is a collapse of venezuela imminent? and news you can use. you can buy the usual case for spring for the $60 case. good morning, everyone. we're live from our world headquarters in new york. it is friday, december 12. i'm tom keene. joining me, scarlet fu and brendan greeley. here's scarlet fu. >> we head to washington. in washington today, the senate will begin debate on a $1.1 trillion spending bill. late yesterday, the house narrowly passed the plan despite opposition from emocrats and republicans alike. nancy pelosi spoke out against it. >> i'm enormously disappointed that the white house feels that the only way thebling get a bill is to go along with it, and that would be the only

reason i think they would say they would sign such a bill that would weaken a critical component of financial system reform aimed at reducing taxpayer risk. >> the senate could pass a bill as soon as today. are we at bottom? not yet. oil closing below $60 a barrel for the first time since july 2009. this morning it dipped to $ 58.80 a barrel. there's speculation opec's biggest members will defend market share. west texas intermediate futures fell in new york. they have plunged 10% this week. oil headed for its 10th weekly drop sense october after opec decided against reducing output. >> the director of the c.i.a. made a rare move. he held a press conference yesterday to answer questions about the senate interrogation report. john beenen said it is "unknowable" whether harsh interrogation tactics used oner it ror suspects used meaningful results. he also described soul

searching in the aftermath of the 9/11 terror attacks. >> the previous administration faced agonizing choices about how to pursue al qaeda and prevent additional terrorist attacks against our country, while facing fears of further attacks and carrying out the responsibility to prevent more catastrophic loss of life. there were no easy answers. >> yesterday marked beenen's first public appearance since the report was released earlier this week. yet another legal challenge for uber. today a paris judge ruled whether to block the company's uber pop service. the service lets users gets rides with private cars. the startup is also engaged in legal battles in los angeles, san francisco, spain, brazil and the netherlands. a french court will decide whether it constitutes unfair competition to taxis and other driver rentals. uber's office services are not at risk. >> yeah, i used uber last night. the san francisco bay area, the storm out there is one of the biggest in decades. the national weather service

expects a slow-moving system to dump eight inches of rain on some parts of northern california. the weather left more than a quarter million homes and businesses, including selected parts of downtown san francisco without power. it also produced widespread flash flooding, closed schools, and cancelled flights. wet weather will continue today with the system moving slowly through central and southern alifornia. let me run through a data check. it is amazing what we're seeing. futures, all you need to know, negative 14 on futures with 2:12 yield crunches to right now. other currencies have trouble. nymex crude is interesting. i saw that last night during a bloomberg panel. on to the next screen, which

really begins to explain the tension. we're back to average on the v.i.x. from 12 to 20. further curve flattening seen by 154 basis points, ruble causes major putin angst. 55 was a big deal. we've blown out almost to 58 on ruble. weaker russian ruble, 13%. 10 overyield there on our ruble bond, dollar index just to show that this is really discrete. there are discrete things going on. >> you thought the period between thanksgiving and christmas was going to be quiet. >> gone. >> does vladimir putin feel angst? >> it's going to be thrown in his face. my experience is, i don't care, i don't care, i don't care, guess what, he cares. ok, over to the terminal. this shows the rate of change of the benchmark for angst, which is a japanese 10-year. here's the central bank ugliness in 2003. forget about that.

this is the acceleration in japan which, of course, filters through everything else, including the german 30-year bond yesterday. >> absolutely. even with that last leg lower, moody's has declared japan is less credit-worthy than a year ago, but japanese investors, anyone who is buying japanese bonds don't agree. >> almost unraveling. this will be a major theme, but through the weekend of reading and into next week. it was something to see oil roll over late yesterday. the opening trading here with a 58 on west texas intermediate. the collapse in oil, the plunging interest rates are signals of looming crisis. they also signal that once again gary schilling is right. schilling, without question, has the call of economics of the last two decades, a trend in past deflation. they're like little dolls where you stick pins in a gary schilling doll. that's how much he's disliked.

he joins us. we dragged along shannon o'neill -- >> do the end, come on. >> i want to talk -- >> now, wait a minute, tom. look at that chart of the 10-year. what does that tell you? >> what -- >> it tells you it's a screaming bye when yield is over 2% versus the one, which is below 1%, and the dollar is rising against the yen. >> you reaffirmed this morning, bond prices up, yields low, and the 10-year yield goes to 2%. >> it's going to 1%. >> 1.00%? >> 1%. >> ok. >> i want to talk to dr. o'neill, ok. we ignored -- brendan and i were talking about this -- we have ignored venezuela. there's putin and this and that. how critical is this weekend for the nation of venezuela? >> well, venezuela has really entered a downward spiral.

we've seen the economy is failing. the public opinion polls for the president have been falling. we've seen a huge spread in the real exchange rate and the black market exchange rate. the real exchange rate, there's two of them, six and 10. the black market topped 180. the economy really, in many ways, is in free-fall. >> which institution bails them out? is cuba going to come to the rescue? >> they've been rescuing cuba. >> yeah. i mean, who bails out venezuela? >> well, they're sending their foreign minister -- they've been talking to the chinese. they've already taken $50 billion from the chinese in loans. it's hard to imagine the chinese would double down on that bet right now. they've really maxed out all their proverbial credit. >> and the chinese aren't desperate until need of the one resource venezuela has to offer. >> they need less of that. >> they can bore free throw argentina. >> there you go. get in line.

>> how prepared is the u.s. for an economic and humanitarian crisis in venezuela? >> you know, the united states has been talking with many of venezuela's neighbors, brazil and colombia, trying to bring together a group. the neighbors of venezuela have been meeting together in a regional organization trying to work out an agreement, or at least talks between the opposition and the current government, but it hasn't been going well. >> the trouble in mexico in the 1980's and 1990's raid on ited out through latin america. who is susceptible to a collapse? >> the interesting thing, is under the last 10-plus years, venezuela's economy has just eroded. it's just oil. who is it going to affect? it will affect those people that they import from. 80% behalf they consume comes from other countries, some from the united states, from colombia and the like. but this isn't going to, i don't believe, really set off an international crisis in the

way that some of the other countries, like mexico, that's so tied to the united states, that would be a huge effect in their economy went down. >> both venezuela collapses in their oil production, down 30% already. suppose it's really taken out. is that a big factor in the global? they have supposedly the world's biggest resefrpbls >> they do, but they're producing up to 2.1 million barrels a day. it's not going to change oil market prices significantly. also, we're seeing so much other production coming up. the challenge for venezuela is, depending on which analyst you believe, their break-even price is probably $70 to $80 a barrel. even if they're still producing -- >> was that all in? margin didn't count when you get in a price car. >> right, but still, it's quite high. >> can brendan ask a question? >> i'm relaxing. i'm like looking at schilling, drinking my coffee. i'm having a good coffee.

we've been talking about. this you look at norway having to make moves. there's this idea when the tide goes out, you see who's not wearing shorts. mexico, norway, they're actually having problems. economy that is we thought were diversified. is venezuela the nakedest in that metaphor? >> i think it is, because it's not diversified. you look at their exports in the 1990's, and about 25%, 30% more things. today it's less than 4%. they make nothing besides oil today. >> have they bony a path? could we rewrite the last 10 years and have a different venezuela that could have survived this? >> we could have, but what you've seen under chavez and now maduro is really a hollowing out of the rest of the economy. whether that's through regulation, bureaucracy, price control, just businesses, you've seen the agricultural sector decline, manufacturing sector decline. even pg&e pulled out because they couldn't produce clorox anymore with any sort of profit. >> they've tried to stifle the

opposition. they wrapped that up. is there any likelihood of a change of government, violent or otherwise? >> well, there's a possibility of a change of government. the question is, would it be violent or otherwise? as things have gone poorly for this government, they've become more and more authoritarian. several months ago, they threw one of the opposition leaders in jail. last week they came out against another one, accusing her of treason. >> i want to switch to the markets. how big is this moment that we're seeing, the acceleration of the last month that we've seen the market? what does it mean for you? >> when the fed got out of the queque business, you had that support for a lot of markets removed. >> you're going to blame yellen? >> oh, yeah, definitely. they were moving together, and

hedge funds were going nowhere, and managed money was going nowhere. i think that's the first thing. >> is z oil print, does that change the december 17 fed meeting? >> i think it probably -- i think it probably does. i think it pushes out this whole thing. i don't think they're going to tighten for years anyway. >> well ark loft themes to talk about. >> we're also going to talk about disruption. brendan is moaning and groaning right now, but our twitter question of the day, despite all the headlines, is uber winning? uber claims it's disrupted, but is it winning? it's facing lawsuits in san francisco, l.a. >> i'm hostile to the word disruption. it is only used by people i loathe. >> despite headlines, is uber winning? tweet us, @bsurveillance. ♪

>> good morning, everyone. square kelly, i don't know, if you're going to charge me for my baggage at southwest airlines. for a while there, they were the only airline left standing. an update from gary kelly, 8:30 this morning, "in the loop" with betty liu. this is sursur, a tumultuous friday. right now, scarlet fu looks to washington. >> the house finally approved the $1.1 trillion spending bill, but not without plenty of last-minute drama. peter cook joins us from washington. we talk about how politics makes for strange bedfellows, but nancy pelosi opposing the white house. what happened? >> it gets even stranger than that. you have nancy pelosi, you have ted cruz, michele bachmann on one side, and then the president and jamie dimon on the other side. that's who was involved yesterday in all the lobbying. at the end of the day, it was the speaker, the president, and

jamie dimon who prevailed. that bill passing around 9:30 last night after about a seven-hour delay in the house as they tried to rally votes, twist some arms. they were successful. now it's over in the senate side. they got two days now to deal with it in the senate. we examine a little more drama before this is all over, but at the end of the day, this is in all likelihood a done deal. >> peter cook, there was a great quote from max een watters. i know the president was whipping the bill, i know that jamie dimon was whipping as well. that's an odd combination. who is actually admittedly for this provision that would take out a piece of dodd-frank? who's saying, yeah, i like it, i voted for it, it's a good idea? >> well, there are actual al lot of people who voted for it, not just last night, but in the past, particularly in the house f representatives. you had a provision when this first came up out of a

committee. their argument is this was never a good idea in the first place, that even ben bernanke at the time and that barney frank at that time wasn't thrilled with this particular provision, which came in late n the dodd-frank conversation. but perhaps the hue and cry may be more painful for wall street. not month ago, that is what's happening. the story here is that the democratic caucus is pulling itself apart. >> don't oversell the republican congress and its ability to rip itself apart as well. you've got a lot of conservative republicans very upset with how this played out, and really, if they don't see a real effort by the republican leadership to go after the immigration actions bit president in february, they are going to be hot and they're going to make john boehner's life much more difficult. but you're right.

what we saw the tensions in the democratic party, the new wrinkle here, nancy pelosi reasserted herself. >> i know who you're not mentioning. what did hillary clinton learn last night? >> she learned last night that wall street is still a big issue. her ties to wall street will be front and center, and also that she the liberal wing of the party wants to be heard and she needs to be careful how she reaches out to them. we could have very tough votes politically for republicans and democrats in the senate as this thing winds down. >> what did jeb bush, chris christie and the rest of the g.o.p. field learn? >> well, they learned that the republicans, if need be, can govern, even under difficult

circumstances t. is a win for john beaner no matter how long it took that the establishment republicans can still succeed, and next year, arguably, it's going to be easier for baner and mcconnell, despite conservatives, they've got more numbers. john boehner will next year. it's going to be easier to get things done. of course, he's got a president standing in the way. but the two chambers working together, republicans can't wait for that to happen in january. >> peter cook, thanks. futures negative, 13. dow futures negative, 120. coming up, m&a, how does it shift as we go to 2015? michael wolf among one of our guests next hour on wall street in the time of market turbulence. ♪

>> good morning, everyone, "bloomberg surveillance." oil is $59 a barrel. futures negative. dow futures negative. we'll cover the markets through the morning here on bloomberg television. let's get the morning must read. here's brendan greeley. this is dead serious, go. >> i was deeply moved by something i read in bloomberg view this morning. the english pub is disappearing. mark gilbert from bloomberg view writes the threats to pubs are many. cheaper supermarket booze keeps cash-strapped drinkers at home. the u.k. property market makes anything with four walls and a roof a lucrative apartment conversion opportunity. my favorite detail in this story, did you know that the u.k. has a community pubs minister. i missed my calling. but it's a really concern.

the pub is so central to british life that, if we lose them to property values, that a central part of english drinkingness must be lost. >> give us wisdom. the only pub i've ever been is in the one in the basement of what are rod's. >> i was looking this morning at the english pubs i used to go to. i used to work in st. james. the first one -- the red line, we have pictures, we have some pictures of the red line where did you. here's the deal with the red line. people used to go there right after work, and i had to learn that once you go there, you may no longer eat. get your eating done before you go to the pub. >> that's cheating if you eat. >> i kept on saying, are we going to go out, get something to eat? no, no, no, you can get a bag of crisps if you want. i went looking for golden lion around the corner and perfectly, appropriate for this story, the golden lion has been .old and turned into a dealer

that is what is happening. property values can no longer sustain simple drinking. is that like an anchor in a mall? you're saying that the pub is central to the community. >> perhaps, yes. >> a little bit, yes, a lot like the macy's in the mall. but i mean, one thing that scared me, the first time i went to a pub, it was summer. everybody was outside. i thought, why are we outside drinking? then i realized there's so few beautiful days in england. they did anything they could. >> this is aquive lent to the pizza parlor in new avon, isn't it? the english pub is like the people place in new haven. >> maybe someone can build an app for it where you can gather virtually. >> i don't know. i think sometimes we get nostalgic for things that were not good to begin with. plenty of untoward vomiting behavior happens. there's plenty of overdrinking that i don't know that's necessarily good for sofmente >> well, some pubs have been

upgraded. they've been updated to gastro pubs. >> scar, fancy -- you're a huge fan of hub grubb. >> i am. ladies' room in pubs are about going with -- >> i'm going admit to you it's not something i regularly check for. >> all right, we've got -- >> what you know i mean. >> we've got more coming up on "bloomberg surveillance." coming up, spillover from falling oil prices. the risks to mexico and the u.s. from cheap crude, it's not good news. ♪

>> good morning, everyone. amazing markets this morning. futures negative, 13. dow futures negative. yen comes in, the global flight to quality, 118.30 on japanese

yen. we started the week with a 121 look there. stronger yen through the week. let's get it a strong set of top headlines am here's scarlet fu. >> all right, in washington, the senate will take up that $1.1 trillion spending bill today. it passed late yesterday in the house despite opposition from both parties. house minority leader nancy pelosi among those angry over a banking provision that rolls back rules aimed at protecting taxpayers against bank losses caused by derivatives trades. halliburton is laying off 1,000 workers brought on by plunging oil prices. the reductions will come from the company's eastern hemisphere region. the world's second biggest oil services company plans to take a charge as it cuts global head count and activities. and another trophy for jack, already enjoying a banner year. the alibaba founder now the richest person in asia. that's according to the loomberg billionaires index.

jack ma's fortune currently valued at $28.6 billion. those are your top headlines this morning. >> right now on the markets and what we're seeing, maybe on the speed and the movement through the week, the challenges of russia, it's been front and center, placing the complete and total collapse of venezuela while we talked about that earlier on the back burner, even north of venezuela. terrific must read, one of the great books of the year. she joins us on the console on foreign relations. i'm hearing mexico this, they win every trophy. i don't buy it for a minute. tell when he the real state of mexico right now. the pace almost always credits with oil prices and the s&p 500.

we've seen over the last two years all these economics reforms that were successful, but the government is facing allegations of state associated violence and killing of 43 students. and then also some alleged corruption charges with a close contractor with this government and houses of various -- the first lady, the financial ministers and others that have bought from this. >> it's geo politics, but if is there a financial aspect to it, or is the experiment still don't known >> i think the financial experiment is beginning ho. the banks are very strong, the economy is fairly strong. manufacturing is growing. all these things are doing pretty well. en credibly important, less for the economy today. particularly for the government, a third of the government's revenues come from oil taxes. >> the sense i got from reading your c.f.r. report about this is that mexico was doing all the right things in terms of --

>> you always the read? >> i always do. i highlighted it. look, more highlighting. do i have to do this every morning to prove i read the report? they were doing everything right, but it may not have been doing it fast enough. does this drop oil prices in danger, the very real reforms that were happening. >> well, it can endanger it in a couple of ways. one is they just announced the auctions that are going happening at the beginning of next year for deep water. this is the first time that foreign investment can come nto mexico's oil sector. is it time when oil companies are a bit more pick snie that's part tv. >> aren't they going to have to cut back on the fracking and so on that are less attractive to foreign investors? they have a lot of reserves in potential fracking, but that really is not what these first auctions were going to be,

because fracking, just 30 miles north on the border from where mexico's reserves, the rule of law is different. everything is different there. i think that would have been a later part of the opening up. >> scarlet, you've got a chart that shows this brilliantly. this comes from shannon's work as well. energy made up over 70% of mexico's exports, and oil revenues accounted for 20% of g.d.p. mexico diversified its economy. what are the best practices that mexico has that states like venezuela, like russia can learn? >> mexico, if you look back in the early 1980's when it was 20% of g.d.p., it was a closed economy, and over the last 30 years they've opened up to competition, thee opened up unilateral. they linked themself to the united states. you saw manufacturing there oom. >> can they distance themselves when they look to the troubles of colombia, peru, venezuela,

talked about before. from the financial stereo types of south america. >> the real story is mexico opening up to the world and linking itself to northwest. but they have in the last several years reached out to other market-friendly, open economies, like colombia, like chile. ke they're not closing in when they hit hard times, raising tariffs. they're opening up to the world and facing competition. >> how much of their manufacturing growth is simply shifting from china as opposed o indigenous growth? >> good question. >> well, mexico had this outflux to china in 2001. a lot of industry went there. what mexico retained, because it's more productive in terms of workers they retain, sort of advanced manufacturing, so

automotive, aerospace, flat-screen tv's, that's what happens here. it happens with the united states. so production is not just in mexico, but it's a back and forth for the united states and, to a lesser extent, canada. >> you laid out a couple of scenario for the price of oil. only your two most dire scenarios show oil below 60. have you been surprised yourself by just how fast this has moved? >> they never happen overnight. we look at some cases where it goes down to $40 a barrel. there is that sort of case that's lower than today. and really, it's only, when this is an extended decline for several years where it really would hit mexico hard. >> you and jeff blake of arizona, you go down to tucson, green valley, arizona, right here the mexican border. you go into greg and amy's twist and shout 190's diner and

have a cup of coffee and somebody from arizona that can't stand those mexicans, what do you say to that person? >> what's interesting is arizona is the only state that didn't join on the border, didn't join the lawsuit against immigration. it's interesting that they do see these ties. whether you like it or not, our future and the competitiveness of our economy depends on mexico, particular physical you're in a southern state right along the border. you benefit from mexico. >> what's the biggest risk to exico as it moves forward? it's a lot more hostile to certain aspects of immigration reform. >> i think the biggest risk is what happens in our economy. if our economy grows, mexico will do well. if we fall behind, mexico will have a hard time. we've seen that over the last 10 years, while brazil and others have benefited from commodity booms, mexico has not. >> i mean, the story of immigration from mexico over the last couple of years has been flattening out as mexico

grows. what's going to happen as the price of oil continues to decline? are we going see increased immigration from mexico to the u.s.? >> there's a possibility, but really, the big factor in the decline in immigration is emographic and mexico. there's fewer mexicans turning 18 every year, and that's for the future. >> let me have you jump in here. is janet yelen, the central banker from mexico? are we so messed up that we're seeing that janet yell is not world and is mexico and venezuela's central banker? >> probably, probably, yeah. the fed has to worry about what's going on outside the bothered. >> bring up the chart from yesterday. five-year forwards is two standard deviations. we've only seen it three times in the crisis. what's that mean? >> very complicated chart. >> that's schilling deflation.

>> we need to have a talk about this. >> but janet yellen and mexico -- >> bear in mind, the fed has two written objectives in their charter, one is price stability and the other is full employment, as they define it. and what i found over the decades is the fed will make decisions that will help the rest of the world, but only if they're at least neutral for the u.s. they never act solely in the interest of the rest of the world if it has any averse effects. >> that's what we try to do here, a clinic on mexico. thank you so much. scarlet, futures negative. >> coming up, we're going to talk about commodities of another kind. our guest host, part-time economist gary schilling will be here. ♪

>> good morning, everyone. markets on the move. oil, $59.32 on american oil. brent crude, gold is flat. futures negative, 13 right now. we need to get to a single best chart. this one a little different. >> it's a little bit different because of who we have here with us. along with y2k, remember the mayian doomsday prophecy?

there was a collapse of the honeybee. big deal last year. our guest host, gary schilling, lives in a beehive when he's not gazing at charts. he's a recreational bee keeper. he has an apiar why in his backyard. he's going to help us analyze today's single best chart, which is all about honey. take a look, gary. production has been coming down since the 1980's. imports have been climbing. imports continue to rise in 2014. what's the story here? what's the back story? >> well, a lot of it is cost. it's a lot cheaper to produce honey abroad. it's more complicated because the u.s. honey producers got basically anti-dumping against china and argentina, which are big honey producers. and there's also a real question. ow, tom here is sampling this.

a couple of years ago they were sampling some honorable that i came in from china, and they came up with a pestside that nobody could figure out. they finally got some old guy and he said, they used to use it on sugar beets 20 years ago. guess what, the sugar in honorable sit same as the sugar in sugar beets, so the chinese were basically using sugar beets and calling it honey. >> we did olive oil the other day, which i learned a lot about that. can i trust the honey in the store? >> no. no. >> well, you probably can in the u.s. most packers in this country are legitimate outfits. if it's domestic, but the imported stuff, you don't really know, and as i say, that's a lot cheaper, and it's filling in. did w that chart, and so any of your colonies collapse? >> what's your decision, tom? >> awesome. i put my fingers in and said i'm going to give it to my executive producer.

>> no, no, no, you double dipped. i don't think she wants it. >> actually -- >> can we discuss that tom just stuck his fing near jar of honorable and i gave it to me? not really, take it home. >> let me explain this. that is 17% water content, which is lower than bacteria. any bacteria on tom's fingers in there are done. >> let's get -- in the time we have, let's get to some of the myths. shannon o'neill, the killer bee hysteria of a couple of years ago, africanized bees, and the map shows they came north through mexico from brazil. >> hold on. that's gary shilling right there. is that you, gary? >> yeah, that's the bees on me because i was warmer than they were. >> they wanted the heat. >> they're just getting warm. i'm a radiator for them. >> how serious are killer bees? >> they haven't gotten north of the line. if you look at florida, go

across alabama, mississippi, they haven't come north of there, and the hope is they don't like cold weather. but they originally were taken to brazil to give the natives in the amazon a cash crop, and they got loose, and they went north and south. but the hope is that they don't go any further north. >> ok. >> all right, let's get to top photos. i think that was our top photo. >> how do you beat gary shilling covered in bees? we're going try with a photo of protesters being removed after interrupting an f.c.c. hearing. you can't quite see it, they're saying reclassify now. as everybody knows, what they're talking about is title two regulations. you actually can't see it. but it says me on the far side that have banner getting dragged out. declassify now? of! it's a net neutrality issues. it allows me to say title two regulation on television, which

die as often as possible. >> they need to come up with a new word. net neutrality doesn't get anyone excited. >> i can't tell you how eagering the control room is telling me to get past it. >> another photo. >> grand canyon in a rare weather event t. happens once every several years. it's when there's no wind and the clouds are forced down by warm air. we are looking down at the grand canyon. those are photos from the national park service. >> as tropical rain -- >> number one photo. tom, can i see your best grimace? this is a slayer kitty. >> i got my tattoo here. >> slayer, the thrash metal band in california, they found a kitten while on tour in indianapolis. they bought it off a home else person for a dollar because it was freezing t. snuggled in toot tour bus for a night, and after the concert, it found a home. >> snuggle and death metal does

not compute. listen, death metal guitarists need love too. >> those guys look like they're just fine. those are our top photos this morning. coming up, do you have $100,000 laying around? our next guest has some novel ideas for how you can spend that. investment of a liquid source, we'll be right back. ♪

>> good morning, everyone. let's get to our top headline this morning. here's scarlet. markets on the move. >> and a major shakeup at gucci. the c.e.o. is stepping down, and so is the creative director. the moves come as the owner has tried to revive growth. shares of caring fell in paris. bs is extending the contract of the c.e.o., les moonves two years beyond his current deal. the 65-year-old moonves will advise for five more years. at the end of that term, he will also have the option to create a production company.

and a stellar trading debut yesterday for the london club. the company's valuation rose to almost $8.5 billion. shares climbed 56% to close above $23 in new york trading. according to data compiled by bloomberg, the lender's market value is higher than all but 13 u.s. banks. its i.p.o. raised a larger than expected $870 million. those are your top headlines this morning. >> it is 5:00 somewhere, and it is friday. if you have $12,000 of disposable income, we can tell you how to spend it on wine. he's head of wine sales of the america's at christie's, $12,000 on wine. >> that would be per bottle for the low estimate with a slight premium, yes. >> which of these bottles that i'm looking at right now? >> this is from the roman ee-conti, which is one of the most sought after vintages they have produced.

>> i can't afford any of the things that you're touching. but what is this? is this consumption? is this an asset, an investment? >> it's for a lot of people, actually consumption, for the true, hard-core wine selector. >> people buy this and drink it? >> they do. >> you have to drink it in one go? you can't leave it overnight or a month? >> people use what they call -- you take out a little bit of wine, but i wouldn't recommend it. if you're going to go through, it i recommend you have a good party. >> we should do it right now. >> exactly. i'm going to take take look at this. you have a bottle here. this is a 300-year-old bottle of wine. i'm going to touch it. >> this is the oldest bottle of wine that we know of? >> we know this is the oldest known in existence bottle of madera. it was made in 1715. it was 300 years old. it's been kept on the island until we retrieved it.

>> ok. >> as we know, in 1715, that was the fall of the venetian-turkish war. >> but you have the duchess just visited. they got the bank account to acquire this bottle, but this bottle was made one year after the house of hanover took over in england with scotland going independent and mel gibson in a kilt and all that? that's what this started? >> that's correct. that was the harvest for that year. >> are you confident it's drinkable? >> oh, absolutely. it is fortified wine, so you add some alcohol to keep its freshness, just like we do with port, for example. >> so in the patrick o'brien novels, they're at the end of napoleon. they're 100 years on from this bottle, or 90 years on, and this is what they had on the boat? >> correct, absolutely. this is what they put barrels of. >> where did you get that bottle? >> directly from the island of madera. there's some old families that

have passed down by generation. >> what is the story behind that? when does the family decide to sell the bottles of wine? how does it happen if they've been sitting 10 generations in the basement? >> for some people, it's pride to take it to market, to share it with the wine drinking community, whatever we like to call it. it's something that should be brought into public. >> you are the litmus paper for the state of out of plutocrary. how are we doing? how rich are the rich as we go into the holiday season? >> i think we have a very hilty interest in wine, and a lot of people are coming back into wine. >> did clinton clinton use one of her speaking fees to buy one of these bottles? >> i don't know if she makes enough. >> remember, hillary clinton was broke. >> it's very cool. >> i know nothing about wine. i took an introductory to wine class at cornell. i can remember nothing. what about young people? &their attraction to wine?

has olivia pope, the way it's depicted on television, does it change the way young people consume wine? >> no, i think it's, overall, america as a society, we started to drink more and consume more wine. if you compare to 30, 40 years ago, the traditions of drinking wine with your meal and making it a part of your meal, it's shifting, becoming more and more popular. >> i grew up on cold duck, so for new year's eve, i got cold duck, a $60 bottle. do i need to pay up for the winston church still in do i need to go up to that $150, $200 a bottle? can i tell the difference? or should i stay with cold duck? >> for new years -- >> shannon knows. she drank a case one night. >> you can tell the difference. >> for new years east, there's a celebration, absolutely. >> go to the winston church i will. >> get an extra bottle. >> the contents of my cellar, thank you for bringing that in.

>> we need a forex report. >> very quickly, futures negative. you see the foreign exchange. the ruble blows through 55 to 57. we've got another hour this friday of "bloomberg surveillance." ♪

>> pelosi breaks through obama. baner and senate republicans flex new muscles. the plunge in oil prices creates true global crisis. is a collapse of venezuela or the general markets, is it imminent? and mergers and acquisitions in the oil patch, it will not be pretty. good morning, everyone. this is "bloomberg surveillance." we're live from our world headquarters in new york. it is friday, december 12. joining me, scarlet fu and brendan greeley. let's get to washington. >> in washington today, the senate will begin debate on a $1.1 trillion spending bill. the house narrowly passed a plan despite opposition from both parties. nancy pelosi among those opposed. she spoke out against a banking provision inserted by republicans and agreed to by the white house that rolls back protections for taxpayers against bank losses caused by drivetives trades. >> i'm enormously disappointed that the white house feels that

the only way they can get a bill is to go along with this, and that would be the only reason i think they would say they would sign such a bill that would weaken a critical component of financial system reform aimed at reducing taxpayer risk. >> the senate could pass a bill as soon as today. meantime, are we at the bottom? that's a never-ending question. not yet, it would appear. oil closing below $60 a barrel for the first time since july 2009, and overnight, the price of crude dipped as low as $58.80 a barrel. there's speculation that opec's biggest members will defend market share. west texas intermediate futures fell in new york. they plunged 10% this week. oil head for the 10th weekly drop since october after opec decided against cutting output. brendan? >> in a rare move, the director of the c.i.a. held a press conference yesterday to answer questions about the senate interrogation report. john beenen said it's "unknowable" whether harsh

interrogations tactics produced meaningful results. he also described soul searching by the u.s. government in the aftermath of the 9/11 terror attacks. >> the previous administration faced agonizing choices about how to pursue al qaeda and prevent additional terrorist attacks against our country. while facing fears and carrying out the responsibility to prevent more catastrophic loss of life. here were no easy answers. yet another legal challenge for uber. today a paris judge rules whether to block the company's uber pop service. the service lets users gets reads with private cars. the startup is also engaged in legal battles in spain, brazil, the netherlands, the french court will decide whether it constitutes unfair competition to taxis. >> very quickly, a storm update on the west coast. one of the largest storms in of rain eight enchings

in northern california, the weather left more than a quarter of a million homes and businesses, including parts of downtown san francisco without power. widespread flash flooding closed schools, cancelled flights. wet weather, it continues today through central and southern california. there is our top headlines this morning. i want to run through the data check very quickly and get to gary shilling. crude oil well under 60. on to the next screen. we've got the flattening out. the ruble blows through 65. the dollar index doesn't move all that much. this is an interesting market right now. shilling shilling is still with us. et's bring up the oil chart.

the oil chart, gary, just says it all. the brutality of this move, you do a 40, 50-page monthly report for your clients. we are well in excess of two standard deviations through the 10-year trend in oil. when you see this brutality, what does it mean? >> it means we're not through it, because there's really no bottom in sight. the saudis are playing a game of chicken with the waco peck members. >> exactly, not with north dakota. >> no, they're playing it with the frackers too. they're playing it, and they're really saying we can stand a lower price than you can. remember, it's not the average cost that's important, it's the marginal cost. >> where is that marginal cost now? >> for frackers, some of them it's probably below $10 a barrel. >> where is the price within your reading and your sources, where is that price for saudi arabia where they say enough? >> it's probably somewhere between $20 toed pods a barrel.

>> that low? >> oh, sure. once you got the pipes, -- >> i feel like all the argument about the the price of oil are just based on the assumption of reversion to the mean. what evidence do we have that it's ever going to climb back up? >> you don't. you don't really have that. but forever is a long time. >> i want to know right now, michael wolf is here, and all the finance of the world, how do you pull the gary shilling world into the michael wolf world? >> i think you probably do it with a lot of trepidation. obviously you have very heavy everage. is this going to precipitate a global crisis? you've had a tremendous amount of money pumped out over the years, and a lot of leverage as a result, and now you get a big -- you get a big decline in the market.

what's the fallout? we don't know. >> have you begun to see this in your world? is gary shilling's world creeping in to m&a and technology? >> well, in the tech world, in business, part of the question is, will this translate into spending by consumers? so far this season, it hasn't. the consumer is seeing lower prices, but not equating that with what they're employing to spend on things like consumer electronics. >> right, yeah. it is a tax cut in effect. in other words, people benefit from this, but the question is, are they going to save it? they're either going to work till they drop dead, or if they save more, maybe they can stop it at age 89, 90. but yeah, you're absolutely -- you don't know this. you really have two things here. you've got the effects of lower oil prices on the consumers, that's a benefit, but you've got on the producers, it's really the good and services versus the financial.

the financial is what's really the unknown, because you try to leverage this -- >> but scarlet, we're going to see three mergers monday morning. >> will we? we've been hearing from a lot of experts that it will take six months before anyone actually does anything and merges with anyone. >> well, sure. >> who wants to step in front of a moving train? today we see halliburton cutting 1,000 people. gary shilling, you don't see what's going on now as part of business cycle. what is the indicator that we need to look at to know that this is over? >> to know it's over? >> yeah. >> you probably have to see some of these ratios of financial, outside financing by a financial sector. you need to get back to where it's normal.

>> industrial classic -- >> consumers, they're borrowing in relation to their after-tax income. the norm is 65%. it's now 103. i mean, a long way to go. >> we're waiting for consumers to get back to 65. >> is apple seeing a bang-up christmas? >> apple isn't, because they've come out with new phones and new devices. but it's not clear that others -- i mean, samsung is really troubled. other companies are having trouble getting their sales up this year. >> i mean, i'm looking at a 2.12% bounce, and folks, bloomberg radio, dr. shilling will join us later this morning , a 212, 10-year yield changes the world. >> yeah, and i think it's going lower. i think that could go to 1%. >> what does the c.f.o. do? michael wolf, help me here. what does any chief financial officer do with the full faith and credit of 1.95%? they have to refi.

>> they load up. there's the line in silicon valley for startups, as well as for big companies, which is you borrow when you can, not when you need. at these kind of interest rates, they're absolutely going recapitalize. >> doesn't that just beg the question, what are they going to do with the cash? they already have so much cash. they're going to borrow more. then what? >> it's not clear whether they're going to turn it to shareholders or use it for acquisitions. so far, for some sectors, we've seen returning to shareholders. >> we're also going see a lot more acquisitions, a lot more activity. what we're not going to see, except in some of the best companies is a lot of investment to r&d. >> that's where the fed's policy broke down. they pumped out all that cash, but it hasn't gotten into the economy. it went to high-income people, and they don't adjust their spending accordingly. they're not spending on capital investments. i mean, the fed has got to be very frustrated, because what

they hoped was to be a generation of economic activity stopped at asset appreciation. >> it's stopping, that's exactly where it's stopping. >> yeah. >> gary shilling, thank you so much for joining us this morning. gary shilling, he will object radio later on. >> we'll get him back to talk about deflation. >> come back to talk about money. >> you call it shilling deflation, as if it's his fault. >> no, bring up the book right now. quickly here, we got to get this up quick. bring up the book for gary shilling. folks, this is the book on deflation. i get a royalty, i've seen so many copies of that. the movie is out memorial day 2017. >> all right, we're going to talk about ube when her we come back with michael wolf. ♪

>> good morning, everyone. markets on the move. oil right now at $59.40 a barrel. let's get to a morning must read. here's scarlet fu. >> it's an uber world, or is it? it's certainly an uber america. this is from a columnist at bloomberg view. she asks, can uber and its app rule the world? she writes that uber pioneered the idea of getting transportation instantly from a smartphone. just because that's become routine for urban nomads doesn't mean it will be the choice for others around the

world. we're seeing the pushback from cities and countries around the world. is there a pile-on effect here, michael wolf? as well, if you look at, it it's almost like countries have been trying to find a way, an excuse to shut uber down. the problem is that it's already -- uber is already in the behavior around being able to order a car service through your phone, that's a behavior that a lot of people are expecting to have. just because governments try to put it out of business, it's not going away. >> do you think the governments are looking for an excuse to put it out of business, or can you lay the problem at the feet of uber which expands first and worried about regulations later? >> the whole internet is about not asking for permission. >> uber is not an internet company. it's not like facebook or twimplet as it scales, it's got real-world friction. >> even though the name is uber technology. >> it's going against some very entrenched interests.

people like taxi drivers and government regulation, the real issue is nobody should think they can get in the way of what you want. if you make it illegal, they're still going to find a way to do t. >> uber's valuation is the last round of capital that went in t $40 billion. it's likely to end up with very well influence, really more of a passive investment. they don't need uber to launch a service in china. >> why would it want to buy a stake in it? >> it gives them real knowledge of how it's working, and it gives them the ability to have an influence for the course of the company. >> real quick, does uber have a groupon problem? can anybody pick it up and use it? >> it's got the network effect, which is already a lot of people are using it.

in some countries, other services are emerging. but certainly in the u.s., it's already got a whole system. drivers are making their living -- people have gotten into the business of limo driving because uber has enabled t. >> created a whole new class of employees, i suppose. >> some of the best internet companies create opportunities for whole, huge groups of people. >> michael wolf, our guest host for the hour. despite the headlines, is uber winning? tweet us, @bsurveillance. ♪

>> good morning, everyone. "bloomberg surveillance," negative 13 earlier, but negative nine right now. so yeah, it's a weak market, but better than it was one hour ago. let's get to top headlines. >> a stellar trading debut for lending club as the company's valuation rose to almost $8.5 billion. the shares climbed 56% to close above $23 in new york. according to data compiled by bloomberg, the lender's market value is now higher than all

but 13 u.s. banks. >> sony film executive amy pascal says she still has support, even of being criticized for racial jokes targeting president obama. pascal is the co-chairman of sony pictures entertainment. she hasn't offered to resign and doesn't want the sign air tack to be defined by the release of private emails. in an email exchange with producer scott rudin, she joked about what films the president might like. he mentioned "django unchained." one billion sold, that's what taco bell says about its popular doritos taco the that's about three for every man, woman and child in the u.s. the restaurant says that number of crunchy snacks would stretch from new york to los angeles 37 times. >> gross. >> taco bell is owned by yum brands t. introduced the offering in 2012. it's been a hit, to say the

least. >> oh, i could eat taco bell in my student dining card when i was in college, and i've never been able to touch it since. >> probably still in your stomach. >> no, it's gone. on to washington, the house has gone home, but before they left they pulled the pin out of a grenade and tossed it to the senate. spending bill that is most a continuation resolution and omnibus allows a rider with a guarantee from the fdic. phil mattingly joins us now with more. phil, elizabeth warren is going to conduct this fight in the senate. is she going to win this battle, or is this bill going to pass? >> it's going to pass. i think there's a reality here that finally showed itself last night after a lot of hemming and hawing, and that is that people actually want to go home, and this will fund the government through september, which for people on capitol hill, that's like the longest time period they've actually dealt with in a very long period of time. so for economic stability and also for the ability to actually come back in january and do other issues other than

fight about spending bills, this is important. >> what's amazing about what happened with elizabeth warren because of her in the house yesterday, it's the ability of this kind of anti-wall street strain, which has kind of been immering for a while, really think this changes the dynamic as we head into january. democrats have found an issue, and they want to seize it. >> what he wants the lesson for democrats? what did we just learn about he democratic party? >> nancy pelosi 48 hours ago was not planning to take this going forward. she knew what the agreement was by the appropriations negativetors. she knew this dodd-frank provision was actually in this bill. elizabeth warren went to the floor, started talking about this, raising heck about it, and all the sudden nancy pelosi as on board. does senator warren change the debate and dialogue, say in

iowa, x number of months forward? did she change the presidential debate last night? >> what elizabeth warren is doing right now is playing a long game. i think she's very cognizant of the fact that the idea that she's going to be able to pull out this provision over the next 48 hours is just not really possible. but she wants to be able to move the party left. >> i think she's smart enough to know that it is clear the party has already decided on hillary clinton and that all she can do is drag hillary as far to the left as possible before she runs. >> very tactical. i want to bring in our guest host here, michael wolf, founder of activate. you specialize in consulting to telecom and tech companies. what does silicon valley think about washington? >> they're worried about what washington will do to them. one big issue for both media

and tech companies is the potential of the internet being classified as a utility. they could hurt a lot of innovation, and it's ridiculous. internet is not a utility. there are lots of competitors. >> are there any republicans in silicon valley? >> really, no. but i think there likely will be over time. there are a lot of libertarians. >> but phil, i think that's important, phil. how critical is michael wolf's world to raising money for the animals you cover every day? >> extremely. over the last two years, there's been house leadership that's made a concerted effort on the republican side to make connections in silicon valley. >> john boehner? >> no, no, no -- >> john boehner is? >> no, no, you send out the emissary you think will be most effective. kevin mccarthy is super wonky, into tech stuff, owns every single apple product you could imagine, read steve jobs' book.

they've been sending him out, and it's helped on some level. still, i think particularly on the social issues, it that's where silicon valley has it made. even the libertarian strain has a major problem. that's where republicans recognize the money really is right now. >> there's a perfect 10 in cupertino, california, for speaker boehner. >> we know that phil is right. we've been watching both chambers, house and senate, teach their members, both caucuses learn more about technology. >> phil mattingly, thank you so much for joining from us washington. phil with the latest on the house spending, passing the spending bill, and throwing the hot potato to the senate. >> i think i called it a grenade. >> same difference, right? >> that's a "surveillance" exclusive. there are no republicans in silicon valley. >> he said basically no. >> basically was in there. basically we're going to have a smart conversation on m&a, not only michael wolf with us, but robert will join with us morgan stanley, and we will look

forward to energy and technology m&a in 20 -- >> when is it going to happen? crude fell below $58 a barrel. what happens next? we'll be right back. ♪

>> this is "bloomberg surveillance." i'm scarlet fu here with tom keene and brendan greeley. we start in washington. the senate will take up the $1.1 trillion spending bill today. it passed yesterday in the house despite opposition from both parties. house minority leader nancy pelosi was among those angry over a banking provision that rolls back rules aimed at protecting taxpayers against bank losses caused by drivetives trades. another triumph for jack ma. the 50-year-old alibaba founder now the richest person in asia. ma passing the hong kong property owner who held the top pot since april of 2012. and cbs extending the contract allowing les moonves,

him to keep the top post through june of 2019. that's two years beyond his current deal. the 65-year-old moonves will advise cbs for five more years and also have the option to create a production company. he's been c.e.o. of cbs since the company split from viacom in 2006. those are your top headlines. >> michael wolf, founder of activate, is knee deep in technology. we use it each and every day. it's something we all know our attention spans diminish by the very second. it is a profound change for all of us. this is topic one for every parent out there. is there anything good in this digital stuff? >> well, first of all, younger audiences are consuming more information. they may not be diving as deep, but they're consuming more. our firm has done research about how much attention there is in a day, and we look at this, and you really add it up

in terms of it's duplicated. there's about 30 hours of attention in a day. it means people are sleeping less, but they're also consuming a lot of different types of media and content at the very same time. >> is there a class distinction? do we have a hyper internet user that's elite, that's getting smarter and smarter? al hunt of bloomberg once said to me, every kid in my penn class is smarter than everyone of 40 years ago, and then there's the rest of america which is just not getting it done on digital. >> when you look at this in reality, there are a lot of americans, it's become a big equalizer. people now have access, they don't have to go necessarily to the best school. they have the ability, if they're self-motivated and driven, they can get a lot more information, learn themselves. also, when you look at things like academy, which allows -- which really no longer accounts for the effectiveness of a teacher, but is more about a student's ability to learn,

we're seeing more attention on those vehicles. >> i want to go to the money question of the moment. facebook in their news feed, everybody curious about how they put information on facebook. how will that outcome play out? >> the first thing they're focusing on is video, because they want to have -- they want to be able to -- people watch video. >> how long? >> two to three minutes. >> oh, come on. 20 seconds. >> no, no, no, they're watching whole videos. but the thing is facebook has put them into the stream, because facebook is trying to compete with google. but they're way behind. >> yeah, but the heart of the matter is, you're watching a two-minute -- josh of bloomberg digital knows this, they're not watching lawrence of arabia and peter o'toole, are they? >> well, some films, but they are watching full-length television shows, because if you look at the amount of binge viewing -- also, you look at movies. look at "frozen." with $1.3 billion in revenue,

the fifth largest film in the history of television -- i'm sorry, in the history of film, and so people are watching -- >> well, let it go. are we going to let go? is michael wolf's future and attention span that's so short we don't read books? >> i think people are going read books, just differently. they're certainly not going to read them print on paper. i don't think we're going see the bookstore exist in the same way we have in the past. they're consume ago lot more information. the facebook feed gives a lot more, is not just what my friends are doing, it's what my friends, the articles and things my friends want me to read. >> ok, michael wolf with us as we talk about technology. i'm really skeptical, this whole attention span there really should be front and center for next year, particularly wrapped around the profound impact of facebook. let's get a profound data check. here's scarlet fu. >> it's pretty straight forward right now. we're all keeping our eye on crude oil. nymex dipping to $58 a barrel

last night. right now it came back, still down to $59.30. futures are lower by eight points. they stayed that way overnight. he 10-year yield down to 2.13%. wholesale inflation due at 8:30 a.m. this is "bloomberg surveillance." i'm scarlet fu with tom keene and brendan greeley. for ale-producing countries, the collapse to $58.88 a barrel may be the worst of times. for investors, it may be the best of times. it has been predicted that the fallout, in short opportunities galore in the energy sector. the co-head of mergers and acquisitions at morgan stanley joins us now. steve schwarzman's blackstone is raising a second fund. is what he's saying correct, that this is the best opportunity in years for energy? >> i think it's certainly an interesting opportunity. i mean, you've had a fundamental reset in valuations in the industry, the price of oil has kind of, in a very

short period of time, changed the complexion of the business f. you're a value investor, a distressed investor, there's more opportunity today than there has been in years. >> so this idea that we'll have a flurry of deals, is that misguided? >> big landmark deals, i think that might be tough. is stability is important, and in the absence of stability, when the price falls, i think that makes it tough. >> are c.e.o.'s changing plans by the day? a month ago we reported that halliburton is going to acquire baker hughes. today we report they're going lose 1,000 employees. is this moving too fast to make any predictions? >> i think the pace of change makes it hard for the m&a business. i think it's always hard to make predictions in the oil and gas industry. i would say it's probably a net positive for m&a. >> i want to get to the energy market. i would suggest there will be three transactions by monday morning. they're down 60%.

do you represent transocean? >> we do a lot of work in energy. >> i want to be careful i don't step on your private matter, but the ferment right now, it's great for you, but what is the angst for the energy business right now? what's the level of sweat this friday morning? >> i think everyone is focused on their business, trying to understand what this means to them. >> there's no business. it's imploding. the second derivative of oil, and you have i never seen this. steve roach was shaking yesterday. >> this is not the first time the oil industry has been through retrenchment. >> correct. s it another midland, texas? >> i think we will see companies that are in more stressed situations, looking to get through. >> you got the guy to get scale merger. somebody is get to get crushed here. >> but to tom's point, the istress does ripple off shore.

the more difficult it is, they're, again, up in canada, they're changing plans by the day. if you're in the middle of a project, you are rethinking to determine whether you're going to get an adequate firm. if you're in the oil services industry, you're talking to your customers about kind of the economics of all the drilling they're doing. >> you're talking to your customers, keeping an eye on your competitors. what about regulators? what level of involvement would regulators have as oil prices continue to fall? >> well, regulatory environment in the energy industry is around the environment. i don't think the price of oil is going to change the environmental regulators look at fracking of horizontal drilling. >> but these are national security interests. we've seen this come up before. > some nations, yes.

>> when i look at the energy, we'll talk about technology later. when i look at energy m&a now, it's within the great distortion of where interest rates are. does the workout that we're going to see in energy benefit from janet yelen's fksal low rates? >> i think every industry has -- have better access to capital, and energy is no different from that. spreads are going to gap out over the benchmark yield because there's greater risk in energy today than there was a couple of months ago. but yeah, they're going benefit. >> don't you think there's a difference between m&a from big companies and what companies like blackstone, who are private equity firms, were investing in discount nights versus just taking advantage of how they get bigger as companies? >> we're going to have to run to a break here, but that's an important question. we'll come back with michael wolf and robert eatroff.

>> we're going to talk m&a in the tech sector as well. there's m&a in the world of uber. according to people familiar with this situation, they're looking to buy a minority stake in uber. is uber winning? tweet us @b and had surveillance. ♪

>> this is "bloomberg

surveillance." i'm scarlet fu with tom keene and brendan greeley. the airline industry reaping the benefits of oil falling. southwest airlines has seen traffic ascend, up over 120% year to date. "in the loop" betty lieu joins with us more, and they're not even charging for check-in baggage. >> i know. how long? that's the big question for gary kelly all the time, how long can they hold to this no baggage fee policy they've had? they're becoming the lone wolf in all of this. so lower oil prices, as you just said, have been a big boon for airline stocks. they've now hit their highest level since 2001, so more than a decade run here for airline shares. but they're not actually affecting airline companies yet, right? a lot of them are hedge,, so in fact, some might actually be losing out on the benefits of lower oil prices. >> they started very early on publicly saying that they were hedging themselves when oil prices were heading higher. >> who could have really

predicted we'd be at $60 or even below that by this time? >> i did. i made a minute. >> brendan, why are you here then? >> exactly. >> so ok, anyway, it hasn't really hit them quite yet. it might actually hit them also on the negative side, because hen you have lower oil prices, airlines see perhaps there's an opportunity here to add some more capacity. that could bring down ticket prices, also consumers may say, hey, am i going to fly or drive somewhere if gas prices are this low? i might actually drive now. >> there could somebody negatives. i want to bring in bob eatroff at morgan stanley. lower oil prices and consolidation in the airline industry, i thought we were done with consolidating. how much more smaller can the airline industry get? >> lower oil prices is positive for consolidation, period. there are plint of other airlines out there besides the

majors, so you can't rule on the the possibility of consolidation. there's no doubt that lower oil prices is positive for m&a. it's not just the airlines. it's any industry that consumers energy, and it's a boost to the consumer. >> the airlines are doing better because they have pricing power. >> well, yeah, ticket prices have gone up about 25% in just the last several years. >> let me rip up the script this. fws back to a surveillance moment of a number of months ago when our josh mentioned from bloomberg business week an essay by tim cook, the "financial times" this morning naming mr. cook their person of the year. it's really a lovely read. a full-page read in the "f.t." on tim cook, and they mentioned the "bloomberg business week" earlier in the year. >> that was a bit of a shameless plug. >> well, it, is but i'm going to go with it. at least lionel barber and the

team do mention what they did with mr. cook. >> and betty liu will be making news with gary kelly, c.e.o. of southwest airlines. that begins at 8:00 a.m. eastern time. thanks so much, betty. all right, we want to get you our twitter question of the day. last chance to answer our twitter question of the day. is uber winning despite the headlines? lawsuits in san francisco, los angeles, pushback from thailand, from the netherlands, from paris, where else? >> pushback from me, brendan greeley. ♪

>> i'm going to be here monday. you should too. i love this guy. guy kawasaki. he's 1,000 volts of intelligence of what we actually do with all this garbage our kids buy and that we use. he is brilliant. he will be with us monday. >> and he used to work at apple. >> that our kids buy? >> whatever. >> that we buy. you buy. >> well, he's very controversial. people really get upset about a lot of the stuff guy says. i'm thrilled that he will join us on monday. >> he's a former chief evangelist over at apple. >> he's really twisted, really interesting. really looking forward to that. we say good morning from new york city from "bloomberg

surveillance." brendan great lee, scarlet fu, and tom keene. >> a major shakeup at gucci. the c.e.o. is stepping down, and so is the creative directory. the moves come as the owner has tried to revive growth at the luxury label. shares of the owner fell just over 1% in paris. halliburton is laying off 1,000 workers as it tries to weather a slowdown brought on by plunging oil prize. the reductions will come from the houston company's eastern hemisphere region. the world's second largest oil company plans to take a $75 million charge as it reduces global head count and activity. and a piece of history unearthed in boston. crews fond a time capsule dating back to 1975 from the cornerstone of the massachusetts state house. they think it was put there by revolutionary war heroes, including samuel adams and paul revere. it's believed to contain old coins, documents, newspapers, and a medal plate that was

owned by revere. they want to x-ray it before they open it officially. >> unbelievable. >> very cool. it had a six pack of layinger they're in there. before october, before the recent moves in oil and foreign exchange, mergers and acquisitions, there was a positive spin. i guess it's still there, but so too is something different. what will be the spirit of m&a? what will be the tone, the tenor as we go to next year? an important conversation with the co-head of mergers and acquisitions with morgan stanley. michael wolf with us with activate as well. it's wonderful to have both of you here just to talk about the shift. it's like in the movie "mary poppins" whether the weather vane changes before they go to cherry tree lane. >> i've only seen the brief version. >> well, there's a shift in the wind here. what is it? >> that's not an analogy i've heard before. >> ok, well, you can go with

it. >> welcome to "surveillance." >> 2014 was a long overdue bounceback. we had three years of flat m&a volume when the markets were rising. this year was really more of a cash-up year, where all the conditions that were necessary to have strong m&a were in place. you have corporate confidence and scarcity of growth, plentyful capital. those conditions are still in place. nothing has changed. we look at 2015 -- >> nothing has changed. but does the behavior change from strategic, you mentioned halliburton earlier, mergers, do we go to we got you mood or we have to mood? >> not at all. and i think you can -- the best metric to lock at in that context is how are the shareholders reacting? >> they love it still. >> two out of three deals in our math. two out of three deals the stock is going up. if that weren't the case -- >> critically you don't see that shifting? >> not today.

>> interesting. >> it's interesting, the sectors that i look at, tech is about got you, because they're trying their best to stay relevant, and that's why we see facebook buying whatsapp n. media, it's about getting new areas. >> is there an air of desperation? >> i don't think. i think it's about moving to new opportunities fumble look at what happened today, the big internet companies, good and he will facebook, are doing acquisitions. the old ones, a.o.l., yahoo! and others, they missed out. >> yeah, the -- >> it's like two different worlds here. >> when you look at tech acquisitions, it's not that standard acquisition that we look at in other industries. they're not combining forces to lose labor. they're actually trying to figure out what happens next and trying to buy a piece of what happened next. >> well, this is a bar bell industry. you have companies on one side of the bar bell that are super high growth and super high value. you have companies on the other side that have a tremendous amount of cash flow, and the values are more in line with the overall market. both sides need to do m&a.

m&a looks different. >> we've been talking about m&a and corporate confidence right now in silicon valley. i want to take the opposing view. this is a quote from one of the people we looked at, the person we look to to understand the value. she said i watched two crashes now, end of the dot-com boom, and one thing that was true of both is that a chorus of observers and analysts saying the tech sector was overinflated before it burst. is it not even worth it to call it down right now? >> depends on the companies. the valuation of big publicly traded companies is based on expectations of growth. the valuations of private companies that are expecting to be acquired, those are really out of sight. > bob, do you agree? >> i think they're based on growth as well. you look back at any period of time when people said the tech market was overvalued, and there are companies that you

should have owned. the size of the market and the growth opportunity is significant enough that these companies have grown into their valuation. >> $40 billion for uber, is that accurate? >> you've go on to ask the investors of uber that. >> oh, he dodged that. >> what about the valuations of the spinoff from hewlett-packard and ebay? >> they're going to be based on their market value. >> take out by another company? >> no, they're going to the shareholders and they'll establish a price for them. >> in the case of ebay, there's a lot of creation of value. i think ebay was holding pay pal back, and they missed some of the big opportunities in payments. that's not going to be the case. dan shulman, who comes with a lot of experience to run that company, he's going to do a lot to get pay pal back into the game. >> all right, that's on the 2015 agenda. speaking of the agenda, let's take a look at the stories shaping the day. tom, get us started. >> oil into the weekend, it will be fascinating to see where we are monday. russian ruble weaker. venezuela, ugly spreads there.

this is the real deal, and there's no bid in sight. it was stunning last night to see us go through 60 and indeed get a 58 print. it was the way we went to 58 that was so distressing as well. there's oil, what i'm going to be reading about into the weekend. >> i'm watching about another -- another finite resource spectrum. you know, this was -- >> well, there you go again. net neutrality. >> this is one of those things that is never important until it becomes important. the spectrum auctions for this band were not expected to bring more than $10 billion. that was going to be a win for the f.c.c. right now they're at $43 billion. this is comparatively worthless spectrum. it's not amazing stuff, and yet you're seeing amazing values for t. >> is this the market telling the government forget about it, we're in charge? >> this is the market telling the government spectrum is always going to be valuable, and it's always going to be worth more money. >> brendan, i have to disagree with the comment that this is worthless spectrum. this is mid-band spectrum that

fits perfectly within the carrier's existing portfolio. the spectrum can get pulled very quickly. the chip sets in the phones are already supported. it's incredibly scarce. >> i completely agree with you. i deferred to simplicity in that case. >> i was talking down to tom. >> there's a good spectrum. >> the bigger issue, frankly, is the battle for spectrum, not just into your home, but the battle into your pocket with your phone. >> yeah. >> let's get to uber, certainly facing a legal challenge in paris as a judge rules whether to block its service. we know l.a., san francisco have piled on as well, suing the company. it was a really good week last week when it was valued at $40 billion. this week is the no good, very bad, horrible week. >> is it aged? >> that's a good question. >> but you noticed a different in tone. they're saying completely different things. >> what's it saying? >> we understand regulation is necessary. we are not above regulation,

but it's got to be sensible. that's a huge change. >> let's get to our twitter question of the day. despite all these headlines, is uber winning? yes, uber is changing the game. the reason the headlines are there. >> fair, ok. >> second answer, it's certainly winning at getting negatives headlines. >> #winning. >> and finally, time to reband #uber to #over. >> addicted to it. >> hold on. we're in manhattan. we're in new york. is it as big a win as it is in other parts of the world? >> this is very much the new york view of the world. >> i'm trying to figure out if i got spectrum in here. >> this is important. >> what is spectrum? >> what you're saying is wifi here. >> spectrum is the highway of the wireless world. if you want traffic, you need to build lanes in the highway. spectrum are your lanes. >> elegant. >> they need a better and cleaner answer.

>> is this a good week? >> this was a good week for us, certainly. >> any week that is over is a good week. >> we did it without colby in the control room. >> our thanks to bob and michael. thank you so much for joining us. "surveillance" on radio continues. ♪

>> good morning. it is friday, december 12 really are life from bloomberg world headquarters -- december 12. we are alive -- are live from

bloomberg world headquarters. we will speak with the author of "following oil," who says now is the time to lift the u.s. crude oil export ban. we are no longer in the 1970's anymore. the world has completely changed in energy. airline stocks are soaring. southwest airlines' ceo will be joining me on whether this is really a gift for the airlines. dear -- here is a look at our top stories. the senate begins a debate on the $1.1 trillion spending bill. late in the day yesterday, the house narrowly passed the contentious plan, despite opposition from both parties. nancy pelosi was among those who opposed, beating out against the banking provision inserted by republicans -- speaking out against the banking provision