>> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line," the intersection of business and economics with a main street perspective. to our viewers here in the night and states and those of you joining us from around the world, welcome and happy new year. we have full coverage of the stocks and stories making headlines on this monday. she'll be holiday has highlights from time magazine's 100 best-performing hedge funds. peter cook looks at challenges to oust speaker john boehner for

leadership. and matt miller looks at challenges for the auto industry . but to our top story we are following at this hour -- crude oil fell below $50 a barrel for the first time since april 2000 nine. surging supply signaling the global fall into a bear market will continue. let's show you how the equity markets are responding. the dow jones industrial average down 308 points. the s&p 500, falling as well. it is down one and three quarters percent to read and the nasdaq down as well, dropping nearly one and a half percent at 4646. for more, john stalls berg is a senior market strategist at oppenheimer. good to see you again. >> hi, mark.

how are you? >> i'm doing fine. coming out of the gate strong in 2015, oil prices fall, concerns that greece may leave the eurozone. are we seeing a perfect storm brewing? >> mark it just reminds me a lot of october 15, except this time it is not ebola. it has to do with greece the plunging price of oil. most of which we would have to say does not make sense. we would have to think that the the market needs time to recognize these problems. if anything, this could put pressure on the european leadership when they meet cheney where he second. as for the price of oil, we are just waiting for that moment of capitulation and we may be getting close to it with the 60,

50 mark. now we are back at 57.74 on my page on the bloomberg -- >> john, talking about oil, the decline in oil prices back in june -- how long is this going to last? >> you know, based on past experience, we would have to say -- and auction -- and also based on the economic challenges outside the u.s. at this time, you would have to think that the u.s. could probably last another three months. but we do not think much longer, and that led, we think at some point, sooner than later, we will see energy begin to trade sideways instead of moving lower . we will establish a base and start coming back. >> speaking on the phone with john stoltzfus the senior

market strategist at oppenheimer about wall street. is greece going to cause the drop in the markets? >> greece certainly has people thinking about the risk involved in emerging markets these days. it is not a characteristic for this type of situation to occur based on the outbreaks of nationalism that we have seen around the world through the last year, year and a half whether it was scotland considering secession or removal from the u.k. or whether it was in spain the questions of whether there was going to be a secession there. and in this particular case, we will have to see the way that the election turns out. ultimately, the vote will have a lot of to do with it and see if

the greek citizenry sees the point and remaining in the european union which seems significantly threatened. >> we have about a minute left. the ecb officials are beginning the debate about quantitative easing. the ecb model, will it be the federal reserve version of qe? would qe reduce the incentive for some governments to institute reforms that they need? >> we think we have seen improvements within the european monetary union -- think ireland, think the netherlands -- in terms of responding and getting things done that need to be done. we would think that qe on parallel will mimic the u.s. qe because of the structure of the european monetary union, a union of many countries. different than the u.s.. but we can't help but think that qe if effectively employed and

seriously committed to will likely produce a good result for the european monetary union, just as it has for the u.s.. >> john stoltzfus chief market strategist at oppenheimer joining us on the phone. always a pleasure. thank you for your time. >> thank you, mark. >> and of course, stay with bloomberg television. we will continue coverage of the market through "street smart" in the final hour of trading new york. now to some of our other top stories -- the euro fell below $1.19 this morning. there is concern that secession could result in greek abandoning the euro. morgan stanley is charging an

employee who stole data including account numbers, from clients. the bank found no evidence the client lost any money. morgan stanley did not name be fired employee. they are notifying all potentially affected clients, which represents about 10% of its wealth management customers. bloomberg news has learned that joseph stiglitz has been blocked from a panel on issues affecting equity markets. he is the nobel laureate who called for a tax on high frequency trading. the sec chair sought to complete the panel with less participants. iran devastated by sanctions, a week in currency, and inflation. now the rainy and president says his economy cannot grow if it remains -- now the rainy and --

the iranian president says his economy cannot grow with it remains isolated. he spoke in tehran. >> the time when we used to say that foreign investors in danger our independence have become ir an's past. it is the opposite today. >> potential jurors stared intently at dhzokhar tsarnaev as jury selection began. over the next three days about 1200 people will be called to federal court in boston to be considered as potential jurors. the courthouse is undertake security -- under tight security with dozens of police officers inside and outside the building. that is a look at our top stories on this monday.

sales rose almost across the board in december. buyers were undeterred by record recalls. they were lowered by cheap gas and record deals. expectations are already through the roof for this yours auto sales. matt miller joins us for more on this story. why is the industry on a roll? >> for one thing we have loose credit. it is easier to get a loan to buy a car. gas prices are down. unemployment is down as well. housing is up. you talk about the perfect storm as far as what is going on in europe and the market laughs at everything. this is a perfect storm for selling cars. this will be the continuation of the success we had this year. december was a pretty strong month. keep in mind, december is always a fairly strong month because everybody wants a car for christmas, wrapped up with a pro, sitting in your driveway.

more realistic, dealers are giving more incentives. no change this december. pretty strong year. 15.5 million units up. the record was 17.4 million back in 2000 and analysts are expecting we will match that at least next year -- this year. >> you mentioned the credit the inglis. why is credit so loose? >> the federal reserve has done it last to make credit cheap. for a long time, it was cheap but still tight. now unemployment has fallen and housing has recovered. banks are loosening up credit a little bit. they have been loosening it up in autos a lot more than in other -- it is tougher to get a mortgage then a car loan, but then it is easier to sell a car than a house. it is an asset you can take away

from someone without going through a months and months court battle. it is a different story for a different day, but subprime auto lending has been -- >> on the rise. >> yes, historically. >> matt miller covers autos for us. thanks so much. >> thank you. go, but guys -- go, buckeyes. did you see that game? it was amazing. >> still to come -- stay with us. bottom on bloomberg television continues. ♪

>> welcome back. the new republican-controlled u.s. congress does not officially open until tomorrow but already john boehner faces a rebellion. a small group of conservative say they will not support in her as speaker -- support john

boehner as speaker. peter cook has more. is john boehner in any trouble? >> the short answer is no, but this is not what speaker boehner and the republican leadership want to happen as the kickoff this new era for republicans, this joint control of congress, both senate and house. he faces a challenge from two conservatives who say they want to run for speaker. they are a long shot. you would need 29 republicans to either say they want to vote for somebody else and simply vote present to trigger a second ballot, and that is likely to be a distraction, and embarrassment from john boehner, but he is going to prevail in the end. the question is, does this have a lasting impact beyond this first day? >> is this a challenge of things to come? >> this is a sign of things to come, if you will.

the numbers are big. they posted that 29 number and all of a sudden john boehner is reminded early on he has to watch his right flank. that is not the sort of message that republicans hoped to convey as things kickoff. they really want to seem united in front, john boehner with mitch mcconnell with the united republican congress on the house and senate sides. ready for action, ready to get back to work. instead we're talking that john boehner still have problems within his own conference among conservatives and those problems may not go away. >> i'm just noticing the bloomberg terminal, and the white house press secretary josh earnest speaking to reporters saying that he sees areas for cooperation with republicans. what might those be? >> market, there is a long list of areas that republicans and democrats say they may get progress.

trade agreements, tax reform. these are serious lists. i think there is a lot of early bipartisan talk, happy talk about the operation. when push comes to shove mark it is hard to believe that this president and the is republican leaders will get that much done. the mood on capitol hill is more talk than action at this point. >> our senior washington correspondent peter cook. thanks so much. we are following a continuing story on wall street right now. as you can see at the bottom of your screen -- excuse me -- the markets continuing to fall on this first monday of january 2015. the s&p 500 dropping, what was it? 237 points. the dow jones industrials down 320 points. we will follow this story, as well is what we can expect from the new republican-controlled congress, as peter just told us.

they will be open for business tomorrow. i am joined from washington by the head of u.s. policy and research from cornerstone macro in washington. thanks for your time today. >> thank you. >> as peter was telling us speaker boehner could face a rebellion, although it may not be likely. can the speakers survive a challenge to his leadership? >> i think there is not much doubt whether he will survive the challenge. the question is whether there will be more than one ballot. i doubt there will be more than one ballot. people will start bowing away. if 30 republicans voted against him on the first ballot, they would probably go back to the republican conference where 200 republicans would be pretty upset that they embarrassed the party that way. to get 20 votes against him is one thing. to get 30, i think is another. >> they said that now is the

time to step up improve the party can govern. that might require cooperation from democrats, who now find themselves in the minority after last fall's rejection from voters. is that cooperation going to be forthcoming? >> i think it will be tough to get bipartisan agreement on many things. the big things like tax reform, big-budget deals. even infrastructure where there is more common ground. i do not think they will take the lead on spending more and infrastructure. i would be looking for bite sized things. basically republican priorities where there is probably 60 votes in the senate. keystone probably ends up getting done. i think it is those bite sized things that get done, not the big things, the consequential kinds of reform like tax reform or big-budget deal or immigration, things along those lines. republicans will have to wait until the next presidential

election. >> the gop's commission since 2010 has been to repeal obama care. lamar alexander will take over the chair of the health committee and he has made no secret he wants the health care law upon president obama will certainly veto any attempt to repeal the law. >> certainly it is not going to get repealed. republicans will want to have that vote and keep their commitments. they did promise they would try to repeal it. then they will go after, like i said, bite sized. they will probably change the definition of the work week from 40 hours to 30 hours. they will try to go after the individual mandate. that is worth watching. the employer mandate. the medical device tax is likely to get signed by the president. >> andy orrin hatch is said to

become the chair of the finance committee. can he put together enough support for an overall of the nation's tax code? we know that senator hatch has been willing to reach across, as he did with the late massachusetts senator ted kennedy, to get things done. >> right, and the ranking democrat on that committee has a history of bipartisan deals as well. i think there is a difference -- republicans and republicans -- democrats do not agree on the purpose. also there are questions such as how do we treat those overseas question mark i do not think there is enough common ground. i do not think it is a priority for the president, which is a factor. if the president is not aggressively pushing and putting

a lot of resources into tax reform, which he has not so far and i do not think he is going to do, i do not think it will get done. >> andy, the next two years seems to be a prelude to the 2016 election. is the democratic field hillary clinton's if she wants it? >> hillary clinton is the odds on favorite. the only person you would have a chance of defeating her in the primary is elizabeth warren, and it does not look like she is running. although she might. on the republican side, jeb bush, it looks like he is in. i would be watching john kasich, mike pence, scott walker. >> all right, andy, thank you so much. stay with us. another check of the markets on the other side of the break.

>> it is 26 minutes past the hour. that means bloomberg television is on the markets. i'm matt miller. let's look at the big drops some wall street. the dow down more than 200 points. at one point it was down 326. this is a bit of a recovery. we are down at a level on the s&p that we have not seen since december 17, which was not too long ago, but still. it has dropped almost three quarters of a percent. the nasdaq down almost one and a half percent. the reasons why our wide and varied, but europe the euro at a seven-year low. oil falling below $50 a barrel

at one point. caterpillar is the biggest loser today. the worst performer in the dow. that stock is at its lows level in nearly a year after j.p. morgan downgraded those shares. ♪

>> welcome back to the second half hour of "bottom line" on bloomberg television. equity markets continue to fall on this monday. let's go to the breaking news desk. olivia sterns has the highlights. >> oil having its fourth biggest drop, making for the biggest slump, still down by more than 3%. off 330, pretty close to the lows of the session your. the s&p 500 is off right 39.38

points. the nasdaq is off by about 80 points right now. we have really seen that so-called santa claus rally disappear. remember december 3, the break through for the tao of 18,000. oil continues to slide. oil fell below $50 a barrel for the first time in five and a half years. we also saw the local benchmarks fall below $55 a barrel, so that has led to a lot of selling in energy stocks. chevron, exxon, all down. that is an intraday move on oil, mark. diamond offshore, down by 8.5 points. the other big concern here is

europe and what is happening to the eurozone. eggs selloff in europe today. it traded as low as -- a big selloff in europe today. it traded as low as $1.20. a lot of big moves. the concern about the euro comes from the prospect of greece leaving the european union. over the weekend there was a report in der spielgel, that they had a source inside the finance ministry, that chancellor angela merkel would be ok with greece leaving the european union if they vote for the opposition party that is leaving in the polls and is very much against the terms of the bailout. that opens the door for a political exit for greece. all of that raising concerns in

the european zone. european stocks down 3.7% today. the dax even in frankfurt down 3%. the biggest selling in athens. ridiculous really a big selloff in those greek banks. -- particularly a big selloff in those greek banks. the greece crisis appearing to renew. back to you, mark. >> olivia sterns, from the breaking news desk. now let's give some context. su keenan joins me with the commodity markets. >> oil plunging and we see the trades settle out and we see oil at its lowest level -- frank crude at its lowest level in eight years. we saw a bit of a rebound earlier in the session, but now it is at its lows of the

session, or close to it. it has fallen as low as 49.82. very close to that. any technical analyst will tell you closing on or near the low of the day is a very, very error signal. -- very very bear signal. russian production is at a post-soviet high. and you have the iraqis even adding more supply to the market, all of that adding to the bearer scenario -- bear scenario. there is a strong color -- correlation between the dollar and oil prices. the dollar very strong. >> this will continue to be a big break for the consumer? >> in 40 states, drivers can find place is selling gas for under two dollars a gallon.

gas futures retail gas both falling to the lowest level since 2009. energy companies all down in today's trade. >> the fact is that these lower oil prices are going to cause the oil industry to adjust and the knighted states. we could probably do oil at a lower cost than most other countries. but compared to venezuela and other places extracting oil at a higher price, we are much more competitive. in the end, our economy will likely be the winner in this. >> oil continues to move lower. one of the richest families betting on a rebound. a final note, we are seeing cold and silver balance up as we see these selloff intensify. >> all right, su keenan thanks. we continue to follow the drop

in the markets. the dow jones industrial average now off 320 points. keep it here on bloomberg. we will continue to follow what is going on in the markets throughout the trading day on this first monday of january 2015. falling oil and gasoline prices may be putting more money into the hands of consumers, but oil-producing states are bracing for a hit to revenues. i am joined by tatum breaks of bloomberg news. thanks for your time. >> it really depends on different states -- what they forecast in their budget for the price per barrel to be and then what percent of the general fund is oil related taxes. we're looking at alaska, north detective -- alaska, north dakota. alaska is among the hardest hit. along with louisiana. texas seems safe. >> how are they compensating for

the loss in oil revenue? >> either by dipping into reserve funds are cutting back on the spending side. so, you have a $180 million shortfall. what are they doing? they cut back on spending. they eliminated 160 vacant positions and are cutting back on agencies. in terms of dipping into reserve funds, you have a state like alaska. they are going into their reserve fund right now. they have lost $2 billion in revenue from the drop in oil. they now face a revenue shortfall. >> ok, so how long before they feel the pain and how long can they survive financially with prices the flow? >> they are feeling the pain right now from the revenue loss. hopefully oil will not stay at $50 a barrel forever. if they can get through the next budget cycle, make tough

decisions, get through it, if oil prices decline at the end of 2015 or early 2016, states will have more breathing room. we are in the mid year cycle. they need to get through the next budget cycle. >> so this 11 impact on the broader economy. what is it going to be and what are the first negative signs folk should be looking for? >> negative gdp. north dakota's unemployment rate 6.4%, texas, under 5%. does that trend reversed? also gdp -- alaska pro economy contracted 2.5%. does that get worse or better? those are some of the signs that we are going to be looking at. >> ok it seems there has to be a silver lining. is any good going to come from this? >> the good news is states have a fairmount of flexibility and what they can do or how they can

balance their budget. they can cut back on's bending -- on spending, state aid to local governments. states get a lot of money from sales tax revenue, so if you look at the sales tax collection, and see if any of the drop in revenue is offset by the increase in tax collection. >> all right, taylor riggs of bloomberg news, looking at the states. up next, bloomberg markets looks at its ranking of the top performing hedge funds of 2014. we have the highlights when "bottom line" on bloomberg television continues in just a moment. ♪

>> welcome back. it is time for today's latin america report.

mexico for president will announce new measures for a housing, to speed projects. that announcement is expected later this month. there will be a summit when president obama meets with the mexican president at the white house. brazil's real has dropped to a two-week low. the brazilian currency joined is emerging-market counterparts after an announcement that german chancellor angela merkel is willing to accept a great exit from the euro. the 14 was a horrendous year for hedge funds, but there were number of managers who beat the odds and outperformed their peers. today, bloomberg businessweek magazine releases its top ranking to performing hedge funds and shall be holiday joins

me with the highlights. who is topping the list? >> there were a few managers who shined, and no one shines brighter than bill ackman. pershing square tops the list with 33% return. obviously the allergen deal did not quite go his way, but he still not about $2 billion of profits from that. he had the canadian railway, the herbalife short, which turned out for him. not a bad year for black men. he was an outlier. not that many -- this was -- not a bad year for bill ackman. he was an outlier. and sts partners -- they returned 24%. i thought it was interesting.

they had double-digit returns last year as well. and topping -- hahl diversified. then you have said it out. it was a year of highs and lows for the seville founder. he had that messy divorce. but actually, it was the fastest-growing hedge fund in history. >> what was it about the climate that made it so good for them? >> ackman in particular did well because he takes a few positions, and those positions did well. the funds that did not do do very well, in energy, they got crushed. they got crushed by emerging deals that fell apart. it was a really interesting year. a lot of guys were right. a lot of guys were really wrong. >> shall be holiday --shelby

holliday. right now the dow jones is down 339 points. "bottom line" continues in just a moment. ♪

>> welcome back to "bottom line ." i'm olivia sterns at the breaking news desk. with some context for the drop in equities. the dow jones is down by 1.9%. that is the biggest drop in several months. nasdaq trading at 46 brief. essentially we are seeing a big pick up in volume today. this is the first real day of action in the new year.

and traders do not like what they are walking back into. we saw oil drop below $50 a barrel for the first time in five and a half years. that is a lot of people concerned. there is no fundamental reason for oil to turn around. it looks potentially like a runaway train, so you do not see a lot of buyers. and on the other hand you seem renewed concern that greece could leave the euro. we have that article in a german magazine. the foreign finance minister angela merkel, saying that she would be ok if recently as the euro after the elections later this month. and we are seeing drops in energy stocks on the back of oil. names like chevron exxon down. in fact, you see all the 30 stocks in the dow, -- all but 30

stocks in the dow lower. big names, denbury resources normal energy, down 9% or more right now. look at caterpillar. at its lowest level since january 2014. back to you. >> of course we will continue to follow what is going on on wall street this monday. it has been a whole market for tech stocks the past six years. the index has been up nearly to 70% since 2009. for those who remember the 2000 crash, they may be tempted to draw parallels to the.com bubble. "street smart" anchored trish regan joins me. you have a column in "usa today" on this very subject. >> yes, i do. it is hard to say how this will play out, but some may will see this -- but some may see this as

an opportunity. remember back in 2000. i can remember. no matter where you wanted someone wanted to know what was the next big thing? and one of those was something called cmgi. it was the stock to have. i do not think anybody knew what the heck it actually did. all they knew was it had something to do with the internet. people fundamentally want to understand how a business is going to change. how is it better at a locating --better allocating resources. that is the big difference. >> ok, and we should mention you were talking to lincoln from capitals from venture -- >> coming up, yes. and this is a way to start the new year right? down about 2%. what do you do in this kind of market? we. >> got it all covered. i will see you then.

>> trish regan, top of the hour "street smart." thanks. we will talk about the biggest stocks in tech this year, coming up. ♪

>> get the latest headlines at the top of the hour on bloomberg.com and streaming on your tablet. that does it for "bottom line." i'm mark crumpton. on the markets with matt miller is up next. >> it is 56 of the hour, which means bloomberg television is on the markets. i'm matt miller. i want to get you caught up with where stocks are trading with this four-day slump. we are pretty much of the session lows. approaching to present losses.

the biggest drop we've seen since early october. maybe even further now. the nasdaq off 1.6 7%. energy companies of his league-leading the drop with crude oil at a low at below $50 a barrel. looking at treasuries -- you see the two-year note yield come down, 10 year note yield coming down, as well as the 30 year. investors running for the safety. the perceived safe haven of u.s. debt. for more on what is going on in the u.s. and global bond market, we are joined by lisa abramowicz. are you as excited about the moves in the bond markets? >> i am always excited about the moves in the bond markets. you have the 10 year yield at the levels we've not seen since train 12. >> this is unbelievable if this continues, right?

everybody was betting on rates rising. >> in the u.s. we have not give the low yet, but one analyst came out and said if oil prices fall below $40 a barrel, prepare for some new lows in bond yields as well. and you are seeing record lows in germany france, spain. basically, where is the incentive for higher yield? where are you going to hide if all of the austerity and stimulus measures do not work? >> i thought the idea was all the growth was coming from here? we do not need anybody else, right? >> that is the question. can the u.s. really diverge from the rest of the world? look at the dollar. potential orders from the u.s.. how can the u.s. get around to the fact that these oil prices are a big reason that there has

been so much growth in the u.s., coming from the energy sector? >> even with oil prices plunging, always leave there is the shargh gige and shale drilling. car sales for u.s. manufacturers are going to be a lot harder to deal with when they are competing with japanese and german carmakers who have different currencies and different pathways to incentives, right? >> exactly, and we are seeing more risk reveals going lower stocks going lower credit risk for companies selling off -- usually a leading indicator for stocks. >> one of the interesting things i heard on bloomberg radio driving in this morning, debt issuance in the u.s. and europe is going to decline this year, whereas in emerging markets it is going to start expanding. >> and this is fascinating right? you see the emerging markets debt load increase dramatically including the car currency debt load.

and this actually creates a potential risk because it is difficult for these companies -- these countries to repay their debt if their currency is depreciating. >> against the dollar. >> another risk factor. >> another silver lining for us. lisa abramowicz, thanks for joining us. storm venture" -- "street smart" is up next. >> hello, everyone. welcome to the most important hour of the session. i am trish regan. we have a big selloff underway. we are holding off. the market is off triple digits and then some. 320 eight points right now on the doubt smp headed to a four-day drop. well prices are continuing their major fall, dragging the energy sector stocks with it. u.s. create sinking