>> this is "bottom line," the intersection of main street perspective. to our viewers here in the united states, and to those of you joining us from around the world, welcome. we have full coverage of stocks and stories making headlines on this friday. willem marx prepares for his trip to cuba as the u.s. eases travel and trade rules starting today. peter cook has a wrapup of the republican retreat being held in hershey, pennsylvania.

we begin with white house correspondent phil mattingly, details on president obama's joint news conference with british prime minister david cameron. strong statements were made about iran. but with the two leaders trying to convey? >> hold your fire, mark. that was the direct quote from president obama when he came to what president should do about further sanctions against iran while the president negotiating team is trying to work out a deal to cut back on iran's nuclear program. so far, democrats and republicans on capitol hill are talking about moving forward with the bill. the president peng shuai did his call to hold off by saying he would in fact to be joe any legislation that is sent to his desk. that is a major issue going forward. again, it's a bipartisan one at that. democratic leaders, one of the top foreign-policy members of the senate felt very strong about going for before those bills. >> in the wake of the paris attacks, there is but again -- there has been again collaborative focus on the

battle against terrorism. was there an agreement on how to handle intelligence gathering? >> it's been one of the big pushes from david cameron. there is a lot of concern on the u.k. side about u.s. companies unwillingness to share certain contacts and communications that alleged terrorists have on social media networks. the president tried to say the balance due to be struck between privacy and civil liberties. but there was a push, both on david cameron and the president side to make clear that intelligence gathering is both necessary and, if it's lawful, a key part of trying to stall any further attacks. i think you are going to see primus or camera continue to push forward on this. and the president is with him in many ways. >> what is the political dynamic like between the two leaders. ? >> it's almost a buddy comedy. the prime ministers said the president has often referred to him as breaux -- bro.

the president and white house officials are keenly aware that david cameron is in the mist of a campaign. he is in a campaign season right now, and two of president obama's advisers are advising on different sides of the campaign. if the premise or wanted it the president complements his efforts on security. they have a great relationship by all accounts, i think that showed through once again during this press commerce today. >> phil mattingly joining us live from the white house. phil, thank you. congressional republicans are on their way to washington after wrapping up a joint retreat in hershey, pennsylvania. they said closed-door talks produced greater consensus on their legislative strategy. one issue continues to defy the party -- immigration. peter cook is in hershey with the latest. peter, one big happy family except an immigration -- is that right? >> one big happy family might be a stretch. we are talking about

republicans. there is no question that the republicans i spoke to feel pretty confident that they had reductive two days of conversations. they forced a better consensus on their legislative agenda in areas like the budget and trade and health care. and yes, even on immigration. several republicans said the open mic session on immigration was a highlight. there was definitely different voices and opinions, but there was more of a consensus on how to proceed with border security. >> there was a handful literally a handful of republicans that got up and said we don't want to do anything on immigration reform. the vast majority which was a big surprise for many -- a large percentage of the freshman class to get it. they understand the american people want us to get things done. the immigration system is broken, it is time to fix it. >> you have been involved in a

lot of closed-door negotiation trying to move house republicans further along towards their final solution. are you much more optimistic today leaving hershey than you were a few days ago? >> absolutely. i don't know a lot of the new members, this was an opportunity to get to know some of them. it seems pretty evident that a lot of them have the attitude that we have to deal with -- we can't just ignore difficult issues. we have to deal with them. they understand that immigration reform is an issue that has to be do with your -- dealt with. they have the courage and the resolve to want to fix it. that's an important step in the right direction. >> they still have not resolved exactly what to do with those in the country illegally already. it's a touchy subject. as i heard from the congressman from utah, they have to put on their big boy pants and deal with this issue. >> any issues where republicans see more confident they can work

with president obama? >> a couple of issues that stood out -- trade is clearly an area where they can make progress with this president. they may be able to help them win over more democratic necessary. we heard that from congress from paul ryan. he was less confident about the ability to do tax reform, it may be too big of a lift. specifically the idea of raising the gas tax was a big fight over highway funding. paul ryan was in fat act -- it is not going to happen on his watch. i would look to trade in particular as one area where they think they can make a person 2015. -- make progress in 2015. >> peter cook, thank you. bloomberg news will have live coverage of the state of the union address on tuesday night. comprehensive coverage begins at 8:00 new york time with a special edition of "with all the respect," followed a half hour later with bloomberg politics state of the union preview.

followed by the republican response to be given by iowa senator joni ernst. stay with bloomberg for comprehensive coverage of the state of the union, all next week. coming up, new regulations on cuba. we take a look at how easing trade in facilitating travel will impact u.s. cuban relations. "bottom line." ♪

>> welcome back. today, the obama administration begins making it easier for americans to travel to and do business with cuba. under the new rules, some companies will be permitted to export to cuba. u.s. banks will be allowed to open accounts with cuban banks. airlines will be able to provide service to cuba without a specific license. americans will be able to bring home as much as $100 in cigars. but the travel ban is lifted entirely. the move is outright opposed by

some republicans, like marco rubio who with willem marx has been looking into the restrictions. talk to me about who gets some of these exemptions? >> that's not changing. there's a dozen categories of people who have been able to travel to cuba, including journalists, humanitarian workers, sometimes educators. those of cuban-american dissents can go to visit family. athletes, performers come all these people. they are no longer having to seek specific approval from the treasury department in order to travel down there. >> what about the impact to american individuals, and industry in cuba? >> if you were in the telik and medications world, the banking world, you may be able to get on their have face-to-face meetings. bankers from south florida will be happy about it. they will be able to meet with corresponding banks in cuba. if you are an inside company,

looking to improve telik indications, -- telecommunications, you can go down. for cubans these restrictions being lifted in the u.s. will be the corresponding restrictions being lifted by the cuban authorities. more money is being encouraged to private business by the american authorities, that doesn't mean the cubans will be allowing it to receive -- to be received by cubans. >> not everyone on capitol hill is in favor of this. the republicans want to know what american got in exchange for this. who does it benefit, and why? >> if you work in certain sectors, and are looking to expand your business, it will be beneficial to you. in terms of cuban americans living in florida and california he will be a lot easier for them to send money back because the banks will be able to open accounts down there. those people will benefit, in terms of u.s. policymakers there's not a huge amount they

can show for it. >> willem marx, joining us. ted is a cuban expert and senior fellow for foreign policy programs of brookings. he joins me from washington. welcome to bottom line. thank you for your time. >> good afternoon. >> of me follow up on what willem marx was telling us. how does the united states benefit from the lifting of these restrictions? >> this is a game changer for the united states in several ways. first, we can start having normal relations with the neighborhood and mouse off are sure, which will lead to a whole set of cooperation and agreements that are in our interest as much as cuba's interest. secondly, we have been isolated from the rest of the international community in dealing with cuba trade the rest of the world has relations is -- relations with cuba. we are having the chance to catch up and be involved in a process of dialogue and change that is already underway on the island. i will give us some opportunity

to have influence there, in a way we haven't before. >>'s "influence, american businesses are eager to do business in cuba -- speaking of influence, american businesses are eager to do business in cuba. what is the bottom line look like in the near term? >> i think it will take some time before american businesses will see any great upside to the market there. we have to keep in mind the cuban economy is very restricted, and for most cubans, their income is very limited. only $20 a month in salary, for most state workers. there is very little capital of the system to allow people to actually become serious consumers. that said, the cuban people receive a lot of remittances from cuban-americans emma from -- cuban-americans, from other cubans abroad. they are living off that cash they get. cuban-americans are set -- have sent over $6 billion after the

remittances program was expanded. this allows cubans to open their own businesses, and to take advantages of the openings in the economy that role castro -- raul castro has opened. in travel, tele-communications agriculture, construction, there will be some initial interesting new activity. it will very much depend on the cuban government, and how they will open up those sectors to allow more american commerce and activity. >> what will increase tourism for you but economy, -- cuba's economy? will hotels be able to handle increased demand? >> tourism has done well, they've invested in new hotels and other structures. they are investing in new sites new golf courses marinas, even condominiums that will be available for foreign renting

and even leasing. this is an infrastructure that is well underway. it still has a long way to go. they have already received millions of visitors from europe, from canada, from russia , from other parts of latin america. the additional insertion of american visitors will be a big boost to them. they don't yet have the full capacity for a big insertion of american travelers. >> will we see a new flood of u.s. goods going to cuba? we'll american exporters see tangible financial gains? >> i don't think so in the short-term. we do have a problem of how much capital the cubans have. the embargo is still in place. in the permitted categories of food in telecommunications construction materials, yes, you will see some initial quick activity. there is a lot of pent-up demand

on the u.s. side to get to know cuba. if anyone is really interested in the cuban market, it is a long-term damage. >> one benefit from private citizens could be the renting out of homes or apartments. how would the cuban government deal with it citizens making money out wide of state control? -- outside of state control? >> this is welcomed by the cuban government. they have begun a process of regulating and licensing these businesses so that average cubans can rent out rooms, like a bed-and-breakfast in their home. this is a very important source of income to them. i think the government wants to see that part of the economy come into the formal system. it would be properly taxed, like in any other country. and they welcome this new insertion of interest in the economy. >> ted piccone we have about a minute left. during the revolution, the castro regime seized property owned by its citizens and american businesses.

is there a likelihood we might see a protracted legal fight with people in corporations affected, trying to recoup those losses? >> that is one of the big challenges ahead. there are about 6000 claims that haven't registered by the you in -- by the united states. these will have to be negotiated. it raises a question for foreign investments, wondering how secure are my property rights in this country? those cases will have to be resolved and negotiated in the coming years. >> ted piccone is a cuba expert. thank you so much for your time and i for tease. we appreciate it. -- time and expertise. we continue to follow the shop from switzerland. we go to zero, get the latest on trading applications from the scarlet flu, when "bottom line," continues. ♪

>> more on the fallout in the shocker from switzerland. the central banks decision to drop its cap on the french franc may put currency trading houses across the world out of business. one of them is fxcm, facing

insolvency. there are talks to give them a $200 million cash of reason -- cash infusion. reporting from zürich he tells us traders are facing uncertainty. >> conversations in zürich are being dominated by a couple of questions -- namely, how much more follow will there be? how much exposure has there been, how much have they been hurt? on a more swiss level -- what will the strengthening of the currency due to the economy in switzerland? 56% of exports go to the european union. those exports will be a lot more expensive for europeans. there has been some conversation about a recession. we spoke with john cox, a local analysts. the rays that probability. >> we see further pressure on earnings estimates.

we think the market is underestimating cuts that has to go through, you will see further pressure on the swiss market. >> another question is what the swiss national bank may try to do to stabilize the currency? willy intermune on the currency market and go ahead and buy some currency? they still could potentially intervene at will. how will markets react? will they see that as legitimate, or an attempt by the swiss national bank to regain some credibility? back to you. >> for more on the hangover from the swiss national bank's decision i'm joined by scarlet fu. scarlet, this is something we were talking about during hans ' piece. no one saw this coming, and 24 hours later, the reverberations are still being felt. >> everyone thought this was bank would stay reliable. they are very credible.

value have other brokerages perhaps facing insolvency. it is in talks with jefferies for a lifeline. the premarket indications showed just how bad it was going to be. a drop of his much 92%. stock was trading below one dollar, compared with $17 last week. that is incredible. it's not the only casualty. a new zealand broker had to shut down, and citigroup, we have learned, lost more than $150 million on currency swings. citigroup is a huge bank, and can absorb that kind of loss. >> we are still talking about $150 million. we have seen big names take a hit since yesterday's decision by the swiss national bank. what are some of the big banks doing today? >> if you look at the swiss market index, it fell 8.8% yesterday. extending that declined today. if you look at a couple individual names like novartis nestlé drugmakers, food

companies, these are big multinationals. our producer said the domestic share prices tumbled yesterday. the u.s. listed shares priced in dollars actually rose. over the past year, the swiss was pegged to the euros, the strong u.s. dollar is bad for u.s. investors buying overseas companies. we got a little bit of a break from that trend yesterday. it's just an example of how big an impact this can have on your investment. >> i feel them last night on "taking stock," and i interviewed someone about the swiss watch industry. he said some retailers are already panicking. they don't know what to do. >> suddenly, everything got 15% to 20% more expensive. do you pass that cost on, or do you take the hit to margins? >> or try to absorb it. they probably won't do that. >> will follow will last for months to come. >> coming up, a rebound in oil.

we take a look at how comments from the international energy agency's help to boost oil prices today. stay with us, "bottom line," continues in just a moment. ♪ . .

>> welcome back to the second half hour of "bottom line" on bloomberg television. i'm mark crumpton. thanks for sticking with us. it is time for the motto these report. my colleague su keenan joins us. >> and eighth week of losses. one of the key drivers was a report from the international energy agency forecasting supply will be lower than originally thought.

so, the bold attitude the tour for low prices could be low prices. we are looking at prices going out pretty much on the high end of the day. oil has been up as much as four and a half percent. we see that pretty much across the commodity play. according to michael lynch, this is the first evidence he says that low prices are rebalancing the market. markets probably have not gone down enough. they have rebounded a few times. check out the big picture. a lot of traders are echoing that view that the markets are trying to consolidate here, the markets certainly a wild ride for a lot of the traders. the wildest since 1986. >> scarlet knight were talking

about the swiss currency. >> we are seeing gold at a four-month high. a lot of people buying gold for investments. given that the euro is falling, gold prices jumped, and call options are bullish. gold prices are now better than 7% since the start of the new year. meanwhile getting back to energy, gasoline prices continue to drop making headlines. new jersey gas prices below to dollars for the first time since 2009. it is now just around $2.16 per gallon. economists point to plunging gas prices as a reason for the highest consumer confidence levels in 11 years. >> su keenan thank you.

for more i am joined by a commodities strategist. catherine, welcome back to "bottom line." good to see you again. >> good to see you, too. >> any surprises for you in the report? >> it matches what we have seen, which is a fairly weak first half with sizable market overhead, but a constructive view in the second half. >> in your outlook for oil markets newsletter you posed the following question -- why were oil prices though high for so long? was it oversupply or was it political? >> memories get very short in the market. i often remind people that prices were high for five years. the number one thing i would .2 it even during a time of weak growth which it has been since the recession, and the unprecedented heights of oil in the united states, until recently the market one --

needed more oil from opec, not less. >> catherine, the turbulence in the oil market, what can it tell us about supply levels and the assumption that oil would remain at a certain level? >> i think that was the most notable thing about the last five years. not just that prices were high. the top reason -- we failed to catch them through market management. if we were to take them at their word, they have essentially abdicated that market management role. i think we are in a time of more consolidation. >> were producers caught off guard and unprepared for this level of volatility? >> you can make that argument. partly because of the market we've seen for the last few years, and partly cause of what until recently was very steep

backwardation of the cord. many investors had shortened hedges. whereas before they may have hedged, 18, 34 months out, the last six years they have been hedging eight to 12 months at the most. >> in your newsletter, you look at the real risk. where and when will that have access on -- an effect on the energy sector? >> absolutely. there are a lot of things that could get better and there are a lot of things that could get worse and that is true today. i think nigeria, given they have elections coming up. it will be much more difficult. venezuela is also a country we have to put on the map. >> katherine, what is going to happen if opec production stays at november levels? >> if that is true and we are

forecasting significant overhang in the first half of the year, we are seeing the girls show up in the inventories both on land and at sea. the second half of the year much as the iea noted, we see that market tightening up. we do see slight improvement in demand cyclically in the second half and potentially some softer production in certain places. >> crude contracts will be delivered in the coming weeks. the technical term is contango. a market strategist told my colleagues "the fundamentals of supply, demand, and storage point to the contango persisting." what does this mean for investors? >> there's a bit of a chicken-egg relationship with contango. they are essentially paying to

keep those barrels and inventory. the more barrels and inventory the deeper the contango gets. when you get into a market like this, it is a bit of a chicken-egg problem that takes a while to work out. >> are there buying opportunities for oil and gas companies to boost capacity? >> i think in a market like this, there are a couple of benefits to company. i think for certain companies that are in stronger fiscal positions, they could see this as an opportunity. >> how long does this last? i guess this is the question everybody has now. we are in the first couple weeks of 2015. long-term, what does the market look like? >> that is the question. how long does this go on? we do see opportunity for strengthening prices in the second half, and especially 2016 at the latest. although we do not necessarily expect them to respond in the

first six months of a price move like this, by the time we get to 12 or 18 months, we do expect that. we do think this cannot go on forever and it is a question of whether it is six months or 12 months or 18 months left to go. >> 2 we are just past:30 -- we are just past 2:30. were you surprised given the ride we have had so far? >> people have to reposition for the risk. this can give us some very choppy trading when we get down to lowe's and when we are at highs at different places in the market. we actually were pretty weak, and i think that contributed to the chop we see. >> katherine spector. it is always a pleasure. thank you so much for your time. >> thank you. >> still ahead, is stronger swiss franc and banks and brokers are getting hurt.

details coming up. ♪

>>♪ >> welcome back. it is time for today's latin america report. the 2016 olympics will be no savior for brazil's faltering economy if last year's world cup is any guide. many of the 3.5 billion tv viewers follow the tournament.

the tourists that followed that has remained flat from a year earlier july 13. central bank data shows that it fell 7.4% compared with a year ago. that is your latin america report for this friday. we wanted you to know bloomberg is the only business news service being offered on amazon fire tv. remember, if you watch any of our -- if you miss any of our interviews, you can watch them on bloomberg tv with live streaming and on-demand videos. up next, encore. your guide to the biggest newsmakers of this week on "bottom line." ♪

♪ >> welcome back.

it is time for encore, a look back at the most notable newsmakers from this past week on "bottom line." >> a free trade deal is something that a lot of liberals do not like, but i think there is bipartisan consensus on that. i think there is consensus on infrastructure. maybe we will get a band-aid. maybe we will get a little more in a bill. finally on tax reform. that is a tough one. paul ryan will have plenty of undivided attention to devote to tax reform. >> to avoid situation where there is not an option. the calculus that we had, we did not think it would summit, but we were wrong. we remain very disciplined and we have high return requirements for our shareholders. >> i need to have a counter of headline growth in the beige

book. that is the only factor i can remember them using. in terms of what the fed uses in the beige book it appears that economic growth is chugging along relatively stably -- stably. >> we've seen these trends -- unemployment falling, gas prices declining, consumer confidence -- we have been ok, but retail sales did not materialize in a really strong way. part of the reason, julie just mentioned. but if you look at the actual data from the 36 retailers we have looked at that came out with holiday sales are earnings guidance for the fourth quarter in the last two weeks 10 of them have been positive. only seven have guided negative. that is a profound change from what we've seen in the previous two quarters. >> encore, a look back at the notable newsmakers this past week on "bottom line."

these swiss central banks also prize moved to scrap the cap on the swiss franc is claiming causalities. fxcm is the largest retail foreign exchange broker in the united states. client losses due to the move could threaten their ability to comply with capital rules. they could experience such huge loss -- huge losses they will have to close shop. trish regan -- joins me. and jim bullard said he was "not aware of the fed receiving any warning from the swiss national bank." >> this is certainly one of the surprise moves. we have heard that from officials. they had no idea this was coming. but it is obviously incredibly difficult for those who have money tied up in this process and i know there are fears it

could spark some kind of contagion. but look at the bright side of all of this. i think there is a danger when you become too complacent and you just assume that central-bank policy is going to be what it is and you make your market assumptions based on that. in other words what this is doing is restoring some uncertainty to the future which is not necessarily a bad thing. >> there are concerns about transparency, too much transparency. here, people say there may not have been enough. >> too much transparency breeds a kind of complacency. years ago, you had no idea what the federal reserve said you're if they did not really tell you. basically you had to check the next day to see what actually happened after a meeting, whether they raised rates are not. there was no pr type of effort no real communication. what that did was, it forced all

investors to look at assets for the value they represented minus whatever the central bank would be doing to support them. i think in the case of the swiss national bank, they would have an incredibly difficult time. it would have been such an artificial pad, given that we know the ecb is going to pump liquidity in. >> ok the big banks, they can observe the stuff but the smaller firms, they got smacked around yesterday, and some of them will be forced out of business. >> yeah, and this may be a wake-up call for everyone that you cannot be entirely reliant on central-bank policy. you need to think for yourself. our guest yesterday, one analyst who said there is no way that the swiss are going to be able to keep this and he was really just applying common sense to all of it. everyone else was willing to take the central-bank afterword -- at their word.

what i think it is doing is bringing the skepticism back in the market. >> much-needed skepticism? >> and you need that for the trades. you cannot have everybody thinking the same and buying into whatever policy. >> and you are going to discuss that with josh rosner? >> yes, we will continue. josh rosner has ideas on it. we will look at the fallout, what other banks what other big banks move. >> all right, trish regan, "street smart," one of her guests josh rosner, coming up in the top of the hour. stay with us. we have a report on the other side of the break. "bottom line" continues. ♪

[applause] >> after a placid bull run for u.s. stocks in 2014, volatility is dominating the markets. the major indices are all down more than 2% in 2015 and the intraday swings have been violent to say the least. our chief markets correspondent scarlet fu's back. we go to off the charts to see how large these swings have been. violence is an understatement. >> it is. especially after this week. it is not the vicks. -- the vix. let's set the scene. remember, the word for 2014 is complacent. think how many people described trading as complacent. stocks kept going up. the path of least resistance was to go higher.

one way to look at this on the terminal is to look at the intraday point for the dow jones industrial average from peak to trough, and if you look at 2014, mark, the dow only swung 22 points twice in all of last year. once in october, and then in november 18 after a selloff and a little recovery. that happened very infrequently. >> what about this year? >> i'm glad you asked. let's pull that chart up, jamie. we have moved 400 points already read that was tuesday. we have had at least 200 points moved every trading day this year. if you calculate and do the math -- and it's really easy math because i was a history major -- [laughter] mark, take a look at 2015. the intraday is basically double 2014. >> what are we taking away from this? >> we are taking away from this

that this is volatility, but not the kind that everybody was looking for. we are talking about the lacquer volatility in the market and trading results because it was not creating opportunity. well, you got volatility. we have talked in the past about good volatility versus bad volatility. good volatility is swings and a defined range. bad volatility is swings coming out of nowhere. >> interesting. when you use the word complacency, people are still saying that whether it is about the speed, the momentum at which this is happening? >> the speed is still one factor. and a lot of reliable players like the s&p coming out that really broke people out. let's face it. the complacency have created a lot of crappy traits. long on the dollar. short on the swiss franc. -- the complacency has created a

lot of bad trades. i'm going to take the losses until things settle down. we do not know how long it will take to settle down. >> i do not know if i have the stomach for this right now. scarlet fu, thank you so much. the latest headlines at the top of the hour on bloomberg.com. that does it for this edition of "bottom line." i'm mark crumpton. we are off on monday for the martin luther king junior holiday. have a great weekend, everybody. "street smart" with trish regan is next. ♪

>> welcome, everyone, to the most important hour the session. we have 60 minutes until the close. i am trish regan. stocks climbing up after five straight days of losses as we going to the long weekend. energy shares rally with the price of oil. the largest u.s. retailer foreign-exchange broker said to be in talks for an emergency cash containment and big banks tallying of losses.