manhattan sidewalk. sony executives are not available for "the interview." this is bloomberg "surveillance," live from new york. monday, december 22. keene.m leslie picker, lovely to have you here. >> lots of coffee. several alarms. >> 5, i set 5. >> oil higher for the second straight day. saudi arabia says it is confident of a crude rebound. west texas intermediate futures climbed 2.5% in new york, oil opec decided to maintain production targets in november held for twovigils

police officer shot. nypd unions from chief patrick lynch, who blames protesters and mayor bill de blasio. new york has seen demonstrations following the michael brown and eric garner decisions. president obama condemned the killings. president obama refusing to call of sony pictures and act of war. the attack cost sony hundreds of millions of dollars and torpedoed plans to release "the interview." >> applet raising iphone prices 35%, the second increase in less than a month as the company accounts for the ruble's plunge. $955 ine 6 loaded costs

russia. $649 in the u.s. a major storm could fill a wrench in your holiday travel plans. a system stretching from chicago to new orleans is heading towards the east coast. heavy rain and strong winds to 2/3 of the country. aaa says 99 million people will thisl 50 miles or more year. brendan greeley will go back and itth to the grocery store >> is already done. check >> another storm, mostly rain. santa will get through. equities, bonds, currencies, commodities. futures up yields churn. oil stronger.

57.67. next screen. 16.49 on friday. yield showing a reaffirmation of a better view on america. 0.64. brent crude over 60. russian ruble was 57 when i walked in. .ver stronger ruble that might not be for good reasons. we can do this on the bloomberg terminal. this is three month dollar-ruble swap. liquid money around the system, russia's emerging market. then we go up. this is the improvement over the last couple days. still massively elevated. >> interesting news of the weekend. china has offered a yuan-ruble swap. are they offering a friendly

hand? are they sincere? is this an attempt to increase ae value of the renminbi as reserve currency. it does show how we are back to where we were in 2007. discussing solvency and liquidity, 2 different things. >> it shows how few options russia has. >> they have a limited choice from economic tough financial crisis. there is quiet in the markets this morning. it is deceptive. switzerland thursday and friday offered negative interest rates to keep billions of dollars away from switzerland. russia riaaised the overnight let to panic levels to not money go to switzerland. partied this weekend, josh

did not. he read on russia. the feeling i have is we have seen this before. is that what it looks like? >> we've seen plenty of emerging market crises. this has a familiar ring to it. >> in economics 101, chapter 16 or 17, linking banking and finance into economics. facing,what russia is banks are front and center. >> they have not developed the thickness and richness and their economy that they can withstand these kinds of shocks. they are so dependent on oil and that is what people are concerned about. >> something even vladimir putin admitted in his press conference, that russia did not diversify. >> he's going to dig in his heels. he did not say we are going to set a new course. it is focusing on nationalism thetrying to circle all

wagons. that is the issue. where is the plan? how are you going to develop a richer and broader base of growth so you can survive tougher times? u.s., do you think janet yellen is understating the impact from russia? >> she's done a good job of trying to calm people down. we don't have to worry about the first order effects. she has not gone into detail of theseiscussion that as issues persist, where is the threshold where it does spill over into your. and from europe into the u.s.. >> over the last two weeks with russia, investors in other emerging markets are pretty sane . able to draw a distinction between what is happening in russia and other emerging markets. >> that will be a theme for 2015 -- differentiation. the men from the boys and the women from the girls.

we cannot just rely on the quiddity from the fed. >> how do you differentiate? importers versus exporters? >> that will be a main thing but there are a lot of other things. there is business culture, rule of law. that is what smart investors are going to be looking for. >> does its bill over into other emerging markets? or does it spill over into the g3 countries, particularly the u.s.? >> not directly. the question is the exposure of european banks to russia. u.s. banks to russia, it is less than 1% of exposure. it is about a knock on effect. >> what did you read over the weekend? i tried to read about cuba. >> i started to read various fed dissents. you are a researcher at the new york fed.

after the fomc announcement there's nothing to read so you look at other regional fed chairs. who's the one to listen to? >> the san francisco fed president williams had an interesting interview. he was talking about the fact that inflation will be low but we are still going to be able to raise rates next year. that is the other big thing, the fed is lifting but what is the path going to look like after they raise rates for the first time? that will interact with the disinflation story and we will hear what that could look like. the relationship between nominal interest rates and real interest rates. does other variables in place for the fed. >> what is the risk of the fed raising rates too soon? do you think there on the right path and looking at the right data? >> they are looking at the right data. they are broadcasting their move very clearly. year of in many ways a hangover from the tape attention of 2013.

2015 will be as well. instead of us being on a taper how do we is about raise rates and avoid the kinds of tantrums we saw. >> what you said is repeatable from 12 months ago. what is the ability to have sustained lower rates, which has been the correct call? hade 1981 we've disinflation. everybody got it wrong 12 months ago. what is the assumption of jumping to a higher rate regime? i do not see the real economy events that get you there. >> -- the point. they're not going to jump, they're going to take baby steps. it has been an extremely methodical move by the yellen fed. they have broadcast almost everything they done in speeches and minutes. thisu read the tea leaves, is a fed that wants to

communicate. that is the lesson of the taper. >> something we will touch on. from bloomberg economics. i am fascinated by russia. more inzed it is not the papers. it is not front and center as it should be. >> while we are predicting disaster here, we ask you art question of the day. you more confident than five years ago, tweet us @bsurveillance. bloomberg "surveillance," streaming on your tablet, phone, and bloomberg.com. ♪

>> nouriel roubini on "market makers."

most interested in the linkages of europe to america. an important conversation later this morning on "market makers." this is bloomberg "surveillance," i'm tom keene. brendan greeley and leslie picker. in on a monday for scarlet fu. welcome to the show. >> to president is disappointed in how sony handle getting hacked. george clooney is disappointed in all of us. they did not lose consumer information, they lost their own . let's take a look at a research report from pivotal research group. pointing out how what happened to sony is likely to change what other corporations do. one, executives are going to discuss last of her e-mail. you will have to stay closer to the home office. their companies, a lot of things --k revealed about things

deals they had with the new york times. discussions with partner companies are going to become less full of trust. it is going to be harder to offer unique terms to each customer. it is a difficult thing to offer a premium. the idea that we will use e-mail less. it is a game changer for everybody. >> i don't understand why we did not know this before. every time there is a hack it is reaffirmed you should not say things in e-mail. it is not just that you should not say inappropriate things, you should not say anything you want a competitor to learn. >> i give you credit for being out front on this. to another generation it is like, duh. it is brand-new. what is the president saying about sony? always been semantics about cyber warfare versus hacking versus theft

. the media has a bad habit of taking attacks and turning it into war. what anonymous did it was a form of protest online. what is happening with sony is harder to tell. i would agree with the president that it is not an act of war. it did not destroy critical afrastructure or shut down powerplant, something you could do if you wanted to. >> the threat of war wasn't there. -- was there. they threatened september 11 style attacks. >> this is part of the problem. we do not yet have in place, during the war, we knew what the tit-for-tat was. a nuclearat merited or conventional response. we do not have that yet. >> is this a comedy, this movie? >> yeah. >> i'm looking at the footage and a lot of it is not comedic.

>> i was looking for to seeing. >> i see that it is pretty bloody, is that a comedy? om says you do not party, or you have gone to see this? >> i would have gone to that after it hit all the headlines. a lot of people might be put off but it made me very curious. the thing that is interesting is this conversation has been bubbling beneath the surface for a long time. 10 years that lawyers have been working on trying to develop treaties to manage cyber warfare between states. that has not reached the public consciousness. we have a lot of catching up to do. we have new technologies. apply the same principles. controlling your paper trail is something we can do in the 20th centuries. there are new ways to do that in the 21st century. >> we do not have a response. if there is a cyber attack, do you have a response? >> i will

rip up the script. the last chapter of the kissinger book is what you have been out front on for two years. dr. kissinger is writing about brendan greeley's world. worrying about internet and cyber. dr. kissinger agrees, we've got to yank ourselves in to a new generation. took a decadear to settle. game theory was an idol idea in 1950. over the theory, game theory was applied and became what we understand as part of the cold war. this is still relatively new. >> the speeds are different. >> what does it even mean to respond to a cyber threat? you launch aar, missile, someone else launches a

missile. youru measure response by the damage you do are the action you have taken? taking this to the world of cyber warfare. >> is it time for a physics? equation? v.w rate, 2 pi f times in the old days, you had slower reaction functions. now, with cyber, it's like this. >> cyber is a terrifying word. what, when we look at sony, an act of vandalism is fair. it is not that destructive. >> a lot to talk about in the next hour. gideon rose, the editor of "foreign affairs" magazine. on innovative and disruption. stay with us, we welcome you. bloomberg "surveillance."

good morning. ♪

>> good morning. bloomberg "surveillance." leslie picker in for scarlet fu. brendan greeley has our morning must read. >> we been talking about how we inflation number and how that became gospel among central bankers. this weekend in "the new york 2%ow a a piece on

inflation target became economic gospel. it started in new zealand. "what if it is wrong?" there it is. anjosh, are you in favor of 8% target? >> not in the near future. hindsight is 2020. 80's and 1990's, inflation was too high. about how 4%lking would jumpstart the global economy. with core inflation, which we invented post arthur burns, are we going to go back to forgetting about core inflation and looking at topline inflation? i don't think they can do that.

>> you have to talk about headline invasion. -- headline inflation. nominal interest rates versus real interest rates. the fed is focusing on long-term inflation. to get to the 2 percent number, the genius of it is that it is not scientific. it is so simple. it avoids the false precision of pretending there is something magical. >> is it a simplistic rule? >> it provides simplicity to market. >> inflation is based on anecdotal evidence that workers do not accept nominal wage decreases. you greece the -- you grease the gears. on anecdotal data, not numbers based. >> some history behind that. inflation is a tricky thing. we are worried about it being too low.

that is more of a concern then being too high. the reality is that inflation is a disincentive to safe. in america we have a situation where citizens are not saving enough and corporations are not investing enough. >> when you look at the if and when wet, do reach a sustainable path of inflation, how do you know that that is not too late to raise rates? in the sense that once you get to a high enough inflation findt that you do not yourself in trouble? >> no one knows for sure. that is the debate for the fed. >> disincentive to safe? distinctionraw a between people who need to save for retirement and a glut of savings desperate for yield. we are talking about convincing people to save. there are two classes of savings >> deke glut of savings is a broad. american are not saving enough relative to the rest of the

world. >> that is a bad thing? >> right. that is one of the reasons we are having trouble in russia and china. a tremendous time of change. the forces come together and -- in ways they have not before. so many emerging markets are buffeted. we speak to pablo from blackrock. it is bloomberg "surveillance." ♪

>> good morning. i promise to see "the hobbit" after i have seen " frozen" 10 times. apple raising iphone prices in russia. for the second time in less than a month, the company trying to account for the ruble's plant against the u.s. dollar. $645e 6, $955 in russia,

in the u.s. makers largest smartphone raises about $1 billion. the company is expanding overseas. omii ha overtaken samsung. hospitalized with pneumonia. a spokesman says it is a mild case and he should be out of the hospital soon. is battlingold ali parkinson's t disease. he is in stable condition. on to emerging markets. what to do in 2015.

the equities and bonds of emerging markets go first. f you dare, where do you acquire foreign bonds? pablo kohlberg deals with this every day with blackrock's emerging-market debt team. youfascinated with where do go when you want to find higher yields. >> you need to look for good fundamentals. a couple headwinds. oil prices could be great for consumers but are bad for some emerging-market countries. you will be having a liftoff in 2015 by the fed. a letter debate. you need to go to the less volatile parts of the asset class. >> give me a country. >> right now in some cases some

trouble spots, brazil, prices have been coming off a bit. in russia, a couple under weights in other places. >> are you buying russian paper? >> we have it. it is not that we are adding. >> how can you go in and buy paper given the inner market rate? >> we are buying hard currency debt. >> what is that mean? >> it is bonds denominated in dollars. >> i read your research from november on emerging-market fixed income. there was no mention of the price of oil at that point. we had not seen massive movements. how much did that scramble your plans? >> the drop in oil prices was important. time to find out what are the domestic and international

impact of that. in some countries these things translated into weaker currencies, like russia. in some countries it translated into weaker prices of bonds like ecuador venezuela. it depends on the variables they have to adjust to the shock. in places they cannot do it through the exchange rate, there will be concerns on credit volatility. and emerging markets, both equities and fixed income, are more sophisticated this time. they are able to distinguish among countries. >> yes. we've seen more and more diversification. nextink that the trends of year are going to be for diversification. we will play a thematic approach . oil importers versus oil exporters. the countries that have ways to adjust to the oil shock against countries that do not have ways to adjust and are more rigid.

this is the approach we have. >> are those the fundamentals you speak about when you try to decipher between countries? what are the key things you are looking for? >> we are looking for solid balance sheets. good liquidity. we are looking for growth stories. we are trying to look for places that will take better care of the volatility that will come along. that is why we are preferring at high-grade bonds over high-yield bonds. the summerwhispers of hedge funds leaving brazil and heading towards col ombia. i've been hearing for 10 years that colombia is the country of the future. incolombia is doing a lot terms of the peace process. the oil pressure has hit colombia, we've seen deterioration on hard currency debt and in the currency as

well. there a point where value comes back. this is what we monitor day in and day out. on it,a put a fine point it is the peace process that is driving it. >> it is a good start. also the improvement in nontraditional exports. >> to bring this to cuba, what has blackrock thought about a new cuba? we are here. >> it's still too early to know -- >> i want your best research on how cuba's capitalism will unfold. >> it is very early. we need to see which kind of process they follow. are they going to be a process like china where they try to bring a lot of capital and put rules for capital to come in. 90 miles away, i

think the idea of a china model for cuba -- >> it's going to be a big challenge. at the beginning of 2014 we saw a lot of back-and-forth amongst global central bankers. emerging-market central bankers laming the fed. do you think we are going to get the same scapegoating in 2015? >> central banking has been difficult in emerging markets. it is not necessarily that they blame the fed. a majorear that when central banks starts changing gears it will affect everybody. we expect to see monetary policy diversions. some countries will be able to cut rates. will have tos defend their currency with high rates.

>> to a nation, i respect their central bank so much, chile to me is almost like a developed economy. is chile a developing market? >> the definition has always been tricky. when you look at geographically and politically, singapore would not be considered in emerging-market. chile has also been dealing with a little bit of a commodity price shock. corporate press is going lower earlier than oil prices:. there the currency can adjust a lot. a process similar to china, a slowdown on their potential rate of growth. the country has done a little bit of the chile model, peru. you so much. a great overview. why do i see february in santiago? >> i thought we were going to havana. >> we can do both. >> i'm going to sao paulo.

we are going to talk about the challenges facing millenials in terms of getting jobs and saving money. this is bloomberg "surveillance." ♪

>> good morning. bloomberg "surveillance."

leslie picker and for scarlet fu. brendan greeley spent all day yesterday going back-and-forth between "frozen" and his single best chart. the single best chart was more interesting. >> relying too much on consumer confidence is a predictor. josh wright looked back at .onsumer confidence in 2010 the mood of the under 35's has increased faster than the mood of the under 55's. something is weighing seniors down. >> we have a demand-supply issue. more older people who want to work and less demand in the economy. >> can we get a camera on tom? he's being weighed down. a metaphor made real. tom keene, and millenial inside. >> what is the difference between leslie picker and me? >> not sure how to answer that.

i wager that leslie is a little bit more tech savvy. i'm sure you've made great strides in keeping yourself up to date. it is different when you grow up with technology. more.arently i'm spending a lot of us in the millennial generation started our careers in the financial crisis. you start with this mentality that you take what you are given. in terms of salary and job and .hen you work up five years later things are starting to look more relaxed and you have more discretionary income and you are going to spend it. >> you have time to adjust and you have time to adapt. there's a lot of handwringing about millenials. they have large student debt burdens, they live at home with their parents more than previous generations. it is adaptive. taking time to rebuild their own personal balance sheet. putting them in better standing going forward. >> we talk about student debt

burden. they are not taking on housing or card debt. >> the experience of the job market around 2009 or so. the experience of seeing other people lose their market in the -- the experience of other people losing their money in the housing market. they're going to be more careful. >> pablo goldberg, can you measure the confidence of manyer people in so nations where it is a huge struggle? the use of the middle east is really struggling. >> the middle east has a demographic issue. a significant amount of the population is under 14 in many places. these economies are very much one sector oriented. for example, some of the countries that are oil-producing. >> in egypt, the challenges we saw with the arab spring. how do you get the youth together> >> you need jobs.

in some of these places this is not really happening. it is a geopolitical issue going forward. >> is also a technological issue. because the young people are connected, they know what they do not have. >> pablo goldberg, thank you. >> we look for bargains in retail equities. this is bloomberg "surveillance," streaming live anywhere you want to watch it. ♪

>> good monday morning. must watch, must listen. gideon rose of "foreign affairs." the new issue is spectacular. we talked to gideon rose about international relations in the next hour on radio and television worldwide. this is bloomberg "surveillance." our top headlines. >> the x ubs banker who won a $104 million whistleblower award . he is asking a u.s. judge to let him move back to europe before his probation is up. he was sentenced to 40 months in prison after divulging how ubs

-- if you need to reach someone at coca-cola in atlanta, forget about leaving them a voice mail. voice mail, the chief information officer says they are simple find the way they work. the change began earlier this month. >> huge trend. >> i never listen to my voicemail. whitney's hedge fund is down. her madison avenue office is now on the market. in twoup less than 1% months. those are your top headlines. response on twitter. i have no metaphor years.

-- i have known meredith for years. >> nobody is right forever. >> detractors took a real shot at her. or worse.egative 11%s this has been a brutal year. meredith, if you are watching, get on here and tell us why it has been such a struggle. what do we got? are little more brutality senior markets correspondent joins us now. ?s there any help anywhere >> there's hope. there seems to be consensus we will see an increase in sales over last year. it seems like saturday this year was a bigger devon black friday. $9dicting $10 billion versus billion. >> what did you see saturday?

julie hyman was a shopping animal saturday. >> i have not been a shopping animal. >> pablo goldberg, or you shopping? getting larry fink something? >> long lines. black thursday, cyber monday, super saturday -- i can't tell we're losing the goal post or consumer behavior is changing. >> we are seeing more of a spreading out. the reason retailers are trying to drive you with events into the stores because they are not getting traffic in concentrated bursts. we saw this with black. they got it earlier in november. they are shopping online. picker at the shoe sale at bergdorf's. crowdsdn't fight any

when i shopped. there was nobody there. are people shopping online? is that why we are seeing not as many people in the stores? >> that they of it. we are seeing traffic migrate. a lot of brick-and-mortar retailers are grabbing a larger share. that is something that we will be watching closely. a is not just amazon getting piece of that pie. it is macy's and walmart, etc. >> how does this shakeup for equities? oneso i s winning are the you would not expect in terms of performance. if you look at retailers we have seen underperformance. the s&p retail is up 7% versus 12% year to date. what is interesting is, you might be getting bargains in the store but you are not getting

them in stocks. price to earnings ratio on the s&p retailers near the highest we've seen in more than a decade. >> critically on december 22, of whatgive us a window we will see at the end of january when they and their quarter and february when they report? is there any sense where the margin will be? >> because of what leslie said we are expecting margins to scrimp a decent amount. >> is this because of nominal gdp? animal spirit is not there and there are too many retailers chasing too few -- >> getting back to the fact that we have young people who want to save more. they are saving more than they used to. they know that they have got to be ready for the future. a lot of that confidence is based on what is going to come down the road. >> we are looking at confidence rising, don't we expect that to turn into retail sales? directly.essarily

it is not a 1-1 correspondence. they are going to be correlated. >> there are two things going on . part of the problem has to do with retail and not the economy. we are seeing spending in restaurants, lodging, airline tickets. people are not necessarily buying as much stuff. i talked to sarah at mastercard advisors. she says you are seeing trends, going back to the millennials. they do not have as much room for stuff. urbanization. there's not as much of a drive for stuff. >> happiness research tell us buy experiences and do not buy stuff. >> that is what we are seeing more and more of. it does not mean spending is not going to be strong. it might mean retailers are not going to do as well. >> are they saving up for the next iphone? >> i don't know how iphone sales are going to be. we will have to see. >> julie hyman on our retail. super saturday? >> panic saturday is what i call it. i am waiting for the 24th, when

i do my shopping. photos. walks on hers boat dock. miles awaylake250 from san francisco. this month, the biggest storm in more than 10 years is not going to fix several years of drought. number two photo, this is a volcano in iceland. tom, do you want to say the name? after experiencing 1600 earthquakes in a 48-hour period. feetspurting at 300 cubic per second. >> so many around the world. >> the best photos of the entire year, this is number one. in gaza city a man blows fire

as gazans celebrate a long-term cease-fire between israel and hamas. 50 days of violence resulted in 2200 deaths, mostly civilians. the cease-fire was put at risk last friday when hamas launched rockets into israel. >> going on everywhere. gaza strip, ukraine. >> the photos of the year, it has been such a busy year. you forget amazing things that happened. in march, april. change been a lot of people on twitter have been talking about 2014 as a miserable year. a sad year. will address this with gideon rose, how international relations came to the four. let's look at the forex market. most important by far, the ruble . that's not a good move. a flight to quality.

a fragileup with banking system. gideon rose is next. ♪

>> this monday, markets stabilize. liquidity, a a banking crisis in russia. it was super saturday for retail america. christmas trees are 90% off on manhattan sidewalks. good morning, everyone. this is "bloomberg surveillance ."pc >> oil is moving higher for the second straight today. questec futures climbed. has decided to maintain its production target in november. vigils were held for the two police officers gunned down in

brooklyn on saturday. i witnesses say the shooter approached a police car and fired through a passenger-side window then took his own life. strong words from chief patrick lynch. >> those that incited violence on the streets under the guise of protests that tried to tear what new york city police officers did every day. we tried to warn it must not go on. it cannot be tolerated. ont is blood on the hands the steps of city hall, in the office of the mayor. >> new york has seen extensive demonstrations following the michael brown and eric garner decisions. from hawaii, president obama condemned the killings. >> president obama is refusing to call the hacking of sony pictures an act of war. koreas. as accused north

of torpedoing sony's plans to release "the interview." x i don't think it was an act of war pimp it was an active cyber vandalism that was very costly, .ery senator mccain called a new form of warfare. >> raising iphone prices in russia a second time, up 35% this time. the company accounts for the ruble's plunge against the dollar, against the euro. and iphone 6, $965. just in time for your holiday travel, a storm. surveillance weather tells us

rain, not snow, with some serious wind involved stretching from chicago to new orleans heading east. again, heavy rain, strong wind certainly disruptive for airlines. 99 million people, including leslie picker, will travel 50 miles or more this year, of 4% from last year. >> we will see on wednesday. trying to denver is not the best place to go. >> denver is terrible. >> everybody flies her travels the day before thanksgiving. you get more people in total. but it is not as concentrated. commodities, currencies, oil below $57. oil had a bid this morning. it gives it up near the 10-year yield. 2014s been a most eventful

, made more so by international relations. looking at the study relations of geopolitics as it buttresses up against economics. we look at russia. they have their own financial crisis. but also the challenges of linking that to acquiring ukrainian acreage. us from bloomberg economics and gideon rose from foreign affairs magazine. congratulations on my favorite magazine. did you know at the beginning of the year how front and center your world would be in josh writes world? -- >> no one expected it. on the other hand, it has come around pretty well. one of the things you don't expect is for people to do stupid things. what russia did in ukraine was stupid and now they are paying the price. a lot of bad things happen. but at the end of the year, the united states looks in a better

position than it did a year ago. cubau talk about linking to russia, all the things we knew -- forget about 40 years ago -- five years ago -- are falling apart. what is your view next year of russia with all these linkages? finally, the u.s. found a partner that wanted to play also. they cuba deal is the kind of thing the obama administration has been tried to do with his former enemies across the board. homerun but itt is a solid single or a double. >> all the baseball metaphors. >> they tried to play with russia. there was going to be a reset pin but no one expected russia to do a stupid thing. we forget it is not a normal country. not a normal country,

but it should have been smart enough to recognize that, in this day and age, invading another country is not going to exley get you anything. it is going to get you a small little thing that you invaded but you will be punished for it. not today, not tomorrow, but soon and for the rest of your life. x within your economic world, we have weak economic growth and political things happen when that occurs. >> when the price stops growing as much and things become more tense, the conversation of how you're going to split up the pie. what is the endgame going to be for russia? it may not be next year, but we have seen them take consequences. down.n is not backing it is he going to have to go to guy ms? -- to the imf? whos he the type of guy

would stand down, especially if you look at cuba as a microcosm of the whole section policy altogether? >> he is not the kind of guy who is likely to stand down and the domestic situation is still quite positive for him. although when you add the sanctions but the oil price drop, it is putting a lot of pressure on. no one knows which way russia is going to jump but i wouldn't expect any major change in insia, either a climb down the next year or so. two years, three years, that gets interesting. >> were you surprised to hear in was about the lack of a diversified economy? it is hard to say how honest and self-aware his presentations are. sometimes he is off in his own world. sometimes it is propaganda you know he doesn't believe in and sometimes it is the actual truth. it is hard to parse those things out. you have to take his public at face valley but

you cannot dismiss them. >> what could be achieved if russia was more of a friend than a foe? >> they could be helping on iran, on syria, and various other issues. but they weren't really friends before this so it's not clear how much we are actually giving up. >> what was the innovation this year in diplomacy, in international relations? >> the real innovation in diplomacy this year was north korea's terrorism by cyber. ,he sony hack as a punishment that is a really interesting, dangerous new precedent, state -- state-sponsored terror. class we do have a rules of engagement in cyber? >> there are rules of engagement

that could be applied but there are no new rules of engagement. but are you going to apply the old ones? koreau going to put north on the terrorism list for its cyber attack, which would be a very interesting way of applying an old-school remedy to a new school problem and normalizing it. >> this has been a problem for eggheads for years. we are now looking at pragmatic issues. >> the real problem with north korea is some rich guy is driving a maserati and a homeless comes up and -- a homeless person comes up and scratches it. what i shall subdue -- what are you supposed to do? homeless. >> jump in here and say something intelligent about cyber security. weover what time finn are going to start to develop a rich vocabulary for these types of issues? we have already seen president obama talk about this over the weekend. >> it already gets pulled back

down by john mccain who calls at war. my book of the year, henry chapter, ithe last did not expect this, was all you have been talking about for two years. thank you so much for joining us. bloomberg economics, look for their briefs worldwide. our question this morning is really important. aren't you more confident and then you were five years ago? stay with us with gideon rose. it is "bloomberg surveillance," good morning. ♪

>> good morning. boil a bit south, 56.82. this is "bloomberg surveillance" from new york city. brend>> the european countries e the ugliest members of the cold war are the ones who have the close trading ties with russia. they drop of the ruble have made things worse.

the scale of external shock suggests that central eastern european currencies may see additional depreciation pressure in the near term, especially in poland and possibly hungary. >> i would go straight to hungary. it is linked into switzerland. >> i was actually going to poland. work in done your rollback and democracy. but what we are talking about now is economics. there is this polish miracle. what does this do to that? >> it would be sad of poland took a major hit or continues to take a major hit. they are the ones who are standing up on the ukraine shont, really trying to pu europe. it couldn't happen to a nicer desperate. [laughter] and poland's 3% plus.

not bad. >> for the first time in the country's several-century modern things are locked into europe. they are in a good place politically. they are economically tied into germany and moving forward. they have good leadership and have done the right reforms. this whole crisis started because the ukrainians look to the polls and said i wanted that. time, poland'st location has always been a curse . every invading army runs through poland. but that location turns out to be amazing for trade. >> there are a lot of countries that do well by being on the margins of a major economy -- major economic power. i think they are well positioned for growth because they can be the emerging market side of the larger, say, german story. >> you have these countries in the east and they are talking to brussels. what do they want? this has been a much greater

existential crisis for europe than the united states. we think of europe as being the eu and nato and russia is on the outside and on the borders. the europeans actually believed that the continent was peaceful and quiet and calm. they don't know what to do because they don't know how to get out of it but they don't know how to go forward either. 11:00 a.m.roubini at this morning on "market makers." ♪

collects good morning, everyone. good morning, everyone. let's get to our top headlines. >> china's largest smartphone vendor is valued at $45 million after a new round of funding. has taken over samsung on smartphone sales and now is

expanding in the context and services. if you need to reach someone at coca-cola atlanta, forget about leaving a voicemail. it has been shut down. simplify the way we work." meredith whitney's hedge fund is down 11% this year through last month and its main investor is demanding money back several theutives have left and madison avenue office is on the market. those are your top headlines. >> big story over the weekend. somehow, i think miss whitney will have a little bit of company after the challenges of this year. the next fed meeting is generate

29th. perhaps there will be more than three dissenters. one of america's foremost thinkers on monetary policy says we should be focused on japan. it is decidedly not pretty. i put it out on bloomberg radio plus. i have been really focused on this. one of the knock on effects of abenomics. korean currency killing korean -- exports. what else should we be watching? one of the key strategies was to reverse inflation. the knock on effect is the weaker yen. the neighboring country might feel some pressure. but on a game theory basis,

they have to respond. japan, singapore, taiwan, korea, all of them have to respond. you can't do abenomics in a test two. >> in principle, there isn't they have to says pursue monetary policies following the yields of japan. in principle, abenomics's increasing inflation doesn't .mply >> structural reforms are really good long-term but related bad as a short-term stimulus. where is japan in that cycle? they haven't done too much on the structural reform side. perhaps the main focus is really the some inflation. the structural reform sometimes have the negative side effect of creating for the pressures that can be counterproductive for japan at this stage.

>> that was one of the arrows for auburn of x. the you keep that in the -- four benomics. -- for a >> john cochran from the university of chicago, he writes his reflection of the year. he says the brief resurgence of traditional kinsey and ideas -- is he calling victory too early? >> that is fair to say. started well, but one of the key mistakes was the sales tax in the spring which slowed their recovery. evidence isding the same way as john cochran, not surprisingly. >> the difference between economic prescriptions and

economic reality -- and put all reality. reality. political >> there is a reason the united states has come out of this stronger and with a more durable and robust economy. there was some stimulus. and hison why cans he him hasn't worked well in the more i would rather have keynesian policies than europe. >> it is him is like he is saying, because we don't need it we never needed it and that is wrong. >> the understatement of the year when the fed said it would be pacing raising rates. just because it had a good labor report, it should not be talking about -- >> we are also talking about different schools in camps and tribes of economists.

>> the issue here is that we have two guys on the set with eight degrees between them. there is a huge part of america that is not parsing john cochran or paul krugman or you. they are just desperate for wage growth. when you look at a classic i slm classic monetary theory, econ 101, which you teach wonderfully, how do explain the real economic effects that we have now? how do the fold into where is the wage growth? >> how do i think about the lack of wage growth? >> yeah. >> we have not had a sustainable recovery yet. that is why we need to pursue further stimulus. >> can the fed generate economic growth? >> i think certainly with the right monetary policies they can. to talkry premature now about hiking in 2015. >> it is our twitter question of

the day. are you more confident today than you were five years ago? thank you so much. tweet us.

>> good morning, everyone of them ruble much stronger. if you are in russia, what do you do with it? in the last hour, oil has given it up. on west texasw intermediate. it's "bloomberg surveillance." >> oil sterling to hold its gains at this hour. earlier this morning, prices were moving higher for the second straight day. saudi arabia is confident of a rebound. futures had climbed as much as 2.5% new york. slumped 21% since opec

has decided to maintain its target in november. the state led company says it has settled when a $4 billion in line with credit agreements. the ceo says it has sufficient foreign currency to pay dead. .- to pay debt apple is raising iphone prices in russia by 35%. that is the second increase in less than a month. it accounts for the ruble plunge against the dollar. costs $995 in russia. gideon rose of foreign affairs, i say it is a perfect stuffing stuffer -- stocking stuffer. we go in search of america's entrepreneurs.

it is so non-foreign affairs, why are you doing clay christiansen 101? >> we are all talking about how to get growth going. we decided to actually explore that. we came away thinking schumpeter was right. much of growth and innovation that we actually see comes from a relatively small slice of the population. how can we help them spread the benefits? the american 1949, economic association speech was a world away from where we are now. how do you drag shumpert or without the cliches in 2015? >> we look at silicon valley, stockholm, london, alibaba and say, you know what, this is what i was talking about. economic done omission, individual people who are creating new products and services and new ways of thinking that push us forward.

and we want to know how governments can help enable that and how we can all reap the benefits. as it moveske uber, into different cities around the world, how much of that resistance is just plain pigheadedness and how much of it is actually legitimate, that this is not the way we want to run our economy? classicpeter's line was innovative disruption. appropriate to think that the disruption is always positive. i think shumpert or would say to his net positive. incredibly cheap and easy and convenient, but it does different ways of doing things. great article talks about our entrepreneurial slumber. >> the startup rate in the u.s. is declining and that is a worrisome trend. but then the question becomes -- one of the things we found out

interviews, we think about it as a silicon valley or an american specialty. but it is moving to europe to india, to israel and asia europe so the world is now getting into the game of entrepreneurship and technology and innovation. >> you mentioned alibaba. to see theseing newfound billionaires and millionaires spending money in techoe, starting their own companies. what does that say about entrepreneurialism in these countries versus here. >> in the long run, it is a good thing. they can't say it in the short run because they don't want to suffer a crackdown. but for someone like a jack ma in the long run would like to see a china as a dynamic and growing economy for an open society.

>> the actual physical copy with type you can actually read, how about a data check? all of aude, 56.50, almost sudden down more than a little bit. me.dan greeley with >> how super was saturday? , not really. candace, you go into malls and figure out what retailers are doing and you are not impressed. --it is a pretty saudi state sorry state. i sat in the mall on saturday, taking a break, having a coffee, and you look this way and there , 50%, 20%.he window you don't have to move. you look at the windows.

big sales. >> is this a consequence of changing consumer behavior? is there something that retailers can do about this? >> remember when stores used to have creative things to draw you in? it doesn't happen anymore. >> are we over retailed? are there too many stores after a 40-year buildup? many bigtely, and too stores. but we see a lot of closings and downsizing and the internet is taking a lot of sales and traffic out of stores. what is the benefit of bringing people into the brick-and-mortar stores when they can shop online? and it wase mall pretty simple. >> i think it is a matter that

stores.too many people like to go in and touch things and get inspired but just as many like to order online. we need both but not the lead is configured now. was with us in the last hour and she said spending is rebounding but it is around experiences, going out to dinner, doing things rather than acquiring stuff. stemretailer, how do you that tied? >> created disruption. we have seenl, some creativity, merchandising, making people feel good. nordstrom rack, it is supposed outlet store.nt they pay attention if the line gets too long. people have handheld registers to check you out. >> she speaks of it with a glow

in her eyes. >> it has the nordstrom's culture. >> does that work in new york city? a functionuse it is of the nordstrom culture and their employees sign on for that culture. >> maybe you can make the shopping experience. look at what apple has done. >> i love that. what can retail learn from the apple retail stores success? make people feel very important, to make them feel like they are really going to be really smart when they enter the store. >> around real estate, how much of a footprint do you need? hexou still have the hankering stores or does it have to be smaller? >> i am not a real estate that itbut we have seen has to be smaller and a lot of a variety we need a lot of stimulation and a lot of variety.

having one big store at the end, is it really worth going down for one big store? no. >> 70% off in these stores, how much of that is psychology and is it really working to bring people into stores? i thought these sales were traditionally for after the holidays. >> how quaint. [laughter] of 2005.he depths is, these arehing smart shoppers and they know, if you have taken the price up to 70% stamp, they are so skeptical. they are very savvy. they know what real prices are. >> what happens over the next three days? >> more of the same. i think the procrastinators will be online. >> 70% off? >> it is 50% off now. >> what is 70% off? a 100 -- a $100 thing is now $30? >> yes.

so was it ever really $100? >> thank you so much. you seem to have some hope. >> i am always hopeful. created disruption. ♪

>> good morning, everyone.

futures up 4%. a little it so. >> we are approaching the end of the tax year and thus it is the season to give him donations from the wealthy are nearly back precrisis levels. david freeman will join "in the loop" in the next hour. betty liu joins us now. >> donations are back up it i don't want to give away everything before the segment. i want you to watch what is going on with the welfare us. who else to top the list of those making the most in 2014? can anybody figure out who give the most? warren buffett. >> does he have anything left to give? change to theand bill and melinda gates foundation.

someone who pops up that number two is nick woodmen of go pro. jill have given half $1 billion to form their own foundation at the silicon valley foundation to help build more entrepreneurs. i don't know if you're a call, but back in october when this sharesounced, go pro went down as a reaction to this. but it is resounding. some of the newest billionaires and millionaires on the list have given up half a billion dollars. >> a very important thing to do is get on the phone and call suzanne helm at the council of foreign affairs. [laughter] your world where you are looking for people to make your wonderful institution. >> grade. the reason that the rich can give so much is not just because they are generous but they have done so well in the last several years and much of the recovery has gone to them.

people in the lower levels may be don't have as much disposable cash to give away. >> but what is the feature that rich people want now when they donate? >> credit? [laughter] >> what i found interesting about this list is that almost half of these donations go toward higher education, towards education. >> for relations. >> there you go. it has to go with further learning around the world. >> gideon rose has a plaque next to the cold macaroni. cold macaroni block to you by blah blah blah. three out of the 10 top donations went to harvard university. >> if they want to associate themselves with the set, that is why you give to a place like harvard. iswhen you look at what going on with nick woodmen, the

stock had risen so much that he felt he could donate that stock to the fund. that goes hand-in-hand with the confidence. ," coming up on "in the loop helm will speak with betty liu. futures up 4%. 10-year-old 2.8%. and i am watching oil this morning. ♪

>> good morning, everyone. tomorrow, and oil challenge and oil challenge at $56 a barrel. we will talk with dr. croft about the middle east. surveillancemberg ." leslie picker with me today in for scarlet fu. its firstdelivered a350 model airplane this morning . the first customer, qatar airways. with boeing'sete streamliner. the airbus 350 is powered by two rolls-royce engines. passengers will get wire seats

. muhammad ali was hospitalized over the weekend with pneumonia. it is a mild case and should be out of the hospital soon. he is listed in stable condition. won a ubs banker who whistleblower award wants to move back to europe and he served time in a u.s. prison for tax conspiracy. a judge to gong back to europe before his probation is. he was sentenced in 2008 after devoting how ubs was helping thousands of americans avoid taxes. this is a remarkable set. ukraine doesn't get lethal weapons from any country. russia a mess is up to 8000

troops in east ukraine. ukraine to pull out weapons from east after a full cease-fire. the game theory goes between the west, ukraine and russia. to be as clear as i can come up when you look at that, you can get smarter about ukraine by looking at foreign affairs magazine. gideon rose joins us this month. i found buried in the back of the magazine a superb article. russia go to ukraine and in that resiliency of a system is really important. iswhat these guys are saying that people tend to straight line project. if something has been stable, you should expect it to be stable. >> do you think media would do that? >> the opposite is kind of true.

a stable system could be a pot with the lid on boiling and be ready to explode. lebanon sales through the air a bit -- the arab spring pretty well. it is not are you stable, but are you fragile? >> is the united states stable? >> it is robust. our economy has come out of the recession pretty well. thehis is the heart of matter, this anti-fragile, this resiliency of democratic policies. >> economies that are reliant on ,ust one resource, exporters even japan with this auto sector, it seems like the strength of the u.s. economy that we are now looking back and realizing is that we do a bunch of stuff. >> are government is pretty dysfunctional but on a centrist way.

ultimately in the grand scheme of the world. and the society is robust. the economic system is open and there is a lot of innovation taking place. here is my morning must-read. it comes from this great extended essay in forbes magazine. i think it is just remarkable how debt is front and center after the geopolitics. >> you have to worry about china in that regard. i look at that debt and go they are pretty robust, too, in a lot of respects. leaderve a new powerful and is adept and is adept in trenton moving things forward. right when you look at china, debt is not as attractive. unknown ina known china, which is what governments

have taken on. >> was do you think about the resiliency of the u.s.? hearing lately that we are seeing more resiliency and manufacturing. the oil boomector, is creating a resiliency compared to a hundred years ago. >> it is interesting because, in the longer-term future, things like what willpower transportation will be in play in a way that it never was. and it hasn't been for almost a century now. the general come thinkf the recovery, i you will actually see significant innovation and better progress in the u.s. tremendousd a graphic. it is just stunning to see their charts of the shrinking icecaps, both of the icebergs in

antarctica. what is the research on disruption versus this raging debate on climate change? a climate change is fascinating issue because it will have dramatic negative effects and some positives. there are winners and losers. openingn and the arctic up, in some ways, it will be terrible if you are inundated by higher sea levels. but it will be a boom to the region in terms of trade. >> it creates a couple of new global powers, denmark. [laughter] denmark is claiming the north pole. >> we should do a whole show on that. my agenda, we get started on a four-day work week. we will be here on friday.

i am front and center on russia. >> i will be here. you will not. >> i will be here. >> ok. >> russia front and center on liquidity, this is a big deal. the russian ruble is stronger for all the wrong reasons. i would watch this like a hawk in the next several days. the liquidity i am talking about comes in the form of rain, the liquid from the sky. that is expected to derail a lot .f travelers this week a third of americans are expected to travel this week, myself one of them. i am headed right into the storm heading west to denver. fingers crossed. you think that a 10:15 flight should be alright but, with laguardia, you never know. >> and watch the kids. they are home from school.

>> amen. i am looking forward to oscar season. voting begins today. it is a different town than it was two weeks ago. a political is such process. now that so much of this internal laundry is being aired, how much does that change what is going on in hollywood? >> we need an interpreter to figure out what is going on actually. >> is a george clooney? did he get it right? of the sony hat, how it will affect the voting, will there be sympathy or repulsion to the comets of the executives at the top? credit george clooney with a globally important insight. nobody wanted to support sony. confidence, consumer confidence, this is our twitter question of the day. answer number one, yes, we are still in the expansion of the economic is the cycle. that is a huge if.

second answer, no, the world is operating in open defiance of western values. we are weak. we are in our twilight. oh, god, i am going to find a whole and i've into it. [laughter] dive into it. [laughter] >> i am bullish. geopolitically, we will have a good year in 2016. >> our twitter respond ease did not agree with you. there was very little hope. am i confident of another financial implosion? absolute. >> that is the wall of worry we have to climb. oute is upside potential there because there are people still blooming and dooming. is a goodeap oil grappling hook. >> do you have hope? absolutely. 2015 is going to be a good year.

>> one more plug for foreign affairs and then we will see you off. thank you leslie picker for sitting in for scarlet fu. in the loop"liu, " on bloomberg television is up next.

>> good morning. it is monday, december 22nd. you're alive in the headquarters area we are nine minutes away from the opening bell with stops

-- with global stocks opening. the year ends coming up fast. shoppers squeeze in their last minute holiday shopping with sales for the weekend. lillie will be with me for the hour. they make everything from candles to coffeemakers to ski jackets. want your ski jacket on. plus, global weather for the economy. energy company will be next. obama won'tdent call the hacking of sony pictures an act of war. the u.s. accused north korea of the attack, which cost