gets it right. we will talk to the ceo's of target and toys "r" us. will jobs growth and rising wages harold rebound in sales? we will talk to the head of the national retail foundation. on this black friday. welcome to bloomberg . i'm erik schatzker. stephanie ruhle is off today. is the day for many shoppers. perhaps you're watching us in line. i want to welcome shannon. theis live at one of world's busiest walmart since a caucus. good morning. here with me in our studios awesomeanjo of our new

commentary service gadfly. it is all about retail this morning but there is news. let's take to vonnie quinn. vonnie: thank is so much. in paris today, they remembered teh 130 people killed two weeks ago. the names and ages of the victims were read out loud at a ceremony. rance's foreign minister says the main objective of these national military campaigns is to destroy islamic state's headquarters in syria. athorities in brussels say terror attack is no longer imminent. they have reduce the terror alert levels and the brussels subway resumed its full schedule today. still, police and troops are patrolling streets. republican presidential candidate ben carson is moving to improve his foreign policy credentials. according to the new york times, carson is making a surprise trip to jordan to visit syrian refugees. before the paris terror attacks, carson was leading in some polls. but his support has jumped because of quest is about his

expertise on foreign affairs. get more on these and other breaking stories at the new bloomberg.com. julie: thanks, vonnie. let's take a look at what is going on with futures this morning. we are seeing the major averages mixed. but keep in mind, of course, the caveat is the file is usually low with futures and is going to be low on the day after thanks giving. we are seeing more action around the world. if you take a look at my bloomberg terminal, we've got the world market indicators. so just a monitor of the markets around the globe, the stock markets. this is the one-day percentage change. in particular, the selloff we saw in asia overnight here. chinese stocks falling in the depthsout since the we saw. you see the three major averages but you do not see the shanghai

composite. if you take a look at what went on in the shanghai composite, we saw a big drop as the largest brokerages disclose regulatory probes. in addition, we got a nationwide read on industrial profits that fell by .4%. moving over to europe, we have seen a little better performance there. not for the euro, however. set for its long history publicly declined versus the yen. the biggest loss since march versus the u.s. dollar. stocks are mixed. we did get some economic data that was better. euro area economic confidence matching its highest levels in four years. the euro came off its lows on that. we see overall the averages mixed on that as well. we have been watching the german two year yield pretty closely. continues its march downward. already, as you can see, it is negative, and that trend has been continuing.

erik; it has been a tough day for chinese financial markets. stocks fell the most there since that mayhem back in august. nick wadhams is with us now. big selloff. 5.5% of the shanghai composite is raising some alarm bells. we have seen fallout in europe. what happened overnight? nick: i think what you saw was the government announced a series of probes into three of the country's largest securities brokerages. so, that is going to spook markets. we had some bad financial data, some indications that a couple companies may not be able to repay their debt. the broader issue here is the government really sort of clamped down on the market after the collapse over the summer. now they are trying to ease things off, allow more ipo's. sort of removing some of the restrictions. but it looks like this market still has not found its floor. of back intort

negative territory after about a 17% gain since august. erik: what is it about the investigation of these brokerage firms that is concerning? why would it cause the market to sell off? nick: i think what you're saying is a broad concern, i mean, that these are just in the government's crosshairs. the government is so powerful. and then we do not really know what they are up to. all we know, for example, is that these three brokerages are being investigated for rule violations. that is all they have said. there are a lot of questions about what exactly did -- they did wrong. there is concern about corruption. perhaps insider trading for you have this crazy phenomenon here where ceo's go missing. brokers are required to tell the exchange, hey, we have not been able to find our ceo. that is been happening a few times. it is just a sense that the government is closing in and possibly looking for scapegoats for that august collapse. erik: the currency, the chinese yuan dropped into a two-month

low. what does that signal? nick: i think what you're seeing is maybe pressure building up. there is a bit of concern creeping back in that the yuan is overvalued. we have a big decision on monday imf considers whether to include the yuan. the greencted to get light. and then we may see some continued selling after the imf makes that decision. erik: good seeing you. and glad you're were able to stay up late for us on this friday. our beijing bureau chief in china. today is black friday. an american retailing tradition but less than it used to be. shelly is with me. the walmart is a caucus, new jersey. one of the busiest in the country. you are on the ground.

why don't you tell us what the mood is like there after 7:00 in the morning? it certainly looks like one of the business in a country last night. it was everything you would expect a black friday. despite there being more deals online. talk of retailer spreading out black friday. the store was packed. the lines were long. electronics was slammed. i saw the same thing at a target. lines for apple watches. right now it is 7:00 a.m. but people are still flooding into the parking lot. it was quite a 6:00 a.m., but shoppers have come out. we'll see at the end of the weekend if they are the same numbers as last year, but despite the deals online, folks are in the stores. erik: there has been no holiday weekend thus far for you. you spoke to the target ceo yesterday. what did he tell you? he's inspecting a good season but he did said the consumer is not as confident as they have been in the past. >> we recognize we still have a

cautious consumer, but they're in our stores, online today. i'm encouraged about the early trend. we expect that continue throughout the holidays. he also said -- he was in the store yesterday. he thought it looked good. he said electronics are going to be big. he is expecting toys to be big. there was a giant stuffed bear that flew off the shelves. as much as we are talking about gadgets and iphones, it is the traditional toys and board games that are selling really big as well. erik: shelly is here with me. to heard what shannon had say in what brian cornell had to say about shoppers being cautious. why is that? shelly: people are nervous ahead of the holiday season. retailers are trying to set everyone up for low expectations.

cautiously optimistic. you know, they want to hedge their bets in case things do not go as well as plans. erik: is there any common theme our approach to the way these retailers are taking this particular holiday season, which kind of began yesterday? shelly: i think it is a slow burn. it gets ar little bit earlier. people throw around the phrase black november. you can get christmas deals before halloween. people are setting up for a long season. this is just the beginning. and they have to be prepared for it. erik: julie hyman, one of the great debates with the rise of online checking -- online sh opping is how how may people can you drive to the store? julie: you have the secular change in how people shop. shopper track tracks the year over year change in monthly

retail visits. visit to it bricks and mortar. here is the zero line. this goes back to 2012. so, the monthly visits to retail locations has been down every month except one going back yearly three years. people are just going to the mall or other retail locations less. the other thing you can look at is the e-commerce sales in the united states. they've reached $87 billion bid we know this light has gone up and up. it is really interesting to see it in real terms how much this has changed. of course, the bricks and mortar retailers are getting some of this e-commerce piece. some of the shop and it goes on is on their sites. an awful lot of it is on amazon, as well. that is going to be an ongoing challenge for them. is showingon, julie us those charts. you know what they show -- the rise of online shopping, the

decline of retail foot traffic. what have you seen out of the about the secaucus, efforts the stores are making to try to pull the consumer back into bricks and mortar locations? shannon: one key one is buy online and pick up in store. that is why they give you the convenience of buying something from your home and get you into the store. target said their buy online was up 30% yesterday. a big increase in that. that is compared to last year. the idea being once they get you into the store to pick up your items, you are going to pick up a bag of chips or you are going to be might as well check out the fitbits. it is all about the stores. the target ceo told me traffic in stores is still key. uyes, they want to be their online but they have to get you in the store because time and time again they find that people spend more money in the store. for a while, retailers try to

fight online. now they realize they have to embrace it. i have to be present online. they have to invest but they cannot give up on their stores because that is going to be, to drive their business. they have got to make their stores of pplace people want to go. , we willlly banjo check in with you in a few minutes. y columnist. up next, we are taking you to moscow for the latest on the tensions between russia and turkey following the downing of that russian jet over the syrian border. stay with us. ♪

welcome back. i'm erik schatzker for bloomberg . french president francois hollande is in moscow meeting

with russia's vladimir putin. hollande's goal p is to getu the to get putin to join coalition which would include the united states. did he succeed? ryan, success for mr. hollande? know, he isyou going for trade as a success. the russian president wanted to be seen as offering his assistants and being part of this big coalition. he said as much. he said they will coordinate strikes with france. will avoidt russia going after the so-called moderate opposition to the syrian president. but i think the devil is in the detail of this kind of stuff. and when it comes to intelligence sharing, sharing command, i'm not sure that is going to happen. one of the remarks he made during the press conference that stuck with me was when he complained that they are already sharing information

about their flights in syria with united states. he said, he is not sure why they are doing that when the u.s. does not control its own allies. he was talking about turkey and he is still very upset about turkey's downing of that russian bomber in syrians guys. -- syrian skies. the idea that russia is going to work together with nato, maybe it will happen, but we are going to have to watch what vladimir putin does. because it would be a bit of a stretch for the guys in the kremlin to be ready for that. erik: did putin or hollande give any sense of how russia might retaliate for what it considers an incursion of its sovereignty, really, in the shooting? turkey accuses the russian jet of flying into turkish airspace. the russians say they were provoked by the turks. the russians have been dropping lots of really big hints about what they are prepared to do in terms of their relationship with turkey.

it is hard to imagine a more acrimonious relationship between two world leaders, the relationship bet vladimir putin and president erdogan. both of them have been been demanding an apology from one another. there is a chance that they are going to meet, by the way, on monday when the world leaders are gathering for climate talks in paris. that might be an opportunity for a little bit of warming in the relationship between the two countries, but for now, the russians are going at it promising economic retaliation and the prime minister says by tomorrow they will have a whole raft of measures that they intend to impose to effectively start something that sounds like a trade war. they have already started, in fact. russians now have effectively a travel ban in place on turkey. russians cannot really go there. all tour operators have canceled their trips. and that is going to hurt turkey. 3 million russian tourists went to turkey already this year.

single biggest after germany country in terms of countries that sent tourists there. and that is at least a couple billion dollars worth of hard currency that turkey needs to deal with his current account deficit. if that money goes away, that is more pressure on the lira. back to you. erik: we thank you very much. ryan chilcote in moscow for -- where the french president met with vladimir putin. scrutinyf regulatory were not enough. it's ceo carl icahn squared off once again. icahng satisfy the fed, and the rest of its shareholders? we will find out next. ♪

erik: welcome back. you are watching bloomberg . let's talk about aig. the company is struggling on two

fronts. carl icahn is one front. regulators in the federal reserve are the other. it is tough to please everybody. >> the emphasis has been with respect to metlife and potential and aig, the extent of their business whether it's in derivatives or products that create funding risk runs, that the f-soc placed emphasis. that is just a judgment, a well-documented judgment about the participation of these firms in activities that are nontraditional insurance activities, but that are activities that connect them with the rest of the system. everyone watching remembers what happens with aig. erik: there is the fed governor explaining why they lumped aig and metlife and prudential together. there is this carl icahn issue. can aig thread the needle? let's talk to insurance coverage

specialist. dan, let's talk about carl icahn. those who want aig break and -- broken up. is there any sign that the ceo is listening and prepared to do something? dan: something, yes. he says he does not want to break the company into thirds. he has been saying for a w wants tot he streamline things and get rid of things that do not have synergies. what he's done since then between his letter and icahn's stake, he sold something in honduras and panama, something in taiwan. neither made a big impact. erik: aig has come back from the dead effectively. the crown jewels. is the general sense among investors that the criticism that icahn and paulson have a the company, are they fair?

-- depends on a look at it depends how you look on it. the stock has done all right. they still trade at a lower multiple to book avlue tha -- to book value. if you are really patient and you have the strategy of slowly sinking the company, buying back shares, redeeming old debt and satisfied with the market return, not so bad. erik: if you are prepared to wait. dan: yes. if you want them to trade is the same multiple as their peers, you can get impatient. erik: is it possible that aig could address criticisms on both fronts? the shareholder side and the regulatory side the same way if . because it is large enough, i bess, for the fed to concerned. if it broke into three pieces, it would no longer, under the scrutiny of the f-sco. -- fsoc. dan: two fof them wouldn't.

hancock has said, and the other much,ve not said thias as that they have so many regulators and so many jurisdictions they'd face a lot of oversight. erik: meantime, fat light -- metlife is fighting a. -- fighting them. he leads insurance industry coverage of bloomberg. the toys "r" us chairman and ceo live from times square next. ♪

>> that is the white house on this friday morning. in washingtont

this morning. welcome back. you are watching bloomberg "." i am erik schatzker. we will bring you vonnie quinn in just a moment. tom keene is here for this morning's must read. tom: dustin has a pulse on retail in america. howent into walmart about they would save the day on black friday. bring it up. left.ote in the walmart's full-time and part-time associates will .eceive the 25% discount seasonal associates and those who have been at the company under 90 days will receive a 15% discount limited to one basket

for associates. hilarity of the retail adapt to the new rules of retail. erik: you mean? tom: any number of things. walmart has the biggest reason to be in a panic, because it isn't working. they are doing it with the internet, but that is a small part of their business versus other businesses. for all their -- for other retailers, seismic changes. they are trying to adapt to amazon and the internet. erik: walmart's stock is down 30%. tom: that is a good place to start. erik: there's a challenge for walmart, target, any other larger retailers to move into the new world where the policy is on the channel. luxuryat you have is a with its own peculiarities.

how about those montreal canadiens this week? they are awesome. you have retail and low-end retail doing really well. zara changing the world with clothing. this black friday, the great middle, what do they do? it is a mystery. what do we do? what is the next next? you might have some answers. >> i don't have the next next, but i have something else facing these retailers. retail earnings and the change and retail earnings. here you have the average hourly earnings in the u.s. you can see change has been steady. and you have the change in average hourly earnings. we looking at two different axes. the rate of change in average hourly earnings has been higher.

on an absolute basis it is not anonymously high, but we have seen retail earnings on an hourly basis go higher. not only do you have retailers grappling with lower traffic, not a huge trend item. warmer weather. you name it. they are dealing with higher costs. tom: there also dealing with product mix. everyone is buying flat screen tvs from best buy. how many apple things do you have in your house? erik: a lot. tom: i am the same way. erik: it doesn't take long to get over 10. tom: the idea is that this is an exciting -- am i doing ok? a changeis that it is of retail season.

i don't have answers of where we are four months or six months from now. they don'tamant that know what retail will do in january or february. estate.ntory, the real we didn't make our cash flow or numbers, what will we do? it is a different year. stevewe will go to brandon, the ceo of toys "r" us. square. times david, good morning. you may have heard tom and i talking about a couple of things critical to retailers. what inventory levels are you dealing with? do you have more product and you thought going it to the holiday season? dave: i think we are where we expected to be. we are on plan. we have so many shopping days promotions, i and will be able to better answer that in a couple of weeks.

right now, i like where we are. tom: is star wars going to save your season? a seasonon't see it as saver. it is an unknown. the movie comes out on the 18. there is a build in anticipation . a have created a store within store. all of our stores have an in-store star wars display area with a huge assortment of products. we have seen good sales, but it is hard to predict how that will build between now and december 18. erik: you have been at toys "r" us for five months or thereabouts. everybodyyou found -- knows by this point that toys "r" us has had its struggles over the past year. what have you found most surprising and what are you working harder to change? dave: the thing where working the hardest on, there is a

reality that customers today , wheno buy what they want they want, where they want, and how they want. if you cannot make it easy, seamless, and customer friendly to purchase in those various channels and the liver and a quick and efficient way you will be left behind. we are working on our virtual platforms, capability. we want to be a bricks and mortar toy store that is successful, but we need to compete in the dot com space. thus far we are doing a good job, but we have a lot of work to do in that area. erik: how do you do all of that, and preserve profit margins? the pricing environment is as aggressive a -- as it has ever been. you know that. marketingo spend

dollars to bring people into your bricks and mortar location. valuese have 20 pages of available to the customer beginning on black friday. is always the same situation. you have x amount of inventory, the hot toys that everyone wants to buy. out of stocks will occur late in the season. you want to manage price, value, and infant tory get -- and inventory. through christmas eve, you want to have ample product. it is an art and science. thankfully, we have been in business for 65 years. we have people that are good at it. tom: you should know the amount of diapers that i've spent at toys "r" us. it has zero's next to it. , this, wants to do this and the other thing.

what is your best practice to battle against walmart? us.: we have to be toys "r" we are a specialty retailer in this business for 365 daisy year. this is not only the time we get interested in toys. we need to be the toy authority. we need people to feel that sense of authority. to let people know what is hot, where to find it, they can touch and feel it. we are devoted to this category, and have been for a long time. we have to leverage that in our difference in how we approach our customer and brand. you about star wars, given the attention the movie is getting, but is there one that you are bidding on to be a savior this holiday season? dave: the thing that will be the the important is how consumer response to the higher price point products involving innovation.

there are so many electronics, robotics, voice activation, voice recognition, cloud-based toys that are incredible in terms of what they can teach children and entertainment value. the bad news is that they are at a higher price point because of the technology. it will be interesting to see how the consumer response. just describedu chatty cathy, which was the innovation of its time. our dolls selling more? this question, but does barbie move for you? dave: we have a barbie in all of our stores. interestingly, they continue to do well. barbie is a great example of what is happening in innovation. for years and years, we have been selling the basic barbie doll. child interacted

with the doll was different outfits, a crew to months, and things to play with. this year we have a barbie that jumps on a horse and rides across the room. tom: do they want that? children have a shorter attention span. they are growing up with ipads, going up with interactivity. that is what will hold their attention. toy vendors are putting a significant investment in bringing that into their toys. tom: children have a shorter attention span. i am shocked. to engage in what if speculation. i do not want to sound like a cynic, but if you find yourself, in january, having come through the holiday season with more product and not as much foot traffic in your bricks and mortar location as you hoped for, what do you do?

do shrink as square footage, do close stores, in a symbol that online is taking over bricks and mortar and toys "r" us needs to adapt? dave: we clearly have a number of stores that are too large. not based on what happens during the holiday season, but what has been going on for the last five years or 10 years. we are trying to reduce the footprint of our stores, come up with something more efficient. that is the wave of the future in terms of managing our real estate and transitioning from old stores to new stores. as it relates to the season, we feel good about our inventory levels and traffic. we are seeing a higher level of growth online in the bricks and mortar stores. that seems to be a macro trend. we have a number of days to go. it will be interesting to see by christmas eve where we are from

an end of story -- from an inventory standpoint and how that makes turns out. erik: that is the ceo of toys "r" us, dave brandon, at his store in times square in manhattan. to thank youwant for this morning's must-read. interesting stuff. tom: we begin with the 8-year-old hysterics about the use of computers. i do not envy him. what a challenge to the euro what america wants. it is a long way from a pet rock. that.let's leave it on a pet rock. tom keene with the morning must-read. we will be back on "" talking about retail heavyweights. some are blaming hot weather. call it an excuse, if you prefer. matt shea of the national retail

federation is next. ♪

vonnie: your latest bloomberg business flash. commerce searches on christmas day. how many shoppers will show up for black friday at brick-and-mortar stores. online sales on thursday were expected to rise 22 percent from last year. the euroconfidence in area. both consumer and executive confidence. the report comes out as the ecb -- debates whether to add stimulus. china will pass the u.s. as the largest airline market in 15 years. china's economic slowdown will hinder growth somewhat, but it is still expected to double by

2024. erik: retailers are blaming warm weather, and other things, for slowing sales. inventory piling up on store shelves. and matt shea. we will get to inventory levels in a moment. we just asked brandon from toys "r" us, they feel good about where they are. not too much more product than i thought they would have at this point. i want to talk about foot traffic. you do surveys it. -- you do surveys. you do surveys into and out of the black friday weekend. historically, i have noticed, according to customer responses, people are more optimistic heading into it than they actually end up being. why is that? for the past several years, we

have seen job growth. the unemployment rate is plummeting. projections and actual, consistently, the projections show most people plan to shop and do not. is a littlek it like asking voters questions. onis a sentiment you express the way in as opposed to what you do when you get there. that is a natural reaction for human beings. i do not think there's a turn off. i think that people are usually more aspirational when they talk to someone then they turn out to be. the numbers look very good in terms of where we are going this weekend. it will be a strong weekend. the two numbers that are most interesting, how many people have already started their holiday shopping, 60% have started, 10% higher than 10

years ago. there are starting earlier. almost half of sales will be driven by online activity. those are important trends that speak to some of the numbers. of stores, in or out there are many ways to do it. you don't have to go to the stores, but tens of millions of people will do that. shopping ande are in stores, but you won't see the big rush in years past. go to can wake up and your laptop, sign on, by a couple of things, do you need to go to the store? unless it is part of your tradition, something you like to do with your family. erik: companies did research, a consulting firm, they found that for 2015, they expect holiday sales, extending past christmas, in-store andended

online. how does that compare with what you are hearing? matt: our forecast is 3.7%, also blended. sales, too.on-store that is better than a 10 year average of 2.5%. last year was 4.1%. the 10 year average is 2.5%. it is a strong number that reflects the consumer fundamentals. you get to the inventory issue. the question is how strong is the consumer and where are they spending their money? where's it going if they have it? shelly: you will hear fourth quarter retailers, the fourth quarter saying it is a good holiday. some are saying it is ok. challenged, hurt by the weather and the rising dollar. they will choose their excuses.

some will win and some will lose. erik: we have a nice chart illustrating the inventory. some are concerned. are speaking to our top line numbers. if you cannot generate revenue at a margin you have a problem. we'll bring up the inventory chart in a moment. concern.he big dave brandon at toys "r" us says he is at a decent position, but some retailers are saying they are not. they are blaming the warm weather issue as a reason. the segment,ng on it could be a real reason. we have the warmest october in 250 years. if you are exclusive in those categories, you probably have more and been to.

plenty of ceos have set that. erik: here we go. the blue line is the most important take away. segment by segment basis, that is the story. that is what you have heard people talk about. depending regionally and what people are selling -- if it is electronics or home goods it is not the same issue, but in the old, it has the potential to be an issue. erik: julie? julie: split into different types, department stores have done the worst. that has something to do with the inventory issue you are discussing. becomely, a pharrell has less appealing in the retail pantheon. 33%.tocks are down specialty apparel is down by the same apparel. companies like the cap have that -- only -- like the gap have

been struggling. as a result, mass merchants, the walmarts and targets of the world have done the least poorly . at least in this comparison. you are down 9/10 of 1%. erik: we will back to you later. matt, you are staying with us. and ceo of the national retail association. shelly banjo will be back later. let's shift focus to south america. brazilian banker was arrested in a widening causing therobe bank's stocks to fall and the stocks to selloff by 20%. many are concerned about a liquidity crunch.

less than 1% on total assets. with us from san pablo, our bureau chief. let's talk about the liquidity crunch. if this will play out, how will it happen? >> you will see people taking money in a response and not wanting to provide funding. depend on short-term funding for their balance sheets. when you have the ceo of the company that has been the public face of the bank in jail, and we do not know how long he will be .here, it is a reputation issue it is only normal that you have clients wanting to remove their money. that said, -- erik: how long will it take before we know if this loss of confidence is hurting the company's access to credit?

julie: it will take a few days. he was originally arrested for five days, which expires on sunday. we need to see how long they will extend his prison term, if they extend it. it takes a few days for regulators to report those thing is. maybe by metal next week we should know better where we stand. man is a billionaire, very noteworthy, a boldfaced name and resell. people -- a boldfaced name in brazil. people outside the country don't know him that well. if they go ahead and downgrade btg's debt, is it a self-fulfilling prophecy? julie: they are the lowest investment grade. they would be downgraded to junk by one of the agencies, that would not help. what movie's -- what moody's

said is they don't know how much the bank is involved. they have no clarity on what he is being held for. they put it on radio watch negative because we don't know how long this will last, and how much it will affect the bank's credibility. erik: what does btg say? julie: they say that they are seeing small withdrawals, smaller than expected. they are fine and could meet their obligations. the interim ceo said the bank is not for sale, which was a rumor. they're looking at the operations that could be remotely involved. erik: we have to leave it there. bloomberg "" continues with matth shay. ♪

how much key question, will online sales cut into brick-and-mortar profits? in canada is a

new front on the war on front prices. decision day draws near for the ecb as they debate on whether to add more stimulus to get the european economy going. ♪ erik: good morning. welcome to the second hour of bloomberg "." i am erik schatzker. shelly: i am shelly banjo. do see how i did that, i'm ready to go. jumpsuit, it is difficult, but i like it. i worked for you today because it is "." made a killer chocolate cake yesterday. it was the highlight of the dinner. andde that trust, chocolate

macadamia nuts in the middle. you will appreciate that. erik: i like that. i also like that people are cooking themselves instead of taking it out. matt shea, the president of the national retail association. are you a cook? matt: i am, but i would like to have some of that chocolate cake . is it all gone? shelly: it is all gone. the president of turkey firing back at vladimir putin. he is denying russia's allegations that the islamic by selling oiley to turkey and they get their financial strength from the regime. russia backs the assad regime. thearis, they remembered 130 people killed in the terror attacks. names were read out loud at a ceremony.

minister sayseign the main objective in the military campaign is to destroy the islamic state headquarters in syria. you may think america's lowest rate drivers are in gridlock city, but the slowest and dangerous u.s. drivers are in montana, south carolina. you can get these stories at the new bloomberg.com. breaking news from volkswagen. the company is saying that they have identified 2 billion dollars in cost savings as the effort to recover from the diesel emissions scandal takes shape. new personnel chief -- a new personnel chief will be named at the next meeting. the manipulation scandal is making buyers insecure here that bodes poorly for vw sales going forward. restraint,rchasing

that is what the labor chief describes, among customers. vw's will be as a result, sales and going forward, there will be cuts in executive bonuses. i suppose that is only proper. we still do not know who is responsible. yesterday that vw has identified and suspended eight employees in association with the software that they put on the diesel engines. the vw brand is planning to reduce investments by $1 -- a by one billion euros a year. you have been looking at the stocks? julie: their unchanged, but that is better than they were. you can see a leg up in reaction to these headlines. it is the latest news that

tokswagen has tried to make move past the scandal. this is how vw has done. this is a six-month chart. this is september 18 when we heard from the epa as to what was going on with the deception. since then, shares are down 20%. they have recovered to some degree. volume surged at the lower part of the chart. .hey are only down 20% these are the german shares. one would think they would have done worse. it is because they have come up out of the depths to some degree. anticipate two billion dollars worth of savings. as far as the volkswagen customer is concerned, there will be fewer models and fewer trim options as part of the cost savings plan. scale backwill

production to avoid bloated inventory as demand weakens. we also have our eyes on the retail picture. michael shea, the president of the national retail association. with us is shannon pettypiece. she is at a walmart in new jersey. where are the lines. i was waiting for people. what is selling? atnnon: is it up in here 6:00 or 7:00 p.m. that is when the doors opened last night. despite the fact that you can get almost all of the deals at walmart.com, people were flooding into the stores. same at a target in jersey city. it is a little bit of a lull now, but there has been a steady

stream all morning. erik: matt shea of the national retail association is here. even though you can get all of these deals at walmart.com, there are still people in the store. what is the point? i apologize. i opened something on my web browser. rei talking about closing on black friday something that i want to talk about. the interesting thing is, people are shopping. we are looking at this holistically. online,are in stores or either-oran proposition. online sales are the retailers. some people like that excitement, energy, doing it with the family. millennials like to do it. some people would rather not.

it gives people the opportunity to pursue it however they want. shelly: online sales are outpacing retail sales, but right now that is mostly amazon. if you look at jcpenney and nordstrom's, although their online sales are positive, they are slowing. matt: we you have heard, and you have relatively new ceos and companies talking about how much they want to invest in the online e-commerce platforms, the digital piece, because they recognize that is where consumers want to play. this is driven by consumer preferences. many people want to do it this plenty, 70ere are percent, and i will not speak for this segment of the population, 70% of the shoppers are women. julie: something that surprised me that has to do with retail vacancies.

they have matched their highest ever at 10.1%. a relatively low vacancy rate. rents are close to a high, close to data.- according went per square foot is going higher. this is a function of shrinking landscape in america. the other piece is that a lot of retailers are pulling back on their bricks and mortar spaces. some are expanding. there is an ever shifting balance between some of these large department stores that are closing stores or shrinking their footprints of existing stores, and other retailers, smaller retailers, that are opening more stores. shelly: and some of the online retailers are looking to do more work and -- more brick-and-mortar. erik: when do more traditional

retailers think of their businesses the way that parker and amazon think of themselves, online first and works in mortar showroom -- and bricks and mortar showroom second. matt: amazon has figured out that they need stores. stores, all opening because they recognize there is an experienced people get, the tangible feeling people want, and they want to be a part of it. it is a combination. shelly: shannon, you're outside the store in new jersey. are people talking about why they are shopping their purses going online in the comfort of their own home? they said they liked the experience of black friday. one of the busiest areas is the electronics section. always baked on

black friday. everyone had a tv in their courage for the past 12 hours. there may be a sense with tech and tangible things they could those -- they get those. target is selling an ipad every second. there is a big demand for tech, particularly in the stores. shelly: what are people actually buying, matt? we have seen a structural shift from people buying clothing to buying services in addition to tech. matt: into the recession, consumers have a hard time doing more than one thing at a time. they were putting money in apparel or discretionary categories, or buying homes and autos. it is hard to drive all of those categories at the same time. consumers are strong, fundamentals are good, but they are spending money on

automobiles, a home improvement, home goods, and experience. those numbers are off the charts. apparel has been a little softer and harder to pull back. erik: i would like to go online versus brick-and-mortar. it fascinates me, because so many companies seem to struggle with it. why is it so hard? it ispart of the reason hard is because there has been such a level of intensity. ceo of qvc said in a conference, this is a company that is focused on technology, said we have been blown away by the speed and intensity i which our customers pulled us to this thing. and this is a company that does it for a living. it has been a challenge in part because it has gone faster. it is also incredibly expensive when you're making decisions

about cap x spending. -- there areeting competing challenges for the resources. there are companies that are very good at it. some bigger department stores, macy's and nordstrom, they have been good at it for a long time. shelly: they are struggling. nordstrom's online sales have been slower. matt: looking at the bigger picture, you are talking about a quarter where they had softer numbers. over the past five years, they have done well. other companies are saying they have to do more. they arellon is saying making huge investments. jcpenney -- they are all saying they will go there. they are huge inter-prices. it is not easy to turn it around. it takes a long time. they will all get better, it is no question that they will do it

well. erik: a great perspective. matth shay, the president and ceo of the national retail association. shannon pettypiece at the walmart in new jersey. you can forget about cyber monday. we will discuss, blurring the lines between traditional and online shopping. who will win the digital race? ♪

vonnie: for the first time, audi has been implicated in the volkswagen admissions testing scandal. they have launched investigations into the luxury car unit. they are suspected of breaking engine tests. cyber monday getting competition, some are calling it

ciber friday. online spending will hit $2.7 billion. cyber monday sales have brought by those of use their computer at work to bring in money after thanksgiving. high beefe to record prices. the cattle herd has expanded. there is more meat. have plunged 33% from an all-time high a year ago. i like how we draw the conclusion that they are fatter so there is more meat. erik: blurring the lines between traditional and online shopping. spencer, matt shea of the national retail association is here and with the to see holiday sales rise. the truth of the matter is that all of the dollars are not going to the same places.

who is winning the digital race? spencer: strong growth from amazon. as one ofpopping out e stronger retailers this year so far. it is early for that level of data. really, we will see much of the shopping today and monday. out withhas come preliminary numbers saying that $1 billion has been spent online, looking at a growth that could hit $1.7 billion today. the cyber monday matter as much, or is it about spreading out the online sales through the holiday season? spencer: cyber monday is still the largest spending day. the gap is narrowing. you will see the fastest growth is not on cyber monday. the faster online spending days

are black friday and thanksgiving. .hanksgiving is the fastest you're seeing people shopping on their smart phones. they're not waiting for cyber to theirles or getting work computer on monday. they aren't going to elbow through stores. they are shopping from their couch on thanksgiving on their smart phone. erik: let's not forget about shelly banjo. shelly, spencer talked about .arget taking an early lead what do these companies need to do successfully? playing two are different games. they are trying to match amazon. all of these companies are trying to have as robust of an online offering as amazon. they will have to compete. amazon is playing a different game, trying to hit prime

subscribers, trying to keep their people for the rest of the year. other retailers are trying to keep up. alix: discounts were averaging 24%, that was responsible for driving sales higher. matt, is it still the discount game? you need to discount to get people to buy? matt: we have seen consumers are value conscience. they have been trained to expect those kinds of deals. that is what they are looking for it. it will be a heavily promotional documentedt has been already. it will be a good season for consumers. erik: you have specific data? julie: these are numbers you have been looking out from cantor retail in terms of where people intend to shop. intentions and doing so are different. this looks like the percentage

of american choppers that plan to shop at given sites. a big jump for amazon. that is the first you are looking at. nearly half of all american choppers plan to buy something on amazon this holiday season. that is a stunning number. walmart, 36%, still quite high. the other retailers, brick-and-mortar retailers, are on down. caveat.nally, the people's shopping plans are for the holiday season. alix: shelley, target is the only one seeing incremental growth. what is the best practice? shelly: they are all trying to fight with amazon. if they do not have those big e-commerce presences they will lose. target, they know that

they have to be a part of this. they have to play hard. --e try hard with discounts they will try hard with discounts and big inventory. erik: thank you for joining us. that was shelly banjo of bloomberg. matt shea is here. we'll get an update on the top financial markets. julie hyman is changing gears. julie: we are seeing a mixed picture. not much change, not much surprising. even on wednesday, trading volume was down sharply. there was action overnight, particularly in china. you can see three different china falling sharply in what was the biggest route since the tips this year for china -- since the depths this year. regulatory probes, we know that

china has been cracking down on corruption. we saw a decrease in industrial profits for china as a whole. all of that is weighing on chinese stocks. we're not seeing that move around the globe, as you saw with u.s. teachers. the dollar has bumped up one third of 1%. the euro is having week this versus the dollar -- is having weakness nurses the dollar. breaking news on aig. it is considering selling blocks of its life insurance policies. it is under pressure from carl icahn to boost returns. is this due to activist carl icahn, or another strategy? thehey are feeling pressure. aig has already had the idea of splitting the company, which is

what carl icahn once. they have been slowly selling assets, but if you're going to accelerate the pace, it would be a good time. erik: what is a life lock? dan: you can think of it as a mortgage. when you enter a contract you get regular payments, probably twice a year. erik: and eventually premiums. dan: and eventually you have to pay out the death benefit. -- the debt benefit. in some ways, it is simpler for custom is to do it rather than split units are break it into thirds. alix: who would want to buy something like that? werethere are companies that is most of their business. life, they have bought from allstate. there have been a bunch of

companies since the financial crisis under pressures from investors, regulators, have narrowed their focus and sold. erik: do you need, in order to reduce the risk, to sell them off? at july off the risk in another way through a reinsurer the risk in reduce another way through a reinsur? alix: what is asleep carl icahn? dan: he was the stock price to go up. alix: that makes sense. dan: if aig can come up with a plan that is not astro-med i guess what he wants and boost the stock, i could see him living with that. erik: his life insurance less profitable? dan: it is more capital intensive. credit marketon

risks, generation risks. the other companies that have done it, it has worked out nicely. i do not think that this alone is enough. erik: maybe a first step? dan: yes. alix: thank you. dan kraut who covers the insurance industry for us. you are leaving us for a little bit? erik: i will, but i will be back. alix: next, our morning meeting. to expect from the ecb on thursday. a huge day. we will discuss. ♪

and i will beback joining you for this whole friday. france has said that the

syrian president should not play role in the country's future of the country may be softening it stands. the french foreign minister said syrian troops could fight alongside rebel forces in an attempt to defeat the islamic state. the aside troops may be needed to recapture the islamic state headquarters in syria. republican presidential candidate ben carson wants to counter his lack of foreign experience. he is making a surprise trip to jordan. he was leading in some polls before the terrorist attacks. there is question about his expertise on foreign affairs. israel season opening to draw russian tourists away from egypt and turkey. almost 3 million russian tourists went to egypt last year and more went to turkey. the terror attack against the and theplane in egypt

shooting down of the plane and turkey may change that. israel is offering discounted flights and you can get more on these and other breaking stories at the new bloomberg.com. julie: i will take a look at commodities. , as an unusual move in gold big get down. it was already lower but seeing downward by 1.25%. there isng to see if any news headlines the cause this but the indian foreign minister -- the indian finance minister said they could give gold to refiners but that would not account for this decline. gold has been in a longer-term ade at a five-year low. it's less attractive as an inflation hedge. if you look at the bloomberg terminal, we are looking at wirp that gives us an idea of

what being priced into the interest rate futures market. as you can see, we have had a significant bump in expectations for rates to go higher at the december meeting for the f moc and now it's the highest i can remember seeing since we have started tracking this. i also want to check on oil prices. we are also seeing a downturn this morning. libya is apparently trying to increase output and we have had russia saying it is not going to pursue any sort of military action against turkey. that has taken out some of the premium from the market we saw earlier in the week. oil prices have come up off the lows of the session to some extent but still want -- but still down 1.7% and oil is the down trend for november is significant. i know you what commodities but that gold movement is a bit of a

head scratcher. alix: i have an answer for you. all india gems and jewelry federation estimated that gold in india could decline to an eight year low in the fourth quarter. it has been a pretty crummy monsoon season and that's when you need your money if you are a farmer. that's the trade we are seeing unwind. julie: we think of gold frequently as just a speculation tool. then you get these little reminders that it's an actual thing that people actually buy especially in india. alix: as well as china. let's get to our morning meeting where we hear wiki banks are looking at today. our guest today is david owens, the chief jeffrey's european economist and joins us from london. we are looking ahead to next week's ecb rate decision. there is lots of possible tools out there. i want to focus on one in

particular which is cutting the deposit rate deeper into negative territory. how deep do you think? >> we think it could easily hit 20 basis points. they charge on excess reserves in the system over and above the $100 billion the banking sector has to keep on deposits within the so-called euro system. that would make it more likely that money is put to work within the eurozone. also, it will drive down the level of the euro against the dollar. alix: it seems like negative deposit rates are preferred because it is the biggest effect on the euro which in theory could lead to bigger exports. how do you understand the link between major currencies and exports? some say is bogus. is a tighterne block of countries and the u.s. the currency is a bigger deal for the eurozone than for the u.s.

it doesn't necessarily translate into actual volume but it would certainly improve export margins which affect profitability. it would then come through into gdp. we find a convincing relationship between the exchange rate and import prices. the currency is down and you drive up in poor prices and you make it more likely that over three years, things can get close to their inflation target. why does the ecb need to act so aggressively? i look at the european economic surprise index. things are not as bad as they were. why the hustle right now? >> well, it's a good point. the eurozone is picking up momentum again. the eurozone money supply israel accelerating particularly in germany -- the eurozone money supply is really accelerating

particularly in germany. ecb wantraghi and the to get escape velocity for the eurozone and they are not there yet. they are way behind the u.s. in the cycle and he want to ensure they get a strong recovery going into 2016. getting the currency down as a key part of that strategy. getting the depot rate down as part of that move it it's very likely to be the rate they are buying bonds. eurosl be 60 billion per month to 80 billion euros which will drive down the currency. it sounds like a total tom keene special. the other issue when it comes to more qe and lower deposit rates is that it seems to benefit mostly countries like germany which you can argue does not necessarily need it. in a greece and spain and portugal and italy. they need the help.

do they get it with these kind of moves? at the systemk and break it down, they sickly, don'twithin the periphery have any excess reserves so the banking industry and spain does not have the reserves in the system. it is all residing in the core in germany and the netherlands and we include france. germana is to penalize banks and french banks and dutch banks and get them to put their money to work. we are also seeing lending rates coming down. company darling over one million euros, they get it cheaper than their german counterparts. it is coming through, it is feeding through to the wider continent. this is the first ecb meeting we have seen after the paris terror attacks. what kind of pressure does mario draghi to pump into the system now which the attacks could have

led france into a recession. >> that's very important. terrorism is negative to gdp. if you look at the different between developing countries, they tend to respond by easing policy and that includes pumping and more liquidity and lowering rates. this will be consistent with what we have seen in other countries. it is like the u.s. after 9/11. to do morer argument easing right now. if they lead into next year, it will be more difficult to get a consensus to actually move further particularly germany is witnessing stronger growth and stronger monetary data and inflation is picking up so they have to go now rather than later. looking forike a reason to not go.

thank you for joining us. joining me now for more on the ecb and the markets is the chief european economist jamie murray. mark barton is in our london bureau. thank you both for joining me today. isk, my biggest question easing and some form by the ecb has been well telegraphed. what is priced into the market? >> if ever there was a beautiful question, that was it. what is priced in? the euro-yen.t the euro is down to its lowest since april today. what's important is it has fallen for seven consecutive weeks and has not done that since 1999. since october has fallen 7% against the dollar which leads to the question, what's priced in? 1.0% rate cut which would

bring it down. beyond that, it's anyone's guess. that is fully priced and according to futures data. will the euro go to parity if mario draghi surprises us? will the euro start rising again which pushes down on inflation? questions, questions, questions. it has been 36 days since the ecb's last meeting and we are almost out of our misery. alix: we are so close and then we have the fed. so jamie, so much is priced into the market and he says a -3% deposit rates is -- so that -- so does that put the ecb more pressure? >> i think the link between the deposit rate and the exchange rate is probably overplayed. i don't see that as the main channel through which the ecb is trying to stimulate the economy.

it's rather asset her juices and increased scale which should make more difference. of 400context of cutting basis points moves since precrisis, it is very small. i'm looking at asset purchases. alix: what kind of asset purchases would you need to see to look at the ecb helping the economy? >> more than there are now. the important thing to understand is why they are doing this. it's not a precisely calibrated estimate that reflects a deterioration. it three thinking on the shape of the eco--- recovery which is not moving fast in a. i think the ecb will move asset purchases up. 75 economists are saying from 60 i think that three's noble and maybe higher than that. so maybe taking an opposite view that the euro is not a good transmission mechanism. julie is looking at positioning

in the euro. julie: we are seeing short interest in the euro at the highest since may. that tradersggest are continuing to bet that the euro will go down. the flipside of that is that if the ecb does not do what many are expecting, if it does not provide more stimulus and we see a bump up in the euro, any increase could then be exacerbated if you get your coverage.that is something to keep in mind as the short interest climbs. alix: what do you think about that we could have a short covering rally or the potential for more shorts to be added? good point. it ultimately comes down that currency trade -- to what extent mario draghi surprises. atre the yield has come from least since october 22, look at

the german five-year yield, it's 0%.ow us -.2 they cannot buy them for less than that. what's important is the 10% cut in the deposit rate freeze up 370 billion euros of bonds. is the ecb chasing its tail? since october 22, 453 billion euros of securities have moved %rom yielding better than -.3 to below. the ecb could be chasing its tail. the market is moving ahead of the ecb. does that mean it will have to keep cutting the deposit rate or decree that it will bend the rule and it can buy any bonds with any duration with any that's a great the sister. a big week next week, thursday will be the day to watch the

currency market and the negative yields in germany. thank you very much both of you. you don't have to follow the pack when it comes to buying electronics. here is the case for disruptive devices. many of these surprised me, next. ♪

alix: welcome back. vonnie: here is the latest business flash. the wagon has come up with $2 billion to offset the cost -- baltimore wagon has come up with $2 billion to offset the coast of their recalls. executives have their bonuses cut as well. aig is considering whether to sell off its insurance contract. carl icahn is pressuring aig to

moderate its returns. investors are shifting their way to what just shifting their focus away from geopolitical situations in the middle east. alix: thank you so much. season, we will spend time talking about the most popular products and brands especially electronics. if you think of the top sellers, he will miss the disruptive trends and arguably better devices. gregg harper is founder of parkervision where he tries out these surprising gadgets. what is the most surprising thing you have this holiday season? >> we all have credit cards and the wallet full of credit cards. the problem with that is it's big and bulky. your phone so open this up and on the back, here is a credit card that has every single card on here. it's electronically connected and that's all i need.

this is my visa card and i push this button and now it's my american express, now it's my mastercard, now it's my personal card. alix: what about gift cards? it tied to my phone so you take it away and it locks immediately. if i forget it somewhere, the note -- the fungos were i forgot it to it will send me a message. if i don't have the phone with me, i can use a tap code to unlock it. alix: what about other phones? would gravitate toward the smart phones. is there a phone that i don't know about? >> there are two of them you should look at. or 3.rst is the 1+2 with this done away with all the marketing. you cannot go to the store to buy it except for today. you have to get an invite. this is your invite. alix: you would have to invite me? >> and then you can go buy it. today, guess what?

this phone is now available in anybody can get it. the best part is this phone not only has the same specs as the apple or samsung phone but it is also have the price. not only that -- alix: because you're not think victor marketing. >> exactly, and it has dual cells. it says t-mobile and at&t. you go to europe, you can put a european sim card and a usm card and when you make your phone call, you choose which card you want to use. it's got a little button on the site where you can decide whether you want to be alerted her silent. -- or silent. you can choose what rings. alix: you also have a google nexis phone? they've got a project called project fi. you pay $10 per gigabyte of service and they used it as opposed to phone service.

i was in europe for two weeks and i used tens of gigs of service. my total bill was $25.50. it uses the data network. whenever you are on wi-fi, it's totally free. if for some reason, there is no wi-fi, that it jumps onto a cellular network alix: you that's awesome, thank you so much. coming up, the pacific is heating up an el niño is on the way and we will take a closer look at the effects that wild weather will have on the economy. ♪

alix: el niño could give the economy a leg up during the winter and a milder winter supports housing and consumer spending. julie hyman is looking at more. i had a leather jacket and sneakers on today. talkinge have been

about warm weather mostly in the context of retailers for whom it is not awesome. according to economists, it is better for the broader economy. let's start with the baseline. this is gdp and what we have seen over the past several quarters. we have seen a weakening trend. when you look historically at has beenn there colder versus warmer weather and what that is meant for gdp, let's look at what has happened. historically, when there is seenr weather, we have more of a dip in seen more of a dip in gdp. because it prevents people from going out and doing things like buying houses, for example. it does not spur that economic activity. it can be good for other types of activity in the economy which is not necessarily -- we have been hearing about retail but this is a little counterintuitive. looked barclays analyst

at general sales and motor fuel. overall and a first quarter, that tends to go down. that means less money for states and less money for local governments. increaselly see an because i will drive more and spend more and i can be good for your state. words, when it's colder outside, people are driving less and spending less on gasoline. alix: and that hurts local revenue. thank you so much. stay with us, u.s. markets are set to open in half an hour we will bring you the top five stories to watch before you start trading today. more "bloomberg " right after this break. ♪

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so your sleep goes from good to great to wow! give the gift of amazing sleep, only at a sleep number store. this week only, save 50% on the ultimate limited edition bed. hurry, sale ends monday. know better sleep with sleep number. alix: we are 30 minutes from the opening bell in new york and welcome to "bloomberg ."

stephanie and david are off today and happy black friday and hope everyone had a good thanksgiving. i am joined by terry geithner and tracy alloway. happy thanksgiving. >> alix: happy black alix: friday. lots of cake in turkey? >> it was momentous. alix: let's go to first word news. france the president of is promising to wipe out what he calls the army of fanatics he blames for the paris attacks. he spoke today during surmise honoring the 130 people killed in the attacks two weeks ago. the islamic state claims responsibility. the president of turkey's firing act on vladimir putin. he denies russia's claim that turkey buys oil from the islamic state. turkey is facing economic retaliation from russia after shooting down a russian jet. denies mocking a journalist disability.

a reporter says he has interviewed trop as on a first nine -- tromp and is on a first name basis with him. on these andore other breaking stories at the new bloomberg.com. if you take a look at what futures are doing, the answer is not much. pictureeeing a mixed when you look at the overall market. we saw a more decisive direction in china over night where we saw stocks falling sharply after a number of the country's largest brokerages said they were undergoing a regulatory probe. that brought down prices overall and we got industrial profits in 4/10 oftry down about 1%. currency, that is notable. the euro versus the yen is set for his longest streak of weekly declines since the inception of

the euro in 1999. all of this has to do with central bank dynamics around the globe as the u.s. is starting to tighten and we see the european union potentially starting to loosen monetary policy. that has been putting pressure on the euro generally. we wanted to check on commodities because we have seen interesting action even as stocks in the u.s. are little changed. gold futures are taking a little bit of a tumble. indiaht have to do with forecasting week gold demand in the third quarter, the weakest in eight years. that there seeing could be liquidation on the parts of funds and it could have to do with that selloff in china. overnight there are number of different factors in oil prices are heading lawyer -- lower at the moment. we see a decline about 2% and libya wants to increase its output and rushes taking military action against turkey off the table.

we saw a boost earlier in the week to oil prices as a result of the downing of that russian jet on speculation there might be a middle east turmoil, more as a result of that. that premium is coming out of the oil market. alix: thank you so much. every day at this time, we tell you the five stories that matter to the markets right now. we have to kick it off with things on china. it's looking more like a storm there. -- the index dropped more than 5% and volatility surged from the lowest level since march. this is the largest a lot since august and was sparked by some of the nation's largest brokerages after they closed regulatory probes. it does not stop there, industrial profits were down as well and you have the ipo freeze. there is a lot at stake. >> there is a lot going on in china. we know that a big part of the

chinese stock market rally is built on leverage and this underscores that. as soon as there is trouble at the brokerages, everything pulls back. >> the chinese government takes these routes very seriously. it's not a free market economy like the uso middle-class favors will borrow large amounts of money to get in a huge stock market increases. when you have an unprecedented decline, you see wealth wiped out like you don't see in other places. the government tries to implement different tools and one was the freezing of the ideas which is a mixed message. they allowed them to come back today and certain other cuts of monetary policy to keep that wealth intact. the market itself seems to be a little out of control. the government might be grappling to figure out what other tools they can use to get control of it. alix: they also want to take off some of those tools. out of control is what

you just said and this is a good illustration. this is an index that maps the swings in the shanghai composite and it goes back several years to 1990. you can see this year, the enormous upswing, upsurge in swings and volatility we have had in the shanghai composite. it captures exactly what we have been talking about that there is this -- because of his government intervention and market reaction, there has been a lot of volatility and confusion on the part of investors and a lot of swings in the shanghai composite as a result. identifiedwagen has $2 billion in savings. they have recall stemming from its omissions scandal. -- itnced to cut costs plans to cut costs including

executive bonuses and they plan to scale back production to avoid bloating inventory of unsold vehicles. it has yet to comment on whether the cost-cutting matters would include job cuts. >> when you see a company that is under somewhat regulatory and enforcement pressures like the emission scandal, they have no go into every single facet of the company to figure out ways to save money. this could be incredibly expensive for the company. you've got the department of justice in several states looking into this and different regulators as well as german prosecutors and regulators. >> you also have the civil suits from customers. you've also got a bunch of dealers mounting suits this week , complaining they are left with this unsellable inventory ahead of the holidays. alix: this reminds me of 2010 and the bp oil spill and the fact that it was the crisis that never ended. the distinction is we keep hearing these things from colts wagon that they are -- from

volkswagen that they are doing things. it took a long time for bp to cap the well and get on top of it. at least bulked wagon is making strong's -- at least volkswagen is making strong decisions. it's easier for them to get on top of this but the issue of inventory, it is what drives sales and what drives profits in the company. if they cannot figure out a way to get sales back on track, i -- $2 billion here and there will have a big impact on the bottom line. alix: let's brings us to the fines. 109lays has been fined million dollars. the bank executed the so-called elephant deal for a number of clients in 2011 and 2012. the latest find comes as a blow

to the chairman at barclays who has made a high-performance ethic one of his three priorities. >> if you read one thing today, please let it be the fta complaint against barclays. i spent my morning doing this. let me not be the only one. there is stuff in there about how barclays basically googled these high net worth clients. >> they bypassed due diligence and used google. basically, the bank has rules and protocols and how it takes a new customers. you have to go through due diligence and that's in line with the regulators and the internal compliance of the bank. in this case, it looks like they took on several high net individuals to do this structured notes deal that seems to be profitable for the investors but there seemed to be a group of people at barclays that did not tell anyone they were doing it. they kept the documents in a safe. >> they wanted it to be

ultra-confidential because these were important, high net worth clients. the most amazing thing about this is they refused to put any of the documents for the deal on a computer. they did everything on hard copy. can you imagine doing a deal all by hard copy? you have to fly bankers and lawyers back-and-forth. >> it goes against what banks are supposed to do right now. $109 million? is that a deterrent? >> it's embarrassing. >> this is one of the latest in a stream of attacks against barclays. they had $150 million earlier this month from new york state that had to do with their algorithms and using those improperly. iny paid $650 million and the livedoor scandal, they paid half $1 million. this is one of many that does not look good in a culture

that's trying to change and become more transparent and more compliant. >> the morning must-read of the day? i can't remember but a good chunk of the morning, i spent figuring out who the clients were. there are some close adult let me be the only one. someone else try to figure it out. alix: number four, for the investors that plate black etf's, you may be out of luck. in the nine years since they began to trade, investors would have been better sticking with traditional s&p 500 stock index fund around the holiday. if you look longer-term, retail ats outperformed s&p 500 given by amazon, home depot, and walmart. thati look at a chart like , it's automatically amazon. >> i think the lesson is don't try to time the market. the idea that it's black friday will buy a bunch of retail etf's is kind of silly.

the idea that you could invest in that long-term and make a better return than the s&p 500 but your outperformance is driven by the big guys like walmart and amazon. will that strength continue? sox: why is retail lagging big this year? they have had more earnings and sales slumps. it is confusing because the economy is doing ok but that's debatable depending the you asked. >> what is the core of the retail slump? >> i have been trying to square that because we have seen consumer confidence numbers that are pretty darn good. the consumer is supposed to be the powerhouse behind the u.s. economy right now and it's just not filtering through to some retailers. alix: it feels like we are at an inflection point with brick-and-mortar retailers. you have an e-commerce giant disrupting your business model but on the other hand, you have aging baby boomers or no longer buying certain things.

like there is a great rotation on both ends that retailers have not yet calibrated. >> some people argue that the differences people place more value on services. we are going out to get massages and big thanksgiving dinners rather than going to a bookstore. number five, crude oil is down for the eighth straight day. the combination of a rising u.s. dollar and libya seeking to boost crude production and a conflict with turkey and russia. the crude market is crazy short right now. you get one headline and there is no reason why you wouldn't see a huge spike in oil? >> we need something like an actual mechanism that would force oil prices higher and i don't see that coming anytime soon. >> what type of mechanism would that be?

>> like china. note got china which will increase its oil consumption any time soon because it's having a terrible economic slump and then we got issues with opec. they could turn their levers which that have an impact. or you can have the u.s. slowdown fracking and crude oil production. none of these things will happen. in store for low oil prices and a volatile market for next year? >> what about the stimulus package for oil? i saw a story before the thanks giving holiday about some metal producers in china asking the government to buy out their stockpiles of metal. alix: you will talk about that in a few minutes. that's a great segue but those of the stories that matter to the markets now. you are looking at a live shot from moscow. nextll be discussing that and the implications of the

kremlin cutting economic ties with turkey and what that means for the economic ties between the two countries. ♪

alix: russia is preparing to sever economic ties with turkey after the country shot down a russian warplane earlier this week and has banned terrorist travel there. the turkish president said it won't apologize so the russian prime minister gave government officials two days to draw up a list of ways to curb economic links an investment project. what does this mean? let's ask ryan chilcote who is live in moscow. what's the biggest economic sever you have seen so far? >> within the last hour, the russians have announced that they will suspend these a free travel for turks that want to come to this country. they have rounded up turkish businessmen and deported them

for coming on tour is to these is. -- of these says. - visas. they have a travel ban for russians want to go to that country. it's massive. russians make up the second-biggest group of tourists that travel to turkey. it's the most popular tourist destination for russians outside their own country, more than 3 million russians traveled to turkey in the nine months of this year.they spend money there .the absence of that money could really hurt turkey in the sense that they already have a current account deficit. the hard currency they get from russians when they go to turkey helps them offset that. without that money in the future, if russia keeps this travel ban in place, that will be difficult and that will put pressure on the lira. it's been one of the worst

performing emerging-market currencies and it's had a terrible year to begin with. it will put further pressure on the lira as this economic retaliation keeps getting bigger and bigger. alix: when with a target energy? 55% of turkish natural gas imports come from russia yet it is important for russia. it delivers natural gas. some death's target will russia target something that specific? the onepeople that is thing the russians will leave off the table. they are very interested in keeping those gas sales going not just to russia but to everyone. the gas prices are low and russia is the world's biggest exporter of natural gas. they really need that income. they shutthat if

turkey down, turkey can go to other places for it. i think that is unlikely. we could see further disruption to the oil market. they shut turkey down, turkey can go to other places fornot massive butn response to the economic retaliation the russians are planning against the turks, the turks might say we need to close and thisrus strait could go further and it could affect energy. have 140 crude ships passed through the straits so far this year. it makes it a very important gateway for crew transport. the other thing that caught my eye is on wednesday, we saw a rush of fell short of its fundraising target at a bond auction. it was the worst result in eight months and that led me to believe that russia has maybe more at stake than turkey in this economic quagmire. that.re is something to certainly, russia has suffered as a result of the increased geopolitical risks. we saw that with the ruble and the price of oil go up in the ruvell go down.

you don't see that very often. they usually move in tandem. that's the threat for the russians is the oil price going down. this would be an issue for the russians. already imposed sanctions against food imports banning european union, food imports from turkey is something that's on the table. that was a retailer saying 25% of the produce in a supermarket is now from turkey because it is not coming in from the european union. you can see more inflation which has been a big issue but the russians are convinced that this would hurt turkey more. have extraordinary things to go through with the threats. you mentioned the prime minister will introduce the sanctions as early as tomorrow. he gave the government two days to do it. that was yesterday so we will

learn more about this tomorrow. it looks like it will get uglier in terms of the economic relations between these two countries. alix: the tension is something we will all watch closely in the coming days. thank you very much. continue to talk oil and commodities. the commodity indexes at its lowest levels 1999. it seems like the commodity story could be shifting from excess supply to a story about falling demand. our bloomberg news chief energy correspondent joins us from as well as tracy alloway and kerry geithner. do you think we are seeing a demand issue versus supply? >> yes, clearly, but we have that problem already particularly because a metal like copper -- china accounts for 50% of demand. some analysts believe that copper demand in china is contracting.

the numbers are difficult to pin down next year. that's what traders believe. the problem in some metals is the demand is falling. if you look at oil, the demand is growing slowly. you have to differentiate the commodities. the metals is the problem of the month. alix: tracy, when we hear things like china once to stockpile metals to support the price that we don't want to cut production, that creates a longer-term issue. >> there are many dynamics and play in the chinese metals industry. mccrory had a good note earlier this week about why steel mills don't want to cut production in china. there are things like last man standing, it's a prisoner's dilemma, no one wants to move first, but there were more intriguing things like they don't want to cut production because it means they might not be able to pay off the bank loans. it turns into extend and pretend for chinese commodities. upx: anyone who winds

cutting them leaves money on the table so who will blink first? >> exactly. some producers have cut production like glencoe. the market rallied for a week and a half and very soon, it was clear there was a glut on supply and not much demand. others were benefiting. the experience of production has been one that no one wants to assert. in aluminum, half of the industry is losing money and very few are cutting. the pain has to be more intense than we have seen so far particularly metals, before we see this materialize in a meaningful way. and: the demand can pick up supply has to be that much more direct -- dramatic. thank you very much. where saying goodbye to tracy and thank you for joining us.

geiger is sticking with us. and big week ahead the economy in the u.s. and abroad and november jobs numbers are coming out and the ecb will talk qe and we will have a preview so stay with us. ♪

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what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. alix: welcome back to "bloomberg but."\ we will be joined the founder of shreve kumar strategies. keri geiger joining me on set. i want to go to vonnie quinn with ms. right now. vonnie: thank you so much. here's your latest bloomberg business flash. askswagen announced savings costs are new to pay for the companies cheating scandal. lawsuitsfacing for using software and diesel cars to trick emissions test. a five-year low this morning could investors are shifting

their focus to the interest rate increase good that will make gold a less attractive investment. a slowing economy, china is excited to pass the u.s. as the world's largest airline market within 15 years. an industry group critics the world passenger total will double by 2034. passengers will amount to 7 million. that is the latest in a bloomberg business flash. week is a huge one for economies around the globe. we will get the u.s. jobs report for november and the ecb meets meets december 3 for strategies. shreve kumar is joining us. what do you think janet yellen things today when she wakes up and sees chinese stocks falling the most since august? sheve: good morning.

i think the major thing for janet yellen and for the fed to wethinking about is she says have said so many times that we are going to hike interest rates and we have not done so. december is coming so we better go ahead and hike interest rates. that seems to be the message that she is giving. it is coming from fisher and the new york fed president as well. they are trying to give you a courtney that message. the inflationand, figure for consumer price index is still at 1.3%. is the so-called deflation code and deflation refuses to go up. you talked about how gold prices have fallen and you have seen oil prices continue to drop. today, the euro has gone b below $1.06.

by next week, we look for it to go further to parity. given all the circumstances, she is thinking, how is it can i justify a rate hike with all these developments? do we have to do it because we suggested we would do it or is it really going to happen? that to me is going through her mind as well other decision-makers at the fed. what you think the risk of not doing a rate hike is at this point? you say she is under pressure because she says she will do it time and time again. there were indications that would happen during the end of the year, but at the time is not right, the time is not right. a seems like the fed is pragmatic institution, although not everyone would agree on that. what would be the point of forcing a rate hike at this point? komal: great question. i've say the fed should of hike interest rates a couple of years ago. they are two years too late

trying to do it. the reason for increasing the interest rate is that there is a have ative bubble that lot of distortions in the market. these are being done because the interest rate is close to zero. traders are reaching for risky investments because they think they are not risky because they want the higher yield. she needs to hike interest rates , not because inflation is rising, which is is not, not of searching,ices which they are not, but she has to do it because the distortions have increased substantially in recent years. that is the reason to do it. ,ecause she is late to the game and if she raises interest rates at this time, i think she has to tolerate a major shock to the market in terms of the equity markets taking a hit and the u.s. dollar strengthening especially with the ecb expected to increase quantitative easing on december 3.

risks thathe various she will be running. it is not coming from the inflation side and not employment related, but by postponing rate hikes, she is really causing more and more distortions in the market. alix: what confuses me is that if you look at the atlanta over thed funds rate, last 18 months, we have actually seen about 250 basis points tightening. 2014ally had a low back in and it has been climbing. that implies the financial conditions in the u.s. have been tightening and we have been fine. why not just go ahead and do it? komal: there are two things to consider. there has been some amount of tightening for other reasons. the dollar is strengthening and it also operates and anticipate a tightening of monetary policy. using andcurrencies the u.s. not using further also leads to a global tightening as

far as the united states is concerned. the problem is that when you explicitly increase the interest rates, there is a lot of borrowing, which may be tied to the interest rates, and it is not clear what the fallout is going to be of an explicit rate hike rather than increases and the shadow interest rate. since they have not increased interest rates in him was 10 years, since june of 2006, they are just walking into this blind. they are going into a dark room not realizing what is in it. they think they have to do it. that is the problem. if they had a better idea, if they had a clear roadmap as to what to be doing and what will be happening with the markets, i would feel more couple. alix: what does mario draghi do? continue qehim to and lower the deposit rate. re the same time, thei

seems to be uncertainty around the fed. what does mario draghi do about that? komal: there's an excellent piece in bloomberg today which came out a few minutes ago explaining how mario draghi is behind the curve because the already assumed the deposit rate will go from -0.2% to -0.3%. he at least has to do that if not go further. the market is expecting qe to be extended from september 2016 to september 2017. so he has to do that. they're looking to the amount of monthly bond purchases to go over the current 60 billion euros. he has to come through with that. then, the market is going to say, what next? mr. draghi has said he will do whatever is necessary at this stage so the market starts looking for more and more. that is the problem.

i consider quantitative easing is comfortable best comparable to a type of drug addiction. we went through that for many years in the united states without being able to get off. we stopped qb, but then we had to resume again. now we are at zero interest rate and that has become an addiction. side, mr.opean draghi's went to find out that he cannot get off the situation. he has to keep increasing qb more and more and push interest rates to more negative levels without improvement in the economy or a pickup in the inflation rate. keri: this is keri geiger in your. on whatad a wish list you could ask mario draghi and janet yellen to do over the next 30-90 days and what you think needs to be done in order to kickstart both the european and the u.s. and the global economy in general, if you think it is lagging of course, what would that be? you have a lot a specific use

that yellen is behind the curve on this and that drug you should not have been aggressive on qe. if you had advice, what would you do? are timelye questions. i say there is for mario draghi or janet yellen to do anymore. the work of the federal reserve and the european central bank is already famous. -- finish. these levels of interest rates and monetary policy is an effective in terms of its entire impact on the economy. i would say essentially don't do anything. .ust shut down the improvement needs to come from structural reforms. you asked the question what needs to be done to turn around? you need employment tax credits in the united states. you need tax reform. for u.s.opportunities companies to bring the money back from a broad and invest it here to employ people here. that is what you have to do. we couple met ourselves

on a 5% unemployment rate when the labor force participation rate is at levels we have not seen since 1977. you can lower unemployment by creating jobs or you can lower unemployment by also pushing people out of the workforce. the latter is not a preferable means. on the european side clearly, the labor market is very rigid. france and italy in particular need to make big changes. germany showed us and the reforms in 2003 and the previous chancellor that labor market reforms do wonders in terms of accelerating economic growth. that is not within the purview of central banks. within the purview of the finance ministry and that is what they need to step in and make the changes. it is not an monetary policy work anymore at all. alix: we have a big friday jobs

report coming out in just a week's time. what you expect? what is the number that you have to see to say december is off the table? komal: the fed has set itself a pretty low hurdle. -- 170,000 and over would be seen as efficient to hike. the unemployment rate remains at 5% or comes down to 4.5% and they will pat themselves on the back. if the labor force participation rate remains at the very low level or goes down even more thatbefore, i would say says to you that you are really done the job on the employment trends. problem is that every time that cutqe doesn't work is that it needs to be extended. it's like the medicine is not effective so i will take more and more of it. alix: it is always a pleasure to

speak with you. komal: good to be on your program. alix: he is joining us live in los angeles at this very early hour. the stocks have opened that we want to see how they are trading on this light volume daty. julie, what have you got? julie: we have a mixed picture with the nasdaq trading up very slightly and the dow is slightly lower. i want to look at the imap on my bloomberg terminal and dig more into the sectors on the move as we get underway. this is just an early look here. we had defensive groups that are doing better today. telecom, utilities, health care are higher. discretionary is lower. let us look at that consumer discretionary group. retail here is actually higher by 2/10 of 1%. it is media that is the big drag on consumer discretionary down 9/10 of 1%. to further dissect those two parts, jcpenney within retail is

higher out of the gate this morning. and analyst is saying that it was higher and now it is only higher by a 10th of 1%. was thehat jcpenney standout winner for thanksgiving and black friday on the strength of demand for its home goods. jcpenney open two hours earlier than last year yesterday at three clock and. as sons -- as such, maybe got a jump on its competitors. lagging in media today is disney. after the close on wednesday, they came out with their 10k. within that, they set espn subscribers have followed by 3% in the last fiscal year. thatnalyst pointed out this is nielsen numbers versus paid subscribers. nonetheless, still a concerning number. the sourceally been of concern over the company's numbers. let us go over to the nasdaq. abigail doolittle taking a look at online retailers on this black friday. very appropriate.

abigail: we are looking at amazon and ebay. it was a great shopping day for both according to channel advisory amazon's thanksgiving sales were up 31.2% year over year and ebay sales were up 11.1% year-over-year. it has been a great year for both of these stocks. amazon is up more than 100% year to date. ebay is up more than 20% your today. some may wonder then if it is too late to get in here. for amazon, you could see the momentum to 10 you could there looking at earnings growth next year while ebay may offer compelling values. andks trading at a discount on the next 12 months price-to-earnings basis, a solid single digit growth. amazon and ebay then could prove to be strong holiday names. alix: thanks so much, abigail doolittle at the nasdaq c. why analyst could be ditching short-term gains for a long-term approach. you are looking at a live shot

over and overcast london. it looks cold. we will be back. ♪

alix: welcome back to "bloomberg ." vonnie: i am vonnie quinn. some audi models could be swept into volkswagen's cheating scandal. "the wall street journal" says the u.s. and germany are investigating the engines. the car has the vw software that trick control test. standard chartered will find out if it survives by giving them a stress test. the bank has sold assets and raised $5 billion since june. regulators getting tough on emerging market exposure to those record high prices could soon be a thing of the past. the u.s. capitol heard is expanding and the animals are now fatter than ever. dow futures are down 53% after hitting an all-time high years

ago. that is your bloomberg business flash. alix: time for today's value proposition. the zero in on controversial issues and stuck a little debate. today, we asked the question -- are activist ditching short-term strategy for a long-term approach? bruce, founder and ceo of old copy partners. as a firm that advises activist investors. thanks for coming. bruce: great to see. alix: are we at a point in active is investing where i say, hey, do this quickly for a pop in the stock or mi in this for 10 years? bruce: we see both of those kinds of campaigns. we are sophisticated activists and we work on sophisticated activist's campaigns. they're taking a look at how they can extract value from the investments that they own and also as they look into new investments. they take a look not only for the short-term certainly for longer terms.

fromss campaigns recently starboard value and what they have said at ge. it really is a look at the long-term. i think it many instances, what that some ofg is the activist hedge funds now have a longer holding period than the average mutual fund. alix: your advising elliott management. it's definitely a shift and a change. keri: we often think of activist going for companies as a negative thing. companies typically would be thought of under siege by activist investors. what advice do you give companies that you work with that are in those situations, whether it is relatively be nine or full-blown takeover strategy? strategies can companies due to expect value out of these ideas and

strategies that make them more valuable? bruce: many times we see the activist viewed as a catalyst for change or viewed as a somewhat hostile investor. are really activists deep valued and research oriented investors in this study companies very, very deeply. they take a look at what is going on in the company. we advise our corporate clients to somewhat think like an activist and approach the campaign saying, what is our plan? what can we do to effectuate growth and create value? what areas do we need more work? we find that the companies that are successful in reaching those saying kinds of conclusions either can avoid a very hostile campaign or they can work with an activist to try to create value. alix: is that enough when it comes to fees? bruce: the fees are about

funding the investments that you need to do. to pay up this really big feet and i'm willing to sit out with you for the next 10 years or however long that investment is. bruce: i think you have to realize that the campaigns that people are finding and the copies that activists really dig into our ones where the work can be on the come. it can be a very long-term situation. for a management team that we work with, it is an understanding of creating value and having a message and moving forward. this time of year is the time of year where a lot of these campaigns are about to kick right now,se companies are planning for their annual shareholder meetings. as part of that preparation, they also require that investors give advance notice if they are going to run for an election campaign. we are working with our clients whether ontanding

the company's they are a target for these campaigns, and if so, what can they be doing proactively. on the activist side, that same kind of determination -- whether or not a company is going to be perceived as the kind of target that might be worthwhile running a campaign. alix: bruce, thanks for coming by. are you going black friday shopping after this? bruce: of course. alix: we will be right back after this break. ♪

alix: welcome back to "bloomberg ." i'm alix steel. time for some of this week's highlights has heard on "bloomberg ." >> i think it is going to be a merry christmas. the two numbers that are most

interesting -- one is how many people of started their holiday shopping. it's the highest number ever. 60% almost have started. it's 10% higher than years ago. they are starting earlier and the other interesting number is that almost half of all sales will be driven by online activity. >> majority of the business is going to take place in brick-and-mortar. i see that trend continuing and we will be benefiting from the strength of our online business, but i definitely think that having bricks and mortar is going to be critical to long-term success for retailers like ourselves. >> this idea that there's some separation between the internet only guy in the brick-and-mortar guys and the bricks and mortar guys are obsolete -- that's nonsense. >> black friday does not tell us how the whole season is ending. all these things that we find out this week, they are great filler and they are entertaining. a give us no insight into what is happening. >> black friday is an anomaly and has nothing to do december. >> this is the black friday show.

tried not to tell us how not important is. >> it's important to the year, but it does not indicate what will happen in the middle of september. -- december. alix: that does it for "bloomberg ." keri geiger, thanks for joining me. what's your biggest take away? keri: we have a lot of complicated economic issues coming up. we have all these issues happening in china and huge economic shifts. we have retail downturn in the u.s.. how you connect us to -- i'm not sure what will happen in 2016. alix: worried about china. get back on cyber monday for another big morning. the cofoundernd will be with us. i'm alix steel. ♪

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>> it's 11:00 p.m. in hong kong. looking to "bloomberg markets." ♪

>> from bloomberg headquarters, good morning after this friday after thanksgiving, i'm erik schatzker. it is black friday, the traditional start to the shopping season. retailers are relying on heavy discounts to lower customers into stores. can they really win the fight with amazon? the insurer is set to be considering asset sales. plans to cut $2 billion in costs, reducing management pay. this is following the emissions scandal. here we are about half an hour into the training -- trading day. let's take you to julie hyman. julie: we are not seeing much action on this day after thanksgiving. we