american banks. frank keating on the politics of the republican party. frank keating with oil, where ola -- where oil is. look for that at 10:00 a.m. this morning on "market makers." it is "bloomberg surveillance." tom keene with brendan greeley and scarlet fu. >> oil prices continue sliding. they will not stop with prices 2009. lowest since wti falling below $65 a barrel earlier today. the implications are global. hans nichols joins us from

berlin with his view on oil. falling oil prices is good for -- >> in some cases this is a theoretical case. you look at the physical market and the futures market, the futures market is 30 times bigger for oil. what we really have here is a test case, one for the books for the economics department -- what is the break even point of u.s. shale? that is what no one knows and that is what the market has seen. case,m costs -- for tom's we will see you in europe. maybe twice this year, not only for dollars -- not only for davos, but for a ski vacation sometime in march? that opec is likely to hold another meeting before june at which it could make a decision.

what are you hearing in terms of a response for opec coming sooner than expected? >> until opec says something officially, you cannot take anything at face value. until opec gets everyone on board for a supply cut, you cannot take much officially. opec putstion levels out there are never really internally policed and are never really internally held. the big effect it has -- remember two or three years ago when all the focus was on releasing the strategic petroleum reserve? the talk from the white house is that it was the speculators driving the price of oil. in some ways we are having the same conversation but in the other way. speculators are driving the price of oil down. >> stay with us. he brings up an important point, whether it is krugman's textbook buiter'sextbook or

textbook, can you assume that currencies are the easy path for policymakers? at least inway these economies, you can get the stimulus going easily is through a depreciating currency. >> we see that in japan and to an extent in europe. >> and even when it is not actively sought as in the u.k., there is increasing certainty about the political future. >> do you have a citigroup price on the euro? the cost down to parity -- not in the fortnight, but in a couple years time it will be there. trying to drive inflation, all these economies are trying to get to that magical 2%, the price of oil has been a big driver.

can they still get to 2%? >> of course they can. they simply have to get there faster. oil is after all just one commodity. massive improvement in terms of trade, which is what we are seeing, and for consumers in the u.s. ultimately it will be positive for europe and japan. pricess an effect on which is negative for inflation. this is strictly high-frequency dances, still oil prices and inflation. >> i think that is the quote of the day. i wanted to bring this back to opec because we have a chart that shows how opec's leverage is limited right now on oil prices. the total oil supply has been rising. that is the blue line. down from a year ago,

and that is the white line. the yellow line, other countries. >> there are one million barrels that the u.s. is no longer importing. >> hans nichols, give us an update of the warmth of europe right now. we see you -- we see the ruble crashing. vladimir putin may be out of the news for the day -- for the next 48 hours. >> for eastern europe, it is higher than western europe. western europe, about a third comes from russia. 15% comes through ukraine. i want to go back to the earlier comments by our caller from -- our colleague from citigroup. weakening be a huge of the euro. you will need to see a massive amount of ecb stimulus to achieve that, and you will still run into roadblocks from the germans. one ofer the weekend,

the key central bankers in frankfurt is against quantitative easing. if you are going to try to drive the euro down one to one, the germans will revolt. they will be out in the street. >> you mentioned this earlier this morning. professor, do you think -- do you see them finally blinking? bundesbank finally blinking? >> as long as they do not resign, it is manageable. the only real threat is the resignation from the governing council. it would be a real political headache. theory.has been a we will continue with willem buiter.

you so much, thank in berlin this morning with the marketing -- with the markets moving dramatically. in the next hour, the former chief executive officer who literally came up with the word "exclusive." look for that on "bloomberg surveillance." dow futures -67. it is "bloomberg surveillance." good morning. ♪

>> good morning, everyone. "bloomberg surveillance." for the morning must read, here is brendan greeley. >> mario draghi spoke on the

27th. this was in helsinki. he said to ensure countries are better off being in the monetary unit when the shock hits them than outside, we need other ways to move them across the less -- the more public risksharing we want, the more private risksharing we need. is the integrated consumer banking union the fix? unit andthe banking the capital markets union. that is private risksharing. getting there slowly with the banking union, with the capital market union we are miles away from home. at least for retailers. >> was his diagnosis correct, that the problem five years ago is that there was not enough risksharing? >> absolutely, yes. we did not do it fiscally, obviously, because the political will is not there. the mechanism simply did not exist. and what there was was then murdered by national regulators and supervisors.

it nearly balkanized the euro area again international territories. thanks to the fact that the ecb has taken over, the leadership in regulation in the euro era -- in the euro area is ending now. >> it seems like it has been that way for a while now. , our guest for the hour, along with mark ellwood, along -- mark ellwood, the author of "argan fever." thisou shopping from work monday? ♪

>> good monday morning, everyone. this is "bloomberg surveillance ." i'm tom keene. and brendanrlet fu,

fit -- brendan greeley has returned from a sabbatical. >> oil prices keep falling. west texas intermediate dropped below $65 a battle for the first time in almost 5.5 years. oil jobs 18% in november. there is speculation prices will decline even more. the oil minister says there is no guarantee u.s. shale oil producers will produce their output. an announcement at glaxosmithkline about their workforce restructuring could come as early as this week. that is according to people familiar with the company plan. their operations have been struggling recently with poor sales in respiratory medicine. sony pictures wants to know how several of its films that have not been released ended up on piracy websites. "the financial times" reports that the studio is asking the fbi to investigate. several titles have appeared online. the on the unauthorized releases

-- authorities are trying to determine if the two are linked. "christmassaid, day." does anybody do that anymore? >> people do not have anything better to do on thanksgiving than go shopping. that happens on christmas as well. some are treating this like it piracy problem. the bigger problem is that someone got into all of the corporate servers. what was stolen was a private screening copy, not the movie quality copy. they got budgets from sony, they jolie'san of angelina passport. sony has a huge problem. the problem is not privacy, it is corporate security of their internal servers. >> another headline we want to monitor are the protests in hong kong. they turned violence once again -- they turned violent once again. protesters charged police lines, and police fought back with pepper spray and water hoses. this was a violent

confrontation. andrew, what is different from this one a few months ago in which police used tear gas? >> well, what is happening is the support for the demonstrations are fading, and this was kind of a savelast-ditch effort to the movement after police successfully cleared some of the key protesters last week. the students caused a big rally -- the students called a big rally sunday night. the numbers swelled a little bit, nothing like we have seen in the beginning of this thing, but they had a lot of people out of the streets. they wanted to shut down the government building, and the police this time said no way and they moved in. they did not resort to teargas, or the protesters were being pretty aggressive. they were charging the police and they were well-equipped. nonviolentively compared to other demonstrations we have seen. there are no weapons or rocks being thrown, none of that stuff. people got bloodied.

>> there is a distinction with what the student leaders had said, that they were going to be nonviolent. how united are the supporters? a few of them were arrested last week. >> i think they are realizing the walls are closing in. what has been going on is that the companies that were most affected by the occupations because the roads remain blocked -- the bus and taxi companies have been asking the courts for injunctions to clear some of these sites. that forces the police to act on courts and go in and do it. the courts are forcing them to take action. they are shrinking the area that the students still control. today there was another injunction approved by the court for a big chunk in the admiralty --a, the remaining session the remaining section where most of the protesters are staying, at the edge of the central

business district. if they clear that one, the students will be cornered, and their area will be shrinking. they will be forced to make some painful decisions. either that, or they escalate it and they drop their pretense of no violence and really ratchet things up. or they go home. >> andrew, thank you for giving us an update on these now violent hong kong protests. >> what did you think of that? >> it feels like tactically the last days of the occupy protest in new york. they are a small group of people stuck in an increasingly small area, and they have trouble rallying support. strategy,f the occupy but it does not look good for the occupiers. >> william bauder is here from citigroup. -- william boyd or is here from citigroup.

with gold down 36% since late 2011, the mail is already coming in on this. how vicious was this deal to do? >> it is expected when you write about gold, which is partly religious, the affection people have for it, you get some unusual responses. but i got some very reasoned objections as well. >> why should the united states empty fort knox? why have that stuff in the ground? it is just another commodity. led, zinc,tockpile tin, or bananas. >> south korean women were inling their gold bracelets the heart of the financial crisis. >> it has value. when there is hardship, you sell

your assets. but it does not have to be something that you can also put in your nose. you is tom is telling that he is worried about what he has in his closet or >> -- in his closet. you compared gold to the massive calcium stones. i was not an accident, right? you are looking at something that is completely historically absurd? >> it is also costly to produce. out and spend a lot of effort. gold is something that you dig up at great expense. then you stick it back in the ground. >> but the utility of gold historically has been that it was a good compromise between a large value and it was relatively easy to move around. sweden had a copper problem. they could not move it because it was not worth enough. >> we did not have to carry it

anymore. >> the morning must read from another time and place. buiter studied in 1936. it was described -- the gold standard was once described as a barbarous relic. from a social perspective, gold held by central banks as part of their foreign exchange reserves merits the same label. >> i don't think any central bank is planning -- >> why? theecause it would have kind of political\-- the kind of political backlash. don't know any governors, the chairman of the fed, who talk a lot about gold. yet they have gold. >> i always wondered when we talk about it here on the show,

it always feels like a short-term debt, not a long-term strategy. >> most commodities have intrinsic uses. either as a consumer good or as a producer of collective input. gold has diminished intrinsic value. -- whatdoes to minimus does diminimous mean? >> low value. on thehere something inside of your wedding band that says, "let it go"? bauder -- willem buiter talks about how gold gets some of its value as a consumer good, as jewelry. to what extent do you see the demand for gold jewelry, given

the move towards more custom jewelry, lower-priced items overall? >> luxury is under as much pressure as everyone else. they are just pretending they are not. most luxury brands will say we do not discount. they are all lying. weizmann street not buying more gold -- why is bond street not buying more gold? havecause obviously we irrational reactions about how we spend. >> and you said in your research it is not going away. >> people mostly by gold -- becauseostly buy gold of its value. it is shiny bitcoin, right? >> that is a great name for a

band, ladies and gentlemen. from antwerp, shiny bitcoin. >> it did not get as much pick says.willem buiter >> coming up, thanksgiving weekend sales may have fallen, but at least there is good news for clothing sources. more evidence that your dollar is going a little bit further. today passing the best chart, next. and i toured a question -- are you shopping online for more today echo -- and our twitter question, are you shopping online for more today? tweet us. ♪

>> good morning, everyone. west texas intermediate, under $66 a barrel. it was much worse four hours ago. healing, but grim markets across the board. dow futures -67. this is "bloomberg surveillance ." let's give you a monday single best chart. >> a place to each of our guest hosts' expertise. our chart shows is more evidence consumers are playing -- are paying less per unit. growth in apparel unit volume has overtaken apparel sales.

at average price p in 2001 $24.73. since then, it has declined, bottoming in 2009. out 12% the price is since 2009. --2013, it was 2% above the mark ellwood, morgan stanley says he doubts the average selling price will return to historic peak levels, partly because beating shoppers expectations will be difficult. >> it is impossible because it is biological. we have hormonal reactions to discounts. the chemical in the brain tells us to do something again when we get a bonus, whether it is a free slice of chocolate cake or a discount. and you get those surging through your brain, you want more of it. when you give that to people when they shop, they keep asking for it. >> people have shifted from apparel to other things. you certainly see that in the average selling prices coming down to electronic gadgets, that

kind of thing. higher price points. >> as long as they get a discount, it is not necessarily about the rice point during everyone wants 30% off. it is what they spend and how they are spending. >> when you see the line drop down, does that say more about pricing strategies or about the cost of reduction? more about retailers' desperation. i don't think many retailers have much of a pricing strategy. i think they are hurling things of the wall, sending out discount e-mails. >> that is eating into retailer margins and they are not passing that on to producers? >> completely. this is not raising the price on production cost. this is getting to market-based pricing, weather is just too much stuff. >> willem buiter, you are nodding your head here. >> that is exactly what is happening. the margins are being squashed by a glut of too much liberty at

the retail level. you nailed this three or four or five years ago, there was the scene in davos last year of lower nominal gdp, less of an animal spirit. do you see a pickup in nominal gdp next year? >> absolutely not. we are seeing globally the number of nominal gdp goes flat. nothing is happening. the emerging markets die. >> but something is happening. >> i wonder if this is even in the economics text books either. did anyone ever think that we make so much stuff efficiently that we just have to bank much stuff? >> manufacturing remains phenomenal. --which part of retail

>> apparel struggles because it is oversupplied above everything else. >> we will talk about that in a bit. let's get to some photos through the weekend to get you started this week. >> we will move from apparel to listen when you, the world's largest coin pyramid. it is the lithuanian switching to the euro like the other baltic states in january 2015. sensemade of lithuanian -- of lithuanian cents. the answer to the question is the litas. pope francis is freeing those code doves at the istanbul holy cathedral. not even have to call this a charm offensive because it is just charming. >> a small christian population within a mostly muslim turkey, but the drama there is with the leadership of the eastern orthodox church.

to see him at the mosque was stunning. >> the message counts. when you watched pope benedict's painful trips abroad to find some connection, when you see how much better he is at it -- what you say, as the pope, it matters. the number one photo, brazil with the world's largest floating christmas tree at a ,agoon in rio de janeiro brazil. it is illuminated by 3.1 million lights. the world's largest floating christmas tree. are there other floating christmas trees? world's only? the doesn't have to be the world's largest? >> is this like the world cup

celebration that they did not celebrate? >> those are your top photos this morning. coming up on "surveillance," it is cyber monday. we discuss whether retailers have a leg up over amazon. and are you shopping online from work today? if so, what are you buying? ♪

>> good morning, everyone. "bloomberg surveillance." you need to get smarter on retail. stephen sat of that stephen stephen sadove will be joining us in the next hour. >> if you look at online retail, there is no comparison with what amazon is doing compared to what everyone else is doing online. different orders of magnitude. >> right now, top headlines with scarlet. >> black friday appears to have fizzled with consumers. the were not impressed with discounting and longer store hours. it fell 11% from a year ago.

they are putting a spot -- a positive spin on it, saying that they were avoiding the initial rush for later savings. darren wilson has resigned, effective immediately. the town mayor says the move comes in response to threats. he will not receive a severance payment or continued benefits. last month a grand jury decided not to indict him in the shooting death of michael brown. playersst. louis rams demonstrated solidarity with protesters in yesterday's game with the oakland raiders. they walked on the field in the hands up, don't shoot pose. the st. louis police officers association says it was pound -- profoundly disappointed with the players' gesture. those are your top headlines. >> dow futures, -62. story, 65.54 on

the west texas intermediate. >> which means everyone can drive to the mall these days because it is cheaper to do so. it is cyber monday today, and it is a big deal for online retailers like amazon, which see more traffic and a man any other day of the year. mark ellwood, the author of "bargain fever" joins us. we were talking about show rooming being the death of rick and mortar retail. rooming replaced show rooming? rooming, you do your shopping at home, you browse a little, and then you say i will cruise the mall. it is much easier and you pick it up straight away. >> both of these terms are different ways of retailers saying people doing things we didnot expected to do and

not plan around. to a shopper, they are two versions of the same thing. >> what does this mean for amazon? use a as price matching becomes more of a reality and people do research online, this reduces their stranglehold. >> wal-mart this season said it would price match amazon online and in stores, which was a wonderful empty gesture because they are normally cheaper than amazon anyway. amazon is also behind the curve because once you merge target targetget.com, think of as warehouses, not just shops. you can web room it and go pick it up. amazon is scrambling at the distribution centers in major cities, so that you can do what target already can do. >> any indication that that will pay off, that that is working? they had had a sort of eureka

moment. "i cannot believe we did not think of this sooner." and amazon, why are we treating amazon like a savior? it is not the cheapest and you cannot get it straight away. >> it is the security of habit. we just assume that is where we buy things, so that is where we go? >> the absolute stark reality walmartthat amazon -- has 5% or 6% growth. in almost aernaut perfectly competitive society. movethink the first advantage in deed is important here. it is almost a verb are now -- it is safer now to amazon. >> thank you so much, willem buiter. mark, thank you for the retail

perspective as well. the ruble, stunning. vladimir putin has to adapt to that. dollar-canada, 1.14 as well. this is "bloomberg surveillance ." ♪ . .

>> this is "bloomberg

surveillance." >> oil and gold continue to collapse and bond yields touch record lows. will u.s. stocks next? blackmore -- black friday fizzles. bowtie tuesday effective immediately. they won't bailout retail america. turneds in hong kong violent. good morning, everyone. this is "bloomberg surveillance ." 1-ish.onday, december i am tom keene. joining me in the holiday spirit, scarlet fu and brendan greeley. >> we need to start with oil. prices keep falling. below $65 a barrel. it has bounceback slightly. -- it has bounced back slightly.

shockwaves from opec's decision not to cut production. the oil minister says the current prices are no guarantee that shale oil prices will reduce their output. in japan, prime minister shinzo abe wants to focus the election on the economy. moody's is not helping much, cutting japan's credit rating by one level. they say there is uncertainty over whether japan can reduce its deficit and boost economic growth. >> in hong kong, please are battling pro-democracy protesters that have occupied the admiralty district. they've used pepper spread and water hoses to push that demonstrators. the city's chief executive that government tolerates other protests -- government dominance of the protests is growing thin. >> any movement that can successfully surround the city government headquarters makes ce andthorities lose faic

gives them a slap in the face. if they want to keep their dignity, they should respond directly to the citizens democracy requests, not using police to clear protests with violence. demandedotesters have that hong kong allow free elections for its next leader and the government is refusing good for the lame-duck congas, a lot to do and not much -- for the lame-duck congress, a lot to do and not much time to do it. on the list, come up with a new budget, no biggie. number two, there expected to renew funding for syrian martyr it's fighting isi -- syrian moderates fighting isis. >> that's it, that's the list? >> no big deal, just a new budget. >> a scandal having to do with cyber monday -- you will next year be able to buy girl scout cookies online. this is outrageous. platform --mputer even thin mints!

thin mints, i say, we will be able to buy digitally. a scandal. we will take your cash up front. digital cookie sales start in a few areas this month and goes national in january. brendan, this is outrageous. >> things in america are no longer sold with a smile and handshake. >> what's next, an app? >> inflict on your fellow employees your daughter. >> you have to order three boxes. >> love your boxes of thin mints. euro does nothing. oil, oil, oil. as scarlet mentioned, it bounced earlier. was 114170.

intraday low. the ruble blows through 50. 52.29. watch vladimir putin. this will be interesting in the coming days as well. >> didn't move before come why would you move -- givingis still instructions to tonya and the conform -- tonya in the control room anton has moved on to another show. >> billable therapy per hour. >> do you need a hug? >> any dog. > tonya, come back to the mornings. berlin nichols in our news bureau with perspective on what this means for europe. what is the distinction between cheap oil in america and europe? >> it is indirectly passed on to because you have much higher per liter gasoline taxes .

in so many ways when we talk about oil we are talking about the effect on inflation and whether or not they get anywhere close to that coveted 2% goal. it looks like oil is cutting the other way. this in some ways makes mario draghi's challenge so much more difficult. at the same time we should never underestimate the rigidity of central bankers. -- creativity of central bankers. >> joining us is the chief economist for citigroup. you have been out front come out on deflation.nt can mario draghi and others stanch the fears of inflation? >> yes, if they move aggressively. >> and soon? >> yes, preferably several months ago. rateflation at the annual -- we are close to actual deflation. >> you mentioned that there are 70 other countries set against the german central bank, the bundesbank.

why don't they have the courage to act? >> well, everybody is equal. some are more equal than others. the bundesbank doesn't quite run the governing council. the governing council cannot afford the third german resignation. >> the fact that you talk about that in a significant way, director have to have germans on the governing board. -- you have to have germans on the governing board. it means more than a seat on a chair. it means the philosophy has to be represented. >> the ecb has to get off its consensus model, where not only the majority decides, but the minority is unhappy. >> 10 cultural change happen quickly enough -- can that cultural change happen quickly enough? >> if it doesn't, we are in trouble. >> the bloomberg commodity index is the old dow jones-ubs index. we are thrilled to bring this to you with union bank of

switzerland. it is an ugly chart. ndan, a rollover, bre to another time. does this signal a further deflation for japan or is it an advantage to the automakers of germany? >> well, the automakers of germany clearly want a weaker euro, right? their biggest concern is whether or not demand in china will keep up. it is the same in the u.s. it helps airbus. they have been clamoring for the euro much lower. minted a global thin index. [laughter] you can track not only how much people are buying from their coworkers, but also, you could have a cost. that is our new project. >> anna sultan and stash a hans and i were e-mailing

few seconds ago and he is being paid in euros, not dollars, and it is beginning to freaking out . >> i can put all my money into thin mint futures and i would be clearly hedged against any sort of collapse pit my daughter's college education will go into thin mint futures. i am long thin mints. i am not a market participant but i am long on thin mints. >> want to bring in our guest is of the hour, current chairman of the national retail federation. we talk about how low gas prices are what is that necessarily good in this era when you do all your research online and you just go to the mall the pickup what you already purchased online? >> we are in and on the general world, the more availability of dollars given to the lower gas prices is good for the consumer because if more disposable income.

thend moves the needle for lower income consumer. they have the disposable income in the more special items are selling well, high-end luxury is performing well. we are in a good environment for the high-end customer. >> you made world headlines an hour ago with your idea of the .arity for the what is the reason you get to a one-for-one? >> asymmetry in monetary policy. weaker growth in the euro area and stronger growth in the u.s., policy finally becoming expansionary in the euro area, finally, december 2015, becoming more restrictive in the u.s. >> we thank you so much for being with us today. i'm pleased to tell you that i will accept all your hate mail.

[laughter] nichols, thank you so much. i love your idea of a thin mints index. i will bring that up with a surgeon michael here at bloomberg. -- certain michael here at bloomberg. >> we should hold them in -- thin mints in reserve. >> you are getting up before the commercial? [laughter] >> not allowed to do that. we have much more coming up on "bloomberg surveillance." we have a market check with portfolio manager and what does that mean for stocks and bonds in the rest of commodities?

>> good morning, everyone. i am tom keene. with me, scarlet fu and brendan greeley. >> i didn't want to go out because i thought it would be crowded. >> you went to the cornell hockey game. >> and we saw richter -- >> almost as good as steve's it off. >> you are chairman of the national retail federation. nrs came out with numbers that say that sales dropped 11% from

the same time year ago. there is controversy over the nrs methodology. barry riddles, a bloomberg view contributor, says the methodology is flawed. >> i don't believe the -11%. the survey says it was -11%. i have talked to retailers over the weekend and i don't see -11%. >> what do you see? >> we are in a marathon. you have to got to look at it in terms of cyber monday. >> bowtie tuesday. >> thursday, whatever it is -- >> bowtie tuesday. >> small business saturday. it is all blending and the consumer is winning. the survey data with the methodology that was developed some period ago, i don't know that i believe -11%. if i look at some of the big

retailers, they had a pretty good weekend, i think. between the stores and the online, there is a seismic shift going on. it slightlyeeing down and online is exploding, probably in the 10-20% growth range. --is impacting the mobile mark talked about webrooming and i've never heard that term before -- >> made it up during the show. >> it is a great time. -- term. >> how much can you extrapolate from that into the overall holiday season? that is the issue. >> it will be a highly promotional holiday season. whether it is -11 or flat, there's a lot of sales yet to come. you have the biggest days of the year still coming, a couple big holiday weekends. there is a lot of selling and it will be very promotional, and the deals are still there. >> thrilled to have you with us.

experience at saks .ifth avenue as well with oil on the move, we need to speak to someone once real oil experience. frank keating is the former governor of tulsa and he will be on "market makers" this morning. stay with us. ♪

>> good morning, everyone. "bloomberg surveillance" from new york city. markets much better than they were at 4:00 a.m. and 3:00 a.m. real issues with oil and gold. nevertheless, improved off of the early morning hours. >> heavy rains near malibu, california, leave the pacific coast highway covered in mud and rocks. about a dozen vehicles were stranded.

of mud and sharp rocks damaged tires. is closed andch his expect it to remain that way. but still, they got rain. >> i don't know, pictures of the flood and i go "whoa, man." at 11%,to-date returns according to any note to investors obtained by bloomberg news. the monthly gain more than doubled. but it lacked behind the year-to-date gain of almost 12%. sony pictures wants to know how several of its films including some that have not yet been released and it up on piracy websites. the "financial times" says that the studio wants the fbi to investigate. several titles including the unreleased "annie" and brad pitt's "fury" have appeared online. those are your top headlines.

>> something to watch for in the movie area. commodity prices implode over the last couple of weeks. full faith and credit, sovereign debt, price up, yields lower. edward campbell is with prudential financial and he gauges the correlation and allocation of paint on how a collapse in oil affects all of our portfolios. can you reaffirm i need to own stocks, given the volatility we see elsewhere? >> i think they are the best alternative among the major asset classes. with of the decline we have seen in oil prices, this is a net benefit for the global economy. if we look at all the major economies -- u.s., europe, japan, china -- they are all energy consumers. the most recent decline is going to generate more growth and

inflation and that is positive for stocks. >> do you see the correlation between the other asset classes is tight enough, that it signals something we can't see? >> tight enough? >> yeah, tight enough, between commodities -- do they signal something different? >> i don't think so. >> in a research note you write that the days of 5% gdp growth weak spirits during the precrisis years are not likely to return anytime soon, as such heady rates of growth depend on rapid growth in emerging world. and then you use tom's favorite word. >> thin mints? >> mediocre. are we looking at mediocre growth? >> christine lagarde we can thank for that phrase, the new mediocre. 3, 3 .5% growth we're experiencing globally. emerging world is no longer able

to grow at 6-8%. we have settled into a new normal for the emerging world at 4.5%. a lot of that is due to china rebalancing towards the growth model away from investment and towards consumption. they can't grow at the rates they have grown in the past. that is basically felt across the emerging world. >> you see this for the long term? >> yes. >> i want to go back to the theme of oil and how it is affecting asset classes. this is from the vice-chairman of ihs and a noted author -- he writes in "the journal" >> really dead on. >> to what extent do you think it might be time to start looking at some of the energy companies, given that they have become so efficient and reducing costs and how they drill for oil? >> well, at some point it will

be time to buy energy. i don't think i would do it right now with oil dropping like a falling knife. but as it continues the valuation starts to get interesting. >> what are you looking at in terms of energy companies, some of the smaller natural gas players, for instance, throwing up their hands and say we're going to start drilling right now? >> it will throw a big wet blanket on the u.s. energy .enaissance i don't see that is a huge problem for the u.s. economy, because that is only about 7% of .otal we think the economy is going to grow pretty rapidly. >> you are at the heart of this not only with your experience at saks fifth avenue at the national retail federation. this is got to be good for american consumption. >> no question about it. >> do you see this immediately or is it something down the road

? >> you see it immediately in the pocket of the consumer. you save $20 a week -- >> going right to walmart. >> but i don't know that the lower and consumers still feeling that, but that is the issue. absolute income has not risen over a number of years. got an interesting comment over e-mail that pointed out that you say we're looking at long-term, a marathon, not a sprint. there is to be a lot of discounts. another way of describing that is deflation. people are delaying purchases because they think they will get cheaper. >> i don't know that they will get cheaper. they will stay at a lower promotional level over the next month or so. there is not the same sense of urgency over black friday to get out there and buy it. >> one last thought from you -- what will you be doing towards the end of the year? >> the way that we are position

that we are progress -- pro-risk. overweight stocks and real estate and underwent commodities. >> we will be right back. out for the question of the day -- ♪

>> this is "bloomberg surveillance." i am scarlet fu, here with tom keene and brendan greeley. another strike hits lufthansa. the pilot strike began today and will run through tomorrow at midnight. it extends a dispute over money and benefits that has crippled the airlines for months. lufthansa says it will affect 150,000 passengers and 1300 flights. the white police officer who fatally shot a black teenager during an august confrontation in ferguson, missouri has resigned. darren wilson's resignation is effective immediately. the mayor says it comes in response to threats. he will not receive severance payment or continued benefits. a grand jury decided not to indict him in the death of michael brown. with the aftermath of the ferguson shooting, several st. louis rams players get

mistreated solidarity with protesters before yesterday's game with the oakland raiders. they walked onto the field in posehands up, don't shoot" popularized by protesters. those are your top headlines this morning. >> this matters to our guest host, the chairman of the national feet all right -- national retail federation. will 2015 bring a bonanza of regional consolidation? we talking about the macy's matings of a few years ago. hudson bay just but-year-old shop, saks fifth avenue. what did they buy? >> they bought a great asset, terrific real estate. i think you saw that they've done a great job already of consolidating indian costs out of the business -- consolidating and getting costs out of the business but over time, they are really bodies saks -- what they

have really bought is saks. >> who does real estate best? >> real estate is an important part of retail -- >> who does it best? retailers can do it well, real estate guys can do it well. it is a question of managing the portfolios. >> we see the megadeals, worn buffet -- warren buffett and heinz ketchup. >> i don't know that big money has to come into retail. you have seen big money come into retail with the eddie lamberts -- >> network -- what a grizzled pro-like you -- how do you see a financial -- you must be shaking her head. >> not necessarily good they can monetize real estate and do some things differently if it is part of a larger play. i think what richard baker and the hudson bay guys have done relative to real estate at saks,

they were able to take mortgage out on the sexes avenue new york avenueg -- saks fifth new york building. if you have a large portfolio of real estate it can work. >> can it work with the merchandising of the gap stores any fashion apparel stores that seem to be struggling? gapertainly someone can buy but it is tough to do it for the real estate because the smaller specialty stores are renting their real estate. they don't own the assets. what you are looking at with saks and sears is owned real estate. >> madison avenue, i don't know half the names anymore, but does stupid money coming, foreign money come in and buy those iconic names? >> bergdorf goodman is owned by neiman marcus which is owned by ares capital. factor,ainly that is a with something that is owned like bergdorf or

niemann. >> back to the real world, what is the number one thing you are watching this holiday season? >> oh, i'm watching the consumer every day and whether they will be doing the on the channel shopping. >> and you disagree with of the gloom out there? >> i disagree that you will have a class in terms of the real joke -- collapse in terms of the resale consumer. >> not just going to amazon? >> oh, they're going to amazon, honestly, but not just to amazon. the winners are playing online and in stores. >> terry lundgren took my head off on black friday. "look, where number eight in retail." >> someone went to macy's and came home and said i love what i just bought at macy's and i'm going online and buying more of them in different colors. nichannel. >> thank you so much. scarlet? >> we have data coming out this morning. -- isn any fracturing

manufacturing to out at 10:00 a.m. the 10 year yield is not changed too much. everyone is watching the nymex crude. dipping below $65 a barrel. is "bloomberg surveillance ." i am scarlet fu come here with tom keene and brendan greeley. >> online retailers like amazon are hoping to cash in on cyber monday. cory johnson is in california surrounded by amazon robots. what is happening behind you, cory? are you in danger? >> surely i am in danger. i usually am, not least of which because the fog is settling heavy. telephone, about an hour and half from san francisco, san jose, and sacramento. it allows amazon soon have operations in a state with a once feared to operate for fear

of sales taxes. they decided to forgo that to be closer to the people they are serving, and they are serving them in this facility with robots. a $735 million acquisition of a company that makes a very interesting robotics system. it is based out of boston when they acquired it and they still make the robots in boston. robots are essentially like giant rollerskates or dollies. going to make cards of stuff people order from amazon and they can lift the 700-plus pound cart and move it to the place where an amazon worker -- all those barcodes in the software that amazon has written themselves -- and when someone orders that thing it moves to protector is what they call it --moves to what they call a picker. this is happening so much faster

than it did when it was done by hand. i was not -- i was at an amazon facility in phoenix where they were doing it the old-fashioned way. people were walking the aisles like it was a safeway, picking up things one by one. it is a very big change. >> the figures aren't going to the shelves, the shelves are going to the pickers. amazon wants to increase the pace of how these shelves work. now it is 300 orders, and order every 20 seconds. can humans keep up? >> when you see happening is the job of the picker at most amazon facilities -- >> it is pretty brutal. >> the walking. you walk into a facility like this and you can see how hard people work for the money they

make. whether it is walking 10 miles a day or standing at the station and picking stuff up and throwing it in a bin, it is hard work. the job is very different when you stand in one place and get more done. >> i want to get our guest post for the hour, steve sadove. you have used those robots before. >> we had those robots before amazon bought them. we weren't one of their largest clients. -- we were one of the largest clients. it is amazing technology. the technology enables the picke r to do the job quickly. you pick nine orders at a time and it is absolutely terrific technology. >> well, it is terrific technology -- cory, go ahead. >> the biggest change for the company's capacity. they can cram twice as much stuff in a facility like this. you see those massive investments of tens of billions of dollars in capacity,

especially as they get much denser, to use the oil and gas turned it they get closer and closer to the customer. it offers the potential of crime and twice as much stuff into the facility -- cramming twice as much stuff into the facility. it is in a him with lots of stuff. usually the had is issues in the u.k. k and germany in particular with the way the workers -- the conditions in the warehouse. this gets around that pesky labor issue as well, right? >> well, look, there are still a lot of amazon workers here and they won't staff -- they will staff up immensely for the holidays. and there are serious labor issues in europe as well. they greeted with different code of conduct with employees and in a case involving not just amazon but a number of companies, the workers were forced to wait to

go through a security check -- take care of yourself surrounded by orange robots out there. twitter question -- ♪

>> this is "bloomberg surveillance"

i am scarlet fu come here with tom keene and brendan greeley. sony pictures wants to know how some of its films ended up on pharmacy websites. several titles, including the unreleased "annie" and the " has endedease "fury up online. betty liu joins us now. >> brad pitt furious over "fury" being downloaded. maybe it will drive people to watch it more if it is that good. it is a constant problem for movie studios. lions gate sued a few years ago for privacy of their movies. -- privacy of their movies. it is supposed to cost the industry $75 billion annually. >> but that is an industry estimate of what it costs them. there is really no good data on what number of people who pirate movies would have gone to the

movie theater. my frustration with the way sony's spinning this is they had an internal server bridge that nobody went into the film vault. they went to the corporate server center dot internal memos and watermarked copies. it was watermarked screener copies. it is not a piracy problem. sony had a cyber breach. it is a computer security issue. >> they are suspecting maybe the north koreans. >> oh, this story is so good! >> i know, it just keeps giving. apparently sony is releasing a film that is radical of the north korean leadership -- critical of the north korean leadership ministry and they believe north korean hackers responsible for the but i don't know if anybody called up on their couches or beds watching netflix over the weekend? >> no time. if i curled up, i was sleeping.

>> netflix will keep you on the couch even longer with this new series called "marco polo." >> such a naked grab for chinese consumers. >> and italian merchant goes to china -- discovers pasta and brings it back to italy. series,ion on this original content. just behind "game of thrones." i don't know if anyone is an hbo "game of thrones" fan. steve, are you? oh, ok. >> this is brand-new for me. i'm excited about this. >> this is a grab for the chinese -- >> yeah, no, this is blind to that. -- playing to that. it will go with the angle -- he stole the pasta. >> and true to form, i think i saw a hint of a boudoir seen. >> got to be, right?

>> betty liu, thank you for joining us this morning. withill be speaking porter bit, weighing in on both of these topics. "in the loop," beginning at the top of the hour. the state of the consumers that the question here, high-end consumer and a mass-market consumer converge as we get ready for the holiday sales season. our twitter question of the day ♪

>> good morning, everyone. "bloomberg surveillance." tomorrow, the most interesting college president in new york city. no, not if the government david -- not ithaca. david skorton of cornell university. you want us to the smithsonian to meet our national museum effort. i am tom keene. with me, brendan greeley and cornell graduate scarlet fu could you went to the hockey game. >> saw mike richter and got to take a picture with him. it was a great night overall because we won. >> let's get to our top

headlines and here is scarlet >>. > black friday appears to have fizzled out with consumers. fell 11 the staff fell 11% from a year ago. the trade group is putting a positive th spin on things. s. oil prices keep falling. they passed yet another milestone on the way down. below $65 a barrel for the first time in 5.5 years. there is speculation that prices will decline further. iran's oil minister says the current prices are no guarantee that shale oil producers will reduce their output. the latest "hunger games" film takes it $56.9 million at domestic cinemas. from lions gate entertainment has generated 200 $60 million in total receipts since it's release on november

1. "penguins of madagascar" from dreamworks -- >> love that. >> finished second. yield, .470, a lower yield this morning. we're focused on retail. retail was soft. the american consumer, to be kind, selective. lower.ecasts it makes for a challenging entry the 2015. stephen sadove joins us is wanting to talk about america, luxury, and the consumption that we do. if my income is good, i want to live something. -- i want to buy something. that aspiration hasn't changed. >> absolutely not. consumers love brands. even during the worst of times people perceive the brands is better than before. the higher end in summer loves

the brands. end consumer loves the brands but they want more exclusive and differentiated -- >> we mentioned someone earlier but who is doing brand best? >> you have hot brands like kate spade, louis vuitton -- >> louis vuitton still? >> oh, absolutely. not growing as quickly. brands havehat the to maintain their exclusivity. if they become too ubiquitous, too available, they lose the specialist of being -- specialness of being a luxury product. if they are too available into many shops -- > >> scarlet, chanel too available? >> you are asking the right person. >> and a sample of managing exclusivity and price points up.

louis vuitton is another great example. >> a goes to the less is more idea. you have said that this might be an overestimation. if we are to look at the luxury, the high-end grunt, what was that over the weekend? >> hard for me to say because i don't have the numbers. my guess is that you are looking at low to mid-single digit growth. growth, not declined. consumer is healthy and the market is growing but it is shifting online as well. >> when you describe luxury, regarding the price point, keeping things exclusive, itself like you are describing apple. is apple technology complete electric company? orapple a technology company a luxury company? >> it is both. that is why they are such a successful brand. the louis vuittons of the world are also in control of their brand. >> we discussed two americas and

female that we get from viewers and listeners is we are -- the mail that we get from viewers and listeners is we are struggling. there is polarity in retail. >> no question. there is clarity in america. the middle -- there is polarity in america. >> where is kohl's? >> lower end. >> nordstrom? >> one of the best in terms of being aspirational and high income -- >> can they win in new york city? huge skyscraper on central park south? >> 50 seven st -- >> that will work? >> they could bring seattle to new york city. there is so much demand in new york city and there are pockets with the new york. soho is different from the upper east side, the westside is different. neiman marcus is going to hudson yards -- >> neiman marcus?

>> oh, absolutely. >> neiman marcus is going downtown -- quote of the day. you mentioned nordstrom being able to straddle both. lowhat it does work of -- is what it does replicable for other retailers? >> they have done a great job investing in technology. we talked about omnichannel and investing in brick-and-mortar and technology. they and macy's have been the best and earliest at embracing cross channel. >> putting brick-and-mortar and online together as only happened recently. what took so long? >> first of all, it is a big investment. i talked about this with scarlet in the past -- the technology investment is higher now than it was in the past. some ceo's don't have experience on the technology side. this is a long game plan they

have to go after. this is the game that we will have to be playing in the next several years because it is omnitics, segmentation, channel, moving inventory around. >> the game that retailers are playing right now is cyber monday. it brings us to our twitter question of the day. here are some of the answers. the anecdotal might prove otherwise. up in go to pick stuff stores and they might pick up an impulse purchase. that is because they are tweeting in from work. >> that is a huge issue. stealing -- his

>> the iphone is eating into the apparel sales. they are the winners, absolutely. >> i got a couple of tweets saying "today i am buying puts." that is what we're focused on. >> big purchase of televisions, too. >> televisions still? >> oh, yes, televisions are winning. >> let's focus on the stories of the day. >> we could talk all day about the markets. maybe focus on the russian ruble. the 52 handle on the russian ruble. every single article tells me mr. putin is not concerned about this. brendan, i don't buy it for a minute. >> he is in turkey ran out practicing gas -- right now practicing guest of clumsy. >> i don't buy the idea that

russia is immune from a valuation at that level. >> it is not immune but he has got other things he is captivating. -- calculating. my agenda item is ferguson. president obama will be meeting with cabinet to discuss police-community relations and federal programs that provide military style equipment to law enforcement could the militarization of our local police force that perhaps lead to do all the violence in the summer. at the we look indictment me get lost in the details and we miss all the other elements that make people angry. >> your agenda item? edgem sure tom is on the of his seat for this. a -- the at the fif award for best soccer player of the year. >> you do this just to -- >> you think that the goal of their should be mario's left foot in the final -- >> took the words right out of my mouth.

>who is going to win? >> i think ronaldo is going to win. >> i knew that. steve sadove. we will continue across bloomberg television and radio. ♪

>> good morning. welcome to december. the last month of the year. you are "in the loop." i am betty liu.

we have a busy show for you. it turns up black friday was a bust. cyber monday does not look any better. we will be talking to pay for how. -- paypal. big onny is betting their latest original series. "marco polo." here is a look at our top headlines. i have nothing oil at this price in five years -- we have not se en oil at this price in five years. him reeling from opec positive vision not to cut production -- reelinget is still from the opec'