>> live from bloomberg headquarters in new york this is market makers with erik schatzker and stephanie ruhle. >> a massacre in paris. gun man storm a newspaper office and opened fire. the city has been put on the highest terrorism alert. >> the pressure is on the ecb. consumer prices in the euro area fall for the first time in more than five years. that may push the central bank into taking unprecedented steps -- unprecedented steps toward inflation. >> u.s. stockpiles probably rose again last week and we will find out --

you are watching market makers on bloomberg television. >> i am matt miller in for stephanie ruhle. >> it is a day of terror, shock and morning in paris. security has been tightened to its lot -- to his ties level. masked gunmen killed 12 people and wounded eight others in the shootings of the offices of a french satirical newspaper. the associated press says the chief editor of the newspaper and two police officers are among the dead. the attackers remain at large. francois hollande says the country is in a state of shock and escalated the terrorism alert. along this schedule to speak at 2 p.m. eastern time. earlier he was on the scene and this is what he had to say to reporters. >> an act of exceptional barbarity was committed here in

paris, which is to say the expression of freedom against journalists who always wanted to show rants they could act to defend their ideas and to have this freedom, which is protected by the republic. >> here is a statement by president obama. france has stood shoulder to shoulder in the state to fight terrorists. generations of our people have defended. just minutes ago there was reportedly a car explosion by a synagogue. this synagogue has been targeted before so we cannot say there's any connection between this attack and the slaughter earlier today. we have reporters and bureaus all over europe. caroline connan is on the scene. francine lacqua is with us from

london. caroline, what is the sense in the city, especially after the second bombing? has this had the effect of stopping people in their tracks? >> i just arrived at the scene half an hour ago. you have maybe 200 around the scene at the moment. the prime minister is expected to speak anytime. the metro station has been closed. there is a high security alert in france. all these places such as churches or religious monuments and transports. near the scene here, the family

members of the victim are being taken care of. you have the family members and the employees over there. obviously trying to help them deal with this dramatic turn of events this morning. as you were mentioning, people were concerned there, including the editor of the newspaper. and for the very famous cartoonists at the use paper -- at the newspaper -- people are still around the scene here. the prime minister is expected to speak and said on his way in that france was touched and its heart. the french were very horrified at the situation. maybe one hour ago here you had

another reaction from the far left leader who said -- these hatred behaviors. there is going to be a silence march organized for one hour from now at the republic square near the newspaper headquarters. >> francis no stranger to terrorism, certainly attract -- certainly attacks perpetrated by muslims. france has not say -- has not seen any think quite like this. -- seen anything quite like this. >> france has become one of the countries most exposed to the threat of terrorism in recent years.

authorities in paris are trying to find out who those terrorists were. the implications are huge. there will be many questions. first of all the nature of the attack has sparked three questions. first of all, how much planning went into this? why was this plots not found out? and do the terrorists have further targets? it poses further problems and questions with upcoming question -- with cup -- with upcoming elections. the german chancellor is here speaking with david cameron. they are due to give a press -- give a joint press conference. they will address these attacks as well. >> you bring up the extreme parties and it makes me think

about this book, which was the cover of this satirical magazine, which was a little bit like the onion but a lot more serious. here is the cover to picketing the french author michelle well back. the new book he wrote is about the national front, the conservative party almost winning and then getting behind at a desk getting behind a fictitious islamic party. -- getting behind a fictitious islamic party. have there been real problems as of late? how do they peacefully coexist? obviously the muslim population is massive and france. >> 5 million living in france.

many of them second or third generation. the message the government wants to pass today, we shouldn't mix the general population in france. you have already had some reaction from the arab league condemning the attack. and the former french president also said about an hour ago that we really need to be careful not to mix -- the response will be antidemocratic. that is going to be the challenge for the government's going forward. >> i heard they have tried to stop charlie from publishing controversial issues in the past.

does the french government tried to stop these publications regularly? doesn't have problems with people like michelle? >> they are making these cartoons not only at against the prophet mohammed or extremists from islam but against the pope against former presidents. in 2012 there was a controversy a couple of years ago when one of the magazines published some comment drawings and there was an anti-muslim film. at the time the french government defended free speech even though they obviously warned charlie hebdo that they shouldn't increase tension against muslims in france. of course the government will

have to be careful on this. >> how is this likely to play out politically in france? is this a moment of solidarity with the city of parents in the country will rally together like they did in boston? or is this a moment for political opportunism for the national front party? to hold this out as a reason for political change? >> that is a great question. it is very clear what we have seen in the last couple of quarters of the fear for islamization -- for at least the last year and a half opinion polls are showing that the anti-immigration lead the polls for the first round of the 2017 presidential election. this is the crooks of the problem.

sure we will have a unified france in the next couple of days but the implications are serious. they are real, especially when we see angela merkel dealing with a similar situation in germany. we had a huge march against islamization interest in. they are a country for freedom. if we see every year -- if we see europe being more radicalized to the right anti-and new creation -- anti-immigration, then we are in trouble. >> that is the beginning of the book. and then the left gets left behind. the muslim party takeover. michelle well back may be clairvoyant.

>> deflation is growing larger in europe creative consumer prices fell for the first time in five years. >> oil prices actually up today. that may change soon. we will get the latest inventory figures less than 20 minutes from now. stay with us here on bloomberg television. ♪

>> i'm erik schatzker with matt miller today. europe is getting dangerously close to deflation. consumer prices fell last month. the first drop in five years. that puts even more pressure on ecb president mario draghi to do something take. andrew balls is pimco's chief global investment officer with us this morning from europe. given this latest read on consumer prices, is there any way druggie will not announce quantitative easing at the

policy meeting, or perhaps even before if that is a little unlikely? >> it seems very likely that they will announce sovereign qe in the upcoming meeting. never say never with europeans. these are difficult things with all the countries try to coordinate. it looks very likely already. the inflation data today. -- the inflation data today underscores the significant risk of the trench inflation in europe. i think it is very likely they announce sovereign qe at their meeting. they will announce the intention without all the detail. >> with signs of deflation,'s prices dropping, is that enough to get germany on board? i think the battle is being one internally.

it is important the german data has been week on the growth side, on the inflation side. this is an issue of german strength doing portly. i think it has largely been agreed already. it's not just they have a negative inflation prints today, -.02%, but the prospect we are going to be very close to zero the rest of this year. core inflation, .8%, .7%. further downward moves in oil prices reinforces the downside risk. mario draghi has to manage a committee it has taken in off a long time getting it. they should have done this to years ago, three years ago. it looks like they were going to announce this at this meeting. >> does mario draghi have a lot

of support there, especially from the bundesbank? and howdy you think he reacted to angela merkel's acceptance of greece leading the euro? >> in terms of the ecb, i think we have seen a pragmatic approach from the bundesbank. it is not clear if the bundesbank will vote again to abstain or vote again in favor. i thought mario draghi was good last time around when he said we know you make difficult decisions not always by 100% majority. it is not just the european case where there can be disagreements on difficult questions. i think the board us with mario draghi. the overwhelming majority of the eurozone central bank, as anyone

who looks at the window and quite honestly the data -- >> the shrinking heroes him. -- shrinking euro zone. >> exactly. separately we have more of the greek tragedy. i don't think that should have a big impact on the ecb. it should not have a big impact on european markets. if you just look at the behavior of spreads, it hasn't had a big impact. if the ecb comes out and has a credible qe program i think the markets will focus a lot less on greece. if the ecb proves again to be hamstrung and unable to function properly with more of a risk around greece -- i think one of the things from the last press conference trotsky said we are

going to be a central bank we're going to focus on monetary policy. it was powerful. the other risk is going to be giving a preliminary judgment on earlier ecb bond buying. i don't think that is going to be a big issue either. another thing to watch, that druggie said very clearly last time, we can operate like a normal central bank. there is no german veto. we are not going to be politicians, we are going to be monetary policy makers. >> so much is already priced in the market. italian 10 year bonds are trading at a yield of 1.29%. spanish bonds are trading at 1.79%. german bonds are less than half a percentage point of yield. how much is the ecb going to have to commit in quantitative easing to prevent bonds from selling off? >> that is the right question.

i think the clarity around what they do -- the more straightforward they do the better. clarity defines what they are going to do. the targets that druggie has talked about implies a minimum of half a trillion euros in terms of size. in terms of effectiveness, i think a lot is certainly priced into the risk-free curve. the more credible the announcement is, the more straightforward. >> give us a number. >> i think 500 billion plus. i hope they do something very straightforward. qe come as much as the u.s. or u.k. did -- the more they have complication, the worse the

approach. i don't think it is going to do a lot to lower the deal. i do think with some of the sovereign spreads with some of the broader credit spreads there is potential to squeeze down the risk of a medium. that is my expectation for what happens. >> eric touches upon something -- i just had a few are writing in about. he says products are attracting capital, and asks how is qe going to solve that problem? >> there is the element of stability in terms of european markets. deflation risks would be very significant. they have to be serious about the inflation target. funnily enough, one of the big mechanisms that will be -- the way qe works is by exchange

rate. and from capital flowing out of the euro zone a weakened exchange rate would be helpful in terms of the european growth dynamics. that being said, normalizing financial markets, we still have these wide sovereign spreads that can be helpful. the medium-term question -- >> i'm sorry, but we have to run. normalization is a long ways away. andrew balls from pimco. you'll be right back on "market makers pimco -- we will be right back on "market makers." ♪

>> a quick breaking news update on the shooting in paris. a car explosion at a synagogue outside of paris is apparently unrelated to what happened at the satirical magazine.

>> a lot of people are quick to jump to conclusions in situations like this. the mayor was quoted. a quick break and we are right back.

>> this is market makers with erik schatzker and stephanie ruhle. >> you are watching market makers. i am erik schatzker. >> i am matt miller in for stephanie ruhle. some breaking news could move the energy market. julie hyman is in the newsroom with the headlines. >> the headlines at the moment our stockpiles has reported by the end minute -- by the energy administration crude oil falling by 3.0 6 million barrels. they were asked me to to have grown by 700,000.

this is a big disconnect. gasoline showing less than expected. the estimate had been for an increase of 700,000 barrels. he had a rebound in oil today. it looks like that is continuing as you may expect. >> thank you very much. >> crude is now dropping. >> it is still up with a gain of a dollar per barrel. it has come down from where it was trading a few minutes ago. you expected to jump on that kind of news. >> let's turn our attention back to the sever -- back to the story we have been covering all morning. the city is on high alert after 12 people -- let's take you to

olivia sterns in our breaking news desk. >> here is what we knows -- here is what we know so far. the mast and men stormed the offices of a satirical magazine in paris. they were carrying coalition a cause and what looked to be a rocket launcher. the ministry says the people are dead, eight others have been injured in a there is amateur video of the siege, in which you can see these masked gunmen carrying these guns. authorities have stepped up securities at the airport. one of the schools has actually been evacuated. separately this morning, the headquarters was evacuated.

it was supposed to be on the cover this week. essentially this is a book that is anti-islam. of course it has been at the center of anti-islamic -- of this whole issue. note both confirmed dead, eight more injured. a very extensive manhunt for >> let's bring in the former ambassador to the negotiation on conventional armed forces in europe. he is currently chairman of the foundation for the defense democracies. a mr. ambassador, lots of

questions are being asked to this morning. is it possible to call this a failure in french a tell -- french intelligence? , it is extremely difficult to pick up individual plots like this. one wants to work really hard at doing this. if you don't succeed at penetrating some of these groups, frankly you undertake some of the steps such as getting rid of stop and frisk in new york that are designed in part to five people carrying weapons and so forth. the other thing that is important to focus on is -- remember a couple of weeks ago when the sony corporation came out with a movie that was supposed to come out him -- come out christmas day? tim johnson own decided he

didn't like it. -- kim jong-il and -- kim jong-ilun decided he didn't like it. totalitarians don't like to be mocked. the devil cannot there to be mocked. you are seeing a movement to now among more than one power. group in more than one western state trying to kill people brutally in order to keep from being made fun of. >> you bring up the interview an excellent and hilarious movie.

in favor of liberty rather than security, a stop in risk policy, wouldn't that be difficult in paris? you have 5 million muslims living among 65 million people. >> i don't think stop and fritz -- stop and risk is on -- it infringes on people's liberty. it's going to have to make various compromises between liberty and security as the situation develops. the question is where do you draw the line? i tried thinking steps like stop and frisk are reasonable. i think one has to pay attention to the fact that satire and humor are so feared and so opposed by the tell terry and. they are willing to get out and

use that as an excuse to murder dozens of people. >> how do the states we are referring to how do they respond to? what can they do beyond what has been done already? >> we cannot acquiesce to their telling us we cannot make fun of them. >> pardon me for interrupting you but if that is the case then we as a society -- is that to say we have to accept incidents like what took place at the offices today? >> we fight very hard against those incidents by making sure people are not carding weapons around the streets. there are all sorts of things we

can do. we have to keep and protect our liberties. there are various compromises one has to look at. i would imagine after this the french will be more pointed in their attention to anyone having a gun in paris. >> it's not as if guns are legal certainly not assault rifles like the ones that were allegedly use in this attack. what kinds of compromises to the french people need to be prepared to make? like racial profiling? >> i don't know. i'm not an expert on france. i think each country has to work in the context of its own culture, its own history, and its own commitment.

what we can't do is assume this is going to happen. so we have to be willing to have it happen. we have to be tough on terrorist organizations. that is going to be done differently in the united states. what we can't do is sit back and say, what a shame these people got murdered. >> we thank you for making time for us in your busy schedule. former director of the cia. republicans take control of the senate. we will talk with one of the gop newcomers.

>> david perdue was asked to turn around major companies like

reebok and dollar general. now the former ceo faces a new turnaround challenge. congress. he is standing by on capitol hill with chief washington correspondent peter cook. >> welcome to washington, welcome to bloomberg. before i get into your transition from business to government i want to get your take on what we see playing out in our air today. your take on what we are seeing in paris? >> it is a tragic event but a reminder of how serious the threat to our own national security is. the government has already said we are going to partner with the government or -- the governor of france. we need to pay attention to our own problems with regard to our own national security. >> a reality check for lawmakers who are involved in this for the first time. >> and raises the reminder we

need to have a renewed sense of urgency. our border security is tied up in immigration debate did we have been saying that for it while and we need to view it as a national security issue. >> you have come from the business community. why would someone from the business community choose to come here? >> the answer is multifaceted. we have so many areas of dysfunction in the federal government right now. what threw me into this race was the financial crisis. the fact that fewer people were working in america in any time since 1978. the primary reason is government intervention. the overreaching arm of government regulation and our tax structure and so forth i felt like i could make a difference with my business

background. that is why i came to washington, help people get back to work and move the economy forward and push back on some of the things our government has done to hold it back. >> we are seeing some improvement, certainly 5% growth. is there something you can build on either working with this president you disagree with on so many policy issues? >> growth this one thing but it is artificial in many respects. we have a huge debt situation at the personal level. it will be difficult to see how the consumer drives this economy forward in we have an opportunity to export that we do not take seriously. wheelman export about 5% of what we produced. we have opportunities to get this company going. >> you have never held elective office before.

tell me how that business experience is going to serve you well. maybe that's a good thing. >> i have never done this before, never dreamed of it. i believe we can wring a sense of urgency and they were to the debate and senate floor. people in georgia put an outsider here because they wanted a new fresh perspective to the problems and to break through this gridlock. a if i heard anything, it was get to washington, move forward but find a way to get people working again. >> you were a dealmaker in the business world. are you going to be one of the people the president can turn to an sake maybe we can meet halfway? >> i want to work with anybody that will help us get people working again. and really become the bastion for freedom around the world that we have historically always been. all of this is in general -- in

jeopardy because we have taken our standard of living for granted in >> your first big vote could be on the keystone xl pipeline. is that sending a bat signal about how things can play out? >> i understand what the president said. we are going to have an active and vocal debate on the keystone pipeline. i think under the leadership we have now, we are going to push some issues to the white house and see how the president really will be -- really will react. we are going to fight in a bipartisan way to get this economy moving again. we need some simple tax reform. then i think the overregulation we have been experiencing in the last five or six years need to be addressed. and third this energy boom could

be hours if we just unlocked it. >> you said you couldn't commit to the support center. mitch mcconnell is the leader of the republicans. any fallout from that? how is your relationship. >> the context was i hadn't had a conversation with the senator. i like getting back to work and making the senate functional again. let's find some bipartisan ways to move this country forward. >> one of the strange things is when you got sworn in yesterday you have a ceremonies -- a ceremonial swearing in. your mother headed off with the vice president. is there a democrat in the family? >> my mother is active politically. my responses i am very tempered somehow. i came here to get something

done. i have a huge sense of responsibility and i am anxious to get to work. >> date two for center purdue -- for senator david perdue. >> he took mercedes-benz from new jersey. there are a couple of more carmakers from there. >> are they moving to georgia? we will find out. we will go back to paris for more on that tragic attack. at least 12 people are dead at the shooting of the offices of a satirical french magazine.

>> for more what is happening in paris let's bring in the chairman of international politics at the american university of paris. he is with us via skype. share with us your perspective

on what is going on, the information you have been gathering, and how you view this in the context of the frauds tensions between the french people the growing muslim community. >> lamy say that the magazine that has been attacked is very critical of french society in general. it has attacked all sorts of subjects, not just muslim religion but it even attacked charles de gaulle when he came to power. we have the head of the national front party here in france who tried to sue the newspaper. there had been a series of editorial cartoons that have depicted the prophet mohammed in various satirical ways. this has brought on the ire of the muslim community.

this is a very popular paper because it appeals to french youth. my wife grew up when she was a teenager reading charlie. they have killed for the major french journalists and cartoonists in this attack plus eight other people at least. >> what is the sense in paris? is it a sense of fear? are people afraid to walk around? a few hours ago we had report of a car exploding near a synagogue and everyone jumped to conclusions, immediately thinking this was the spread of terrorist attacks. last time there was a serious act of terrorism in 1995, there were multiple explosions over time. people may think this is an the

only thing that could happen today. >> it was frightening. we luckily got on the wrong metro. if he had gotten on the right one, he would have been dead. but question is is this an isolated incident or part of a series of potential attacks? there have been numerous reports that there have been major terrorist attacks. >> we are just getting a live feed of john kerry with the polish prime minister. we want to hear what he has to say on a day like this. >> each and every american stands with you today, not just in horror or anger or outrage

for this vicious act of violence. we stand in solidarity and commitment both in the cause of combating extremism and the cause at which extremists fear so much, and which has always united our two countries, freedom. no country knows better than france that freedom has a price. france gave birth to democracy itself. france sparked so many revelations of the human spirit born of freedom and free expression. that is what the extremists fear the most. they may wield weapons but we in france and the united states share a commitment to those who wield something that is far more powerful. not just the end -- not just a pen, but a pen that represents an instrument of freedom, not fear in of free expression and

free press are core and universal values. principles that can be attacked but never eradicated dinner brave and decent people around the world is will never give them -- around the world will never give in to the intimidation and terror to those seeking to destroy those values we employed the french imam called the slain journalists martyrs for liberty. today's martyrs are part of a larger confrontation. not between civilizations but between civilization itself and those who are opposed to a civilized world. the murderers dare proclaim charlie abdo -- charlie hebdo is dead. make no mistake, they are wrong. today, tomorrow, across the world, the freedom of expression in this magazine -- the freedom

of expression it represented is not able to be killed by this act of terror. it will never be eradicated by any act of terror. what they don't understand is they will only strengthen the commitment to that freedom and our commitment to a civilized world. i like to say word to the people of france. [speaking french]

>> the secretary of state john kerry speaking in french. >> that is impressive french. >> i don't understand a word and neither do our viewers. >> we are hoping to take you back to call gardner at the american university in paris.

>> a very good speech >> what stuck out to you? >> the emphasis on liberty and the fact the french are not going to give in to these threats. hebdo the offices were bombed in 2012. they continued to publish. they were aware this was a possibility. they run a series of critical cartoons of mohammed. when the cartoonist was killed, they republished those cartoons in 2006. they had a whole series -- they expected this. french security, apparently, was cut off recently. they thought, maybe the threat was over. these guys knew exactly when to strike charlie hebdo.

this was fairly professional. >> clearly, freedom of speech and liberty is what we should be talking about. it was right for the secretary of state to raise that. you are in paris and observing america from afar. can you blame some people about being cynical listening to john kerry talk about the importance of -- the importance of defense while his administration punishes reporters for confidential sources? >> it is a different issue. these people are being killed for their beliefs. for the freedom of the press. it should be a universal right. the government not just the american government, is cracking down on that freedom all over the world. i would make a distinction between snuffling the rights, and killing and torturing those

who are responsible for bringing the freedom of the press. >> of course, that is an important distinction. i don't want to get into a philosophical discussion, that it is a matter of principle that can be expressed in different ways. we have to leave it there. thank you for spending time with us. paul gartner of the american university in france. 12 dead, eight injured in paris france. armed men stormed the offices of the french satirical publication charlie hebdo. that has occupied the majority of our attention today. much continues. you heard the secretary of state john kerry, speaking in english and french speaking of solidarity with the french and his president and has condemned the attack.

he is going to travel to detroit. that will remain on his agenda to talk about economic plans. phil is into joy. we have to expect the president will have his own words. he will also deliver his own remarks at some point during the day? >> no question erik. we don't have a timeline, but he speaks here at 4:00. if he doesn't speak before then, he will speak about it here. it is supposed to be an economic speech, and i think that this is taken over for the day. france is america's oldest ally. they did shoulder to shoulder with the united states against the war on terror time and time again. the french have stood up for

universal values. you heard the same thing from the secretary of state john kerry. there are the micro issues of american security, and the president is trying to figure out the bigger issues. france is playing a big role in counterterrorism. >> is there any sense out of rushing 10 -- any sense out of washington that the government will respond by raising this country security alert? phil is having trouble with his connection. let's talk about this for a moment. i was going to ask phil whether or not the united states may move did you what to the french president did to raise the security level in paris. i'm not sure how important that is.

do we have you back, phil? >> is there any chance of raising security levels? >> i was wondering if we have picked up intelligence to suggest there is a security threat to american targets? >> an extension of that, is does this appear to be an organized attack or is it the work of a few people who only had charlie hebdo as their target? >> a couple of things. right now u.s. officials are being very cautious and a very cognizant of any potential spillover effect. they have not been able to identify one, that i know of. before i came on i was talking to the department of homeland security who said they are evaluating the threat level. there talking to international,

state, and local partners to see if there's anything that may justify an increase in the level. so far they have not made the decision to raise the level. they are definitely looking at it. there are a lot of unanswered questions. the most notably, the shooters are at large which is stunning to intelligence community folks. that is the most concerning thing. they are aware of everything going on, but no move right now to raise the threat alert. >> that is phil mattingly white house correspondent, awaiting the president's arrival in detroit. in the early greenhouse has written extensively about charlie hebdo's controversial cartoons in the past. we have heard about charlie hebdo's history briefly. you know much more. it is not like they have not courted controversy in the past

they court it every week. >> the publication was founded in 1970, after another publication. they publish an article that was banned. >> its forbearers was banned? >> yes. it started mired in controversy. i wouldn't want to use the word extreme, but it is off-the-cuff, like the onion taking to the jugular. it is funny and savage. >> is it celebrated in france? >> by the left. there is another publication that may be a little like spy. it is not completely like

mainstream. in 2011 they were fire bombed after a controversy oh article that was guest edited by the prophet mohammed. after that the office was destroyed. the editor started to have security at all times. >> they followed with an issue, that trade on the cover, one of the editors making out with a fully bearded, apparently muslim man. >> after that the website was attacked and they were firebombed. that is how they have taken all of this right now. the website says that they would

rather do their cartooning standing than on their knees. >> will he get over the neck several days or weeks? the idea that freedom of speech and controversial positions are perhaps, not only risky, that there are people who undertake them and are conscious of the price they may ultimately pay? >> the french government leaned on charlie hebdo to not publish things in the past? >> absolutely. more pertinent, in 2012, not long after the benghazi attack which brings us closer to home charlie hebdo published a episode mocking the american

film --. charlie hebdo's tagline is irresponsible newspaper, and they published it. they were quite prepared. the french embassies were shuttered for that day. i think the fact that everyone is tweeting with charlie hebdo, but the french prime minister tried to warn the publication. >> i think that sensor is exactly what the french government wanted to do. the police also spoke out against the publication because they were worried about the violence that may ensue. now we have two french police officers killed in this violent attack. >> it is one thing to be satirical it is another two expels a point of view. is there one that you could attach to charlie hebdo relative

to islam or radical fundamentalism? >> it is not anti-extremism. the most recent issue, today was their press day, and we may or may not put what they were going to put out -- >> surely we well. >> the latest issue had a debate mocking whether or not jesus existed. everything is fair game. >> the way it should be in satire. >> emily greenhouse has covered charlie hebdo extensively and now is a reporter with bloomberg politics. >> the plunging oil prices. a number of american companies are finding out what that is. >> what happens to fee at chrysler when ferrari gets spun off. we will look at how the auto industry may consolidate. ♪

>> investors beware. u.s. equities may take another hit in this upcoming earnings season. the s&p 500 will break a streak of five straight losses. it remains down 2% and the first week of the year, even with the gains we are watching. for closer look is the portfolio manager. mark, welcome to the program and thank you for joining us. we will step away from the debate on security versus liberty, and talk about the debate on the impact of falling oil prices. on the wine hand everyone is excited this will put money back into the pockets of consumers who will spend it. then 70% of our economy will grow. on the other hand they are concerned about the effect on defaults.

a lot of high-yield debt held by oil companies. a lot of countries depend on oil money, and a lot of banks depend on those groups to fund their operations. are a -- is the drop in oil prices going to affect earnings? >> it depends on the group you are in. for you, it is great. the question is, when you make the turn? there will be opportunities. my problem with buying aggressively in the energy sector, is that stocks react poorly when there is poor news. when dividends get cut stocks go down. they're not act eating like a group of being put into the bottom. in the next weeks when you have earning reports you will see negative operating leverage in these names. there will be large negative surprises. >> isn't it dangerous to try to

time the market to find the bottom? if you have done research, and you believe it is creating below its intrinsic value, provided you are not too worried about looking poor relative to benchmarks, you should want to buy. >> we could be saying that for the last 10%. when do people say that when they are down 25 40 now they are down 50% and 60%. when he came to financial institutions we used book value on citigroup at 30%. then 20%. it didn't work. i don't know what the earnings are going to be next year. when i see a better bottom put in, that will be the green light. >> what if you take a broader look at equities, or at the

effect of falling oil prices on earnings. do you see a positive correlation over a longer term? if oil falls 5% in the day equities fall as well. in the long term if oil comes down from $80 to $40 per barrel does that mean that the stocks, s&p 500, and averages also come down? >> it is difficult to use the word stocks. it will benefit 15% of the economy, and 5% or 8% is not a benefit. next year we will continue to have the sale for lower gasoline prices. in new jersey they are paying $1.80. >> are you going to move to new jersey? >> not yet. in the next six months, it will continue to be healthy. but about the global economy, that is where the worry comes in is the second half of next year.

the global deflation has to hit our shores at some point. >> if oil is too hot to handle, and you have the concerned about performance of economies out the u.s., how do you make the money? >> you try to state u.s. centric in the first six months of the year. at alpine equity fund we have a position in the u.s. treasury. that is rare. it is money. >> you are an equity investor calling for a continuation -- >> we have been all year. >> you are making money today. >> when you have the tragic events and nonmarket factors that will impact next year, it is a good hedge. you have a 10 year boone put in at a 30 point basis. the u.s. treasury sorry

tenure, looks like a good value. it is a good hedge for the market fact. >> the 10 year with a yield of 197 looks like a good value? wow. >> when i look at everything else, on a relative value basis, there are supports for the yields. we have not had qe. economies are performing far less than ours and are considerably lower. >> will it be easier or harder to beat the benchmark this year? >> easier if you are in the right place. the alpha generation from stock pickers should be there. >> and much better market than a rising tide of lifting elbows. >> volatility offers opportunity to purchase. when it gets overbought, sell it.

that is the kind of stock market people like. >> mark spellman, new jersey, the portfolio manager at alpine funds. you talked earlier about whether the u.s. would raise its readiness level. now the new york police department is redeploying resources after the paris attack. there is no specific threat to the city that he sees, but interesting headlines from the new york police department. "market makers" will be back.

>> welcome back to market

makers, i am erik schatzker here with matt miller. if you're just coming to this at least 12 people are dead in paris and 8 are wounded after a terrorist attack on the offices of a french satirical newspaper charlie hebdo. it is leftly named, but popular in many quarters. this is amateur video taken from a video near the charlie hebdo offices. that shows -- [gunfire] >> what this shows is shots being fired on the streets of paris.

we understand that is a masked gunman storming into the building housing the offices of charlie hebdo. you can see the amateur with a presumably cell phone camera because of the low quality being very careful. lots of shots being fired. >> are these amateurs actually employees? the people you see far away i am not sure if those are the gunman. i know the people in the offices of charlie hebdo went to the roof. people in other buildings may have also gone to the roof. that is the smartest place to go. is it interesting to see the view of paris in this video. the gunman are at large. two policeman were killed, and there is a manhunt in paris. we will continue to cover it throughout the morning. >> that is the latest of the

terrorist attack in france, the depth of 12 people, and the wounding of 8 others. that is a live shot from paris. we will be back in two minutes. ♪

>> this is "market makers." >> i'm erik schatzker. >> i'm matt miller. i'm in for stephanie ruhle. get ready for consolidation in the auto industry, so says sergio marchionne. he has announced he is spinning off ferarri. jeff schuster is in detroit. thanks for joining us. is sergio marchionne's strategy

to get fiat-chrysler bought? >> it is to say the store is open. for purchase or for selling. when we look at the history here and look at what he does typically -- he likes to keep people guessing. this is part of that strategy. >> when i talked to industry insiders at other car companies and i marvel at the incredible sales numbers a chrysler, they always counter with incentives. they say, they are paying such a high price to buy them. is it a sustainable strategy that chrysler is into practice here? >> when you look at the group's performance in 2014, they beat expectations.

yes, the use incentives. there incentives were not out of the realm and range of incentives used elsewhere. it is not just an incentive story. they had gains in the retail market coming from the products as well. when you look at sustainability the question is, can they continue the level of growth? they have very lofty global targets in terms of where they want to be and where they want the group to be. they are looking for a partner or using some of this cash to potentially develop additional products. that is all on the table. >> that raises the question as to whether they would be a seller or a buyer. do you see a question -- scenario where it might be a consolidator? >> we could see that. i honestly believe everything is

open at this stage. i don't think there is a direct plan on, we are seeking a purchaser of the group. when we look at the consolidation that has taken place so far -- i would agree with the statement that over the long term consolidation is the name of the game when you are looking at the investment that is going to need to compete in the global marketplace, the scale needed to have operations around the world and have the right products in the right markets. regulation is a backdrop. technology advancement. it suggests that there is a lot of different ways to get there. >> who is too small to compete in that playing field? >> from a global sense, it depends what their strategy is. if you look at honda, their goal is not to compete in all markets

around the world and all areas. mazda is the same way. if you are focusing on the premium end of things, bmw, mercedes, they are highly focused on the premium markets. i think you really have to carve the market up and look at the large, mainstream players. you have expansion and growth aspirations from all of them. hyundai-kia nissan, the volkswagen group. they are vying for this strong position with gm and toyota. >> i find most interesting when people mention hyundai-kia as a possible buyer for fiat. more mainstream is the idea that volkswagen would make an offer for fiat-chrysler. manager magazine reported on a first.

they have a long history of being on it. is it possible that they would take fiat-chrysler without ferarri? it is like buying pizza without the cheese. >> [laughter] it is possible. when you are putting the targets out there and you have the goals in mind, you have to look at all avenues to get there. this is a possibility. the negative with that is the overlap. there is a substantial amount of overlap. brands would likely disappear consolidation of that across the european market. it would give them a stronger hold in the u.s. market. as of late, they have been struggling. they have their own aspirations of goals in the u.s., does the volkswagen group. everybody has a place where they need to do some work and

everybody is looking at asia. >> that is a question mark for the high-end luxury players. do you like a ferrari without the former chairman who was unceremoniously kicked out by sergio marchionne? do you like it as a spinoff? >> from a standalone standpoint i think it is interesting. i do like the idea. looking a synergies with the group there really were not a lot. to keep the ferrari brand as exclusive as it really is it can work in a standalone situation. >> hopefully they start winning races at some point. that has to be put of the mystique as a brand. >> no question. >> thanks so much for joining us. >> when we come back, the people

at the consumer electronics show cannot quit talking about it. maybe that is all they are talking about. is one company poised to cash in? ♪

>> the consumer electronic show is underway in las vegas. brad stone is out there. he is standing by with the ceo of ericsson. >> thank you, erik. >>you run europe's largest technology company. let me get your comments on today's attacks in paris. >> i read the news as anybody else. it is extremely tragic. it is hard to grasp when you are sitting here in las vegas. >> our thoughts are with them.

thank you for that. you have made some announcements at ces. you want to increase download speeds for smartphone users. >> we have been working for a while in the licensed and unlicensed spectrum. you can actually improve your indoor coverage much more. mobile traffic networks are indoor because people are using the phones as much indoors as outdoors. up to 70% of traffic is indoors. this is a way to boost that traffic capacity. >> using network capacity that is used for things like wi-fi. >> absolutely. this is a way to use all existing means of traffic growth.

we are increasing 10 times the amount of data traffic per year right now. this will be very important. >> will this require operators or consumers to buy more equipment? >> the carriers will have more options. you want a seamless consumer experience. that is what we want to give to the carriers and then the carriers will have that to give to consumers. >> what about the long-term? with every device in this conference hall, the cars, the wearables, the home appliances, they are all connected to the internet. how do we avoid a massive traffic jam? >> our prediction is 50 billion connected devices by 2020.

our view is the following. one third will be with better technology. >> now you are talking about 5g. >> absolutely. then we are talking about licensed and unlicensed. also we are talking about new spectrum. >> let's talk about the connected cars piece. house and you think all cars will be connected and you think that should be mandated? >> i think over time, all cars will be connected. what we are looking into as a company is connecting all the cars in order to make an efficient transport system. you can have connectivity between the cars and the parking meter.

we are having connectivity between the helmet and the car to avoid crashes. this is what we are seeing in our technology. >> what are the safety implications? >> the safety implication is positive because we should be able to avoid accidents earlier. we will have connectivity between cars. or you're going to connect two things around the car to avoid hazards. this will include efficiency and safety for traffic management. >> how is ericsson working with automakers? >> we are doing the orchestration in the car. we put in software. there are so many sensors in the car today.

all of that comes together. we are orchestrating that and you can display that on the screen. operators are taking real-time information and displaying it. >> thank you very much. back to you. >> brad stone with more great interviews out at ces. the senior editor at "bloomberg businessweek perko stick with us. -- "bloomberg businessweek." stick with us. we will have updates from the shooting out of paris. the terrorist attack. we will be back. ♪

>> we want to check in on the

developing story out of paris. three gunmen are still at large and 12 people are dead after people were killed --"charlie hebdo at the offices of -- at the offices of "charlie hebdo." >> i want to start with what we are hearing from the white house. the white house is saying that president obama will be meeting with vice president biden and secretary kerry in the next few minutes. we will hear from the president later this day. the white house did put out a statement earlier today where president obama condemned the attacks. he has directed the administration to provide assistance needed to help bring the terrorists to justice. paris is on lockdown. this is a massive manhunt. take a look at the amateur video that appears to be from outside the headquarters of the "charlie hebdo" offices.

this is amateur video. you are saying masked gunmen carrying kalashnikovs. they want in a shooting rampage in the offices of the satirical magazine, "charlie hebdo." they fled in cars. the police are looking for suspects. they fled by car, heading north. the guardian is reporting that the three assailants allegedly hitchhiked another car. they have been on the loose for nearly six hours, despite the fact that several thousand additional police have been mobilized. train stations, airports, schools, cultural sites, places of worship media outlets are all under extra protection. the publisher of the book at the

center of the controversy, their headquarters was evacuated. the whole city is on high alert right now, completely on lockdown is the manhunt continues. >> we are seeing pictures on twitter of large crowds gathering at public places in paris. the city must be shocked. you heard president along -- hollande saying that the whole city a shocked. france is going to have to undertake a very difficult debate over freedom of the press versus security. liberty versus security. >> freedom of speech versus security. it will be interesting to see how this affects the upcoming elections.

the head of the conservative group was talking about this getting ready for the elections and it will be interesting to see if they gain or lose votes because of what has happened. >> "market makers" will be back. ♪

>> that pretty much brings us to the end of "market makers" today. >> we will continue to follow

the situation in france. it is 6:00 p.m. >> president hollande is due to address the people in paris at 8:00 p.m. that would be 2:00 p.m. here in the united states. president obama is meeting with vice president biden and secretary of state john kerry currently. the president is due to flight to detroit later today. there is the widespread expectation that the president will expand upon his statement earlier today condemning the terrorist attack in paris at the offices of "charlie hebdo" that left 12 people dead and eight people wounded. journalists, satirists, cartoonists, police officers, an innocent person on the street. >> eight people are still in critical condition. 20 people injured.

we will have a special hour of coverage focusing on this in the next hour, anchored by tim fox. julie hyman is going to bring you what to know on the markets. >> we are going on the markets. we are seeing stuff bounceback today. the dow was kicking in a triple digit returns. stocks are trying to snap the longest losing streak and 13 months. joining me for the options in sight is the senior equity derivatives trader at bno capital. what you are looking at today with stocks going up and the fix pulling back a little bit, but not very much -- vix pulling back in little bit, but not very much. >> the vix is hovering around the 20 mark. we are seeing the volatility

emanating from europe and spilling over to the u.s. you can see the relationship and pretty stark contrast were european volatility is that a wider spread to u.s. volatility. u.s. follow till of the is high and european volatility is even higher. that is ahead of the ecb meeting at the end of january, where mario draghi is expected to unleash a quantitative easing program. >> turning back to the u.s., i want to talk about jcpenney. this is the first of the big retailers to come out and holiday numbers. holiday sales up by 3.7%. shares are searching. jcpenney -- surging. jcpenney has been one of the troubled retailers. what are we seeing in terms of today and how the options market is reacting to this number?

>> we did see significant call buying. there was preemptive flow in the options market. the stock is a highly shorted stock. it erased most of its losses from december. what will be interesting is talking about gross margins and sg&a expense. we expect the earnings event to be a particularly volatile catalyst. >> we will be watching for that. you have a trade ahead of friday's jobs report. >> in the case of rising interest rate expectations, it is interesting to see the 10 year falling. we will get jobs numbers on friday.

we will bring back into focus the imminent raising of rates. there is a cheap way to play rates bouncing back. >> gotcha. the tbt is a leveraged etf, a short treasury etf. >> we will be on the markets again in 30 minutes. thank you very much. a special edition of our noon show is coming up next. ♪

>> you are watching bloomberg television. i'm tim fox with brendan greeley. we have an update about the shooting at the offices of the satirical new safer -- newspaper "charlie hebdo." what have you learned at this hour? >> there is a massive manhunt underway in paris. 3000 police officers are combing the city looking for these alleged three assailants. they allegedly left a car in that cars under forensic examination. it has been six